Thursday, September 20, 2007

Yipes! Stripes!

The things I discover when I take a road trip: a total rebranding job southwest of Houston that I’d not been aware of before. (And no, it’s not an excuse to put a pretty girl up on the blog…merely an example...really.)

As I headed southwest for Mexico, to hunt the wily whitewing, I ran across my first Stripes© store in Goliad, TX. It’s a C-store (convenience store) hiding under a Valero gas canopy, my first sight of a new trade dress campaign that’s a year old. Apparently, I don’t get out enough.

I asked the counter clerk who operated Stripes. She could only tell me that the chain sold Valero gasoline and she thought its headquarters was in Corpus Christi. It is.

Susser Holdings Corporation tapped Houston-based BrandExtract to: help define and launch the new brand. BrandExtract crafted a complete identity package, including new logos and exterior store signage. The new look and feel will be taken to market via outdoor boards, weekly radio spots, in-store point-of-purchase signage, Stripes cups and other packaging. (It’s very thoughtful of Susser to mention the agency on its website.)

Then I arrived (with six of our eventual 10-man hunting party) in McAllen and found Stripes everywhere – the eastern Valley area alone has 60+ stores in the phone book. According to Susser, it’s one of the Top 20 operators of C-stores nationwide…and Stripes is the “new face” of the old Circle-K brand.

It’s a very good job – despite the apparent dissonance between the Stripes and Valero trade dressings. It doesn’t seem to hurt the company’s business at retail. And there may be some not-really-hidden reason behind the brand change.

According to a company press release, Susser began re-branding its convenience stores from the Circle-K licensed brand to Stripes in the second quarter of 2006. At approximately the same time, Susser began re-branding its fueling islands to Valero from CITGO after signing a new 12-year supply agreement in July 2006 – in the third quarter.

All the retail stores that were supplied by CITGO were to be supplied by Valero. It looks like Susser was one of the breakaways from CITGO in the wake of the remarks by Venezuelan President Chavez that so upset CITGO marketing partners here in the US.

The same February 2007 press release quoted Ron Coben, Susser’s CMO: “The main goal of this campaign was to transfer the goodwill that we have earned over the last decade as Circle K into even stronger customer loyalty as Stripes.”

One valid reason to re-brand a company or operating unit (especially one long-established) is to signal a change in direction – in this case, leaving behind old or no-longer-appropriate marks (Circle-K and CITGO) for new offerings (Valero).

Whether you agree that Valero’s teal-and-yellow looks a bit odd against the Stripes red-and-white, Coben’s team and BrandExtract have come up with a very strong identity – and you can see executions in addition to “Bikini Girl” here.

On the one hand, Wall Street doesn’t seem to have given Susser much credit for this particular effort. But given that it’s a year after the new brand’s rollout and every Stripes store I saw was crowded, I’d have to say the campaign is very successful: Customers have picked up on the brand transference. What’s the disconnect among Susser stakeholders? I’ll write Ron Coben to find out.

And hats off to Jonathan Fisher and the BrandExtract team for a neat ongoing campaign.

PS: Circle-K is still a going concern. Susser was a major licensee.


Leigh Lerner said...

Hi, Richard: I’m a little confused about the reference to Susser rebranding the stores, since hereabouts [Quebec, Canada] we were of the opinion that Susser sold off Circle K, then ConocoPhillips in turn sold it to Alimentation Couche-Tard, which owns a variety of convenience outlets, and by the thousands. Did Susser buy back some stores? Is Couche-Tard trying out a new brand? It’s not clear to me how Susser fits in:

"Circle K is a trademark owned by Quebec-based Alimentation Couche-Tard, which acquired it from ConocoPhillips in 2004, to designate a chain of company operated and franchised convenience stores in the United States."

Richard Laurence Baron said...

Merci beaucoup, Leigh – and thanks for the direction. Readers, check under “Business Units” and note:

“The Company has over 3,000 stores in the United States, which are located in 29 states. The stores are primarily operated under the Circle K® banner. The simple and ongoing renovations carried out in the Circle K stores make them easy to identify.

“In addition to the North American Couche-Tard network, there are approximately 3,500 Circle K licensed stores located in seven other regions worldwide (Japan, Hong Kong, China, Indonesia, Guam, Macao and Mexico).”

Susser has been a licensee of Circle K: “We completed our rebranding initiative, in which we converted our stores from the Circle K brand to the Stripes brand, during the first quarter of 2007. We spent approximately $8 million on this initiative, of which $4.5 million was spent in 2006 and the balance in 2007. We paid $3.6 million in royalty expense for the use of the Circle K brand for the twelve months ended December 31, 2006. Royalty expense for the first quarter of 2007 was $66 thousand as we completed the rebranding, and is eliminated beginning the second quarter of 2007.” By creating its own brand, Susser chucks the royalty expense off its balance sheet, spending a couple of years’ worth of royalties to rebrand.

There’s an extra item. Susser announced yesterday that it is acquiring Town & Country Food Stores, which operates 168 C-stores in West Texas and Eastern New Mexico. So the company’s going to be juggling a lot of retail brands.