Up and Running
Speedway’s conversion of Hess locations is under way
With the transaction now complete, Speedway's focus is on converting 1,245 Hess stores in 14 states. To complete this task, the company has developed a multi-faceted approach to the conversion.
On Sept. 30, 2014, Marathon Petroleum Corporation subsidiary Speedway LLC officially closed its deal to acquire Hess retail locations. The acquisition marked an important step in Speedway’s goal to expand its operations. Speedway is now the largest company-owned and -operated convenience store chain in the nation based on revenue and the second-largest by store count.
With the transaction now complete, the focus is on converting 1,245 Hess stores in 14 states to Speedway. To complete this task, Speedway has developed a multi-faceted approach to the conversion.
First, stores go through a re-identification process. All of the Hess branding is removed and replaced with Speedway branding. All green identifiers associated with Hess are removed and replaced with either red or another standard Speedway accent color or material. All of the point of sale (POS), information technology (IT), and security equipment is replaced with Speedway’s standard equipment.
A significant number of Hess stores will also be remodeled during the conversion process. Speedway plans to make capital investments in support of increasing sales and supporting growth. Remodeled stores will receive food service upgrades and potentially expansions of coolers, both of which enable Speedway to remain among the industry leaders in convenience store inside sales.
In the months ahead, as Hess locations continue to be integrated into Speedway, further analysis will be conducted to determine best practices to see if there are additional synergies that can be leveraged across all retail locations.
“Since we are nearly doubling our store count, this is the largest conversion we have undertaken at Speedway,” says Speedway President Tony Kenney. “We believe this approach allows us to quickly rebrand the Hess locations and invest in capital improvements where appropriate.”
In developing the schedule for conversion, Speedway considered a number of factors. The weather and its impact on the different Hess markets guided Speedway to start in Florida and South Carolina during the winter. They plan to start in the Northeast in the spring and then move through the Mid-Atlantic region.
An ambitious plan, Kenney knows its success is tied to the Speedway team. “This transition is going to require a great deal of time from all of our employees,” says Kenney. “The proper pacing will be critical to ensure we are successful with this conversion while maintaining all of the existing Speedway operations.”
The first conversions began in mid- November in Jacksonville, Fla., and the conversion team converted 60 locations by the end of 2014. “While we have three years to fly the Hess brand, our goal is to have all store re-identifications completed as soon as possible, and we are pursuing multiple alternatives to accelerate the process,” explains Kenney.
Speedway is converting five stores per day in a 24-hour turnaround period. Stores that are being converted close at 4 a.m. and reopen the next morning at 6 a.m. Conversion teams of 20 Speedway employees complete each store’s conversion. On any given day, Speedway has 100 employees in these stores along with additional support teams in Enon, Ohio, and Woodbridge, N.J., completing the re-identification process.
The transition is proceeding quickly, with no signs of slowing down. “We successfully opened the first five stores just 40 days after the purchase was finalized and 30 stores in the first week,” says Kenney. “This aggressive approach proves to the market, our shareholders and competitors we are coming and intend to capitalize on this opportunity.”
The human element
Re-identifying stores is only one step in the process. Another team at Speedway is transitioning legacy Hess store employees into the Speedway organization. Former Hess store managers and their key assistant managers are participating in training in the days just prior to their stores converting. The training is focused on the fundamental changes a store manager would experience in transitioning to Speedway – inventory management, information technology, human resources tools, POS and back-office systems.
During the multi-day training, employees “work” in a real-time environment. Participants are able to end shifts on the POS, conduct invoicing and ordering, and even complete multiple daily sales reports.
Each class is designed to accommodate 20 or more participants, and each individual has his or her own laptop to navigate the training environment. A portable, fully functional Speedway POS terminal for hands-on training is also utilized.
The training is held within the markets being converted so there is minimal impact to the daily operations of the stores. Upcoming training sessions will cover nearly 200 miles of the Florida Atlantic coast. Nearly 3,000 legacy Hess employees will be trained during the conversion process. “The entire Speedway team is committed to completing this conversion and bringing the value of the Speedway brand, as well as our Speedy Rewards program, to millions of new customers,” says Kenney.