As the pandemic took hold, Parkland Corporation noticed an interesting change in the company’s revenue stream.
The independent gasoline supplier and marketing company behind Fas Gas Plus service stations among a number of other brands was seeing a lot more people stopping by its On the Run convenience stores to pick up grocery staples and other last-minute food items.
“It’s interesting if you look at the height of the pandemic in 2020 convenience store sales soared,” said Parkland president and CEO Bob Espey.
“Folks were reluctant to go into conventional stores because of the health worries. What we’ve seen is folks have re-discovered convenience stores as a way to get their fill-in type of shopping done.”
For many years, the trend headed in the opposite direction, with fewer people using convenience stores for basics like milk and bread.
“But we’ve seen a migration back to seeing some of these basic staples offered through convenience stores,” said Espey.
He said two years into the pandemic, convenience store sales numbers are not tailing off and the trend, along with the growth of online grocery shopping, appears likely to continue. Convenience stores have shown themselves to be resilient even during economic downturns like the one Alberta has experienced for the last few years.
The boost in shoppers came at a good time because Parkland has been working on increasing its food options in its convenience stores along with introducing its own line of foods under the 59th Street Food Co. label.
It is a name with a strong Red Deer link. Jack and Joan Donald, who founded Parkland Industries and grew the company from a single service station into a major gasoline retail and wholesaler company, opened the first location in Red Deer on 59th Street.
Parkland, now headquartered in Calgary, has also rolled outs its Cargo brand, which covers non-food items such as windshield wiper fluid.
“Part of our strategy is to have our own brands so we can pick the markets and build brand equity around our consumer,” said Espey. “The advantage of having your own brand is you have control. You can offer what the consumer wants.”
It is also profitable. The profit margin on covenience store products is typically in the 30 per cent range. But it’s about 50 per cent for the 59th Street and Cargo lines. Owning its own brands also gives the company leverage when negotiating with vendors.
Espey said Parkland’s business model is built on fuel and non-fuel pillars. Typically, the profit margins on selling gasoline are 10 cents or less per litre, which for a company that markets more than 21 billion litres of petroleum products across its retail, wholesale and commercial businesses in Canada and the U.S., is still a lot of money.
But the tens of thousands of small convenience store purchases made every day are critical to the bottom line.
“To run a site you need to have the non-fuel to make the economics work. You can’t be only a fuel retailer,” he said.
“The next step in our evolution is to build out our food offer, both on the fresh and the frozen side.”
Parkland has partnered with Triple O’s burgers, which has restaurants adjacent to an On the Run convenience store, to provide customers more options. On the frozen side, Parkland has partnered with M&M Food Market to offer some of their products.
In Alberta, those options are being rolled out in larger centres first but find their way into Red Deer locations in the future.
Parkland supplies and supports a network of about 2,000 retail gas stations across Canada operating under brands such as, Ultramar Esso, Fas Gas Plus, Chevron, Pioneer and Race Trac. On the convenience side, is On the Run and Marché Express. The company also operates in the U.S. and Carribbean.
The company did more than $15 billion in fuel and petroleum product sales through the first nine months of 2021.