Flexibility and agility are the key traits that Yesway’s Derek Gaskins attributes to the convenience store chain’s ability to adapt to the challenges posed by the Covid-19 pandemic. This flexibility and agility comes in numerous forms, including finding sources of products they never would have considered before, leveraging Fedex or UPS to distribute products to stores when necessary, and taking on furloughed QSR employees as temporary help.

Indeed, the retailer has managed to achieve what’s seems almost impossible to do in today’s world -- staying one step ahead of the coronavirus.

In this interview, I take a deep dive with Derek, who is Yesway's Chief Marketing & Merchandising Officer, into some of the ways the pandemic has impacted the chain, what they’ve done to address these challenges, and what key learnings came from this they will apply to the business once the pandemic passes.

Note: Retailers looking for new sources of products can check out ECRM's Efficient Supplier Introductions or our Virtual Programs, which launch in May!

Listen to the podcast here (full YouTube video at bottom of the page)

PODCAST TRANSCRIPT

Bennett: Good afternoon everyone. This is Wayne Bennett with ECRM and today I'm joined by Derek Gaskins, who is now the chief marketing and merchandising officer of Yesway. I'm glad to have you here today, Derek. I see you're a sheltering in place, looks like in your home, is that correct?

Gaskins: I am, yes. Right now I happen to be on the North Shore of Boston up in a little town called Marblehead, Massachusetts sheltering in place while my store is open and trying to run things from afar and get that supply chain going or keep that supply chain going rather.

Bennett: We definitely want to talk about that. Before we get into it I first want to ask, you're looking well, you're looking sharp, but how are you handling the situation and tell me a little bit about what you're doing to keep your team focused and managing their emotions and how you're kind of doing all that.

Gaskins: Yeah, it has been a challenge and I think like many of you, and certainly you Wayne, personally, we've had to change how we do things. Going back maybe six weeks ago, it was more of a crisis mode. I had members of my price book team for instance, that may not have had laptops or connectivity, so had to prepare for where we are now and where you can literally do the job from home. I would say when you get to the category manager or brand manager and up level, we were already adequately positioned to do that level of our work. But you know, we certainly had to make some last minute accommodation and to get people's home offices and things set up. So now I would say the best way that I'm handling it personally, and with my team personally, I think the biggest challenge is finding balance. You know, as easy as everyone thinks working from home is, I actually find it's the opposite in many ways it's harder to turn off.

You may be working earlier than you typically would because you get your morning coffee and get started right away without a break. And then next thing you know you can end up working through dinner hour and family time. So, the most difficult challenges to try to get a schedule so that you're not bored and you know, without that schedule and some routine, I think you start losing what the rhythm of your life is, and so that's been a challenge. I would say with the team it's using tools like we're using right now, Zoom or Microsoft Teams, and FaceTime and other tools to use video, which you know is not a perfect replacement for face to face, but at least it's better than just phone. Now I'm even looking at more of the social things that everyone is doing. The Zoom happy hours or the team happy hours for weekends, start to have some fun.

The biggest thing that's missing, and I've even heard my team express this to me, is just that casual walk down the hall or the next cube over the next office over and just shooting an idea off of each other. When you lose that it's hard to maintain what the connections are. And so some ways that we try to overly compensate, they create busy work. Your email volume might have doubled because now you're copying people to make sure they're in the loop because you can't have that conversation. The phone calls may double for those same reasons.

Bennett: Derek, I hear what you're saying. It's funny. I call my virtual happy hour with my team the weekly Drink a Drink. And this Friday when we're having it, the backdrops going to be your most recent vacation.

Gaskins: I'm going to steal that.

Bennett: There you go. It's for you. More seriously, obviously there's a lot of supply chain disruption in the marketplace, but I'm curious to know what you're doing to keep the supply chain going, to meet the demand that you have in your stores? Maybe talk a little bit about that demand. I know people are driving less and how you're navigating through all of that.

Gaskins: I would use two words that I would say within the convenience channel we've always taken pride in: flexibility and agility. But it's on hyper growth mode right now. So I would say the short answer to how I'm keeping the supply chain going is identifying alternative paths, vendors, suppliers and partners to source things from. I've had to be flexible even with my own policies where I may say we only get store supplies from our main line wholesaler. Well, guess what? If they run out now that goes out the window. So are we direct sourcing? Are we working with vendor that I may have never even heard of? Can I be a little more agile to get them set up in our systems and to get that product? We would never done Wayne, and this may come as a shock, but we had never sent products via FedEx or UPS direct to stores.

But I have now, that's how we're getting things. When people were saying, "How do you still have sanitizer? How do your stores have masks and gloves and how are we able to get those so quickly as we did?" it's because we were more flexible and more agile and accommodating of these new waves and have identified distributors and suppliers where there's FedEx is going to stores where breakdowns of hand sanitizer, disinfectant, disinfecting wipes, gloves, masks, hat shields, you name it. So the first, the most important focus was get our team members as safe and comfortable as they can be. We introduced something called a hat shield that's more of a personal sneeze guard. You've certainly seen them. They look like what a medical practitioner or someone from CDC wears with the clear visors. It's almost like a personal sneeze guard in many ways.

Every team member, field technician, district manager, has those. We also then supply them with N95 masks. So everyone has the option to wear that in addition with the hat shield, so that they can be comfortable. Then, the routine things; gloves, disinfectant, disinfecting wipes, hand sanitizer, we have kept that in stock for store use and customer use on the sanitizer, but also for retail sales. We're even selling individual use surgical masks in all of our stores and have them readily available for customers to grab.

Obviously the most innovative thing that we've done is our CEO authorized a new role, called a greeter, and what we've been doing with these greeters is engaging with other brands in the QSR space or other companies that have actually furloughed people. I'll name some names here: we've worked with folks from White Castle, from Regal Cinemas, Cinemark. We're talking to the Inspire Brands. They are behind Arby's and BW3, Sonic and some of those concepts. And so as they're furloughing people, we can welcome them on a temporary basis as a greeter. And these greeters can be ambassadors or cleaning hosts where they're literally holding doors open so we can operate as close to touch-free and contactless as possible. So customers can come in.

Then there is a secondary benefit of seeing someone actively engaged and disinfecting and wiping down high touch surfaces on a constant basis, whether it's the fuel pumps, the doors, the coffee bar, the counter, certainly restrooms. That has repositioned us as a place that customers trust going into to shop and in the long term with that added labor, they're going to do other things, whether it's bringing product curbside right to the customer's car, it's contactless. That's something that we've been quite proud of.

The CEO took another huge step early on. This was literally five weeks ago now, where everyone was given two weeks additional PTO. You're not feeling well, you're concerned, you think you've come into contact with anyone that has been exposed to Covid-19, do the right thing. Stay home don't worry about your pay. He increased pay, he even gave store credit. The store credits are a way that, basically, they can use the credits to purchase anything they want from HBA products, general merchandise, cleaning supplies, food, beverages, you name it. The only exclusions we had were things such as lottery and tobacco and things of that ilk. It's up to $250 credit per person that they're able to use and they can even buy fuel. So these are things that they need at this time. To your point around the impact on the business, I think, like most, there was the early, don't want to say boom, that's the wrong term to use, but it was the early...

Bennett: Surge, the early surge.

Gaskins: Surge, yes. The early surge. One of the phrases that I use was it went from pandemic buying to panic buying and pantry loading that as everything was running out or closing around us, we started selling in categories that we typically would not have sold those volumes, grocery, center store, HBA, cleaning supplies, pet. Then that transitioned into what I would call, take home pantry loading. The things you would obviously think of that convenience stores do very well, like beer for instance.

But beer has, we've literally had a tough time, because as bars and restaurants closed people were coming to us for beer, wine, and spirits. I'm very conscious that we do not want to have predatory pricing or gouging of any sort, so we adhered to what our target margins have been, if not even lower, to make sure we're delivering value, but it has led to, if the average person would buy what they would consume in two weeks or one month, I think that consumption curve, with everyone staying home, is now that's one week. We're selling take home. That has been the biggest shift, is that the immediate consumption food for now, snacks for now, those are trending down versus the food for later; meal solutions, grocery, take home soda, soft drinks, packaged beverages, bottled water cases, certainly, take home beer, large bottles of liquor and wine, where it may have been the 50 milliliters or the hundred. That shifting consumption pattern towards the take home has benefited us. So while gallons are down and traffic down, basket size is way up.

Bennett: Interesting. Very interesting. So a pivot from a media consumption to more of a pantry fill later on consumption.

Gaskins: Exactly.

Bennett: Interesting. Obviously we've talked about masks and PPE related sanitizer, the interesting dynamic between immediate to future consumption, but what are you finding in your stores right now, sort of as an interesting assortment outcome of the current pandemic, pandemic buying, pantry buying, that you're seeing today and any insights about where that might take you into the future in terms of assortment of product?

Gaskins: Certainly think we now have more license within the fill in categories and if you were asking me, even this time six months ago, I would say fill in within the channel is limited at best. It works in some rural markets or urban markets that may be food deserts. I think now there's a clear need for that and a want for that at a good value. We are looking at those staples that have exploded. I mean everyone laughs about toilet paper and the memes that are associated with that. Whether it is, paper goods, fill in truly everything from milk, bread, eggs, butter and those commodities to the paper and inedible grocery cleaning supplies, HBA. I think we have license now beyond just trial side that as a channel and industry everyone was going down food as the future food as the current. And that meant numerous things, whether it's made to order, grab and go, self-serve, all of that. I think that is now broader. That it's more about fill in and solutions and food is certainly part of that.

I think within food some of the things that have been restricted for sales have been self-serve. We have some states that we operate in, Kansas or South Dakota, other regions around the country, those were some of the first things that were restricted because of the hard surfaces. Not allowing refills of mugs and then eventually leading to not even having dispensed cups and beverages served at all. Packaged food and beverage products I think is something that I had not thought about as a long term option and I think having food that's packaged for an individual or for two, it could be food for now or food for later, but on the go, much as you're probably did five or 10 years ago. I think those trends are going to accelerate here now. People want even their produce items packaged, of course sandwiches and meal solutions, things like that. If I can give it to you in a bag or a box with gloves on and it's contactless or I can deliver it to you or bring it to your car curbside, I think that is a permanent change that has been accelerated.

There's another little phrase that I've been using that is: things went from being innovation to expectation. I think on the backside of this, things that were innovative prior, such as mobile ordering and delivery and third party delivery, and fulfillment and curbside, and drive throughs, these are now expectations. Every brand, even Home Depot, is doing curbside and contactless. People will come to your door and leave a package and ring the bell and walk away or not even ringing the bell, will leave it because you don't want them to touch anything. So I think that is the new world that we're going to live in. Hopefully we all won't be wearing masks for the long term and gloves and things of that nature. But I do think the packaging and the contactless and that supply chain that gives you some comfort over the sanitation and the security of what you're eating is here to stay.

Bennett: Derek, very insightful. So I know at the end of 2019 you had finally integrated with Allsup's. That whole integration, I know it took a lot of your time and effort and focus at 2019, and then in the fall of 2019 that integration was finally finalized. Tell us a little bit about how that's going in light of Covid-19 and it's a new paradigm but give me a sense of how you think your business will pan out in 2020.

Gaskins: I think that while the acquisition lane is what was completed at the end of, call it, 2019 or November. That's when we closed the deal. So right now, we're right in the midst of the integration and the systems, the ERP solution, point of sale, introducing private label affiliation into both stores, improving our supplier agreements, negotiating with vendors. So all of that, to your point, is what the teams have been working on for the past three to five, six months or so. It's accelerating. Covid, in some ways, sped it up. It's the first time that, I think, even signage and communication to customers with one voice from our CEO, here is what we are doing as a company. Not two distinct banners but here's what Yesway, and all subs as a family, what we're doing. The communication, the greeters are in both the houses or both banners and brands.

Then as I look towards the summer, as we're on the cusp of spring and summer selling season, that will be our first promo period where we'll have the same promotion with vendors and features across all 420-plus stores. A lot of excitement there. I have optimism towards 2020, certainly have long term optimism around what as a company we're doing, seeing what we're accomplishing on a daily basis. It's been really cool to see IT systems, and the price book, the accounting, and all of the infrastructure. The marketing and merchandising team are now one, where the category manager for tobacco is doing it across both banners, the enterprise and all stores. Same thing in beer and packed beverage and center store. Some really fun things. I think the only negative is that we're doing it remotely. We're doing it in this video conference, Zoom era and not face to face like I would have loved to do.

Bennett: Derek, that's really good. I'm thinking about the pandemic and you think about how the pandemic will drive innovation across the board, but I do also like your comment about how it will drive expectation. I'm happy to hear that your expectations for your overall business will is continued to be strong and on track. That's really good to hear. Derek, as an essential spokesman for Yesway, you've carried the flag over the last couple of years. I'm very appreciative of you having a strong industry voice for Yesway, but also for the convenience store industry sort of in totality. You're very active in industry affairs and I appreciate what you bring to the table. So can you maybe shed some light or some perspective, maybe it's your own personal perspective, on where you see the C-store industry going in light of Covid-19 but also beyond? 

Gaskins: Certainly. I think Wayne, I've taken tremendous pride in watching the industry as a whole step up and to be recognized as a superhero that a lot of our frontline team members absolutely are. They are... I mean it is unlike anything I've ever seen and I've always been long on small format retail and grocery as well as convenience. I think this is even made me double down. As essential workplaces and retail entities, it has been remarkable seeing the pace of change. Everyone stepped up. To your point, I am very comforted, that I feel that as much as e-commerce is now, so many people have done it that had not done it, but we know it has mainstreamed. It again went from innovation to expectation.

I think small format, neighborhood retailing, has done the same thing. That as people have said, "You know what, I'm out of this, I need a potato,” or "I need milk to cook with," or "I'm out of this particular product,” that they have been able to rely on their community convenience store. I think when you look at the role that NACS has played in looking at the convenience industry and trying to champion that, one of the things has always been this struggle with suppliers to, not just notice us, but to give us the respect that we're due, not to just notice what the problems are. we can all talk about the complexities of the business. It's over 150,000 of them. It's hard to reach them. The supply chain is fragmented. Individual operators, chains, very regional, no dominant player. We get all of that. But I think the opportunities now have spoken for themselves, that as other places have shut down, those convenience stores have stepped up. They're still open. Those neighborhood grocers fulfilling markets are still open and meeting those needs.

The suppliers have also stepped up. I think they should be lauded, because they're dealing with what we're dealing with. When a plant, or a facility, or a warehouse has exposure that supply chain can be disrupted and they're putting together protocols to make sure that they don't disrupt that. We've had our share of hiccups with big vendors, small ones, and it's just been admirable how quickly they've come back online. And I'm talking about the Altria, the Coca Cola, the Hershey, the Mondelez, Pepsi, Red Bull, Monster, you name it, that they may have had a disruption or a supply hiccup, and within days, I mean that, within days they've been able to say, here's how we fixed and solved for that and we'll have a truck to your stores at this particular date.

Early on this whole sentiment of, we're in this together, was one of the rallying cries for the nation. I just think that it's real. It's not hype, it's not puffery. We'll get through this together. It's been remarkable watching the entrepreneurial spirit come out from the convenience store segment, as it always does, to help solve one of the bigger challenges and problems. It keeps me up at night, making sure that my people are safe, that supply chain keeps going. I take it as a badge of honor, frankly, that I've been trusted with keeping the wheels on that bus going.

Bennett: Yep. Well, Derek, I know you're busy doing all these wonderful things to keep your store associates safe and your shoppers safe. I really do appreciate your passion for the business and your leadership, not only at Yesway, but for the industry as a whole. It was really a great opportunity to speak with you today and you look great out there in Boston, so whatever you're doing keep doing it. I appreciate your time today. Is there anything you want to offer in closing to the audience that will be viewing this?

Gaskins: Yeah, just to say, for us all, it will get better. Have that spirit of American exceptionalism or whatever term that we want to use, but I think retail is one of the oldest things that has kept society going and even now with the pandemic, we're still rolling and doing our best, so just that spirit of can do, we will get through this together and come out better for it.

Bennett: Yes, Amen to that. Derek, listen, I'm going to let you go. I appreciate the time and the opportunity to speak together. My hope is that we'll be able to see each other sooner rather than later at an upcoming function of face to face function, whether it's an ECRM function or some other industry function. I look forward to keeping in touch with you and whatever we can do here at our organization to continue to serve you and your team. I'm fully committed to that. Thanks again. Appreciate your time. Stay safe and stay healthy.

Gaskins: Excellent. Thanks so much, Wayne, and that's to your family and the whole team. So, thank you again.