Speedway was one of several companies that encouraged its summer interns to take part in the Chamber’s Careery Sync program.

Growing from gas and cigarettes: How Enon-based Speedway is adapting for the future

Speedway needs to be a step ahead of its competitors as the convenience store industry is undergoing rapid change, the chain’s president recently told members of Springfield’s Rotary Club.

Anthony Kenney, Speedway’s president, also said more consolidation in the industry is likely. Speedway was already the second-largest company-owned convenience store chain in the U.S., but two recent acquisitions expanded the company’s reach across much of the U.S.

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Marathon, Speedway’s parent company, recently announced a $23.3 billion merger with Andeavor, a rival refining firm that could add as many as 1,100 new stores to Speedway’s operations if the deal is approved. The chain also recently acquired 78 new stores in New York held by Petr-All Petroleum Consulting Corp. In all, Speedway is expected to grow from about 2,800 stores to 4,000 locations once those deals are finalized.

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Kenney said the company is facing several challenges including more competition and changing shopping habits of consumers. But he said Speedway’s primary concern now is finding qualified employees to work in its stores at a time when unemployment levels are at a record low and similar companies are vying for the same worker.

He said in the long-term the company may look to technology to address some of those concerns. For example, Kenney said there may come a time when the chain offers self-checkout in its stores. That may make some customers think about self-checkout lines at grocery stores. But Kenney said the company may be able to use a customer’s cell phone to remotely scan items customers pick up as they walk through a store.

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Convenience stores have traditionally relied on gasoline and cigarette sales for the bulk of their profits, but those products are facing declining demand.

“Our challenge has been how do you replace what has historically been your largest source of revenue in gross margin in your business with other areas to keep your business growing and allow us to continue to acquire new businesses and grow organically,” Kenney said.

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Instead, Kenney said the chain plans to focus on fresh foods and grocery products and devote more resources to boosting technology to remain competitive. Speedway faces competition from grocers, other chains, tech companies like Amazon and most prominently, dollar stores chains that have seen significant growth over the past several years.

“They’re actually competing more for the typical type of consumer who shops in convenience stores which is basically a lower-income consumer heavily skewed toward the male population right now,” Kenney said of dollar chains. “That’s kind of who they’re skewing to, the $40,000 a year or lower income level has been our traditional consumer. But that needs to change and we need to evolve.”

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Companies that are unable to evolve typically go out of business, he said.

Online shopping is disrupting many industries, but products sold at convenience stores like coffee and snacks are somewhat immune. Those are mostly impulse buys that customers don’t buy online.

“What it does is it takes trips off the road,” Kenney said. “Someone that may have been traveling to Best Buy or Macy’s or making a trip now have bought those products online aren’t on the road.”

Kenney said the company needs to be able to adapt its marketing strategies and products to attract new customers. That might mean marketing more heavily online and offering more healthy, fresh products in the chain’s stores.

That also means continuing to invest and improve the chain’s Speedy Rewards program, which he described as one of the most successful loyalty programs in retail. The program gives the company the ability to use consumer data and purchase history to offer customized deals to individual shoppers.

“We know what your individual purchase behavior is and we know how to target offers to become more relevant in terms of using the data analytics around the data that we do have to continue to grow that loyal customer base we’re counting on.”

Kenney said Speedway plans to continue its growth, both organically and through additional acquisitions. He noted the chain has budgeted about half a billion dollars this year to build new stores and remodel existing properties.

“We’re putting a substantial amount of capital in the business to build these stores,” he said.

In Springfield that includes a planned investment to add a Speedy Cafe restaurant that offers made-to-order food at the chain’s location on Bechtle Avenue.