The Motley Fool

ALERT: This Retail Giant Could Present a Buying Opportunity

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Alimentation Couche-Tard (TSX:ATD.B)(TSX:ATD.A) offer fast and friendly service, providing food, hot and cold beverages, car wash services, and other high-quality products and services, including road transportation fuel. These services are designed to meet or exceed customer demands in a clean, welcoming, and efficient environment.

Couche-Tard’s business model is key to the company’s success. The company is a customer-centric, financially disciplined organization that routinely compares best practices and uses the company’s global experience to enhance operational expertise. The geographic diversity of Couche-Tard’s store network reduces the company’s exposure to adverse local and regional market conditions, including fluctuations in road transportation fuel prices.

Business strategy

Further, Couche-Tard continually monitors the company’s competitors, market trends and market share, and is well positioned to react quickly to maintain Couche-Tard’s competitive position. The company develop networks of stores in the geographic areas where it operates. This allows it to study each market, refine the location strategy, and carefully manage the closure of any underperforming store.

The company puts great care and invests significant resources in choosing the locations of Couche-Tard’s stores to maximize visibility and customer traffic, making it more difficult for new competitors to penetrate Couche-Tard’s markets. The company’s private brands for select products, loyalty programs, and Couche-Tard’s focus on customer service also give it a competitive advantage.

Focus on higher-margin businesses

Also, Couche-Tard has successfully put in place compelling in-store merchandise, which allows it to generate higher margins than those achieved through the sale of road transportation fuel. The company is rolling out a prepared food program across Couche-Tard’s network in North America and an enhanced food offering in Europe to further improve profit margins and differentiate Couche-Tard’s stores from those of the company’s competitors.

Decentralized management structure

Furthermore, Couche-Tard’s agile business structure sets it apart from the company’s competitors. The company’s entrepreneurial culture is one of Couche-Tard’s most important business strengths. The company manages most of the operations and workforce through a decentralized model with support and direction from several key global teams. This allows it to speed up decision-making, to address local demand for specific products and services, and to optimize corporate overhead.

Couche-Tard’s founders and management team have worked together for many years and have developed extensive expertise in operating convenience stores. The company has completed many acquisitions, and management’s ability to integrate stores within the existing network has been an important factor in Couche-Tard’s success. Many members of the management team have worked with the company for several years in roles of increasing responsibility, while others have joined Couche-Tard from acquired companies.

New executive structure

A new executive structure was developed by the company in 2019 to provide greater strategic balance between functional and operational roles. This new structure is in line with Couche-Tard’s five-year business strategy and will establish clear roles and responsibilities, empower individuals, and facilitate the decision-making process.

Recently, Couche-Tard applied to register a variety of trade names, service marks, and trademarks that have significant value to the company’s business. This could serve as a catalyst and result in a higher stock price.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Nikhil Kumar has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends ALIMENTATION COUCHE-TARD INC.

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