Jason Fouts compares a jobber’s relationship to its dealers as that of an NFL franchise owner to its players. “If the owner succeeds and gets the best in there, the team wins,” he said. “If the team wins, he looks good to fill the seats for the stadium. And that’s the way we look at it: It’s a win-win.”
Fouts is director of dealer operations for Littlefield Cos., Fort Smith, Arkansas, which has 37 consignment dealer-operated sites and more than 90 dealer-owned and -operated locations, along with its own chain of 23 Littlefield Express stores. Littlefield supplies unbranded and Phillips, Valero, CITGO and Alon fuels in four states.
Both sides need to do their part to make the relationship a success, Fouts said—the jobber providing the fuel branding, supply and retail support, and the dealers keeping stores clean and well run. “It’ll go hand-in-hand, just like Jerry Jones and his team,” he said.
This symbiotic, complex relationship is a relatively new industry phenomenon. For decades, jobber-dealer relationships were focused mainly on pushing fuel gallons.
These days … there is less access to capital and cash to get the inventory to open a store.
Andy Gammel, senior vice president of operations with Empire Petroleum Partners LLC, Dallas, Texas, describes the traditional jobber-dealer relationship as transactional. “Just have a good price, bill them correctly and don’t really cause them any issues operationally,” he said. Empire has more than 1,500 wholesale locations in the Mid-Atlantic, Southeast, Southwest and Midwest and supplies most of the major oil brands.
But in the past five to 10 years, the jobber-dealer relationship has become much more dynamic as competitive and consolidation trends reshape the industry. “As our business has become more and more competitive, and maybe profitability and margins for a while there were really, really, compressed, you had to set yourself apart from competition,” said Gammel. “Out of necessity, we’ve had to improve.”
“Back in the day, you could churn through dealers as you needed to,” said Roy Strasburger, president of Temple, Texas-based StrasGlobal, which supervises dealer sites for jobbers, among other services. But that stream of potential dealers is shrinking.
“There are fewer people who can go into the stores these days because there is less access to capital and cash to get the inventory to open a store,” Strasburger said. He also pointed to immigration restrictions, the troubled economy and pandemic pressures as factors that will “drastically reduce the pool of dealers” in the months ahead.
To continue to grow in this environment, jobbers need to treat their dealers like franchisees of their brand, Strasburger said, and provide that same level of support. “If the dealer is more successful, that means more people are coming to his store. If more people are coming to his store, that means you’re selling more gasoline,” he said. “So, it becomes a virtuous circle just because you’re paying attention to the needs of the dealer.”
Growth Opportunities
As fuel margins have grown increasingly unreliable, the store has become the stable cornerstone of the modern jobber-dealer relationship. Littlefield has been able to tap vendor relationships from its Littlefield Express stores to give its dealers access to better foodservice programs.
Empire has a preferred vendor program that provides access to foodservice, coffee, grocery and other offers. Recently, the jobber partnered with EVgo to coordinate charging-station installations. Dealers pay no costs, but instead collect an upfront fee and rent for the area of their site where the stations are installed. The units are metered separately, so the dealer doesn’t pay electricity costs.
Wixom Food & More in Wixom, Michigan, has been an open dealer with Empire for nearly nine years and branded Marathon for its entire 25 years in business. The store, located near Detroit, will host some of the first EVgo charging stations in Empire’s dealer network. Owner Eddie Osman points to the EVgo program as one way that Empire has assisted his growth over the years. It also negotiated a dispenser upgrade deal that was several thousand dollars cheaper and had a longer warranty than what Osman could secure. Empire connected him with a new frozen dispensed beverage program with no maintenance costs and new bean-to-cup coffee machines.
Beyond category growth, jobbers are assisting their dealers with site count expansion. Empire sold Yuba Parajuli, co-owner of Perfect Food and Gas in Chelsea, Oklahoma, four of his five sites since he signed on with them in 2017. “They have brought me so many opportunities—without them, I wouldn’t have five stores right now,” said Parajuli.
Littlefield also helps its exceptional dealers find locations to buy. And it quickly steps in when their existing stores need replacement. In 2019, the Arkansas River flooded and swamped Angela Harvell’s Highway 64 Express location in Roland, Oklahoma, a Conoco-branded site that she has leased from Littlefield for the past three years.
“The water was in there for a week, up above your belly button,” she said. “We lost everything in it, [including] the building. Littlefield came in and rebuilt it.” The process—rebuilding the store and fuel island back up from a concrete pad—took about six months. Harvell could sense Littlefield’s obligation not just to her but also to the town of Roland.
“One of the reasons they did it was for the community,” Harvell said. “It had been there forever and was a staple.”
Let’s Make a Deal
That said, expectations also are higher for dealers. As the nature of retail has changed—and competition has ramped up from dollar stores, big box and e-commerce—the traditional gas station approach doesn’t cut it anymore.
“The old model where these dealers just went in and sold cheap fuel and that would drive traffic and [customers would] automatically buy candy bars and Cokes? That’s dead,” said Aaron B. Littlefield III, president and CEO of Littlefield Cos.
Today’s dealer is making a deeper commitment; Littlefield compares dealer recruitment to hiring an employee who has the desire and loyalty to stick around. “Once somebody steps in the door, we give them the keys, and they turn the lights on the next morning. It is theirs for a long time,” he said. “That’s one thing that we try to make sure that they realize and fully understand.”
Fouts says it can be difficult to find dealers with that level of commitment. Littlefield relies on word of mouth and referrals in growing its dealer network, which includes several operators who first partnered with the company back in the 1980s.
You want a good jobber/operator relationship. The ones that are flexible and offer support—that helps build that tight relationship.
“A partnership is when everybody brings something to the table,” said Fouts. “If we’re putting them in our stores, I’m bringing a good location. I’m bringing a facility. I’m bringing the fuel side of it. I need them to bring the hard work, the store inventory. I need them to bring that as their part to the partnership.”
This year has put the jobber-dealer partnership to the test, as the COVID-19 pandemic has battered gasoline volumes and in-store sales for retailers across the country. It’s required jobbers to flex and be responsive to their dealers’ needs.
“You want a good jobber/operator relationship. The ones that are flexible and offer support—that helps build the type of relationship an operator wants to have with their supplier,” said Ken Shriber, managing director and CEO, Petroleum Equity Group, Chappaqua, New York.
Dealing with brand volume obligations has been a necessary component of this. Littlefield’s fuel volumes fell more than 30% across its dealer and retail network in April but had risen back close to average by June. In the lean months, it helped its dealers navigate fuel contracts.
“One day demand went way down, and then also, the price of fuel went way down,” said Fouts. “It was tight there for a few weeks, but we were working with people,” he said.
“The dealers are Empire, and Empire is the dealers—we’re in this together,” said Gammel, who notes that Empire’s sites also saw big drops this spring. “To a great extent, the [major oil companies] are in that boat with us. As they have granted us some leeway and have worked with us, so have we passed that on and worked with our dealers.”
The pandemic also has highlighted other support opportunities. Littlefield, who is chair of the PMAA executive committee and serves on the NACS legislative committee, has shared expertise and resources from these groups about such topics as personal protective equipment (PPE) with his team, and in turn, his dealers.
Empire has distributed PPE to its dealers and supported their charitable efforts. For example, after hearing that Perfect Food and Gas was supplying free sack lunches to local kids when schools were out of session, Empire offered financial support to keep them going. And when the retailer swooped in to sponsor the town’s Independence Day fireworks, Empire again provided financial backing.
The old model where these dealers just went in and sold cheap fuel and that would drive traffic and [customers would] automatically buy candy bars and Cokes? That’s dead.
Wixom Food & More was among the first retailers in its area to offer disposable hand coverings at the pump, sourced by Empire. After Osman began making deliveries of food and sanitation supplies to local senior living centers, Empire offered financial support. Osman celebrated the collaboration by making a 10-foot-wide banner for outside his store. It reads: “This too shall pass. One day at a time, and stronger we will be.”
This message of growing strength is timely as Empire’s wholesale fuel and retail network recently closed on a deal to merge with GPM Investments LLC, out of Richmond, Virgina. Empire will serve as the wholesale arm of the combined entity. Gammel expects the merger to boost the jobber’s economies of scale with the major oil brands, which should directly benefit its dealers with better fuel pricing.
And inside the store?
“It will be supercharged,” he said. “We’re going to have the benefit of their size on the retail side, which will also help us on our wholesale side—especially with our vendor program. That will make us bigger and stronger and more capable.”