Quebec’s Couche-Tard: the king of the corner store

In Quebec, depanneurs are the ubiquitous corner stores that peddle beer, toilet paper, sardines and other late-night essentials practically around the clock. Depanneur culture has its place in Quebec literature—“They save us in the morning and fuel our lazy nights,” author Judith Lussier once wrote—and, increasingly, on North America’s business landscape. Alimentation Couche-Tard oversees nearly 6,000 depanneurs and convenience stores across North America, with roughly US$25 billion in sales last year. You may not know of the company based in the Montreal suburb of Laval, but thanks to its voracious appetite for acquisitions in recent years, chances are it has sold you something. It owns the Mac’s convenience stores, nearly 200 Shell outlets in Quebec and the Maritimes, as well as Circle K and numerous Dunkin’ Donuts outlets in the U.S. It has recently set its sights on Statoil Fuel and Retail (SFR), a large Norwegian chain of stores.

Yet amidst its prodigious expansion throughout Canada, the United States and overseas, Couche-Tard finds itself bumping up against another enduring reality of its home province: the union movement. Over the last two years, Quebec’s Confédération des syndicats nationaux (CSN) has waged a unionization campaign targeting Couche-Tard locations in Quebec. Among other things, the CSN is demanding that Couche-Tard install anti-theft “panic buttons” in all their stores, give its employees four sick days a year and a 30 per cent hourly pay increase for those with at least four years’ experience. The very public battle with the unions is a potential monkeywrench for the company’s planned expansion into Europe.

Even in a province known for acrimonious labour relations, the fight between Couche-Tard and the CSN has been ugly. It began when workers at two Montreal locations voted to unionize in early 2011. Both locations closed in the following months; Couche-Tard said they were underperforming, while the CSN said the company was trying to cut out the union. Either way, in closing those two branches, Couche-Tard joined the likes of Wal-Mart and McDonald’s, both of which have closed locations in the province shortly after successful union votes there.

“We didn’t target Couche-Tard. The employees themselves called us,” says CSN vice-president Jean Lacharité, adding, “Couche-Tard is disrespectful of its employees.” In fact, Couche-Tard has had more complaints lodged against it at the province’s labour relations board than Wal-Mart, according to CSN figures, even though Wal-Mart has more employees in the province. (Through a spokesperson, Couche-Tard refused to comment on any union-related activities at its locations.)

Couche-Tard has since gone on the offensive. In a video to employees, leaked to Quebec business magazine Les Affaires in March 2011, CEO Alain Bouchard took issue with CSN’s activities, saying it was “attempting to seduce” workers “by spreading lies” and that unions were unnecessary in what he called “Couche-Tard’s large family.” It’s not all corporate spiel: according to Les Affaires corporate rankings, the company is among the best employers in the province, recognized for a work environment “where everyone knows each other and feels they belong.”

The employees of three other Couche-Tard locations in Quebec have voted for union accreditation, and an arbitrator will decide what additional benefits the employees will receive this fall—if the company doesn’t shutter the stores beforehand. “Couche-Tard is hardly a depanneur,” Lacharité says. “It made $370 million in profit last year. It can surely share the wealth without putting the company in danger.”

It may seem odd, given the company’s anti-union bent, that it’s looking to expand into Norway, which has one of the highest unionized worker rates in the world. Yet Couche-Tard hopes to do just that in its bid to acquire SFR, a chain of 2,300 gas stations. Couche-Tard’s offer is valued at $2.7 billion for the chain, which includes outlets in Scandinavia, the Baltic States and the rest of Europe.

The deal came at a precipitous time. It would secure for Couche-Tard an economically stable beachhead in Scandinavia, and provide a gateway to Europe if and when the continent makes its way out of its debt-ravaged misery. At the same time, SFR’s main shareholder, Statoil, was looking to get out of the cigarettes-and-sardines business.

“When we IPO’ed SFR in 2010, we were very clear that it was the first step to exit the retail business,” says Statoil CFO Torgrim Reitan. “We decided to focus on what we are best at, which is finding oil and gas and developing fields. We were looking for ways to bring the retail business to the next level, and Couche-Tard came in at the top of the list as a strong industrial player. We were very impressed with the company.”

Certainly, Couche-Tard has behaved noticably differently with Statoil than it did with the U.S.-based Casey’s General Stores. In 2010, the company attempted a hostile takeover of Casey’s 1,500 convenience stores—and was forced to retreat when investors insisted that Couche-Tard had severely undervalued the company. Most analysts say Couche-Tard’s Statoil offer is far more generous. And despite the strong union presence in Norway, labour relations aren’t nearly as fraught as they are in Quebec. By law, union members sit on the boards of larger companies, and disputes aren’t often the stuff of headlines. “We’ve met with Couche-Tard managers two or three times,” says Ketil Johannessen, one of three employee representatives on Statoil Fuel and Retail board. “It’s been good relations so far.”

“A company that doesn’t have a good reputation with the union is worrying, of course,” Johannessen says of Couche-Tard, noting how CSN representatives had contacted his office to inform him that the Quebec company “isn’t very union-friendly.”

Alain Bouchard may well have radical plans for SFR. In a recent Canadian Press interview, the CEO was taken aback by the size of SFR’s head office, which has roughly 200 people. In contrast, Couche-Tard is radically decentralized, with fewer than 20 people sitting in Laval. “These guys know what they are doing very well,” says Statoil’s CFO Reitan. “They are able to make the business more modern than we could have ourselves.” It seems Norway is about to get a taste of Quebec’s depanneur culture—in more ways than one.