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Wednesday
Jan062010

I Know We Can Do Better!

A very wise associate once advised me that the “C” in C-Store, widely accepted as describing “convenience”, might be more accurate in its use for describing and predicting “change” in our industry.   As we roll into 2010, one can only speculate as to the ride we may be in for.  I think most would agree that 2009 served to wipe out any complacency from which many of us may have suffered regarding our industry.  The first quarter of ‘09 saw halfway decent margins, only to deteriorate and remain depressed throughout the remainder of the year.  “Money is tight” would appear to be a gross understatement of the economy, in general.

2010 presents change and challenges in an economic environment as adverse as anything we’ve seen in the last ten years.  Consumers will continue to be challenged to exercise discipline rarely practiced in recent years.  Margins and spending will be thin.  All of this will create a very competitive environment.   Staying efficient in all aspects of industry best practices will be critical to our success. 

Here are a few things to consider:

Make sure you are running a good perpetual inventory.

The economic downturn has affected us all.  Remember, while your vendors and employees may be happy to have a job, they may be struggling all the same.  Keeping a tight perpetual inventory during the upcoming winter months will be critical.

If you don’t have Deli or Hot food, get it.

I know a lot of stores simply cannot facilitate Hot food, however, if it is an option, it would be well worth considering.  Look no further than the leaders of our industry to see where they think our profits will come from.

Fast food, Hot food, Deli—whatever you want to call it—continues to lead all categories of sales for gross profit, year end, year out. This has manifested itself through slick merchandisers, good quality, and clean and consistent offerings such as Roller grill, pastries, fruit, and a myriad of beverage options.  Consistency and cleanliness are the key components for success with any offering.

Constantly assess competition and potential change to market conditions.

While we all know what our competition is selling their gas for, or if a new competitor is moving in down the street, today’s economic condition warrants rededication to this practice.  Financial hardships are just as common among retailers as they are for consumers.  Changes to offerings and buying practices may be substantialThis knowledge and information will create opportunities, as well as indicate areas where we have become deficient.

Exploit goods and services your competition can’t match.

This is becoming harder and harder to accomplish. We’re competing for the same dollars on most of the same products. How do we differentiate ourselves from competitors besides just selling for a lower price?  Obviously this can only be accomplished through a better customer experience.  New marketing ideas and added convenience concepts provide subtle opportunities to enhance profit centers every day.  Several examples below illustrate the changes to offerings by new entrants in our industry:

Deli vs. Grills

The hot box for fried foods has provided meaningful profits for many of us for a number of years.  This trade has evolved into different concepts and offerings, most notably, roller grills, which have been implemented and refined by the leaders in our industry.  Obviously one of the biggest advantages to exploit may be the rollers grills’ limited product offering.  One manager of a multi-store chain began preparing fried fish, which she converted to a sandwich using Subway bread she had at the store.  She couldn’t cook enough of these.  Look for ways you can customize your offerings into a signature item for which consumers will repeatedly pay a premium price.

Get Car Wash in the Game

A lot of our stores operate an automatic car wash, a staple from major oil and store concepts from yesteryear.  I would speculate that most of us maintain an ambivalent perspective on this profit center and its associated equipment.  The new entrants to this segment of our industry have now raised the bar with more convenience and a better product based on personal services, including hand drying or removing brake-disk residue from the wheels.  You will find, upon consideration, that a lot of your competitors cannot provide this service, or even a car wash, period.  If your car wash was once good, or volume and customer counts indicate sales should be better, it may be time to look at upgrading or customizing your offering.  With the downturn in jobs and rampant unemployment, opportunities often present themselves for the addition of service-level employees or contractors capable of offering services such as hand drying, wiping down front wheels, and working the fuel island while emptying trash cans.  Suggestive selling is fairly easy while working the lot and you may find a lot of satisfied customers returning.

Drive-Thru

Thinking of upgrading your store, reconfiguring, or adding on?   Please consider a drive-thru if your lot and traffic flow can accommodate one.  One of my savviest friends has this concept down cold.  Not only are his stores built around the drive-thru, the entire sales area is configured for absolute efficiency.  His drive-thru sales area has its own fountain, hot box (just steps away), cigarettes with easy access, and the ability for a sales associate at the window to walk three steps right into the cooler.  Not only is he exploiting his highest profit items, he’s pushing his volume items out the window as well.  If you have any doubt about how the public feels about the drive-thru, just ask your local Walgreens or CVS pharmacist.

Does your store and operation measure up?

Is your store clean, well stocked, customer friendly, and as good as—or better than—your competition?  This is the foundation and most important aspect of your offering and ability to compete.  Failure here will make all the other considerations or upgrades listed above meaningless.  

Think for a minute where you shop (your grocery store, Walgreens, Wal-Mart, Target, Best Buy, Lowes, or QuikTrip) and why you shop there.  Have you ever seen a trash can overflowing at one of these stores?  Ever been confused by who, or where, the store employees were?  Ever encountered one of these employees carrying on a personal telephone conversation while checking you out?  Is this how customers perceive your store? 

Market research has indicated that 80% of a family’s disposable income is being spent by the woman of said household.  I see a lot of facilities not really geared to sell to this clientele, which, in turn, run the risk of being shopped once by some women, who may never return.  Why?  Dirty dispensers can get grime on clothing, the bathroom may not work or is filthy, adult magazines are displayed in the most prominent or conspicuous locations, or the hotbox may be dirty, leading to questions about food cleanliness.  The female customer normally isn’t looking for cheap cigarettes, but rather fountain drinks, chips, candy, cappuccino, a corndog, and so on.  Would women feel comfortable shopping in your store?

The days of simply operating as cheaply as possible by cutting hours and wages—and not executing the points I’ve mentioned above—may simply accelerate one’s demise in the industry.   Consumers are spending less; I’ve seen a double-digit decrease in inside sales volume nearly straight across the board.

While we do our best to grow our businesses, we need to make absolutely sure we don’t lose any existing business at the same time.  As always, the most surefire practice is a smile and friendly hello.  We’re all in this together and can only do the best we can.

Wishing you all the best for 2010.

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