By Betsi Bixby
Not every convenience store is an elite performer. Challenges do arise that will slow a location’s performance. Of course, finding solutions to right the ship can be challenging as well.
Here are four suggested measures that if implemented, can go far in determining a site’s future success or transforming a struggling player into a winner.
1) Customer count. For any site to make money, it needs a certain volume of customers. You can increase the probability of obtaining a high customer count in several ways:
• High traffic count: Select sites that either currently have or will shortly have high traffic counts.
• Easy physical access: High traffic counts do little good if the site is difficult to access.
• Appealing image: To attract new customers, your site must look friendly, clean and safe.
• Efficient, friendly staff: An enjoyable shopping experience creates repeat customers.
• Frequent buyer promotions: Consider implementing loyalty programs with attractive discounts.
2) Sales revenue per customer. Not only do you want lots of customers, you also want each customer to spend lots of money each time they visit. Increase sales per customer through:
• Customer research: Through analysis of your location, determine a target customer profile, identifying the customer most likely to maximize sales. Then, carry inventory and market your store to match the target customer. For instance, a store near a high school might carry goods for 14-18 year olds. The product mix would be different in a store near a retiree section of town.
• Store layout and merchandising: Make it incredibly easy for your target customers to buy naturally-related merchandise easily. The technical term for this strategy is market-basket merchandising. For instance, a store in close proximity to the beach would put sunscreen, sunglasses and beach towels close to the cold drinks. Market-basket data is most easily obtained in fully-computerized operations.
• Cross selling: The most common cross-selling promotion in the industry is a discount on store merchandise with a minimum fuel purchase. With the prevalence of pay-at-the-pump technology, customers sometimes need an extra push to come inside and shop.
3) Margin. Even with great customer counts and high per-customer sales revenue, successful stores utilize strict margin management. Margin maximization requires keeping strict price-sensitivity data. Price too high and you lose sales. Price too low and you lose profits. Also:
• Set individual product margins: Although it’s tempting to use category margin management, you’ll lose profits if you use broad-brush pricing. For instance, within taxable merchandise, you may be easily able to get a 100% margin on one item, while you only get 20% on another. If by using category management you price both at 50% margin, you are not maximizing sales and profits on either product.
4) Operating efficiency. This can make or break any store operation. Even with great customer counts, high per-customer sales revenue and great margins, you can still lose money if you don’t run a tight operation. Key areas include:
• Payroll expense management: Shift scheduling and retaining good employees are the keys to cost reduction. Payroll currently runs 8.1% of sales or 26% of gross margin in the industry.
• Inventory management: How goods are ordered, received and stocked, not to mention the problem of shrinkage, has much to do with any store’s success. A great deal of personnel time is wasted on unnecessary inventory errors.
• Facilities management: Insurance, utilities, repairs and maintenance can add up to significant costs. Containing these costs and, in particular, streamlining maintenance procedures to avoid down time, is critical.
If you find you are lacking in some, or all, of these areas, start by getting the shopping experience right first so customers who shop with you will want to return.
Besti Bixby and her company Meridian Associates Inc. currently assist more than 3,300 petroleum marketers to increase cash flow and profits. Visit www.petroanswers.com for more money-making information.