By Jim Callahan.
Many years ago when I was still fairly new to the industry, I was tasked with dragging five utterly sorry convenience stores into compliance and profitability. I say with a wee touch of embarrassment that nothing in my career came as close to defeating me as those five troubled stores.
The locations had been acquired in a buyout more than a year earlier. Previously, the son of the former owner had been chosen to run the operation. It’s fair to say the son’s talents lay elsewhere.
The stores were flat-out dirty. We tackled one category at a time, ensuring each was clean, properly set, scrutinized for “space to sales” effectiveness, and instituted and monitored “sell by” dates. I assigned and enforced cleaning duties, then carried those processes to the next category space. With things coming together in various sections, worker morale began to percolate.
We tackled the cooler because it was by far the weakest part of the store, marked by blocked aisles, broken bottles, a filthy interior, unclear interior sets and so on. If you ever face a situation even remotely as bad, realize that you can’t obtain an accurate inventory count under these conditions. Shrink at these locations was three times the industry average. Instead, the norm in the group of stores was outages of Marlboro Reds and Blues two days a week for instance, along with many other popular items like Gatorade.
Luckily, we found a small local wholesaler that delivered the missing products and again, morale rose.
Using “build up” sheets or similar techniques is essential to controlling stock levels, including cigarettes, because they are expensive and easily concealed. Soon the staff was counting the cigarette inventory at shift change, then recounting until both shifts were in full agreement on the number.
Theft and cash shortages were rampant. The climate proved the old adage that you should never hire out of desperation—in the long run it’s better to invest your own hours or pay the dreaded overtime than hire the wrong person. Managers were paid $255 for 54 or more hours of work per week.
At the time, management didn’t understand that incentives should be attainable and sincere “atta boys” could be given both out of fairness and as a means of improving morale. Rewards can be inexpensive. I constructed simple letters such as “Star of the Day” and “Life Saver” (for turning down underage sales).
Other practices we implemented included investing in state-of-the-art video equipment, which paid for itself in mere months and continued to pay dividends afterward. Scanning the tape, I observed one of the cashiers would place a quarter in the cash register at the beginning of her shift to avoid using the “NO SALE” button, then making 13 one cent rings—her license to play in our money box. It doesn’t take a genius to realize we didn’t have one-cent products to sell. The video found her pilfering $20 bills on three different occasions.
Another time I found two $4.25 rings in the beer category and realized we didn’t offer any priced items in that category. Going back to the video showed a cashier selling 18 packs to his fraternity brothers for $4.25 instead of the listed $13.99. When confronted, he explained “I wasn’t stealing, I was discounting.”
He was still arguing the point even when handcuffed and on his way to jail. My advice then and now is to have a firm policy on theft and ensure your existing employees know it as well as all future hires.
The proudest moment finally arrived after much sweat was spilled when we retained one of the original five managers who had struggled mightily with shift counting and recounting the tobacco category. With this achievement in hand, her confidence soared.
MORAL OF THE STORY
So what’s the moral of the story? No big one, really. The point is to recap what everyone in the business already knows: this industry is complex. To be able to wrap your head around all of the tasks and concerns that this business requires in a big job indeed.
However if operators can identify the responsibilities that must be done, they can take better control of their stores—each and every day.
Jim Callahan has more than 40 years of experience as a convenience store and petroleum marketer. His Convenience Store Solutions blog appears regularly on www.cstoredecisions.com. He can be reached at (678) 485-4773 or via e-mail at [email protected].