If you’re like most folks in the convenience store business, you browse through a variety of publications each month and spend some time reading articles that are interesting to whatever your role in this dynamic retail segment might be. Usually, there’s some articles regarding government regulation, trade shows, segment results and other relevant pieces of the pie. Over the years, those topics are consistent, but there’s another very prevalent element that’s also a constant in what we read and what we talk about, and that’s the chain stores.
The biggest chains seem to always be featured, as they are on the cutting edge of technology and innovation. Let’s face it, from an attention side of things with suppliers, these are the high-profile retailers that either make or break an account manager or define a wholesaler’s success because everyone knows whether you’ve got a presence in Kwik Trip or if you are now supplying Casey’s — it’s just how it works. But there’s a lot more to the story!
Over 60% of all convenience stores in the U.S. are independent stores. That’s right; of approximately 150,000 c-stores in the country, over 95,000 of them are singe-store operators. Most of these operators are either recent immigrants to the country or second-generation. These stores don’t have one set of planograms like RaceTrac; in fact, you’re likely to find 95,000 different sets comprised of assortments one might find unfamiliar.
The product range can be overwhelming, and many of these retailers purchase their goods from multiple suppliers, they shop on price and deals, and this makes their ordering patterns often inconsistent and unpredictable. Of course, some independents are better run than others, but these stores all have one thing in common: They are the main income source for the owner-operator, and they will stock items where they are able to make money. So, how do you supply these if you’re a manufacturer or wholesaler?
I have personally been a big supporter of these accounts throughout my career, as I often felt that they were truly on the front lines, and I could get the most immediate feedback on programs, products and what market trends were occurring.
For more than a year now, Kit Dietz (former president of JF Walker, Lorillard board member) and I have had the pleasure of doing some deep dive consulting with Colonial Distribution based in Tampa, Fla. The company is one of the largest independent full-service wholesalers in Florida and services approximately 3,000 retail locations through its sales/delivery operation, along with its two payless cash and carry operations.
Independent retailers present a whole different set of challenges than large chains, such as receivables, assortment, deliveries and having the right group of salespeople to work with such a diverse group of nationalities.
“When I started this business 20 years ago, I had no choice who I would supply — it was only independents. What chain was going to have me supply them? Now, 20 years later, the only retailers I want to supply are single-store-type retailers”, said Yasin Saad, founder and president of Colonial Distribution.
Saad limits his assortment to under 5,000 items at any time, but it’s a dynamic and constantly changing variety of products.
“Everyone obviously needs to sell M&M’s,” Saad explained, “but supplying candy items varies based on where a neighborhood store is located. The Hispanic market has different preferences than an African American market, and that has different preferences than an Asian American market. We pride ourselves at Colonial in being quick to respond to changes in each of the markets, and we rely on our great sales team to keep us informed of what trends are happening in the broad market, and in the more specific segments of the areas we service.”
The number of micro-markets can present some real challenges, sometimes trying to figure out the source to acquire a product or brand, but the rewards are there if the effort is made.
“I always like to say, ‘we supply the items the retailers need, not the items we tell them they need,” said Somoud Hamad, sales manager at Colonial.
Hamad meets with her entire sales team on a monthly basis but is constantly communicating with them on customer needs and what items they are not selling any longer.
“The retailers are smart, and you can’t push them around. But we love the opportunities they create for us, some of which would be impossible to enact quickly with a chain,” she noted.
Colonial recently invested significant resources in developing its own bottled water facility and branded it Aquell, beginning production to churn out thousands of bottles per day.
“I’ve always worked with chain-driven businesses the last couple of decades as a consultant, and when I see what Colonial can do by not only developing its own bottled water, but having the ability to get it placed store by store, it creates bottom-line results that I had rarely seen before,” Dietz said.
Dietz and I have not worked on changing their business, but on enhancing the understanding of its dynamics and developing programs that improve what the company already excels at.
“Between Steve and I, we have focused on pioneering new employee incentive programs, warehouse efficiency, departmental structure and, most importantly, how to improve profits in an already profitable business that far exceeds the peer group Colonial resides in,” Dietz said.
“Suppliers realize we can perform distribution and promotion functions for them in thousands of accounts that they don’t send reps into, and they often come to us with innovative programs and work with us to fine tune those programs, improving their sales,” said Saad. “We feel like we are a true partner in growing and supplying the independent retail side of the business. These single stores make up almost two-thirds of the c-stores in the country, but they make up 100% of what we service in Florida. We have to be the best of the best at this, or we won’t be in business 20 years from now.”