One customer’s purchase of a miscellaneous object is a retailer’s high-margin sale.
By Pat Pape, Contributing Editor
Products that fall outside of the cash-cow categories of tobacco, fuel and foodservice are often dismissed as nice-to-have income, but for many convenience store and travel center operators, the general merchandise category is a big boost to their bottom line.
Just ask Mark Russell, director of operations for Russell’s Truck and Travel Centers in New Mexico, which operates a handful of locations that devote about 20% of their interior footprint to three auxiliary areas: merchandise for truckers, gift items and general merchandise, such as sunglasses and ice chests.
“Truckers come in for oil, additives, CB (radio)-type stuff and parts,” said Russell. “Travelers come in to buy stuff they need and pick up gifts and souvenirs.”
One of the company’s large travel centers sits in eastern New Mexico, on the original Route 66, an iconic American highway that once extended almost 2,500 miles from Chicago to Los Angeles. The Route 66 cachet makes Russell’s an ideal place to find unique postcards and auto memorabilia. Locations also offer clothing, women’s accessories, plush items, hats, games and toys.
One of the greatest benefits for convenience retailers that commit to extra space for general merchandise is that it provides retailers with higher-than-average margins, sometimes as much as 50% on certain items.
“If customers are buying general merchandise, it’s an extra sale,” said Russell. “A big portion of these people we aren’t going to see again. It’s not like we’re in town where you’re going to get the same people coming in every week. We do have local customers who need dog food or whatever. But for the most part, we’re looking at travelers as our customers.”
QUEST FOR QUALITY
Like consumers everywhere, convenience store shoppers appreciate high-quality merchandise. Among the 18 Busy Bee convenience stores with headquarters in Madison, Fla., five serve as gift shops that attract travelers and locals alike.
“These stores are chosen based on their locations,” said Megan Forcey, director of advertising and e-commerce for Busy Bee. “Not all our gift locations are highway based. We analyze the area where each store is located to find the best fit possible.”
Busy Bee shoppers may choose from branded jars of gourmet pickles, candied jalapeños, pie fillings, jams and hot sauces. The woman’s jewelry collection includes $7 bracelets and $160 sterling silver initial necklaces. Household goods include everything from monogrammed wooden serving trays and personalized glassware to scented candles and Busy Bee-branded beach towels. Gifts items do double-duty as e-commerce offerings and can be ordered online from the Busy Bee website.
WESTERN WEAR
In Sherman, Texas, the Douglass Distributing Co. operates 22 North Texas convenience stores and sells fuel to 170 more. It also does a healthy business in general merchandise.
“The biggest seller is cowboy hats, and girls buy as many as the guys,” said Bill Douglass, CEO of Douglass Distributing. “It’s a popular look nowadays whether you live in California or Las Vegas or Texas.”
High-quality products are showcased on his stores’ two general merchandise gondolas. Shoppers can pick up an $80 blanket or a $60 purse at the same time they pump a tank of fuel.
“Some of these things are beautiful and not cheap,” he said. “And then you can sell $2 widgets, like fidget spinners, because Barnum was right.”
HOT AND NEW
Ranglers convenience stores in central Texas have offered a wide range of gift items for the past 20 years.
“A lady suggested that we offer gifts, and she started [the program] in one of our smaller stores,” said Bradley Haile, vice president of the four-store chain. “Then, we figured out it worked and took it to our bigger stores. That was about the time that some of the convenience stores were getting souvenir stuff, but this is better than souvenirs. “
Depending on the store’s size, Ranglers dedicates from 500 to 2,000 square feet of space to general merchandise, including purses, belts and women’s accessories.
“Anything that’s hot and new,” said Haile. “If something is not working, we try something else. Cowboy hats have worked for 10 years, and we keep them at a reasonable price.”
Merchandise seems to sell best between spring and fall when families are on the go. Although the stores offer toys and activity books to keep kids entertained on long car trips, “stuffed animals is probably 50% of our gift sales,” he said.
“We have a large display of stuffed animals in each of our two biggest stores,” said Haile. “They’re located close to the bathrooms, and people have to walk past them to get there. Right now, we’re adding 3,000 square feet to our store in Hico [Texas] to make our restrooms larger, and 1,500 square feet of that space will be for gifts.”
GETTING STARTED
When first adding general merchandise to a store’s product mix, the chore of selecting gifts and accessories can be mind-boggling.
“If a store operator is starting out brand new, I would tell them to go through a brokerage or the company they’re getting stuff from now,” said Russell.
“Those people already have contacts with vendors. A lot of companies that had salespeople now realize they can get more done if they go through a broker. Going to the trade shows is where you are going to pick up connections if you want to do it individually,” he added.
Successful general merchandise sales depend heavily on a retailer’s ability to read its customer base.
“You really need to know the area you’re in and your primary demographic,” said Forcey. “When deciding how to expand, we do extensive research in our customer base and the surrounding area and then tailor the products to that location.”
Offerings should be driven by the local market, agreed Douglass.
“In South Carolina, you might be selling honey, and in Florida, it would all be beach items,” he said. “It’s very different according to the local culture.”
Of course, demographic indicators are important.
“It really varies from location to location,” said Forcey. “We have some stores that are more Millennial-based, and they’ll need different products than stores that see more female baby boomers. Our team has a strong product awareness, and each department works hard so that we are on top of changes or trends.”
Many retailers travel to the gift markets in Dallas, Atlanta, Las Vegas and Denver or go to regional trade shows to source merchandise that meets the needs of customers. A few work directly with vendors who basically sell goods to the store and guarantee that they will buy back anything that does not sell.
At Rutter’s Farm Stores, based in York, Pa., almost all of its 68 locations feature a display fixture showcasing electronics and sunglasses. The display takes up about six square feet of space and comes from a single vendor who agrees to take back unsold items.
“Those vendors are getting harder and harder to find,” said Robert Perkins, vice president of marketing for Rutter’s. “General merchandise takes a lot of attention and needs to turn over fairly quickly or the product become stale. If a retailer doesn’t have the time and space to commit to it, I wouldn’t recommend it.”
For Russell’s Travel Centers, that’s not a problem.
“For us, general merchandise is an extra sale,” said Russell. “Anytime I can sell a customer an ice chest or an iPhone charger, it’s a definite plus. We want to capture every dollar we can get.”
