Building a winning operator-distributor relationship
Canada’s distribution network moves more than $55 billion in goods and services to c-stores each year. And since the pandemic shifted the universe last year, c-stores that were designated essential services became lifelines to consumers from coast to coast.
Distributors have always been an integral part of the convenience supply chain, but their role has become even more pronounced. We asked three industry leaders to weigh in on what’s changed, how the operator-distributor relationship has evolved, and what to expect as we move forward to our new normal.
Joint ventures
Along with everything else since the onset of the coronavirus, the c-store operator-distributor relationship has evolved, and in a good way, says Dan Elrod, president of Wallace & Carey in Calgary. So has managing, ordering, delivery and set-up.
“Our relationships have become much closer and, in many cases, more collaborative,” explains Elrod, noting that as c-store consumer needs have changed, smart retailers have stepped up to meet those changing demands.
With traffic down from 15% to as much as 75% for some operators, retailers pivoted quickly to more staples, larger sizes, and supplies of PPE products, adds Elrod.
“Some launched delivery options, including apps for customer use in placing orders. Those wholesalers, having adapted quickly to these changing needs, have certainly fortified customer relationships. And those having true partnerships—as opposed to only buy-sell relationships—are emerging as leaders in meeting the demands of Canadians through these trying times.”
The COVID-19 crisis brought many businesses together, because everyone had common goals, says Peter Kerr, vice-president, national key accounts & sales at Sobeys Wholesale in Mississauga, Ont.
“At the onset, it was panic buying on critical items like—toilet paper, sanitizers, disinfectants, and grocery items,” says Kerr. “As a distributor, we were struggling with long-term out of stock items, manufacturers delaying smaller pack items which are critical in the c-store environment, production adjustments and limitations to availability. Our teams have had to act quickly to ensure that product availability is met with each retail customer.”
Continued collaboration between customers at the head office and site level ensured that information flowed accurately and on time, he adds.
Increased communication has been critical in fostering strong partnerships, as public health and government guidelines were updated daily, agrees Serge Nadeau, vice-president, projects & development at Beaudry & Cadrin Inc.
“Getting products from providers has been a challenge, because a lot have been out of stock for a long time,” says Nadeau. “It has taken a lot of research and hard work to get everything. We faced a big change in volume with different food categories; tobacco and wine categories increased. And because more sanitary processes were put in place, we lost efficiency, added hours to continue providing good service and took on more expenses.”
Lasting impacts
After most provinces recognized c-stores and their wholesale distributor suppliers as essential businesses, wholesalers were able to continue making deliveries and providing retailers with the necessities their customers required. But there was a shift in perspective as industry players learned from the shared challenges brought on by the pandemic, says Elrod.
“Retailers realized the wisdom of minimizing the number of deliveries they received, and the corresponding touch-points required during a delivery,” he explains.
“This consolidation of supply reduces store labour costs, minimizes the likelihood of transmitting infection, and benefits the environment through improved transportation efficiencies. I expect developments such as self-checkout, pick-up and delivery, and other emerging innovations to see wider adoption in the c-store industry.”
Kerr believes the pandemic will likely change many facets of the distribution model in the future.
“We’re continually sourcing hard-to-find products, while quickly responding to a reactive consumer purchasing behaviour, creating responsive supply chain opportunities which will likely change behaviours going forward,” he says.
One of those behaviours will surely be continued sanitary processes, and larger demand for meals, adds Nadeau.
“Convenience stores became a destination for consumers for meals,” he explains. “We’re a licensed distributor for M&M Foods and we’ve seen a huge increase with stores offering ready-to-serve or frozen meals.”
Strategies for success
“Exceptional fill rates and on-time delivery results are the price of admission for a successful wholesale distributor; they are essential to every c-store retailer’s success,” says Elrod.
Support, safety and security have become key priorities as well. The pandemic drove home the point that wholesalers must develop effective best practices and protocols to ensure that delivery drivers and retail staff are protected during the delivery process, he adds.
“An effective partnership requires the wholesaler to know where the retailer is going, and invest in technology and infrastructure to support that vision,” says Elrod.
Close communication at the leadership level, along with speed to market on innovation ensures everyone shares the same goals and strategic path so operators can run their sites effectively and efficiently, agrees Kerr.
“We work with our valued customers to ensure that they have the best sellers included in their assortments and that they have all new impulse items and seasonal products prominently displayed,” he explains.
Kerr’s team also encourages c-store operators to use social media to attract their consumers to their store, and assists with substitute items due to manufacturing adjustments, as well as with planograms and displays to attract consumers while in their stores.
Building a winning operator-distributor relationship
Above all, c-store owners need distributors who are available to them, insists Nadeau.
“As distributors, we have to make their business life easier,” he says. “We have to advise them on the latest trends and newest products. And new concepts must be developed to meet consumers demands, such as fresh food, frozen meals and diversified ready-to-serve meals.”
Nadeau believes that consumers feel more at home in their neighbourhood convenience stores than ever, so distributors have taken on a bigger role.
“We’re no longer just distributors; we are consultants and specialists in this sector,” he says. We have to adapt our offerings according to our customers’ location and the community they serve.”
Performance is the key driver to a successful, productive wholesaler-retailer relationship, adds Elrod.
“Distributors also need to have a clear understanding of the metrics needed to achieve the retailer’s service objectives, diligence in exceeding these, and ongoing communication to ensure the KPIs, when met, are achieving the customer’s goals,” he says.
In his three decades working with c-store retailers, Elrod says one facet still holds true: Listen to your customers.
“The c-store industry is a fast-paced environment where winning and losing is determined by meeting the consumer’s needs, literally every hour of every day,” he explains. “Operators know what those needs, and by default, their needs are. They’ll tell you, if you’ll only listen.”