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02/14/2022

Capitalizing on wholesaler and supplier partnerships: Advice for smaller operators

Being an independent or small-chain operator in the convenience store industry alongside large chains that operate hundreds — or in some cases, thousands — of stores has its challenges.
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Being an independent or small-chain operator in the convenience store industry alongside large chains that operate hundreds — or in some cases, thousands — of stores has its challenges. Because they don’t have the scale of their larger counterparts, and also lack visibility, it can be harder to capitalize on wholesaler and supplier partnerships to increase profitability and success.

“With 100,000 different independent and small operators, it can be harder for suppliers to access them, and tough for the retailer to get the visibility from suppliers to create an impact and extract value,” said Jamie Hudson, senior vice-president and general manager of offers and insights at PDI Software, based in Temple, Texas, which acquired CStorePro in 2019 and has been offering technology solutions to smaller operators in the United States since then.

Many suppliers and wholesalers traditionally focus on the larger convenience chains, so there is less individualized service with smaller operators. This results in their needs getting overlooked, according to Lynn Swanson, director of sales, mass markets for McLane Co. Inc., a wholesaler based in Temple, Texas, that works with small operators on category management and more.

Additionally, small chains are less likely to have in-house expertise when it comes to marketing and merchandising compared to the larger chains, so they need to look outside for help from wholesalers, suppliers, buying groups and more, noted Ed Burcher, a partner with the Business Accelerator Team, based in Phoenix, Ariz.

However, while there are challenges to being small in the c-store industry, there are also benefits. One of the biggest is being able to make changes quickly, and be faster to implement and try new products vs. the larger chains, said Swanson.

“Smaller c-stores typically have less red tape than a large chain regarding the direction and decisions flowing from the top of the organization,” she explained. “In addition, something new requires a smaller investment and allows for more flexibility.”

Independent and small-chain operators also tend to be more familiar with their local customers and more in touch with their needs, allowing them to personalize their business and even identify their niche in the market.

The dos & don’ts

The good news is there are suppliers and wholesalers who work with smaller chains and may have a lot more to offer than operators realize. It all comes down to collaboration and give-and-take.

Wholesalers and suppliers can be helpful outside of simply supplying product to the store.

At McLane, the distributor serves as a support team for small operators, offering category management, new items, deals, and implementation of profitable programs, according to Swanson. The company also offer a virtual tradeshow that allows smaller operators to take advantage of supplier deals and new items, she noted.

Many wholesalers have turnkey programs, including foodservice options like pizza and chicken programs. For example, McLane offers the McLane Kitchen program developed exclusively for c-stores. It offers thaw-and-serve options, as well as more expanded offerings such as Choice Chicken and Javaperks.

McLane also offers small operators a variety of programs from suppliers that come with rebates and deals. For instance, if they buy a certain supplier’s hot chocolate along with their coffee, there could be a rebate instead of using hot chocolate from a separate supplier.

When there is data to gain at the store level, an independent or chain can become more visible to suppliers and brands, and can get more targeted help when it comes to merchandising and sales, according to Hudson of PDI Software.

Providing data to suppliers can help them work “smarter and harder” with the retailer around how to promote their products in-store, and enable the operator to get access to rebates and other values offered, Hudson said.

“Getting value from suppliers requires you to share data, and operators can use their scan data to extract rebates and values from tobacco and other consumer packaged goods companies,” he explained. “Suppliers often refer to small operators as ‘the dark channel’ because they don’t have the visibility. But when you can track what is occurring on a day-to-day basis, you will have better merchandising — and won’t have products not moving through an efficient cycle — as well as data-driven promotions that will lead to profitability.”

Burcher encourages small operators to speak up and ask their wholesalers what programs are available and what they need to do to reach certain levels so that they qualify for the rebates. He cautioned, however, that there may be some “pushing of supplier products” vs. what a store’s customers want, so it is important that needs are balanced.

“Also, don’t be afraid to go outside of the programs as long as it doesn’t damage any of the rebates you may be getting — which are also only one piece of the puzzle. At the end of the day, you need footsteps in the store and you do that by having the products people want,” he said.

Another tip for small operators when working with wholesalers is to know that they don’t have to take everything without questioning it. They should look at what the top products are in their categories (even regionally) that the wholesaler doesn’t carry and see if they can add those to their lineup, Burcher said. If they can’t or won’t, he recommends finding a secondary supplier. 

“If you are missing pancake batter No. 1, I wouldn’t go searching for it, but if you are missing the No. 2 soda in the category, I would look for that,” he advised.

He also recommends small operators ask their wholesaler about rebranding its programs to create a unique offering. For example, if the wholesaler offers a sandwich program, ask if the store or chain can use the product, but rename it so that it’s branded with the chain.

“I am a brand person at heart — you can only get Wawa’s hoagies at Wawa — so when you are taking product distribution, ask if you can brand it your own. Johnny’s Store can use the pizza program and name it Johnny’s Pizza,” Burcher said. “Also, don’t be afraid to say, ‘This may be the way the program comes, but I want to change it a bit because it doesn’t 100% fit my market.’”

Another best practice for collaborating with suppliers and wholesalers is to plan ahead. It doesn’t matter if it’s a single-store operator or a 100-store chain, an annual planning calendar is critical so that an operator can sit down with a supplier or wholesaler and plan out their year

“The suppliers all know what their calendars look like, so you don’t miss sales opportunities,” Burcher said. “Plan out your promotional calendar, what space allocation will look like, how many cooler doors you will have for CSDs [carbonated soft drinks], the percentage of space you will give to direct-store-delivery chips. And be aware of saying yes to everything because then, you are limiting yourself.” 

Originally published at Convenience Store News - U.S.