If all of the forecasts are correct the economy will slow down this year. That reality, combined with the increasingly competitive nature of the c-store industry, will make the management of your c-store a very important factor in determining your success or failure.
Over the last several years of working with a variety of independent retailers, I’m often amazed at how little some retailers seem to know about the details of their business. With that in mind, it seems to be appropriate to highlight some of the actions you can and should take, regardless of your size, to better understand and manage your business.
The critical first step to making informed business decisions is to ensure that you are recording, measuring and tracking the weekly performance of the key 15 – 20 categories that make up your business. This information will make it possible for you to easily understand their performance, the proportion of your sales that they are generating, and whether they are growing or declining. Although most retailers use scanning to ensure products are sold at the right price, not enough work is done to make sure those sales are captured and recorded into logical and meaningful categories. Doing so will help you better understand your margins and profitability, where you have opportunities for growth, what categories you should expand and what you should change to grow your business.
Understanding the market:
In order to better manage your business, you need to make yourself a student of the market in which you operate. You need to regularly visit your immediate competitors, as well as the newer stores of any of the major convenience chains, to look for new products, trends, or innovations that you could adopt for use in your store. You also need to talk to your customers in person or through social media to find out how you can better satisfy their needs.
Managing inventory & purchases:
One of the greatest opportunities for improvement in sales growth and customer service for almost everyone in the convenience retail business is to reduce out-of-stocks of best selling products. (Remember you are “convenient” for your customers only if you have what they want to buy when they want or need the item.) There are three important things that you need to do to solve this problem:
- Anticipate demand so that you order what you need before you run out of stock. Too many retailers wait until they are out before they order additional product.
- Develop a well organized ordering system and order on a regular routine.
- Concentrate your ordering with a full-service wholesaler who can supply most of your needs, who will provide you with an ordering guide and who will deliver the products to your site. Although you may pay slightly more for this service it will save you valuable time and effort, help you better serve your customers, and help you more effectively manage your business.
Remember, you never make any money when you buy a product; you only make money when you sell it.
As the market becomes more competitive, as your customers have more options where they shop for convenience, and as margins continue to tighten, the effectiveness with which you mange your business will become more critical to your ability to both survive and prosper.
Hugh Large is a retail consultant with more than 35 years of experience in working with chains and independents to develop and implement successful Store Layouts, and Merchandising and Marketing programs for the Gas and Convenience channels, Hugh can be reached at [email protected].