Proper Merchandising Encourages Sales
Dealing with a host of primary wholesalers, multiple DSD vendors and local foodservice providers, convenience store chains are learning to grow more efficient without sacrificing goods and services.
By Pat Pape, Contributing Editor for Convenience Store Decisions
Like millions of Americans, Matt Paduano was traveling this summer, but he didn’t return home with a sun tan and postcards from his vacation spot. Paduano, vice president of category management for Nice N Easy Grocery Shoppes, spent three days in Temple, Texas, at the McLane Lab Store, a mock retail environment that features the latest products displayed in a manner that encourages customers to buy.
“We did planograms for tobacco, candy, gum, mints and sweet and salty snacks,” said Paduano, who will implement them at Nice N Easy’s 80-plus locations in upstate New York.
Staging a store to encourage sales is a science that requires consistent attention and frequent tweaking. For most retailers, store sets are not a one-time-and-done chore, but an ongoing part of doing business. At Thorntons, the Louisville, Ky.-based retailer with 165 stores, management does regular resets based on category.
“We set up a schedule and reset sections throughout the year, so we really don’t have to reset the whole store at one time,” said John Zikias, senior vice president of supply chain and category management. “It’s more efficient to do it by category.”
Plaid Pantries Inc. operates 107 locations in Oregon and Washington, and resets take place year round. “We do periodic resets every month of the year,” said Tim Cote, vice president of marketing for Plaid Pantry. “We don’t have an etched-in-stone timetable, such as ‘It’s July, so it must be candy.’ A lot of it is driven by new product launches or an underperforming category. We get into that category and fix it. And that usually entails some type of a reset.”
Making the Cut
When preparing for a reset, the Plaid Pantry team looks at internal scan data and compares that to market data. “I look at drug and grocery scan data,” said Cote. “Sometimes the specific items don’t match, but you do get brand information.”
Zikias does the same. “Scan data only tells us what we’re selling,” he said. “We also like to look at market-share information in case there are items that are selling in the market that aren’t doing as well in our stores or that we might not have at all.”
He reviews both micro space (the gondolas) and macro space (the store’s floor plan), looking at the performance of every category. “The managers for each category or group of categories look at the space they have, and the director of category management looks for opportunities to move categories around or expand or shrink category space. We may cut back on one category to make space for a category that is growing.”
Shop the Competition
Successful merchandising involves bringing new items into the store while they are novel and popular. To stay on top of the latest products, some operators shop competitors to see what they’re selling. “Competition is everything from the drug store to the dollar store to Walmart to the gas station,” Paduano said. “You name it, and that’s the competition.”
Members of the Nice N Easy team regularly check out other retailers. “They give me a call and say ‘this guy has a new item’ or ‘they brought in a new piece of equipment.’ There are a lot of eyes and ears out on the street,” he said.
Cote agreed. “A lot of it is just going into competitors—and everybody is our competitor—and seeing what they’re doing,” he said. “The concept may not be comparable one-to-one, but it’s about how you take something they’re doing and modify it to work at a c-store.”
Drug store chains and club stores, such as Costco, often receive new products sooner than smaller retailers, Cote added. “Go out, see what they’ve done and then shake your rep. Say, ‘Hey, rep, why haven’t you presented this to me yet? Isn’t there a c-store version of this?’”
For example, Plaid Pantry is successfully selling 10-ounce packages of beef jerky in addition to smaller sizes. When Cote spotted the larger-size product “pegged all over the walls” of a local competitor, he knew it would be a hit. “You try things and sometimes they don’t work out,” he said. “It’s all about taking a little risk.”
Wholesalers and Manufacturers
Corporate convenience chains can purchase scanning equipment and have someone on staff to read and analyze the data, but the small operator is often hampered by limited resources. That’s where wholesalers and manufacturers can help.
“We work with our suppliers in all categories, because they’re the experts in those categories,” said Zikias. “We’ve worked with a number of manufacturers to understand when they will have new products coming out. There’s usually a schedule for that, and we work around those schedules so it makes the most sense for everybody.”
“Lean on your wholesalers,” said Cote. “Any Core-Mark sales rep can bring in a lot of things, and they have programs and tools out there to help you manage your categories.”
Paduano seconds that advice. “They need to reach out to their vendors,” he said of small retailers. “Before scanning, when we had 25 stores, we were relying on the vendors. Obviously, with scanning you have better control, but if you’re a single store guy, you need to reach out to suppliers. That’s your best bet.”
Small Chain Success
Kent Couch owns Stop and Go, which has a busy 4,000-square-foot convenience store in Bend, Ore. He knows that his wholesaler can be his partner when it comes to determining the best way to allocate category space and present products. After teaming up with Core-Mark a year ago, he has seen major in-store improvements.
“We asked them to evaluate our store without worrying about hurting our feelings,” Couch said. “We wanted them to come in and tell us what they’d do if it were their store.”
He followed Core-Mark’s advice and saw positive results almost immediately, including impressive growth in refrigerated deli snacks. Stop and Go added an opened-face case, began selling Core-Mark’s pre-made sandwiches and quit making its own. “It cut down on labor,” Couch said. “They’ve got a good line of products for the cold deli, and the sandwiches look great.”
Traffic patterns in Couch’s store also impact product placement. He studies those patterns by using the store’s camera surveillance system. Someone sits in the back room watching the monitors during a busy period, such as 4-5 p.m., and records where customers go when they walk inside the store. This information has helped increase sales.
“Chips don’t hold a great gross profit, but we decided to move chips to the outside aisle where the primary traffic flow was going, and we increased the sales volume,” he said. “We also moved salty snacks near the beer, and that’s helped a lot.”
Developing and implementing planograms—and then adjusting them for changing seasons and customer demands—can seem daunting if it hasn’t been a regular business practice. Couch thinks it may actually be more effective for an operator with one or two stores than for a large chain.
“Corporate stores have planograms that make their stores uniform,” he said. “That’s easier to manage, but it doesn’t cater directly to the clientele of [an individual] store like we do.