A Clean Identity
The 1,200 square feet that make up Becket General Store in Becket, Mass., are jam-packed with merchandise, yet owner Bob Gerner still manages to clear out a square foot of empty counter space for a promising new product.
Fifteen miles down the road in Pittsfield and another world away, 15 other convenience stores vie for the same customers' attention, many boasting twice the floor space and the more open, streamlined look that characterizes many convenience stores' interior merchandising these days.
But Gerner has no plans to follow the trend. "My philosophy is if I don't have it, I can't sell it. I try to maintain the things people need on an everyday basis," he said. "If you expect people to come back, you have to have what they need." The town's 1,600 year-rounders and 6,000 summer residents can be persuaded not to go the extra miles if they can pick up the basics right in the village.
Across the nation, convenience stores are growing larger while the number of SKUs they carry is declining slightly, feeding a trend toward wide aisles, modified store layouts, greater shopping ambience and a clearer identity to customers, according to "Redefining Convenience: Successfully Marketing to 21st Century Consumers," a February 2001 report developed by the National Association of Convenience Stores (NACS)/Coca-Cola Leadership Council.
Yet it's that same desire for a strong identity that keeps some chains in the more-is-better school. Your desired image "dictates the type of products you carry and how cluttered you want to be," suggested Nick Kouzomis, president of Conveniencemarket Solutions in St. Louis. "Both can exist, absolutely. It depends on how you want to define your business."
Roots of a Trend
Increasingly, however, chains are defining themselves as bigger and more open.
The roots of the trend toward bigger and more open stores can be traced back at least a decade, according to Kouzomis. Back then, fill-in grocery was a top-10 category and operators relied on little more than gut for merchandising decisions.
"They knew they sold a lot of beer, but if you asked how much they sold on the Fourth of July they'd say 'I have to get the stubs out,'" Kouzomis recalled.
It was also an era when shippers were rampant, with manufacturers tempting operators with retail display allowances in return for taking shippers.
Then, a rash of late-80's bankruptcies by major retailers "shocked them into reality. They asked, 'What can I do to survive?' and became a little more open and willing to explore," he says.
It was about that time that technology vendors began to offer convenience stores solutions that had long been enjoyed by the likes of Wal-Mart. Over the last five years, "the industry has desired to move to where the chain drug, mass-merchant and supermarket industries have gone in terms of EDI, category management and inventory replenishment, which is all driven by scanning technology," Kouzomis said.
"Convenience stores really began to understand the costs associated with having excess inventory in the store," added Jon Hauptman, vice president of Willard Bishop Consulting, Barrington, Ill.
They also began paying closer attention to customer perceptions and appealing to a larger customer base, eliminating insult pricing, improving store appearance and creating and marketing an image, Kouzomis said.
Now decisions about creating and executing a look can be made based on real data instead of instinct.
"One of our major competitors has a very cluttered look," noted Ken Hagler, vice president marketing for 42-unit Family Express Corp., Valparaiso, Ind. "A lot of customers have indicated the reason they like our stores is because they're not as cluttered. Some customers appreciate a store that is clean and well organized, where they're not tripping over displays and shippers."
Merchandisers at Ricker Petro Marts, a 29-unit Anderson, Ind., chain, regularly spend time in stores watching customer patterns and querying customers, formally and informally, to shape their in-store appearance. They learned women perceive well-lit, clean, bright stores as inviting and designed resets with this in mind.
Some choose clean to contrast with a competitor's clutter, but most operators say competition only slightly influences the look. Merchandisers at 1,145-unit Clark Retail Enterprises Inc., Oak Brook, Ill., which operates 862 company-owned stores, are "cognizant of the playing field," says Rick Morzak, director of merchandising, but "we respond more to what our customers are demanding."
Rationalizing the Store
Careful analysis is evident in the stories each chain tells its customers.
Stop in a Family Express store to satisfy a hankering for coffee, for example, and the merchandisers are loath to interfere. The entering java-holic has a clear view of the coffee bar and a wide aisle to navigate his way to a caffeine fix.
On the way to checkout, though, the coffee lover is ripe for temptation by a series of strategically placed shippers. Two to three artfully placed displays, carefully selected because of their one-two punch of high impulse and high margin, serve up top-20 sellers from selected categories, usually a candy, a sweet snack and a salty snack. It often works.
With such good results, it might be tempting to add more shippers or cash in on allowances, but "when there are a lot of shippers, there is not a significant increase in sales," said Hagler. And the deepest discounts tend to be on products that don't meet that high-impulse, high-margin, sell-through profile.
Hagler calls it "careful clutter." Too much promotion and hubbub, and "you lose the effectiveness of the overall experience," muddying the merchandising message. But too little is also a danger, he said. "I think a sterile or spartan look does not lend itself to maximizing sales and gross profit. It lacks excitement."
Family Express orchestrated its look by shifting a central checkout to the end, restricting gondola-plus-product height to 58 inches, opening up destination aisles to 5 feet and tightening planned purchase aisles to 36 inches. Reset stores have enjoyed sales increases of 8 to 20 percent.
Family Express's reset program is no exception to the trends. According to the NACS/Coca-Cola study, the average c-store grew from 2,375 square feet to 2,407 square feet from 1999 to 2000, with even bigger growth in urban and new stores. One out of six new stores is 3,000 to 5,000 square feet.
They used that extra space to add more services, not SKUs, which dropped from an average 2,975 to 2,870 per store.
The bottom line: Bigger stores had better sales, with top-quartile performers in 2000 averaging 2,718 square feet, 13 percent larger than average. "The larger, more progressive stores have learned over time to clean up their stores and allow the customer to shop more, have the merchandise accessible," said Conveniencemarket's Kouzomis.
Many operators are jumping on the bigger-begets-cleaner bandwagon.
Ricker Petro Marts used to have two store sizes for new construction, using the larger model for stores with foodservice. Now all stores have the larger footprint and marketing manager Keith Broviak uses that space to add 4 feet of gondola. "It's helped us add SKUs without adding a bunch of clutter," he noted.
But not everyone attains the cleaner look by going bigger.
Rutter's Farm Stores, a 55-store chain based in York, Pa., has spent the last two years resetting its older stores by reducing the amount of shelving and opening up the sales floor near the counter to "make the store more inviting and airy," says Jeff Leedy, vice president of marketing.
And Clark Retail is working to transition its newly acquired stores "to adopt a clean, clear-path merchandising scheme," said Morzak. "The clean, clear approach provides a friendlier, open look and offers a better visual appeal as the customer enters a store." A customer who is comfortable and can see the merchandise "is more likely to make an impulse purchase."
All are reacting to change in customer expectations. "Convenience stores that do not merchandise properly are in danger of losing a lot of business to people who are picking it way from them" said Eileen Ford, vice president of marketing for display maker HMG Worldwide, New York. "You should know right away what store you're in if [the message] is communicated properly."
Opening up the sales floor is step one toward cutting the clutter.
Planning space for shippers, rather than wedging them into already-tight planograms, is a hallmark of the open trend. So is taking firmer control.
"In some of our competitors you might find 15 or 20 shippers," notes Ricker's Broviak. "But we feel that at that level the point gets lost. People see a lot of clutter and don't understand what you're trying to promote."
Ricker's larger stores now have just three to five shippers. "We will not sacrifice our philosophy of an open, clean environment" to add more displays, and in smaller stores a promotion is often made off the shelf. "Obviously you sell more off a shipper if it's in a high-traffic area, but we feel that by not cluttering up the store and keeping it open customers can see what you have," Broviak says.
Retailers are also intent on ensuring shipper promotions don't overlap, mandating that old shippers be removed and replaced by a certain date — even if they don't sell through.
Such rules are indicative of convenience store operators' increasing control of their store environments. Shippers are incorporated into year-long promotion plans, and retailers specify the look and offer presented, in conjunction with suppliers.
Disposable coupon dispenser maker PromoEdge, based in Elk Grove Village, Ill., has seen this first-hand, as retailers dictate the message, look and location of its disposable coupon dispensers. Many want their own brand on the dispenser and even multiple-brand coupons to promote the category. Telling of this trend is the fact that one of the company's biggest "customers" is Circle K — even though manufacturers actually pay PromoEdge for their materials. Retailers "don't want anyone telling them what to carry in the store and what it should look like," said Ted Bohnen, vice president of marketing. "They're more and more concerned with the look of the store."
While shippers are often the most obvious source of a crowded look, other aspects of store merchandising add eye clutter. Take every promo offered to the average convenience store operator and the store would be awash in signs hanging from ceilings, clinging to cooler doors, poking from shelves, covering floors and papering every square inch of window.
Chains taking control of shippers have similar policies about signage.
One of the most dramatic is window signs, which if overdone obscure the view of the inside of the store. With pay-at-the-pump already keeping customers out who used to be forced to come in, retailers need another way to tempt them inside. Rutter's solved the problem by removing window signs in favor of gas-island signage.
Inside the store, retailers are equally cautious. For example, "if signs are at eye-level it feels more claustrophobic. The store seems busy, not open," notes Family Express's Hagler.
Another tactic operators take to attain the look of being well-stocked with the right categories — without actually overstocking — is in specifying smaller promotional displays and using spacers on shelves to give the appearance of fullness, noted HMG's Ford.
How Suppliers React
It's been somewhat difficult for suppliers to see their store-cluttering promotions cut back, but retailers say they've come around thanks to proven results.
Rutter's, for example, now limits its stores to five shippers. "When I came here three-and-a-half years ago every kind of chip imaginable was on promotion all the time," recalled Leedy. "Consumers got the impression they were always on sale. No one got a lift." Now just one chip gets promoted each month and "the net result is, our business is up in profitability and [chip makers'] business is up in profitability.
"In the beginning they were skeptical, but by the end of the first year they were saying 'You were right,'" he added. "It built the suppliers' confidence in our judgment."
Suppliers have also borne the burden of complying with retailers' more exacting needs. It's far cheaper to mass produce a single point-of-purchase display than to produce displays customized for each convenience store chain, but chains want that control.
"In the long run, retailers, by establishing guidelines, are indirectly helping manufacturers become more efficient," said Willard Bishop's Hauptman.
Of course, all the promotions in the world can't be effective if they're not executed well in the stores.
"Our largest problem [with the new look] is executing at store level," admitted Leedy. "A lot of times the new promotions go up and the older ones are not taken down." Too many displays and the clutter is back. "It's an issue for marketing and store operations."
"One of the single greatest challenges to retail today is getting any program implemented at retail," added Willard Bishop's Hauptman. "Getting to market, putting it up, taking it down, keeping it in stock, making sure the POS materials are as they should be is a huge challenge, and most have not conquered it."
Manufacturers can help by making point-of-purchase materials as easy to set up as possible. Retailers can do their part by instilling greater discipline in stores.
But for some retailers, executing well will still mean cramming the right products into the right locations.
"I understand the stack-it-high-and-let-it-fly philosophy. If you're making a statement in a certain category, it's valid to be that. Absolutely have a full offer, full variety, and never be out of stock," said Hauptman. Just don't do it in every category.
Such support is good news for adherents of the more-is-better look, who evidently are a little shy about bucking the clear-and-open trend; several refused interview requests for this story.
Regardless of the merchandising philosophy or the loads of data, retailers say balancing the store's look and feel is an ongoing challenge. Most revisit planograms and tweak shelf sets often, in an ongoing quest to look exciting but not overwhelming, full but not cluttered.
The ultimate driver, of course is convenience. Whether that means clean or clutter is up to retailers.