How to Manage Every Category in Your C-store
LAS VEGAS — Two adages hold as true today as they have in the past when it comes to convenience retailing. The first is "Retail is detail," and the other is "We don't plan to fail; we fail to plan."
"Many years ago, it used to be that retailers made customers search the store. Now, it’s radically different. Today's in-store shopping is more like an online experience," Casey McKenzie, senior principal consultant at Impact 21, said during a category management education session at the 2018 NACS Show.
The focus of today’s shopping experience, according to McKenzie, focuses on the "three Ps":
- Position — Is it easy to find?
- Product — Is it in stock?
- Presentation — Is it clearly priced?
As e-commerce continues to evolve, so does the convenience store shopper's in-store experience. With the right category management tools, c-store retailers can adapt and evolve with their customers' wants and needs.
There is a plan of attack c-store operators should follow to implement changes and manage in-store categories, according to John Zikias, executive advisor for Holmes Oil Co. From the get-go, he said c-store retailers should ask themselves three questions:
- Which categories need the greatest support? (Think soft drinks)
- What categories can be managed by others? (Think grocery)
- What are the growth-driver categories? (Think packaged beverages)
To identify which categories fit which criteria, retailers need to consider their importance to a c-store's overall strategy; what their current sales and profit contribution are; if there are outside resources available to support them; and if there is potential for future growth and an opportunity to beat the competition, explained Zikias.
"When we talk about competition, we think first about Amazon. But Amazon is going to do what Amazon is going to do. Find out what customers think about your brand and your products. Your numbers will tell you what you need to know," he emphasized.
Once you have the answers to the questions above, key suppliers should be identified. These suppliers will be able to tweak data each time you meet with them, as well as provide market research, resources, tools and technology to support their category.
As an operator, Zikias said you must ask suppliers what other retailers they are supporting in order to ensure your plan isn't identical to a competitor's. You should also discuss the objectives and goals you have for your categories.
The next step is to develop a plan by using data types, identified through the acrostic "CASH":
C — Consumer, identifying attitude and behavior;
A — All store, covering all aspects of the c-store;
S — Scan, pulling reports on the market and region of total sales for products with SKUs; and
H — Household, linking products with typical consumer household information.
As the plan is developing, identify the appropriate planning tools and merchandising support to help execute the category management plan. For example, c-store retailers should lock in dates with suppliers in advance to ensure they'll have the time and appropriate information to share at the next sit-down to map out merchandising and planograms. At this sit-down, both the retailer and supplier should be able to provide their own syndicated data on SKU performance. This information will show where each product stacks up in ranking mix for volume and profits.
What the product mix and merchandising looks like also needs to be taken into consideration. To determine which products should continue to be offered, or which should be eliminated, five considerations need to be made:
- Is the product a top seller?
- Are customers loyal to it?
- What are the product's margins?
- Does the product have a point of difference?
- Does the product offer exclusivity?
Retailers must also weigh the benefits and challenges of introducing new items to a category. New items represent a point of difference from the competition. However, new items may overlap with existing SKUs, may be a passing fad or part of a passing trend, and may overwhelm consumers with too many choices.
"If you bring a new product in, get it out quickly. Don't get extra shipments when you're done with it because I guarantee you, it will wipe out all the profit you've already made," Zikias noted.
His final thought on managing categories across the store is that you can't run every category, but you can manage them. So, set priorities; seek the resources that will help you the most; seek and use data to help you make decisions; set plans ahead of time; and adjust as necessary.
"The sooner you start, the quicker you benefit," he concluded.
The 2018 NACS Show took place Oct. 7-10 at the Las Vegas Convention Center.