Small Operators Benefit From Open Dialogue With Supply Partners

NATIONAL REPORT — Whether operating a single store or a small chain, surviving and thriving against the larger convenience store chains is always top of mind for the industry's small operators, and it can be challenging at times. This is especially true as of late, as the convenience channel's single-store owners and small operators grapple with labor and staffing issues, an unpredictable economic climate and supply chain woes.

Because bigger chains have more buying power to get better deals, which they can then pass onto their customers, it is in times like this when the most important relationships a smaller retailer can leverage are the ones they have with their supplier and distributor partners.

"Our suppliers are key to everything we do. We wouldn't have products on our shelves if we didn't have wonderful relationships with our suppliers, so it has to be a win-win relationship. That comes from a lot of communication and collaboration," said Liz Williams, president and chief financial officer of Chicago-based Foxtrot, the hybrid e-commerce and physical store operator of 23 retail locations throughout the Chicago, Dallas and Washington, D.C., metro areas.

Communication is so critical for a mutually beneficial relationship that Ricky Bearden, vice president of sales for Elmwood, La.-based Imperial Trading Co., the nation's fourth largest convenience distributor, stresses that overcommunication is necessary. This is because, in essence, distributors are the category management team for small operators.

[Read More: Imperial Trading Wraps Up Deal for City Wholesale]

Many small operators are limited in the staff they have, so suppliers and distributors must support them with as much information as possible, Bearden said.

"Don't assume that the retailer is getting all of the information that you're getting. Don't assume that he has all of the knowledge you have," he cautioned his fellow distributors. "Any knowledge that you have as a supplier and distributor needs to be communicated to retailers frequently and aggressively, so you know that any sort of change such as new products, price changes or promotions are conveyed."

Equal Opportunities

The instability of the supply chain over the past year has put a greater significance on transparency and open lines of communication between small operators, suppliers and distributors. A supplier or distributor must be aware of an operator's needs and ambitions, while the operator must know what to expect. This connection gives all parties the opportunity to create optimal solutions and pivot where necessary — whether that means taking advantage of better costs by opting for an alternative product, or purchasing more of a product that is in stock so that the retailer has sufficient stock on hand.

"In the convenience space, we get replenished so quickly; if we have a busy weekend or a busy couple of days. Our stores are relatively small, so we don't have huge stock rooms, so leaning into our relationship [with our suppliers] is important to keep shelves stocked, reach consumer demand and make sales," Williams told Convenience Store News.

Imperial Trading receives weekly reports from key manufacturers that retailers may not have access to. These reports show supply risk items, the time these issues will begin, and the time these items are no longer at risk. Often, these issues can last as long as four, five or even six months, so Bearden pointed out that it's important to stay engaged with small retailers to ensure their planograms are current.

"This planogram process used to happen twice a year, and now we update planograms essentially in real time," he said. "Staying in communication with retailers allows them to make quick decisions and if they'd prefer to replace these at-risk items, we can have new tags placed in a timely manner. If it's a top-selling item, they can decide to leave the tag up and wait for recovery, or our category management team can offer a suggested item for replacement."

Another side of the coin in a mutually beneficial relationship between small operators and their supplier and distributor partners is letting each other know about opportunities to act on. While a supplier will inform an operator of a price increase or promotion that a manufacturer is offering, an operator can let their supplier know of any discounts or promotions that might be happening with their competitors. That way, the supplier can go back to the manufacturer and ask for the same programs, noted Roy Strasburger, CEO of StrasGlobal, a Temple, Texas-based provider of consulting, operations and management services serving the small-format retail industry.

"The most important 'do' for the operator and supplier is reliability — doing what you say you are going to do. For the operator, you need to do the promotion or buy-in that is required to get the discount or rebate. For the supplier, you need to deliver the products and programs that you say you can deliver," Strasburger emphasized.

The most important "don't," he believes, is don't create an antagonistic relationship. "Operators and suppliers need to work together to maximize the business opportunity for both parties," he continued. "Blaming each other for out-of-stocks or nickel-and-diming the supplier creates a short-term win and a toxic long-term relationship. Both parties need each other to be successful and they need to work together."

Supporting the Business

In Strasburger's opinion, the best thing a supplier can do for an operator is introduce new products to the retailer. Suppliers have earlier knowledge as to what is being introduced and can help assess which new products would work in the operator's market.

"An offshoot to this is sourcing and introducing local products for the operator. The more locally oriented the store is, the stronger the relationship between the operator and the customer," Strasburger said, noting that the next retailing state will be hyperlocal. "The more locally oriented a store is, the better it can compete with the large chains, online purchasing, and quick- delivery competitors. It's not just about the products, but also about creating a relationship with local manufacturers that the community wants to support."

Outside of supplying products to stores, Imperial Trading encourages its retailer partners to allow the distributor to maintain their retail pricebooks because of how frequently price changes occur.

"We try to become an extension of [a retailer's] accounting department by allowing us to manage those retails, print tags, and get them to stores and up on the shelves as quickly as possible," Bearden said. "We've also tried to work with category management teams to make larger orders and take advantage of price brackets offered to us to help keep costs down. That may require us to carry inventory for a longer period of time, but we try to do what's needed to ensure that our retailers stay competitive in the market."