Small Operators Point to Store-Level Efficiency Among Top Priorities

Balancing customer-facing and back-office solutions becomes a matter of dollars and cents.
The letters ROI on a dial

NATIONAL REPORT — Retail technology continues to change and evolve, and there are so many new and exciting options for convenience store retailers to utilize in the operation of their stores. However, when it comes to small chains, the budget size is minimal compared to large companies and although many innovative technologies offer lower-priced alternatives for smaller operators, there are far more options available than there are dollars in the budget.

"Technology is still expensive, [so] small operators need to uncover what they are trying to do with it and ask, 'How can this make me more efficient?' or 'How can this save me money?' when evaluating what to invest in," Steve Morris, owner and president of St. Paul, Minn.-based Retail Management Inc., operator of 17 stores throughout the United States, told Convenience Store News. "In some cases, they won't be able to find revenue-generating options, but will improve customer service or employee satisfaction or just become more efficient, which could lead to a cost savings."

When it comes to technology, retailers are often looking for a return on investment (ROI), whether that's an actual dollar amount or measured by improvements in customer satisfaction, labor or efficiency. At Smith Oil Co., based in New Cumberland, W.Va., and operating 12 sites — four with fuel only — the chain requires a hands-on and engaged approach from its entire management team to successfully execute any new initiative, including technology.

"We initially start with a low-tech approach, but if that doesn't meet expectations, we look to technology to help," explained Michelle Fluharty, secretary and treasurer for the company. "With each decision, our management team must discuss cost analysis, labor implications, effectiveness and necessity of the technology."

Smith Oil also evaluates efficiency because that has a direct effect on employee retention and customer satisfaction, including having the right products in stock, accurate pricing and adequate inventory at each location. "All of it combined helps give you a good reputation in the towns you operate, and an efficiently run business will be more profitable," Fluharty added.

In fact, along with customer-facing technology, administrative and back-office tasks are often a priority for small operators because that is where they see "the actual ROI" through efficiency and labor management, noted Morris.

For example, Smith Oil recently launched a new app for its rewards program while also making investments in the back office, such as suggested ordering software. "We look at both back and front-facing because both are equally important," Fluharty said.

Customer-Centric Technology

Mobile apps, digital signage and self-checkout are all options available to c-store owners today that can have a positive impact on customer satisfaction and, in some cases, employee satisfaction as well. Chains of all sizes are investing in these technologies, and that includes small operators as more affordable options continue to become available.

Another investment the company made recently was installing digital menuboards, which has allowed the retailer to decrease printing costs and improve efficiency in updating menuboards and food prices, according to Morris.

Loyalty programs and mobile apps are also top of mind for many small operators.

Marshfield, Wis.-based Weiler Convenience Stores, operating three locations, upgraded from a punch card system for coffee and pizza to using an app to track purchases and points that can be redeemed on in-store products and fuel. Customers can use the app to look at their transaction history, the number of points they earned and how far along they are in the coffee or pizza program. Additionally, the loyalty program is based on a customer's 10-digit phone number, so those who do not want to use the app can give their number at checkout.

"We decided to invest in the technology because it's really the trend, and we want to keep up with it," said Kelly Weiler, co-owner of the chain with her husband. "We watch what is out there in the industry and listen to what customers and vendors are telling us as well."

In fact, it was customers who asked for the ability to use a phone number to track their coffee and pizza program purchases rather than carrying around a punch card. The app also allows the small chain to gather data on its customers, including how many times they visit and what they are buying, and even compare data between stores.

"We try to keep up with what is out there with other chains, and we have a five-year plan on spending whether it's technology, painting a store or upgrading a bathroom," Weiler noted. "Every year, we update something. With technology, we pay attention to what is out there, but if you jump on the first new thing and it's not proven, it can be expensive to be a guinea pig."

Smith Oil had an app for eight years prior to rolling out its new one. Relaunching with Liquid Barcodes, the new app functions as a loyalty card, while also enabling customers to activate the fuel pump and roll back pricing by 10 cents per gallon. Phase two will integrate its beverage program of buy five, get one free, as well as tailored discounts, said Fluharty.

"We will also be rolling out a subscription service in the app where customers can pay a set amount each month and then come in and get coffee or a fountain drink with it," she added.

Liquid Barcodes integrates with the company's POS system. The operator opted to invest in an upgraded app and program because they wanted to offer customers a "wide range of benefits comparable to industry-leading competitors," Fluharty explained.

Additionally, the chain decided to participate in Skupos for the ability to offer additional product discounts. Skupos brings independent operators together to participate in brand-funded promotions and more. The solution also allows operators to gather data and see who is using the program, while offering customers discounts to stand out amongst competitors.

Back-Office Investments

For small chains with limited staff, freeing up administrative work can be a huge benefit to them, which is why so many are investing in back-office and payroll technology.

Without this type of automation, paperwork can become time-consuming and limit a manager or owner from being able to handle other tasks, Morris pointed out.

"Anything small operators can do to automate or assist them with administrative tasks, such as payroll or vendor reconciliation, is where they are going to find the best ROI," he said. "That may not be customer-facing, but when I talk to my clients that are single-store or two-store operators, this technology is freeing up their time to focus on something that is more revenue-generating."

For the 17 sites his company operates, they rolled out payroll technology with a mobile app and electronic onboarding, which reduced paperwork and training documentation for new hires, and improved the ability to interact with employees electronically and individually.

"It saved a ton of paperwork, and saved both money and time because as the company grows, we can be more efficient and won't have to hire more administration support," Morris noted. "It allows for company growth with growth in expenses, and the efficiency and time savings allow us to give employees other things to do."

Also focusing on back-office technology, Smith Oil implemented suggested ordering software to optimize its inventory levels and resource allocation, and is getting ready to introduce an advanced software for retail site management along with upgraded handheld devices "to enable our managers to dedicate a greater portion of their time to the sales floor, reducing their time on administrative, back-office tasks," said Fluharty.

The company uses PDI Technologies for back-office software, through which they can run reports to check overstocks and previous sales data to see how much inventory is on hand, how much is overstocked, and identify out-of-stock missed profit opportunities.

"You don't want to have too much and if you are running out, then you have missed sales, so the technology is allowing us to finetune it to the best of our ability," said Fluharty. "Monetarily, you can't put a number on it for savings, but once we move a store to suggested ordering, I compare overstocks and out-of-stocks before and after and you wind up with additional sales when something is not out of stock."

At Weiler Convenience Stores, the chain has been scanning for years not only at the POS, but also in the back office with vendor invoices.

"It gives you better control over your pricing and making sure your pricing is accurate," Weiler said. "We have one of our office staff perform audits and being able to scan in the vendors lets her audit cigarettes, tobacco, liquor, lottery tickets and more, so we will know if we have a thief quickly because if you don't shut it down, the store becomes a target for more."

Retail Management Inc. is looking into scanning invoices and investing more in back-office technology because moving from scanning one invoice rather than scanning each product will offer a big savings in labor, according to Morris.

This ad will auto-close in 10 seconds