Small Operators & Spending Technology Dollars

NATIONAL REPORT — With all the advancements in retail technology, it's hard to imagine a convenience store without any tech.

Whether it's the point-of-sale (POS), back office, security cameras or tools for human resources, there are more options today to automate the store and improve business efficiency and decisions than ever before. And while the large c-store chains have bigger budgets and more options to choose from, there have been major advances made in technology specifically geared toward the industry's single-store owners and small operators.

So then, how should a small operator decide where to spend their more limited budgets?

"Calculate the return on investment (ROI) before investing in a technology," advised Steve Morris, president of Retail Management Inc., based in Saint Paul, Minn. "How much time or money is this going to save me? Will I be better able to report what is going on in the store? Will this technology open doors for me to other programs? Will I be able to access rebates or other marketing funds that were not available without it?"

At Rhodes Convenience Stores, a 30-store operator based in Cape Girardeau, Mo., there are always open discussions happening around technology, and the company tries to think "outside the box," according to Duane Statler, vice president of information technology. The company does its research and tries to quantify where technology can help them save in some way.

"We look at the benefits a technology can provide, like helping our team and making their job easier," he explained. "What are we gaining from it? From a business standpoint, will it make me better and efficient? Then, we look at the cost and say, 'Is this worth it to me?'"

Although vendors will often share figures for what a chain can expect to save, Statler does not rely on this information to make a decision about investing in new technology. In fact, he has not looked at any new technology recently that offers a large money savings upfront, and so the chain does not use this as a main indicator to purchase.

"I haven't looked at anything in a while that shows we will save $50,000 if we spend $200,000. It's more about if it's going to help make the business better. It has to have an end of making us better one way or another — better for customers and better for our employees. Then, we can decide if we can swallow the cost," Statler said.

Budget should be considered along with strategy depending on how large the chain is and how rapidly it plans to grow in the future, noted Peter Rasmussen, founder and CEO of Convenience and Energy Advisors, based in Boston. If there is a growth plan in place, chains should start by deciding if they want to adopt a less expensive technology option and then invest in bigger, more robust technology as the growth occurs, or if they want to invest in the larger option upfront.

"A smaller chain or one-store operator can start with a less expensive option that offers less features, and then upgrade as time goes on if they grow," he said. "It all depends on the strategy and what they want to get out of it."

Essential Technologies

Regardless of chain size, having a POS and backoffice solution is a necessity in today's c-store world. The ability to pull reports from the POS to see what products are selling and how much, and also having the ability to reconcile that with ordering is "business 101," according to Morris. "It's so essential, I wouldn't open the doors without it," he stressed.

If a single store or small chain is not selling gasoline, or offering unbranded fuel, there are a lot of economical options when it comes to a POS, including some that run with an iPad, Rasmussen pointed out. However, if a store or chain has branded gasoline, they often have a list of approved POS vendors to choose from, which is usually NCR, Verifone or Gilbarco, he explained.

One option to consider linking to a POS is security cameras. Many top POS vendors will integrate into DVR security systems to link sales transactions with video so that stores can monitor for internal and external theft, according to Rasmussen.

"Start with the fundamentals, making sure it will easily connect to other technology if you plan to grow bigger," he said. "The POS and back office will give you the facts and data to make the right decisions. Otherwise, you might think you are doing well or that you have a problem when that isn't the case."

When choosing technology as a smaller operator, the goal is to keep things simple. The support, maintenance and upgrades should be accessible and doable — and, in some cases, can even be outsourced to a third-party if a company does not have an internal information technology (IT) department, Rasmussen said.

It's also important to check with vendors about how they support you when something goes wrong to avoid downtime, especially for the POS. "When something breaks — because it will — what is in the service level agreement in terms of repair, replacement and remedy?" Morris posed. "Will they respond in 24 hours or 36 hours? Also, what are the upgrade costs and what schedule does the vendor have for upgrades? These need to be looked at upfront."