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Small Operators Stay Competitive With Strong Partnerships

Trust and transparency with distributors and suppliers are key as the marketplace changes.
People fitting cogs together

NATIONAL REPORT — Historically, the practice of convenience store retailers aligning with suppliers and distributors to fulfill the quick needs of their customers has given the advantage to larger chains and their bigger buying power.

However, the COVID-19 pandemic produced something of a supply chain silver lining across the channel. Large retailers, small retailers, suppliers and distributors were all in the same overturned boat. Trust and transparency were heightened like never before in order to produce solutions to get everyone back on track. The result: updated best practices in collaboration that recognize forward-thinking small operators in a bigger way.

[Read more: Small Operators Hold an Advantage in Tight Labor Market]

The pandemic accelerated the need for greater access to real-time data to inform decision-making amid supply chain disruptions, labor shortages and decreases in consumer spending, noted Blake Weber, retail technology project manager at Clarkston Consulting, based in Atlanta.

"While these challenges may have added tensions to some existing retailer/supplier relationships, overall we are seeing that they have actually driven collaboration and trust in the partnerships, large and small, as both sides have worked together to navigate these issues," he told Convenience Store News.

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For example, Weber cited that exchanging inventory and forecast data is now providing advanced visibility to avoid retail stock-outs; outsourcing inventory management to suppliers and distributors is removing friction in the retail ordering process and ensuring shelves are quickly replenished; and collaborating on managing promotions and leveraging historical sales data is driving promotion efficiency and execution.

"As smaller c-store operators adjusted to industrywide changes, they have been exploring ways to lean into the supplier and distributor partnerships to achieve efficiencies in resourcing and costs," he added. "Rather than selecting suppliers based on costs and margins, c-store operators are evaluating relationships more holistically through the lens of creating long-term, mutually beneficial — and profitable — partnerships that will ultimately provide the best experiences for their customers."

The pandemic inspired positive changes in how Lacey, Wash.-based Harbor Wholesale, the largest independent distributor in the West, serves small operators. The fourth-generation, family-owned company serves more than 6,000 convenience stores, independent grocers and quick-service restaurants with a selection of local and national products, business solutions and its proprietary Real Fresh Brands items.

[Read more Small Operator news here]

"We started doing more with social media and e-newsletters to ensure that all the information was getting to our retailers," said Harbor Wholesale President Rick Jensen. "Our product mix also shifted; we added more traditional grocery items to support the local communities our retailers serve. Lastly, we became more flexible in order to manage through supply-chain challenges and changes in product availability."

Because Harbor Wholesale is a family-owned company that's "entrepreneurial at heart, we understand the unique challenges the independent business owner faces," Jensen explained, noting that the distributor is currently working with its c-store partners on high-quality foodservice programs, promotional activity and store-level rebates through its Harbor Rewards program, and a new seasonal candy program to get more consumers inside the stores and drive incremental sales.

"We have grown with our independent c-store customers," Jensen said. "As their needs change and grow, we continue to learn and add new solutions to our business. Our mission is dedicated to supporting the local entrepreneurs that provide jobs in their communities, bring convenience to busy lives, and invite us all to experience life around the table every day."

The pandemic has had a lasting impact on Temple, Texas-based McLane Co. Inc., one of the largest distributors in America, as well, according to Jeff Opp, who serves as sales director for independent business. Since then, McLane has reimagined and launched a new pizza program, beverage program, fresh program and more with an emphasis on innovation, on-trend items and being a strategic growth partner, as well as a one-stop-shop for the convenience store industry's smaller players.

"We want to equip the smaller c-store to succeed to the highest quality with turnkey programs," Opp stated. "We have trucks making deliveries in every zip code in the country, essentially. We know we can reach them, and we think we have the assortment and tools to help them grow."

Small Operators, Big Ideas

While the consensus is that the pandemic accelerated a better world of partnerships for small operators, the question now is: What will make them even better?

Recognizing that small operators don't often have the staff to study and analyze their businesses, Bill Nolan, a partner with Business Accelerator Team, a group of c-store industry consultants based in Phoenix, hopes they can let go more and rely on suppliers and distributors to provide trends in the marketplace, new item and promotional insights/opportunities, and assistance with planograms and seasonal resets.

"The partnerships that improve the most will be those that stay in touch, respond quickly to calls and follow up on problems or issues," he said. "Staying connected beyond just the next delivery means the small operator should inquire about special programs, promotions and marketing opportunities. It means distributors/suppliers should share how they are working to be more efficient and helping to drive costs out of their business that can be passed along to the small operator."

From a foodservice perspective, Tim Powell, managing principal of Foodservice IP, a research-based management consulting firm headquartered in Chicago, agrees that for small operators to have healthy collaborations into the future, it will depend on the retailer's ability to make sure their partners understand their unique operating pressures, business structure, concept, requirements and potential, and to build a consultative relationship with them.

"In the future, I expect to see more external intelligence. Distributors and suppliers will help smaller operators understand commodity information, marketplace information, demographics, menu ideas and competitive intelligence," he said.

The way Clarkston Consulting's Weber sees it, the c-store industry is shifting away from being fuel-focused to being a destination for customers to buy fresh food and beverages, household items and quick-service meals. "Retailers and suppliers can strengthen their relationships by embracing this change. Leveraging each of their data, they can collaborate on tailoring the assortment to bring new and innovative products to their local customer base and look for opportunities to innovate together across categories," he advised.

Relationships between retailers of all sizes and their suppliers can also benefit from the adoption of new technologies that help drive operational efficiencies. Ultimately, Weber believes technology can simplify and/ or automate many of the back-and-forth exchanges in the future, driving down costs and improving profitability for both parties.

Opp envisions small and independent c-store retailers also leveraging more private-label products in the future, which he said are especially attractive among millennials these days. He noted that McLane's CVP (Consumer Value Products) line of more than 240 private-label products is continually being tweaked and expanded.

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