Staying Current, Yet Unencumbered

Industry insiders praise convenience store chains like Speedway LLC, CST Brands Inc. and Murphy USA Inc. for being on the forward-thinking edge of vapor products, willing to try new items and reconfigure counter space in their stores.

Speedway is reportedly “very sophisticated,” according to one anonymous supplier, who said the chain tracks up-to-the-minute point-of-sale (POS) category data and has a newly created and dedicated electronic cigarette/vapor buyer, who recently visited the supplier’s manufacturing facilities along with four other executives on the chain’s vapor/tobacco team.

But even for some of these convenience store retailers on the forefront, inventory overload is reportedly weighing them down, with many finding themselves stuck with “the latest” vapor items from several months to a year ago that just didn’t sell.

Is it possible for a c-store to stay current, yet unencumbered, in the constantly evolving vapor category? Ray Johnson, operations manager for Las Vegas-based chain Speedee Mart, believes it is. In fact, he has found a “common sense” way to bypass inventory liability.

“I try new things, but I keep that inventory fairly low, and when it doesn’t sell, whoever the new vapor guy is that wants to come in, he has to pick up the old guy’s inventory. He writes me a credit and that credit goes off my initial delivery — that is the cost of getting an e-cig/vapor rack on my counter,” Johnson explained.

In the innovative vapor arena where new suppliers are constantly trying to get some shelf space, inventory liability is “easy to fix,” he continued. “You just make it the next new supplier’s ticket inside your stores.” Because if the overloaded inventory didn’t sell, chances are that company is either long gone or not in a position to take anything back.

Understanding that the typical course of action c-stores take regarding old or discontinued product is to mark it down, Johnson further rationalizes his strategy to new suppliers by explaining that if they don’t credit him for the old inventory, he’s going to mark it down to half price. “I ask them to consider which they would rather have: our stores putting half our effort into selling the obsolete product and half our time selling their product, or 100 percent of our effort into selling their product?” This reasoning usually seals the deal.

SAMPLING THE GOODS

Another requirement for new vapor suppliers that want space in the 20-store Speedee Mart chain is they must supply all employees — currently numbering around 100 — with a sample product so they can intelligently educate and answer customer questions about it.

“When you introduce something new in this category, nobody really reads the signs to understand it; they ask the cashiers,” Johnson reasoned. “And if they see our employees using it, for sure, it creates curiosity and leads to a natural conversation about the product. Then, our people can answer from a position of knowledge. I find [the employees] like talking about these products if they get to try them and use them.”

Johnson makes one stipulation to employees regarding their use of the vapor items — they are encouraged to enjoy them while working, but they can’t puff on them while at the cash register/POS terminal. “That’s just my rule of customer courtesy,” he said.

Regarding fellow c-store operators who are waiting out the vapor game, afraid of inventory liability and hoping to see which items will end up having legs before committing, Johnson strongly advises that “you can’t sit on the sidelines and wait in this category.”

“Vape shops are everywhere and they will take your cigarette customer away if you aren’t involved in the category,” the Speedee Mart executive cautioned. From his perspective, vape shops are a force to be reckoned with and dealt with head-on.

In some cases, vape shops are also an opportunity for partnership. After doing some social media homework, Johnson convinced one Las Vegas vape shop chain with three stores, The Pink Spot, to partner with him and let Speedee Mart sell its branded, disposable e-cig product.

“I called them up and said, ‘You don’t really want to sell your disposable product, do you? You only have three locations, I have 20, and I don’t care which brand I sell. You’re the one doing all the advertising; just put me on your website as a place to get it,’” he recalled. “After they got over the shock, they agreed.”

Johnson happily reports that The Pink Spot partnership has drummed up more business for both parties.

He encourages other convenience store retailers to be more proactive in the vapor category and to think outside the convenience box and even outside what’s being done in other channels.

“Convenience is supposed to be fun and exciting. Remember, we’re faster than the grocery and drug dinosaurs; we’re supposed to dance around them and be quicker on our feet than they are,” he said. “Vapor is the perfect category to do that with.”

“When you introduce something new in this category, nobody really reads the signs to understand it; they ask the cashiers.”
— Ray Johnson, Speedee Mart