What Convenience Stores Learned from the Pandemic

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What Convenience Stores Learned from the Pandemic

By Ryan Yost, Avery Dennison - 11/03/2020

Convenience store executives have been on the front lines of consumer demand during the pandemic. However, “convenience” has taken on new meaning in the current era of product shortages, supply chain logjams, and rising consumer demand for items like hand sanitizer and disinfectant wipes, which may outlast the pandemic itself. 

A survey published in April by Convenience Store News found that two-thirds of convenience store retailers had trouble staying in stock with in-demand products like household cleaners and paper products. Another 10 percent said they could not keep their store shelves stocked due to intense customer demand. 

For convenience stores accustomed to predictable product inventory, pinpointing how to meet new, unpredictable consumer demands is becoming essential data.

How Did We Get Here?

The same CSNews survey noted that three-quarters of U.S. convenience store retailers reported that the nation’s social distancing and other emergency measures enacted to slow the spread of the novel coronavirus (COVID-19) pandemic have had a negative impact on their sales.

At first glance, this statistic aligns with customer fear of entering retail establishments. But there’s another important reason — the virus didn’t just infect humans, it also “infected” the supply chain.

The drive to increase inventory velocity was itself a symptom of this virus. During the pandemic, bottlenecks appeared at nearly every point on the supply chain, which left convenience store shelves barren and deliveries delayed.

As speed to market increased, manufacturers, distribution centers and convenience store operators had to make speedy temporary reconfigurations. And now, as convenience stores hope to return to normal, supply chain executives will be responding as well.  

How C-stores Benefit From Direct-to-Consumer Shifts

Supply chain operators are already addressing the rise in direct-to-consumer (D2C) online sales.

In the grocery retail sector alone, online sales increased 100 percent in the month of March. Online sales in the United States overall increased 25 percent, on average, for daily sales March 13-15 compared to the first two weeks of March, according to Adobe Analytics.

This is good news for convenience stores because they can also leverage the investment in technology and automation that supply chains are implementing in order to meet the direct-to-consumer movement.

Automation to optimize supply chain operations will be the most efficient means to deliver a higher volume of packages to convenience stores, as well as the consumer end user.

How New Supply Chains Impact Convenience Stores

It’s not just U.S. businesses that are retooling their supply chains as the economy reopens. Every vertical in every country is taking a hard look at how to create new strategies, revamp operations, and change processes. Convenience store operators need to understand what will happen along the supply chain because it will directly affect their inventory control.

The starting point will be to enable end-to-end inventory visibility, which will allow the supply chain — encompassing manufacturers, distribution centers and retailers — to quickly respond to the ebbs and flows of consumer demand without additional labor and resource allocation.

Consider what the supply chain would have looked like during the pandemic if consumers and convenience store managers had the visibility into inventory levels for essential products like hand sanitizer, masks and gloves. There would not have been panic-buying and hoarding that left convenience stores shelves empty.

The lack of total inventory visibility to both shippers and consumers during the pandemic was a clear signal to supply chain executives that technology offering end-to-end visibility throughout the global supply chain would be the way of the future.

Digitization of the goods through technologies such as RFID and barcode provide that full transparency throughout every step of the supply chain. This directly benefits convenience store operations.

What C-Store Operators Need to Know About Their Supply Chain

Agility will be incorporated into lean logistics. It is going to be a difficult transition, but the supply chain workforce will shrink to at least some extent. Cost-cutting will mean smaller staffs, but direct-to-consumer demands paired with the immediacy of convenience store inventory management will present labor challenges that need to be met. Therefore, the reduction in manpower will mean technology to automate processes will be necessary to meet the needs of manufacturers, retailers and distribution centers.

In a lean setup, operations are already set up to process inventory in order to maximize labor efficiency. However, that doesn’t allow shifts both up and down to meet changing market demand. Agility in supply chain operations is the key. Supply chains need to have the ability to adjust operations to meet fluctuating demand.

With 40 percent of essential items now being bought online, supply chains need to evolve operations to accommodate much higher volumes in direct-to-consumer shipping while, at the same time, increasing their ability to serve convenience stores.  

As businesses continue to normalize operations, all eyes will be on supply chain executives who will need to pivot in meeting new and significant challenges. It will be a test or their ability to flex with new demands.

It’s all about the digitization of goods. With the surge in online ordering, logistical adjustments have become a must in order to meet fluctuating consumer fulfillment needs — while meeting the inventory needs of convenience stores.

By giving products a digital unique identifier at the origin of the supply chain, full transparency of inventory at the product level is possible. This is vital to meet the new rise in direct-to-consumer expectations and continued demand at retail locations.

How Convenience Stores Will Meet the Future  

While some industries such as grocers are seeing a surge in business, and other industries like apparel are taking a hit, nearly every industry — including convenience stores — are currently reevaluating their existing business operations to ensure they can successfully meet the ever-changing world of consumer demands.

As the coronavirus continues to be a global focus, convenience stores will discover supply chains that adopt technology will offer them flexibility and agility. In the new normal, the only “constant” in the convenience store will be change.

Ryan Yost is vice president/general manager for the Printer Solutions Division at Avery Dennison Corp. In his role, he is responsible for worldwide leadership of and strategy for the Printer Solutions Division, focused on building partnerships and solutions within the food, apparel and fulfillment industries. For more information, visit https://printers.averydennison.com/en/home.html.

Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News