NATIONAL REPORT — In today’s competitive retail environment, convenience stores are utilizing technology to gain insight, stay up to date on trends, and boost their bottom line in all categories. In the high-margin foodservice category, which has been hard-hit by the pandemic, mining data can help c-store operators decide on menu items, pricing, promotions, merchandising and more to increase overall sales and profits during these challenging times.
While point-of-sale (POS) and loyalty program data are important pieces of the puzzle when it comes to mining data to impact foodservice sales, they are not the only sources c-stores should be tapping in order to make decisions. Most savvy retailers combine internal data with customer surveys and outside sources, looking not just at the c-store industry, but also other retail channels.
“We look at a combination of what our customers are currently doing today in our stores vs. what customers are doing in competitive stores, as well as what they are doing in other channels,” said David Hall, vice president of global foodservice for Circle K Stores Inc., which operates 16,000 c-stores globally. “You always want to start with what is happening in your stores — what are customers doing and buying, what does the basket look like, what is the need state or occasion — but then you look at outside data, like Nielsen, to see how people are behaving in the industry.”
Outside data sources, such as Nielsen, Information Resources Inc. (IRI), The NPD Group and the National Restaurant Association, can show retailers what is happening in their industry and in their market area, as well as in other competitive industries. This can give them the opportunity to spot things they may not be doing but should be, as well as see what customers are buying outside the channel that could be an opportunity for them, Hall pointed out.
“It’s about utilizing these pieces of data to identify and optimize the assortment offering we have, and deciding what is the assortment we want to carry that delights our customers and does that in a way that is uniquely Circle K,” said Hall. “Everyone has to have Coke, Pepsi and Doritos in their stores, but those are the cost of entry, not differentiators. So, we look at what is the strategy and portfolio we can create to set us apart from other competitors.”
Start With the Basics
Whether it’s from the POS and back-office suite, a loyalty program or both, c-stores have a large amount of in-house data available to them to use when making foodservice decisions for their stores. Michael Caldwell, loyalty manager for Yesway, the Des Moines, Iowa-based chain of 415 convenience stores, recommends retailers “start with the basics.”
“What are your customers buying, and why are they buying it? Use the data to observe trends, and watch what metrics go up or down when you pull certain levers,” he said. “Learn as much as you can about your customers and what can change their behaviors.”
Looking at the average size of a customer’s basket when purchasing foodservice items, and what they are buying alone or together with other categories, can help retailers not only know what is selling, but also what items to promote or merchandise together to boost the overall dollar amount spent by each customer.
“Market basket data allows you to establish the right bundle to offer to entice customers to add another item to their basket,” Circle K’s Hall noted. “Using that market basket data, look at how you can develop locations for the items, co-locate or co-promote items to be purchased together. The same with meal solution bundles or combos that give the customer additional incentive to add another item to their basket.”
It isn’t always about a promotion or offer either, he noted. In some cases, if an operator knows customers are buying a certain snack item with food, they can co-merchandise the items together so that the customer sees them and it triggers them to add it to their basket.
At Yesway, which operates c-stores under both the Yesway and Allsup’s banners, the company is using data to back up every decision made, according to Caldwell. The retailer recently completed a $7-million technology upgrade at all of its Allsup’s locations and now has its 400-plus stores on the same PDI back-office software and using a consistent POS as well that utilizes both Verifone and Gilbarco systems.
“This is going to be very exciting as the Allsup’s foodservice program is legendary,” Caldwell said. “We’re looking forward to digging into data as we introduce Allsup’s Rewards in the coming months so that we can learn what motivates our customers, especially with regards to the [Allsup’s] World Famous Burritos. With this information, we can alter our program to give them more of what they want with even more value.”
Yesway partners with Paytronix to power its Yesway Rewards and Allsup’s Rewards programs, each with their own app. Right now, the company is using data to find affinity items and determine what products are more likely to be purchased together. This will drive merchandising decisions, and how to feature foodservice items in the rewards programs.
“For instance, fountain drinks are by far and away our most popular reward item, so we use sales and reward redemption data to help direct us on the promos we run with dispensed beverages,” said Caldwell. “This includes when and where to offer free drinks, and when to offer discounted pricing.”
No Loyalty Program, No Problem
Even for operators without a loyalty program, there are a number of ways to use POS data to make decisions around foodservice items. Not only can they see what items are selling, but they also can break those items out by daypart to see where they are having the biggest sales impact.
“Take all of your locations and segment them out, so maybe there is a group for stores where traffic tends to skew toward the morning and the fast-moving items tend to be indulgent, while another group sells more in the afternoon and the items are healthier,” said Greg Crow, executive vice president, product at Koupon Media, based in Addison, Texas. “Come up with a dozen or so profiles, and look at what you are offering and the store signage to promote it.”
Whether it’s deciding what menu items to offer, strategizing where foodservice items are located in the stores, communicating the offerings to customers, or making decisions on promotions, pricing and item pairings, data can open doors for c-store operators.