Through a special arrangement, presented here for discussion is a summary of an article from Convenience Store Decisions magazine.
Dealing with primary wholesalers, multiple DSD (direct-store-delivery) vendors and local foodservice providers stocking a limited amount of space, some c-store chains are looking deeper into category management.
"I think recognizing the potential of the store from the standpoint of destination categories and merchandising the stores to capitalize on high-margin impulse categories like candy and snacks is important," said Kit Dietz, president of Dietz Consulting.
There are, Mr. Dietz emphasized, some big in-store opportunities available since candy and snacks deliver -- candy particularly -- the highest margin and true profitability in the center store.
Operators also need to make sure they have the best-selling SKUs. The top 50 SKUs, which only represent about six-tenths of 1 percent of all of the SKUs in the convenience channel, drive 32 percent of the business.
There are "significant gaps" in the best-selling SKUs in the marketplace, Mr. Dietz added. "That's not to say that only independents are missing it; some of the big chains miss it as well. When it comes to the biggest opportunity to improve profitability, that comes from finding a distributor that is able to deliver high-quality planograms that are developed not only by looking at national data, but regional data, and from looking at individual retailers' movement in the store."
Many retailers also tend to concentrate on price rather than the total cost of acquisition, noted Steven Montgomery, president of b2b Solutions [and a RetailWire BrainTrust panelist]. "Price is what they see on an invoice. Total cost includes all the elements of cost that go into a purchase. This could include cost elements such as terms, return policies, order quantities, delivery and a host of support services."
One of the best ways to remove cost from the supply chain is to control the number of vendors making deliveries to your stores. This is an area 7-Eleven has been heavily studying of late. The results of a pilot program the chain is running in California could have a significant impact on how goods are delivered to c-stores across the country.
"We have worked with retailers who have vendors with overlapping items," Mr. Montgomery said. "One of our recommendations is to consolidate vendors whenever possible."
From the years of work he has done with candy and snack manufacturers within the distribution community, Mr. Dietz has found that companies are continuing to adapt to the realities of the marketplace. "They are starting to recognize that this is a limited-assortment channel, highly impulse-driven, driven by instant consumables. We haven't done a good job of rationalizing assortment, and there are some true opportunities there."