CSD: What’s On Your Customer’s C-Store Shopping List?
Through a special arrangement, presented here for discussion is a summary of an article from Convenience Store Decisions magazine.
A customer-first product assortment can often serve as the foundational element of a relevant shopping experience, driven largely by a deliberate and strategic collection of offerings. For the c-store, where additional factors such as fuel brand can be a key differentiator for prospective customers, relevant assortment can serve as a key element of cultivating a loyal customer base.
Moving away from the traditional thinking — "We have something for everyone" — today’s c-store assortment strategy should tell a different story — "We understand what you need."
There are three key elements to achieving an assortment that will both delight consumers and ensure that business goals will be met: Â
1. High Performance
The assortment must include high performing items, but should be defined here as more than just sales. There are several customer-based performance criteria that must be satisfied:
- Assuming that the retail strategy is not 100 percent niche, items that have broad appeal are essential to generate in-store traffic;
- Keep items on the shelf that maintain a loyal following and are often repeat purchases. Product loyalty engenders retailer loyalty, and the consequences of not having these items available can be extremely damaging;
- Carry items that are favored by the store’s best customers. If deciding between two products that perform relatively similarly, reward the store’s best customers by keeping the item that they consistently prefer.
2. Coverage of Consumer Needs
Some buyers seek convenience while others prioritize value. And still others have specific brand preferences. An in-depth understanding of the customer, their need states and usage occasions is essential. This can be achieved by a variety of means, either through survey research, or better yet, an examination of actual consumer behavior from shopper loyalty data. Typically, research in this area can identify customers’ key needs through an analysis of a product’s substitutability. The need to avoid duplication is particularly heightened in c-stores more than traditional grocery, given the limited shelf space available.
3. Relevance for the Right Consumer Targets
A relevant assortment for all consumer types can mean making sure that there is a variety of targeted options on the shelf. It can also mean catering and customizing the assortment by store or transaction point. For example, a customer-centric retailer will offer and display more upscale products in stores that serve more affluent consumers and feature more value-oriented products in stores that serve value consumers.
Customer-first retailers approach product assortment as a form of storytelling, as a way to thoroughly engage and personalize the shopping experience for their most loyal customers. Retailers must learn to disregard their assumptions about who they think their loyal customers are and what they think they want. Further, sales figures are not the only indicator of a product’s performance. As a retailer begins to study and understand who their most loyal customers are and what they need, product assortment decisions become more effective and successful. This model will help retailers achieve not only greater cross-category alignment but, ultimately, a more loyal customer base.
Discussion Questions
Discussion Questions: Beyond sales performance, what factors should drive decisions around a c-store’s product mix? What influence should data on best customers play in mix choices?
While gross sales cannot be dismissed as a relevant metric, c-stores, like most retailers, need to focus on fulfilling the ongoing needs of their target customers. The historical approach of filling the store with a variety of “convenience” products needs to be refined to match the market and provide a positive point of difference.
The emergence of drug stores as the c-store of choice for women, plus the stated intention of Walmart to get into the business will require current c-store operators to trade in their shotguns for rifles to better target their markets.
Although c-stores tend to be very low-tech, the larger chains should invest in optimization technology that allows them to target store-specific demographics reflecting the makeup of the surrounding area. C-stores are becoming than just a place to grab lottery tickets, cigarettes and soda, and assortment optimization can help c-stores discover profitable items that might be outside their typical planning.
The article assumes the c-store retailers have a loyalty program. Most c-store retailers do not. The issue for most of the retailers is developing a cost effective program that is interesting enough for the customers to want to participate in given the limited number of items c-stores carry.
There are numerous factors that can influence a c-store’s product mix. Certainly sales are an important indicator that the retailer is meeting the needs of its customers. However, are its current customers its target customers? If not, then either it should change its target or the items it is carrying.
What need states is it trying to fulfill? The industry has (for the most part) moved from a positioning of replenishment to refreshment. That being said there are still companies who are successfully in the replenishment business due to their locations. Who their competitors are is also a factor. Does a particular competitor already own certain categories? If so the retailer may want to still carry but deemphasize them. One of the hardest things in the c-store industry to do is create and maintain a point of differentiation. It can be done through category and SKU selection but it is not easy as most c-stores carry very similar items.
As Richard pointed out the convenience customers is being pursued by more and more channels. C-store retailers will have to continue to evolve their category mix to maintain their customer base.
Operators are well advised to not forget what the “C” in c-store stands for. CONVENIENCE. Any trade-off in item mix that limits convenience will limit business.
C-stores fill a need. That need isn’t for Pampers, but for diapers. It isn’t for Haagen-Dazs, it is for ice cream.
It is very likely that the 80-20 rule applies to c-stores. In fact it may be a 90-10 rule in terms of volume. But, unlike supermarkets, the “loyal” customers may only represent about minority share of gross sales.
In this class of trade, focus on the need, not individual customers.
Really good food to go would be nice, as Sheets and some others have upped the ante. Quicker service in high demand hours would be nice, as I have stood in line for 15 minutes off the interstate while traveling. Really good coffee is a must for my wife, as she avoids places like the plague if they don’t sell a fresh premium blend.
PS: Clean bathrooms would be nice as well….
Extending on what Gene shared, convenience is of vital importance to the shopper and should never be dismissed or minimized. However, the definition of convenience is not exclusively “time reduction” in every instance. Some retail purchases can be convenient and require MORE time than purchasing elsewhere if the experience is deemed helpful, educational, assistive, contributory (or fill in your own experience that is highly valued).
Just as one example, given that the “drug store” is often seen as the “c-store,” why not help the shopper understand the health benefits of various products? That would be convenient, differentiating, and serve the mission of the retailer all at the same time.
In the late 80s at Southland Corp. when I was Ad Mgr. for 7-Eleven, we identified these same “key elements to achieving an assortment that will both delight consumers and ensure that business goals will be met.” Plus a few more. Thanks, dunnhumby, for this insight.
The issue is not identification, but implementation. We found that franchised stores made this interesting, and that company-owned stores made it, well, also interesting. Franchisees have the advantage in identifying their customers’ needs and wants, but it also gives them a certain amount of franchisee chauvinism that blinds them to company programs. Company-owned stores, on the other hand, with less-dedicated managers (I managed two of them during college, so I write from experience), have less interest in store performance and blindly go along with every company program without offering feedback.
Field management is the key, not product assortment.
I travel by car quite a bit, and have yet to find any convenience store attached to a gas station that sells a decent selection of healthy snacks, especially for breakfast. I tend to spend time searching, only to leave with the resolve to pack a Clif bar in my handbag for every morning I’m on the road.
I know the stores don’t have loyalty cards and POS data by store, but how about advising the clerks to ask shoppers if they wanted something they could not find and just keep a list for the management to look at?
Specialty food retailers do this all the time to help them keep in touch with the wants and needs of their regular customers. It’s old school, I know, but it works.
Has anyone thought that training the staff and avoiding high turnover might help the overall performance and profitability? I have seldom found one that cared about service.
Having some differentiation in product mix or offering unique products is definitely a plus, however, product mix should really flow from a higher level business strategy designed to create competitive advantages. Product mix is just one way to create such advantages.
It’s usually pretty easy to tell what a top quartile chain’s strategy is but difficult to pick up a defined strategy from most small to mid-size chains. Not having a clearly defined, and appropriate strategy is the most dangerous strategy. It puts you in a constant defensive position, rather than an offensive one where your competitors need to react to you.