Polishing Convenience’s Strenths To Shine Through The Blur

WE LEFT OFF last column with an important point, that beverages are in multiple channels and the use of multiple channels has increased dramatically as a marketing method. We also stressed that loyalty and point-of-purchase were the keys to cutting through channel blurring .

Now, when it comes to convenience stores, there are multiple examples of encroachments into the traditional strength of that channel. For one, there are multiple places within a mile or so of my office to grab a sandwich and a cola – meaning that what was once the turf of convenience and deli is now available at the supermarket, or even at a store like Target.

So how does the convenience store industry keep competitive with the options that surround their stores? What steps are necessary to build customer loyalty? As a starting point, it’s certainly fair to assume that beverages are one of the convenience channel’s core competencies. But it’s also true that many other retailer types have made great strides in another convenience strength, quick fresh food options, focusing especially on the morning and lunch day parts. And traditional customer loyalty options, like loyalty programs, that other channels have used and been successful with will most likely not work for convenience.

So, as a beverage seller in this multi-channel environment, knowing there are others trying to (ahem) eat your lunch, how can you stand out and encourage loyalty? For convenience, in particular, I believe the answers lie in focusing on the right categories, effective merchandising, and discounting appropriately.

Thinking about convenience, I am reminded of the Beach Boys and “Be True to Your School.” In any business, we learn that our greatest potential for increasing our business is to drive sales increases in high volume segments. If we’re good at beverages and our customers know us for beverages, let’s discover how to build that business. Continue to focus against what you do the best and do it even better.

I recently visited a Turkey Hill store in Pennsylvania. I noticed that they had expanded their water category to include a variety of import waters. As I continued through the store, I noticed signage suggesting to customers that new waters of the world were arriving daily. They had focused on water, which is one of the highest volume categories in the vault for the convenience channel. But they had gone further, enhancing the selection and communicating the new (higher margin!) items in-store. Focusing on the right categories and enhancing opportunities within those categories will grow the overall business.

In a convenience store’s small footprint, space is precious and we all know it. Have you run out of ideas for using new space? Recently, there’s been a lot of buzz about improving the efficiency of the forecourt – either with displays of actual products or appropriate signage to push the upsell. When it comes to beverages, retailers – especially in warm-weather climates – know they need to find places to stack inventory and using the forecourt ultimately serves the dual purpose of inventory storage and of opening up new space for incremental sales, especially in take-home. There are also great examples recently of retailers using this area for other categories, some of which can also move customers in for beverage purchases. NOCO in New York just added a propane exchange program through Blue Rhino to take advantage of this area, and 7-Eleven just tested $1 per night DVD rentals. They’ve been effective in using the forecourt, they’re adding a new category to their stores, and both of those categories (grilling and movie watching) scream for incremental beverage purchases.

When it comes to discounting appropriately and creatively, my experience from managing beverages still holds true: a discounted price on a beverage that is going to be purchased as a single regardless of the discount doesn’t make any sense. It’s more practical to understand your data with regard to items that are purchased along with their single-serve sale. As an example, many consumers purchase a bottle of water with another beverage. They satisfy their current craving with the beverage and save the water for later. Or, in the case of an isotonic or an energy drink, they may plan on having one for morning consumption and noon consumption so they buy two. Understanding what other food items are most likely purchased with certain beverages can be a great tie-in opportunity and offer discounting in a different way. Be innovative with discounting. Avoid doing it just to do it and read your data after the discounting period to determine its actual effectiveness. It may end up being a discount you won’t run again. I’ve found several examples of this especially with categories with lower per-store unit sales.

As a good example that ties all of these strategies together (albeit not for soft drinks), I love this: 7-Eleven recently introduced a private-label chip in a high volume category and drove it through effective merchandising under the roller grill on the top shelf. Just recently, I’ve been impressed with their implementation of the meal deal using their chips, the Big Gulp brand, and the ¼ pound Big Bite. What could seem like a natural to many in today’s blurred environment was enhanced with the effective use of the right price point, merchandising, signage, and a new brand. I am amazed at the number of stores I see with a display at the end of the aisle showcasing the actual combination of these items. That, along with the outdoor window banner, ties it all together for a successful and innovative program.

I recently read about virtual reality simulations and using them to re-create the in-store experience as a tool to evaluate the effectiveness of sales initiatives. Obviously, these may be too costly and time-consuming for convenience, but it reminded me to point out the necessity to evaluate, evaluate, evaluate. Test your concepts and evaluate the results. Tweak those concepts, execute them, and evaluate the results again. Evaluate incremental growth, sales increases, and positive or negative changes in profitability. Make sure you’re making effective decisions. In a small store, even a small change can pay big dividends.

Debbie Wildrick, the SVP of Sales and Marketing for Equa Water Corporation,?is a sales executive and channel strategy specialist in the consumer packaged goods industry. The former Senior Director ?of Vault and Proprietary Beverages at 7-Eleven, Inc., she has extensive experience in retailer, supplier, and ?technology aspects of the consumer packaged goods business.