Tips to drive the “7 Elements for Fuel and Convenience Retail Success”
By Ian Thompson, Senior VP, Global Solutions Consultancy
Over the past several articles, we have constructed a race car that was designed to win the race for volume. I think it has been a great analogy for how retailers can design their businesses for success.
This final article in the series summarizes the “7 Elements for Fuel and Convenience Retail Success” and describes how best-practice fuel retailers maximize performance by considering the role of each element in the daily tactics and strategic horizon of their sites. Optimizing the 7 Elements depends on a fuel retailer’s specific business, but only an integrated focus can ensure that every possible area of value is being leveraged.
Market
Every fuel retail site exists in the context of a broader competitive landscape. Winning the race requires understanding the lane you are driving in compared to the competition. It means having a keen awareness of how your key competitors are performing in the market, knowing their goals and having a well-thought-out plan of your own for responding—all without letting the competition in on your strategy and tactics.
Where are your competitors building? What are they building? How do they operate their sites? What is their pricing strategy?
Leave nothing on the track when it comes to discerning and monitoring competitors, and just as important as “know the competition” is knowing your own strengths and weaknesses.
Location
One of the most important elements in the race for volume is location. Get it wrong and your chance of success diminishes greatly, no matter how well you’re doing everything else. Selecting the best fuel retail locations is a multifaceted process; taking the time to get it right upfront will pay off in huge ways for you.
Critical to the site-location process is understanding your potential customers and their habits—where they live, work, go to school, run errands and play. If adding new locations, you must also consider the impact to your existing network and current competitors. For example, a location that’s great for one fuel retailer may be poor for another, because its cannibalization profile could be dramatically different.
Facility
A facility is far more than just the physical building. That’s certainly part of it, but your facility is made up of a collection of important components: accessibility, interior layout, fueling positions, parking spaces and much more. Understanding the interaction of all these components is also necessary.
The bottom line in this: Your facility must meet the needs and demands of your customers. How easy is it to maneuver into the lot and around the property? Are there enough fueling positions to meet customer needs at peak times? Is parking space sufficient for the convenience-store customer? What is the optimal number of cooler doors?
Network consistency is also a factor, as it promotes a certain familiarity and comfort level with customers. Consistency is an often overlooked challenge for fuel retailers with multiple channels of distribution.
Operations
In our race for volume, operations is where the rubber meets the road. It’s the point at which the human element of the retail engagement comes into play. The best facility and location in the world will have difficulty maintaining volume with inadequate operations.
Customers expect quick service, courteous employees, well-stocked shelves, well-functioning equipment and fresh-food offerings. The impact of employees can’t be overestimated. Well-trained, quality people who are retained over time will contribute positively to the bottom line.
Merchandising
While stocking shelves with ample products is an integral part of merchandising, a concentration primarily on that aspect will not get you across the finish line. Successful merchandising is about offering the right products and services, at the right time, at the right price, with the right attitude and using the right techniques.
Retailers with best-in-class merchandising practices also emphasize category killers. These low-priced, low-margin popular items draw customers into the store, and the right merchandising strategy leads the customer to make the impulse, high-margin purchases. Eye-catching displays, product placement, store layout and product tests are just some of the merchandising practices that matter when it comes to driving traffic into your store.
Brand
Brand is not just a great-looking logo. Your brand is everything you are—every day. Your character, quality and consistency are reflected in your brand.
A champion brand influences customer choice and creates long-term loyalty. It also plays an essential role in attracting and keeping the right staff. It can even impact the cost of financing your business.
Understanding the position of your brand relative to critical mass and saturation is important. Before you reach critical mass, your network is vulnerable to competitive threats and acquisitions. Once critical mass is achieved, new sites added to your network will experience greater gains in market share than in outlet share. In other words, as new sites are added to the network, volume share increases at a greater rate than outlet share.
On the other hand, once your brand moves beyond saturation, it risks stealing volume from other sites in your network.
Price
Customers want to be sure they are getting good value for their hard-earned dollar. Your pricing posture helps to drive volume and profits, or a combination of the two. But no matter what the strategy, the price must be perceived as competitive by customers; it must closely align with your brand proposition. Your customers vote with their feet every day, so analyze price position to ensure it remains appropriate.
This “Race for Volume” article series has been presented as seen through the lens of the “7 Elements for Fuel and Convenience Retail Success.”
Original article series first appeared in CSP Daily News