Another one of those great questions that happens in convenience retailing all the time. What are we really trying to do? Are we a fast food restaurant, gas station, novelty store or all of the above? It is interesting how that changes with whatever ownership we deal with. In the past few months, I have been working with a major branded gasoline retailer. It was a throwback to the old days when I was a pump attendant with Texaco. Waiting on cars, selling cigarettes and TBA. (Tires, batteries and accessories for you youngsters that don’t go back that far.) All of our business discussions centered upon cents per gallon and should we sell cigarettes on a two pack, three pack or carton strategy. Management rejected all promptings to get involved in even basic food service such as cup categories. Their facilities would be small boxes of 1800 square foot that was filled with old merchandise. They relied on gasoline profit to offset all costs and were not taking advantage of the higher margins the rest of the store can generate. Store after store was filled with junk that had been there multiple years believing they would take advantage of the higher purchase margin.. Seemed similar to mark to market accounting to me. We hoped that when we sold it, it would still be worth what we hoped it would be when we bought it. So what was going wrong with this model? By the time we were able to sell it, the time value of money had increased and we also had to mark down the price and had a lower than desired revenue. So what does work?
I guess this is the question all of us have had to ask sometime in our life. I like to phrase it as what do you want to be when you grow up? Our client needed to answer this and make sure they had the right answer. Too many operators try to be all things to all people or nothing to everyone. Our business model is not that complex or as they say, it’s not rocket science. But there is some science!
What need or value are we trying to supply to our market? In this case we are talking about consumable packaged goods that our customers want and that we can provide more efficiently than our competition. Fancy but what does it really mean? I think many times we forget that the real name of the game, what we are really trying to do is CONVENIENCE. It is stated plainly in the business name but why do we struggle with it so many times and forget what we are really trying to do? Anything that saves resources, time energy or maybe most important, frustration is convenience. We measure margins, we measure turns, we measure operating expenses and of course cash and profits. But yet many times I have to look at other industries to obtain metrics that benchmark what I am trying to do. Convenience, how do I save on the above mentioned items and do it more effectively than my competition? Isn’t that the value I am trying to provide? If I am doing something else I probably need to hang a different sign on the building.
One of the metrics I try and hammer home with every company I work with is speed of service. I became drilled in this metric working in QSR operations and absolutely love it for any business I have worked with. How quickly can we satisfy the need and want of our customer? There are other metrics such as plus selling additional menu items and of course food costs and labor but my favorite is speed of service. In convenience stores we measure that from the ingress/egress of getting in the store, making the sale and getting the customer back out on the street. In the process we want them to have the best experience possible; wowing them with the smile factor and making them feel better about their day. We need to have good products at a decent price and a clean environment but if we can get this aspect of our business, speed of service with a smile, we will be successful. More to come….
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