CSD: Category Management for C-Stores
Through a special arrangement, presented here for
discussion is a summary of an article from Convenience Store Decisions magazine.
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."
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
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."
Discussion Questions: What’s the biggest benefit c-stores can gain from category management practices? Does category management work differently for c-stores and other small formats versus big boxes?