ROSEMONT, Ill. -- Attendees at CSP Independent magazine's premiere State of the Independent conference earlier this week in Rosemont, Ill., may have thought they had wandered instead into a taping of CSI.
Handing out the board game Operation to symbolize the purpose of the event, CSP's vice president of sales, Ted Asprooth, told the audience, We're here to dissect the independent operator. What followed was a day-long discussion of the c-store industry from the perspective of one- to 10-store owners and the suppliers and distributors with which they [image-nocss] do business.
After CSPI executive editor Bill Donahue presented findings from an exclusive survey of independent operators, a panel of retailers began the day with plenty of passion. On stage were successful businessmen convinced of the rising and future importance of their place in the channel.
The retail panelists asked suppliers and distributors to understand their plight, though, given recent months' sinking profit margins on gasoline. They also tried to convince vendor partners that it was in their best interest to help increase the independents' success by customizing products and services to maximize throughput and gross profit dollars.
We're the brand of the future, said Amer Hawatmeh, CEO of Coast to Coast Markets Inc., Tampa, Fla. We are all things to all people. We can't keep chasing pennies, we need dollars.
Hawatmeh and his compatriots wanted new products faster, and to increase their in-store sales to offset low fuel margins and credit-card fees. There was a debate among the panel when it was asked what it seeks in a relationship with a distributor, however. Hawatmeh chose loyalty because it allows you to fall back on someone when you need to fall back on someone.
Barry Appelbaum, of Philadelphia-based Grilladelphia Exxon, and Danish Ismail of Lincolnshire, Ill.'s Combined Oil Co., gave the edge to pricing. I really don't have that loyalty, said Appelbaum. I have to save every penny.
Said Ismail, Loyalty is important. Pricing is extremely important.
Differentiation matters, as well, said Kiran Asher of McAsher Inc., Marysville, Wash. He said he chose his cigarette wholesaler because, though the price was not the lowest available, the company took payments by credit card. Bring us product the other guy cannot, said Asher.
NACS 2007 State of the Industry numbers indicated that, of the approximate 145,000 convenience stores in the United States, almost 97,000 belonged to retailers with one to 10 stores. One supplier asked how his company could possibly attend to that many while providing the level of service retailers were seeking.
Asher said the suppliers and distributors should concentrate on the 1,200 to 1,500 influencers that will sell 80% of the suppliers' product. His definition of influencer was the most profitable, cleanest, highest-volume stores. Find out who influences that region, said Asher. You already have the tools. Minimize them.
NACS vice president of research Dae Kim asked the retailer their guess as to the percentage of vendors who understand retailers' plight; 10% was the highest answer.
Do you know your customers? asked Ismail, who indicated that many independent retailers were not white or English-speaking, with Southeast Asians making up the bulk of the growth in the segment. How are you working towards that?
A wholesaler panel explained the importance of independents to their business, and their efforts to communicate new product availability by e-mail and the Internet.
Ron Coppel, vice president of business development for Naperville, Ill.-based Eby-Brown Co., told retailers that they shouldn't believe their size means they have no leverage. A single operator with a lot of volume can be very important to their distributor if they maximize their buying power by not splitting their purchases, he said.
Coppel and Jim Biser of McLane Midwest, Danville, Ill., agreed that they needed help from suppliers with timely UPC code updates. That, in turn, would help retailers get updated. Biser said that, just like a retailer, his company has to rationalize what products to carry because the house is only so big.
Machelle Gifford, director of national sales strategy for Bentonville, Ark.-based Sam's Club, said of the relationship between independent operators and distributors, It's complex, but it's not complicated.
Paul Reuter, president of CSP, began a broker panel by borrowing from Gifford. Trying to understand that complexity, he said, is how to get the best ROI.
Suppliers would do well to re-set their volume expectations from other trade channels to c-stores, Kennith Fries, president of Arlington, Texas-based TNT Marketing Inc., said. Then the multiples can happen.
Getting new products quickly is a matter of will on the part of all groups involved, said Blaine Johnson, vice president of business development for Austin, Texas's Sell-Thru Services Inc. He reminded the audience that c-stores at one time were the channel to go to for new products. If that's a mandate, then it can be done, he said. If it's not, 10 years from now we'll be talking about the same thing.
All agreed that as well as adjusting volume expectations, suppliers have to realize that not all their products are ideal for all c-stores. Tell us where you want to be, what you're willing to spend at the distributor level, at the retailer level, then let the people closest to the street do their jobs, Fries said.
Reminded the crowd that his company is as concerned with what it buys and represents as are retailers, Calvin Johnson, corporate director of sales and planning for Acosta Sales & Marketing, Columbia, Md., said, We're paid on commission like you're paid in gross profit. The one thing we own is our reputation. We have to walk away sometimes.
Fries said of his product standard, Is it No. 1 [in sales], is it No. 2? Is it an innovator? He said his company rejects products that claim to taste the same as a leading product but just cost less. That's not a business plan, he said.
Sometimes the answer isn't to be in 120,000 stores, said Johnson. Sometimes the answer is to be in the right 20,000.
[Pictured: RetailerPanel (left to right),Danish Ismail,Combined Oil Co.;Kiran Asher,McAsher Inc.; Barry Appelbaum,Grilladelphia Exxon;Amer Hawatmeh,Coast to Coast Markets Inc.; and Jon Lanphier,CBC.]
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