Soaring to New Heights
Full coverage of CSPs Convenience Retailing University 2012.
Win with High Polarity, High Convenience
From the zoomed-in picture, it looks like any other electronics shop. As the camera retreats, however, the eye feels deceived. It’s a box, literally, plunked down in the heart of gritty Brooklyn, N.Y. Inside, the bright green container, known as Shopbox, showcases assorted wares, from felt baseball caps to high-end 3-D printers. It might be the hippest twist on thinking inside the box.
Such out-of-the-box thinking was in wide display when self-proclaimed retail prophet Douglas Stephens, took CRU attendees on a trip to the future. They enjoyed a dazzling ride featuring a rich display of virtual stores, unorthodox buying models and the intersection of retailing and TV.
What does Stephens mean? Well, imagine watching “30 Rock” and a side screen pops up, giving the viewer the ability to buy the same glasses Tina Fey wears.
From Stephens’ presentation, one can make the following conclusion: Stores are becoming media points and media are becoming stores. QR codes, apps and clever engineering are letting consumers interact with products via smartphones. (Have you zapped your phone against your box of Tide lately?)
The point, said Stephens, is that retailing is changing in radical ways, largely due to social media and the scale of technology that is transforming a mobile phone into a pocket-sized wallet and data warehouse.
This revolution is redefining destination and distribution to the point that virtual stores with no brick and mortar and no formal supply chain are becoming destinations. For example, he cited Ikea’s app, which smartphone users can employ to not only download a catalogue but also customize and order products simply through the app. No cashier, no store, no fuss.
This message could be demoralizing to a traditional retailer, such as a convenience chain. But not necessarily. Stephens sees two winning polarities: one focused on high fi delity, which he defi nes as exclusive, experiential, emotional (think Apple products); the other is high convenience, such as Dunkin’ Donuts, that plays on density and cognitive connections.
What you don’t want to do is be in the middle, to be homogenous. Stephens cites several examples of marketing in a new way. Benjamin Moore grew share when it shifted its message from paint to personal expression. Another retailer won customers for its “Business Sucks Sale.”
Don’t be someone’ showroom, he cautioned, citing Best Buy’s current struggles in the face of Amazon. “You have a massive opportunity,” Stephens said. “These are not bad times. You have a massive opportunity to reimagine your category and your industry.” —Mitch Morrison
Huck’s CEO: ‘Passion Makes the Difference’
Take a service-oriented culture and add strict attention to detail, and the result is another banner year for the Huck’s conveniencestore chain, according to CEO Todd Jenney.
Jenney outlined his 109- store chain’s philosophies and the steps that its parent, Martin & Bayley Inc., Carmi, Ill., takes to execute on its strategies.
Though credentials, intelligence, education and other traditional factors play a role in hiring, Jenney told a general-session gathering, “more than anything else, passion is what makes the difference.”
That passion within the Huck’s chain has led to record-breaking revenues despite a three-year recession. Jenney reported double-digit increases in its performance metrics, creating sizable rewards for employee owners. Part of its success lies in its infrastructure, having developed a supply-chain model that includes its own warehousing system, store deliveries twice a week and its own fuel-transportation business.
Innovations also occur at the store level, with themed displays such as its Sweet Street candy aisle and focused promotions on specific candy bars. For instance, its internal contest with Reese’s Peanut Butter Cups brought in two years’ worth of sales in just one month. Its current focus on Kit Kat bars is on pace with the Reese’s effort.
The company is also interested in innovation, building a drive-thru program that now exists at 35 locations.
Looking ahead, Huck’s intends to grow through small acquisitions and new builds, having developed a streamlined format for expansion and construction. The chain currently operates in Illinois, Indiana, Kentucky, Missouri and Tennessee. —Angel Abcede
Admiring Life’s Heroes
The four-start admiral and admired straight talker scraped through the plight of Afghanistan, sharing a story about the only female governor of a historical Buddhist province in the embattled country.
What could U.S. troops do for her, the admiral inquired. She described the frequent fl oods that often turned her region into a quagmire, cut off from necessary services and supplies. She sought a bridge, and though her request was not completely fulfi lled, the corps of engineers was able to erect a temporary structure.
For William Fallon, the respected military leader who stepped down three years ago as head of U.S. Central Command, this woman, Dr. Habiba Sarabi— a hematologist and then politican who was appointed governor of the Bamyan province to help transform one of the country’s poorest areas—is one of his life heroes.
Interestingly, Fallon’s heroes were not military stars, as one might have expected. Rather, the other two role models he cited were famed Antarctic explorer Sir Ernest Shackleton and the diminutive Mother Teresa, whom Fallon described as the “little, wiry nun.”
In both Shackleton and Teresa, Fallon chooses fi gures renowned for self-sacrifi ce and endurance. Indeed, it is on the ship Endurance, on which Shackleton attempts a voyage to the South Pole, where he achieves his greatest fame, as he and a team of 28 men overcome staggering hurdles to return home after their vessel was crushed by ice in the Weddell Sea.
What perhaps are the greatest qualities of his heroes are their humility and focus on people.
“It’s normal not to have all the answers. It’s normal not to be in total control,” Fallon said. But what makes great leaders is not ducking the crisis ahead. “Occasionally, if an opportunity or challenge comes up, don’t be afraid to step up.” —Mitch Morrison
How to Capitalize on Insights, not Facts
Gordon Wade has a reputation for bluntness. He’s CEO of the Category Management Association and has waged the wars of retailing, having worked with more than 100 companies on how to improve product assortment and total customer experience.
So Wade began his presentation with typical straightforwardness: “Let’s stop this Rubik’s Cube story,” he said of oldschool category management. “We’ve got to be able to tell the retailers what works.”
He then went on to distinguish between “fact” and “insight.” The definitions are critical if retailers are to effectively mature from regurgitating data to exploiting information for better performance. “A fact is not an insight,” he said, “and an insight is few and far between.”
Fact: Infants often begin eating with their fingers at six months. Insight: If your baby is doing that, he or she is developing at a normal pace. And for suppliers such as Procter & Gamble and Kimberly- Clark, this insight yielded a marketing strategy centered on a baby’s life stages.
Fact: Males drink X number of beers. Insight: Beer is a badge of male bonding, so the best beer makers bank their strategy on bonding. “Insight is a profound understanding that can be leveraged for profit,” Wade said.
For the pragmatic retailer, expanding from fact to insight can transform how one markets a category. For instance, Wade shared how a mass retailer struggled with seasonal-candy sales. The retailer contracted an ethnographer to better understand its consumer base and shifted from a standard endcap and static set to building a candy theater with a plannedout color scheme and robust product line. The average basket ring during that period sizzled, jumping to $62.
Be the Budget
When it comes to your budget, what you don’t know can hurt you, according to Jim Vonderhaar, vice president and general manager of regional operations for Summit Energy. “You can’t manage what you’re not measuring,” he told attendees during his session “Reduce Energy Costs Now.” “With some pretty simple calculations, you can do it with the [energy] bills you receive already.” It begins with a study of six key areas:
- Refrigeration: Stock fridges as they are meant to be stocked, according the user’s manual; use night covers; and defrost only when absolutely necessary.
- Lighting: “Not a lot you can do with lighting without spending some money,” Vonderhaar said. Retrofitting old stores to use all LED isn’t always cost effective, but do a new construction with LED.
- HVAC: Change your air filters. “If you don’t clean them, it’s going to wear your system down,” he said.
- Building shell: Make sure you have the proper amount of insulation.
- Purchasing electric: Are you on the best available rate?
- Energy usage patterns: You will pay a demand fee based on your peak usage calculation. Make sure all nonessential loads are off during that time to lower your demand fee the following year.
Seize the Moment of Truth
Jim Matorin, business catalyst for SMARTKETING, is a self-professed marketing nerd. During his session “Explore the Moment of Truth—Impulse Sales,” he quoted more numbers off the top of his head than a Google search for the term “moment of truth” could generate. For example:
- “Your average customer is only in the store for 90 seconds.”
- “Seventy-nine percent of your people are making purchasing decisions because of their smartphones.”
- “Joe C-Store” makes 87 trips a year to convenience stores with an average of $4 total spent each trip.
- Gen-Y “Now” shoppers have $170 billion in disposable income. They like variety. And they aren’t brand loyal.
- The Hispanic marketplace represents 38% of the population in social media.
- 68% of the population uses five or fewer apps per week.
Mining the Center Store
- 4 times faster: Turn rates when the four top-selling items are brought in
- $158 million: The size of the opportunity if top sellers replace slow-moving items
- 33% vs. 46%: Margins between direct-store deliveries vs. warehousesupplied products
- Plan-o-gram advice: Block by segment; block by brand; block by flavor.
- “What are we losing when we chase trade dollars vs. increase sales?”
- “When big cigarette dollars went away, we went after every rebate we could find.”
Sources: General Mills, Procter & Gamble, CRU retailer attendees