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
New Heights
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
More Beer, HBC SKUs May Help Sales: Study
What categories have the potential for more SKUs? How can retailers maximize market-basket opportunities? How price-sensitive are c-store customers, and what categories have the greatest price elasticity? Such questions— and their answers—formed the foundation of CRU’s opening general session, led by Don Burke, senior vice president for Management Science Associates Inc.
Burke gave attendees a litmus test for what’s selling across the industry, as well as where unearthed opportunities may still exist. The insights came from two years of warehouse data from McLane, mined from 7,155 ZIP codes, as well as two years of totalstore POS data from 7-Eleven, 7-Eleven franchisee Handee Marts, Tedeschi Food Shops, Easy Trip and Forward Corp.
With the caveat that every market and every retailer is different, Burke explored what might happen if a retailer were to increase SKUs in a particular category. Beer was shown to have the most potential to increase sales if more SKUs were added, followed by HBC, edible grocery, wine, cigarettes, packaged beverages, salty snacks and nonedible grocery, in descending order of opportunity.
Categories with modest potential include (in descending order of opportunity) candy, publications, packaged ice cream and novelties, and packaged sweets. Categories with the weakest opportunities in increased SKUs were packaged bread, automotive products, cold and frozen dispensed beverages, and frozen foods.
Burke also explored subcategories with growth potential. While premium and branded-discount cigarettes show potential for growth with more SKUs, retailers might want to look closely at fourth-tier brands before expanding the assortment. For the beer category, import and craft beer categories have room to grow, and even domestic could take on more SKUs.
As for packaged beverages, juice and juice drinks were “by far the area where if you’re going to grow packaged beverage SKUs, that’s where,” Burke said. The candy category has most potential in gum and mints; for salty snacks, it was in “all other” products, such as tortilla chips.
A few categories were found to drive sales of additional items particularly well: foodservice, bottled water, sports drinks, fuel and iced tea. Cigars, hot dispensed beverages and potato chips showed average potential, while store services, juice, premium cigarettes and chocolate candy had some of the weakest potential.
Burke shared the pairings most often purchased together. Among the most common: fuel and packaged beverages; foodservice and potato chips; foodservice and all other salty snacks; potato chips and all other salty snacks; sports drinks and bottled water. —Abbie Westra
Food Packaging Can Seal the Deal for Customers
We live in an era in which food culture is prevalent, and yet we don’t have time for it. This juxtaposition is what makes quality packaging crucial to sales, according to Kevin Carney, director of national accounts for packaging company Sabert Corp., in his session “Packaging for On-the-Go Foodservice.”
In a study conducted by the Sayreville, N.J., firm, consumers said that a leak-proof container was the most critical factor in a good packaging experience, followed by the ability to reapply the lid, and visibility of food through the container. Also, 80% of consumers eat directly from the packaging, so keep in mind the eating experience as well.
A popular option for plastic packaging is a black bottom with a clear top, but an all-clear package has benefits as well, Carney said. Black-bottomed containers offer a striking aesthetic and expose only top garnishes—ideal if the bottom of the food is less important to see. They’re also ideal for horizontal merchandising. Meanwhile, clear-bottomed packaging is ideal for vertically stacked merchandising and foods that benefit from complete visibility.
As for lidded vs. modified atmosphere packaging (MAP) with a film seal, both have their place. Lidded packaging has lower capital investment, is easier to prepare and is reclosable. MAP is tamperevident, offers a longer shelf life and has a lower production cost. However, Carney pointed out, the freshness factor of MAP is still a learning curve for consumers.
Other insights:
- Package tightly, making foods look fresher and portions bigger while keeping ingredients in place.
- Display cut sides of sandwiches and wraps.
- The majority of consumers say two-piece containers have a higher perceived value than clamshell.
- Seventy-seven percent of consumers said they are more likely to purchase an item if a tamper-resistant element is evident. —Abbie Westra
How to Effectively ‘Go Viral’
Digital-marketing strategist Tod Maffin told the story of a park ranger who got hit by lightning seven times and lived. Though getting hit by lightning may be rare, the park ranger’s job put him outdoors in a regional corridor known for its thunderstorms. Similarly, businesses can increase their chances of producing a video advertisement that “goes viral,” or gets thousands, even millions of views from people surfing the Internet.
The science behind viral videos starts with what makes people want to share. The psychology of sharing involves three things, according to Maffin: affinity, advocacy and emotion. With affinity, a person has an attachment to the subject, character or situation in the video. Regarding advocacy, a person believes in the video’s cause. And with emotion, the person watching the video actually feels something.
To facilitate those basic ingredients, the video ought to deliver a single, simple concept, as well as evoke a sentiment—some form of emotion or call to action. Unfortunately, some viral videos, while garnering huge numbers of views, don’t ultimately achieve the intended goal. The message gets lost.
To avoid this mistake, three things are necessary for a viral video to make its point:
- Knowing the audience. Having a keen awareness of who needs to take notice.
- Content. Providing images, action and a message that the target demographic would connect with.
- Call to action. A higher-calling message attached to a tangible action plan, so viewers can buy, donate or speak out.
In one successful case, Maffin showed video of a soccer player rebounding a ball off the top bar of a rectangular goal post. The player does it four times without the ball touching the ground. That video “hit the mark,” as it were, Maffin said. The simple message targeted athletic consumers, appealed to a healthy lifestyle and communicated how the company’s shoes were part of the solution.
Other tips that Maffin suggested were to tie a reward of some fashion to the intended consumer response; deliver successive rounds, meaning produce sequels to any successful video; and embrace the “unofficial,” so if the viral video sparks an unintended response, advertisers ought to exercise a sense of humor.
In reviewing his concepts, Maffin said, “Remember, lightning is not random.” —Angel Abcede
Mobile Marketing May Be a Must
If mobile options aren’t part of this year’s marketing plan, maybe they ought to be, especially considering the fast-food channel appears to be making headway, according to Tim McCallum.
Focusing on various cellphone technologies used to reach customers, McCallum, president and CEO of Raze Media, Dallas, said text messaging, QR code marketing, apps and mobile website development are important, cost-effective tools.
Having worked with numerous clients in the QSR field, McCallum cautioned the retailers at the session that c-stores and QSRs are battling for the same customer.
“You’re fighting with high-quality foods,” he said. “QSRs have chosen to fight with technology.” Strategies include specific, time-sensitive specials sent via text to a focused set of customers, possibly pared down by ZIP code or age group.
McCallum stressed the importance of mobile marketing by speaking about the explosion of cellphone use. Providing statistics from various sources, he said 5.2 billion people subscribe to cellphones, and they will outnumber TVs and computers very soon. And while it may take four days for a person to view an email, the average cellphone subscriber will view a new message within 4 minutes.
He offered a list of do’s and don’ts for retailers interested in developing mobilemarketing campaigns:
Do:
- Keep marketing materials fresh and updated.
- Attach an offer to your opt-in campaign.
- Text customers deep discounts over a short period of time to yield high ROIs.
- Use contests and giveaways to maintain the database.
Don’t:
- Broadcast too frequently or too little. Try for two times per month.
- Broadcast announcements that can be found in other media.
- Ask for data or information without rewarding the consumer.
- Create elaborate messages longer than 140 characters. Also, McCallum said true mobilepayment technology needs to become faster and less complex for the customer. —Angel Abcede
CSP Award Winners Create Superior Retailing
Admirable store design, remarkable community involvement and a great customer experience: These are the three primary attributes honored in CSP’s annual Convenience Retailing Awards. But really what drives the award winners is passion for providing a superior retail experience to customers.
A Decade of Loyalty
Speedway Convenience Stores was honored for the superlative customer experience its Speedy Rewards program has provided for 10 years. And with more than a decade of experience under its belt, Speedway finds its Speedy Rewards program has very much become part of the landscape and part of the way the Springfield, Ohio-based company does business.
Working in tandem with the chain’s strong emphasis on friendly customer service, Speedy Rewards allow customers to earn points toward gasoline discounts and free merchandise in the stores, as well as coupons.
“When you look at what we sell vs. what our competition sells, we generally sell the same things, whether it’s gasoline, candy, soda, fountain, foodservice items,” says Speedway CEO Tony Kenney. “So what we’ve tried to do is find a point of differentiation to give that consumer more choices or more reasons to shop at Speedway as opposed to one of our competitors.”
A variety of “award clubs” let customers choose the quickest way to earn the freebies they want most, while signage in the store clearly defines the benefits of each “club.” Speedy Rewards now counts 3.5 million active members.
New Store Format Brings ‘More’
Kum & Go’s newest store format brings more to the table: more cooler doors, more floor space, more Earth-friendly touches and more opportunities to win customer loyalty. Unveiled at 20 sites, with more to come, the new Kum & Go format is about 45% larger than the former footprint, at 5,000 square feet. Much of this added space has been given to a huge foodservice expansion, complete with an in-house kitchen—the new Go Fresh Market—serving up freshly made pizza, cold and hot sandwiches, subs, wraps and baked goods.
West Des Moines, Iowabased Kum & Go added open-air coolers for milk to make grab-and-go easy. And thanks to customer input, the restrooms are entirely touch-free. Entry doors have been replaced by long, twisting hallways; and sensor-driven sinks, toilets and hand dryers are standard.
The new format also features a checkout area moved from the side to the center of the store. This enables the associate to see everything that’s happening in the store and to greet as many customers as possible.
Branding Meets Community
When Road Ranger was developing the branding for its proprietary gasoline offer, it keyed in on the concept of horsepower. And while the Mustang, Stallion and Thoroughbred gasolines the chain rolled out were a natural extension, another idea hit home: extending the branding to include moral and financial support for America’s wild-horse population, which in 2005 was facing new challenges from hunters and public-land removal. It was then that the Rockford, Ill.-based company joined with other horse activist groups to create the American Wild Horse Preservation Campaign. The 80-store chain began distributing literature about the plight of wild horses in the United States and collecting money to benefit organizations that help protect them.
“It’s become bigger than we ever dreamed it would,” says Road Ranger CEO Dan Arnold. “We at first thought we’ll get involved in the wild-horses campaign and make a difference, but it’s turned out we made the difference when we created the umbrella organization that encompasses all the varying groups that are seeking to preserve the wild horses in the West. And inside the store, it brought the whole horsepower and Wild West theme into our branding.” —Steve Holtz & Samantha Oller
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