It turns out that a few nickels of profit can quickly add up—especially for a category as varied, vast and underestimated as general merchandise. For Steve Desautels, senior category manager of general merchandise and nonfoods for Murphy USA, El Dorado, Ark., the key is customizing the category to his store’s very distinct footprint.
Q: Murphy USA has mostly kiosk sites. How does this shape your category offer?
A: Everything is basically outside the store—the only thing inside the building typically is the cashier, cash, cigarettes and lottery. Anything I put on the counter, I have to think: Is it weatherproof? And it will be out there with bugs, mosquitos, crickets, birds, the owls trying to grab food. Everything we sell at our stores, we have to figure out how to sell and keep perfect for customers.
For smartphone accessories, we worked with one vendor to create a rack that sat on counters. We built a pie-shaped two-tiered display to fit that, and put lids on it to keep bugs and the weather out. We sold close to $4 million in phone accessories in the first year. It’s a very good gross-profit item, and only six SKUs are offered to the customer, but we kept it simple at $5, $8 and $10 (price points), which is very competitive. It ended up helping the vendor become a successful company and it helped us make a lot of money at the same time.
Q: What is another example of how the right fixtures have helped lift a category?
A: It rains on all of our product and labels, so product has a short life span. We had to develop our own automotive centers with roll-down doors that can be locked up at night. At the same time, we used every inch of the cabinets on the outside with advertising that we could use to help that vendor on a monthly basis to promote products. We became one of their top retailers and one of the first to roll out a new oil product for them.
Q: How have fixtures helped you grow lottery?
A: When a customer walks in to see lottery, I want it to look like Las Vegas, a slot machine. It ought to have blinking lights and jackpot signs about it. So instead of little acrylic boxes, we built our own boxes and lit everything up so they have a unique look.
Today when the state lottery gets an 8% lift, that’s good, but year after year we’re getting 25% to 35% same-store-sales lifts. It’s become the third- or fourth-highest profit item in the store.
Q: How do you handle a turbulent category such as shots?
A: We call it “riding the wave.” For example, last year the Viva Zen shot hit the market. If we waited too long to analyze the business or see what everybody else was doing, we could definitely miss the boat. It became a craze that was so insane—customers were literally buying boxes at a time at the stores. Then it left the market. Had we missed the seven- or nine-month wave, we could have missed $2 million in sales.
Q: What is your approach to new items?
A: We’re really good at knowing margin by item. If it’s not earning its space, it doesn’t sit long in our stores. We’re not a large ship that takes forever to make a turn. We’re a speed boat that needs to move very quickly. If something is not selling, you know it in 30 days. We’re already getting product out and getting something in we know will sell better.
“Everyone in the lottery world pretty much knows ‘Nickels’ by his reputation as a great leader and facilitator.”
General Merchandise: What to Watch
Health Care
Prepaid & Financial Services
Personal Care
Specialty
View the full 2016 Category Management Handbook
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