4 Category-Management Tips to Boost Sales

Demographics, product mix and other ideas to optimize space in your c-store

stocking store shelf

Brought to you by Core-Mark.

For convenience-store retailers, balancing the right core items with forward-thinking, innovative products is the key to refreshing stores and boosting profit margins. These are the bones of good category management in the convenience industry.

And sure, it can be challenging to determine which products or programs will attract new customers. But don’t sweat it: There’s plenty of category-management data that can help retailers do just that.

Here’s a look at four key areas of category management data convenience stores can use to analyze their offerings and boost their sales and profits.

1. Understand Consumer Demographics & Behaviors

By analyzing the type of people living and working in a specific market area, it’s possible to pinpoint shopping behaviors for different types of customers based on gender, age, income and other variables.

“We established the Focused Marketing Initiative, a full-service data analysis and marketing program in 2009, at a time when the economy was in quite a bit of turmoil,” said Sandra D’Asaro, senior director of sales for Core-Mark. “Many of the same challenges for retailers from a sales and profitability perspective that existed then still exist today.”

And that’s just the start. By analyzing this type of data, c-stores can determine tactics that will attract those particular consumers to their business, whether that’s by introducing new products, programs, categories or even simple enhancements to the store. But retailers should also be mindful of emerging trends, as adding on-trend products can have a dramatic impact on growing category sales.

It’s also important to be mindful of adding line extensions of current brands—retailers should consider how the core SKU’s are performing and how adding more SKU’s will impact the entire portfolio. It’s important that additional SKU’s add additional sales, not just dilute existing sales.

“Core-Mark was one of our first partners as we entered into the c-store channel, and being a part of their SmartStock and now FMI programs gained us widespread distribution in small chains and independents, which was the base to continue our exceptional growth in this channel,” said Pat Eshan, national account manager for Kettle Chips. “They had the foresight to see how an all-natural brand would grow the category for their retailers, and we grew the overall salty-snack category substantially.”

Eshan added that other important factors to think about when considering products include whether or not the product is in line with current flavor trends, manufacturing processes and even sourcing practices, as all of these are increasingly more important in today’s environment. 

2. Perfect Your Product Mix

Performing an analysis of inventory purchases can help retailers identify top-selling items, category performance and missing opportunities through outside comparative sales data and benchmarks. C-stores can and should also use demographic data as well as on-site observations to develop the most relevant product mix for their specific sets of customers.

Supplier information can also be helpful, but c-stores should also compare and contrast what they might receive from various suppliers to make sure the recommendations are right for their customers.

Proper product rotation, price and expiration date checks also help maintain the right inventory to maximize potential sales without over-ordering.

3. Optimize Your Space and Merchandise Effectively

Analyzing the profitability of merchandising space in the store can help retailers identify which products are overindexed or underindexed and maximize store real estate with the most profitable items.

If you can access scan data for your store, it’s helpful to periodically run a space-to-sales analysis. This can be as simple as dollars per linear foot—or dollars per cooler door for your center of store and beverage categories—to determine how effectively the category space is allocated in your store.

Be careful that the productivity is not driven by just a few highly productive SKUs, as this may artificially inflate the actual space you need to maximize sales in a given category. “Many times, we find more products are overindexed in certain categories,” D’Asaro said. For example, a retailer might have an overabundance of snack foods, leaving less retail space for higher-profit items such as fresh foodservice offerings. And categories that are often overlooked, such as HBC, actually need more space based on the characteristics of a given store.

Also key is data from vendors, many of whom have critical insights behind how consumers shop the store, which direction they take when they enter, how their eyes and attention are captured and more. Category-management data that includes cross-purchase data can also help retailers know which items to place adjacent to one another to maximize sales. This type of information is crucial for convenience stores, who fight to make every square inch of their space profitable and generate every possible dollar in sales through smart merchandising.

4. Conduct a Competitive Analysis

Studying data from other c-stores and QSRs in the market area can help determine optimum pricing—and profitability potential. It’s not uncommon for stores to price products too low compared to others to try and push value, but this can potentially cause lost profits—just as pricing too high can chase away customers and cause less profitability through customer loss.

“Much like many retailers compare gasoline, we look at the top items in other stores that consumers make decisions around,” said Core-Mark’s D’Asaro. “In many instances, we find that our particular target store might have items priced higher than stores in the market place for sensitive items where the right pricing is commonly known. Conversely, some retailers have priced certain products too low compared to others, and there’s a chance to capture more profit.”

“Using these simple types of category management data can help your c-store compete at a higher level in its specific market,” D’Asaro said. “We have a large base of customers that don’t have the luxury of getting access to a lot of this data, which is where our core-solutions team comes into play and provides the data and analysis to help our customers grow their sales and profits and better compete where they do business.”