CHICAGO -- Retailers, suppliers and industry experts converged near Chicago for the 2018 NACS State of the Industry Summit, held April 10-12.
The U.S. economy is doing reasonably well and the convenience-store industry continues to see record sales, but that’s no reason to get complacent, said Bill Conerly, economist and consultant for Conerly Consulting. Conerly said retailers should be prepared for any economic eventuality, but also said it is generally a bad idea to bet against the U.S. economy.
With that economic outlook in mind, here are five great ideas shared during the NACS SOI Summit ...
1. Create a 'trough plan'
Back before the Great Recession, construction equipment company Caterpillar developed a "trough plan," otherwise known as a recession contingency plan, Conerly said.
The plan prepared the company on what to do to continue to be profitable if revenue was cut by 80%. Conerly suggested c-stores should have a similar trough plan for lean times. But he also suggested c-stores consider how their business would change during periods of strong growth.
2. Consider outside-the-box acquisitions
“Maybe you need to think about acquiring businesses that have nothing to do with c-stores,” said shopper-insight expert Todd Hale, principal of Todd Hale LLC.
Hale used Target’s December 2017 purchase of delivery startup Shipt as an example. The retailer made the acquisition in order to compete with same-day delivery, which has become popular with e-commerce retailers. It may behoove c-store retailers to apply a similar strategy and look to businesses that can help them compete in this changing era of retail.
3. Appeal to high-income consumers
Low-income consumers have very little discretionary spending available and are also being targeted by dollar stores and drugstores, according to Alan Beach, senior vice president of merchandising for 7-Eleven Inc., Irving, Texas.
“We need to become a better destination for more consumers and in more income levels,” said Beach. He suggested adding salads as more restaurant concepts focus their offerings around salads, and wine, which saw about 5% sales growth last year and has seen consumption grow every year for the past 25 years.
4. Give the people what they want
Beach also suggested private label is a major opportunity for c-store retailers, noting there are types of flavored water and other beverages that consumers want but are not widely available. “There’s huge opportunity here for beverages and private brands,” he said.
He cautioned against duplicating a flavor or type of beverage that's readily available. Instead, he said, c-stores should try to find unmet consumer needs and fill them. He also pointed to Amazon.com’s snack business, which was up 42% last year because of new snacks introduced by the e-retailer. “We need to get our piece of this 42%,” he said.
5. Empower employees
Author and keynote speaker Scott Stratten of Unmarketing started his presentation with a story about a few Ritz-Carlton employees who went above and beyond typical customer service. He talked about a family whose child accidently left a stuffed giraffe at a Ritz-Carlton hotel.
The child was upset when he arrived home and realized he had left his giraffe, so his dad bought some time with a parenting white lie and said the giraffe was taking an extended vacation. Dad called the Ritz-Carlton hoping to find the giraffe, and not only did the hotel send them the giraffe via overnight delivery at no charge, employees also included pictures of the giraffe enjoying its extended vacation at the hotel. Photos showed the giraffe lounging by the pool, getting a massage and working loss prevention at the hotel.
Stratten said the experience inspired decision-makers at the Ritz-Carlton to empower every employee by allowing each of them access to $2,000 to use to make any customer’s experience great. They called it "Delight or Make Right." Stratten urged c-stores to learn from the Ritz-Carlton’s example and give employees the trust to make customers’ experiences worth of word-of-mouth and social media.