FLORHAM PARK, N.J. -- Over the past several months, I have been comparing our retail network to a high-performance car in a competitive race for volume. So far, we have looked at how pricing, data, competition, facilities and operations enable success. In this article, I will focus on merchandising and how it equates to the spoilers and wings that make our performance car run efficiently.
When designing a race car, certain elements like the chassis, powertrain and tires are fundamental to the speed at which the car can be driven. However, it is often the small but critical enhancements that can make a huge difference to the overall performance. I once read that a Formula One car could be driven upside down in a tunnel as the downforce created by spoilers, skirts and wings was greater than the actual weight of the car. While that may or may not be true, the point is that in the same way these design enhancements impact the aerodynamics of a race car, and ultimately its performance, smart merchandising can improve the overall success of their retail outlet. From offering the right products at the right price, to appealing displays and strategically mapping your store layout to attract customers and navigate them through the convenience store, the power of merchandising cannot be underestimated.
Merchandising is more than just stocking the shelves with ample products. It’s about offering the right products, at the right time, using the right techniques. Strategies like placing expensive items on top shelves, displaying store brands next to the equivalent branded product, positioning impulse products at eye level and within easy reach: These are tactics known to generate instinctive responses from customers. When it comes to promoting higher-margin items, gondolas or end caps are typically the most effective. The consumer has become increasingly aware that bins of merchandise normally offer bargain, end-of-life products; the retailer is equally aware that the revenue from these bins is often significant.
Displays also need to be eye-catching. For example, a wall of different colors can be appealing and especially powerful with food items. The psychology of displays is also important; help your customers to visualize consuming the food by using props where appropriate. In fact, creating an environment that positively impacts all of the customers’ senses—including smell as it relates to foodservice—is a focus for leading retailers.
Finally, the layout of your store will have a bearing on sales. Never place oil, washer fluid and other “dirty” products close to food items. But do place the everyday grocery items like milk, bread and beer toward the rear of the store. The more products the customer has to walk past to get to those essentials, the greater the possibility of additional purchases. Impulse purchases should be located close to the checkout, and the flow of the store should create easy navigation and proper impulse buying events.
While most of these merchandising practices are widely held truths, there’s another truth that is important to keep in mind. Each store is unique, and running tests to establish whether a product is in fact a good fit for your store is a necessity. Energy drinks and vaping products are categories that have delivered significant success recently, but for every hit there is an equally significant miss. Test numerous products before investing in a single offering, then use smart merchandising techniques to entice customers to purchase.
Race-car designers test numerous configurations before settling on the best design. They are constantly looking to make minor improvements to the wings and spoilers to glean every tenth-of-a-second improvement from their car. You should be doing the same in your store. Use a combination of market knowledge, data analytics and reporting, vendor advice and intuition to weed out the myriad of products that you are certain will not work in your retail chain, then construct a robust test that isolates the impact of introducing a new product.
I am sure many retailers feel that fresh food is the panacea to all of the convenience-store industry’s ills, but in reality, only a select number of stores have the space, parking spots and layout to successfully accommodate a foodservice area that will add value to the overall store offering. Testing before investing is key. Not just which type of food offering will work, but more fundamentally knowing whether your store is able to support profitable foodservice without negatively impacting the rest of the store.
The right merchandise, thoroughly tested and presented in a well-lit, cleverly displayed and strategically mapped out store can drive significant traffic into your convenience store.
Coming in Part 7 of “The Race for Volume” series: Location.
Ian Thompson is the senior vice president of strategy at Kalibrate.
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