A recent research study on the convenience store business estimated that it will reach a whopping $3.12 trillion by 2028, thanks to substantial growth in the years to come.
Overall sales were up 1.5% and total basket size was up 18.5%, according to data from the US National Association of Convenience Stores (NACS), proving that the COVID-19 outbreak had a favorable effect on the convenience store sector. Reasons for this include consumers' aversion to long checkout lines and crowds of people at supermarkets and hypermarkets.
However, convenience store inventory management is becoming increasingly complicated due to the industry's rapid expansion. The increasing number of retailers and the unpredictability of demand-affecting factors have rendered most of the procedures manual, necessitating automation and systematization.
How to manage convenience store efficiently and profitably? It's a long list! While having clean restrooms and fair gas prices are certainly important, they are far from the only factors in operating a profitable convenience store. If you follow these guidelines, you should be able to identify the areas of your company that need improvement.
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How To Manage Convenience Store Efficiently and Profitably?
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In 2020, the industry's fundamental principle was proven: customers shop at convenience stores because they are convenient.
In exchange for the convenience of being able to pop into a smaller store where they know exactly what they're looking for, they are prepared to sacrifice the bigger assortment and perhaps lower pricing offered by larger businesses.
That's why C-stores started stocking a wider range of fresh foods, grab-and-go options, and even short-order kitchen service after the pandemic.
When it comes to time, c-store customers have grown to love the extended hours of operation, but they've also grown to love the new time-saving choices like contactless purchases, curbside service, and at-the-pump ordering.
Here is how time and convenience are coming together in today's convenience store environment, according to NACS:
- On average, it takes customers just three or four minutes to stroll in, make a purchase, and go.
- Food service sales are quickly overtaking fuel and tobacco items as the most lucrative sector for convenience stores.
- Around 1,100 individuals visit a typical convenience store every day that sells fuel.
Just having a convenience shop on a popular intersection isn't cutting it anymore. Cleaning and public safety have become very important to post-pandemic consumers.
Efficient store managers prioritize creating a safe environment by arranging displays in a way that is easy to navigate, staff members who are well-groomed and focused on customer service, and the cleanliness, maintenance, and lighting of the entire facility.
Flexibility is the key to the convenience store's appeal. Everyone is constantly on the go. Time is of the essence for them. These stores are convenient for getting the things you need every day. Stores are open for business all day, every day.
Due to everyone's hectic schedules, this works. Placement is deliberate, frequently in highly populated regions. Perfect for customers who want to grab and go.
- Flexible Schedule: Works for everyone.
- Smart locations: Easy for families, students, and commuters to get there.
- Variety in Inventory: Fulfills a Wide Range of Customer Needs.
Key Characteristics Differentiating Convenience Stores
Convenience stores, true to their name, epitomize accessibility and quick service. These retail outlets stand out for several key reasons:
- Prime Location: Strategically located in high-traffic areas, convenience stores are easily accessible for people on the move.
- Compact Size: Their smaller footprints allow for quick navigation, enabling customers to find what they need swiftly.
- Extended Hours: Many convenience stores operate 24/7, catering to both early risers and night owls.
- Curated Product Selection: They offer a focused range of products tailored for immediate consumption, ensuring customers find essentials quickly.
- Speedy Service: Efficient transactions are a hallmark, getting customers in and out promptly, enhancing the overall convenience.
Key Metrics And Benchmarks For Success
To ensure your convenience store thrives, it's crucial to monitor key financial metrics regularly. Analyzing these figures consistently will reveal your store's performance and identify areas for improvement. Key metrics to focus on include:
Metrics and Benchmarks
- Daily Sales: Aim to meet or exceed targets established through thorough market research.
- Gross Margin: Strive to maintain or surpass the industry standard.
- Inventory Turnover: Ensure it aligns with the shelf life of your products.
- Net Profit Margin: Focus on achieving steady month-on-month growth.
- Break-even Point: Aim to reach this within the first year of operation.
Establish clear benchmarks for these metrics and regularly compare your store's actual performance against these standards.
Promptly address any discrepancies with data-driven strategies. Effective financial planning and analysis are key to the success of your convenience store.
C-Store Management Tips To Make Your Business More Successful
- Keep the Shelves (and Tanks) Full
Keeping the right things in stock at a convenience store is a whole different ballgame than knowing what to stock. Once you establish trust with your customers and provide them with the services they need, they will look forward to returning for more.
Stores end up empty when both the tanks and the shelves are empty. It's frustrating when you get to the gas station and they're out of gas. Most customers understand that it happens from time to time, but if it happens more than once, they might just never come back.
You should probably look for a new fuel provider if they consistently take advantage of you.
- Sell In-Demand Items
Managers at convenience stores still have a lot of work to perform after a consumer walks through the door. Making a sale from them is the next step. Ensuring your store has all the things they want to buy is a basic step in that direction.
Depending on your location and consumers, your stock will be determined. The demands of your clients must be anticipated. Get a feel for what sells and what doesn't by perusing your sales statistics and checking out what other stores are doing well with.
Think of a convenience store on the corner of a busy highway that sees a lot of tourists. This convenience store may do better if it sold more than just easy-to-eat foods—things like local guides and interesting gifts would be a nice addition.
Conversely, people who live in densely populated urban areas may be more likely to walk into a convenience shop for their daily requirements. Having a variety of hot foods and basic shopping items on hand might be helpful.
- Sell at Competitive Prices
Pricing requires finesse, just like any other aspect of running a business. To break even, your margins need to be high enough to cover expenses, but they also need to be reasonable enough that consumers will pay them. Here is a way to think about while you're deciding on prices:
Consider all of your operational expenditures, like as inventories, utilities, and personnel, and draw a detailed picture. Both the minimal acceptable price and the required income will be determined by this.
Consider all of your operational expenditures, like as inventories, utilities, and personnel, and draw a detailed picture. Both the minimal acceptable price and the required income will be determined by this. The best way to position your store to compete in the market while still making a profit is to study the pricing methods of nearby stores. It also depends on how many stores are in your vicinity.
You can meet the needs of a wide range of customers by providing both high-end and affordable solutions. Customers' perceptions of value can be boosted and larger purchases can be encouraged through bundling, promotions, and loyalty programs.
To stay flexible and sensitive to changing market conditions, the store regularly reviews and adjusts prices based on sales data and customer feedback.
- Offer a Great Customer Experience
Many of your clients will be passing by on their way somewhere else. The only things they need are gas and a bathroom. But it's so much more than that for a lot of neighborhoods' corner stores.
It's a regular spot where they can obtain what they need, visit with a kind cashier, and more. Your store's client retention rate will increase if you focus on both of these demographics.
To identify the obstacles keeping customers from returning, make your store more accessible to feedback through surveys or systems such as customer satisfaction buttons strategically positioned throughout.
- Keep a Clean and Tidy Store
Maintaining a spotless convenience shop is critical to happy customers and repeat business. The term "gas station bathroom" has come to mean uncleanliness for a reason: many business owners fail to maintain these facilities.
One easy method to make your convenience shop stand out is to keep the floors, mirrors, and shelves consistently clean. Putting money into personal care items and cleaning supplies is a small investment that may have a significant impact.
Keeping the outside neat and appealing can increase foot traffic. Make it an hourly task for the daytime employees to pick up garbage in the parking lot and have the windows cleaned frequently. Keep the grass mowed and the weeds pulled. To take your store's curb appeal to the next level, consider planting some beautiful flowers or bushes if you can afford it.
- Good Staff Makes a Difference
Good C-store management begins with hiring and keeping good personnel.
To attract and retain top talent, consider the following:
- Provide salary and benefits packages that are competitive with the local market, and find out what this is.
- Onboarding and ongoing training should be conducted in a comprehensive manner.
- Maintain open lines of communication by meeting with staff members often.
- Make an investment in them that goes beyond just the pizza party by providing them with valuable career training, bonuses, and incentives.
- In order to maintain a happy and motivated workforce, it is important to be receptive to input.
Optimize staff schedules to ensure peak times are adequately covered with Xenias’ work scheduling feature.
By having the right number of employees at the right times, you can maintain an orderly and well-stocked sales floor, even in a small space.
Challenges Faced by Convenience Stores Operators
Issue #1: Absence of Inventory Storage Space
The compact layout and restricted inventory space are defining characteristics of convenience stores. In the event of an imbalanced supply replenishment, this element will invariably result in losses.
Boosted purchases by management to guarantee 100% availability of items frequently result in write-offs or markdowns. On the other hand, if inventory is not restocked promptly and demand exceeds expectations, sales opportunities will be missed since shelves will be empty.
Set up the "empty warehouse" option for your convenience store's inventory system.
The "empty warehouse" method of inventory management is vital for convenience businesses. The model ensures precise ordering and logistics, so you can keep the right amount of stock on hand without having to keep track of balances all the time.
Issue #2: Limited Assortment Space
Every inch or centimeter matters when space is at a premium. Sales are lost and excess inventory is created when shelves are not used efficiently. That is why stores shouldn't display unnecessary items that don't sell or satisfy customers. An intelligent optimization of the product selection offered by convenience stores becomes crucial to achieving this goal.
Xenia streamlines the process of stocking and organizing products by creating detailed work orders for specific tasks. This ensures that your limited shelf space is used efficiently, with regular restocking and organization tasks assigned and tracked.
Issue #3: Demand Fluctuations
The unique aspect of managing inventory for convenience stores is the wide range of factors that impact changes in demand. Throughout the week, consumer activity is in a constant state of flux.
There are a lot of variables that determine the kind of these variations, such as:
- The store's location.
- Weather patterns shifts.
- Changing seasons.
- Introducing brand-new public spaces, rival retail establishments, etc.
Critical mistakes will emerge over time, leading to write-offs and missed sales, if computations are done manually if demand fluctuations are not adequately predicted.
Final Thoughts
So to wrap up, how to manage convenience store efficiently and profitably? Success in the convenience store sector is dependent on knowing one's customers inside and out.
Owners can cultivate devoted customers by welcoming change and being open to new ideas. Keep in mind that meeting customer demands and making your store more convenient are the two most important factors in achieving success. Use these exclusive strategies to put your convenience store on the map to success.
Xenia’s all-in-one platform revolutionizes convenience store operations by automating and optimizing key processes.
Features such as real-time reporting and analytics, digital task management, and comprehensive maintenance tracking streamline everyday activities. Managers can effortlessly assign and monitor tasks, ensuring consistency and efficiency across all operations.
The integrated communication tools enhance team collaboration, while audit and inspection capabilities ensure compliance and high standards.
With Xenia, convenience store owners can significantly boost productivity and profitability.
Unify Team Operations, Maintenance and Safety Compliance with Xenia
Xenia unifies daily operations, maintenance management and quality assurance to help ensure teams and facilities are effective and efficient.
Our customers love Xenia's robust use cases including:
Operational Execution
✔️ Checklists & SOPs
Create checklists, SOPs, Inspections and Data Logs to power accountability, training and staff clarity on every task.
💪 Team Task Management
Assign work digitally to defeat pencil whipping and disorganized teams. Complete tasks, chat with teams on any device, track time, collect photos, and ensure high quality work.
📆 Recurring Tasks
Create recurring schedules for daily opening and closings, performance review meetings, inspections, cleanings and more.
📲 Chats & Announcements
Centralize team communications with in task chats, one-on-one chats, team messages and company wide announcements
📊 Team Performance Reporting
Use Xenia's analytics dashboards to view staff work reports. Filter by asset, location, category or due date and export the report in PDF or Excel
Maintenance Management
🛠️ Work Orders
Create work orders with associated team, asset, location, priority, category and due date. View live progress reports on each work order, chat with teams, and review resulting template submission, images and notes to improve operations.
🧰 Preventive Maintenance
Create a preventive maintenance calendar to ensure asset uptime is not compromised. Attach images, templates, videos and notes to every task and assign to a team or individual for completion.
📲 QR Codes
Generate and attach QR codes to equipment and facility locations to enable fast and accurate inspections and data logs.
⚙️ Work Order Requests
Receive, approve and assign work order requests from tenants, regular customers and vendors. Enable requesters to submit, track, and communicate with your team, without access to operations templates or unrelated work orders.
📁 Equipment Work History
View work history for every asset and sub asset in Xenia. Review performance data and enable corrective actions to improve your operation.
Safety Compliance & Quality Assurance
👍 Concrete Brand Standards
Put your brand standards in a clear and operational checklist to be attached to work assignments.
🔎 Smart Inspection Workflows
Xenia's operations template builder has built in conditional logic into each step. This allows you to trigger actions based on a form response such as creating a corrective action on a failed inspection step, sending a notification to management for out of range meter readings, and much more.
✨ Corrective Actions
Operationalize inspections with fast work order assignment arising from a failed inspection step. All corrective data is stored in the checklist submission for auditing and accountability.
📋 Analytics and Reports
View live dashboard summaries of tasks, employee performance, template submissions and more. Filter, organize and export compliance reports to PDF and Excel formats to simplify compliance management.
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