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Four Keys to C-Store Success

What key critical factors determine a c-store’s degree of success?   If you want to expand your store operations in the near future, use these four criteria to predict a site’s future success. If you happen to be struggling with an unprofitable location, use these same criteria to transform the site into a winner.

1) Customer Count – For any site to make money, it needs a certain volume of customers. You increase the probability of obtaining a high customer count by:

J       High Traffic Count – Select sites that either currently have or will shortly have high traffic counts.

J       Easy Physical Access – High traffic counts do you little good if your site is difficult to access. Watch for traffic controls and medians.

J       Appealing Image – To attract new customers, your site must look friendly, clean and safe.

J       Correct Inventory – You must carry what your customers want.

J       Attractive Pricing – The lower the traffic count, more restricted the physical access and less appealing the image, the lower prices must be to induce customers to shop at your location.

J       Efficient, Friendly Personnel – If you want repeat customers, their shopping experience must be enjoyable.

J       Frequent Buyer Promotions – To generate repeat traffic, consider implementing programs that give repeat-buyers discounts. Coffee mug refill programs are the most common, but this concept can apply to any commodity item you carry.

2) Sales Revenue Per Customer – Not only do you want lots of customers, you also want each customer to spend lots of money each time they visit your site. Increase sales per customer through:

J       Customer Research – Through analysis of your location, determine a target customer profile. Identify the customer most likely to maximize your sales. Then, carry inventory and market your store to match the target customer. For instance, a store located next to a high school would carry goods wanted by 14 to 18 year olds — junk food, teen magazines, tapes, CDs, etc. This product mix would be completely different in a store located near the retiree section of town which might stock reading glasses, mature periodicals and novels, vitamins, etc.

J       Store Layout and Merchandising – Make it incredibly easy for your target customers to buy naturally related merchandise easily. The technical term for this strategy is market-basket merchandising. For instance, a store in close proximity to the beach would locate sunscreen, sunglasses and beach towels close to the cold drinks. Market-basket data is most easily obtained in fully computerized operations.

J       Cross-sell – The most common cross-selling promotion in the industry is a discount on store merchandise with a fuel purchase of $10 or more. With the prevalence of pay-at-the-pump technology, customers sometimes need an extra little push to encourage them to come inside and shop.

3) Margin Management – Even with great customer counts and high per-customer sales revenue, successful stores utilize strict margin management. Margin maximization requires keeping strict price-sensitivity data. Price too high, and you lose sales. Price too low, and you lose profits.

J       Set Individual Product Margins – Although you’ll be tempted to use category margin management, you’ll lose profits if you broad-brush your pricing. For instance, within taxable merchandise, you may be easily able to get a 100% margin on one item, while you can only get 20% on another. If by using category management you price both at 50% margin, you are not maximizing sales and profits on either product.

4) Operational Efficiency – The last component of success is one that can make or break any store operation.    Even with great customer counts, high per-customer sales revenue and great margins, you can still lose money if you don’t run a tight operation. Key areas include:

J       Payroll Expense Management – Shift scheduling and retaining good employees are the keys to personnel cost reduction. Payroll costs currently run 8.1% of sales or 26% of gross margin in the industry.

J       Inventory Management – How goods are ordered, received, stocked, etc., not to mention the problem of shrinkage, has much to do with any store’s success.   A great deal of personnel time is wasted on unnecessary inventory errors.

J       Facilities Management – Insurance, utilities, repairs and maintenance can add up to significant sums. Containing these costs and in particular, streamlining maintenance procedures to avoid any down time, is critical .

If you find you are lacking in all areas, which should you work on first? That depends on your individual situation. First, you want to insure that any customer who shops with you will want to come back. It’s no use getting more customers in the door if they won’t come back!

Once you know you can take care of your customer, then work at getting more of them, as you manage your margins, contain costs and develop increased sales-per-customer.

If you are acquiring a location or starting a store from scratch, make life easier on yourself by selecting only high traffic locations. With that key component out of the way, you’ll only need to fine-tune your marketing, margin management and operational efficiency.

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