It's probably safe to assume that there's no longer anything "traditional" or "non-traditional" about retailing today. This personal hypothesis brings to mind a phrase I first read some 25 years ago in a motivation course which has stuck with me ever since: "Genius is seeing the usual in the unusual."
In writing this series of articles on "Troubling Trends," I remembered my exasperation with past subordinates who presented only problems without solutions, and I have tried not do the same. In part 1 of this series, I presented the problem of cigarettes-only stores, but I also supplied an easy way to measure your stores' vulnerability to the potential marketing changes affecting cigarette sales. In part 2, I discussed still more of the challenges facing our industry, but provided you with a questionnaire to help you compare your company's financial position, and your response to trends and to the industry overall. In this article, the conclusion to the series, I'd like to move from the more tactical concepts previously offered to a more strategic big picture. Here are some thoughts for your consideration...
The current complexion of retailing
Six years ago in CSP Magazine, I tabled several distribution-related issues that became quite controversial in our industry. Many c-store retailers thanked me for bringing these dynamics to the fore, and a few indicated that they had similar concerns and were pleased that I was pushing for definition. The good news is that those particular distribution issues were resolved quickly. The bad news is that new distribution concerns will dictate the destiny of c-stores and just about the only thing retailers can do is raise their consciousness of the supply chain's evolving dynamics, and then find a way to be part of the game instead of being left out of it.
The retailer feedback we've received to Part 1 confirmed that operators continue to evaluate ways of countering the major threat cigarette stores pose to our number-one merchandise product. In my opinion, we'd be unwise to look at the recent changes in the distribution of tobacco in isolation. Instead, we should anticipate the ways in which other manufacturers and/or service providers might be planning to establish a more direct link to the customer. Such strategies would be devised to eliminate middlemen, which could translate to c-stores and other conventional retail channels!
When Charles Schwab introduced its discount brokerage service, it dramatically and permanently changed the securities industry. Last year, Kodak disarmed its film industry competitors by announcing deals it made quietly with four mass retailers who agreed to use Kodak processing exclusively in their combined 10,000 locations. And Post Cereals brought about a permanent price reduction in the cereals market when its "Marlboro Friday"-like announcement (devised to gain market share) forced Kellogg's to match their prices.
What's next? It's no doubt being designed as we sleep! And while it's in the works, I think I'll get on the Internet to purchase my Post Cereal, a carton of cigarettes and some groceries, and then drive down to my neighborhood delivery depot to pick up my order. At the same time, I may as well fill up at the new discounted gas pumps on their lot.
The bottom line is that everything in our industry is about distribution, so we'd do well to regularly examine our vulnerabilities to existing distribution systems, as well as to the new systems emanating from the imaginative strategizing taking place in this "traditional" arena.
Consistency and Caring. Why are some c-store companies able to execute proprietary foodservice programs and others aren't? Why do some major chains with apparently unlimited financial resources turn in sporadic results? And why are the motives of one manufacturer or supplier accepted without question, while those of another manufacturer or supplier in the same category are greeted with suspicion?
As I embark on my 20th year in this wonderful industry, I do so with many fond memories and valuable experiences. I carefully considered many of these as I pondered what wisdom I'd bestow on a possibly suspecting readership. After all, this article may be read by early traditional c-store pioneers like George Miller, Hugh Howton, Chester Cadieux or Dick Wood. What could I possibly tell these visionaries that they don't already know? What can I tell the smart petroleum marketers who began selling convenience items in the 70s-- many of whom brought innovative gasoline marketing strategies to complement our overall consumer offerings? What can I say to retail managers of major oil companies (the assets of which are exceeded only by what the EPA would have them spend to re-capitalize their refineries)?
In asking myself these questions, I concluded that I am only as smart as those who taught me this business. I've reviewed the modus operandi of my most successful teachers and discovered that these winners have several characteristics in common. Here is a summary of those characteristics:
Successful convenience store operators are educators
If you wonder how some of the chains you admire execute their strategies so effectively, you'll probably find after some examination that education is the foundation of their consistent performance. The answer isn't a single program or a particular trainer, it's a system of education-driven disciplines strongly supported by senior-level commitment. You'll also find an environment that encourages the sharing of information and provides the troops with the timely "tools" they need to affect results.
Successful convenience store operators know employees have another life
We've all heard the phrase "get a life!"-- perhaps it's even been directed at you once or twice. (It has to me!) The consistent winners I've known in this industry practice policies that enable and even encourage their store employees and corporate staff to have a life outside the workplace. I'm not proposing paternalism, and I have no desire to crush enthusiasm or discourage hard work. I'm simply saying that the operators who go beyond giving "lip service" to this issue reap genuine loyalty from their employees.
Successful convenience store operators are generous with rewards
In the most effective organizations, bonus plans for all levels are simply structured and easy to understand and monitor. There are no "surprise adjustments" and they aren't doomed to failure from the inception. The employees of these companies believe that their compensation plans are fair and consistent. In addition, most successful companies offer 401(K) plans to which they make some matching contribution, and several chains have employee stock option plans (ESOPs), which they've found to be particularly effective in retaining good talent.
Successful convenience store operators are good communicators
The best companies have a mission statement that guides the goals and actions of all of their employees. A company mission is simple but it's much more than a catch-phrase-- it's an ongoing program of interaction between corporate staffers and operations. The mission defines a common purpose, and therefore leads logically to teamwork. Employees monitor themselves and their colleagues for compliance with the mission. Ultimately, it becomes the employee's reason to come to work and instills in him or her a sense of pride for contributing to the accomplishment of a shared goal.
Successful convenience store operators have integrity
You never hear major suppliers complain of being "gouged" by the category managers of successful chains because those chains demand integrity from their management and employees. Moreover, those retailers have developed and advocate win/win standards for negotiations which lead to true "partnering" for success.
Successful convenience store operators are open to suggestions
There's no room at the top for the kind of "not invented here" attitudes that frustrate initiative in many companies. Instead, policies and procedures are in place that encourage input on ways to improve service levels, sales and profits from both employees and suppliers.
If I've lost some of you because none of these suggestions are a "quick fix" that can be implemented tomorrow to reduce costs and/or increase gross profits, I'd like to conclude by illustrating another important attribute of the winners I've studied.
Like any other company, the most successful are always on the look-out for the easy profit-enhancers that surface from time to time and they pursue them aggressively-- typically more so than other operators. The difference lies in the top companies' ability to differentiate between a product, service or way of doing business that's nothing more than a mere blip on the radar screen from something with more staying power. Sure, they'll be quick to capture the moment, but they will also carefully evaluate a trend's potential impact on their long-term objectives.
As I said at the start, genius is seeing the usual in the unusual.