Welcome to the newest post in our blog series, Darren’s Great Ideas! for Independent Operators.
Seven Tips to Maintain Sales Amid Growing Competition
I think it is fair to say that our industry is seeing many ‘X factor’ locations begin to take shape in our fuel and retail environment. New entries to our industry as well as those that may be returning to the market after some absence are beginning to dot the interstate landscape. They are staking their claim to the interstate customer and most are performing well, taking market share from here and there.
To capture business, these new and returning competitors are focusing on more differentiated products/food service and services or hard discounted fuel pricing with limited assortment value selection and or some combination of both strategies. It is not uncommon to see strong street pricing, robust food programs and limited product and service offering focused on GMROII and NOC in travel center operations servicing the interstate customer.
Not only is there new competition on the interstate, we are seeing it in non-traditional businesses—Lowe’s home improvement stores have added Subway and here in Texas, Rudy’s BBQ restaurant has added fuel.
With so much new competition on the street and elsewhere, similar to the early 2000’s, I believe it is even more important to work closely with your vendors in order to prepare your operation for success.
For retailers, understanding who their customer is paramount. Creating programs and services within the operation through proper diagnosis of their shoppers, with the help of vendors, increases their ability to capture more purchases while consumers are in their stores.
For vendors, it is important to understand who the customer is in our channel so they know the number of assets and the nature of assets allocated to each customer.
To better meet customers’ needs and attract business, it is important to share information. If you are not passing along that your location’s core business is made up of coast-to-coast long-haul owner operators and local customers from your small town, you may miss the opportunity to become known as the local corner interstate grocery store and or vice versus the opposite if your customers are short-haul fleet drivers and intrastate four-wheel travelers where speed, limited assortment value selection and food service are paramount, both you and your vendors are going to fail.
Here are my seven areas of cooperation recommended for interstate fuel retailers and their vendor partners.
- Diagnosis of Consumer: Retailers and their vendors should be sharing insights with each other to provide additional information on consumers. Vendors in particular can share a broader global insight into consumers in general.
- Diagnosis of Customer: Retailers should discuss with their vendors the differences between customer and a consumer, specifically as it applies to the inside operation. Gasoline customers in particularly are often fueling at the pump then leaving and or entering our premises to use the restrooms them departing empty handed. Sharing your conversion rates with vendors will assist you in developing a plan of action to combat this issue.
- Differentiation: The ability to provide localized offerings, offerings that match who your customer is, will lead to success within this current and new fuel and retail environment. A Coke is a Coke and a Snickers is a Snickers no matter who sells it. Retailers and vendors need to discuss how to make differentiation work, understanding that our core customer does not park his truck in location X and get frustrated because YY cent gum is YYY. He does not jump back in his truck and drive across the street and do the entire process over again at location XX where the gum is YY.
- Store Layout: Sophisticated models exist to facilitate store layout designs that maximize consumer shopping and buying habits, customer stopping habits, maximization of product placement, etc. However never lose sight of the common sense.
- Product/Item Assortment: Like store layout and design, similar sophisticated models exist to help create the proper product and item assortment, however reliance solely on these models, specifically from a vendor when both parties are not communicating about customer diagnosis can be detrimental. Product cannibalization, retail trade downs (in which two of the same items are offered in two different sizes, which allows the customer to purchase the smaller, less expensive item rather than just grabbing the larger item) and redundancies all need to be discussed and avoided.
- Shopper and Buyer Marketing: Understanding the difference between a shopper and a buyer is as critical to understanding the difference between a consumer and a customer. In the early 2000’s, the art of building account-specific programs became the norm in traditional retail however in our industry is still evolving almost a decade later. Shopper and buyer marketing programs go beyond the traditional account-specific promotions as new ways to reach customers, new media, new in-store media, reward points, tailored communication, etc.
- Product and Service Development: Retailers and vendors should be working hand in hand to create programs, product offerings and services that assist the retailer with differentiation and localization. The ability to take the ordinary, one size-fits-all promotions and programs, needs to evolve into programs and promotions within a given marketplace that is new and different whether it be size, package, configuration, form and or offering that creates a new calculated competitive advantage.
/// Read more Darren's Great Ideas for Independent Operators posts here.
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