C-Store Marketing/Operations

Steve Montgomery has over 25 years of experience that spans top management positions in both entrepreneurial and large corporate business environments. He has served as President and Member of the Board of Directors for Dairy Mart Corporation, and as General Manager for Convenience Stores and Manager of Convenience Retail Strategies and Programs for Amoco Oil Company. Steve is a past member of the Board of Retailer Directors of the National Association of Convenience Stores and is currently a member of its supplier board. Steve is a frequent contributor to articles on the convenience retail/petroleum marketing industry and is a frequent speaker at industry functions. He has worked with NACS as a program director and program moderator on topics ranging from foodservice to the non-traditional competitors.

Web: www.b2bSolutionsLLC.com

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Recent Questions:

One of the other keys is how dependent on fuel is your site versus that of your competitors. Do you have a stronger c-store offer? If so, then you are likely to suffer less than the other locations in the market. If you determine that there are weaknesses in your current offer (the look of your site, the products, services you sell, your personnel, etc.) then start now to address them. Get the lights fixed, the parking lot re-striped, make the personnel changes and put yourself in the position to compete before they open. Don't wait - once they open its too late.

2) We're thinking of outsourcing our IT department. What should I know before I take the leap?
There are lots of issues to be considered. This issue has surfaced more and more lately as retailers consider everything from using an ASP to truly outsourcing all their IT functionality.

The place to start is why are you considering outsourcing? Have your needs outgrown your staff's skill sets? Are you looking to be able to incorporate some of the latest technology, but don't have the internal hardware to do so? Or is this something you are looking at as a way to reduce cost?

All may be valid reasons to consider outsourcing, but this is one of those moves that is easier to do than undo. With an in-house department you have people who are directly accountable to you. If you outsource you will loss some of that control. This is a true case of look before you leap.

3) We have 32 stores in 3 different markets, all under the same store name. We just acquired 3 more stores that have a pretty strong brand in one of our markets. Should we switch the new stores over or just keep them the same?
This is a more complex issue than it may first appear. One of the benefits of size is the economies of scale. However, in this case the addition of three stores is unlikely to make any change in your purchasing power with your vendors, so that rationale for making the change is less compelling than if you had purchased a chain of a similar size as that you currently operate.

There are some underlying questions that have to be answered. First, do you now control all the stores with the new brand? Based on your question, I assume the answer is yes.

The next question is do the new locations compete with some of your existing sites? If the answer is yes, then you may want to consider keeping the second brand and allowing the consumer the perception of a choice.

A major issue is how similar are the offers between your existing and the new brand? I have seen many cases where companies acquired competitors and changed the brand and the offer only to find that the customers reacted very negatively to the change. Why? Because they had cast their economic vote (their dollars) for a particular offer and it's no longer there. The price points are different, the items and services have changed, etc. It is not an easy task, but try to look at the units from a customer's point of view and ask yourself, it these things changed would I still want to shop here.

4) What are the telltale signs you need to see to close an under-performing store?
The first question is do you know why the store is not meeting your expectations? Is it a sales related issue (fuel and/or inside sales)? Is it a margin issue - again fuel or inside? A combination? Is this something you have seen in your other units, but not to the same extent - a systemic issue that is just more pronounced at this site? You need to analyze the "what" and then look for the "why".

I would also look at the timing. Did it once meet your expectations and no longer does? Or is it a store that from the start failed to meet projections? Did it meet projections until you made certain personnel changes? What have you done to address the "what" and the "why"?

Is this something that applying capital would help? Customers generally have three alternatives where they might buy fuel and/or convenience items. If you were driving down the street, would you stop at this store? We have something we call the "Mom test" - is this a site you would expect your Mom to stop at? If the answer is no, then perhaps the issue is the "eye" appeal of the site.

As you can tell, we consider closing a site a significant event, and before we recommend a site be closed, we encourage clients to really look at it objectively, analyze what has and is happening, and then make the correct economic decision.

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