Jayne Rice, Yesway

including the latest from Nielsen and other sources, according to Sharan Kalva, chief operating officer at C-Store Master, a distributor based in Huntsvilla, Ala. Category managers can use this information to see what the newest brands are in each category, what areas of the country these brands are popular in, and what they should be carrying in their convenience stores, he noted.

“I always tell category managers to stay in touch with their primary distributor and/or manufacturer. This type of relationship will ensure they know what new products are coming out ahead of time,” Nolan agreed. “You always want to have the ability to be first in the market because of the high potential value or amount of advertising associated with that new item.”

Core-Mark International, one of the largest marketers of fresh, food and broadline supply solutions to the c-store industry in North America, leverages data to make all of its decisions, “running it through Blue Yonder/JDA Assortment Optimization to help measure product performance using a weighted analysis, targeted metrics and individual product rankings to identify the right product mix,” said Chris Weaver, space planning analyst at Core-Mark.

The distributor, based in Westlake, Texas, and serving locations in the United States and Canada, also works with convenience retailers by looking at shelf capacity and making recommended adjustments at the UPC level.

“Through a focused marketing process, we craft a marketing plan custom to each site, and part of the analysis provides guidance on overall product-mix assortment and recommendations related to allocation of product by category,” Weaver said, explaining that Core-Mark offers an Advanced Ordering Solution (AOS), which is a combination of computergenerated ordering and computerassisted ordering. It combines computer algorithms, POS data and inventory quantities, and can provide visibility of both past and average quantities to help retailers make better ordering decisions.

The distributor also has a partnership with IRI that provides c-store operators with the data necessary to help them make decisions, especially smaller operators who don’t have access to syndicated data on their own, Weaver noted.

An Eye on Shrink

One of the best ways for a marketing department to determine shrink is to watch margins. If a category typically brings in a 40 percent margin and unit movement remains about the same, but the margin has dropped considerably, there is a good chance product is going out the door that is not being paid for, according to Bill Nolan, partner with Business Accelerator Team, a group of convenience retailing consultants based in Phoenix.

“Regular audits can also help identify margin problems,” he said. “I’d recommend an audit at least once per quarter. However, if you have a problem store, then you’ll want to change that to monthly until you have solved the problem.”

Many point-of-sale (POS) systems can be set to flag any issues in real time, as well as generate reports for each cashier, so operators can become aware of issues quickly and take action, said Michael Chalberg, marketing manager for Combase USA, a POS provider.

“We have product reporting flags to call out any missing product issues right away, and also a shift report for each cashier to identify voids and comps,” he said. “Also, operators can set employee permission levels to control what certain employees can do in the system.”

For categories with high shrink, such as tobacco, there are dispensing machines available for c-stores that first debuted in Europe and are now coming to the United States according to Sharan Kalva, chief operating officer at C-Store Master, a distributor based in Huntsvilla, Ala.

“There are dispensing machines that only dispense an item once it’s been ringed through the register, and only the store manager has access to the back of the machine to stock it once a day,” he explained, noting that GM Global Solutions produces such machines.

“It integrates with the back office and point-of-sale. An employee types in Marlboro Red on a touchscreen, takes payment, and then the item gets dispensed. So, there is no room for shrinkage and only the manager would get keys to the dispenser,” Kalva said.

Analyzing & Utilizing the Data

At the most basic level — and what some single-store and small chains don’t always have — is point-of-sale and back-office software to scan and collect data for inventory management, according to Michael Chalberg, marketing manager for North Las Vegas-based Combase USA, provider of the KORONA POS system. Once this is set, retailers can start running reports to take it to the next level, like top seller reports, inventory analysis and forecasting.

“Make sure there is reporting and analytics with your system, so you can see what is selling and what is not, because the scanning software itself isn’t going to give you the data you need. However, combined with accurate reporting, you can get insights to make decisions on inventory,” he explained.

Many back-office reporting systems today will rank items sold, making it easy to find which are performing the best and the worst. Chalberg noted that the KORONA POS system breaks down the entire database of products by letter grade to look at A, B and C products, and a report can be run for an entire store in just seconds.

“Operators want to look at the top sellers and the slow sellers, along with those providing the least amount of margin, as well as overall revenue,” he said. “Then, compare their data with outside sources to see what should be filtered out to make room for new items.”

The goal is to always be eliminating products that are not selling so that when new items are presented and available, there is room for them in the planogram, Nolan pointed out. Also, if there is extra space at some point, operators can always add facings to the top sellers.

It is equally important to look at “anchor” products that are carrying a store’s revenue, Chalberg said, and know what items can be put on sale for the best results and what items can be paired with them that can be increased in price. Another piece of the inventory management puzzle is a loyalty system. By tracking customer purchases, market basket data and more, c-stores can get excellent information on what promotions are working and what items to bundle together in the future, Nolan said.

“This type of data can help in developing revenue, as most loyalty programs will give you market basket information that can be just as valuable as in-house data,” he said. “The idea is to link all the pieces together, [which] can have a significant impact on the profitability of the store.”

Having the right product at the right levels means a store doesn’t run out of stock. Having the right product in the right place is about making sure top sellers are easily

“Every month or two months, take a clean look at your product assortment, whether it’s energy drinks, water, salty snacks or candy, and make sure the 20 percent of your inventory that is making up 80 percent of your sales never runs out of stock. The only way to do that is with good data.”

— Bill Nolan, Business Accelerator Team