A Win-Win Partnership

Sharing data, asking the right questions and utilizing technology can help small operators better work with their wholesalers and suppliers

By Tammy Mastroberte

BEING AN INDEPENDENT or small-chain operator in the convenience store industry alongside large chains that operate hundreds — or in some cases, thousands — of stores has its challenges. Because they don’t have the scale of their larger counterparts, and also lack visibility, it can be harder to capitalize on wholesaler and supplier partnerships to increase profitability and success.

“With 100,000 different independent and small operators, it can be harder for suppliers to access them, and tough for the retailer to get the visibility from suppliers to create an impact and extract value,” said Jamie Hudson, senior vice president and general manager of offers and insights at PDI Software, based in Temple, Texas, which acquired CStorePro in 2019 and has been offering technology solutions to smaller operators since then. Many suppliers and wholesalers traditionally focus on the larger convenience chains, so there is less individualized service with smaller operators. This results in their needs getting overlooked, according to Lynn Swanson, director of sales, mass markets for McLane Co. Inc., a wholesaler based in Temple, Texas, that works with small operators on category management and more.

Additionally, small chains are less likely to have inhouse expertise when it comes to marketing and merchandising compared to the larger chains, so they need to look outside for help from wholesalers, suppliers, buying groups and more, noted Ed Burcher, a partner with the Business Accelerator Team, based in Phoenix.

However, while there are challenges to being small in the c-store industry, there are also benefits. One of the biggest is being able to make changes quickly, and be faster to implement and try new products vs. the larger chains, said Swanson.

Utilizing Buying Groups to Gain Scale

One of the biggest disadvantages a small operator in the convenience store industry has compared to the larger chains is scale and buying power.

To a supplier, an order from a fivestore chain is very different than a 50- or 500-store chain. However, there are consortiums and buying groups a retailer can join to even the playing field. They pool operators together to create a larger order and get better deals from suppliers.

“The buying groups allow operators to collaborate and join forces with other smaller operators to provide more scale and visibility,” explained Jamie Hudson, senior vice president and general manager of offers and insights at PDI Software, based in Temple, Texas.

There are a variety of buying groups available to c-store operators — either regionally, nationally, or brand specific. For example, the Marathon Buying Club is available nationally, but it is exclusively for Marathon branded retail sites. Another such group is the Independent Buyers Group, which offers services to retailers in Texas, Louisiana, Florida, Oklahoma, Mississippi and Arkansas. There is also Royal Buying Group, which is available nationally.

While wholesalers can share research and data with small operators, this can also be obtained through buying groups. But there is a cost to join and take advantage of the benefits, and this can cut into profit, so retailers need to make sure they are worth it in the end, according to Ed Burcher, a partner with the Business Accelerator Team, based in Phoenix.

“If you can work directly with a manufacturer through your wholesaler, you will get a bigger piece of the pie,” he said. “Find out if the supplier has the ability to work with you directly and if you as a retailer have the bandwidth to work with the supplier in that way. If you just don’t have the volume needed, that is when buying groups can be helpful.”

“Smaller c-stores typically have less red tape than a large chain regarding the direction and decisions flowing from the top of the organization,” she explained. “In addition, something new requires a smaller investment and allows for more flexibility.”

Independent and small-chain operators also tend to be more familiar with their local customers and more in touch with their needs, allowing them to personalize their business and even identify their niche in the market.

The good news is there are suppliers and wholesalers who work with smaller chains and may have a lot more to offer than operators realize. It all comes down to collaboration and give-and-take.

For example, if available, giving suppliers and wholesalers data from the store level can help them gain visibility into that store or chain and provide better advice and solutions — and in some cases, even rebates available to the larger chains, said Burcher.

“Getting beyond the salesperson is also key, and most small operators don’t know how to do this,” he added. “They need to find out who their field person is and how they can get to the marketing or research department in the corporate office because they have the summary data retailers can use.”

Data, Rebates & Turnkey Programs

With a smaller team of employees, many small operators lack the experience and dedicated resources that larger chains have, whether it’s marketing, purchasing or overall category management. This is where wholesalers and suppliers can be helpful outside of simply supplying product to the store.

“Many small chains may not have the expertise in certain categories and are better off letting someone from the outside help them,” Burcher said. “Suppliers and wholesalers can bring them data and research to help make better decisions based on what is going on in their market. It’s critical to find the right partners, and wholesalers are a great place to start because often they can be a one-stop shop.”

Wholesalers collect data and research from suppliers and other sources and can bring this information to small operators, so they can make better decisions on what to stock, where to merchandise products in the store and more, he explained. However, it’s important to be aware that “what wholesalers have to sell is what they have to sell, so make sure what is being presented matches your market need, and look for other alternatives as well.”

At McLane, the distributor serves as a support team for small operators, offering category management, new items, deals, and implementation of profitable programs, according to Swanson. The company also offers a virtual tradeshow that allows smaller operators to take advantage of supplier deals and new items, she noted.

Many wholesalers have turnkey programs, including foodservice options like pizza and chicken programs. For example, McLane offers the McLane Kitchen program developed exclusively for c-stores. It offers thaw-and-serve options, as well as more expanded offerings such as Choice Chicken and Javaperks.

McLane also offers small operators a variety of programs from suppliers that come with rebates and deals. For instance, if they

buy a certain supplier’s hot chocolate along with their coffee, there could be a rebate instead of using hot chocolate from a separate supplier.

“It’s hard to pick up pennies as a small operator because you don’t have enough time and you can miss money in the center of the store with rebates and programs that wholesalers can bring you,” said Steve Morris, president of Retail Management Inc. (RMI). “If you can pick up two cents on a candy bar, that is two cents more than you had yesterday and you are going to sell that candy bar anyway.”

Burcher encourages small operators to speak up and ask their wholesalers what programs are available and what they need to do to reach certain levels so that they qualify for the rebates. He cautioned, however, that there may be some “pushing of supplier products” vs. what a store’s customers want, so it is important that needs are balanced.

“Also, don’t be afraid to go outside of the programs as long as it doesn’t damage any of the rebates you may be getting — which are also only one piece of the puzzle. At the end of the day, you need footsteps in the store and you do that by having the products people want,” he said.

Another tip for small operators when working with wholesalers is to know that they don’t have to take everything without questioning it. They should look at what the top products are in their categories (even regionally) that the wholesaler doesn’t carry and see if they can add those to their lineup, Burcher said. If they can’t or won’t, he recommends finding a secondary supplier.

“If you are missing pancake batter No. 1, I wouldn’t go searching for it, but if you are missing the No. 2 soda in the category, I would look for that,” he advised.

He also recommends small operators ask their wholesaler about rebranding its programs to create a unique offering. For example, if the wholesaler offers a sandwich program, ask if the store or chain can use the product, but rename it so that it’s branded with the chain.

“I am a brand person at heart — you can only get Wawa’s hoagies at Wawa — so when you are talking product distribution, ask if you can brand it your own. Johnny’s Store can use the pizza program and name it Johnny’s Pizza,” Burcher explained. “Also, don’t be afraid to say, ‘This may be the way the program comes, but I want to change it a bit because it doesn’t 100 percent fit my market.’”

Tapping Into the Power of Data

As a small operator, there are technology solutions available to this market that allow scanning at the pointof-sale, back-office software to collect and analyze data, and pricebook solutions.

When there is data to gain at the store level, an independent or chain can become more visible to suppliers and brands, and can get more targeted help when it comes to merchandising and sales, according to Hudson of PDI Software.

“There are easy ways for independent and small-chain operators to leverage back-office, pricebook and scan data solutions, and even implement a loyalty program,” he said, noting that PDI offers a 30-day free trial for its solution, which is $59 a month and aimed at the one- to five-store operator.

Providing data to suppliers can help them work “smarter and harder” with the retailer around how to promote their products in-store, and enable the operator to get access to rebates and other values offered, Hudson said.

“Getting value from suppliers requires you to share data, and operators can use their scan data to extract rebates and values from tobacco and other consumer packaged goods companies,” he explained. “Suppliers often refer to small operators as ‘the dark channel’ because they don’t have the visibility. But when you can track what is occurring on a day-to-day basis, you will have better merchandising — and won’t have products not moving through an efficient cycle — as well as datadriven promotions that will lead to profitability.”

Planning Ahead

Another way to collaborate with suppliers and wholesalers is to plan ahead. It doesn’t matter if it’s a single-store operator or a 100-store chain, an annual planning calendar is critical so that an operator can sit down with a supplier or wholesaler and plan out their year.

“The suppliers all know what their calendars look like, so you don’t miss sales opportunities,” Burcher said. “Plan out your promotional calendar, what space allocation will look like, how many cooler doors you will have for CSDs [carbonated soft drinks], the percentage of space you will give to direct-store-delivery chips. And be aware of saying yes to everything because then, you are limiting yourself.”

Burcher noted that he’s worked with stores where the entire cooler door was on sale and if everything is on sale, then nothing is on sale, he said. “Plan out that one month Pepsi will be on sale and the next month it’s Coke. That is how you drive sales,” he said. CSN