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Convenience Biz Fits Right into College Stores
04/17/09
They don't sell gasoline, beer, lottery tickets, or tobacco products. They may not be open all hours of the night. The square footage is often small and most customers arrive by foot rather than by car.
Yet campus convenience stores can provide a lot of the same services—and rack up similar profits—as traditional convenience stores. College stores that don't offer a convenience operation are missing out on a proven revenue generator, in the eyes of Dick Wood, a 35-year veteran of c-store retailing and now a partner with CEO Consulting Group LLC.
In his CAMEX 2009 educational session Convenience Store Operations: Trends and Opportunities, Wood explained how college stores can adapt traditional c-store practices to the campus environment.
A traditional c-store is usually a standalone site affiliated with a retail chain or gas station, while a campus c-store is more likely to be a designated section within a college store or separate operation. Wood advised college stores to "create a home" for convenience products in a concentrated and clearly marked section "so that when people come in, they know they're in a convenience store."
Planograms or an Excel spreadsheet can help plot the convenience section layout. Once the section is up and running, though, Wood said you should track sales per square foot and adjust your merchandise to keep nudging that number up. "It doesn't matter where you come in on those figures initially. The point is to benchmark them," Wood said.
He urged college stores to embrace point-of-sale technologies as a means to help bring more dollars to the bottom line. For tracking convenience sales, "you certainly should be scanning, and if scanning, should utilize the data" to help manage product selection and inventory, he said.
What should a campus c-store stock? Snacks, candy, beverages, common grocery items, and health and beauty items are obvious choices, but also consider ice, automotive products (especially for commuter campuses), prepaid cards, magazines, school supplies, and general merchandise.
"You've absolutely got to determine who your customer is and what they want," Wood said. Depending on what nearby retailers offer, a campus c-store may need to stock a different set of products. Yet customers will still expect to find some of the most popular brands. Wood suggested picking a few of the top 20 products in each category.
"If you're not carrying one or two items out of each category, you're probably missing some sales," he noted. But stores should also be sure to reduce stock levels during campus breaks. "The product sits there all summer for two months and it's costing you," he said.
One fast-growing convenience category is branded proprietary food service. "The margin is so darn high you've got to figure out a way to get in it," Wood said. Campus c-stores might explore partnerships with the institution's food service department.
Traffic patterns for convenience sales may be different than for other areas of the college store. While many retailers decide daily staffing levels by calculating labor costs as a percentage of expected sales, Wood said that practice may result in over- or understaffing, especially for a c-store section. Instead, he recommended identifying all the tasks that need to be done to run the c-store, calculating the amount of time for completion (including cleaning and maintenance work), and adding 23 seconds per sales transaction. From that, the store can determine how many workers to schedule.
If your store is running to warehouse clubs or discounters to buy products in bulk for individual resale, include costs for the trip.
Wood cited two trends that are gaining in importance for traditional convenience stores but he thought were overlooked among campus c-stores: consumer research and customer loyalty programs. "You may think your students are captive, but I challenge that. They're not," he said.
Conducting research will enable your c-store to learn more about customers and spot opportunities to improve sales and service. Loyalty programs might seem counterproductive for student customers who will be gone in a few years, but Wood said such programs can help "capture the buying patterns of your students" and discourage them from shopping elsewhere.
An outline of Wood's session, along with handouts listing top-selling products, product categories, c-store history, industry web resources, and related associations (all in PDF format), is located on the CAMEX handout page at www.camex.org/handouts.asp.
—Cindy Ruckman
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