The COVID-19 pandemic forced merchants to rethink the way they do business, and that includes the way convenience retailers approach category management. Proven pre-pandemic strategies and tactics don’t always work when consumers hoard products, vendors can’t get merchandise and truckers don’t make timely—or any—deliveries to your store.

NACS and Impact 21, its category management partner, jointly tackled that topic during a recent webinar, “Looking Through a New Lens at Convenience Category Management.” Moderated by Lucia Romanello Crater, executive vice president, Impact 21, the panel included insights from Kim James, head of the global center of excellence, merchandising and marketing, Circle K of Tempe, Arizona; Lindy Smith, senior category manager, Maverik of Salt Lake City, Utah; and Tim Young, category marketing manager for FiveStar convenience stores, which are owned by Newcomb Oil Co. of Bardstown, Kentucky.

The panelists looked at category management through three lenses:

• Does the customer want it?
• Can my stores execute it?
• Does the ROI justify it?

By the Numbers

At Circle K, management uses syndicated data from NielsenIQ and IRI to understand the chain’s position in the marketplace, “and we have a lot of dashboards so we can evaluate weekly category and subcategory levels and the competitive market,” said James. “Not every retailer is large enough to have that [data] internally. But you can use your supplier partners to gather that information. They have a unique view of their products and can give you great insights into how you’re performing.”

Everyone wants to get everything in, but sometimes the space just isn’t there.

Circle K also uses industry information, such as the NACS State of the Industry report, white papers and trade journals. “Together, they give you the whole picture of what your stores are doing in the marketplace,” said James.

Store visits are a good source of anecdotal evidence about your market and local shoppers’ buying habits. “Circle K category managers are in the office on Mondays and Fridays. Those are meeting days,” said James. “Tuesday through Thursday, they’re in the stores—including our competitors’ stores—with our operations or supplier partners to understand what’s happening out there.”

Smith advises category managers to use in-store visitation time wisely. “When you’re in the stores, what do you really do? What do you see? Ask your employees how things are working,” she said. “Are your competitors carrying something interesting you aren’t carrying? What are their customers doing? What are they buying? Are they purchasing the promotions? Were they upsold by the cashier? Make your store visits purposeful.”

A weekly category scorecard can provide store operators with up-to-date information on how various items are performing. Smith shared a sample of an Anheuser-Busch scorecard that Maverik category managers have adapted for their own use.

“This is probably my favorite scorecard,” she said. “It gives us a good snapshot of how we’re performing by state, by brand and by subcategory.”

Make Room

Every category manager dreams of discovering that next fly-out-the-door product that will boost sales and profits. But if that should happen, where on store shelves will you put it?

When the FiveStar team does a store reset, they work to create additional space for unanticipated discoveries. “We have the flexibilty to support wings, shippers and endcaps, and we work closely with the vendor community regarding timing,” said Young.

Prior to any store reset, Young likes to focus on two things: “Margin dollars—what the product brings to the table—and unit movement,” he said. “If I’ve got 75 items in the meat snacks category, and I run the numbers and find certain items are on the cut line, I bring in new items. It’s all about the data,” he said. “Everyone wants to get everything in, but sometimes the space just isn’t there,” Young said.

“Make sure you really evaluate every potential new product,” Smith added. “It’s going to make money, right? If it doesn’t, it’s not worth bringing in. Remember, it’s OK to walk away when looking at new items.”

The Value of Loyalty

Today, most convenience stores offer some form of loyalty program. According to NACS State of the Industry data, 57% of consumers participated in loyalty programs in 2020, a big increase over the prior year, and their shopping data can be a gold mine for the category management team.

“Loyalty allows you to gather data about your customers and use that data with your vendor partners to create programs that can change shopping behaviors,” Young said.

One example is the Halloween promotion that FiveStar conducted in partnership with The Hershey Company. Using loyalty program data, “we took a look at customers who had shopped the candy category in the past 42 days but for whatever reason had not come in the store for the past seven days,” Young said.

FiveStar created a test group and a control group from loyalty members and then sent out a special offer for a Reese’s pumpkin standard bar. “We saw a sales lift not only during the promotion, but when we did the post-28 days analysis the growth was a double-digit increase,” he said.

Maverik frequently uses loyalty data to promote its foodservice program, Smith said.

“When using loyalty, the primary objective is to retain existing customers and encourage them to buy more,” she said. “So, you want to keep the promotion simple. Define clear goals. Focus on the customer. Meet their needs, and customize those offers. Use your own data because that will tell you what customers are buying and how frequently.”

Out-of-Stock

The pandemic created supply chain challenges, some of which still linger. But when customers come into a store, “they don’t know or care about your supply problems,” said James. “That’s where you have to become nimble finding and communicating alternatives.

“Whether you’re using Nielsen data or relying on your supplier partners, be creative about what you can get and how you can add new items quickly,” she said. “Maybe you can bring in a regional SKU or find a different flavor. Empower your operators to do the right thing and take care of the customer in the best way they can.”

Requirements for successful category management have changed and will continue to evolve. Managers must be fast, focused, flexible and open to new ideas. In addition, Young recommends that they continue building their professional networks with both vendors and others in their profession.

“We’re all doing the same thing, and it’s really a close-knit group,” Young said. “I’m confident that I can call my category management friends and say, ‘I’m running into this issue. Have you seen it? What do you guys do in this situation?’ You’ll be surprised at how people are willing to help.”