Seasonality has always been a key consideration for convenience store operators. Drivers coming into the store after fueling up look for season-specific refreshments: hot coffee in the winter, sports drinks in the summer. Now that summer is here, convenience retailers need to adjust their inventory management and promotional strategies.
The U.S. Energy Information Administration projects that gas prices will be lower this summer than last year. This means convenience retailers can count on higher traffic volume throughout the season as more consumers take road trips, but low prices and competition may threaten their margins. Seasonal promotions on in-store items can help convenience retailers both capitalize on the higher traffic volume and make up for potentially lower profits on fuel.
So, what should convenience retailers do this summer to optimize those promotions? Can vendor-funded offers make these promotions more profitable? And how can they know what promotions will have the most influence on their shoppers?
Sweet Summer Savings
Like other major retail holidays, summer is an opportunity for convenience retailers to match seasonal consumer demand with promoted inventory. Summer-themed general merchandise can encourage impulse purchases, as shoppers will grab an extra pair of sunglasses, sunscreen, even a pool toy if it’s promoted correctly. Of course, ice cream and frozen novelties are always “hot” items in the summer; the category even increased 1.22% as a percentage of gross margin in 2017, according to NACS. Likewise, sales of frozen dispensed beverages – a key inventory item for many c-stores – typically peak between $1,200 and $1,400 per store during the summer months.
Promoting these categories can turn a routine fuel-up into a store visit and encourage shoppers to buy high-margin items. And if a c-store can take advantage of vendor-funded offers on these items, they can increase their margins even further. Many consumer brands – including CPG brands – will incentivize convenience retailers to promote their products with seasonal offer funding. But identifying these vendor-funded offers, making sure they’re worthwhile, and integrating them into their POS and accounting systems can be a full-time job for a c-store operator. It helps if a convenience retailer has a marketing partner that can source and manage these offers.
Know What Your Customers Want
Displaying summer-themed merchandise and keeping the ice cream cooler and slushee machines well-stocked will only get a convenience retailer so far. Having insights into their current customers’ behaviors, preferences and patterns – and being able to use these insights to their advantage – is as important to convenience retailers in the summer as it is year-round. Understanding shopper behavior also helps to create more effective seasonal promotions.
This understanding comes from customer data, which comes from many sources. For example, an overwhelming majority of convenience retailers have a loyalty program, but only a fraction use the customer data it generates to customize offers and promotions. Even fewer have a way to connect their loyalty program data to their point of sale or back-office data, making it difficult to get a full picture of their customers’ activities. If they do have a way to combine customer data across systems, then c-store operators will be able to tailor their summer promotions to meet the patterns and expectations of their customers, and predict which promotions will perform best throughout the season.
On the other hand, convenience retailers that don’t connect customer data won’t be able to base their promotions on the preferences of individuals or customer segments; they’ll have only generic appeal. They won’t know that a promotion on sports drinks will fall flat with an entire customer segment because that segment tends to be conscious of sugar intake. A sugar-free frozen yogurt promotion might work better. This knowledge can be the difference between a promotion that drives revenue and foot traffic, and one that fails to deliver ROI.
Summer season promotions can be key revenue generators for convenience retailers. The right promotions can attract more fuel customers from the pump into the store, helping c-store operators capitalize on the increased traffic volume of the summer travel months. But convenience retailers need to have a solid seasonal promotion strategy in place. They need to be able to identify the vendor-funded offers that can make promotions profitable. And they need the right technology solutions to connect their loyalty and transactional data so they get a complete view of their customers. If convenience retailers can optimize their promotions in these ways, they’ll be in for some “hot” summer nights this year.
Convenience retailers don’t have to approach their seasonal promotion strategy alone – they can identify a partner that can provide the technology and expertise they need to optimize their promotions this summer and for the entire year.
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