Making Money with Technology
Number one of a nine part series
Some kinds of technology serve essential purposes, such as point of sale systems, accounting systems or ATG systems. All convenience store chains, large or small, have to have these systems. But how is it that the big chains sell twice the revenue per square foot? Most of their advantage comes because they apply additional technology to make money. In this series we will explore how large chains use technology to gain an advantage. We will cover nine topics and go into depth on one topic in each issue.
Today’s topic is number one: “Capitalize on New Trends before they become Ancient History,” but over the series we will cover these topics:
- Capitalize on New Trends before they become Ancient History.
- Know your Inventory In Depth.
- Optimize Prices Using Real Time Data
- Remote Operations
- Think about Baskets not Items
- Identify Issues in Real Time before they become Costly Problems
- Leverage Purchase Negotiations with Live Data
- Expand Operating Footprint through More Efficient Management at a Distance
- Assimilate Newly Purchased Stores More Quickly
Capitalize on New Trends before they become Ancient History.
Summertime tends to bring lots of changes to convenience store traffic. Schools are out. College students move around. People go on vacation. People travel to watch or engage in sporting events. And of course the pandemic puts a twist on what actually happens, as does the government spending to help those thrown out of work.
A convenience store chain that can identify the new trends quickly, especially the unexpected trends, can create a big competitive advantage by changing inventory, pricing and displays to match the trends.
Business Intelligence software helps identify new trends in four key ways:
- Breaking items out into many detailed levels of categories so similar items can be compared
- Tracking in real time the changes in item sell-through rates
- Alerting management, hour by hour, to emerging new trends through the application of artificial intelligence
- Identifying, not just the item trends, but all associated basket item trends
Armed with the “breaking news” about new trends, merchandising managers can get first in line to order the hot new products while avoiding fading items distributors are trying to push off their shelves. Their immediate actions can be adjusted on a local level, store by store, since trends affect some stores differently than others. All this “actionable knowledge” will be brought to their attention on an hourly basis without the drudgery of sifting through mountains of irrelevant data.
The Hard Seltzer Example.
Last year, we authored an article that discussed how hard seltzer entered the market and destroyed planograms. Consumers adopted this new category of beverage and there was no historical data to rely upon in order to determine how to best optimize purchasing. Specifically, which flavors were most popular and what beverages were cannibalized as customers began to consume more White Claw. Business intelligence software (like StoreKeep) enabled operators to answer these questions in real-time so inventory could be adjusted to minimize their losses on the bad flavors and maximize their profits on the good ones.
The need for real time visibility does not go away because we now have almost a year of historical data on this category of beverages. As Forbes reported in January of this year, the hard seltzer market stands to become quite “crowded” with every brand introducing new products in an effort to capture a share of the growing market that Goldman Sachs predicts will reach $30 billion in sales by 2025 (compared with $4.1 billion in 2020). Yikes! Not only must a merchandising manager determine which new flavors to stock, but also which brands of beer and wine to cut in order to make room for the new labels.
Using business intelligence technology to analyze sales data in real time allows operators to answer these questions as soon as the trends emerge so that purchasing and profitability can be optimized. In fact, some operators even use the system to test new products at one or two stores before rolling them out across the entire chain. We even have one savvy operator who has started using the data from his sales to reclaim losses off unpopular products that his supplier talked him into purchasing. The possibilities are quite exciting once you begin to explore your own data in a flexible tool.
Business Intelligence is not Accounting
“Capitalize on New Trends before they become Ancient History” is an example of the application of “Business Intelligence” to convenience store management. The larger chains spend five times more on Business Intelligence software than on accounting software. Why do they spend 5 times more? Because Business Intelligence is the technology that makes them money. Until now, independent chains had no way to buy Business Intelligence software because there wasn’t a product that could affordably interface to the complex mix of systems typically inherited by an independent chain as it acquired new stores. StoreKeep, from Taiga Data, makes Business Intelligence practical for independent chains. Compete with the big players! Click Here for a live demonstration.