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NEW YORK -- While the recession is wreaking havoc on much of convenience stores’ operations, there are opportunities retailers can take to ensure the survival of the business, and secure a strong foundation for growth once the economy turns around, according to a Webcast presented yesterday by Convenience Store News and sponsored by Ruiz Foods.
"I am an eternal optimist. I believe all clouds have a silver lining, and within them, there are opportunities within the chaos," began Sonja Hubbard, president of E-Z Mart Stores Inc. and NACS chairman. Hubbard, a special guest to the Web cast, presented the audience with her views of the recession, and provided measures to take for fellow c-store operators.
Also presenting during the Webcast were James Russo, vice president of marketing for The Nielsen Co. and Don Longo, editor-in-chief of Convenience Store News
"Cash is king, and certainly so during these tough times," Hubbard said, citing the importance of maintaining cash flow to cover the cost of fuel, especially when fuel prices rise – which she said they will. "We can’t count on these fuel prices to become the new norm. Be prepared for those to go back up."
She also advised retailers evaluate margins differently with fuel than other categories. Instead of net profit, c-stores should look at margins as a percent, including in the equation the cost of transaction processing fees, which drain cash flow to stores during times of volatile fuel prices, Hubbard said.
Retailers need to look beyond fuel and into the stores to find ways to better cash flow.
"If an item isn’t selling, it’s a drain on cash and an investment in nothing," Hubbard said during the Web cast. "Review your inventory and look at discounting items [that aren’t selling]. Whatever you sell it at, a sale is an increase in cash flow."
Hubbard also recommended convenience store retailers key in on items that do sell. Avoid overstocking, she advised, but make sure you are never out of stock on the important items, because if you lack one items that a customers desires, their business – including any ancillary sales – will go to a competitor. If necessary, create a "Never Out of Stock" list for stores, and coordinate with suppliers to ensure the products on the list are in stores at all times, she said.
Stores can also reduce inventory levels in what is not selling, as well as products that are delivered frequently. "You probably don’t need six weeks of product for a weekly delivered product," Hubbard said.
Monitoring cash flow is just as important as finding new opportunities and inflows of cash, according to Hubbard, who added new sources constantly arrive in the business, and can be discovered by attending trade shows, reading trade publications and visiting other c-store operators and competing retail industries. She also recommended convenience store retailers rely on suppliers for the latest trends.
Another key to weathering the recession is maintaining positive relationships with banks and investment companies that subsidize the business. "It is vital to have a close relationship with the supporters of our industry," she said, noting it is important to establish the relationships prior to the difficult times.
Hubbard concluded by saying, "Our industry is reflective of the current difficult environment -- those that are thriving are monitoring cash flow and living by the motto of ‘Cash is King.’ By maintaining relationships and establishing them, we’ll weather this storm, and the strong ones will find the silver lining and thrive, even though we have a few bumps to get there."
A free replay of the Webcast is available for the next 90 days by visiting www.nieslencast.com.