Data Drivers

Convenience wholesalers are the industry leaders in harnessing and mining data for the collective benefit of the supply chain

It has long been said that numbers don’t lie, making them a very valuable business tool. In convenience store sales and profit terms, that value is heightened when the dataset is more uniform and spreads across the channel in real time. Thanks to the technology and data-driven efforts of c-store wholesalers and distributors, this is now becoming a reality.

Convenience wholesalers have emerged as industry leaders in harnessing and mining data. Some of the largest distributors, such as McLane Co. Inc., Core-Mark Holding Co. Inc. and Eby-Brown Co., are doing it independently. Others have come together through the recently created InfoMetrics database developed for the American Wholesale Marketers Association (AWMA).

Why is all this newly mined data worth its weight in gold? Industry insiders say data has always been deemed a valuable tool in the retail world, but it is even more crucial to convenience store retailers and in the convenience supply chain because there is a lot less scan data available compared to other retail channels.

“Most c-stores are not scanning, so data that is reviewed this way is based on a small sample,” said Scott Ramminger, president and CEO of the AWMA, an international trade organization that works on behalf of convenience distributors in the United States.

Maximizing the space in c-stores is also critical and can be aided by data. “C-stores have less real estate than almost any other retail outlet, so it’s very important for them to get the assortment correct,” Ramminger added. “The data is helping manufacturers, distributors and retailers in the channel maximize their profit. It’s in everyone’s best interest to have the right assortment, which helps spot existing trends, as well as what the next trend might be.”

Product lifecycles have been shortened in today’s marketplace, especially in the categories that are synonymous with c-stores: tobacco, candy, beverages and snacks. What’s more, emerging consumer groups are fickle and much less loyal to a particular brand.

“To stay on top of the window of opportunities, the convenience channel has to look and act on maximizing space in a more expedient manner than ever before,” explained Keith Canning, owner and managing partner at Pine State Trading Co., a distributor based in Gardiner, Maine.

The convenience channel’s unique and dominant mix of independent and family-run businesses also makes data a very crucial and evolving commodity.

“One of the reasons this industry has so much inefficiency [is because] scale doesn’t exist,” said Viv Penninti, president and CEO of InfoRhythm, developer of the InfoMetrics database for AWMA. “Sixty percent are one- or two-store operators and they have a lot of need for a systems-based approach, which only the largest [operators] have. The small guys can’t afford that, so this application [InfoMetrics] really touches these guys; they can get the most benefit out of it. The real value is in the independent world — that’s where the most revenue will be generated.”

A COLLECTIVE EFFORT

Growing richer in industry participation and data every month, InfoMetrics is the single largest database of c-store shipments covering all SKUs except direct-store-delivered products and beverages. InfoRhythm estimates that 60 percent of all c-store sales are covered.

As one of the earliest adopters of InfoMetrics and a contributor to its C-Metrics database, Pine State Trading can attest to the enormous impact the data is having on its independent convenience store customers.

“These stores were virtually off the map with this kind of data previously. They had in-store data, but they didn’t have any benchmark to compare it to,” said Canning. “And because the market has become so challenging, if they’re surviving, they’re thriving. They’re the ones adopting the data; it’s the only way to maximize their ROI [return on investment]. The independents are just looking for a level playing field and this does that for them — the data is now accessible and affordable for them.”

Simply put, the InfoMetrics program is a “fantastic benchmarking tool for distributors to help their customers understand what’s going on,” according to Ramminger. “When they submit data, they get access to a distribution portal that lets them see in real time where their sales are against the rest of the industry. As it evolves, InfoRhythm creates customized portals for distributors and their retailers.”

There are four primary areas of analysis with InfoMetrics: benchmarking, category management, sales management and rebate management. This is the type of data that in the past, only manufacturers with deep pockets had access to. But now with InfoMetrics, wholesalers, retailers and manufacturers can all make decisions based on real-time, up-to-date performance metrics, Penninti relayed.

Pine State Trading, for example, has utilized the program to eliminate 15,000 slow-moving SKUs from its roster — and therefore, from c-store shelves. On the flip side, the data can also reveal the top-selling products in each category, the core.

Prior to InfoMetrics, distributors were limited to data that came from their warehouses, but now data is coming from an entire region. “The more distributors that participate in it, the more the sample base is populated [and] the more the data is balanced,” said Penninti.

Now equipped with tablet technology and InfoMetrics data, wholesalers are walking into meetings with their retailer customers and pulling up the top-selling items in the market that they should be carrying. They are identifying overstocks and solving out-of-stock issues.

And the evaluations are being made monthly or even weekly, instead of yearly and quarterly. “Instead of submitting an analysis and waiting for the data to come back, you’re live. It’s a nine-day cycle,” Canning explained.

The next step for InfoMetrics is to incorporate demographics to further improve the value of the data. “How do we get more value out of the data? How do we make it more focused for stores, that say, have a high Hispanic concentration? That is the next level,” Penninti said.

INDEPENDENT ANALYSIS

While InfoMetrics has good industry participation from early adopters including Pine State Trading, J.T. Davenport & Sons Inc., S. Abraham & Sons Inc. and many others, some of the convenience industry’s largest distributor operations chose to independently analyze their own databases for their retailer customers.

McLane strives to maintain one of the industry’s most robust data warehouses, utilizing an aggregated class of trade-specific data and comparing and contrasting the findings with multiple syndicated data sources. The company said it is a powerful analytical approach that allows its customers to compare their sales and product movement with that of other trends on a national, regional and local level, as well as by individual stores and specific items in order to determine best-mix product scenarios and identify key selling opportunities.

Recognizing that growing in-store sales is a primary objective of retailers and equally critical to the health of the wholesaler and manufacturer communities, McLane offers the McLane Lab Store as a collaborative approach to category management.

“In years past, category management was a manufacturer-driven, self-serving process,” said a company spokesperson. “McLane believes that the wholesaler’s role in category management is to provide the tools, information and environment necessary to facilitate the development of an unbiased, consumer-driven approach that enhances retailer offerings and grows in-store sales.”

Eby-Brown is likewise focused on increasing the sales and profitability of its retailer customers through the use of data and technology. The company utilizes SAP Business Warehouse running on SAP HANA (High Performance Analytic Appliance) in-memory analytics to manage its data needs. SAP HANA is touted as a completely re-imagined platform for realtime business.

According to Dustin Snyder, senior vice president of business development, SAP HANA is quick to retrieve data, which allows for faster decision-making, improves the ability to manage inventory and provides more robust analysis of market trends, along with more overarching cost control. The real-time analytics create a predictive engine to process and analyze big data.

For category management, Eby-Brown uses a combination of its internal sales data and independent consumer purchase data by market for its SmartProcess program. A team of dedicated analysts identifies the core SKUs for each key c-store category and then develops a unique planogram for the retailer’s various store configurations. Carrying the best mix of products for a specific market translates into “outstanding sales lifts” for the retailer as consumers increase their market basket and frequency of visits, Snyder reported.

Also, as part of Eby-Brown’s commitment to optimize the retailers’ experience, the company is implementing a mobility platform. Retailers can place orders, request shelf tags, view the cost of products and be alerted to items that are new or on promotion by using an iPad, Bluetooth scanner or Eby-Brown applications.

UNLOCKING INTELLIGENCE

Ultimately, whether the information is being mined independently or collectively, one thing is abundantly clear — the true purpose of the data is to unlock intelligence for the benefit of the entire convenience channel: retailers, wholesalers and manufacturers.

At AWMA’s C-Metrics Convenience Industry Outlook Forum last year, Penninti pointed out that the convenience industry is the largest retail sector in the United States and will grow from the current 150,000-plus stores to nearly 165,000 by 2023. He also predicted that by 2023, dollar stores, some of which have initiated tobacco sales, will have jumped from 21,500 to 28,894 locations and will increasingly syphon off tobacco sales from c-stores.

“This really begs us as an industry to wake up,” Penninti stressed.