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CHICAGO -- In an industry fighting decreasing margins, increasing costs and new competition from retail goliaths such as Wal-Mart, convenience retailers can find new hope in $1 billion or more in potential additional profit. PerformanceRetail, Inc. the leading provider of web-based software for the convenience retail industry announced today projections of $1 billion or more in additional profit opportunity available to retailers who put in place web-based retail performance management solutions. The Austin Texas-based company will demonstrate how its Web-based technology solutions can deliver the opportunity for this growth at the National Association of Convenience Stores (NACS) annual conference this week in Chicago.
According to the 2003 NACS State of the Industry Report, the 132,400 convenience stores in the United States generated $291 billion in total sales for 2002, but delivered a meager $2.6 billion in pre-tax profit, a decline of 24 percent from 2001 and a 45 percent decrease since 1999. On a per-store basis, the average convenience store generated only $20,400 in pre-tax profit on $2.3 million of total revenue, representing a significant opportunity for improvement. These results have forced leading convenience retailers to explore new imperatives to drive improved performance, including replacing older systems technology, capturing and effectively using item-level inventory, sales and margin data to drive merchandising decisions, enabling proactive business visibility and intelligence and streamlining operational processes to reduce costs.
"The convenience retail industry represents a significant percentage of the worldwide retail business and a major part of consumers' everyday experiences. The underperformance of this market over the last few years stands to affect us all," said Marc Hafner, president and CEO of PerformanceRetail Inc. "Our work with customers over the past two years has clearly shown the opportunity to replace antiquated systems technology and drive significant improvement to the retailer's bottom line. We are committed to continuing to provide innovative solutions that drive increased performance for the convenience retail market and look forward to working with retailers to deliver these results."
PerformanceRetail's InSite software solution, an integrated suite of web-based merchandising and store operations applications provides enhanced capabilities to improve retail performance and deliver the opportunity for bottom line impact. Based on research and customer experience with the InSite solution over the past two years, PerformanceRetail has identified specific opportunities for revenue and margin improvement and for direct expense reduction through the use of the software. Drivers of the additional profit opportunity are centered on:
* Increasing revenue through centralized price execution and control, optimized product assortment and space utilization, fewer out-of-stock items and optimized pricing and promotional activities.
* Reducing product costs through more effective supply chain management and better control of invoice exceptions.
* Reducing operating expenses through streamlined ordering and receiving processes, improved operational efficiencies, lowered shrink and waste and optimized inventory management processes.
* Reducing overall cost of technology ownership through centralized control, a minimized technology footprint, lowered customization and maintenance costs and the replacement of existing antiquated technology with modern, Web-based solutions.
PerformanceRetail estimates that these factors can drive as much as a 30 to 50 percent improvement to a retailer's bottom-line. Across the convenience retail industry in the United States alone, the accelerated valuation creation opportunity represents minimally $1 billion, an impressive 38 percent on top of the industry's 2002 $2.6 billion total pre-tax profit, with an opportunity to drive additional profits as retailers continue to improve their merchandising and operational processes. Additionally, the efficiencies and cost reduction potential driven by these factors gives retailers increased flexibility to enhance their competitive position by passing along savings, improved product assortment and enhanced service to consumers.