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Convenience store retailers intrinsically fulfill a consumer need, have a longstanding hold in the retail sector and above all, are consistently profitable. However, like all retail markets, the convenience store landscape is changing as consumers demand a more robust array of stock items, and safety continues to be a competing concern, impacting customer loyalty.
Not to be discounted, the pressure of the economic downturn means retailers are also looking to maximize investments and minimize new spending. In this new environment, convenience store retailers have a unique opportunity to ensure inventory efficiency, the highest level of security and overall store performance, all within the confines of a tight budget. How is this possible? Just look up in any convenience store -- the answer is already in place.
Traditionally, video devices have been implemented throughout convenience stores to target dishonest employees, monitor deliveries, ensure the safety and security of employees, and capture infractions at the fuel pumps. But the requirements for success across the retail landscape have evolved beyond just ensuring security to now ensuring comprehensive retail executions to meet the demands of today's savvy shopper.
Forward-thinking retail executives recognize the opportunity to leverage existing technologies, such as video devices, to extend the value of collected data to not only ensure efficiency across the retail environment, but also increase profitability.
With more than 440,000 small-box stores in operation globally, convenience stores remain one of the fastest-growing retail segments. While traditional convenience chains can't compete with big-box players on price, they are in a unique position to remain the "friendly neighborhood store" that today's consumer wants. Additional growth drivers include:
- Customers seek convenience and don't want to drive 20 to 30 minutes to a big-box retailer;
- Smaller households in many mature markets are making big-boxformats less attractive;
- The aging population in mature markets are more prone to buy in smaller formats; and
- High costs of car ownership and increasing gas prices motivate consumers to visit stores nearby instead of hypermarkets at the periphery.
To meet consumer expectations, convenience store retailers are significantly expanding their offering to include an assortment of prepared foods (many made to order), gourmet beverages (coffee), fresh produce and even in some cases, in-store dining. These categories have higher margins than traditional convenience store offerings like tobacco and fuel, and are lower risk -- not subject to fluctuating gas prices or the regulatory pressures associated with tobacco. This expansion has convenience stores now competing with drugstores, discount stores, supermarkets, fast-food operators and coffee shop segments. As demand grows within this market, convenience store retailers have an opportunity to capitalize on this momentum and leverage existing technologies, like captured video data, to make smarter decisions about store performance and security. By applying business analytics to collected video, convenience store executives can analyze employee training and performance, ensure the cleanliness of the store and stockrooms, and evaluate the effectiveness of promotions unlike ever before.
By leveraging collected video to identify patterns of behavior by both customers and employees, convenience store executives are empowered to make better business decisions to enhance the in-store experience, gain a competitive edge and increase profitability.
Today, convenience store retailers have an opportunity to consolidate data from video and implement applications to analyze at an enterprise level, with benefits reaching beyond traditional loss prevention to merchandising and store operations. By employing the analysis of metadata with techniques such as heat mapping and dwell times, convenience store retailers can identify patterns of behavior by both customers and employees.
Examples of applications include:
- Tracking employee traffic patterns to determine if critical tasks are being completed accurately and at required intervals. For example, given increased investment in house blends of gourmet coffee, new applications can track the frequency of brewing fresh coffee, as well as compare brewing systems and thermal carafes vs. burners to ensure better-tasting coffee.
- Studying traffic flow to the coolers in the back of the store to determine aisles that have the most traffic and are most impactful for sales. This information may also be used to charge suppliers for premium display space in coolers or on shelves based on this data.
- Understanding the optimal placement of cash generating items, such as ATMs, to encourage shoppers to see and ultimately make additional impulse purchases while in the store to get cash.
Today's consumer demands convenience and variety. Convenience store retailers are in an ideal position to capitalize on this trend by relying on traditional devices like video to optimize store performance, ensure safety and security and increase profitability. By applying analytics to collected data, retailers gain unprecedented intelligence about their business that they can use to make smarter, more strategic decisions, while leveraging existing technology investments.
The video device initially installed as a proactive security measure today provides the strategic visibility to help today's convenience store retailers gain a competitive edge and increase market share.
Kim Warne is director of solution marketing at Tyco Retail Solutions. She is responsible for bringing Tyco's complete line of loss prevention and retail performance solutions to the global retail market. These solutions are sold through ADT, Tyco's direct sales and service organization, as well as through authorized business partners around the world.
Editor's Note: The opinions expressed in this column are the author's, and do not necessarily reflect the views of Convenience Store News.