Convenience Store Promotions

Those of you that have worked with me in this industry will know that I am passionate about convenience stores – to the extreme in many instances! And the one thing above all that absolutely gets me – is the way in which so called promotions – are applied at store level within this industry.

I have no clue why they bother even having these promotions. It must drive the retailer/franchisee nuts on a monthly basis! Here are some priceless ones that I picked up today.

Buy either a packet of Tennis or Eet Sum Mor biscuits for R9.95. Now I ask you with tears in my eyes – does that sound like a bargain to you? Are you going to drive your car to this store to buy either of these products? I would hazard a guess that any biscuits sold in our stores equates to less than .05% of our sales. So why promote it, knowing that I as a customer can buy it cheaper at my local supermarket?

How does that build feet into my store? It is not a product that my customers are looking for?
Here is another one: Buy two Milo drinks for R9.95. Does that sound good value to you? Again I bet you could buy them off the shelf for cheaper at the local supermarket.
There are other applications for so called promotions – like buy 2 of this product and enter into a draw to win tickets to a confederation soccer game or even better win a diamond! Do you know anybody who actually won one of these diamonds? It was smaller than the head of a sewing pin! I am still waiting to hear how they suggest I set this diamond?
And I bet you the small print around winning a trip to a soccer game will exclude flights! So if I win a ticket or two in a region that I do not live in – even if it advertises a ticket to the final – will mean that I actually cannot use it anyway!

So why do the oil companies in particular persist with these non-sensical “non value add” promotions? Well here are some of my guesses as to why they just do not get “it’ when it comes to promotions.

1. The supplier is paying a “kick back” to the oil company for the privilege of getting their product onto the best shelf space in the stores, advertising on glossy pamphlets – and free advertising on the oil company website to boot! How does it add value to the oil company- well it doesn’t quite frankly. I wonder how many retailers or franchisees actually know their breakeven point on a given product on promotion? Does the oil company care about the success of each product on a promotion? I wonder how many of the buyers are made to calculate the success rate of each product on promotion?

2. The buyer has a KPI (key performance indicator) which says – thou shalt deliver 5 product promotions per month. So quantity and not quality are the key to his success or failure in his position. I doubt he gets measured on increased number of feet in the store, increased margin for the retailer et al. Why do we need to have so many products on promotion at any given time?

3. This industry remains subservient to the supermarket industry. Now what do I mean by that? And here I blame the suppliers as well as the buyers within this industry. In the supermarket world, I as a supplier pay for the privilege of getting exclusive rights to a gondola end for a particular period of time. So in turn this same type of principle has been applied to this industry except that the mechanics and purchasing habits are distinctly different. And yes I know we as customers buy in the same way no matter where we are shopping BUT I stop at a convenience store for a very different shopping experience to that of a supermarket shopping trip. My planned purchase is different to the one I have when stopping at a supermarket – and we know for a fact that price is not the priority when considering where to stop at! I want to see this industry “grow up” to take its own identity separate to that of the supermarket market. And here the suppliers also have to rethink their strategies on how to work this market to their benefit going forward.

Suppliers and retailers need to step back and re-evaluate their reasons for running national promotions. What is the primary purpose that drives our selection for a good promotion? Please do not tell me that in this industry that “Price” is a driver. The first example I listed is based on price – the second one is based on value add.

Neither work.

Why not?

Well to the average customer R9.95 for a packet of ordinary biscuits sounds about the normal price – in other words I do not perceive any price saving. As regards the tickets for a soccer game – and I might be wrong about the small print here – (but that is based on the pathetic diamond campaign a few months back) – so I win a ticket to the final and I live in Cape Town – how on earth am I going to get there?

Does that add real value to me?

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  1. #1 by marc sacco on May 20, 2009 - 10:08 pm

    I don’t know Joc…. In New York we have neither Biscuits nor Milo and know one knows anything about Soccer- so it all sounds pretty good to me!

  2. #2 by Li Lai on June 2, 2009 - 12:52 pm

    Very Interesting read indeed! Some of the comments have hit the nail on the head – quality vs quality. I will be forwarding this to my compatriots as this will provide food for thought.

  3. #3 by Vernon on June 3, 2009 - 7:59 am

    Non-disclosure agreements between suppliers and franchisors make the quantifying of rebate values difficult. This would give you a clearer indication of the basis for these promotions. Additionally it would be interesting to find out how the selected products listed for promotion have been performing in the conventional supermarket chains.

  4. #4 by Slayd on June 12, 2009 - 4:37 pm

    I AM NOT A FRANCHISED CONVENINECE STORE, BUT REMAIN PRIVATE BECAUSE I DONT WANT TO BE TOLD HOW TO RUN AND MARKET MY STORE, THEREFORE I DO NOT GET ALL THESE REBATES ETC. WHAT I HAVE COME TO LEARN VERY QUICKLY IS THAT WE ARE BEING SHAFTED BY THE SUPPLIERS, MOST OF THE PRODUCTS WE SELL CAN BE BOUGHT FOR THE SAME PRICE AT A WHOLESALER AS IT CAN FROM THE SUPPLIER! SECONDLY IT IS VIRTUALLY IMPOSSIBLE TO GET ANY KIND OF ADVERTISING MATTER FROM THE GUYS, MAKING IT REALLY DIFFICULT TO CREATE ANY KIND OF PROMOTION. AS TO SHELF SPACE- I THOUGHT ONLY THE SUPERMARKETS GOT THESE “RENTALS”

    WITH REGARDS TO THE SOCCER TICKETS I CAN CONFIRM THAT THERE ARE TWO TYPES OF PRIZE- ONE INCLUDES ALL OTHER COSTS AND THE OTHER ONLY TICKETS- WHAT WE NEED TO REALISE IS THAT THESE ARE ALL MONEY MAKING SCHEMES FOR THE PROMOTERS DUE TO THE SMS KICK BACKS WHICH ARE GENERATED. WHAT EVER HAPPENED TO THE IN-STORE “FREE” COMPETITIONS?

    CHEERS

  5. #5 by LM on June 18, 2009 - 11:25 am

    Interesting analysis from your side but i guess the question of price is not an issue as you have mentioned earlier so the shopper expect to pay more even on promotion at the c-store. My understanding of this industry is that promotions are discussed with franchisees who are in this business to make money who will not agree to run a promotion because they like the buyer but will agree because it is working for them. I am sure that if you engaged the specific suppliers or oil companies that are running these promotions which you feel are “non-sensical” they will share their breaken point info. with you. I am one of the players in this industry and i really doubt your passion if you can make these assumptions and comments without researching the promotional success for all perties involved shoppers, consumers, franchisees , oil companies and suppliers.

  6. #6 by Troy Maidwell on June 26, 2009 - 2:27 pm

    Hi Joce,

    my view is that the promotions in the oil company c-stores worked very well in the early days, and I know this because we used to measure every promotion from a perspective of before, during and after. Franchisees were advised of their breakeven point as well.
    I do however agree that we haven’t moved on from that point yet – it’s all the same, some 10 years down the line. It’s time for something more innovative, regressive or progressive – just something different.

  7. #7 by DAVID on July 4, 2009 - 10:15 am

    Thank you Jocelyn, we really appreciate your effort for retail industries expecially for the dealers, i think this kind of aticles will help alot of them.

    I will be in Capetown by nextweek, i dont if possible we can see eachother, just t discuss more how we can also work as a team.

    Cheers
    David

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