The 3-Part Call-to-Action Against Rising Convenience Store Operating Costs

By Joe Skupinsky

 

 

cutting operating costs

We’re living in politically uncertain times. While the new Presidential administration has promised to be pro-small business, there’s no guarantee that convenience store operators will experience change at the local level. That’s the American democratic process and the power of states’ rights. It’s also part of the frustration for business owners who don’t see change—they just see rising operating costs while their gross margin dollars slow down. That was the key point of this recent article in NACS Magazine. Direct store operating expenses (DSOE), including wages, payroll taxes, health-care insurance, card fees, utilities, repairs/maintenance and supplies, are all on the rise. These rising costs jeopardize the operator’s profitability.

Those in the convenience store industry with strong political convictions and a penchant for activism know the reality: When it comes to costs that are not under your direct control, business owners are at the mercy of government action (or inaction) at the state and local levels. But this is not to say that business owners are not in control over efficiency. In these challenging times, it’s crucial to make every dollar count and to generally increase accountability in your organization.

There are the 3 areas every convenience store operator needs to focus on in 2017:  

  1. Document and be proactive about the “little things.” The so-called little things are often part of a bigger picture of efficiency. Your managers know what’s working in their stores and what’s not. They know the faulty equipment, they know when the promotional placement isn’t working, and they know their staffing needs. And if your store managers are too wrapped up in the day-to-day operations to report it, then that’s a task for regional managers. The question is: are you providing your team the tools of communication to report these issues before they become larger problems? Are you responding to these concerns in real-time?  

  2. Manage labor costs. According to NACS data, health care and wages comprise more than 48% of DSOE. More states are raising their minimum wage above the $7.25 federal wage. Leroy Kelsey, director of industry analytics at NACS, points out that convenience store operators have direct control over the decision to offer a higher hourly wage. More convenience store operators may choose this path considering that more mass retailers are bumping up their hourly wages to $10 per hour. However, the key is to retain good employees. “You’ve got to close the loop on training people, acknowledging them and presenting them with opportunities to grow. The best retailers are doing that right now,” he advises.  

You’ve probably seen these graphics floating on LinkedIn and other social networks. Employees stay when they are paid well, challenged, promoted, involved, on a mission, empowered, and trusted. Creating such an environment requires a grassroots effort that needs the support of regional managers and store managers. It will require the ability of the organization to identify and recognize talent. If you think it’s impossible, think again. The right tools make it possible for daily or weekly reporting of employee achievements at the store level.

  1. Treat each store like a microenvironment for efficiency. Speaking of a grassroots effort, convenience store operators need not wait for the next big promotion to follow up with stores. Senior managers and regional managers are likely on the same page when it comes to best practices for operations, but they need employees to comply. Standardize those best practices with checklists that become a routine part of a manager’s reporting system. Then, assign tasks based on those checklists, as needed.

If the thought of a paper checklist immediately turns you off, we don’t blame you! It’s time to go paperless with your process, especially for operators with dozens, maybe even hundreds of locations. Imagine having the ability to make a change, whether it’s the way a store is restocked or the way your foodservice team handles the afternoon rush, and then having the ability to observe and document that change over a period of time. Mobile tools like Zenput give managers that flexibility.

Zenput Helps Improve Accountability

I could happily extol the benefits of using Zenput for the next 500 words, but I don’t think that would be as effective as if you heard it from a major convenience store retailer, MAPCO, which uses our platform. Watch MAPCO’s testimonial or read about the eye-opening operational insights they have gained and acted on, and please feel free to reach out to us with questions that pertain to your specific needs.

Download the MAPCO case study

Also, while you’re visiting, please check out examples of the mobile forms retailers can customize for store-level insights. Remember: Forms are distributed in real-time to mobile devices via cloud-based technology. No Internet in the store? No problem! The information will sync online once a connection is restored.

Subscribe to Zenput's Blog