General but Specific
To succeed with general merchandise, retailers must be picky.
With apologies to the ’60s folk group The Byrds— and the Bible—for every season, there is a general-merchandise item.
Or let’s put it another way. Not every general-merchandise item works in every convenience store. And among the items that do work, some of them are obviously seasonal.
Mohammed Hossain, general buyer for New Paltz, N.Y.-based CPD Energy, uses heavy-duty shelves outside his stores to market firewood in winter.
“We do well,” he says. “Our generalmerchandise sales are bigger in winter when stores stock firewood outside.” Of its 200 locations, CPD’s smallest store sells about 2,000 firewood bundles in winter; others sell as many as 5,000 bundles. In the summer, he switches the display to gallon-size bottles of water. Overall, Hossain estimates general merchandise accounts for 3% to 4% of his stores’ inside sales; the NACS average is 1.3%, according to numbers from its State of the Industry Report of 2009 Data.
United Dairy Farmers of Norwood, Ohio, also stocks firewood outside its 188 stores. Along with that, “We stock charcoal in summer and salt in winter,” says company president David Lindner. About 1% of his stores’ sales come from general merchandise, he says.
While variety in general merchandise is inevitable, given the disparate types of stores in the industry, it takes time to figure out what’s going to work, according to Steve Montgomery, president of b2b Solutions LLC, Lake Forest, Ill.
“There are hundreds of items that you can select from, but that takes time,” he says. “Many retailers do not want to devote the time to determine what works and what doesn’t—especially when it may vary as much as it does on a store-by-store basis.”
Vacation: All I Ever Wanted
Tourists are a consideration at some stores along interstates where souvenirs and travel needs are popular. Some Jenny’s Markets, operated by Lone Tree, Colo.-based K&G Petroleum and situated on the way to Colorado ski resorts, stock special sunglasses for skiing, according to marketing director Walter Ryan. Some stores also use spinners for sunglasses in the summer and mittens in winter.
“In areas with high transient traffic such as tourist sites and along interstates, general merchandise can definitely be a differentiator,” Montgomery says.
Michael Harrell often scratches his head as he plans general-merchandise sets for his Duck Thru stores in three different areas: the beach, rural small towns and a university city.
“The GM we stock and sell at our beach stores is entirely different than at our stores 100 miles in shore, where we serve rural small towns and our stores may be the only retail option,” says Harrell, president of Jernigan Oil, Ahoskie, N.C. His 33 Duck Thru stores follow the eastern shore of North Carolina and southeastern Virginia, including sites at Nags Head along the Outer Banks.
“At the beach, we sell coolers, suntan lotion and beach toys,” he says. However, in inland small towns with populations of less than 1,000, “we are the only convenience store and really serve as a grocery store, even a hardware store” and must stock accordingly. Duck Thru stores in Greenville, N.C., home of Eastern Carolina University, stock ECU-themed merchandise and coolers.
The Sporting Life
Sports-related products can be big, depending on the area. “We sell New York Yankees bumper stickers and other items at our stores near New York City,” says Hossain of CPD Energy.
Football is popular at Tevis Oil Co.’s Jiffy Marts in Maryland, where general manager Tom Moser uses sports-related GM products to spark interest in his stores and draw customers inside.
“At the beginning of football season, the Baltimore Ravens hold their training camp in Carroll County, where our stores are located,” he says. “We say ‘Baltimore Football Starts Here’ and stock T-shirts and caps.”
Later in the year, the Maryland stores stock sweatshirts and other merchandise, especially if the team makes the playoffs. Moser says, “When we sold Ravens teddy bears, they flew out of stores.”
Jiffy Mart advertises the Ravens products on Facebook, the company website and at store pumps through an interactive screen. Customers can print out coupons for $3 off a sweatshirt at the pump, according to Moser.
“Once customers know we have this merchandise, they come back looking for it,” he says. “We have to get the word out fast because football season doesn’t last forever.” Profit margin on the items is 50% or better. Aside from the obvious financial plus, Moser views the popular items as a tool to spark interest in his stores and draw customers inside. “A couple of years ago we only drew 60% to 65% of fuel customers into the store; now it’s up to 75%.”
The Old Standards
For David Crawford, marketing/ operations director for Las Vegasbased Green Valley Grocery, carrying propane in some stores was an easy decision. About 75% of the chain’s locations offer propane exchange to customers. “This is not a huge category for us,” Crawford says, “but it is important.” Two of his stores do propane refills due to the high number of recreation vehicles frequenting the Las Vegas area.
Along with propane displays, other general-merchandise items located outside can encourage customers to stop. “Some GM items are impulse purchases available outside the store like mulch, which a customer might see while driving by,” says Ron Coppel, senior vice president, business development for Eby-Brown, Naperville, Ill. “Windshield fluid is also big. Think how long it would take to drive to a bigbox store, park, find these items, and get out. These are convenience items for customers.”
Another no-brainer, and a big part of the general-merchandise category, is the lighter subcategory. Crawford says his 42 stores have moved exclusively to BIC lighters and have seen some sales increases. BIC recommends retailers display lighters on the front counter close to the register and provides various displays to show its range of lighters. “This is done in a very economical footprint, resulting in consistent and reliable fast turns, strong rings, and extra profits,” says Adam Blumenthal, brand manager of pocket lighters for BIC USA Inc.
Along with the company’s recent Collectors Series of Lighters, BIC keeps things seasonal with its Flex Multi- Purpose lighter, geared to outdoor uses such as barbecues and tailgating.
Other Profit Possibilities
Coppel of Eby-Brown encourages retailers to consider interchangeable sets of general merchandise: “Many retailers have success using quick in/ out displays of nontraditional items.”
He cites a rack of cooking utensils as one successful promotion he has seen. In/out displays are usually items—bought at a very good price— that the store doesn’t usually carry and likely won’t once the display sells out. The hard part may be managing the inventory once the display gets low. “You have to use an aggressive discount to move out the remaining items,” Coppel says.
But while offering GM items is important for some chains, keeping an eye on sales space on a store-bystore basis is equally essential—and so is knowing your competition. Green Valley Grocery, for example, has been shrinking GM displays as a result of supermarkets and discounters expanding to 24-hour operating formats. “If you can’t compete in a category, you shouldn’t be there,” Crawford says.
Retailers must give time and thought to tailoring general merchandise or they could wind up with a bargain bin of lost profit. “Successful retailers carry what their clients want to buy and not what they want to sell,” Montgomery says. “When a retailer has a disproportionate investment in GM, it is because they are chasing potential rather than actual margin.”
Make the Most of GM
- Tailor merchandise to each location, such as ski-related items at stores on the way to winter resorts.
- Advertise merchandise on social-networking sites or at the pumps to let customers know of its availability.
- Placing items such as mulch or windshield-wiper fluid outside the store can lure in customers who see the products from the road.