Change is accelerating
STAY AHEAD WITH THE POWER OF 7 ELEMENTS FOR FUEL and convenience RETAIL SUCCESS
Best-of-practice fuel and convenience retailers maximize performance by considering the role of 7 Elements in the daily tactics and strategic horizon of their sites. The 7 Elements are price, location, market, merchandising, facilities, operations and brand. Optimizing the 7 Elements depends on a fuel retailer’s specific business, but only an integrated focus can ensure that every possible area of value is being leveraged.
"Uncover Hidden Value with 7 Elements for Fuel and Convenience Retail Success"
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7E makes business decisions clear
As a filter for decisionmaking, the 7 Elements perspective supports executives charged with long-term strategy as well as on-the-ground analysts and managers. Over the years, we have found that:
- In isolation, no single element can predict sales performance with any reliability. The consumer experience is multifaceted, so no single factor drives a consumer’s purchase decision.
- Retailers can be held back by their weakest element. Total Site Profitability is a result of the sum of components.
- There is no single formula for influencing consumer behavior. Optimizing the 7 elements depends on a market-by-market, product-by-product, and consumer-by-consumer analysis.
Is your 7E Score high enough to succeed in your market?
Overview of the 7 Elements
Thrift-conscious behavior kicked into high gear in 2008, and now it’s become standard for price-conscious consumers. As consumers, we want to be sure that we’re getting good value for our hard-earned dollars. Corporate strategies dictating pricing posture can be set to drive volume, profits or a combination of the two. No matter what the strategy, the price must be perceived as competitive by consumers.
Selection of fuel and convenience retail locations is a complex process with many angles to consider. Site location must be understood relative to consumers and their habits — where they live, work, go to school, run errands and play. Concepts such as critical mass, backside of demand, natural barriers and competitive environment are just a few of the characteristics that distinguish marginal from exceptional site selections. Fuel and convenience retailers adding new locations must also consider the impact to their existing network and current competitors. For example, a location that’s great for one retailer may be poor for another, because its cannibalization profile could be dramatically different.
Every fuel and convenience retail site exists in the context of a broader competitive landscape. Successful retailers understand their key competitors and have insight into how they might react to marketplace changes. They also know where their competitors are building, what they are building, how they operate and how they price. Although the hypermarkets have proven to be fierce competition to many, best-of-practice retailers — those who manage all 7 Elements — are thriving against them.
Offering the right products and services, at the right time and with the right attitude, is the art and science of merchandising. Success depends on the correct product mix, adequate inventory, fresh merchandise and a clean, neat appearance. Retailers with best-in-class merchandising practices emphasize category killers. These low-priced, low-margin popular items draw customers into the store, where they tend to make impulse, high-margin purchases.
A facility must fulfill the needs and demands of customers. That goes well beyond considerations about the physical building. Efficient flow through the shopping and purchase experience is crucial. For example, how easy is it to maneuver into the lot and around the property? Are there enough fueling positions to meet customer needs at peak times? Is parking space sufficient for the convenience store customer? Network consistency is also a factor, as it promotes a certain familiarity and comfort level with customers, who like to know where to quickly pick up the products they need. Consistency is an often overlooked challenge for retailers with multiple channels of distribution.
Site-specific, personal and often intangible aspects of management and customer service should complement the investment at any specific site. The best facility and location in the world will have difficulty maintaining volume with inadequate operations. Customers expect quick service, courteous employees, well-stocked shelves, well-functioning equipment and fresh fast food. The impact of employees expert in customer service can’t be overestimated.
Whether local hero or multinational giant, a company’s quality and consistency is reflected in its brand. Retailers should understand the position of their brand relative to critical mass and saturation. Before a fuel and convenience retailer reaches critical mass, the network is vulnerable to competitive threats and acquisitions. Once critical mass is achieved, new sites added to the network will experience greater gains in market share than in outlet share. In other words, as new sites are added to the network, volume share increases at a greater rate than outlet share. On the other hand, once a brand moves beyond saturation, it begins stealing volume from other sites in its own network.