5 Mistakes That Sabotage Your Convenience Store Marketing & Sales Success. Artwork

Convenience Marketing Group with Tim Lazor

Tim Lazor's Unique Retail Marketing Firm Specializing In Growing The Convenience Store Sales by focussing on Customers. We help: Convenience Store Retailers…Convenience Distributors…Convenience Manufacturers & Suppliers……Grow their sales and margins with differentiated, disruptive, and value–creating marketing programs.

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Convenience Marketing Group with Tim Lazor

5 Mistakes That Sabotage Your Convenience Store Marketing & Sales Success.

January 27, 2025

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When you learn to see...

•The convenience industry and its' customers DIFFERENTLY,

•Your store model and retail marketing DIFFERENTLY...

...ONLY THEN can you create new sales and growth opportunities.

Let's explore:

Why doesn't the convenience store industry grow commensurate with the growing importance of convenience in every other business category?

Are industry profits healthy or not?

Are you creating new customer value or just looking for the next Magical Product at NACS?

Are you a PASSIVE retailer and marketer? Hint: That's the root of your problems...not competitors. (They're passive too)

Are you advocating for your customers FIRST in your company...or yourself? (Amazon's Jeff Bezos advocates for customers first.)

Are you investing time and dollars into creating and marketing new customer value? How?

Why does the convenience industry RANK LAST when it comes to investing a portion of its sales into marketing? And why do industry leaders like Sheetz do the OPPOSITE?

Where do you start to create a better marketing budget?

Ideas for the industry to get itself unstuck.

And much more!

http://conveniencemarketing.net/

5 Invisible Mistakes That Sabotage Your Convenience Store Marketing & Sales Success.

Podcast. Tim Lazor

You're listening to the Convenience Store Marketing Podcast with Tim Lazor

This is a podcast for leaders of convenience stores, leaders of convenience distributorships, and also manufacturers who make things for the convenience store industry.

And we come here to gather and learn new marketing approaches to grow sales and to grow customers. And we do this with differentiated marketing plans and programs which we share. We also do all of this by proactively creating new value, solving customers, convenience customers, changing convenience problems, and helping you become a better retail marketer.

I'm Tim Lazor, your host. Welcome to our podcast. Here is one of my favorite business quotes of all time. Quote, "It's not what you look at, it's what you see." And that quote is by Thoreau. The reason I love that quote is because, first of all, I think it's the truth. Secondly, I think that if you're going to change anything, if you're going to change the model and the way any industry operates and creates value for its customers, you absolutely have to see it differently before you can do anything to create it differently.

And honestly, when it comes to the convenience store industry, I really see retailing a lot differently. I see the convenience distribution world and model a lot differently. And I even see manufacturing people and organizations that make products and services for the convenience store industry a lot differently. The main reason that I see things differently in the whole convenience store industry, I see through the lens of my ideology and what I believe about the convenience store industry and what I bring to it.

And there's a couple of things, just so you understand where I'm coming from in seeing the industry differently. First of all, I bring a point of view from a retail marketing standpoint. And that's based on some of the experience that I've had in my life. But that's one of the things that's influenced my ideology toward the convenience store category. The second thing is, I am a proactive person. And I think one of the things affecting the convenience store industry as a whole is passiveness. Because a lot of the leaders are not proactive enough in the industry. And we'll get into that a little bit more in this podcast. And if you've heard other podcasts that I've produced, you'll also see that that's a running theme that comes to my ideology about the convenience store industry.

The other thing that I bring to the convenience store industry is that I believe that marketing and advertising and promoting and communicating value to customers, it always works. Whether you're using traditional media, whether you're using social or digital media as well. When the messaging is centered around value, value creation, problem-solving for customers first. Not you, for customers first. Then your advertising and marketing budget will always work. It'll always get a return on your investment. And you might be pleasantly surprised by how much of a return you can get. And I can talk a little bit about my Sheetz experience and some of the other things I've done in the convenience store category to prove that point.

I also believe that the only reason for marketing in this category, or any category for that standpoint, is to grow sales, to grow margins, and to grow customers. That's the only reason for marketing. Any other buzzwords around that, you're not going to get an audience here with me about that. So I believe that the job of marketing is to grow sales because you're communicating your value.

So the title of this podcast is "five and a half things that I see differently in the convenience store industry than you do." And I want to set the table here with a big overarching question. And that big overarching question is this. As convenience, as we know convenience, as convenience becomes more and more important in every aspect of every industry, no matter what it is. The question I have is this. Why doesn't the convenience store industry grow commensurately with this trend of the importance of convenience? That's the central question that I want to address and explore in this podcast.

Okay, so before we get into the five and a half things that I see differently, I want to start with some facts just to put a framework around the industry. And this comes from NAC's State of the Industry report, I think it was 2023, and the IBIS report as well.

So the industry is $860 billion total. Of that, $328 billion comes from inside the store sales, which also includes food service. And the other $532 billion comes in fuels or comes from fuels and gasoline. Now, when we look under the hood, and we look inside the store only, we see that sales were up about 1.3%. However, the caveat and all that was inflation drove a lot of that. The second thing we look at is gasoline, which was down about 11%. Now, think about this, the convenience store industry has 80% of the share on any given day of fuel purchases, you have to go to a convenience store to get your fuel no matter what. However, gas was down by 11%. And that was driven by lower prices. And the only point that I make to make this point is that even though you have 80% share, you're still hostage in a lot of ways to gasoline and the fluctuating prices and margins in that part of your business.

Here's another fact. Customer counts were down 0.4%. The average convenience store gets about 1500 customers a day, roughly according to this report. That's a ton of at bats, and I'll come back to that later. And then overall store counts in the industry is about 152,000 stores. And that's after four years of decline, it ticked up just a little bit here recently.

CSP 2024 STORE COUNT UPDATE: https://www.cspdailynews.com/company-news/us-convenience-store-count-edges-down-slightly

Another interesting fact about the convenience store industry is its profits. When you look at food service profits and fuel, roughly it's about a 37% profit margin, which is nothing to sneeze at. Now remember, we're just looking at 2023 as a marker in time here. But when you look at a really a four year trend from 2019 to 2023, you see almost a 3% decline of growth in the convenience store industry. So I wrap that piece of it all up to say the profits in the industry are healthy at 37%. But it seems like it's such a grind for the convenience store industry to grow in overall revenue, in profits, in customer counts, in store growth. And that is a conflict in my view, and the way I see the world. It's a conflict because as convenience and the importance of it grows in every single industry, the industry that invented convenience, the convenience store industry doesn't seem to be the boat floating with the tide.

And I want to explore that with additional things, five and a half additional things in this podcast as to why I think that's happening and see if I can convince you to see things a little bit differently, or maybe a lot differently in the convenience store industry. Also, one more note, as after we explore these things at the end of this podcast, I'll give you my five specific recommendations as to what I think should be antidotes and ideas to solve these problems, to grow your store customer counts and your sales.

Here's the first thing that I see differently and that I believe. I think you need to differentiate your store with value creation, with solving customers, evolving convenience problems, and incorporating your retail ideology into your stores and into your marketing and not relying on magical products.

So what do I mean by a magical product? A magical product is what everyone is looking for every year when they go to the NAC show in October. It's a product that's high margin. It's easy. You put it on your shelf. Customers come in and demand it from you while you wait behind the counter at your store. It requires little to no labor or work on your part. And when customers buy it and you ring it up and you put all that profit inside your cash register, it's like magic. And that's why I call it a magical product. One of the most recent ones, obviously, was the Jewel product a number of years ago, which was a high ticketed price, high margin. Customers came in and demanded it, but it was a magical product.

And I think that convenience retailers continue mistakenly to look for the magical product as a solution to their problems and their problems are mostly caused by them being passive and not being proactive in creating new value. So when you rely on looking for a magical product you automatically and almost invisibly get yourself into sales and margin trouble.

There's a terrific book by a guy named Ron Baker and the name of the book is called Value-Based Pricing and in that book Ron Baker discusses that one of the things and one of the only ways that you can disrupt an industry is not by incremental improvements but by totally disrupting the model of the industry. So when you look back at some recent history and you look at things like Amazon and you look at Apple stores, take a look at Uber and Lyft. The running theme in all of these businesses was they completely disrupted and turned over the current model of the business and created massive value inside it to create a new model of business that met the demands of customers.

And when I look at businesses like that I get excited because when you're looking at it through the correct lens which is what is the new model how did they disrupt.

However when we look at the convenience store industry we don't see a disruption of the model yet and that's both the good news and the bad news from my vantage point in the way I see it.

So at the top of number one when I said you need to differentiate your store with value creation instead of finding a magical product what I'm really saying in the subtext of all of that is you need to change the model of the convenience store to create more value more problem-solving value for that changing convenience store customer that's out there. And you will not the answer to this problem with creating a new model does not come from your brain and inside you initially. The place to look for the simpler place is from the customers and getting closer to the customer asking the customer getting in touch with the customers and where those emerging convenience store needs are going to land.

And when you start to see that overarching direction from about 5,000 feet up you'll start to see the pieces the nettles the glimmers of what that new convenience store retail model is going to look like for you. And just one final point here under number one in terms of differentiating your store. One of the things that you need to think about is what I call your retail ideology. And what I'm asking you to try to define for yourself is this. What is it that you believe about the convenience store industry that makes you passionate about it? What is it that you believe about customers? What is the one problem that you want to solve for convenience store customers?

And I would even put it to you this way from the book The Strategist which is by a woman named Montgomery who wrote this book. And here's a question from that book. If your store or stores went away tomorrow would there be a hole in the universe that couldn't be filled by anybody but you and your group of stores and also by your ideology? If the answer to that question is no there would not be a hole in the universe by our absence then you've got a problem in differentiation and value creation.

And one of the simplest ways to solve that problem is what's called a value wheel. I'm not going to go into that in this podcast maybe I'll devote another podcast to it but if you need help with it you can reach out to us and we can certainly share some information on how to create a value wheel that helps you differentiate your store create new value more value and also disrupt and create a new map new model of a convenience store.

Okay let's move to point number two. I believe that it's your passiveness that causes most of your sales and margin problems in your retail stores and it doesn't come from your competitors. This is another way that I see the convenience store industry. You've all heard the term waiter or as a waiter in a restaurant is waiting on customers and I think that the convenience store industry is literally waiting around waiting for a customer to stumble in and buy a magical product and I don't think based on my experience that that's the best way to grow your business and I don't think based on my experience that that's the best way to grow your business.

Here's another way that I see the convenience store industry and they're literally behaving like a passive warehouse store.

And not as a proactive retailer. As I've said before, marketing's job is to grow sales and to grow margins and to grow customer counts. And to do that, marketing has to create customers. It's not designed to wait around and wait for customers to stumble in and find you. It's my vision and my hope that you see this a little bit differently now and you want to become a proactive and a proud retailer. Somebody who's a hustler, somebody who wants to sell things in their store and be proud to sell things in their store.

I think one of the things that's happened here over the last 20 years is as the younger generation has gotten to become marketers and in the marketing department, I actually think they're a little embarrassed to ask for the order, to ask for the sale, to drive sales into the store, to create value and offers and promotions that get customers excited about stopping into your hard physical retail store. And I think that that shift has hurt the industry. And at the top of this podcast, I think it's why the industry doesn't grow when convenience is becoming more and more important in every industry. The convenience store industry just seems to stagnate and grind along. And it shouldn't be that way. I think that if any category in this in America basically has big opportunity, the first on my list would be the convenience store industry. And the fact that it isn't growing as fast as probably the rest of convenience should be continues to bother me. And I think you need to look at it differently.

Number three on my list and the way I see something differently in the category is this: you do what's good for you first, not for the customer. I have two examples of that that would be an older one and a recent one. In my most, my older example of that is loyalty cards and loyalty programs in the convenience store industry.

I don't necessarily think that a loyalty program is a bad thing. The problem I have with a loyalty program is you're doing what's good for you by the data that you collect with the loyalty program. And then you turn around and you pump out all this sludge back to the customers that has no value to them. So they make the mistake in a sense of signing up for a loyalty card thinking that it's going to add value to their life. And what happens is it just becomes spam of promotions and outreach and communication either into their email or to their phone. And then they basically don't want it because it doesn't have much value.

The second program that I see in convenience stores right now is RMNs or retail media networks. And this is a cousin of the loyalty card. A retail media network is basically a radio station or a digital program that the convenience store owner runs at the store. They basically have a media company. And then they turn around and they sell either ads or they sell the data that they collect back to the consumer packaged goods companies so that the consumer packaged goods company can do something for themselves that's in their interests. And I have a real problem with that simply because the customer isn't coming first. I'm not sure that with both loyalty cards and the way that they're structured or especially retail media networks and the way that they're being put together now. Yeah, it's a great opportunity for the convenience store owner or owners to drive revenue to their bottom line.

But my question is and my first question is this: is it really creating value for the customer that the customer wants is demanding from the convenience store? And the answer to that I think is a resounding not really at this moment. And I think that what will happen with retail media networks over time is they'll fade away simply because they don't create any new value for the customer inside the store.

An additional idea that I would add on to point number three here about you know you do what's good for you but not for the customer first. And some of you may be doing this but I highly recommend visiting retailers and businesses that have nothing to do with the convenience store category. You know go to trade shows that have nothing to do with the convenience category. In addition to going to the NAC show every year, it hits some different types of shows. Go to vintage collector shows, go to car dealership shows, other type of shows, other type of retailers, upper other type of businesses and just see and steal ideas on what's working for them.

One of the problems I have with the convenience store industry is that it continues to be and this is what I think makes it weak and why it's not growing as quickly as it should is that it's too insular and when somebody gets a loyalty program somebody else copies that loyalty program and then somebody else copies the copy of that loyalty program and before you know it everybody's just breathing the same fetid air and I think that's a recipe for boredom and for disaster and especially for not creating value for customers. So get outside the box see what other businesses are doing out there and try to steal some ideas that would create new value for your customers.

Point number four as far as how I see the category of convenience and convenience stores differently is this: you need to invest more time and more money into your marketing. However, marketing in my world view is when you're creating new value for your customers then you take that value and you differentiate it and then you also incorporate your retail ideology into your stores along with the value that you create.

Once you have that whole package of value creation and differentiation and ideology together then and only then are you permitted to market it and by marketing it I mean communicating all of that to customers who are out there with convenience problems. That's the time when you communicate it out up until that point until you create that new value that earth-shattering value and you've talked to customers and you listen to them until you start to listen to those customers first and create that value there's no point in really communicating anything out to them because that you really don't have anything to say at that moment in time but you can change that by simply focusing on creating new value for your customers.

Now I know that putting together a budget for marketing is foreign to a lot of convenience store owners and I'm going to address that in a second. However, one of the mistakes I think convenience store owners make and a lot of them do this is they try to quote-unquote save their way to success and by what I mean by that is rather than create new value and then keeping some of that value for themselves what convenience store owners tend to do is they turn around and they beat up their suppliers or their distributor to try to save money or save their way to success and maybe they go out and shop at a Sam's Club or they shop at a Costco for products trying to drive their costs down within their retail structure and their retail organization.

That's a good mindset but by itself is not going to create future growth and success. Yes, you need to keep your costs under control you do need to fairly negotiate with your distributor but to beat them up thinking that your profit should come out of their pocket over the long term is a mistake in my view and what will happen is you won't get the service from your distributor or from your vendors that you need and why would you because they have to make a certain amount of margin as well and as you know those are thin lean margin type of businesses as it is. So a key point in all of that is be more obsessed with creating new value for your customers rather than turning around and beating up your suppliers for pennies.

So let's riff a little bit more off of my idea the way I see the convenience store category about marketing and my question is this: do you think that marketing works? Do you think investing dollars your dollars out of your operation in marketing will work and generate new revenue and new sales and new foot traffic inside your stores? And I think that deep down this is a conflict with all retailers because I think they believe that it can and would work but the problem is they don't know how to do it and there's a framework and a methodology to doing this and before we kind of get into that and maybe we'll do it on another podcast instead of this one I want to talk about creating a budget.

There is a report that you can find online it's published by Schoenfeld I think it's Schoenfeld associates and it's called the advertising to sales ratio report and in that report there's hundreds of categories of business that historically what Schoenfeld does is they break down how much they spend from their sales and place into their advertising and marketing budget and you'll see in that report a whole bunch of retail categories as well and how much they take from their sales and devote it into advertising hence the title of this called the advertising to sales ratio. It's a very good and it really is helpful for starting with a budget.

However, I want to talk about a conflict. If you look at the Schoenfeld advertising to sales ratio report of 2024 you will see that convenience stores allocate 0.05 percent of their sales and plow that back into advertising and marketing. If you look a little further and you look at gas stations as well and you compare them to the hundreds of different business categories including a lot of retail categories that are in this report you find the convenience stores at 0.05 percent of their budget going into advertising and marketing is the lowest in this report. I want to say it one more time for emphasis because of a comparison I'm about to make: 0.05 percent of sales going into advertising is the lowest advertising to sales ratio in the Schoenfeld report for advertising to sales ratio.

Okay, I have a question and then a comparison to make with Sheetz convenience stores. The question I have is why is this? Why is it so low? Why is it that an eight hundred and sixty billion dollar category with a 37 percent average profit that the convenience store industry is spending next to nothing on its marketing and communicating of convenience out into the world? This question reminds me a little bit of the one of the final scenes in the movie A Few Good Men when Tom Cruise is questioning the general about moving Santiago when he uses this logic of if your orders are always followed and you gave the order why did Santiago have to be moved off the base? And I would use that exact same logic by asking it in this way: if convenience is so important and we're the people that offer convenience to the world why is it that we won't tell anybody about it through our marketing? Why? Why do Santiago have to be moved off the base?

Okay, let's go to that comparison that I promised you. When I worked on the Sheetz convenience store business for seven years and did all of the advertising and marketing we typically allocated about five percent of inside the store sales to marketing and advertising. We did not even include an advertising to sales ratio based on gasoline sales because of the thin margins and the volatility of gas pricing so we simply used five percent of inside the store sales and allocated it over to advertising and marketing to communicate our value out to the world.

So now that you know the difference in an advertising and marketing budget of 0.05 percent for most of the industry but when you look at an industry leader like Sheetz and I'm sure if you look at some of the other big players in the industry they would be about five percent of inside store sales that are allocated to their marketing. When you look at that comparison and you look at the results of the growth of somebody like Sheetz where do you think the difference in success came from? There's really only one factor that I can see and it really comes down to creating value, differentiating it, having an ideology and then spending money, investing money in a marketing and advertising budget to tell the world about your differences.

So the way I see it, you have a choice to make here: you can either wait and wait on customers, you can be passive and wait for somebody to tumble into your store and buy something from you or you can be proactive, put together a plan, communicate your differences out there to the world and grow your sales, your margins in your customer counts. If convenience is important to people in all categories of business and it is, at some point you have to invest money into communicating that you offer convenience and value to shoppers.

Point number five that I would like to make is that from my vantage point it seems to me that the industry right now is stuck and let's be honest in some cases it's downright boring. But the good news is it does not have to be that way and if you want to change it you can change it. And just to drive this point home, and I'm going to do another podcast on the trends in the industry, I'm going to tackle them and I'm going to have some antidotes that I would recommend to combat the boredom that we all might have with the industry.

But just to ask a couple of questions here, and this is what I mean by the industry being stuck:

How long are we going to drone on about things like food service being important? Think about this for a second. Sheets and the MTO food program was invented and introduced in Maryland in 1986. It's been almost 40 years and it has been wildly successful for Sheets, so I don't understand why there's still controversy or a question around whether food service is important in the convenience store industry or not. There is 40 years of evidence to prove that it is important. If you can't do it, or you don't want to do it, perfect fine. Let's find something else to do that can drive sales and margins inside the convenience store or offer more convenience value to customers. It's okay. If you don't want to do food service, let's just stop talking about it because it's getting boring.
Here's another question: there were probably about four magazines and a whole bunch of websites and things that cover just the convenience store industry. It's magnificent in the amount of coverage that the convenience store industry gets. However, do you find yourself stacking up those magazines and not reading them? So you have a pile of, you know, 12 or 24 or 36 of those things that you never get to. My question is why don't we ever get to them? Why are we stuck? Why are we bored? Why are they not offering enough ideas, innovation, value to keep us engaged and interested in the industry? I just find that we seem to talk about the same things, the same categories over and over and over again and as a result I find myself getting a little bit tired with the industry when I know it doesn't have to be that way.
Here's another challenge and another question: tell me the five most earth-shattering new innovative ideas that came out of NACS this past year. Maybe there are five. I don't think I could name them but maybe you could. But that's a challenge and a question. And I also look at the industry and say who is getting promoted inside the convenience store industry and why are they getting promoted? And the question and the challenge I have with that is who are the industry leaders and the butt-kickers that are out there innovating and adding new value, new sparks of ideas to the convenience store space? And I don't mean a redesign and a new, you know, upgraded logo on the outside of your store or something like that. I mean something that's new and innovative and convenient and earth-shattering that everybody has to pay attention to. And my guess is the answer from you is I really can't think of anything at the moment.

Again, it doesn't have to be that way and I'd like to wrap up this podcast by wrapping up the five things that I would recommend now and how you can see and initiate things in the industry that are different and it will help you grow:

You have to differentiate your store. Don't worry so much about magical products and products inside your store. Try to position your store and the value you create with the overall store model in the marketplace. That's what will make you special. If you get too micro-focused on the products, you'll just end up searching for the next magical product at NACS.
You have to be a lot more proactive and initiate your ideas into your store and into the marketplace. It's your passiveness and you're waiting for customers to come in. It's getting you in trouble with your competitors. You need to stir your marketing pot and there's probably one or two ideas that you've been thinking about but haven't acted on and I would suggest that just find one of those. Find a way to initiate it inside your store and into the marketplace and see how it works. I will warn you however that when you do that you'll probably get some blowback from your employees because you're going to be creating extra work and I'll talk about that in another podcast. However, drive and initiate marketing ideas into the marketplace. Try to find money from your sales, not just 0.05%, but maybe something closer to 5% and really put in marketing initiative and a communication effort out there into the world about why and how you're creating value.
Do things that are good for the customer first. Ask your customers, and a methodical way to get feedback and input and research and surveys from your customers. Number one, that will be great for you, but two, it's actually going to spark ideas for new marketing initiatives and ways to create new value for your customers.
And I'll reiterate this again: you have to find a way to build a marketing budget out of your sales inside your store or overall sales. You have to find a way to do that. I would suggest you look at the Schoenfeld and Associates report to figure out where you might start. If you want to try to save your way to success or have a paltry 0.05% of your sales budget into marketing, you'll never get the word out about what's special and different about your store and how to make it a destination.
If the industry wants to get unstuck, it has to obsess about creating new value and do things for customers and what customers want first, not second.

And finally, number five and a half is if you need help or want to discuss how my firm can help you create new value and market your differentiation to the world, you can give us a call. The phone number here in Pittsburgh is 412-423-0044. You can check us out at our website, which is www.conveniencemarketing.net. You can email me at my name, Tim, T-I-M, Lazor, L-A-Z-O-R, timlazor at comcast.net. If you need help putting together a focused sales driving, customer driving, traffic driving campaign or promotion, or just innovative ideas that we can help with, give us a call to discuss. We'd love to hear from you. My name is Tim Lazer from the Convenience Store Marketing Group, and thank you for listening. Tim Lazor

http://conveniencemarketing.net/

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