Stock rotation the key to forecourt store growth
revenue sources for the leading supermarket groups, either as part
of their own petrol retail business or in partnership with fuel
companies. But maximising the potential of these small stores has
always been difficult because of the limited shelf space available
- until now. Chris Jones reports.
New research from market analysts Datamonitor suggests that retailers are turning to stock rotation to ensure that they meet the demands of customers throughout the day.
"By replacing the traditional approach to inventory management with a carousel of breakfast, lunch and dinner items occupying the same shelf space at different times of the day, forecourt retailers wanting to stay ahead in the race for convenience consumers can maximise the potential of a strategy which pushes up sales and encourages customers in," said Datamonitor analyst Pandita Louram.
The stock rotation strategy is already used by forecourt retailers in the US, and builds on the trend towards out-of-home food consumption. "By 2007, there will be 72 more out-of-home meal occasions per European adult than there were in 2002," said Louram. "Forecourt shops battling for custom in the highly competitive convenience arena may find the key to a lucrative future if they literally wake up and smell the coffee."
"A menu starting with a Parisian croissant and a cappuccino followed by a fresh Caesar salad and ending with a ready-to-heat tagliatelle dish is far more appealing than the familiar but relentlessly mundane sandwich or Croque Monsieur. Forget impulse purchases and confectionery, in order to survive convenience retailers need to increase and diversify product ranges," she added.
Stock rotation has already been shown to work in the US, where it has been adopted by the world's biggest convenience store operator 7-Eleven. The sheer size and sophistication of the company's distribution network - which allows it to track every sale, in every store, minute by minute - has enabled 7-Eleven to ensure that the right products are on its shelves at the right part of each day.
"By dawn, customers will find shelves loaded with egg and sausage muffins and continental pastries. By ten, pitta pockets and Tex-Mex wraps replace breakfast items and are versatile enough to serve as either lunch or dinner options. This product rotation secures regular customers return twice or even three times daily whilst the opportunities to attract new custom are made all the more possible."
But the complexity and time consuming nature of stock rotation means that it will not necessarily be suited for every European retailer. "Stock-rotation may be a solution to the constraints of size but its success depends largely on the suitability or adaptability of other aspects in the forecourt store," Louram said. "Staff numbers must be sufficient as products need to be regularly alternated throughout the day. Deliveries must be regular and efficient whilst a degree of storage space must be available"
She continued: "Pricing must be clear and accurate in order to direct the consumer with ease to their product of choice whilst avoiding any confusion such periodic reorganisations may involve. The store's layout also needs to be arranged in a fashion that compliments rather than hampers the shopping experience."
The cost of additional resources may deter some retailers, she said, but for those well-suited to stock rotation, short-term investment will be rewarded by long-term profits.
"Stock rotation gives forecourt retailers the opportunity to make shelf space work three times as hard," Louram said. "A strategy committed to ensuring fast moving products from freshly baked pain au raisins to tantalising parmesan and rocket salads means the choice of the customer remains at the forefront on the forecourt all day, everyday."
