Technology is not a silver bullet, says retail solutions specialist

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Retailers can use technology to determine top-selling lines

Jon Dunman (JD), vice president of petrol and convenience at Torex, the global technology solutions provider, talks to Retail Times editor Fiona Briggs (FB) about the retail trends, which can drive sales

FB: How important is technology to retail businesses?

JD: Technology is not a miracle cure for convenience stores and forecourt retailers. Technology on its own is no use to anybody. There are three parts to it: technology, people and process and you have to have all three to benefit.

FB: How will convenience stores be impacted by the current economic climate including the recent VAT hike and public sector job cuts?

JD: It’s all quite a worry but for a predominantly grocery-based business, it’s not going to have the same effect. Buying a new TV is optional, feeding the kids tomorrow is not.

The grocery trade has always been shielded more than anyone else and, while there is 10% unemployment, 90% are employed.

FB: Has the transition of a CTN, majoring on confectionery, tobacco and news, to a fully fledged convenience store, selling fresh and chilled foods, boosted the independent retailer’s chances?

JD: Yes, as has the move to frequent, top-up shopping. The move towards chilled and fresh will continue and anybody that has not embraced it does need to keep pushing it. Retailers have to invest in wastage to build trade and it will take at least 12 weeks for customers to feel a retailer will have availability of fresh product. That’s the top up mission they will come for, it’s the distress purchase.

FB: How can independent convenience stores compete with multiples?

JD: As an independent, if you can see an opportunity, you can take advantage of it today. A multiple can’t, they are much slower to react. The best independents are light years ahead of the multiples because they can play to their local community.

FB: What does that involve?

JD: It means ensuring customers know what is available and stocking the right local lines.

When there is snow all over the place, nobody is going to drive to the supermarket, and independents can win by being light on their feet. But it is only going to happen if the independent actually does it.

Dunman: independents can play to local community

FB: What role can technology play?

JD: Convenience retailers have to be multi-taskers but they can make use of technology to determine top-selling lines, for instance. Eighty per cent of a c-store or forecourt’s turnover comes from 200 golden lines. If a store has constant availability of those lines it will drive up turnover. It will deal with most of its customer needs – that’s where the technology starts to help and then people and process come into play.

Similarly, technology can help stores understand what is important to customers in a local market. Traditionally, c-store stores and forecourts have been pigeonholed as serving neighbourhood and transient markets respectively. However, a transient and on-the-go customer may have a neighbourhood-style shopping habit, buying a meal for tonight on the way home, for instance.

We are not telling them how to run their business but helping with the things that are difficult for them.

FB: How will new consumer technologies impact convenience retailing?

JD: Consumer technologies, such as mobile apps, will take off in time but not as a function of the technology but as a result of mass acceptance of the technology. It will only happen over time and with the natural progression of younger people.

In-store technologies, such as self checkout, have to be spot on to win acceptance. Note acceptors, for example, are notoriously difficult to manage.

Pay at pump technology has huge potential in the UK but is currently underdeveloped compared with Europe where there are lots of unmanned sites.

There’s growing acceptance in the UK for pay at pump and, for dealers with a range of pump technology on their forecourts, Torex has a software solution to provide consistency across technologies, which is ‘hardware agnostic’.

FB: Doesn’t pay at pump reduce store sales?

JD: It’s a myth pay at pump impacts store visits because impulse is such a small part of purchasing. For fuel only customers, who don’t want to go into store, not going into store is an advantage. For consumers who do want to go into store, they will go in and the fact there are fewer people queuing is an advantage.

Pay at pump can be used to discourage drive offs, which typically happen on lanes one and two on the forecourt, those closest to the road. These pumps could be turned to pay at pump only at night. It also offers a security solution for mums with kids in the car.

All round it’s a win, win.

FB: Looking ahead to 2012, what opportunities do the London Olympic Games present to retailers?

JD: It will be a great retail opportunity but like any retail opportunity it will be dependent on location. Convenience stores can take advantage by examining the buying habits around the Twickenham Stadium on match days. Business will be from foot-based traffic and motoring traffic will stay away. If a store is on a walk-way to a venue, it will have an advantage but it will have to do something about it. Independents should consider other lines they should be selling and those that are weather related. An independent can also re-lay their store to take advantage.

Retailers have to be prepared to roll with the opportunity. If there’s a stadium near you, use technology to tell you what are your top 200 selling products and what’s changed?

Don’t skimp on staff, don’t be afraid to overstock your store, technology can help but you have got to think with it.