By: Emily Boes | August 11, 2023
C-store retailers are still navigating the supply chain post-pandemic, learning which strategies lead to success and focusing on struggling categories.
A few years ago, during the height of the COVID-19 pandemic, the supply chain proved a constant source of stress for convenience store retailers. With out-of-stocks aplenty and hardships maintaining inventory in a timely manner, c-store operators had to be creative with solutions.
“Overall, the pandemic brought about significant changes in the supply chain, prompting companies to rethink their strategies, embrace digital transformation and prioritize resilience and flexibility in their operations,” said Nick Triantafellou, director of marketing and merchandising, Weigel’s, which operates 74 c-stores in Tennessee.
Now, supply chain issues aren’t as prevalent, but they haven’t quite gone away.
“Supply chain for many items had been constricted (during the pandemic), with many items not available or only certain sizes or flavors available,” said Fred Faulkner, director of sales and marketing for Jaco Oil Co., which operates 55 Fastrip stores in California and Arizona. “The inventory levels started to improve in late 2022, and now in 2023 they are better; however, they are not 100%.”
Judy Wall, purchasing/product analyst and marketing for Corner Store, agreed that the supply chain could still use improvement, although it has been getting better with time.
Based in Seminole, Texas, Corner Store broke ground on its fourth location in June. Recently, the chain has noticed a change in product supply.
“Various items that were gone for months are back in production, and we’re able to make our customers happy by bringing them back,” said Wall.
For Weigel’s, the pandemic led to the chain adopting practices that it still maintains to allow for stronger business.
“It took great partnership, staying nimble as a company and communication skills to get through the pandemic. In the past year, we have come out stronger with our vendor partners due to what it took to get out of the pandemic,” said Triantafellou.
Supply Chain Struggles
At this time, Fastrip is still struggling with the supply chain for confectionary and grocery items such as pet food, dry goods and condiments.
Corner Store, on the other hand, is still experiencing issues with supply for bottled drink and mineral water products.
For Weigel’s, supply chain issues are occurring with primarily center store categories.
“It pops up randomly with things you wouldn’t expect like marshmallows. Or as products start to bounce back from their pandemic dip (i.e. gum) with significant growth over the last year, our top manufacturers can’t keep up and have caused huge holes in regrowing subcategories,” said Triantafellou. “We closely watch commodity reports to try to gain any insight we might be able to gain about future issues in our supply chain, like the cocoa shortage the world is entering.”
Weigel’s is currently preparing for potential shortages in products that rely on cocoa beans, readying helpful strategies.
Convenience stores have experimented with different methods to find solutions for out-of-stocks.
Recently, Fastrip has explored alternative supply sources, either as secondary or primary sources depending on the category.
“And of course (we have been) staying on top of situations when needed or applicable to encourage prompt delivery or supply,” Faulkner continued.
When the situation is dire, Fastrip acquires inventory even if it means purchasing from a competitor such as Costco, Walmart or Sam’s Club.
“The bottom line is we try not to be out of stock at any time on anything,” said Faulkner. “We may also on occasion substitute sizing to accommodate our customers — 24 ounces vs. 16 ounces, etc.”
Faulkner said he believes the best way to manage the supply chain is to stay ahead of changes in the marketplace. He encouraged convenience store retailers to anticipate challenges and follow instincts. “You have to make decisions and then react quickly. Sometimes you win, sometimes not, but you have to react,” he said.
Triantafellou concurred that reacting and staying nimble are key to finding solutions for out-of-stocks.
For example, Rebecca Gregory, Weigel’s center store category manager, adjusts planograms (POGs) on the fly to fix holes by filling them with similar products that Weigel’s is able to source from its wholesaler. She also sends out new POGs and tags to all stores, weekly if necessary, Triantafellou said.
“She has stayed on top of her merchandising principles and makes sure stores always have a solution to issues we are seeing,” Triantafellou said. “Instead of throwing up her hands when an item all of a sudden hits a supply chain issue, she stays nimble and acts fast.”
Weigel’s deploys a seven-step process for top supply chain management.
With all vendor partners, Weigel’s enhances visibility, diversifies the supplier base, strengthens collaboration with suppliers, prioritizes inventory management, embraces technology and automation when possible, invests in omnichannel capabilities like Vroom and Uber Eats, and continuously assesses and improves.
“We are always looking at ways to collaborate and communicate with our vendors more while following our best practices,” said Triantafellou.
Corner Store’s Wall emphasized the importance of having backup vendors and establishing good relations with the companies and representatives they work with.
Additionally, Corner Store built more storage space to hold extra items. If a product is struggling to be stocked, the chain will order an additional case of that product when it places the order.
When it comes to out-of-stocks, “unfortunately there is no perfect solution,” Wall noted.
“Whenever we notice we’re struggling to receive a certain product, we reach out to our additional vendors to see if they are able to supply us with that item,” Wall said. “One of the downsides is that the secondary vendors are normally not able to match the cost price of the original vendor.”
This then results in either the company’s reduction in the gross profit margin or a new change in price for the consumer. Triantafellou also stressed that in the c-store industry there will never be a “perfect, no-issue” day.
Therefore, he continued, adaptability, resilience and leveraging technology effectively are the keys to best supply chain management post-pandemic.
“By implementing these best practices, you can enhance efficiency, mitigate risks and meet the evolving demands of the convenience store industry. It is the ability to react quickly and find solutions that will see your stores through any challenges they face,” said Triantafellou.
He noted that the best partnerships are built on growing the overall category’s business.
“Increase focus on building strong relationships with suppliers, logistics partners and customers to address challenges and find innovative solutions. Collaboration platforms, video conferencing tools and real-time data sharing become essential for effective supply chain management with your partners,” Triantafellou advised.
Source: CStore Decisions