Tailor your general merchandise categories to meet customers’ specific needs.


By: Sarah Hamaker | September, 2022

Walk into any convenience store and you’ll notice something different in each one. Some stores emphasize packaged beverages or the beer cave, while others focus on foodservice or grab-and-go, with offers often localized to a specific region. That attention to detail is most evident in how retailers stock their general merchandise category.

“General merchandise consists of everything from cellphone accessories to batteries to school office supplies,” said Jayme Gough, research manager, NACS. “In 2020, many retailers added COVID-19-related items, including masks and hand sanitizer, which boosted sales for the category starting in April 2020. Going into 2021, sales stayed high but dropped below 2019 levels starting in May as COVID-19 concerns continued to wane and consumers bought fewer masks and hand sanitizer.”

The Hub Convenience Stores stocked personal protective equipment early in the pandemic. “But here in North Dakota, they just weren’t in high demand,” said Jared Scheeler, owner of the five-unit chain based in Dickinson, North Dakota, and NACS chairman. “Even though we were prepared, we sold through 10% of our supply of PPE items, so we have no plans to proactively prepare for another wave of COVID.”

Last year, the general merchandise category grabbed 1.93% of inside-store sales, down from 2.06% in 2020, according to the NACS State of the Industry Report of 2021 Data. “This tracked with data showing sales dropping below 2020 monthly figures for all but four months of the year,” Gough said.

Average monthly sales per store fell 4.1% last year compared with 2020, hitting $4,646 per store for the general merchandise category, according to the NACS SOI Report of 2021 Data. Gross margins for the category rose 1.26 points in 2021 to average 44.90%, compared with 43.64% in 2020. “Despite this, gross profit declined 1.3% year over year, and average monthly gross profit per store for the category averaged $2,086,” Gough said.

CATCHALL CATEGORY

General merchandise has long been a category for items not fitting into other store sections. In 2021, the subcategory of “other general merchandise” was the biggest, capturing 47.2% of category sales for items like fans, candles, trash cans, personal protective equipment and flashlights, according to NACS SOI data.

“At The Hub, we’ve really focused on high-end flashlights and utility tools,” Scheeler said. “I continue to be surprised at how many sales we register for a $30 multipurpose flashlight. These are all incremental sales on top of what we’d typically expect at our stores.”

With the category having so many options, finding the right merchandise mix can be key to maximizing profits. “We stay in close contact with our convenience retail customers to discuss how our wide variety of products in the general merchandise category can work for them,” said Brian Cox, CEO, SurgePays, a technology and telecommunications company focused on underbanked and underserved communities.

“Convenience stores operate on a fraction of the footprint of other general merchandise retailers, with the majority of sales coming at the pump but the majority of profits coming from inside the store,” said Christine Vondran with BIC Consumer Products. “Therefore, it’s all about meeting the consumers’ needs, wants and desires at the point of purchase.”

BIC relies heavily on shopper marketing data, category management insights and syndicated data analysis to be a resource to help retail partners acquire a profitable merchandise mix for their locations. “With certain subcategories, such as HBC, stationery or automotive, it’s often not needed to have more than one SKU offering to meet the needs of the consumer,” Vondran said.

‘TIS THE SEASON

Convenience stores make good use of the general merchandise category by stocking seasonal favorites. The second largest subcategory was seasonal last year, which had 9.5% of category sales in 2021, but that number is lower as a percentage of sales contribution year over year, according to NACS SOI data.

“Sunglasses and t-shirts are always popular in the summertime,” said Cox. The company keeps in close contact with its convenience retail customers to “ensure they have ready access to the season’s hot merchandise.”

Because North Dakota weather experiences extremes in all four seasons, The Hub Convenience Stores stock appropriate seasonal products. “Our stores sell an incredible amount of winter hats and gloves, hand and feet warmers, and winter automotive accessories,” Scheeler said. “In the summer, that transitions to the expected items like charcoal and lighter fluid but also to sun dresses and trendy hats.”

BIC has seen an evolution from seasonal to include holiday-specific merchandise. To meet that seasonal and holiday customization need, BIC has designed more than 100 different lighter series. “For instance, in addition to summer merchandise, consumers may also be encouraged to purchase Americana-inspired designs for Memorial Day, July Fourth and Labor Day,” Vondran said.

ACCESSORIZE ME

Telecommunications hardware (9.2% of sales) and propane exchanges (7.6%) were the next biggest subcategories, according to NACS SOI data. Sales of propane exchanges rose in 2020 because people were home and using their outdoor grills during the first year of the pandemic.

At The Hub, telecom hardware carries the general merchandise category. “We have a heavy selection of both lower-end and OEM-equivalent hardware, and sales continue to grow year over year,” Scheeler said. “We have plans to double down on telecom in the near future because of its popularity with our customers.”

The lighter segment has seen more innovation in the last two years than it has seen in over 20 years.”

Christine Vondran

Smoking accessories (7.5% of category sales) snagged the fifth-biggest slot last year, according to NACS SOI data. BIC works to keep its products interesting to consumers. “The lighter [segment] has seen more innovation in the last two years than it has seen in over 20 years,” said Vondran. For example, last year, BIC launched EZ Reach, a pocket lighter with an extended wand to keep thumbs away from the flame when lighting hard-to-reach spaces. To add to the momentum on EZ Reach, BIC added Djeep Lighters in July to its portfolio.

“When analyzing our general merchandise sales, our unit volume is dominated by smoking accessories,” Scheeler said. “BIC lighters make up seven of our top 10 general merchandise SKUs when measuring by unit volume.” The chain stocks a wide variety of lighters in countertop displays to snag impulse sales at checkout.

SurgePays partners with convenience stores on promotional materials. “For example, our prepaid card racks are easy to set up and provide marketing collateral to catch customer attention and lead to sales directly at the counter,” said Cox.

The Hub also has a small selection of branded merchandise, namely branded coffee and fountain mugs. “We’ve been fortunate to sell five figures’ worth of mugs in an average year at our five locations by focusing on quality, variety and purchasing in quantities that will allow for solid profit margins,” Scheeler said.

A GENERAL FUTURE

With general merchandise, convenience retailers have a lot of room to branch out and try new items and products. “Though this category provides many opportunities for creativity, at the end of the day, it’s the necessities our customers continue to want,” Scheeler said. “We’ll focus on merchandising those items well, which include batteries, cellular hardware and smoking accessories, as well as take advantage of any seasonal opportunities that come our way.”

“The future of general merchandise, especially in convenience stores, is to maintain and grow the core, while bringing in new customers through innovation,” said Vondran. “The key will be to strike the right assortment balance in these two segments to satisfy the consumer but not carry more facings or items in the category than needed.”

Source: NACS