By Jim Callahan
When it comes to understanding convenience store profitability, I have always relied on analyzing and digesting all of the data I can get my hands on.
After all, the numbers don’t lie.
I was taught to compute and appreciate numbers during my 10-year stint in the accounting department at the American Management Association, while learning the c-store industry under the tutelage of Edward Dewey of the Reinhardt Oil, based in upper state New York.
I learned to appreciate how you can use data to gain a competitive advantage and an accurate picture of what’s really going on in your stores. Both of those on-the-job experiences provided me with a retail education that remains with me years later.
I was reminded of this last month when I was poring over reports for one of my c-store clients. I had almost convinced myself that the lackluster sales at one of their best stores were the result of bad weather and a post-Christmas downturn in consumer spending.
Before assessing the numbers for the next store, I reviewed the initial returns one more time with a more critical eye. I noticed that two of the first seven days had an abnormally low average sale per customer (ASPC). I found that one of the days that had a low ASPC sales could have been directly attributed to much higher-than-normal lottery sales, which always increases the customer count, but those sales aren’t included as part of in-store sales.
The other day’s sales revenue in question, however, could not be readily explained with the information I had on hand. I found myself with an unexplained, 80-plus cents lower-than-normal ASPC. Something was obviously wrong.
Understanding the Data
In management, leaders must always be suspicious and always remove personal feelings from the mix to objectively examine and act upon the facts. To me, the scenario in front of me had all of the markings of theft, but this was a store with inventory almost always within tolerance, and cash was well managed by a seasoned crew. My instincts led me to look at a very pleasant and punctual new hire.
However, before zeroing in on her individual ASPC shift numbers, I decided to go back and dig deeper and go through the original paper work for the day. In doing so, I discovered that the beer sales of just over $1,200 had been inadvertently left out of the total inside sales total. When you divide a 1,477 customer counts into a bit more than $1,200 in beer sales you will find that your average sale per customer comes out to at least 80 cents on the low end.
I realize that being able to relate this story as uncovering a theft would perhaps be more dynamic and hard hitting, but in truth, I hope it shows that when you take the time to investigate a real problem, you achieve a real solution. Jumping to conclusions that aren’t fact based benefits no one.
It’s the job of c-store leaders to send out complete, accurate reports, with no questions left unanswered. Don’t allow your mind to overrule your logic because you want something to be right or you are in a hurry to get out of the office. Keep your eyes on the accuracy of your math, but focus your brain on the “believeability” of the numbers. Do they look right?
Finally, keep dishonesty in mind at all times because it is a fact of life. As a leader, though, it’s your job to eliminate all other possibilities before acting on it. And remember, look at the numbers. They don’t lie.
Jim Callahan has more than 40 years of experience as a convenience store and petroleum marketer. His Convenience Store Solutions blog appears regularly on CSDecisions.com. He can be reached at (678) 485-4773 or via e-mail at firstname.lastname@example.org.