Jay Ard, Vice President of National Sales, Convenience Retail, has been withThe Coca-Cola Company for 37 years. Starting as a sales helper in 1979 in Pensacola, Florida, he worked his way up the ranks, from supervisor to sales manager to general manager and more, landing in his current post in 2005.
Convenience Store News recently named Ard to the Convenience Store News Hall of Fame. He took the time to share his insights on the convenience store industry with CokeSolutions readers.
Q: The convenience retail channel has seen incredible growth in recent years. What's been the most impactful change?
A: The No. 1 thing driving growth in convenience stores is how they have embraced made-to-order and ready-to-eat food. Our best operators are really good at this. For instance, there is one operator that has more than 500 stores in Texas, New Mexico and Oklahoma. Its food brand is now the eighth-largest Mexican food chain in America. (Fun fact: Convenience stores are now the second-largest QSR behind burgers, which means they surpassed pizza this year.)
The second change is store design and layout. Thirty years ago, the average convenience store had a kiosk and a couple of cold vault doors. Today's convenience store is 5,000 to 6,000 square feet, with inside seating and everything from custom-made coffees to frozen yogurt and a whole variety of food options.
Channel growth is also due to operators becoming more consumer focused. They know their shoppers better than they ever have, and their information systems have become more sophisticated.
Q: What are some other recent changes?
A: During the downturn in the economy, many of our best operators bought properties. Now, with an improved economy and better profit margins, they are building many new stores.
Another change is the millennial shopper, who is using the channel because all of the beverage and snacking choices appeal to them. In addition to these changes, we are seeing the industry starting to consolidate — many of the smaller players are getting out, and the bigger guys are getting bigger. Today there are around 154,000 convenience stores in the United States. Of those, 70% are owners who have fewer than 10 stores. Over time, those will consolidate more.
Q: What exciting things are on the horizon for the CR channel?
A: The next generation of loyalty programs is going to be exciting. Instead of the loyalty cards that we all have on our key rings, they will be digital. The best retailers are tapping into how shoppers want to use their phones for loyalty programs.
Another exciting development will be the next generation of store formats. We have stores that are testing drive-thru and pharmacy services and are morphing into a different type of store than we have seen in the past.
Q: What do you see as the biggest challenge facing convenience retailers today?
A: Fluctuating fuel prices can really mess with operators' profitability. Convenience stores sell 80% of the fuel in the United States today, so as fuel goes, so goes the convenience stores. Another challenge is competition. Drug stores, dollar stores and supermarkets are all trying to become more convenient.
That said, they are having trouble with speed of service. That's the convenience stores' secret weapon; they are great at getting people in and out quickly. The time from when the average shopper opens his door and gets out of the car at the convenience store to the time he closes it is 3 minutes and 20 seconds. That blows every other retail format away.
Q: What's the most important thing a convenience store operator needs to consider in today's evolving market?
A: Know what your store stands for. For instance, are you a commuter store? Are you across the street from a high school or near a hospital? Are you going to stand for great food, or are you going to stand for more beverage choices than any other store? Or will you be known for speed?
Q: How can technology and innovation benefit retailers and ultimately consumers?
A: Only 4 out of 10 people who pull into a convenience store go into the store. Technology can draw people in. For example, retailers are testing beacons that can send messages to the phones of consumers who have the store's app. When they get within a set radius of the store, they receive a message about a special offer. The best retailers have a ton of information; they know a great deal about their shoppers, even what's in their basket and what they buy together. This understanding leads to better bundling of products — like a Coke and a hotdog, or a snack and smartwater®.
Q: What are some strategies operators can implement now to increase overall beverage sales?
A: The simplest thing an operator can do is have a well-lit lot and a clean store, so people will feel safe coming there to eat and buy drinks. Another thing operators can do is be smarter about bundling. It is a really simple way to make baskets bigger. Also, when operators are limited on space, they need to be sure they are carrying the right products. You need the right assortment, which means knowing your shoppers and neighborhood. Who's coming in, and what kind of traffic patterns do you have?
Q: How does The Coca-Cola Company work with retailers to help their businesses grow?
A: We do a number of things, and one of my favorites is the NACS Coca-Cola Retailing Research Councils, which takes on industry projects in partnership with leading retailers. Our current project is employee engagement. Convenience stores have very high turnover rates, so we are working with them on employee engagement. Many people would say that doesn't have much to do with Coca-Cola, but it has so much to do with our credibility in the industry.
We also provide value-added services in category management and marketing by partnering with operators to set stores up efficiently and by bringing our brands to life in stores in order to drive traffic. We do specific work with our largest national retailers, as well as deliver things to all 154,000 convenience stores we serve across the country.