Recent law changes have further increased the cost of cigarettes and there is now more pressure on convenience stores from shrinking traditional high-volume, high-margin revenue streams. Crossmark New Zealand managing director Grant Leach offers six strategies to combat these challenges.

1. Develop a loyalty programme for your dairy and use technology to make this fast and easy.

It has never been cheaper and easier to use technology to engage with customers and develop a loyalty programme. This was previously the domain of large corporates, but it is now much more accessible and affordable for smaller businesses.

For example, if convenience stores use Quick Response codes for their best-selling lines, stores can create an online loyalty programme that enables the customer to get a discount when their cumulative purchases pass certain spend thresholds (eg, spend $100 in three months and get $5 off on your next purchase). This is a simple application to develop and can be used on virtually any smartphone.

Alternatively, just use the good old card system that my corner wine store and local cafe uses.

If it works for Wild Bean at a BP service station, then it can work for a dairy.

2. Demand more from the distributors who call on you.

Recently I had a conversation with the CEO of a top 10 grocery manufacturer about the issues he faced when dealing with the convenience sector. He commented how their distributors primarily focused on deliveries and order taking rather than up selling or cross selling their core product range.

He also commented that many convenience store owners did not push the distributors for added value promotional activity that would have the benefit of boosting incremental sales. Often many of these manufacturers have large amounts of promotional and POS materials available and are only too happy to assist.

As the old saying goes “there is no harm in asking” or even strongly requesting for that matter.

3. Take a more aggressive approach to promotional activity in store… bring the supermarket model into the dairy.

Supermarkets are great at maximising promotional activity for the primary shelf location, yet I do not see this occurring to a great degree in dairies. Service stations take much more of an FMCG approach to this, although they still have a way to go.

As a comparison case study, at Crossmark we have a national sales team that services Four Squares nationwide and we have our clients provide us with the resources and materials that were previously only allocated to Countdown, Pak’nSave and New World stores. With these resources, good deals and relationships, the incremental growth that the Four Squares have experienced has been nothing short of excellent.

Dairy owners could do the same. If they are being visited by a distributor, the opportunity is there. And to take it a step further, rotate the promotions during the day to reflect the prime time shopping trends – eg, staples first thing in the morning; lunch products at mid-morning to midday.

4. Use customer behavioural insights to extend your product range.

Each dairy should ensure that the products they range reflect the demographics and psychographics of their immediate customer catchment. My local dairy sells locally made cakes and fresh Naan bread at the check out and they are nearly always sold out by Sunday when I pop in for a can of Fresh Up after a workout. While it is a simple example, I strongly believe that if each dairy owner sat down and understood their customer base and promoted accordingly, their revenue would increase substantially.

5. Make it easy for the customer to boost their in-store basket spend – offer multi buys or companion product offers.

In recent times I can’t remember seeing too many combo deals in the dairy. I see it often in service stations. For example, two cans of V for $5, or two novelty bars for $4. Even at its most basic level, if the customer thinks they are getting a good deal, they’ll always buy more. It’s fundamental human nature.

6. Take a customer relationship approach not just a functional transactional approach.

As people, we like to go to a store where we are treated well and made to feel special. Again it is fundamental to human nature. Yet I can’t recall when I went to a dairy and I was engaged in a genuine conversation beyond the dialogue of requesting a product or paying for it. For most of us, we go there as a last resort because it’s a cold functional experience.

Contrast that to my local butcher, who always makes a real effort to show interest and engages in a genuine conversation. I visit my butcher weekly, whereas if he hadn’t taken a relationship approach I’d be shopping for meat products at the supermarket, which quite frankly is far more convenient.

Whilst it is not rocket science, to do any three of the six points detailed above will drive incremental revenue which will more than make up for any drop in tobacco sales.