Home Register
Log
In

Ask
NACS Photos
Contact
NACS About
NACS Advertise
with NACS

Today's
News

Current
Month's News

Daily
News Archives

Press
Releases

Media
Center/PR Toolkit

Washington
Report Archives

NACS
Elects Four New Members to Its Board of Directors

Coping
With Change

Time
to Throw in the Towel

Cold,
Dry Weather Could Lead to Rise in Static-Related Incidents at
Pump

Diesel
Prices Hit Record High

Cutting Costs to Improve
Efficiency and Increase Profits
October 19,
2004

LAS VEGAS -- If most convenience store operators had one wish, it
would probably be to find ways to slash costs in critical areas that
cost them dearly. The NACS Show 2004 workshop titled "Top 10 Ways to
Cut Costs in Your Business" held Monday, October 18, offered
examples of how convenience stores can reduce health-care, energy,
labor, credit/debit-card processing and technology expenses.

With health-care benefit costs outpacing inflation and premiums
growing at a double-digit rate, convenience store operators are
faced with a dilemma: offering health-care benefits is a key to
attracting and retaining the best employees, but most operators need
a more cost-effective way to do so.

Industry consultant Gray Taylor offered a number of suggestions
for mitigating rising health-care costs. Switching from a PPO to an
HMO saves money, as does increasing deductibles. "Most people don't
use even close to the minimum deductible, so raising it means you
can save and put those dollars back into your health-care plan,"
said Taylor.

Health-care spending accounts have changed for the better,
allowing portability between jobs, year-to-year rollover and tax
savings for employees, noted Taylor. Offering employees such an
account involves them in health-care cost management and helps
offset increased deductibles. Taylor also encouraged store operators
to promote responsibility in prescription purchasing, adding that
shopping around and choosing generic drugs can reduce costs
dramatically. Promoting better health habits among employees is also
critical. He said that operators can do this by reducing
preventative-care co-pays, increasing co-pays for nonemergency ER
visits and promoting smoking-cessation programs.

Energy management is another area where cost containment can
impact the bottom line. Hucks Convenience Stores, operated by Martin
& Bayley, Inc., tried a number of methods to conserve energy,
including signage reminding associates to "turn off the juice when
not in use" and thermostat controls. It found that "next to labor,
energy was our biggest P&L item," said Todd Jenney of Martin
& Bayley. "We wanted to find a cost-effective solution that was
easy to install, use and maintain and offered remote accessibility."

Using Profile Systems LLC's Wireless Energy Management tool
helped Martin & Bayley reign in costs by centrally controlling
lighting and HVAC and monitoring freezer/cooler function in its
stores.

Martin & Bayley ran a pilot test using Wireless Energy
Management and found that it yielded a 21 percent savings on
lighting costs and 14 percent on HVAC costs. "It has less than a
two-year payback," said Jenney. To further the savings, all
hardware, installation and service fees were paid upfront to
capitalize the expense.

Using centralized controls helped Martin & Bayley increase
margins through lower operating costs; determine accurate HVAC set
points, lighting schedules and freezer/cooler temperatures; extend
equipment life; and lower maintenance costs.

Although health-care and energy savings make a big difference,
reducing labor costs--most retailers' number-one operating
expense--is critical for all convenience store operators.

A demonstration of the NACS Labor Budgeter tool sparked Wesco
Incorporated's interest, since the convenience store chain was
experiencing large differences in labor costs between stores. Wesco
set out to standardize practices to reduce overtime, optimize use of
labor levels, gear labor to customer traffic, improve customer
satisfaction and share more profits with store teams.

Wesco tested the NACS Labor Budgeter in four stores, making sure
to collect time-study data, compile a complete task list and
validate time studies against the test group. "Using the tool,
managers were able to take a harder look at available labor to staff
more appropriately for traffic throughout the day," Wesco's Joe
Gauthier said.

More effective budgeting resulted in a $630,000 savings for Wesco
in the first year, and an additional $350,000 the second year, with
30 straight months of reduced labor costs. Gauthier said that by
using the Budgeter, Wesco learned that customer count was the main
driver, that labor budgeting is an ongoing endeavor requiring
flexibility and that documenting findings was important to future
projects.

Reducing payment-card costs is an often-overlooked way for
convenience store operators to save money. According to Taylor,
operators are probably wasting money if they process with an
independent sales organization, do not accept PIN debit cards, are
charged more than 2.3 percent for Visa and MasterCard transactions,
paid more than 1 percent of total sales in card costs last year or
pay their processor a flat rate for bank cards.

Taylor highlighted four things stores can do to reduce
payment-card costs. First, operators should audit past settlement
statements. "If you are paying interchange surcharge and/or more
than $.065 per transaction for processing, change processors," he
recommended.

Operators should promote PIN debit transactions, said Taylor,
noting that these help to lower costs, but many stores lose out
because they don't accept such transactions. Installing broadband
data communications means increased speed and reduced transaction
fees, and it establishes an infrastructure for future data
communications needs. Eliminating transaction downgrades by
maintaining card readers and performing timely settlements also was
recommended.

"You have to know what you are paying for," stressed Taylor.
"Take the time to examine your statements--you wouldn't accept a DSD
invoice without detail! Determine what it costs to stay with current
vendors and develop a constant audit process of transaction fees
because mistakes do happen."

As convenience stores continue making investments in technology,
standards are becoming more important to ensure that systems connect
properly and efficiently. By supporting organizations like the Petroleum Convenience Alliance for Technology
Standards (PCATS) and complying with its standards, convenience
store operators can eliminate the repetitive handling of paper,
focus on statement reviews instead of exception reports, reduce
pricebook errors and avoid constant revisions to financials.

"Urge your vendors to join PCATS and make it a part of the RFP
process," Taylor said. "Demand that your suppliers support your
future--and theirs by supporting data interchange via PCATS
standards."

The NACS Show 2004, which runs from October 17 to October 20 in
Las Vegas, is considered the $337 billion convenience store and
petroleum-marketing industry's "must-attend" event. More than 23,000
participants are expected to attend this year's event, which ranks
among the 50 largest annual trade shows in the United States, based
on 1,400 exhibitors and 370,000 net square feet of exhibit space.

Stay tuned to NACS Daily for in-depth coverage of the
Show throughout the week. For more information on the NACS Show,
check out http://www.nacsshow.com/.

Print
Today's Stories

Print
This Story

Email
This Article

Subscribe
to NACS Daily Email

View
All NACS Show News

Industry consultant Gray Taylor shared
suggestions to help convenience store owners pare expenses in
the NACS Show 2004 workshop "Top 10 Ways to Cut Costs in Your
Business."

Copyright © 2004
NACS   |    Privacy
Policy    Terms of
Use    Help