Convenience Store Practices And Progress With Efficient Consumer Response: The Minnesota Case

The adoption of Efficient Consumer Response (ECR) practices by Minnesota convenience store (C- store) is explained in this study. Data were collected through a mail survey distributed to more than 250 Minnesota C-stores ranging in size from single, independently owned stores to over 100 store chains. The survey instrument was developed to collect data on the following components important to C-store operations and the implementation of ECR: information systems, ordering, receiving, inventory management, and pricing practices. Findings are presented from three distinct perspectives: 1. Location: Rural C-stores, which often meet customer needs that were once met by small supermarkets, carried a wider range of products and offered more services than C-stores in urban and suburban locations. However, rural stores had the lowest adoption rate for practices related to the ECR initiative. Urban chains coordinated business practices with suppliers to a greater degree than suburban and rural chains. 2. Chain size: Larger chains were more likely to have implemented the more costly technological practices than were small chains. This was expected since large chains can spread the fixed costs of ECR adoption over a larger number of stores. Larger chains also cooperated and communicated more with their suppliers than small chains. Again, this was expected, since larger chains can economize on transaction costs involved in maintaining these business relationships. 3. ECR practices: ECR adoption and superior performance were positively related. Having adopted six to nine practices was positively correlated with higher inside and outside sales per square foot of selling area and higher annual inventory turns. However, it was not clear whether there was a causal relationship in either direction between ECR practices and store performance. The C-store industry is changing, as new information technologies, new business practices, and new retail strategies are developed. The results from this survey can serve as a baseline for future research monitoring the adoption of these innovations and assessing their impact on productivity and profitability. Minnesota C-Stores appear to be smaller but more productive than the national average. Overall, it appears ECR is just beginning to impact the Minnesota C-store industry. Nonetheless, regression analyses confirmed ECR practices are positively related to store sales performance and those stores adopting the most practices had higher productivity measures.