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While consumers still appreciate the core principle of convenience stores — quick and easy access for immediate needs — the market is shifting. Just as consumers increasingly view convenience stores as a viable “fill-in” option between regular grocery hauls, these shops are becoming a practical alternative to fast food restaurants and a destination for healthy, prepared meals. In fact, food service is now a bigger in-store business than tobacco products, and it’s likely the reason in-store sales (which exclude gasoline) contributed 37.1% of sales in 2023, up from 33.8% the year before. 

At the same time, there are plenty of other retailers taking aim at the on-the-go, value-minded consumers who traditionally shop at convenience stores. And even if those grocers, mass marketers, drug stores, and others can’t compete on speed and location, independent and proprietary delivery platforms are making up the difference.  

In essence, the line between channels is blurring. Whether they are working to retain key customers, vying for business from non-traditional customers, or fending off threats from rival retail channels, convenience store operators face more competitive pressures than ever.

One way they are responding is by stocking an ever greater assortment of products on their shelves. But the broader variety of products required to keep customers happy can stress distribution inventory and handling capabilities. Maintaining product integrity for fresh produce, for example, is vastly different than it is for gum and chips. 

Distributions centers supporting today’s new breed of convenience stores must be agile and able to handle a larger number of SKUs with complex storage, picking, handling, and logistics requirements. Whether chain owners are remodeling existing facilities or building new distribution centers from the ground up, the best solution offers well-planned design and an unbiased approach to equipment choices.

Meeting expectations of current and non-traditional customers
Despite a drop in the number of U.S. convenience stores — the count fell 1.65% from 154,958 during its peak year of 2018 to 152,396 in 2024 — the sector remains a massive brick-and-mortar channel, second only to dollar stores. And while online shopping is drawing customers away from other categories, most consumers still have immediate needs that convenience stores are best equipped to meet. 

To further distinguish themselves, convenience stores are altering their product mix to help retain current clientele and attract non-traditional customers, including health-conscious shoppers, consumers looking for ethnic food options, and younger generations drawn to unique or trendy items. This has led to a growing emphasis on categories such as fresh foods, elevated ready-to-eat or ready-to-cook meals — from tacos and sushi to hummus and curries — gourmet coffees, premium juices, and energy drinks. At the same time, the market for cigarettes, a convenience store stalwart, is shifting to electronic and vaping products — bringing new shoppers with it.

But while made-to-order ready-to-go offerings have helped convenience stores remain relevant to consumers — particularly younger generations looking for fresher options and people who eat healthy snacks throughout the day — these items present a logistical challenge. Keeping short shelf life items such as sandwiches and parfaits fresh can strain distribution centers, individual storerooms, and transportation operations alike. 

Unique challenges and constraints of the convenience store market
Convenience store distributors face product challenges that other retailers do not. Most convenience stores lack ample storage space and have complex replenishment cycles, making just-in-time delivery critically important. In addition, convenience stores are more physically constrained than any retail chain, which means that each product must be the right fit for the market — culturally and geographically. Increased stocking diversity only adds to the complexity. 

As convenience stores change their stock to meet today’s customer demands and expectations, they are also looking for ways to optimize their distribution centers to better accommodate both traditional convenience store fare and on-trend offerings. Whether convenience store chains are building a new facility or reconfiguring, re-equipping, or expanding an existing one, ensuring that all products are delivered where they need to be, on time and in proper condition, is essential. That means the distribution center must:

• Have a robust inventory management system that tracks product levels, monitors expiration dates, optimizes storage space, and provides visibility into inventory.
• Use technology such as barcodes, voice-directed picking, and automated guided vehicles and storage/retrieval systems to ensure fulfillment accuracy, speed, and reduction of labor costs.
• Store, pick, and ship products at the right temperature, whether ambient or frozen.
• Understand and be equipped to handle the cumbersome processing of cigarettes.
• Handle hazardous automotive products safely.
• Efficiently process, pick, pack, and distribute labor-intensive products such as fresh and prepared foods and baked goods that often require special storage and transportation efforts to ensure speed of delivery and consistent quality.
• Be scalable and flexible, able to adapt to seasonal changes, new product offerings, and fluctuating demand.

Thinking inside the box: The advantages of distribution center renovation
In an ideal world of unrestrained CAPEX and compressed construction schedules, building a new distribution center would be the best way to meet those needs. Starting with a blank slate is a chance to optimize every operational aspect, from the loading docks to the power systems required to support energy-intensive technology. Sometimes there’s no alternative to a new facility, like when a chain is entering a territory without existing infrastructure in place.

Many times, though, revamping an existing facility is often a more strategic choice. There’s a number of reasons why.  

It’s easy to understand how renovation requires less capital investment — there are no land acquisition expenses, no site development costs, no permitting fees (or the delays they create). And it’s reasonable to expect that renovations will move faster than new construction, bringing the distribution facility back to full operations sooner, with fewer potential supply disruptions. The return on investment is often faster, too — not to mention greater.

But often overlooked is the fact that it’s possible to customize an existing facility just as much as a new building. Working with the right team of contractors can ensure that the modernized facility will be configured for efficiency and throughput. The right equipment and processes will be in place to boost productivity, reduce waste and service interruptions, mitigate risk, and keep up with evolving and growing consumer demands. And though designing a distribution center can be a full-time job, project management and procurement experts with access to a range of equipment solutions can help reduce the workload and worry. Partnering with professionals frees your staff to focus on their daily responsibilities and not be distracted or overwhelmed by complex and intensive tasks where they lack expertise.
 
It starts with knowing the needs
Whether building from the ground up or updating an existing facility, a needs analysis is a crucial early step. For a distribution center revamp, the fundamental purpose is to identify gaps between current operations and future plans, reduce total acquisition cost, and increase the return on capital investment.

The number of items considered in a comprehensive needs analysis varies depending on the size, scope, and complexity of the distribution center. Some basic considerations involve:

• The facility's layout: This includes determining bottlenecks or other symptoms of inefficient workflow. Is the space being utilized correctly? Is the facility well-organized or cluttered? Is there enough storage? How safe is the workplace?
• Inventory management: The heartbeat of the distribution center, a well-managed inventory system ensures the right products move smoothly from supplier to distribution center to store. Are inventory levels appropriate? How often do stockouts occur? How often are there picking and packing errors?
• Technology: Seamlessly integrating hardware and software systems — to optimize the flow of products, information, and resources — contributes to speed, accuracy, and cost reduction. Is inventory tracking accurate and timely? Is the material handling equipment up to date and well maintained, making the environment safer and increasing capacity and efficiency — while reducing distribution costs?
• Infrastructure: Planned operational improvements can’t start if the building isn’t in good condition and safe to occupy and when electric, HVAC, and other systems aren’t up to date. A well-planned infrastructure revamp ensures that the distribution center can adapt to evolving business needs without major overhauls in the near future.
• Logistics: Efficient and cost-effective delivery of goods helps convenience stores maximize profits while minimize waste and operational costs. How are the inbound and outbound movement of goods handled? How is the dock managed?
• Workforce: Well-trained, motivated employees are productive and more likely to stay on the job. Do team members have the right skills and preparation for the job they’re doing? Do they make a lot of mistakes or take too long to get their work done?  Are there steps that could be automated?

While most distribution centers rely on automation to some degree, convenience store networks shouldn’t overlook the need for training. Distribution center employees require hands-on training well in advance of new equipment commissioning. This is especially important to remember when using equipment made by a variety of manufacturers — which is also a good reason to make sure that, early on, someone is in charge of organizing the necessary training.

Bringing it all together 
Once the needs analysis is complete, convenience store chain executives and the design team can work together to decide what to keep, what to change, and what to discard. 

Every design detail must center around the demands of the supply chain, from column spacing, height planning, and floor loadings to compressed air and electrical service requirements, lighting plans, and sprinkler coverage. That might include space-saving, multi-level cigarette picking modules that can be expanded, torn down, or re-configured as needed; central conveyor systems that improve picking time and move totes at a high rate per minute; and even customized sorting equipment for specific products. 

For companies baking products such as cookies or donuts in-house, customized racking and conveyors can reduce labor, increase efficiency, and ensure that baked goods are delivered with an eye to consistent quality and speed. Scalable equipment that can be expanded, shifted, or removed as needed gives the distribution center flexibility and room to grow well into the future.

Regardless of what’s on the distribution center shelves, the accuracy and completeness of orders is essential. To ensure orders are correctly picked, the design footprint must allow sufficient space for in-line weigh scales or order verification scanning at final packout. 

It takes a holistic approach to ensure the design of a convenience store network distribution center will result in efficient, profitable operations. In this fast-paced, ever-evolving world, where missteps can cost customers and money, getting it right the first time can help operators stay ahead of challenges.