Independent convenience store operators often can't buy products at the same prices as their larger competitors, making it harder to compete in a rapidly evolving industry. While some independents try to compete through differentiation, for thousands of independent owners, buying groups have become the primary tool for closing the pricing gap.
The Strategic Alliance of Affiliated Store Owners of America is one of the largest buying groups in the U.S. Founded in 2010 by Jigar Patel and three friends who pooled their purchasing volume across 25 stores, the nonprofit now spans 16 states and has more than 5,200 members. SAASOA recently partnered with the American Petroleum and Convenience Store Association, a West Coast group with more than 2,000 stores, creating a combined network of more than 6,500 locations from coast to coast.
Patel, SAASOA's vice president, also operates three Fastime convenience stores in Fairhope, Alabama, with plans to open additional locations this year.
C-Store Dive spoke with Patel about how the group works, what it offers beyond purchasing power and where independent operators still face structural disadvantages.
This interview has been edited for brevity and clarity.
C-STORE DIVE: How does pooled purchasing through SAASOA impact a single-store operator?
JIGAR PATEL: We have tracked our incentives, monies and rebates that we brought to our members, and on average, we've saved them over $20,000 a year on their purchasing or sometimes getting rebates back to them. That's a big deal for an independent operator who is working day in and day out to get that kind of rebate.
Through technological investments into our membership, we've started taking more control of the space in the store, so that instead of us waiting for the vendor to figure out and plan the space, we are now planning the space so that we know what we can do to bring more vendors in and bring not only a better experience for the customers, but more turnover, and with more turnover, more rebates.
What do you offer members beyond procurement, in areas like technology, compliance or category management?
We have an in-house planogram software that we developed, keeping all members' and vendors' feedback in mind.
We're very focused on compliance, and the reason we can be more compliant than many similar groups is that we have a very transparent rebate system that our members can see, track and compare against their own numbers.
We also provide education to our members. Many times, our members are wearing multiple hats, so they don't have the time or the chance to attend all these industry events and learn about the new trends and what benchmarking looks like. If they don't learn, no matter how much more rebate or incentive we offer, they will never be able to tweak their businesses to meet the needs of consumers today.
We've also made a big push for grassroots legislative efforts at both the state and federal levels.
You've talked about transparency as a core value. What does that look like in practice?
The original idea was to reduce the hands in the cookie jar. I've seen many other groups start like this — but in the end, they ended up being another hand in the cookie jar.
For that reason, we've kept a very lean team. We don't have a big office building or fleet of cars. All of us work remotely. Often, my house is the central point for meetings. As a retailer, I want to get more benefits from a platform like this. If I were to add more administrative expenses, the value would be diminished.
What challenges do your members face that the group buying model can't fully resolve compared to a major chain?
In a big chain, when a vendor goes in, the execution of those plans is easier. For us, it's a double challenge because our members are not our franchisees. We have to play the education angle and show them the value — that if you follow this program and stay compliant, it brings real value to your bottom line.
We have to invest in teams on the ground, and being a not-for-profit organization, sometimes it's a challenge because you are always struggling with limited resources.
Having similarly minded people on both our team and the vendor side will make this space more beneficial.
Foodservice has become a significant part of the c-store business. How are you helping members push into that space?
We still have members who are very hesitant to get into that space because of the learning curve, the capital investment, the training and the cost that comes with it.
We've identified three different levels of programs. If someone who is not in foodservice wants to get into it, they can start with very simple, ready-to-make or already-made offerings like cold sandwiches and salads.
If someone is already at that level and wants to up their game, we've created programs where they can offer tacos, pizza and breakfast biscuits.
And if somebody is already there and wants to offer a full-fledged food service program with a hood, fryers and a convection oven — a fried chicken program, a made-to-order sub program — we have curated a program and pricing along with a financing program, where if they don't have the capital, they can get a preferred rate on financing.
What does it actually take to operate as an independent in this space?
You have to be an expert in site planning. You have to be an expert in vendor negotiation. You have to be an expert in environmental laws. You have to be an expert at HR laws. You have to be an expert in food service, and sometimes you have to be a therapist for your employees as well.
That's usually what it takes to be in this space as an independent operator. Those are the cards that we've been dealt. We are trying to make the most of it by using this platform to bring all these members together and share their concerns with lawmakers and vendor partners at the state and federal levels, so they can understand the issue and bridge that gap for us.
