By Terri Allan
A recent revision to Texas law on the subject of wholesale delivery of alcohol beverages is shedÂding light on the advantages of nighttime delivery of DSD (direct store delivery) products to convenience stores across the country.
While nighttime or 24-hour delivery is hardly the inÂdustry standard, retailers, distributors and suppliers have at least begun discussing the opportunities and drawbacks of the practice. But only time will tell if delivÂery after dark becomes widespread.
The new law in the Lone Star State â€" effective in May â€" allowing 24-hour delivery of beer, wine and distilled spirits to retailers (with the exception of Sundays and Christmas Day) apparently had few opponents. Distributors and retailers both embraced the measureâ€™s merits. "It gives beer distributors flexibility to control the distribution process," remarked Rick Donley, president of the Beer Alliance of Texas, which represents the interests of malt beverage wholesalers.
"We were not involved with the legislation, but are glad that there are more delivery options," said Jon Kuehnhold, category manager for alcohol beverages at Dallas-based 7-Eleven.
"Shortly after the law was passed, two of our largest beer distributors in the state came to us to determine if this was an initiative that they could pursue," he said.
Some Texas beer distributors, meanwhile, said that while itâ€™s still early, only a small number of retailers have expressed interest in late deliveries. ,"Out of our 11,000 customers, only a couple of dozen 7-Elevens are taking evening delivery," reported Kevin Bartholomew, president of Ben E. Keith Beverage of Fort Worth, Texas.
"If a customer wants evening delivery, weâ€™ll do it. But not a lot of customers are asking for it," concurred Bob Boblitt, COO of Silver Eagle Distributors of Houston. Weâ€™ve "had no discussions with convenience store companies so itâ€™s premature to say what effect [the law change] will have."
Overall, in markets where nighttime delivery is not in place, DSD vendors and distributors report a slight uptick in interest, but not an overwhelming demand.
Jay Ard, vice president of national sales, convenience retail at Coca-Cola Enterprises, said that while there appears to be increased interest among convenience retailers for nighttime delivery of soft drinks, the response has not been overwhelming. "When we broach the subject with our retail customers, we have found that there is interest," he commented. "However, most customers donâ€™t proactively approach us."
The issue appears to be largely championed by a few large retailers, including 7-Eleven. "We support nighttime deliveries," remarked Kuehnhold. "Itâ€™s beneficial to both our stores and customers anytime suppliers can deliver their products other than at the busiest shopping times."
Kuehnhold reiterated that, "cusÂtomers rely on 7-Eleven for conveÂnience. And we want to provide them with safe and easy access to our outÂlets without large delivery trucks blocking them from our lots and front doors. All of 7-Elevenâ€™s fresh foods and time-sensitive products are delivered during nighttime hours."
Kuehnhold added that nighttime beer delivery fits into the retailerâ€™s conÂsolidated delivery approach. ConsoliÂdated delivery, the 7-Eleven executive explained, can "significantly reduce the total number of deliveries per week for stores, balance loads throughout the week, reduce store inventory through more accurate ordering and timely deÂlivery, and improve current daily store delivery vendor fill rates."
Bob Gully, beer category manager at BPâ€™s ampm, also supports evening delivÂeries. "Nighttime delivery of beer absoÂlutely makes sense," he said. "It is good that the industry is looking for alternaÂtives [that wonâ€™t] clog up the lot."
And at least one DSD vendor is atÂtempting to facilitate dialogue among retailers and distributors about the benÂefits of 24-hour and nighttime delivery. "We continue to have ongoing discusÂsions with both retailers and wholesalÂers in an effort to increase efficiencies and determine best practices that adÂdress the needs of both parties," stated Evan Athanas, vice president of sales at Anheuser-Busch Inc.
But while some retailers are big advoÂcates of the enhanced service, the A-B executive cautioned that 24-hour delivÂery must be "efficient for both the reÂtailer and supplier" to justify the "change in service strategy."
A big advantage to nighttime delivery for some convenience and petroleum retailers, according to Gully, is the savÂings via lowered evening labor costs. "Because it is off-peak, there are not as many vehicles in the lot," he explained, and extra staff are not needed to juggle multiple deliveries and customers. "In the dead of the night, our people [have the time to] put away the delivery."
Ard agrees that by delivering at night, "we are able to avoid visiting our c-store customers during their busy times of the day. [We are] more likely to determine our customersâ€™ needs during off-peak hours when there are [fewer] distracÂtions, and we can more effectively comÂmunicate and provide the best customer service possible."
According to one beer distributor in Arizona, which has offered nighttime delivery to convenience stores for the past 12 years, one key retailer benefit has been reduced inventory levels. Doug Kendall, branch operations manager at Hensley, an A-B distributor, reported that company salesmen make their calls to accounts in the morning, and the orÂders are placed by noon. Delivery is then made that evening, allowing retailers to reduce inventory levels to five to 10 perÂcent from the previous 20 to 25 percent (when delivery was made the morning after a sales visit).
Hensley started providing nighttime delivery to Circle K and a few other acÂcounts in 1997, Kendall said, and today 285 of the distributorâ€™s 600 convenience store accounts take advantage of the practice â€" largely Circle K and QuikTrip stores. Under the delivery system, beer trucks leave the warehouse between 4:00 and 5:00 p.m., and make deliveries until 2:00 a.m.
But distributors and retailers also point to some drawbacks of nighttime delivery. Kendall and others agreed that one problem is that the manager who places the order earlier in the day is often not on duty when the delivery arrives. Additionally, more staff could be needed at night if multiple deliverÂies are scheduled â€" one person to man the store and one person to receive the deliveries.
Bartholomew from Ben E. Keith reÂported that in Texas, payment to beer wholesalers is due upon delivery, and many store operators may not be comÂfortable with giving this responsibility to nighttime personnel.
Indeed, ampmâ€™s Gully commented, "I like my managers there for deliveries." He also noted that "nighttime can be a very vulnerable time for retailers and distributors when it comes to safety and security. There is higher theft."
In the past, and in some states, beer vendors were usually paid in cash at the time of delivery. Obviously, having that much cash on hand at stores overnight is not ideal nor very safe. Thankfully, auÂtomated invoice settlement services have eliminated this requirement for many retailers.
For soft drink and beer distributors, the issue of nighttime delivery has a few benefits. Kendall, Bartholomew and Ard cite a reduced need for multiple delivery vehicles.
"Delivery at night provides us with an opportunity to increase efficiency and effectiveness," said Ard. "Instead of buying more trucks that run simultaneÂously during the day, we are able to dual-utilize our fleet by running the same trucks during the day and at night."
Kendall added that the non-peak time delivery allows Hensley deliverymen to roll in cases of beer through front doors at some convenience stores, rather than stacking cases outside the stores during peak hours â€" and in the extreme Arizona heat.
Tom Fox, partner at Detroit-based CM Profit Group, which advises beer distributors, believes wholesalers need more services like nighttime deÂlivery. "There are distributors in a number of major cities that are frusÂtrated over the gas expense and loss of productivity when their trucks are forced to sit in traffic," Fox said. With time and continued pressure from reÂtailers, he believes that more distribuÂtors will show interest in exploring after dark delivery.
But all is not golden for distributors. In addition to safety concerns, nighttime delivery can provide labor issues for DSD distributors. "Finding workers to service permanent night shifts is diffiÂcult," conceded Ard, but added that it can be done. "We may have to rearrange schedules for warehouse employees to build the loads for the proper departure times," he said.
In Arizona, Kendall admitted to a "learning curve for manpower" when Hensley adopted nighttime delivery. To accommodate the service change, the distributor transitioned from a traÂditional Monday to Friday workweek to four 10-hour (4:00 p.m. to 2:00 a.m.) shifts. Once workers realized that "evÂery weekend was a three-day weekend, they were very motivated," Kendall reÂcalled.
Ard also pointed out that routing of nighttime delivery accounts must make business sense. "If there is an area where very few customers request nighttime deliveries, we could end up servicing routes in the same area at night and durÂing the day, which could have a negative impact on fuel cost and labor hours. Itâ€™s critical that delivery volume is consisÂtent to maintain efficiency on the routes," he said.
A-Bâ€™s Athanas agreed that for disÂtributors, 24-hour delivery can bring both opportunity and disruption.
"A majority of beer sales are made Friday through Sunday, so wholesalers that evolve their service strategies to inÂclude weekend and 24-hour delivery have greater potential to increase sales," he explained. "That said, 24Âhour delivery may require the wholeÂsaler to make significant changes in staff scheduling and delivery routes. Bottom line, in order to meet todayâ€™s retailer demands, we as suppliers are willing to demonstrate flexibility and be open to new delivery mechanics."
For convenience store consumers, nighttime delivery of beer and soft drinks appears to have no drawbacks. CCEâ€™s Ard commented that nighttime delivery "positively benefits c-store shoppers" because it creates "more parking spaces during high-traffic hours that our trucks would potentially use."
Moreover, Ard notes the positive enviÂronmental impact of the late deliveries. "With nighttime delivery, we have fewer trucks on the road during high-traffic times, decreasing the amount of emisÂsions released when idling, " he said.
While nighttime delivery of beer and soft drinks is a long way from a standard industry practice, vendors, distributors and some convenience retailers have at least begun to discuss the possibilities. But according to Ard, for the practice to become more widespread, more inÂvolvement from retailers is needed. "We are exploring nighttime deliveries," he said, "but more interest from our c-store customers is necessary for a large-scale expansion."
Terri Allan is a New Jersey-based freelance writer, specializing in the beverage industry. She can be reached at email@example.com.