Convenience retail is anything but simple these days. With tariffs, fluctuating input costs and ongoing supply chain uncertainty, inventory strategy has become a critical lever for profitability.
One of the biggest decisions retailers face is whether to utilize “saw tooth” bulk buys or a just-in-time (JIT) replenishment model.
There’s no one-size-fits-all answer. But understanding the trade-offs – and having the right partner to help you weigh them – is more important than ever.
What is the Saw Tooth Model?
In this model, retailers buy a large volume of product at once, often in response to an opportunity buy, to meet supplier minimums or to reduce handling fees. Stock is held in-store or in a stockroom and gradually sold down, creating the classic “saw tooth” pattern in inventory levels.
This approach can sometimes pay off, especially during periods of cost volatility or looming tariff hikes. But it comes with a number of hidden challenges, especially in high-turn environments like c-stores.
The Real-World Costs of Buying in Bulk
1. Space Issues and Poor Store Experience
That big delivery has to go somewhere, and many convenience stores simply don’t have the backroom space to absorb it. Overflow stock ends up cluttering aisles, crammed into hard-to-reach places or stored off-site (if you’re lucky enough to have that option). Valuable floor and shelf space gets tied up with slow-moving products instead of higher-turn, higher-margin items.
2. Increased Inventory Carrying Costs
More stock means more cost: insurance, shrink, damage and the financial cost of tying up working capital – and unlike a warehouse, your store isn’t designed to hold dormant stock.
3. Stranded Inventory and Obsolescence
If demand shifts, you’re stuck with the product. You can’t quickly pivot to a trending SKU or accommodate regional preferences if you’re sitting on weeks’ worth of overstock. And for perishable or seasonal items, that risk is even greater.
Why Just-in-Time Isn’t Just for Big Box
JIT isn’t about running on empty. It’s about buying smarter and reacting faster, especially in uncertain times.
1. Lower Carrying Costs, More Flexibility
Stock moves through the system more quickly, freeing up cash and space. And you can respond in near real-time to demand shifts, whether it’s a change in weather, local event or supplier issue.
2. Minimised Exposure to Cost Spikes
By buying smaller quantities more frequently, you reduce the risk of locking in high prices. It mirrors the average cost buying strategy used in investment markets: taking advantage of dips while smoothing out risk across price fluctuations.
3. Better Stock Availability and Visual Merchandising
JIT allows you to keep high in-stock rates without overcrowding the store. Products are easier to access, easier to replenish and better presented for your customers.
So Which Is Right for You?
Here’s the catch: sometimes the saw tooth approach does make sense, especially for fast-moving, non-perishable items when there’s a clear discount or cost pressure on the horizon.
But determining when to buy big and when to buy lean isn’t easy. Many convenience retailers don’t have the internal resources or planning bandwidth to properly analyse pricing trends, supplier deals, inventory velocity, and floor space trade-offs. So they end up defaulting to the path of least resistance.
That’s where a Planning as a Service (PaaS) partner can make all the difference.
Take the Guesswork Out of Inventory Strategy
At 4R, we combine technology and human planning expertise to help convenience retailers make smarter inventory decisions. With our Planning as a Service model, we help you:
- Identify when bulk buys make strategic sense and when they don’t
- Optimise in-stock levels without overloading your store
- React quickly to demand changes and external cost pressures
- Reduce total inventory cost while improving sales and customer experience
Your inventory strategy doesn’t have to be all or nothing.
Get the tools, insights and support you need to find the right balance between flexibility and cost-efficiency.
Get in touch to talk to us today about Planning as a Service and how it can work for your convenience retail business.