Is It Time for Milk to Make a Comeback?
By Steve Holtz on Sep. 06, 2016WASHINGTON -- Convenience-store retailers have lost more than $1 billion in milk sales by slowly taking their eyes off the category, according to new research on category management and store profitability.
Fluid milk is one of the most underleveraged profit drivers for both grocery and convenience stores, the study showed.
Here's a look at the study results ...
The dairy case has seen dramatic changes in recent years with the proliferation of new product segments—ready-to-drink coffees and protein drinks, for example—competing with milk for space, the report said. Simultaneously, shopper behavior has changed, and the retail landscape has evolved with trends changing the way Americans shop.
These changes have created an untapped opportunity for one of the most frequently shopped-for products: milk.
To uncover key opportunities for milk at retail, the comprehensive research was conducted by a team of retail industry experts from Prime Consulting Group and Willard Bishop on behalf of the Milk Processor Education Program (MilkPEP). The research team leveraged national IRI data and a major dairy-milk shopper study involving in-home interviews and shop-alongs.
The research found:
- Milk far outperforms on space, generating 18% of dairy-department profit from 10% of the space.
- Milk remains a key category driver for shopping trips and profit. Baskets with milk are 23% more profitable than those without.
- Milk merchandising hasn’t kept up with other store sections. Communicating milk’s protein benefits and chocolate milk’s recovery benefits can drive purchase frequency and sales, according to MilkPEP.
- Convenience stores have lost ground to other channels. Sales have shifted to other channels, and c-stores have lost more than $1 billion in potential milk sales since 2008. Milk now has a very small set compared to other beverage categories, yet it delivers some of the highest profit per linear foot.
“This new research comes at an important time as retailers respond to dramatic changes that have taken place within the industry landscape, particularly in the dairy case. Shoppers are also demanding a greater in-store experience,” said Doug Adams, president of Prime Consulting Group. “There’s a huge opportunity awaiting retailers when they make even small changes to the dairy case. Whether it’s increasing milk varieties to address consumer needs or dedicating more space to fluid milk to ensure product availability, the dairy case has the potential to drive greater profit for retailers and a better experience for shoppers.”
The study uncovers growth opportunities, best practices and insights that have the potential to maximize milk sales and drive retailer profit. Retailers can remedy out-of-stock issues with milk and increase days of supply and milk product variety, given the growing innovation in the milk industry. Convenience stores in particular have an opportunity to affect variety, address gaps in target needs and optimize store space.
“The findings have the power to reignite the dairy case and capture opportunities for growth and retailer profit,” said Kikke Riedel, vice president of strategy and insights for MilkPEP. “With positive trends in the marketplace, new milk brand innovations and powerful national marketing programs, the time is right to maximize the dairy case.”