Category, consumer insights key to "catching" a purchase
CHICAGO -- Way back in his retailer days, Casey McKenzie had the opportunity to sell a singing, animatronic largemouth bass and passed on it. It's a decision he remembers to this day; that's because in its first year alone, Big Mouth Billy Bass became a huge novelty sensation and went on to ring up $100 million in sales.
All retailers have similar tales of the one that got away--whether it is a new product that seems like a gimmick but becomes a breakout hit, or the many customers who buy fuel--and nothing else. That's the incredible challenge and opportunity of impulse sales, and the nearly 40 attendees of CSP's 2013 Driving Impulse Sales meeting gathered in Chicago last week to hash out the best approaches to triggering a purchase in snacks, candy, general merchandise and HBC.
"It's important to be strategically resourced and ready for contingencies," said McKenzie, today a senior principal consultant at Impact 21 Group, Lexington, Ky., and a presenter at the meeting. Consider that 68% of buying decisions are unplanned, and 70% of brand decisions are made at the store, according to the book Shopper Marketing: How to Increase Impulse Purchase Decisions at the Point of Sale, by Markus Stahlberg.
So when and where is the best time and place for retailers to fish? When the fish are biting, said McKenzie. He cited research showing the high-impulse nature of candy, packaged beverages, lottery and salty snacks. In fact, data from Scientific Games Corp., a provider of gaming services, reveals that lottery customers over-index the average consumer in total purchases. "How can you entice a lottery customer to buy an item they over-index on?" he asked.
Category management is fueled by a retailer's own scan data, as well as industry and supplier research. "When you combine these together, it exponentially increases your chance of success," said McKenzie.
Several suppliers and analysts shared category insights with attendees at the 2013 Driving Impulse Sales meeting. These included:
- Candy. According to Nielsen research, trips are down in most classes of trade while baskets are growing. In c-stores, trips are declining while baskets are flat. For convenience retailers, the challenge is to offset this decline and grow conversion of shoppers into buyers. One option is catch them at the counter. For example, an under-counter merchandiser for candy can boost sales by 11%, with 80% of these being incremental, according to Cesar Del Carpio, manager of category insights for The Hershey Co., Hershey, Pa. "Merchandising brand names are critical in the front--if something doesn't draw an impulse purchase, it won't capture impulse sales."
- Meat snacks. Assortment is key to triggering a meat-snack purchase, said Andre Pontes, a brand manager for Oberto Brands, Kent, Wash. He noted that flavor and brand are the top two factors influencing a purchase decision, with original, teriyaki and peppered being the "core," top-selling flavors--although spicy and bacon are quickly catching on. "Once they are in the store, you need to have a good display, a reason for them to buy," said Pontes. "Display, display, display is the key in this category."
- Nutrition bars. With 80% of nutrition-bar dollar sales coming from the top five vendors, and 80% of high-protein bar sales from the top five brands, according to Nielsen, focusing on the biggest sources of growth for the category is best, said Brian Iannello, category development manager for NBTY/U.S. Nutrition, Ronkonkoma, N.Y. He suggested retailers follow a candy-bar model with their nutrition-bar displays, placing the bigger, higher-priced protein bars at the top to drive sales at the register, followed by energy, healthy snack and diet brands.
- Grab-and-go. One food occasion where c-stores dominate other channels is grab-and-go, according to Darren Seifer, food and beverage industry analyst with The NPD Group, Port Washington, N.Y. To fully optimize the occasion, retailers should consider that more than 60% of consumers eat their grab-and-go food item while in transit or at work. "We're busy when we're doing this," said Seifer. "It stresses the need for portability." Indeed, 58% of grab-and-go "eatings" are served from single-serve packaging, according to NPD research.
Watch for additional coverage in the September issue of CSP magazine.