If convenience-store healthy-snacking programs are still in an incubation stage—as many retail participants believe—imagine how fallow the selling opportunity for these varieties was in 2002.
Randy Adams remembers all too well. Adams, center-store category manager for Carmi, Ill.-based Huck’s Convenience Stores, says the chain 12 years ago aggressively pushed an energy-bar merchandising program in conjunction with a major supplier-partner.
It failed to resonate with customers. Hit the fast-forward button to present day. The chain of 113 stores has found new life in healthy snacking in the form of “Good For You,” a standalone merchandising program featuring healthy bars as its nucleus. Separately and positioned in-line are a growing number of better-for-you (BFY) products, including pita chips, healthy popcorn, breakfast, cluster and yogurt bars, as well as nuts and seeds.
But at Huck’s, it’s the snack-bar department that holds sway. In a blending of both high-brand equity varieties with those Adams calls “under the radar,” the selection in Good For You range from Clif Bar and MET-Rx to Athena Greek yogurt bars and Robert Irvine’s Fit Crunch bars, two SKUs of which are ensconced in Huck’s top 10 bar sales.
So what’s the recipe for success today, as opposed to previously? More healthful eating is one, but segment innovation can’t be denied.
“There was a seven-year period where consumer product goods (CPG) companies slimmed down on innovation, but the last one or two years they’re ramping that up again,” says Kit Dietz, principal with Dietz Consulting LLC, a Huron, Ohio-based retail consulting firm.
“I’ve asked a number of CPG companies about what BFY means to them: Is it fresh, heart-healthy, no- or low-fat, less processing, made with whole grains, high fiber and protein? The definitions vary,” Dietz continues. “And as a retailer, you have to proceed prudently because innovation can actually hurt a category, as ‘new’ sometimes doesn’t mean better.
“It’s a recalibration of the category for a lot of retailers. What I would be wary about is people overemphasizing BFY to the extent that it’s taking profitability down in the store.”
At Huck’s, innovation plus a newfound appreciation for healthy eating is fueling a conversion of sorts. “Three years ago, we took some bottled water located in-line and launched Good For You,” says Adams, pointing out that the section now outsells Huck’s automotive products.
Better-for-you snacks in the c-store are rising each year. According to McLane Mpulse numbers, the healthy-bar segment has grown 37% in average dollars per store per week over the 90 days ending first-quarter 2014.
NPD Group’s National Eating Trends In-Home and Away-From Home database indicates that 63% of c-store shoppers say they want more BFY products in c-stores, while 51% say if BFY products were carried in stores, they would shop there more often.
CONTINUED: You Better, You Bet
You Better, You Bet
Viewed store by store, the selling hook starts with image and value. “People want differentiation. Once they try your healthy snacks, you either hook them or lose them,” says Sam Odeh, president and CEO of Elmhurst, Ill.- based Power Mart. “People might come back and say, ‘That was pretty good; what was that?’ ”
Dominated by Clif Bar and MET-Rx bar volume, Good For You has worked so well that in the future the chain is seeking to carve out additional display space beyond 4 feet, integrating six to seven new bar types to accompany the dozen vendor products that make up the set. “I’m thinking of expanding to items that we are missing,” says Adams. “It’s been a constant tinkering of Good For You, and since we operate our own internal supply network, we have the luxury of moving things in and out quickly and inexpensively.”
In an additional nod to healthy, Huck’s entertained—but has tabled— the idea of launching an entire shelf of 100-calories-or-less products, such as crackers, cookies and bars.
Indeed, Odeh says Power Mart was eager to establish control of its own healthy-snack destiny it would not have enjoyed with other brands. Three years ago, it developed a proprietary Powmaro’s brand, with high-velocity sellers being a nut cluster bar and a bagged potato-skins variety.
Motivated by the assurance of quality control, Powmaro’s is able to cultivate the specification of the package and ingredients, and thus avoid what Odeh calls “brand camouflaging,” meaning that consumers aren’t certain of the snack contents. “We call it a ‘fishbowl’ strategy— Powmaro’s comes in clear plastic containers where people can see the ingredients,” he says. “There’s no camouflage. It’s entirely transparent.”
Undoubtedly, healthy-snack volume expansion hinges on the way the value proposition is parceled out. “Snack manufacturers are keeping things simple and touting values such as, all-natural, high protein, whole grains and fiber, when it comes to attracting the c-store consumer,” says Kristen Hamby, category manager for snacks for Temple, Texas-based McLane Co. Inc. (In the retail set example pictured at left, McLane Co. recommends retailers block six to nine healthy SKUs in an in-line salty set, trying out the items before adjusting the mix in the following reset.)
The package terminology is the micro endeavor. On a macro level, it’s determining the breadth and depth of the merchandising. “As a retailer, you can create stand-alone sections and adjust the size, but also in-line positioning with mainstream offerings is an option,” says Dietz. “The varieties have to be called out and located in a place where consumers are going to see it. Plus, retailers have to determine what is being moved out to make way for BFY.”
At Huck’s it’s a balancing act: Adams says he would never rob 4 feet from a candy or salty snack aisle to put in more good-for-you brands. “That would be nothing more than a negative tradeoff,” he says.
McLane recommends customers start with products in a visible space, preferably adjacent to the transaction counter. “Knowing that this location is prime real estate for c-stores, test the plan-o-gram in this spot a couple months minimum so consumers know that it’s there,” Hamby advises. “Block six to nine healthy SKUs in an in-line salty set, and give trial to the items first; adjust the product mix in the following reset based on consumer reactions.”
Also, attractive signage or shelf tags helps distinguish them from the traditional snack sets and attract the targeted female and healthy-snacker audience, says Hamby.
Within the nutritional umbrella, McLane recommends that 40% of a retailer’s set be allocated to protein-based healthy snack offers, with 25% allocated to energy, 25% to “healthy” and 10% to dieting options, Hamby says. Retailers can then relocate the department in-line or to another location in the store if sales velocity goes north.
CONTINUED: Strength in Numbers
Strength in Numbers
One way to hook customers is to make the value proposition as compelling as possible. Ambitious merchandising displays encompassing multiple vendor lines are one way, as Farmingdale, N.Y.-based c-store distributor Harold Levinson Associates Inc. learned in 2011.
HLA’s multivendor endcap consists of 10 vendor brand options for c-stores to fill within a 4-foot display, and it’s regarded as the organization’s best performer among all display models, says Marty Glick, vice president of sales for HLA, which has 17,000 accounts (7,000 of them c-stores) in six states.
“We have placed 1,000 of these healthy multivendor endcaps in c-stores,” says Glick. “Most retailers in the network turn the display eight to 12 times a year.”
HLA is currently on its third assortment revision, with two rows of peg bags and six shelves of healthier snacks. The company continues to add organic and gluten-free options, such as a new rice-cake line.
“We are never reluctant to add new products. Twice a year we see the need to replace an underperforming one with one that has solid potential,” says Glick.
For instance, HLA in 2013 featured two rows of Kind bars but slightly downsized it to pave the way for new varieties. Displays will feature offerings such as Greek yogurt bars, Clif Bars, various breakfast snacks, Kashi’s Go Lean crisps, breakfast treats, fruit crisps, protein meal bars and hummus corn chips.
The universe of options that can recalibrate the mix—and do it accurately—is a lot for chains to get their arms around. Carving out in-line space for healthy snacks is a conversation that goes back and forth. As a distributor partner, Glick’s HLA team instructs retailers to “position the Kind bars in two spots in your store rather than one—so it’s a dedicated endcap as well as placed in-line. Endcaps attract impulse consumers, and those who walk through the aisles on the way to their cooler purchase might pick up a snack item en route.”
Beverages dictate the fortunes of food products, including snacks. Dietz points out that consumer tendencies have repeatedly shown that “before you can sell them a better-for-you snack, it’s all about the beverage. Until they have that drink in their hands, you’re not going to sell them anything else,” he says.
Recognizing the relevance of beverages, Huck’s has incorporated several carefully orchestrated cross-promotions for Good For You that revolve around beverages.
“We found that a Clif Bar user tends to like flavored water, so we created a bundling offer around that. Or MET-Rx users—not unlike Power Bar people—buy coffee, so we can bundle those two items,” Adams says.
Additionally, the chain uses clip strips of David’s almonds and sunflower seeds and Brookside chocolates to pair with healthy snacks because customers like to have a MET-Rx bar now and the other item later.
CONTINUED: All Bets Are ... On?
All Bets Are … On?
Getting healthy snacks to assume a stronger growth trajectory banks on consumer tendencies not only toward healthy eating but also to the growth of the mini-meal occasion. Many customers like to diversify those meals across exotic, mainstream, indulgent and healthy.
Through the lens of healthy snacking, Dietz describes three types of consumers. “You have people who seek stuff that’s ‘less bad,’ others seeking ‘more good’ and then you have the ‘healthy elite’ consumer, which is the smaller group,” he says. “They are the ones who train a lot and are the perfect targets for products like gluten-free. The ‘more good’ user seeks high fiber, calcium—things that give him or her energy. Those seeking ‘less bad’ choices seek stuff that’s heart-healthy, maybe low- or no-fat.”
It’s a lot to digest; therefore, subsegment challenges remain. Dietz’s data indicates that what consumers want in a c-store first and foremost with snacks is taste (88%), with better for you (60%) bringing up the rear.
Then there’s the ongoing misconception of products that are gluten-free and organic. “People see organic and assume it’s more expensive,” says Adams.
HLA’s Glick says that “if you as a retailer or marketer are placing too much emphasis on terms like ‘organic’ or ‘gluten-free’ [in merchandising messages], it has a tendency to scare some people away.”
Some snack foods don’t translate well to “healthy,” either. The Snack Food Association, for example, reports that consumers will pay higher prices for healthier snacks, but not for healthier cookies, where they seek indulgence.
And then there’s a store’s location. College-based stores with a robust healthy-snack department have a chance of thriving because millennial consumers are attuned to these types of offers. “Millennials say they want healthy choices, but their actions don’t always match their words,” says Dietz.
Glick says that when HLA launched its multivendor display, “we originally discounted the inner city [as a prime market for it], but then reconsidered that idea on certain cases. One reason is you have to consider the people who work in proximity to a store and not necessarily who lives there. So an urban store with a hospital close by might have a high number of employees or even patients who place an accent on healthy snacking.”
While confection has more of a cookie-cutter category management blueprint, healthy snacks? Not so much. “You could create a universal endcap from one end of the U.S. to the other and it would consist of much of the same top 50 candy brands,” says Dietz. “Mainstream snacks tend to be more regionalized, while better-for-you snack boils down to a store-by-store decision.”
When better-for-you departments in stores resonate with a customer base, they often help revitalize and reinvent the store’s image. “Many people are used to seeing this type of display in a GNC, so when they look at this endcap they do a double-take,” says Glick. “I think that having this assortment of healthy snacks is an indication to the customers that the retailer cares about them. Many are in a rush to eat on the go and want a healthier alternative to a piece of crumb cake.”
The 411 on BFY Sections
Industry consultants look at multiple factors when it comes to healthy snacks. Their advice:
▶ Start small and branch out with better-for-you (BFY) once it gains a foothold. Don’t become too zealous overloading the section at the expense of mainstream top 50 snack items.
▶ Keep the display’s marketing moniker more broad-based. Broadcasting terms such as gluten-free and organic can be a turnoff for consumers who don’t need it and don’t see the overall value proposition.
▶ Develop a systematic, store-by-store approach about the types of BFY that offer the most velocity in a particular store in a chain’s network, and drill down to identify core users and potential users. Make day-part planning a priority, because people like different kinds of BFY snacks at different times of day.
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