Cutting to the Core
Industry execs recommend a more focused approach to choosing SKUs, filling shelves.
Need for Nutrition
Opposite of meat snacks, the nutrition category is more of a destination purchase than one of impulse, said Jim Powers, vice president of sales for Carson City, Nev.- based Forward Foods/Detour Nutrition.
Nevertheless, finding a home for nutrition products has been confounding. Powers suggests retailers “give it a home” near the vault or coffee bar as possibilities, because nutrition products generally are purchased with food or beverage. “I’m not going to suggest you guys re-merchandise your stores completely, but as you’re building the stores, it makes sense to use this adjacency because it will help you to sell more of both,” he said.
Since a “low-carb fiasco,” about six years ago, which launched products that didn’t sell, the nutrition category has almost doubled, due to better-tasting products, innovative nutritional benefits and nutrition bars now being used as meal replacements, he said. C-stores have picked up on a lot of the business, because stores such as GNC, found in malls, might simply seem less convenient, he said. “So it really is an advantage for the convenience stores, and those that have taken that position have helped the business grow.” Powers suggests promoting the segment with two-for pricing and other marketing steps: “It gets more and more customers used to the fact that you are in the nutrition business.”
Beauty and the Beholder
Another relatively small c-store performer with a niche upside is health and beauty care (HBC). Though generally ranking between eighth and 12th in top c-store drivers, HBC generates more profit while consuming less space than general merchandise, said Dietz. Liquid vitamins (energy shots), for example, produce 31% of sales and profit and use only 7% of the space.
HBC also serves as a tactical emergency fill-in category. “From a consumer destination standpoint, it might be a destination, but it’s a sometimes destination. It’s not their primary destination,” Dietz said.
Competition from the drug channel can make it even less of a destination for c-stores. But operators shouldn’t forfeit the business. “Don’t just cede them to the drug channel, because they’re taking your core categories to bring consumers in; don’t give them those other categories as well,” said John DiFalco, Procter & Gamble’s senior account executive/project manager for convenience and specialty team. He suggested offering multidose products and catering to female shoppers:
- Multi-dose Products. “We are concerned that some stores are moving only to single dose, and not stocking the smallest multi-dose product as well,” he said, sharing an example where stores benefited by carrying both single and multi-dose respiratory and stomach medicines. “You really do yourself a disservice if you only stock the single serve.”
- Feminine Ways. While the mindset might be that convenience customers skew male, the demographics actually angle more to females in the Northeast and in the South, DiFalco said. And those shoppers are more likely (24% vs. 14%) to shop c-stores daily vs. males. “We have a great opportunity to deliver some of these categories that women shop more frequently,” he said. In feminine care, for example, carrying the leading brand is essential. Relying on the No. 2 brand will undermine growth potential.
“You probably want to stock both if you’ve got space,” DiFalco said. “But if you’ve only got room for one, you need to stock the national brand—otherwise you’re sub-optimizing your result.”
Offering wisdom for all the categories discussed at the forum, as well as embracing his holistic ideology, Dietz imparted a dose of economic common sense that sounds simple but requires unyielding discipline and commitment to execute.
“[We need to] really look at what’s selling, what’s the movement and what is the profit-per-square-foot facing,” he said. “We need to apply those metrics to every category and really understand the consumer and each one of these minute segments.
Participants in the 2011 CSP Driving Impulse Sales: A Forum for Candy, Snack, HBC & General Merchandise, held July 12-13 in Rosemont, Ill.:
BP Products North America Inc. (BP/ampm)
Casey’s General Stores
Circle K Florida Region
Circle K Great Lakes
Drake Petroleum Co. Inc./XtraMart
EZ Energy USA
Mac’s Convenience Stores
Pilot Flying J
Royal Buying Group Inc.
TravelCenters of America
Western Refining Inc.
Kristen Foegal Suppliers
Balance Bar Co.
Forward Foods/ Detour Nutrition Products
The Hershey Co.
The Kellogg Co.
Kraft Foods Inc.
Lindt & Sprungli USA
P&G Convenience and Specialty Team
Promotion in Motion
U.S. Nutrition Co.
Overheard at CSP’s Driving Impulse Sales
It’s not realistic to expect convenience to carry everything. … And if we’re able to focus as a manufacturer and supplier, it helps you as much as it helps the convenience channel with their sales.”
—Sara Williams, Ferrero USA
“A lot of companies come to this channel with displays that aren’t relevant, displays that are too big, too expensive. As a manufacturer, if you’re not really aware of how the chain operates, the barriers can be very high.” —Steve Ornell, NECCO “Our customers continue to have more outlets to buy our products elsewhere, so how do we keep them coming to convenience stores? That’s a huge challenge.” —Caroline Laramie, U.S. Nutrition Co.
“Rather than walking in and saying what you want retailers to take, walk in and ask them what is it they’re trying to accomplish, because if they have a strong business plan, as a manufacturer, we can fit.” —John Haley, Lindt & Sprungli USA
“I would argue if you’re a chain convenience store and you’re focused on the core, and the guy on the other side of the street is a chain and he’s focused on the core, how are you different? … It comes down to who’s the best retailer.” —Jonathan Ryckman, Balance Bar Co.
“Within the last year, we discontinued 15 SKUs. … We’re all going to take a really hard look at our items and say we’re practicing what we preach, we’re focusing on the core and the importance of incrementality—so we’re committed to these items.” —Kelly Fulford, General Mills
“How does a retailer or wholesaler decide which one is core—the one that led the category, the one that has the high share or the knockoffs that keep fragmenting it out?” —Jim Johnson, The Kellogg Co.