Corrie Burdick’s lament is one shared by many retailers when it comes to merchandising at the front end: lack of space.
“With the different machines we have on our counters, whether it’s lottery, the registers themselves or different terminals that we have to use, space is a big issue,” said Burdick, category manager for the North Grosvenordale, Conn.-based XtraMart chain.
Adding that the problem is exacerbated by the fact that her stores are not “cookie-cutter” sizes and shapes, she said, “Trying to utilize limited space to offer items we feel would be most impulsive, without overloading the customer, can be quite challenging.”
Indeed, Michael Lawshe, president of Ft. Worth, Texas-based Paragon Solutions Inc., even went so far as to say at CSP’s Driving Front-End/Impulse Sales forum that c-stores are the “worst at merchandising,” partially because of overdisplayed front counters. “When you have a mess, you’re not the atmosphere and the attitude for impulse.”
New products, he said, are what customers seek: “They want an experience, they want change, they want something new, something different. Stop giving them the same stuff.”
Perhaps retailers can take a cue from Valero Energy Corp., where providing new “stuff” is serious business, according to senior category manager Pat Fitzpatrick. “We have a very hard-line rule,” he said, “that promotional designated fixtures inserted into the counter have to remain rotated promotions, instead of permanent programs. Otherwise, it starts to snowball and, before you know it, they all become permanently placed programs.”
CAPABLE CATEGORIES
So what are the right items for maximizing that space-constrained front end? Presenter Thom Blischok, global president of innovation and strategy for Chicago-based SymphonyIRI Group, shared that everyday indulgences, many of which are found at the front, have shown strong growth in dollar sales percentage vs. a year ago, including energy drinks (up 6.1%) and chocolate candy (up 5.3%). “So if I look at grab-and-go now and I look at affordable indulgences, I have a tremendous opportunity to reposition the c-store itself,” he said.
Many of the insights shared by attendees were around such repositioning of those categories and others at the front end:
Energy Shots. According to SymphonyIRI data in the 2010 CSP Category Management Handbook, energy shots meant $531.4 million in sales in 2009—up 57.8% from the previous year. “Once we plan-o-grammed a display for the counter, the product sales grew over 150% from the previous year,” said Richard Shortt, director of marketing for Wayne Oil, of his company’s energy-shot efforts.
Candy. According to a Mars Strategic Insights C-Store Shopper Study, c-store candy shoppers purchase candy frequently, with 92% of respondents saying they purchased candy at c-stores without fuel and 89% with fuel in the last three months. It also was a big impulse item, with 36% buying candy at c-stores as an impulse, 6% as a planned purchase and 58% as both.
Because candy is such an inherently impulsive purchase, display it at “points of interruption,” suggested Noel Vacanti, senior manager of strategic insights for Mars Chocolate North America, Hackettstown, N.J. Engage shoppers with the products by using merchandising and providing an offer that’s compelling to customers, he said.
Gum. Kim Zenchak, director of shopper insights for Cadbury North America, Parsippany, N.J., said people on average buy a pack of gum every 45 days. Customers who buy two units tend to come back in 65 days instead of 90, “so the great news here is the more people buy, the more people chew.” The best primary stocking location for gum, according to Zenchak, is either below or adjacent to the checkout counter, improving category sales by 6% vs. in-aisle.
Batteries. John DiFalco, senior account executive for Cincinnati-based Procter & Gamble, said they are a popular item customers are accustomed to spotting at the front end (as evidenced at drug and hardware stores), and they consume minimal space. DiFalco said, “In a lot of cases, they’re doubling what your average ring may be.”
Health and Beauty. Blischok pointed out that health and wellness for preventative care is a $100-billion annual business, with notable opportunities in allergies, headaches and muscle/joint pain: “People can’t afford to go to the doctor to get treated; 42% of [Americans] get their medicine advice from the Internet.” He said 30% of c-store shoppers his company surveyed say they would visit c-stores more if they had a better range of over-thecounter medicine. In fact, DiFalco said, when it comes to single-dose medicines, customers pay as much as $2 for two pills. “But they’re willing to pay it, because it is meeting the immediate consumption need and it’s in a format and location that’s appropriate,” he said. C-store retailers should be mindful of that in competing with drugstores, he said: “When the consumer goes to these other channels to buy the HBC category, they’re going to be buying other stuff there, too.” Front-end displays can capture impulse purchases from consumers not accustomed to looking for health and beauty items in the traditional convenience set, DiFalco said.
Private Label. “We have seen in this economic transition that private brands have become trusted brands,” Blischok said. “In fact, 46% of the cstore shoppers we talked to are today selecting them.” While retailers should maintain a balance of private brands and national brands, he said, privatelabel sales are expected to increase in the next year. Fitzpatrick said Valero is “deeply into private label” and likes to kick off private- label items at the front counter. “Our private-label lighters make up 20% to 25% of our lighter sales,” he said.
Snacks. Fitzpatrick said Valero has also had success in snacks, thanks to plus selling. “We’ve gone back to more focused plus selling. It worked 20 years ago, and it still works,” he said. “We focus all of the stores in a region on a hot deal and put it at the front counter in a basket or similar temporary vehicle. The clerk asks every single customer. It’s small in total dollars, because it’s one item, but it’s really impacting our snack category.”
CONSUMER INSIGHTS
Understanding shopper behavior can help drive those impulse sales. Five attitudinal behaviors are top issues for shoppers these days, said Blischok:
- Lasting economic concern. “It’s absolutely the overriding filter driving the reshaping of shopper spend as we know it today.”
- Increasing survival instinct. “Shoppers have changed their focus, and the basic instincts of family and personal survival are now top of mind.”
- Continuing frugality. Blischok said the “lens of affordability” is critical and that the c-store channel is often perceived as “nonaffordable.”
- Guaranteeing creature comforts. “Shoppers are trying to live better lives for less. … Retailers that give more guaranteed value, while saving time, are fundamentally the holy grail in retailing.”
- Simplicity mandate. Less is more and usage clarity is crucial. Fifty-one percent of shoppers know what they’re going to purchase in the cstore before they enter, meaning 49% don’t, he said. “You actually have the ability to influence their shopping decisions as they walk in the store.”
Lawshe suggested that the “senses are the gateway” in driving those impulse sales. He recommends engaging all of the customers’ senses by having music in the background, using lighting on impulse racks and in profit centers and having the smell of fresh cinnamon rolls, coffee or cookies to enhance sales.
And don’t forget to refresh endcaps and the front counter, Lawshe said. “If your endcaps are the same as they were six months ago, they’re no longer doing what they’re supposed to do; they’re no longer impulse,” he said. Also consider following the lead of CVS and Walgreens and devote endcaps by seasonality.
“Bringing in things you didn’t have last week are sales that you didn’t have last week,” Lawshe said
Participants in CSP’s 2010 Driving Front-End/Impulse Sales,
July 20–21 in Rosemont, Ill.:
RETAILERS
7-Eleven Inc. Lisa Grubbs
BP am/pm James Hachtel
Casey’s General Stores Cindy Howe
Circle K Great Lakes Region Larry Vertal
Colonial Pantry Ltd.: Charlie Brown, John Miller
Delta Sonic: Jill Garcia
Drake Petroleum Co. Inc., dba XtraMart: Corrie Burdick
Family Express Corp.: Frank White
Handee Marts Inc.: Bruce Earhart
Quality State Oil, dba Q Mart Marketplace: John Winter
RaceTrac Petroleum: Marielos Brown
Reid Stores Inc.: Betty Smith
Speedy Stop: Reece Mahlmann
Tedeschi Food Shops Inc.: Dan Powers
Thorntons Inc.: Kristin Morhet, Mike Santiago
TravelCenters of America: Erin Slater
Valero Retail Holdings Inc.: Pat Fitzpatrick
Wayne Oil Co.: Richard Shortt SPONSORS, SPEAKERS & SUPPLIERS
Abbott Nutrition: Daniel Diaz deLeon, David Hunter
Cadbury North America: Howard Edmond, Kimberly Zenchak
Convenience Valet: James Blosser
Ferrero USA: Raymond Beadnell, Kirk Bettes, Martha Laka
The Hershey Co.: Randy Roche, Brooke Steeneck
The Kellogg Co.: Bill Henry
Kraft Foods: Randall Froeschle
Last Round: Robert Wolfson
Mars Chocolate North America: Susan Gwinnett-Smith, Ian O'Donnell, Noel Vacanti
McLane Co.: Lance Smith
MET-Rx: Lucia Crater
Paragon Solutions Inc.: Mike Lawshe
Procter & Gamble Distributing LLC: John DiFalco, Jim Wenz
Promotion in Motion: Marilee Edwards
Scientific Games: Jeffery Sinacori
SymphonyIRI Group: Thom Blischok
VPX Sports/Redline Energy: Rick Briley, Joe Huntowski :
Wm. Wrigley Jr. Co. Mike Carroll, Sue DiPietro
Having Seconds
Although space is a big concern for c-stores, many retailers are turning to secondary merchandising locations for front-end products. “We feel new items are what has been expanding the growth in many categories over the years, especially candy, gum and snacks,” said Richard Shortt, director of marketing for Wayne Oil. “We have a merchandiser we display new items on every quarter. If the items show sales during the three months, it becomes an inline plan-o-gram item.
“Many of our end displays are contracted to a single company, and not focused on growing the entire category,” he continued. Because of this, Shortt has also started using multivendor endcaps for candy, gum and mints, although he said it’s too soon to tell how they are doing.
According to Lance Smith, category manager for McLane Co., with the high impulsivity of the confections and snack categories, multivendor endcaps have proven to accelerate growth in both—in many cases by as much as 13% to 15%. (For more on MVEs, see story on p. 201.)
“Secondary merchandising tools should reflect the demands and preferences of your market both in location and type, as well as reflect the direct needs of your specific customer base,” Smith said.
Tops at the End
Seven of the top 10 merchandise categories by gross margin percentage can be found in the front end, according to the NACS State of the Industry Report of 2009 Data:
- Health and beauty (49.5%)
- Candy (47.8%)
- Alternative snacks (43.4%)
- Salty snacks (37.2%)
- Packaged sweet snacks (30.6%)
- Other tobacco (30.3%)
- Cigarettes (15.7%)
Front and Center
- Rotate in new products at the front to enhance the customer experience.
- Consider secondary merchandising to drive added impulse.
- Capture customer interest by engaging all five senses.
- Merchandise candy for impulse by placing it at points of interruption.
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