See candy, buy candy, eat candy. Repeat.
This, broken down into its simplest parts, may be the definition of an impulse purchase. But triggering that “buy” part of the impulse equation is almost an experiment in psychology.
“If they come in with the intent to buy one thing, how do you influence them to buy something additional? In my mind, that’s the essence of impulse,” said Bruce Earhart, vice president of marketing for Handee Marts Inc., Gibsonia, Pa. “You’re modifying and changing the shopper experience in some way.”
“It’s not planned—that’s my definition,” said Jim Matorin, “business catalyst” for Smartketing, a Philadelphia based marketing consultancy for the CPG and food industries. From his standpoint, triggering the purchase decision is a journey that, thanks to technology, can begin before a consumer even gets a craving.
Earhart and Matorin joined a group of more than 40 retailers and suppliers representing the candy, gum, snack and lottery industries in Chicago in May to wrangle the topic at CSP’s 2012 Driving Impulse Sales Forum. The discussion highlighted how truly 21st century the art and science of impulse marketing has become, as attendees debated how to marry tools such as social media, apps and mobile banner ads with traditional shippers, shelf talkers and signage.
For Matorin, the ideal approach for the times can best be summed up in the concept of “nanomarketing”—or “intercept marketing strategies that capitalize on mobile technology that will accelerate our moment of truth.”
Putting it more simply, how can retailers and manufacturers best use mobile technology to trigger a purchase from consumers who already are time-starved and, according to some research, who spend only 2 minutes in a c-store? A first step is simply getting customers from the pump into the store.
Matorin pointed to loyalty apps such as Shopkicks—now being tested by ExxonMobil—which awards points to customers just for entering a participating store, which can then be redeemed for movie tickets, gift cards and more.
“Is there anything we can do at the pump with QR codes?” he asked. “Is it text messaging so you’re getting to the person who is third in line at the pump? Our challenge here is to understand what technologies you can utilize to get that person in the door from the pump.”Other opportunities include:
- Customized Loyalty Programs.Gone are the days of punch cards, said Matorin. Consider using social media such as Facebook and FourSquare to drive a loyalty program. For example, Quick ChekCorp., Whitehouse Station, N.J., offers a free cup of coffee to every FourSquare customer who visits its stores six times.
“It’s a great source for a merchant to up sell,” said Lisa Austin, vice president of sales, convenience, for Kent, Wash.-based Oberto Brands, and an avid Foursquare user. She observed that after checking into a restaurant, many of them will suggest she try a new item at a discount.
- Mobile Banner Ads. To better target millennials, consider ads on popular music-streaming apps such as Spotify and Pandora. For example, an Oberto meat snacks ad, when clicked, directs consumers to the nearest retailer selling the product. “There are people out there who are hitting all touch points in our life … so that subliminally, it’s in our head,” said Matorin.“We just don’t think generically ‘candy’ anymore. We’re thinking a specific candy because it’s been in our face.”
- Shelf Talkers. Place QR codes on shelf talkers next to new snack or candy items to take customers to exclusive promotional material, nutritional information or a video. (See “Breaking the QRCode,” p. 95.)
Figuring out how to spur impulse sales with the right mix of social media, mobile technology, traditional merchandising and loyalty strategies is a task best taken in stages. As Kera Smith, merchandising specialist for Top Star Express Convenience Stores, Emmaus, Pa., asked, “If we decided to jump into it, should we keep coffee punch cards? Our older customers won’t use a smartphone.”
Yes, advised Matorin. “People who are going to be most successful are starting slowly and ramping up,” he said. “Instead of being all things to all people, you probably do something as it relates to Twitter and Facebook before you jump into the next thing that comes along.”
Embracing Tradition
While the possibilities of mobile technology seem endless, the holy grail—and the biggest payback—is when high tech is played off tried-and-true merchandising practices.
“When we talk about social marketing… it is to drive people into our location. Then when they’re there, good displays get people to buy,” said Jeff Sinacori, vice-president of retail development for lottery supplier Scientific Games, New York.
For example, Quick Chek has conducted two-hour sampling events at its stores in coordination with DSD vendors, and driven participation through Facebook and Twitter. Recent promotions included samplings of Pepsi Next, DrPepper 10 and blk. Beverages’ blk.water, an enhanced bottled water created by participants of the popular reality show “Real Housewives of New Jersey.” The manufacturers absorbed the cost of sampling promotions for one week, and had access to Quick Chek’s sales data for their products.“
You better make sure the product is there,” Bill Tencza, senior category manager, warned retailers. “Otherwise, someone will do a negative post about it.”
Handee Marts, a 7-Eleven master franchisor with 62 sites in four states, has pursued a social media strategy that includes a Facebook page and Twitter feed, from which it has run contests and gasoline giveaways. It also has an app powered by Gas Buddy’s OpenStoreplatform. But when it comes to making the in-store impulse sell, Handee Marts relies mainly on traditional tactics.
For candy, points of interruption such as shippers have worked well. “We call it ‘merchandising by stumbling into,’ ”said Earhart. “By putting shippers in key traffic areas, if a customer walks into it, they’ll buy.” More recently, the retailer has found success with shippers offering “two-for” pricing on standard bars, seasonal items such as Reese’s peanut butter Easter eggs, and regional favorites such as Mallo Cups.
For snacks, adjacencies have proven key, with gondolas carrying better-for-you and sweet items facing the store’s 12-foot coffee bar. Handee Marts has also designed its own end cap featuring 7-Eleven’s private-label 7-Select line of candy and snacks; positioned near the front of the store, it has delivered a 15% to 20% lift in private-label sales. Similarly, a rack featuring Mars’ Combos, positioned across from the Pepsi door of the cooler, delivered a70% lift in sales of the snack. For general merchandise, Earhart stressed the importance of getting in and out of trends early (see: Silly Bandz), and having an exit strategy for product that doesn’t sell.
One nascent segment that has been a hit for Handee Marts is e-cigarettes. The retailer placed acrylic towers at the checkout by the lighters, offering a value and premium-priced brand at a $6.99 and $8.99 price point, respectively.
Highlights
Attendees of CSP’s 2012Driving Impulse Sales Forum learned:
- How to trigger an impulse buy with social media.
- Why QR codes are a promising tool to increase impulse sales
- Best practices for merchandising impulse categories.
- How daily multiple pricing can boost candy sales and profits.
- The reasons for gum’s slump, and what to do about it.
- How to climb the decision tree for planned and unplanned meat snack purchases.
- Tips to get lottery buyers away from the counter and loyal to your store.
Breaking the QR Code
Those black-and-white patterned boxes, becoming ubiquitous on advertisements and media, have great potential for the c-store industry, said Jim Matorin of Smartketing. He cited McDonald’s move to place QSR codes on its menus this October as a sign that even the biggest players are taking it seriously. However, as with any new technology, there have been several misfires that highlight the key areas to nail to maximize QR codes:
- Link to a Mobile-Friendly Site. Because consumers will be scanning the QR code with an app on their smartphone, ensure that they are connected to a mobile-friendly site. A recent campaign by burger chain White Castle directed users to its non-mobile-friendly site, which was tough to navigate and read. “You don’t have to get a QR code for every promotion you do; this code goes back to your mobile-friendly site,” Matorin said. “If you have the resources, you can change [the site] daily, weekly or monthly.”
- Make It Easy. Be sure to reward consumers who scan the QR codes with original content on your mobile-friendly site.“They’re looking for something, and they’re also looking for handouts,” said Matorin. For example, QR codes on window signage at drug chain Duane Read directed customers to deals of the day and coupons. An incentive can prove especially important when trying to spur an impulse sale, he said. And be sure to offer basic instructions for using the code: According to Matorin, only one-half of consumers understand what a QRcode is, and only 25% of these folks are using them.
- Get the Basics Right. Several retailers and manufacturers have been tripped up by marketing basics in their first QR code promotions. In one, a c-store chain partnered with a vendor for a promotional game that was canceled before it was scheduled to end. In another, a cigarette manufacturer placed a QR code too close to a UPC code on packaging; this confused some QR code scanners, which forced a product recall and delayed launch. Finally, an energy-drink manufacturer ran a QR code promotion in the subway—not considering that many smartphones cannot get a signal there.
- Offer an Alternative. For consumers who do not have QR code scanning capability but would still like to check out the promotion, offer a URL or text number for them to follow.“I think this is still in its infancy,” said Matorin. “I have people challenging me that it’s going away, it’s going to become extinct. No, I think we’re going to get it right as marketers, and I see it being key in this segment here, because it’s going to drive impulse sales.”
Category Notes: Candy
Speaker: Jeff Lilla, Hershey
- 53% of candy is bought on impulse.
- At least 75% of shoppers purchase candy at least once a week.
- Candy has a fast purchase cycle; it averages 16 days between each purchase.
Ideas to Take Back:
- Merchandise at front counter: Focus on a streamlined, focused set with solid assortment of top sellers across all candy segments.
- Everyday multiple pricing: Drive trade-up and grow basket with daily two-for pricing on candy. Retailers are seeing lifts on standard and king-size in the range of 25% to 30%. Recommended price points: king-sized two for $3, standard two for $2.22. Success is all about the take rate: If you’re offering two for $3, how many customers walk out with two items vs. one at full price? Average take rate is 35% (percent who buy multiple of two items), with profitability increasing 10.2% and volume up 23.7%.
- Bundling: Confection is purchased 84% of the time with another category, such as foodservice, coffee, gum/mints, CSDs. Adding candy to the average c-store purchase f $4.94 grows basket to $5.70.
- Seasonal: Almost $250 million opportunity for the channel. Carry key, core items and limit the number of SKUs. Focus on seasons in order of size: Easter, Christmas, Halloween, Valentine’s Day.
- Innovation: The first seven months of a new item introduction are critical; this is when the manufacturer has the strongest launch plan. What are the key new items that have a lot of support activation and are long-term and sustainable?
Category Notes: Gum
Speaker: Heather Oliver, Kraft
- Gum is No. 2 most snacked category, after fresh fruit (NPD).
- On dollar basis, gum is the No. 4 center-store “snacking” category for c-stores.
- Three-quarters of all gum sales come from six brands: Trident, Orbit, Wrigley 5, Stride, Extra and Dentyne.
- 54% of gum shoppers decide to buy gum after they approach checkout.
- Gum shopper decision hierarchy: Functionality first, then brand and flavor.
Ideas to Take Back:
Over the past 3 years, household penetration of gum has declined, as have c-store sales. Kraft sees a few factors at play:
Challenge: Erosion of super-heavy users (teens and young adults). High price, lackluster new products have lost gum fans. Solution: Instead of line extensions, focus on true innovation. A recent example: new Kraft/Cadbury brandID, built from ground up with teen focus groups.Challenge: Less category relevance. Gum is not top of mind, not a need in social settings. Solution: Three greatest snacking needs are to alleviate boredom, gain energy and enhance pleasure—and c-stores meet all three. Location, assortment, speed to market and secondary placements are important. Merchandising gum below front counter brings 6% lift to category.
Challenge: Eroding value perception. From 2006 to 2010, average price per unit of gum rose almost 48% as manufacturers added functionality. Consumer perception that gum is affordable luxury down 11%. Solution: Gum doesn’t have entry price points that other confection segments do. See: five-stick packs of popular, premium brands at 50-cent price point.
Category Notes: Lottery
Speaker: Jeff Sinacori, Scientific Games
- 75% of U.S. adult population has purchased a lottery ticket in their lifetime.
- Game players are typically 18 to 44 years old, while draw-game players are typically 35 to 64.
- Men are more likely to buy lottery games such as Powerball and Mega Millions.
- C-stores with gas sell 39% of lottery tickets, followed by 18% for c-stores without gas
- Lottery commissions generate more gross-margin dollars per store than cold dispensed drinks, according to NACS.
- 50% of lottery sales come from 20% of retailers.
- Lottery customers buy 50% more items than nonlotterycustomers.
Ideas to Take Back:
Retailers often consider lottery a “necessary evil” with many pain points:
- Low commission at only 5.5% per sale. Solution: While profit is low, unit sales are high
- No room on front counter for card-scratching customers.Solution: Consider whether giving valuable counterspace to non-impulse categories. Check out dedicated 4-foot “lottery centers” to create social atmosphere and free up counter space.
- Not enough winners to excite customers. Solution:Launch a winners awareness campaign with signage to highlight each win. Hold “second-chance drawing ”with losing tickets and give away prizes donated by local businesses.
- Online lottery: Consider it an opportunity. Post your store location on state lottery websites with special promotions to bring customers into stores.
Category Notes: Meat Snacks
Speaker: Dana Rohde, Oberto
- Total category dollars up 12.5%, driven by jerky and sticks, result of price increases, growing distribution.
- 40% of meat-snack purchases are planned.
Ideas to Take Back:
Purchase decisions are different based on whether planned or unplanned.
- Planned: Flavor and brand are key drivers. Have right assortment with most popular flavors—original, teriyaki, peppered, spicy and BBQ—and a mix of top brands.Unplanned: Flavor and taste craving are key drivers. Make jerky noticeable to consumers with in-store displays, promotions and bundling. Also, innovative products bring in new users: Consider all-natural products, spicy flavors.
- Bundling: Give consumer an incentive to add jerky to go along with fountain drink or CSD purchase to drive incremental sales. Merchandise product by fountain or in clip strips on cooler.
- Better for you (BFY): 33% of consumers plan to choose healthier snack options in 2012, and 77% of consumers ages 18 to 34 said they’d shop more frequently at a food retailer if healthier options were available. Merchandise jerky with other BFY options in dedicated secondary displays.
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