The first thing Jane’s son, Tommy, wants after school is a snack. She puts a plate of cookies and a glass of milk onto the counter, then runs upstairs to collect her sweatshirt and his bat bag for batting practice. When Jane returns to the kitchen, she finds that the after-school snack she laid out has grown, based on Tommy’s cravings. The spread now includes leftover meatloaf, a container of sautéed veggies and a slice of cold pizza. She realizes the old-school snack of milk-and-cookies is gone for good.
As Jane and many others have discovered, there is a new world of snacking, a reality that marketers of packaged goods are wrestling with. The reality is not bad; it’s very good, because it opens the door to new opportunity.
Snacking has become pervasive. It crisscrosses normal meal times and those in between. Nearly nine of 10 Americans snack. But what we eat and when we eat varies across all segments—and can also vary based on the consumer’s whim.
So how can consumer-packaged-goods (CPG) manufacturers and retailers capture what will soon be a more than $200 billion industry? For the convenience channel, which has about 12% of the snacking market, a modest increase or downturn could cost operators thousands of dollars in profits per store. It’s important to have a strategy.
Strategic Snack Assortment
The industry’s top new-product launches illustrate how adept manufacturers have become at understanding what their target consumers seek and delivering new products that hit the mark. In the convenience channel, this includes traditional snacks with pizzazz, such as Cheetos Mix-Ups.
Then there is traditional with a new spin, such as Kit Kat Minis and Snickers Bites, which make on-the-go indulgence a breeze, while bite-sized portions allow for a modicum of control. And then there are options such as Muscle Monster Energy Shake, which provides a quick burst of energy in a drinkable form.
These, though, are more traditional snacks. To further succeed in the new world of snacking, convenience retailers must portray a broader definition of snacks: smoothies, frozen pizza and cold cereal, for instance.
Given the preciousness of space in a c-store, retailers should tailor their snack assortment on a store-by-store basis that reflects each unit’s target market and demographic. This is certainly a challenge, because our nation’s population is growing more diverse.
As a general rule, two large market sectors stand out as a great place to start. Millennials will account for more than one-quarter of the snack market in the next five years. They are a huge and diverse group with a strong desire to be treated as unique individuals. This extends into snacking behaviors.
Millennials epitomize the notion of grazing—they snack morning to night. As a result, they will eat “snack foods” for meals and “meal foods” as snacks. They eat yogurt, for instance, during traditional dayparts and “in-betweens.” They like their trusted brands, and convenience is king.
Boomers, by contrast, treat yogurt as a morning or afternoon snack rather than a mealtime solution. In general, boomers’ snack window is more condensed than that of millennials. They tend more toward traditional snacks, such as bakery snacks, and one-quarter demonstrate a willingness to purchase a sale brand over a favorite brand.
What’s Your Story?
Snack merchandising activity in c-stores is below industry average levels. Only 5% of c-store yogurt volume, for instance, is sold with merchandising support, compared to the industry average of 33%. Even core convenience categories, such as salty snacks and chocolate candy, show a huge disparity.
Nearly half of boomers stock up when items they want are on sale, and a similar amount say they often make unplanned purchases when a sale catches their attention. Avid deal seekers, millennials are even more inclined to be motivated by a good deal.
Merchandising is clearly a driver of volume. To resonate, though, merchandising efforts must also demonstrate an unwavering commitment to individualized treatment, because, even within a single segment, lifestyle attitudes, social connection, confidence, financial habits, shopping styles and technological aptitude and attitude vary.
Based on a survey of more than 3,000 respondents, IRI’s MillenniaLink segmentation identifies six distinct segments based on these and other factors. The youngest among these segments, the Free Spirits, are largely active and aspirational males, but their spontaneous, on-the-go lifestyle means the need for convenience and eating excitement often gets in the way of healthy eating.
At the other end of the spectrum are the Confident Connectors, an ethnically diverse segment that thrives on connection to friends, family and community. They tend to eat healthfully but are often overweight. Powerful marketing programs will address these differences head-on.
CONTINUED: Embrace Ideal Media
Embrace Ideal Media
Displays and feature advertisements are powerful marketing tools. Used together, these tactics often generate sales lift of more than 100%. The reality, though, is that these tactics are combined very infrequently. The reasons vary but, particularly in a c-store, lack of floor space is often the hurdle.
This is where digital media delivers a strong ROI. Digital media requires no floor space, yet it’s a powerful tool for reaching key consumer demographics and it also underscores a message to younger shoppers that a store is cool and connected.
Mobile devices as a CPG tool are in early stages, but they have momentum and complement to a retailer’s total strategy.
Three-quarters of consumers indicate an intention to ramp up mobile usage during grocery-shopping activities, and millennials are at the front of the pack. Smartphone apps already influence brand choice for one-quarter of millennial shoppers. While the effect on boomers is smaller, the momentum is definitely building for them.
The Power of Pairing Up
Another way to get more from merchandising efforts is pairing products based on consumers’ co-purchase tendencies. Logically, a critical first step is understanding the shopping basket of target shoppers: which categories/brands have high co-purchase incidences. Snack/granola bars and English muffins have a high tendency to be in the same basket as yogurt, so it’s likely to be effective to offer a co-promotion offering special savings or incentives tied to the purchase of both of these categories. Tapping into the key pairings of key shoppers will increase value perceptions and grow basket rings.
The snack world is forever changed and, with America’s melting pot becoming more diverse daily, the evolution is likely to continue. Being the go-to locations for grab-and-go consumption, c-store operators are well positioned to seize a disproportionately higher share of this dynamic marketplace.
But the key to success lies in an unwavering commitment to embracing and serving diversity. An adept ability and willingness to dive deep into the hearts and minds of core shoppers will allow convenience retailers to capture share of sales and loyalty today and in years to come.
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