Soaring to New Heights
Full coverage of CSPs Convenience Retailing University 2012.
More Beer, HBC SKUs May Help Sales: Study
What categories have the potential for more SKUs? How can retailers maximize market-basket opportunities? How price-sensitive are c-store customers, and what categories have the greatest price elasticity? Such questions— and their answers—formed the foundation of CRU’s opening general session, led by Don Burke, senior vice president for Management Science Associates Inc.
Burke gave attendees a litmus test for what’s selling across the industry, as well as where unearthed opportunities may still exist. The insights came from two years of warehouse data from McLane, mined from 7,155 ZIP codes, as well as two years of totalstore POS data from 7-Eleven, 7-Eleven franchisee Handee Marts, Tedeschi Food Shops, Easy Trip and Forward Corp.
With the caveat that every market and every retailer is different, Burke explored what might happen if a retailer were to increase SKUs in a particular category. Beer was shown to have the most potential to increase sales if more SKUs were added, followed by HBC, edible grocery, wine, cigarettes, packaged beverages, salty snacks and nonedible grocery, in descending order of opportunity.
Categories with modest potential include (in descending order of opportunity) candy, publications, packaged ice cream and novelties, and packaged sweets. Categories with the weakest opportunities in increased SKUs were packaged bread, automotive products, cold and frozen dispensed beverages, and frozen foods.
Burke also explored subcategories with growth potential. While premium and branded-discount cigarettes show potential for growth with more SKUs, retailers might want to look closely at fourth-tier brands before expanding the assortment. For the beer category, import and craft beer categories have room to grow, and even domestic could take on more SKUs.
As for packaged beverages, juice and juice drinks were “by far the area where if you’re going to grow packaged beverage SKUs, that’s where,” Burke said. The candy category has most potential in gum and mints; for salty snacks, it was in “all other” products, such as tortilla chips.
A few categories were found to drive sales of additional items particularly well: foodservice, bottled water, sports drinks, fuel and iced tea. Cigars, hot dispensed beverages and potato chips showed average potential, while store services, juice, premium cigarettes and chocolate candy had some of the weakest potential.
Burke shared the pairings most often purchased together. Among the most common: fuel and packaged beverages; foodservice and potato chips; foodservice and all other salty snacks; potato chips and all other salty snacks; sports drinks and bottled water. —Abbie Westra
Food Packaging Can Seal the Deal for Customers
We live in an era in which food culture is prevalent, and yet we don’t have time for it. This juxtaposition is what makes quality packaging crucial to sales, according to Kevin Carney, director of national accounts for packaging company Sabert Corp., in his session “Packaging for On-the-Go Foodservice.”
In a study conducted by the Sayreville, N.J., firm, consumers said that a leak-proof container was the most critical factor in a good packaging experience, followed by the ability to reapply the lid, and visibility of food through the container. Also, 80% of consumers eat directly from the packaging, so keep in mind the eating experience as well.
A popular option for plastic packaging is a black bottom with a clear top, but an all-clear package has benefits as well, Carney said. Black-bottomed containers offer a striking aesthetic and expose only top garnishes—ideal if the bottom of the food is less important to see. They’re also ideal for horizontal merchandising. Meanwhile, clear-bottomed packaging is ideal for vertically stacked merchandising and foods that benefit from complete visibility.
As for lidded vs. modified atmosphere packaging (MAP) with a film seal, both have their place. Lidded packaging has lower capital investment, is easier to prepare and is reclosable. MAP is tamperevident, offers a longer shelf life and has a lower production cost. However, Carney pointed out, the freshness factor of MAP is still a learning curve for consumers.
- Package tightly, making foods look fresher and portions bigger while keeping ingredients in place.
- Display cut sides of sandwiches and wraps.
- The majority of consumers say two-piece containers have a higher perceived value than clamshell.
- Seventy-seven percent of consumers said they are more likely to purchase an item if a tamper-resistant element is evident. —Abbie Westra
How to Effectively ‘Go Viral’
Digital-marketing strategist Tod Maffin told the story of a park ranger who got hit by lightning seven times and lived. Though getting hit by lightning may be rare, the park ranger’s job put him outdoors in a regional corridor known for its thunderstorms. Similarly, businesses can increase their chances of producing a video advertisement that “goes viral,” or gets thousands, even millions of views from people surfing the Internet.
The science behind viral videos starts with what makes people want to share. The psychology of sharing involves three things, according to Maffin: affinity, advocacy and emotion. With affinity, a person has an attachment to the subject, character or situation in the video. Regarding advocacy, a person believes in the video’s cause. And with emotion, the person watching the video actually feels something.
To facilitate those basic ingredients, the video ought to deliver a single, simple concept, as well as evoke a sentiment—some form of emotion or call to action. Unfortunately, some viral videos, while garnering huge numbers of views, don’t ultimately achieve the intended goal. The message gets lost.
To avoid this mistake, three things are necessary for a viral video to make its point:
- Knowing the audience. Having a keen awareness of who needs to take notice.
- Content. Providing images, action and a message that the target demographic would connect with.
- Call to action. A higher-calling message attached to a tangible action plan, so viewers can buy, donate or speak out.
In one successful case, Maffin showed video of a soccer player rebounding a ball off the top bar of a rectangular goal post. The player does it four times without the ball touching the ground. That video “hit the mark,” as it were, Maffin said. The simple message targeted athletic consumers, appealed to a healthy lifestyle and communicated how the company’s shoes were part of the solution.
Other tips that Maffin suggested were to tie a reward of some fashion to the intended consumer response; deliver successive rounds, meaning produce sequels to any successful video; and embrace the “unofficial,” so if the viral video sparks an unintended response, advertisers ought to exercise a sense of humor.
In reviewing his concepts, Maffin said, “Remember, lightning is not random.” —Angel Abcede
Mobile Marketing May Be a Must
If mobile options aren’t part of this year’s marketing plan, maybe they ought to be, especially considering the fast-food channel appears to be making headway, according to Tim McCallum.
Focusing on various cellphone technologies used to reach customers, McCallum, president and CEO of Raze Media, Dallas, said text messaging, QR code marketing, apps and mobile website development are important, cost-effective tools.
Having worked with numerous clients in the QSR field, McCallum cautioned the retailers at the session that c-stores and QSRs are battling for the same customer.
“You’re fighting with high-quality foods,” he said. “QSRs have chosen to fight with technology.” Strategies include specific, time-sensitive specials sent via text to a focused set of customers, possibly pared down by ZIP code or age group.
McCallum stressed the importance of mobile marketing by speaking about the explosion of cellphone use. Providing statistics from various sources, he said 5.2 billion people subscribe to cellphones, and they will outnumber TVs and computers very soon. And while it may take four days for a person to view an email, the average cellphone subscriber will view a new message within 4 minutes.
He offered a list of do’s and don’ts for retailers interested in developing mobilemarketing campaigns:
- Keep marketing materials fresh and updated.
- Attach an offer to your opt-in campaign.
- Text customers deep discounts over a short period of time to yield high ROIs.
- Use contests and giveaways to maintain the database.
- Broadcast too frequently or too little. Try for two times per month.
- Broadcast announcements that can be found in other media.
- Ask for data or information without rewarding the consumer.
- Create elaborate messages longer than 140 characters. Also, McCallum said true mobilepayment technology needs to become faster and less complex for the customer. —Angel Abcede
CSP Award Winners Create Superior Retailing
Admirable store design, remarkable community involvement and a great customer experience: These are the three primary attributes honored in CSP’s annual Convenience Retailing Awards. But really what drives the award winners is passion for providing a superior retail experience to customers.
A Decade of Loyalty
Speedway Convenience Stores was honored for the superlative customer experience its Speedy Rewards program has provided for 10 years. And with more than a decade of experience under its belt, Speedway finds its Speedy Rewards program has very much become part of the landscape and part of the way the Springfield, Ohio-based company does business.
Working in tandem with the chain’s strong emphasis on friendly customer service, Speedy Rewards allow customers to earn points toward gasoline discounts and free merchandise in the stores, as well as coupons.
“When you look at what we sell vs. what our competition sells, we generally sell the same things, whether it’s gasoline, candy, soda, fountain, foodservice items,” says Speedway CEO Tony Kenney. “So what we’ve tried to do is find a point of differentiation to give that consumer more choices or more reasons to shop at Speedway as opposed to one of our competitors.”
A variety of “award clubs” let customers choose the quickest way to earn the freebies they want most, while signage in the store clearly defines the benefits of each “club.” Speedy Rewards now counts 3.5 million active members.
New Store Format Brings ‘More’
Kum & Go’s newest store format brings more to the table: more cooler doors, more floor space, more Earth-friendly touches and more opportunities to win customer loyalty. Unveiled at 20 sites, with more to come, the new Kum & Go format is about 45% larger than the former footprint, at 5,000 square feet. Much of this added space has been given to a huge foodservice expansion, complete with an in-house kitchen—the new Go Fresh Market—serving up freshly made pizza, cold and hot sandwiches, subs, wraps and baked goods.
West Des Moines, Iowabased Kum & Go added open-air coolers for milk to make grab-and-go easy. And thanks to customer input, the restrooms are entirely touch-free. Entry doors have been replaced by long, twisting hallways; and sensor-driven sinks, toilets and hand dryers are standard.
The new format also features a checkout area moved from the side to the center of the store. This enables the associate to see everything that’s happening in the store and to greet as many customers as possible.
Branding Meets Community
When Road Ranger was developing the branding for its proprietary gasoline offer, it keyed in on the concept of horsepower. And while the Mustang, Stallion and Thoroughbred gasolines the chain rolled out were a natural extension, another idea hit home: extending the branding to include moral and financial support for America’s wild-horse population, which in 2005 was facing new challenges from hunters and public-land removal. It was then that the Rockford, Ill.-based company joined with other horse activist groups to create the American Wild Horse Preservation Campaign. The 80-store chain began distributing literature about the plight of wild horses in the United States and collecting money to benefit organizations that help protect them.
“It’s become bigger than we ever dreamed it would,” says Road Ranger CEO Dan Arnold. “We at first thought we’ll get involved in the wild-horses campaign and make a difference, but it’s turned out we made the difference when we created the umbrella organization that encompasses all the varying groups that are seeking to preserve the wild horses in the West. And inside the store, it brought the whole horsepower and Wild West theme into our branding.” —Steve Holtz & Samantha Oller