CHICAGO — For all the talk of growing foodservice and owning the tobacco category, convenience stores, for many consumers, are still all about snacks and beverages.
But as the coronavirus pandemic has forced more people to work from home and kept them off the road, the reliable single-serve snack segment is experiencing tough times.
That’s not to say snack sales aren’t booming, but c-stores are not finding themselves in the sweet spot of that growth. As single-serve snack format sales decline, the question is whether the channel that calls packaged snacks core and essential can rediscover its mojo.
Examining recent COVID-19-era trend data, it’s clear snacking has increased during the pandemic, but that snack food growth flowed to other channels of retail as consumers opted for family-size snack formats.
Snack sales growth is being realized across all retail channels except convenience and drug, with share of dollars driven by grocery, e-commerce, club and dollar channels, according to Chicago-based IRI and its Total Store View survey.
Related: Overcoming the Snack-Bar Malaise
Consumers limiting their brick-and-mortar trips has been a particular boon for e-commerce. A recent survey from consulting firm McKinsey & Co. found that about three in four people have tried a “new shopping method” due to the coronavirus, and that more than half of all consumers intend to continue using curbside pickup and grocery-delivery services after the pandemic is over. Nearly 70% of consumers surveyed intend to continue buying online for store pickup.
The “pandemic collapsed into three months a process of adopting e-commerce that otherwise would have taken 10 years in the U.S.,” the New York-based firm reported.
Package Size Matters
No doubt, larger package sizes—not the domain of many c-stores—dominated consumer snack- buying tendencies. Digging deeper, however, there are additional fault lines in c-store trends.
“In the channel, it seems that snacks have historically been geared more toward younger males, starting with less health salty and meat snacks,” says Matt Kleinschmidt, CEO for Chicago-based Reach3 Insights, a marketing consulting group. “In our research, we found that those consumers who reported snacking more were more likely to also feel they were eating less healthy overall. Those who snacked less felt healthier overall.”
One conclusion: Less-healthy eating trends might serve as a wakeup call to those who need to forge healthier consumption, including snacks—and provide retailers an opportunity to offer healthier snacks to achieve results.
Kleinschmidt also says that brand loyalty took a hit at the outset of the pandemic due to out of stocks, as 30% of people surveyed by Reach3 Insights took the occasion to sample new snack brands.
“There’s a lot of snack fatigue going on right now,” says Sally Lyons Wyatt, executive vice president and practice leader, client insights for IRI. “People want better-for-you options but still really want and demand those snacking indulgences.”
Fighting Back
Some c-store solutions to combat the one-two punch of economic strain and snack fatigue include:
Reconsider package formats. “Snack package size matter,” says Wyatt. “Large sizes are seeing the biggest increases and smaller ones have seen a decline. … [It] makes sense for c-store retailers to make an attempt to carry some larger snack sizes,” picking and choosing which package sizes make sense based on brand preferences. “This strategy makes most sense for retailers that operate in neighborhoods with families who serve as their core customer. So be selective and go large by identifying maybe four to five snack brands to showcase a family size,” Wyatt says.
Be creative. Retailers need to “remind consumers about snacks,” perhaps positioning some snacks as meal accompaniments or meal replacement options, says Wyatt.
Emphasize speed. C-stores definitely have a lever to pull when it comes to appealing to people who want to shop brick and mortar stores but are wary of spending too much time in big box, club or grocery stores. “The silver lining is the c-store is a quick-trip mission, and many people continue to see it as a way to get inside and out quickly,” says Wyatt. It is this opportunity where consumers who shop for beer and cigarettes might reconsider c-stores as their go-to packaged snack channel.
Embrace winning snack segments. C-stores see meat snacks and jerky leading the category. “Those who are still on the go working externally, such as construction workers, look to the c-store for their daily meat snack items,” says Wyatt.
Dried fruit snacks, trail mixes, rice and popcorn cakes have all done well over the 26-week period ending late October in all channels, according to IRI. But isolating the c-store channel, rice and popcorn cakes are a small representation of packaged snack sales. It’s a growing segment that deserves to be leveraged to a higher degree by convenience operators and get back into the game, says Wyatt.
Wyatt says that, overall, c-stores are not in bad shape from a macro-merchandising performance perspective; it’s just that snacks are, at least temporarily, one of the casualties of the pandemic.
“When I just look at demand, convenience overall, from a channel perspective, is doing OK—just not in snacks. It’s the non-edible sin products that are doing well, along with health/beauty and home care/household cleaning.
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