Beverages

Navigating Supplier, Customer Relationships Among Cold Vault Forum Big Ideas

‘Earning the trust of your vendor will get you much further than beating them down, because they don’t need your business’
Weigel’s Summer of Points campaign, Nik Modi, Mark Buonomo, Brian Nichols
Photographs by CSP Staff; image courtesy of Weigel's

As inflation continues to strain consumers’ wallets, as store traffic remains unpredictable and as labor challenges continue, two retailers atCSP’sCold Vault Forum last week encouraged attendees to lean on their suppliers to help them reach their goals.

“Everybody is worried about traffic,” said Adam Ruessler, senior category manager of cooler, center store and tobacco for Love’s Travel Stops, Oklahoma City. “We ask our vendors: What can you do to bring [customers] inside [our stores]?”

Often that leads to unique promotions, from buy-one-get-one promotions to sweepstakes and other giveaways.

“We fold our plans together and look at where we have similar goals, then we build on that,” he says.

Nick Triantafellou of Weigel’s Stores, Powell, Tennessee, echoed that strategy with the sentiment: “Vendors are not your enemy.” The director of marketing and merchandising for the chain instead urged fellow retailers to build strong relationships with their suppliers to benefit both parties.

“Nurture your vendor relationships,” he said. “You can have the best contract in the world, but when you start talking about marketing campaigns with a vendor, that’s when the traffic really starts flowing.”

Powell, Tennessee-based Weigel’s Summer of Points campaign (pictured), for example, includes opportunities to win free beverages, gasoline and even a Jeep or all-terrain vehicle in promotions backed by a variety of vendors, including Monster, Pepsi, Red Bull, Celsius and others.

“Earning the trust of your vendor will get you much further than beating them down, because they don’t need your business,” he said.

‘Mind Your Social Currency’

Liza Salaria of consultancy Impact 21, Newtowne Square, Pennsylvania, echoed the above retailers’ ideas within her rules to keep customers happy, including advising retailers to “mind your social currency.”

“This is how things go viral,” said the former retailer and current senior principal consultant at Impact 21. “Think about partnering with vendors to get exclusivity of new products, or at least exclusive in your market.”

A customer is likely to share on social media where he or she tried a product for the first time, creating social currency by driving others to the store.

Among Salaria’s other rules:

  • The Law of Relativity: Salaria explained how offering three tiers of a product type can be more profitable than just offering two. Using bottled water as an example, she said research shows when two tiers—private label and premium—are offered 60% of customers typically choose the lowest priced option. But when a third option—imported—is added at an even higher price, only 40% choose the private label offer, 45% opt for the middle tier and 15% will buy the highest-price alternative, driving increased profit margin across the board.
  • The Pain of Paying: Research shows consumers are happier if they only have to pay once, even if they end up paying more in the long run, Salaria said. This, she said, suggests subscriptions—car wash, coffee, fountain, etc.—are an ideal option to grow sales. While there are customers who will take great advantage of an all-you-can drink subscription, for example, the loss of profit will likely be made up elsewhere. “While we may lose profit at the fountain, we’re actually driving trips and increasing basket size.”
  • For a Cause: When Salaria worked in convenience retail, she drove customers to take advantage of a Gatorade buy-one-get-one promotion by providing an option to donate the “extra” drink to a local soccer club. Her stores saw a 30% increase in take-rate. “People like to volunteer,” she said. “They’ll work harder for a cause than for cash.”

Sales, Customer Insights

Elsewhere, there was a look at the economy and several sales and customer insights from Nik Modi (pictured left), managing director/beverage analyst at RBC Capital Markets, Toronto.

An official recession may or may not happen, but consumers are changing their behavior, he said.

“Things are likely to get worse before they get better,” he said, and consumers are looking for value. “Get ready for a ramp in promotions and/or innovation around value messaging.”

Modi said nearly 80% of respondents in an RBC Capital Markets survey said they plan to buy more value brands in the next six months and only 29% view national brands as a better value than private label brands.

Modi also said:

  • Simplify the math to help highlight value, he said, showing two images for sale on Coke. The first read the price and, “Save $1.46 each when you buy 3,” the better one reading the price and “Only 63 cents per can.”
  • In categories such as energy, consumers are shifting dollars online and the other channels. Energy is down from 62.3% a year ago to 55.9% today at gasoline and c-stores, and up online and at mass-market, grocery, dollar and club stores.
  • Energy multipacks have enjoyed strong growth, particularly among millennials, Gen X and boomers.
  • Younger consumers look for sensory experiences in store (not limited to convenience) and at the same time seek value when faced with inflationary pressures
  • RTD spirits will continue to be the biggest growth driver of the alcohol beverage category, and 86% of adult consumers want to purchase spirits RTDs where they already buy beer and wine.
  • At least half of frequent c-store shoppers want more digital offerings, including automated checkouts and online ordering.
  • Retailers might have more space than they think. A jam-tasting study presented consumers with a table of 24 various jams, 60% of shoppers stopped to sample and 3% made a purchase. At a table with six jams, 40% of shoppers stopped to sample and 30% made a purchase. “There’s way too much stuff that’s unproductive on the shelf,” Modi said. “You need to make your space more productive.”
  • Take advantage of more celebrations in the local market. “We need to start rethinking merchandizing and events,” Modi said. “If there’s a big Asian contingency, maybe you should do promotions around their holidays. Be culturally relevant to them.”

‘Protect the Core’

In a retailer panel, Mark Buonomo (pictured bottom left), senior category manager, beer/wine/liquor, at Global Partners, Waltham, Massachusetts, said it’s important to “protect the core. Do you have the offerings customers will need and can you satiate them with a price point?”

Retailers need to serve the current needs of the customer while sprinkling in a few products for future needs. “You need to have offerings to hit all the consumers, not just catering to new customers,” he said.

Added Brian Nichols (pictured bottom right), senior category manager, non-alc/packaged beverages at Maverik, Salt Lake City, Utah: “Pay attention to trends, the new items, flavor profiles, functional beverages. Put it all together and focus on the right items and not all the items.”

Having enough supply is extremely important, Buonomo said. “If you don’t have their product, they’re extremely sensitive to that and they’ll leave.”

Nicols said Maverik is doing more sets tailored to specific regions. “That’s really helped us out a ton from a distribution standpoint and catering to consumers’ needs, so all our sets don’t look all the same,” he said. “We’ve gotten more granular.”

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