Be nimble and know the numbers.
These are two suggestions from convenience-store retailers and vendors when it comes to when, how and if packaged-beverage inventory should be recalibrated on shelves to improve sales.
At Worcester, Massachusetts-based Nouria Energy, Kevin Platt, senior category manager, says the once-a-year process studying their shelves begins in December by meeting with all vendor partners. Discussions include new brands, and decisions are complete by February. By March, after analyzing scan data from several sources, including internal numbers, vendor data and Nielsen, they begin their beverage reset, which won’t be complete until mid-June.
“We don’t go back and start tweaking anything for the summer months because we are just finishing our planograms,” he says.
Exceptions are made for midyear pull-and-plugs with items that have “fallen off the ranks or we can’t get due to distribution,” he adds.
While also relying heavily on data, Rutter’s, conversely, is more apt to reset shelves on the fly.
“We want established brands out there, so we’re sometimes a little bit late to that product potentially.”
“I’m continuously analyzing both alcohol and tobacco trends,” says Adam Long, senior category manager at York, Pennsylvania-based Rutter’s, which has 79 locations. “I don’t lock our stores into a set number of planogram changes per year.”
There are a couple of annual key resets, Long says, but he likes to be nimble enough to make changes as needed throughout the year.
“You never know when a change will be necessary in these highly regulated categories,” he says.
Long says his first consideration when refreshing shelves is customers and the products and merchandising strategies that will give them more and better options. He says building stronger brands and growing business “requires a category focus over a brand focus.”
Challenging Times
Regarding vendor input and their data, Platt says if vendors have solid-performing products in other channels or markets, Nouria, with 170 stores, will examine that data and give it a shot in some stores. However, today’s economics make it increasingly challenging to bring in newer items.
“We want established brands out there, so we’re sometimes a little bit late to that product potentially,” Platt says.
The new products that make it to Nouria’s shelves do so by a combination of positive sales data and customer requests, he says, and in their 40 to 50 new stores with more doors, Platt will test products there.
One product doing well for Nouria is G Fuel, which the chain started carrying after customer and subsequent manager inquiries. The energy drink has grown and drove double-digit growth over the past few years, Platt says.
“Energy drinks and hot food items do really well together.”
Elsewhere in energy, Nouria was an early adopter of C4. Platt opened a half or full shelf in some sets to make more room for the drink in 2023 because it performed so well.
“We have a lot of smaller brands that have their little niche,” he says. “They’re promoting, they’re investing in their brands, and it’s not just us out there trying to develop their brand for them.”
Many energy drinks that started in places like GNC or Vitamin Shoppes are trying to bust into the c-store channel, Platt says.
“We’ve done very well with the few that we have chosen to partner with,” he says.
Giving the products the proper attention and not bringing in items that aren’t selling are key to success, Platt says.
Nouria enjoyed double-digit package-beverage growth from the start of the year through March.
Patience Pays
Platt says he gets a new packaged beverage pitch daily, and because of this avalanche has learned to patiently sit back and see how a product fares in the market.
“You can’t react that quickly to some of these brands,” he says, adding he will wait for internal and external sales data.
In addition to building out sets, product selection and space allotment, Brian Nichols, category manager at Salt Lake City, Utah-based Maverik, says improving sales also involves using technology to pursue “lapsed users” with targeted offers.
For example, Nichols says they can use sales data collected via their c-store’s loyalty app and contact customers who haven’t bought a Pepsi product in 90 days, offering a dollar-off deal when two are purchased to lure them back.
“Retailers should consider that typically 20% of the SKUs drive 80% of the revenue.”
Also, when conducting yearly resets, Maverik, which opened its 400th store in January, builds in facings for key categories and bigger brands to do limited-time offers.
“Think when Mountain Dew comes out with all their Baja Blasts throughout the summer,” he says. “We have space built into the set to account for that without cutting into the core Mountain Dew space.”
The yearly reset is a long process, Nichols says, using robust internal data and wrapping up at the end of May. Toward the end of summer, they begin pulling data to examine how brands and new and current items are performing. “It’s 100% data driven,” he says.
To help sales, Nichols has many offers with each brand and looks for high-affinity items, promoting pairings of beverages and other products, such as hot food or center-store items, that sell well together.
“Energy drinks and hot food items do really well together,” he says.
Bring the Balance
At E. & J. Gallo Winery, Modesto, Calfornia, Jeremy Cutler, managing director, category development, says it’s important to offer a balanced assortment of products shoppers want to buy. Retailers should look at demographics, market and sales trends, sales velocity, days of supply and revenue when deciding what to stock.
“To establish the number of items to offer, retailers should consider that typically 20% of the SKUs drive 80% of the revenue,” he says.
Another consideration when stocking shelves is to look at the data from a big-picture perspective, says Jaron Friedman, head of sales for Toronto-based sparkling water brand Clearly Canadian. For instance, sparkling water accounts for 7% to 10% of sales across all store types but gets one shelf out of 40 in a c-store.
“So that’s 2.5% of your cooler,” Friedman says. A c-store retailer might not want to jump from one shelf to four shelves, but they should consider recalibrating “because the rest of the market—grocery, mass market—is growing much faster and has a higher percentage of their space than you do.”
Not adding space for a product can result in “a self-fulfilling prophecy” of low sales in any given subcategory if that segment isn’t given the same percentage of facings corresponding to the market average, he says.
Know Customers’ Needs
Friedman also says retailers should make sure the brands they carry fit their shoppers’ needs.
“You really have to understand who your consumer is and the brands they are looking at,” he says.
Vendors should know the consumer demographics for their brands, Friedman says. Putting a high-end product in a c-store whose customers are middle of the road will not change that store’s shoppers.
Another way to boost sales is via innovation and variety, says Carlton Austin, director of convenience retail strategy at Coca-Cola, Atlanta. “The novelty and get-it-before-it’s-gone urgency of the limited-edition releases have resonated with young consumers,” he says.
Last year, Coca-Cola Creations Starlight drove 30% of sparkling soft drink category growth in the channel, with 32% from new category buyers and 24% from expanded category consumption, Austin says.
“You never know when a change will be necessary in these highly regulated categories.”
In addition to introducing new products, c-store retailers should implement eye-catching promotional tools throughout stores.
“We know drawing fuel patrons into the store is key to driving overall sales,” he says. “Signage at the pump and on the exterior windows is a good place to start, and digital tools like the store’s website or app can also assist in increasing visibility.”
Joe Sepka, co-founder of 3Tier Beverages, a Chicago-based data management consultancy, recommends retailers study the sales data in grocery and mass-market stores across their area. Look at the number of cases per store a brand is selling monthly, for example, to get a gauge on a product growing in popularity. That success will soon migrate to c-stores, he says.
“Keep it simple. Take some of that sales data, see who’s growing in distribution and in dollar sales overall,” Sepka says.
Finally, keep an eye on selling too many variations of the same product, he says. “You get diminishing returns the more you duplicate,” he says.
A retailer selling four types of a hard seltzer, for instance, will get 85% of sales from one of the four. Cut one and sales will flow to another SKU, he says, “which makes room for another slot, something that might be entirely different than a hard seltzer—and you can capture more sales from that.”