CHICAGO -- Some retailers built their empires on dairy. Others have let it go sour in the depths of the cold vault. But changing shopper habits and surging subcategories—along with smart merchandising—are helping move more milk, cheese and yogurt at touch points around the c-store.
1. Go for the gallon
Texas might be known for its 10-gallon hats, but Randy Morton makes do with just one: He’s an advocate of everyday low pricing for 1-gallon milk.
Morton, owner of Morton’s, Hallettsville, Texas, understands that using milk as a destination purchase can help build the market basket.
“My gallon milk ($3.99) is often a loss leader that produces a positive domino effect,” says Morton, who profits on pint ($1.69) and half-gallon ($2.59) sales. “We get mom to buy milk and also buy bread and staples. Eventually, her husband comes in to buy craft beer.”
Morton allots one full cooler door, top to bottom, to gallon milk. He then advertises it regularly via digital messaging on his fuel dispenser.
2. Turn to snacks
Other dairy subsegments, such as yogurt and cheese, are ripe for destination status. Morton offers a 9-ounce, domed-lid cup of ready-packed figs, cashews and dried cranberries and pairs it with single-serving yogurts.
He also sells 9-ounce refrigerated cups filled with pepper jack and colby cheese cubes, adding in locally sourced dry sausage—to the tune of a 60% profit margin. The key to high margins? “Use a cutting board and slice cheese yourself, which reduces costs. I know retailers are busy, but it pays off,” says Morton.
3. Upgrade the offering
According to Mary Kay O’Connor, vice president of special projects for Madison, Wis.-based International Dairy-Deli-Bakery Association (IDDBA), “cheese is a high-margin product and an on-trend category.”
Ninety-eight percent of shoppers buy other items while shopping for premium cheese, including crackers, yogurt, baked goods, dips and spreads, according to the IDDBA.
“C-stores should ask, ‘How do I stack up as a destination for specialty varieties?’ ” she says.
O’Connor also recommends elevating the foodservice offer with high-end cheese: “Use specialty cheeses on prepared deli sandwiches to gain interest and boost future specialty-cheese sales.”
Assess the opportunity
Active dairy “superconsumers” make protein a critical component of diets, spending $634 a year on dairy products—$300 more than the average consumer, according to the International Dairy-Deli-Bakery Association/Midwest Dairy Association.