FORT WORTH, Texas -- 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 education and insights at CSP's Convenience Retailing University, held in Fort Worth, Texas, through Thursday.
In the opening general session, Don Burke, senior vice president at Management Science Associates Inc., 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 data from McLane, mined from 7,155 ZIP codes, as well as two years of total-store POS scan data from 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 increased 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 groceries, in descending order of opportunity.
Categories with average potential included (in descending order of opportunity) candy, publications, packaged ice cream, novelties, and packaged sweets.
And some of the categories with the weakest opportunities in increased SKUs were packaged bread, automotive, cold and frozen dispensed beverages, frozen foods, other dairy, hot dispensed beverages, fluid milk, ice and liquor.
Diving deeper, Burke explored subcategories with growth potential. While premium and branded discount cigarettes had opportunities for 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 had most potential in gum and mint; salty snacks in "all other" products, such as tortilla chips.
Driving Up Ring
A few categories were found to drive sales of additional items particularly well: foodservice, bottled water, sports drinks, fuel and iced tea. Cigars and hot dispensed beverages showed average potential, while store services, juice, premium cigarettes and chocolate candy had the weakest potential.
Burke went on to share the pairings most often purchased together. Among the most common pairings:
- 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.
- Bottled water and carbonated soft drinks.
- Foodservice and ice cream.
- Cigars and all other salty snacks.
- Juice and carbonated soft drinks.
- Sports drinks and alternative beverages.
Strong Price Elasticity
It seems the c-store industry has very positive price elasticity--meaning consumers are not particularly sensitive to pricing.
Wine, other tobacco, beer, other dairy and candy are the categories with the most price elasticity.
"People are not as price sensitive in those categories as they are in salty snacks, fluid milk, packaged beverages and cigarettes," Burke said.
Further, there was a stronger opportunity for price elasticity on smaller-sized beverages than on larger-sized beverages.
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