The year 1978 marked several significant milestones in history. Under President Carter, the half-century-old federal ban on home brewing was lifted when he signed H.R. 1337. The year also marked the bottom of the trough for the number of breweries in U.S. history (only 50). To really make this year memorable, as juniors at the University of Dayton in Ohio, my soon-to-be wife, Lisa, and I got engaged.
Fast forward to Dec. 22, 2015, in my backyard in St. Louis. There you would find Lisa and me with our daughter Melissa; her husband, Jesse; and our future son-in-law Nick brewing up a recipe we called Alaskan Low Bush Triple IPA. Earlier that same month, the National Beer Association reported the opening of the 4,144th brewery in the United States, which surpassed the previous high of 4,133 breweries reported in 1873.
Seemingly unrelated, these events highlight two important factors facing c-store operators and their suppliers today. Consumers’ interest in products, styles, flavors, origins and uniqueness is growing. The coveted millennial customer and the aging baby boomer are demanding more choices. Also, with the number of brewers having grown by more than 80 times, the number of SKUs operators have to sort through has grown at an even greater clip. The pressure to make good decisions amid increasing demand for choices and a tidal wave of new items can be overwhelming for small-format retail operators.
Retail Pain Points
Suppliers, take note of Convenience Store Products’ retail survey from last year that documented retail customers’ pain points [Convenience Store Products—July/Aug. ’15, p. 20]. At the top of this list, 78% of respondents identified finding space for new items. This is a quandary for suppliers that are challenged to innovate or be left behind in trying to satisfy the demands of our consumers. Suppliers work hard to identify consumer trends and then build their products to respond accordingly. Millions are spent on research, product development, packaging and marketing leading up to launch. The last mile to the consumer is getting it to the store in the right spot.
The millennial customer and the aging baby boomer are demanding more choices.
Suppliers do a great job of building their selling story on product innovations. Sometimes, after they share critical information with retailers about why and how they are supporting these new launches, they hear, “Great, I am in!” Unfortunately, they also may hear, “Which one of your products are you taking out of the set?” Suppliers hate this question. It’s best to figure out how to put a retail buyer in a frame of mind that ensures such a question never enters into the discussion.
Solutions and Execution
Simple yet effective solutions are worth consideration. Empathy for the store-level challenges of demand management is key. Bring data to support why and, most important, where your product should go. Sure, it’s Category Management 101, but sometimes we forget the basics at the store level. Understanding the daily management of store operations means coming up with simple, data-based recommendations for getting your product placed effectively. Consider suggestions for underused space in the store that can be made into theater for your product. Look at nontraditional areas that merchandise your product near a likely co-purchase category. Have an exit strategy that minimizes or shares risk with your customer.
Bringing in temporary merchandising tools that create space for your product may be the best solution. (“No worries, Mr. Retailer, I will bring my own space.”)
Ironically, the Food and Nutrition Service (FNS) is increasing the pressure on space with its proposed rule about retailer participation in the Supplemental Nutrition Assistance Program (SNAP). Newly proposed requirements codify changes to retailer stocking requirements enacted in the 2014 Farm Bill and take them a step further. In addition to knocking “multi-ingredient” items off the list, the FNS clarifies how retailers carry certain core food items on a “continuous basis.” NACS’ Anna Ready summed it up this way: “The proposed rule clarifies the definition of continuous basis as a minimum of six stocking units per variety. … That means a retailer must have at least 168 staple food items stocked and on display at all times.”
It is critical that suppliers understand the potential effects of the FNS Proposed Rule on the very consumers SNAP is intended to assist. A likely result is that many c-stores will be pushed out of SNAP because it will be too difficult for them to participate. This is where being an industry advocate comes into play.
Joe Vonder Haar is the co-founder and managing partner of iSee Store Innovations LLC. Reach him at email@example.com.