CSP Magazine

Opinion: BTGOs, Beer and the Next Generation

"I have to start writing some of these down.”

This came from a bright young customer at a recent meeting, delivered with sincerity and respect after my use of consecutive metaphors and acronyms. I spent the rest of the meeting measuring my words to ensure that I did not go to this literary well again.

What was unique about this particular meeting was the participants: all millennials, one of which was our newest iSee team member, Melissa Vonder Haar. Consider this the family version of the “twofer.”

Appropriate use of similes and acronyms make for effective tools in communicating opportunities. At the NACS State of the Industry Summit this past spring, Andy Jones, CEO and president of Swift Mart, said quick-service restaurants (QSRs) “were stealing from the c-store playbook.” Discussing the growth of “two-for” promotions by fast-food kings McDonald’s, Burger King and Wendy’s, Andy highlighted the success that the c-store industry has had in trading customers up without suffering the pain of a deep-discounted, everyday price.

Beer, my favorite category, has taken Andy’s message to the singles shelf. IRI data suggests a 20% lift when the “buy more” strategy is executed with simple but clear shelf communication. Grouping like items on the same shelf makes sense for the shopper.

The SKUs are individually priced while being promoted as “buy any two” with simple pricing communication, making everything on the shelf part of a value play. This is a win all the way around: The consumer gets value and simplicity, the retailer drives increased market basket with improved sales, and the supplier gets promotional spend efficiency and sales growth.

BTGOs and Interruptions

An emerging trend this past summer in the beer category has been the use of a modified BOGO—let’s call it BTGO—in which the consumer buys two and gets one free. Primarily executed with domestic premium multipacks, this pricing tactic has been successful with other product categories. IRI results show retailers who executed this program saw significant beer category growth in dollars (up 4.2%) and volume (up 6.3%) during summer

2016. While all-channel IRI data showed positive sales for the entire category, retailers that implemented BTGO saw growth that was double that of the rest of the trade in both dollars and volume. Initial analysis also shows that gross-profit productivity was significantly better with BTGO. Knowing that premium beer sales are responding is great news for our channel, which sells the majority of premium beer.

Research consistently demonstrates that customers abhor having their convenience shopping mission disrupted, unless, of course, there is a “positive” interruption.

For the adult shopper, “free beer” messaging might just meet the criteria. Communication of this offer at the vault and on ambient displays is critical, considering limitations on the use of the word “free” when it comes to age-restricted products. The message of the offer at the point of purchase needs to be direct and simple. Educating store associates about the offer can also send a customer back to the vault to grab two more. Everybody is happy—as long as the product is in stock.

Prepare for Success

Without planning for improved sales, there can be a predictable disaster: The dreaded OOS (out of stock) abbreviation.

For c-store beverages, out of stock can mean not having a product both cold and on the shelf. The best operators figure out how to ramp up cold holding power to maximize category performance. Beer-cave retailers have the best tool for using promotional space, but mobile cold displays and flex space in the cold vault are also areas in which to improve feature item pack-out. Warm displays work as a great communication vehicle for promotions and effectively help keep the featured items available in the store, if not cold.

With warm displays, retailers can also put themselves in a position to pick up a “stockup” trip that may be pure incremental sales.

If there is one overriding point of difference for c-stores vs. other channels, it is the many entrepreneurial, family-run, multigenerational organizations within the industry. CSP has well documented the many family-run c-stores that are grooming the next generation, pointing out that “convenience retailing is in their blood, inheriting their passion from a  multigeneration tradition that sometimes dates back to their great-grandparents.” With Melissa joining me and her sister Jessica as part of iSee, this is a good page to steal from  this industry’s playbook. You can write that one down.


Joe Vonder Haar is CEO and founding partner of iSee Store Innovations LLC. Reach him at joev@iseeinnovation.com.

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