Snacks & Candy

A Closer Look at the Current Convenience Store Landscape

supplied by client

Q: What shifts have retailers been seeing in the way consumers shop c-stores? Are in-store visits shorter? More orders placed online? Consumers using apps more frequently? Is it true that visits are down but basket rings are up? Why?


A: During the pandemic, shoppers were using the convenience channel in different ways.  Store proximity became a bigger decision in choosing a retailer than before. C-stores got credit for being easy to get in and out, and are smaller stores than mass or grocery channels, so therefore had fewer shoppers. C-stores also offered consistent products in stock that were not available in bigger box stores, and were more likely to be clean and maintain a level of safety due to size of the store. Fill-in and stock up trips became more common in the channel for those reasons, all while shoppers continued to have impulse and “treat myself” moments. Basket rings were a bit higher due to some of those trip missions and larger packtypes associated with them across categories. The ability to get in and out of the store easily is still a top benefit to the channel, though length of trip has maintained across data.

 

While commuting trips are still impacted with continued work-from-home scenarios, loyal c-store shoppers who were previously morning commuters may still shop the channel later in the day for a treat or meal. Those whose work or lifestyles were not impacted by COVID-19 have maintained their trips and routines to the c-store. Online and app ordering is still expanding within the channel.  There has been directional adoption of that technology, but it still accounts for a minority of transactions.  Shoppers note that in-store is still the preferred method of shopping the channel, as they needed an item immediately and couldn’t wait for an online order or were already out and about and it was easier to go into the store.

 

Q: How is it affecting the candy category?
A: The candy, mint, gum category is still a top category in the channel by dollar sales and is outpacing center store excluding lotto by dollar percent change and transactions percent change. Throughout the last year, larger packtypes grew significantly, which aligns with the stock up trip mission and increased basket size trend. Now, as mobility increases, the trend is swaying back towards instant consumables packtypes.

 

Q: How important is candy to building basket in this channel? How do candy purchases increase dollar ring at c-stores?

A: Candy is very important to building baskets in the channel. Research has shown that candy is often purchased with another item. It is a highly impulsive category with high household penetration, so the combination makes it a great basket builder. Data shows the average c-store basket ring increases by approximately $1 when candy is in the basket.

 

There has also been positive impact from everyday multiple pricing has on the category and baskets. Trips may be down, but everyday multiple pricing is enticing those consumers who are coming into the store to buy more. Retailers executing everyday multiple pricing on King and/or Standard candy see around 100% unit conversion, which is significantly higher than retailers without everyday multiple pricing.

Q: How important is merchandising to sparking impulse purchases?

According to IRI, the average consumer shopping time for the candy, mint, gum category is 27 seconds and 58% of category purchases are partially planned or not planned at all, so effective merchandising to spark impulsive purchases is very important. Approximately two-thirds of candy, mint, gum purchases are picked up in the aisle, so one-third are picked up elsewhere. Strike Zone Optimization merchandising in the aisle is rooted in the consumer decision process, so it helps them find what they want quickly. Out-of-aisle merchandising throughout the store like a branded corrugate display can get shoppers who were not previously thinking about the category to pick something up. And merchandising the highly impulsive category at the checkout gives consumers one last chance to grab a treat for themselves.


 

Q: Is there a Strike Zone approach for c-stores? How has that increased sales for retailers who have used it?

A: Yes, Strike Zone Optimization merchandising is best-in-class. C-store shoppers are quick; if they cannot find the candy, mint or gum item they’re looking for in the time they’re willing to spend (average is 27 seconds), they may leave the category. Retailers who have converted to Strike Zone Optimization do see a big initial lift during the first year, and smaller, yet continued lift, in subsequent years. The delta between retailers using Strike Zone Optimization and those not using it increased during this last year, likely because consumers were wanting to spend less time in store to reduce potential exposure to the virus and Strike Zone Optimization helped them find what they wanted quickly.
 

Q: What are some co-locating strategies (i.e. Kit Kat near coffee, grab-n-go racks near carbonated beverages)?

A: When it comes to co-locating strategies, think about the different dayparts and the natural affinities between candy, mint, gum and other categories. In the morning daypart, coffee is a top category and pairs well with Kit Kat, Ice Breakers and Reese’s Snack Cake. For the afternoon and evening dayparts, the top candy, mint, gum category franchise, Reese’s should be merchandised with fountain drinks, carbonated soft drinks, deli cooler and near food service.   
 

Q: How about merchandising near ordering kiosks?

A: C-stores have seen a +10.5% annual growth rate in food prepared on-site over the past 9 years. Research and examples overseas have shownthat consumers are looking for a meal bundle, especially at lunchtime. When it comes to the sweet part of the combination, 93% of meal combo shoppers would rather have a Standard candy bar than a King candy bar.
 

Q: Are there other merchandising techniques that c-stores can easily activate in stores?

A: One of the easiest techniques is to merchandise candy, mint, gum category products on or under the checkout counter. It is the only location in the store that all paying customers will be in during their visit. Customers expect certain items at the checkout and gum, mints, chocolate candy and non-chocolate candy are amongst the top “must have” items. The specific items that should be merchandised there are top performers because they’re the brands and items that shoppers love and will impulsively add to their basket.
 

Q: How do new products and limited-edition products help drive category sales?

A: New products and limited-edition products help drive category sales because they create excitement and encourage consumers to enter the category. They also improve packtype unit conversion; on average, King and Standard’s unit conversion including innovation and limited-editions is 900 basis points higher than when not included. Strong innovation and limited editions have merchandising units for out-of-aisle display, which include new and core items, so those call out the innovation or limited-edition and remind shoppers to grab their favorite, too.

For more information visit https://www.hersheysolutions.com/en_us/retail-insights.html

 

This post is sponsored by The Hershey Company

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