RICHMOND, Va. -- The no-brainer of no-brainers. That's how Dave McComas, the CEO and president of Fas Mart/Shore Stop Convenience Stores, described the concept of warehouse-delivered multi-vendor endcaps (MVE) for snacks. His growing chain, perhaps doubling in size to more than 300 by year's end, with a goal of 500, according to McComas, has recovered from bankruptcy in 2001 in part with the help of skyrocketing increases in snacks sales.
Mechanicsville, Va.-based Fas Mart, under the guidance of senior vice president of marketing Russ Quick, is the poster [image-nocss] chain for the power of MVE that was touted to the 10 other retailers in attendance at the warehouse Delivered Snacks Advisory Meeting in Richmond, Va., Sep. 5-6.
The discussions, sponsored by a host of manufacturers and distributors and the American Wholesale Marketers Association (AWMA), included presentations by Kit Dietz, of Dietz Consulting, and Quick, as well as tours of Fas Mart stores.
Quick said that excluding the 58-store MVE test year of 2004, the combined sales increase in overall snacks of 2005 and 2006 was 50.2%, including boosts of 66.7% in alternative snacks, 57.9% in salty snacks and 24.7% in sweet snacks. The three-year gross margin gain for Fas Mart was 79.6%.
There is no increase in labor with the adoption of MVEs, and the margins are higher, Dietz explained, because there is one order placed, and fewer deliveries, resulting in a lower cost structure. So what's the catch? Why are there only 24,000 MVEs in use across the country?
Because it takes guts and some faith in the MVE success of other retailersDSD contracts, and the placement money that come with them, must be reconsidered (though Dietz and Quick made it clear that DSD brands are powerful and need to be kept in some form). Also, it's more work for the store operator, because category management principles must be applied to a segment that was managed by a DSD vendor. Most importantly, management must be sold on the concept, and then operations people must be sold on it, and all must work together.
If Quick's presentation wasn't evidence enoughHow much more incentive do you need? asked Dietzsuppliers and distributors were adamant that the risk was well worth it. It is the easiest thing we've ever done, said Tommy Thomas, corporate director of sales and marketing for wholesaler H.T. Hackney Co., Knoxville, Tenn.
While retailers face obstacles to adoption of the concept, so do the concept's champions. Other than Fas Mart's impressive experience, there is little c-store data with which the AWMA can market MVEs. Michael Fitzpatrick, marketing director for Lawton, Okla.-based EZ GO Foods, said he would share the numbers from his 15-store MVE program.
How do we get this across the country? asked Marty Monserez, convenience channel leader for Procter & Gamble, Cincinnati.
Steve Manders, of Steinhagen Oil Co., Beaumont, Texas, said his 26-store chain would try MVEs. McMullen, of 50-store Wiegel's Farm Stores, said he has had MVEs in all of his stores for six months. While it's too soon to definitively declare success, he said, initial performance highly suggests it, and there's been a bonus related to the smaller space the DSD vendor now has.
It's made [the DSD vendor] do a better job, he said. We've brought it down to where they can manage it.
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