Convenience retailers and analysts had their say in the second half of the Convenience Retailing University conference in Orlando, Florida, last week. Here are eight more insights and ideas from category breakouts and general session …
Intern-al Victory
One of the biggest boons to the Country Fair convenience store chain during the worst of the pandemic labor crisis came in the form of a single intern. Steve Seymour, director of personnel, training and development, found an outgoing college student to help with the chain’s application process. The intern’s role was to call every applicant as soon as possible to connect before competitors had the chance to scoop them up, as applicants typically apply to similar roles across the market. “You have to be aggressive,” said Seymour. Today, that intern is a fulltime employee working in the personnel office.
Get on Board
The litany of social issues that grew in prominence over the past three years requires new levels of attention and training by employers. The Wills Group, for example, provides constant training of DEI (diversity, equity and inclusion) issues because “everyone has biases, and it’s about opening your eyes to those so you can have a more inclusive environment,” said Lorissa Martin, talent acquisition and performance manager at the Wills Group, dba Dash In. “Some people think of diversity as race and gender, and it’s so much deeper than that. When you start peeling it back, you start seeing more connections, and then you start hearing more people talking about [times when they] felt uncomfortable. You are giving them tools to speak out in a comfortable, confident way.” It is a continuous learning process for every person, she said, and “your senior leadership team has to be very on board with it.”
Price-Driven
Cigarette pack prices have increased four times a year for the past two years, which traditionally is unheard of, said Vivien Azer, managing director and senior research analyst at Cowen, New York. Category managers need to understand what the motivation behind this is, she said. “It’s not just because of these cigarette industry volume declines; it’s because of their global aspirations,” Azer said. Philip Morris International, for example, is generating more than 32% of its revenue globally with heat-not-burn product Iqos, she said, but other major players such as British American Tobacco, Imperial Brands and Altria are behind in terms of global reduced-risk product innovation. In order to fund their investments and catch up with PMI, they need money for innovation and marketing. “Launching a heat-not-burn proposition and generating trial and consumer attention is expensive. So everyone is taking pricing in U.S. cigarettes to fund their global aspirations around reduced-risk products,” she said.
Pack-Bev Profits
Packaged beverages account for 15% of in-store c-store sales, second only to cigarettes at 30%. However, packaged beverage is a bigger driver of the industry’s in-store gross profits, representing 19%, behind only foodservice at 35%. These stats were among a bevy from Bonnie Herzog, managing director at Goldman Sachs, during session on packaged-beverage trends. When it comes to c-store margins by category, packaged beverages are above average at 42%, versus the total in-store average of 34%, Herzog said, citing NACS data. For context, ice is No. 1, at 72%, and publications are last, at 13%. “The consumer channel preferences for beverages continues to evolve since COVID,” Herzog said. “Beverage sales have really improved, and that’s encouraging.”
Out-of-Stock Alternatives
The pandemic forced multiple supply chain issues that kept products from getting to market. Among the most common ways to avoid having empty shelves are doubling up on best-selling candy, stocking seasonal limited-time offers and filling space with other categories. One alternative suggested at CRU: ordering shippers of candy items that are otherwise unattainable. Retailers choice whether to showcase the product in the cardboard setup or move it to in-line shelves. And Stephanie Reeder, center store category manager at Yesway, Fort Worth, Texas, recommends sending shippers to the best candy-selling stores to avoid missing a sale.
Share the News
Meanwhile, it’s important to communicate with all players in stocking shelves about the state of supply. There’s an assumption from some district managers, said Brad Connell of bp America/Thorntons, that center-store supply is back to normal, often throwing store associates off balance when product does run low. Instead, said Connell, senior center store specialist, category managers need to “understand why [products] are out and understand the recovery or your next plan of action.”
Not What It Seemed
The early success of hard seltzer sales is often credited to the larger trend of interest in health and wellness, but that may not be the case, said Vivien Azer, managing director and senior research analyst at Cowen, New York. Lower calories, lower carbs and no or minimal sugar may have been an initial draw; however, more flavored malt beverages are coming out that don’t necessarily have those same attributes, and they’re still doing well, she said. “It doesn't seem like that's holding consumers back at all,” Azer said of increased calories and sugar in the segment. “They're just looking for something new and flavorful.”
Better App, Better Business
Make your c-store’s app one your customers keep on their phone and use. “I heard the stat that the average older adult has numerous apps on their phones—pages and pages—but younger folks have only four or five at any given time,” said Matt High, senior sales manager, made-to-order platform, at Sheetz, Altoona, Pennsylvania. “You have to develop your app in a way that keeps the younger audience engaged.” High said he would love to stream Sheetz Radio on the company’s app. “That’d give them one more reason to keep our app,” he said.