Opportunities abound for specialty food makers as c-stores elevate their product selections.
A destination for more than 165 million people across the U.S. and accounting for more than one-third of the brick-and-mortar-retail world, convenience stores are increasingly meeting consumers’ immediate need to eat, oftentimes with premium fare.
“C-stores are elevating the consumer experience, bringing in better-for-you items, those that are natural and organic, and more fresh foods,” says Paul Pruett, specialty food industry consultant and CEO of Designer Protein. “All are potential and attractive prospects for a specialty food manufacturer.”
With the numbers of these stores growing, so is the expectation for premium products, opening doors for specialty food makers that could lead to far-reaching brand exposure, traffic driven to other channels, and new product introductions. According to the Specialty Food Association’s 2018 “State of the Specialty Food Industry” report, 15 percent of consumers surveyed report they shop for specialty foods in convenience stores. The numbers are highest among 18–23-year-olds, indicating c-stores are a channel of growing interest and appeal to young shoppers.
While real estate might not be easy to come by in some c-stores, scoring placement can be a game changer. Here’s the quick on convenience to help get your head in the game.
Convenience Stores Are Cool
C-stores are becoming community staples, where customers feel comfortable popping in and out for a quick bite, cup of coffee, or snack. A July 2018 report by the National Association of Convenience Stores, “Convenience Stores and Their Communities,” found that 63 percent of Americans report that convenience stores offer food they feel comfortable eating, while nearly two in three consumers say that convenience stores share their values.
These attitudes are a result of c-stores building better in-store experiences and product selections, recognizing the need for healthier, fresher items, and sourcing locally made fare.
“There is no longer a ‘downmarket’ perception of convenience stores,” notes Pruett. “It’s becoming completely the opposite. While you can still get a familiar bag of chips, cup of coffee, and pack of cookies, you now have the option of more specialized items in these categories like cookies with a protein boost, or organic coffee.”
Foodservice, fresh, local, and better-for-you are the buzzwords. Foodservice sales, particularly in the prepared foods category, account for the largest component of the broader convenience store foodservice segment, (67.1 percent of total foodservice sales), according to NACS. Sales are largely from traditional items such as sandwiches, hot dogs, pizza, and chicken. However, an increasing number of convenience stores also offer high-end foodservice prepped in-house, and better-for-you options.
Get to Know the Little Guys
Beyond the ubiquitous Wawas and 7-Elevens, a new crop of convenience stores with an entirely new footprint is popping up across the country and can be the gateway for specialty food makers to gain placement.
These hybrids—like Choice Market in Denver, where 90 percent of the product mix is a combination of better-for-you-and local—combine traditional convenience store operating hours with modern positioning. They have a socially responsible philosophy, offer fresh in-house prepared meals, organic produce, and use technology—be it online ordering, payment kiosks, or app ordering—to help time-starved customers get their shopping done in mere minutes.
“Seeking out independently owned urban markets is a great starting approach for someone trying to break into the c-store channel,” says David Browne, market research and retail consultant for the natural and specialty industry. “These smaller stores want to differentiate and are usually already skewed towards more premium products.”
Also, owners can usually make margin decisions that maybe the bigger chains can’t and are willing to be more flexible when it comes to pricing your item,” he continues, “alleviating a customer ‘grudge purchase’ for an item with a 100 percent markup that they might find at a more traditional c-store.”
Know Trending Categories
While grocery categories like beverages and snacks dominate
c-store sales, subcategories such as sports and energy drinks, functional RTD beverages like kombucha, coffees, and teas are especially big. So are snacks with healthful and functional attributes and those with unique and exotic flavors and natural ingredients, as well as clean-label prepared products.
Mike Fogarty, owner of Choice Market, makes sure products coming in jibe with the stores’ values and is more apt to choose products that are relevant to in-demand categories like plant-based, functional beverages, and ancient grains.
Kombucha, especially, has been a win for his store. “We have 1,500 highly curated items including 25 SKUs of RTD kombucha and a kombucha kegerator,” says Fogarty, who initially worried the kegerator would cause some cannibalization. “It was the exact opposite, he says. “Sales for both are strong.”
Package with a Purpose
Tony Gains, EVP sales for Advantage Solutions, a business provider helping companies grow their brands in various channels, and Fogarty point out some product and packaging considerations when selling to c-stores.
Functionality. Consider the consumer and offer ease of instant consumption. Products should be focused on ready-to-eat, heat-and-eat, thaw-and-serve, and/or be hand-, car-, and mobile-friendly, requiring little additional packaging or utensils for consumption.
Examples include: resealable bags vs. traditional foil, single-serve items vs. larger portions, and bundled items in multi-faceted snack packs that are not only complementary to one another but also meet the need of the snacking occasion.
“Niman Ranch, Justin’s, and Horizon Organic are great examples of successful convenience store products because of their content and functional packaging,” Fogarty notes.
Gains points out that it is important to call out strong product attributes on packaging. “High-protein, low-calorie, whole grain, etc., are what customers are looking for now,” he notes.
Flexibility. Even chains of just a few stores have many different layouts, fixtures, planograms, and shelving configurations, so you need to consider a retail package and/or display fixture that can facilitate a host of merchandising options. Traditional options can work, but then you need to be flexible when it comes to merchandising.
Master Packs. Master packaging is critical, notes Gaines. “C-stores have little or no back-stock storage and very limited refrigerated and frozen storage capabilities, requiring small case counts or inner packings.”
Date Coding. Fresh items in the grocery perimeter are dominating trends, but c-stores do not have the multiple weekly deliveries required for daily fresh or very tight date-coded products. Gaines suggests date coding of a minimum of 45 days as ideal for the current supply chain models being utilized by most of the channel.
Build Brand Identity, Drive Demand
Building brand identity can plant seeds for customers to buy your product again—hopefully in a bigger size and in an additional channel.
However, it is very difficult for new, unproven items to earn or buy placement in the best-selling merchandising areas of c-stores (checkout, coffee bar, etc.) Traditionally, they are reserved to bottom shelves or lower-traffic areas. Aside from supporting products with off-premise advertising, Gaines notes a great idea is to specifically designate a sample case for store personnel to help spread brand awareness.
“Store teams are excited about new items when they are made part of the introduction. If employees have the opportunity to taste and like your product, they are the very best salespeople and ambassadors,” he notes.
Pitch a Planogram and Collaborate
If c-stores are going to build around natural and specialty products, they need complementary products that will make a strong set. “You don’t want to be an island—one brand sitting amidst a bunch of junk food in the store,” notes Browne. “You need to be shelved with your competitors.”
Browne suggests approaching buyers with both your products that they need to sell as well as the competing brands that complement them. “You need to pitch with this mentality to get buyers thinking of what other sets they should have to build upon items that are better for their customers.”
Taking it even a step further, Browne says there is also no harm in collaboration and using the power of your peers. “If you are going into a big chain, think about approaching channel buyers as a group with like-minded manufacturers, to make your case,” he advises.
Ponder Private Label
Private label can be an avenue to getting on the shelf.
“Everyone is constantly looking for ways to differentiate and creating a private label or co-packing solution for a chain like 7-Eleven—which has 7-Select Go!Smart, a private-label brand of better-for-you snacks and beverages—could be a way to bring in elevated products with a better price point. For instance, last year, 7-Eleven began carrying a line of proprietary RTD juices that are cold-pressed and organic under its private-label brand.
Value for the Money
C-stores have price ceiling ($1, $2, $5) perceptions and specialty items are perceived as higher quality, commanding a higher price. Though some of the ceilings tend to be more related to shoppers’ discretionary cash or their change from another purchase than actual unwillingness to spend more dollars, it is still a must that specialty manufacturers provide value in return for price.
“Consumer relationships [with products] in the c-store are very short due to immediate consumption,” Gains says. “This creates a more immediate perception of value—making a $10 item seem possible. But they must feel that they’ve received a value for the expense.”
Nicole Potenza Denis is a contributing editor to Specialty Food Magazine.
from Industry Operations http://bit.ly/2F3QM2M
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