C-Store Basket Case: The ABCs of Impulse
Retailers, suppliers discuss how health, demographics, sizes, more shape sales
Published in CSP Daily News
CHICAGO -- Convenience store trips and baskets were down in 2013, according to research by The Nielsen Co., while all other channels saw growing baskets. What's the convenience channel to do? Build up those baskets by triggering more impulse sales, said participants at the recent CSP Driving Impulse Sales Forum in Chicago.
At the meeting, around two-dozen retailers and suppliers discussed the many considerations when triggering an impulse purchase, with discussion touching on everything from health and wellness to demographics to activity-based costing (ABC).
Some of the big discussion points included:
*Better for you, better for sales. The healthful, "better-for-you" trend has touched many of the impulse categories and is directing new-product innovation and retailer offers. In meat snacks, for example, the demand for better-for-you protein sources has helped drive sales, said Stephen Oberto, senior associate brand manager at Oberto Brands, Kent, Wash. It also led the company to embrace an all-natural position for its jerky line, including redesigning packaging to highlight the clean ingredient list and lack of preservatives and artificial flavors.
Even in ice cream, considered an indulgence at any time, the better-for-you trend has led to growth opportunity for portion-controlled items. Todd Root, director of sales at Nestle USA, Glendale, Calif., told attendees how single frozen ice-cream snacks and portioned items such as the company's Dibs are seeing stronger sales, and have the opportunity to bring new consumers--especially health-conscious millennials--into the category.
- Know your Hispanic consumer. In a presentation highlighting research on the Hispanic consumer, Roy Kokoyachuk, quantitative research director and managing partner at ThinkNow Research, Burbank, Calif., said retailers need to hone in on the level of acculturation of their Hispanic customers to best serve their needs. For example, according to ThinkNow research, the greater the degree of a Hispanic consumer's acculturation, the more likely they are to value low prices.
Kokoyachuk suggests this may be because these consumers are most familiar with their brand options and able to compare and choose items with greater confidence.
Similarly, Hispanic consumers who are less acculturated are more likely to leave a store if they don't see an item they are looking for in stock--likely because they are not as familiar with the alternatives to their preferred brand.
- Gum gives up space. The gum category continues to decline across all channels, with both household penetration and purchase frequency decreasing, according to data shared by Joey Hendrix, senior manager of category strategy and insights at The Hershey Co., Hershey, Pa.
In the past three years, c-store gum sales fell the equivalent of $189.8 million.
Hershey, which manufactures Ice Breakers and Bubble Yum gum--along with major chocolate brands such as Reese's and Kit Kat and nonchocolate brands Twizzlers and Jolly Rancher--recommends that retailers adjust the candy set to reflect the changing fortunes of the segments. With chocolate, nonchocolate and mints approaching 75% of c-store sales, Hendrix recommended devoting that same percentage of space to these subcategories, while trimming gum to 25%.
- Big is better. Whether it was take-home sizes of snacks or novelty candy bars, retailers reported surprising success selling bigger package sizes. This includes QuickChek Corp., Whitehouse Station, N.J., which is rolling out take-home beverage and snack displays filled with bottled water, energy drinks, carbonated soft drinks and chips.
TravelCenters of America Corp., Westlake, Ohio, with its professional driver base, also sees opportunity in large snack and candy sizes. According to Susan Moravick, convenience category manager, the truckstop chain has a "Buy Big and Save" promotion on four bulk items each month, including 5-lb. bags of gummy bears and 2-lb. sheets of Rice Krispie Treats.
- Focus on items' and categories' "true profit." In a presentation discussing the activity-based costing model, Kit Dietz, principal of Dietz Consulting LLC, Huron, Ohio, argued that retailers, manufacturers and distributors need to do a better job of focusing on core SKUs and evaluating categories holistically.
As Dietz noted, core SKUs drive 4.5 times more "true profit"--which takes into account all of the elements associated with handling a SKU, such as labor and electricity costs, as well as discounts and allowances.
At the same time, he urged retailers to not manage snacks by distribution method--warehouse vs. direct-store (DSD)--but instead take one "big look" at the category. He pointed to the example of one retail chain that took a total category-management approach on snacks over a three-year period and saw a 66% lift in gross-profit dollars and 57% lift in sales. The idea is to harmonize assortment so that it meets customer needs first, not those of the manufacturer or distributor.
For more highlights of CSP's 2014 Driving Impulse Sales Forum, see the June issue of CSP magazine.