Perspective: Depending on how you look at it, a category can be on the upswing or slipping.
Take, for example, instore sales for convenience stores during the 52 weeks ending Dec. 25, 2011. Chicago- based SymphonyIRI Group reports that dollars rose 5.3% and unit sales went up 3.6%, with unit increases for seven of the top 10 categories. Energy drinks saw double-digit gains, salty snacks and bottled water grew respectably, and even carbonated soft drinks (CSDs) inched up 2.5% after years of slipping.
Now compare the third and fourth quarters of 2011. In-store dollar sales fell 8.8% and units were off 10.9%, with none of the top 10 categories escaping a decline. Energy drinks, salty snacks and bottled water saw some of the biggest decreases.
What does it mean? It could be missed opportunities, pressure from other channels or both.
“Things that are normally instantconsumable purchases … it looks like those sales went to other channels,” says Matt McCourt, a consultant for convenience and spirits for SymphonyIRI. Food-channel sales rose 2.5%, McCourt says, while drug and mass grew 5.6%.
“We held our fair share vs. last year,” he says. “If you look at the fourth quarter, we were really hit hard. Total chocolate candy was slipping, and nonchocolate, bottled water and cigarettes took a pretty good hit. When they start slipping, they really start impacting the business.”
McCourt believes food, drug and mass discounted heavily during the holidays. “If you have a savvy consumer watching ads and watching their home dollars, are they going to pay for it or buy it in bulk from bigger-box stores? When you name categories such as chocolate, nonchocolate, carbonated beverages, snacks, nuts, seeds, corn nuts—when looking at those bigger categories at play in convenience, there are big dips in there. And obviously bigger-box competition really drove that.”
Ultimately, it goes back to c-store retailers examining the data and looking for new items they may have missed that are not currently in distribution. “The consumer is changing and they continue to look for deals, continue to look for the best opportunity to stretch their family dollars,” McCourt says. “If it means they drive half a block or walk across the street to CVS or Walgreens, who is now infringing on the footprint of a c-store, how do I stop that? And how does the manufacturer and supplier help me combat that?”
While McCourt expects growth of 2.5% to 5% for c-stores in 2012, he believes much of the growth will be driven by foodservice, and by retailers focusing on a few key categories. “Some people over the last few years have taken an approach where they’re going to do it all. Then they realize they can’t,” he says. “Now retailers are focusing on one, two or three things and want to do it well in foodservice.”
McCourt advises retailers to concentrate on assortments, instead of relying on suppliers and manufacturers to manage the categories. In addition, c-store retailers facing new competition from within the channel need to focus on protecting and defending their share, and determining where growth will come from.
“Some folks are not looking for expansion but to defend against anyone who wants to play against them,” says McCourt. “You have Sheetz, Wawa, Race- Trac, QuikTrip, Kwik Trip: They have a specific thing they do, and when they are expanding, it’s a good thing, and it means folks there operating will have to step up their game. … You need to up your game to protect and defend.”