Industry View: Merchandising in the Ice Age
Business lore tells us the convenience store industry was born in Dallas in 1927, when Joe Thompson’s Southland Ice Co. began to offer milk, bread, eggs and other items for the convenience of his ice customers. Today, many retailers have implemented policies that prohibit merchandising products on ice in response to operational and legal hurdles it can present.
It seems ironic that an industry founded on ice now finds ice a challenging and controversial merchandising tactic.
Experts tell us that an appealing environment that creates an emotional connection with the customer is what drives incremental sales. There appears to be little data to support what drives appetite appeal for cold beverages; however, since the dawn of promotion, brands have featured their beverages on ice. The term “ice cold” shouts from nearly every billboard, TV ad and in-store merchandising. “Refrigerator cold” just doesn’t evoke the same emotion.
Beverage industry expert Bump Williams, CEO of Bump Williams Consulting, cited research on a retailer that “merchandised the same product on a front-end display, and then we placed it in an ice-cold bin/display. The sales rate of the ice-cold beverage was nearly 8-to-1 greater.” Retailers that use ice in their displays offer similar testimonials. NACS chairman emeritus Dave Carpenter says, “At ShortStop we put our Gatorade on ice and sold more per store than any other retailer. Large iced-down barrel and a hot summer day? Nothing looked better.”
From a brand perspective, retired beer icon Willie Laufer says, “Every retailer who wants to be a beer destination wants to have the ‘coldest beer in town.’ Is there a better way to promote cold to the shopper? I don’t think so.” Mark Byrd, chief customer officer of Retail Net Group, says ice merchandising “is aspirational to how you want to consume it, and provides more sparkle and emotion of refreshment.”
Perception Is Reality
In recent store tours, I observed customers picking up their favorite beverage out of the vault (at 28 degrees) and then, upon seeing the same product on ice, grabbed the iced product. When I asked one man why he chose a 32-degree iced product over a 28-degree product from the cooler, he responded, “I love it cold, and ice does not lie. … Nothing is colder than ice.”
The continued threats coming from drug, dollar, grocery and even Walmart highlight the need for every operator to leverage their core strengths. The daily routine of the time-starved consumer is a trip that c-stores own. The beverage segment may well be the front line of the battle for shopping trips, and it behooves operators to protect this niche and grow via the best means possible.
Many operators are “concerned with legal issues of ice melting and causing an accident in the store, and concern with hygiene of people dipping their hands into the ice,” according to Williams.
“Ice merchandising is a bit challenging,” Carpenter says. “Filling it with ice, and keeping it stocked and drained, is critical. Having the right merchandiser that is portable, easy to drain, right in front, well-stocked and tied in with good pricing and POP materials” are all factors to consider. Also, having your own ice-making equipment helps the economics to work.
“The incremental appeal and sales are worth finding a way around the concerns,” says Byrd. “Consider a floor mat and a golf towel tied to the display to wipe off the bottles and avoid drips and spills.” Williams emphasizes that a retailer may be “missing out on a tremendous opportunity to drive traffic, encourage sampling and impulse sales and to differentiate yourself from the other 550,000 stores in the marketplace. [Ice merchandising] is a smart investment.”
Consider this: If c-stores had not had the operational discipline to manage significant change in the coffee offering, consumer perception would still be a single pot of burnt, bad coffee. C-stores that can implement standard operating procedures for challenging merchandising can leverage competitive advantages that set them apart.