You are here
The food industry is in a state of transition as consumers continue to look for convenient and healthy food choices -- often a difficult combination to find. Where they purchase (and are willing to purchase) these foods continues to evolve, and the grocery, quick-service restaurant (QSR) and convenience channel are all responding by providing more fresh and healthy meal solutions and snacks.
This trend represents a great opportunity for the convenience channel to brand itself as a convenient food destination for health-conscious consumers. And while there isn't a crystal ball to outline future success, a good roadmap for the convenience channel would be to watch the trends in the grocery channel, currently representing roughly 96 percent household penetration for prepared foods. In contrast, the convenience channel represents just under 10 percent, according to Nielsen Homescan Panel research.
Two key trends in the grocery channel that provide insight and opportunity for the convenience channel are on-the-go meal solutions and healthy snacking.
On-the-Go Meal Solutions: Deli-prepared foods represent roughly 60 percent of deli sales in the traditional grocery channel and continue to grow year over year. During the last 52 weeks, growth has concentrated on deli-prepared chicken (mostly driven by rotisserie chicken growth); deli sandwiches; deli dips, spreads and toppings (driven by hummus sales growth); sushi; and pizza (both pizza slice sales growth, as well as whole pizzas as part of a take-and-bake program).
Convenience channel operators can capitalize on the fact that consumers are looking for both individual and family meal options. They're interested in unique foods, often ethnic, and they want to purchase meal components they can combine easily at home.
Healthy Snacking: Many fresh food suppliers are making the transition to providing more healthy snacking options for perishables departments, offering products and programs specifically targeted to meet the needs of convenience store shoppers looking for snacks and meals on the go, as well as unique needs of the convenience store distribution network.
Chiquita, an industry leader in the grocery channel, successfully transitioned to the convenience channel. Understanding c-store operators may have limited weekly deliveries but must have fresh product on the shelves, Chiquita developed natural packaging technology, an exclusive Stay Fresh Pack, to extend shelf life -- keeping bananas ripe up to seven days longer and resulting in higher margins for the convenience channel. Another key element of the Chiquita To Go platform includes merchandising and handling training programs for c-store personnel.
Crunch Pak, a Washington state supplier of fresh sliced apples, created packaging specifically targeted to in-the-car snacking. Its mini bags of sliced apples and "Grab 'n Go" fruit cups are designed to fit into car cup holders and be eaten without a spoon, providing healthy snacking options for kids and parents alike.
Ready Pac Foods Inc. created a three-pronged platform for the convenience channel focused on fill-in/quick-trip solutions, on-the-go meals and healthy snacking. Ready Pac creates convenience store and distributor partnerships to bring consumer-centric products to the convenience channel. Whether it's a full meal solution program, developed and delivered with a focus on product and culinary innovation, as well as shelf-life extension expertise, or its healthy snacking line, which brings consumers both sweet and savory unique snacking options, Ready Pac provides partners with a wide array of products ready to meet consumer demands for meals, health and convenience.
While selling fresh-food options is a great opportunity for the convenience channel, the reality of perishable products requires operators to have their eyes wide open when it comes to understanding the challenges and nuances. A few key insights from perishables suppliers that have made the transition to working with the convenience channel are:
Expect Product Shrink: Due to the seven- to 12-day shelf life of perishable foods, there will be product shrink at the store level. In general, 2 percent to 6 percent is good, while 8 percent to 13 percent is average.
Price for Sales: Be aware of the price points for similar products in the grocery channel. It's OK to be a bit higher, but be reasonable. Expect lower gross margins to start -- margins will increase the more active role the store manager/ personnel put into their fresh foods case. Promotions, sampling and even meal bundling can increase sales.
Keep it Cool: Convenience store distributors are not typically used to handling perishable products. Maintaining 34 to 40 degrees refrigeration is optimum, and it's important there are "chill" capabilities along the distribution channel, from warehouses to trucks and to the stores.
Increase Delivery Frequency: Due to the vast geographies, some distributors only deliver to stores weekly, often causing stores to run out of product. Ideal minimum delivery frequency is twice weekly for fresh code dates and to minimize shrink.
Engage Staff With Fresh: Work with partners willing to provide education/training to staff and reward staff for growing fresh sales.
Merchandise for Sales: Set up a schematic outlining all the "fresh food" offerings available by time of day. Example: breakfast = fresh cut fruit/parfaits/ whole fruit. Lunch = fresh cut fruit/salads/snacking. This gears products specifically to the consumer who will consume them within one to three hours of purchase and improves food safety. Also, ensure staff monitors fresh product appearance, culling out-of-date and poor-looking product.
Consumers want fresh foods, and they're open to getting their foods from outlets other than the grocery channel if it means they will save time. This makes the convenience channel a logical solution for many consumers, but only if convenience store managers know how to stock, merchandise and price fresh-food options.