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Competition is coming at convenience stores from all angles. Dollar stores, drugstores and grocers, to name a few, are luring customers in with cigarettes, beverages, foodservice and other convenience store products, making it more and more incumbent upon c-store category managers to get all the help they can from suppliers and employ the appropriate merchandising and shopper insight tools to differentiate their offerings and drive sales.
The 2014 Convenience Store News Category Captains awards, which are newly redesigned this year, honor suppliers for their category management prowess demonstrated through their partnerships with convenience store retailers. This year, 10 winners have been selected based on compelling examples of key category management initiatives.
Category Captains are leaders. They have the ability to think strategically, navigate change and implement new processes and products. This year?s entries demonstrate that from foodservice to snacks, the supplier community continues to demonstrate its understanding of convenience store owners? goals and offers innovative ways to achieve them ? elevating the visibility and relevance not only of their own company brands, but also of the categories as a whole.
Our winners know category sustainability is less about whose name is on the package and more about what?s inside and how they can deliver solutions to customers. This year?s Category Captains honorees are helping c-stores capture more than their share of consumers? attention and dollars.
With rapid new product launches and packaging developments come new challenges and opportunities for retailers to manage ? and grow ? a profitable business, as evidenced by SKU counts in the beer category increasing at a rate of 5 percent per year for the past five years.
Anheuser-Busch found retailers were interested in insights and recommendations on how they were performing compared to the market and to key competitors. Although beer can be very profitable, retailers cannot leverage any one beer segment?s growth at the expense of another if they expect total beer category growth.
In 2012, Anheuser-Busch developed the first phase of its ?Balanced Portfolio Approach,? recommendations that analyzed data by beer segment (not by brand) to identify the fastest-moving SKUs so that retailers could maintain inventory and gain more customers by adding new product offerings. The first year of the program yielded many successes.
Last year, Anheuser-Busch developed new partnerships with syndicated data experts to deliver an expanded approach that looked not only at which retailers were winning, but also why they were winning. Data was pulled from nearly 40,000 retail outlets from different syndicated providers. Revenue and unit sales, weekly display and feature information, price, assortment and space were all analyzed at the store level.
Next, retailers were segmented by channel type ? grocery, convenience, drug, etc. ? and again by retail route-to-market. Then, data was segmented by population density to ensure all retail accounts had the same population of shoppers able to purchase beer. This segmentation normalized all stores to ensure like-for-like comparisons of sales. Once this was complete, Anheuser-Busch quartiled each cluster of accounts to determine winning retailers.
Now, the company could look at the differences in space, assortment, features, displays and price between each quartile. This allowed Anheuser-Busch ? for the first time ? to see what the top 25 percent of retailers were doing vs. the bottom 25 percent.
This hyper-focused approach evolved into the ?Your Balanced Portfolio Approach? and Anheuser-Busch was able to glean several key insights into what factors contributed to a winning retail mix.
The Hershey Co.
One of the most significant challenges for the candy category over the last three years has been the continual rapid declines in the gum segment, which has fallen by $205.7 million or 17 percent since 2010. The Hershey category management team worked proactively to understand this trend from both an analytical and shopper perspective.
As a leading consultative partner, Hershey provides comprehensive insights into the convenience store shopper, enabling a better understanding of recent trends. The Hershey team leveraged multifaceted shopper research with Nielsen Panel metrics to identify several key factors driving the declines in gum sales.
The comprehensive analysis enabled Hershey?s retailer customers to have a firm understanding of their shoppers? changing behaviors and expectations. The gum segment was suffering because of decreases in household penetration and buying rates (dollars per buyer), coupled with a less-frequent purchase cycle.
Hershey?s shopper research identified a variety of reasons for these trends. One of the more common was that shoppers were overwhelmed with the extensive innovation and frustrated by the challenge of finding their gum choice in the constantly growing item assortment. Shoppers also indicated that mints satisfied many of the same needs of gum, with greater social acceptance.
The Hershey team was also able to discern that there were core gum items doing well, which also contributed a high percentage of overall segment dollar sales. The shopper insights gathered by Hershey reassured retailers that reducing the underperforming items would not only reduce confusion at the shelf, but also create space that could be allocated to growing segments.
In addition, the Hershey category management team completed detailed analysis of the data to determine proper space allocation by segment in this changing environment. Despite challenging gum sales, the confection category has delivered healthy overall growth on the strength of chocolate and super king-size items along with mints.
For optimal growth, Hershey determined that retailers should align space allocations with growing segments and reduce exposure to declining segments.
Ambess Enterprises Inc.
Cell phones are the center of the telecommunications segment of the general merchandise category in convenience stores. Smartphones and tablets need charging, which is where the Ambess Power Tower comes into play. The display is a compilation of the key USB component-based chargers, sync cables and accessories used today.
The Ambess Power Tower showcases all of the top-selling USB chargers and accessories in an eye-catching 6.5-inch by 9.5-inch footprint. This fast-moving assortment offers a blend of sync and charge cables, wall chargers, car chargers, ear buds, auxiliary cables and more. They are all bar-coded for warehouse scanning, come in a variety of colors that attract all age groups, are component-based with an interchangeable design for full flexibility with any USB device, and are backed by a lifetime manufacturer warranty.
It is imperative for the success of any retail business to constantly work toward improving not only the efficiency of employees, but also the productivity of the store?s selling space and inventory. Ambess Enterprises assists convenience store retailers with both.
Promoting the Ambess Power Tower requires no training and it?s ready to sell as soon as it arrives at the store. The display generates more than $600 net profit per square foot. Retailers that currently offer the Power Tower are selling an average of 1.25 displays per month, which equates to more than $750 net profit per square foot per month, the company?s entry noted.
Nestlé Purina PetCare
Convenience store pet-food shoppers and product offerings have been increasingly studied with more focus on core assortments, location and pricing. Nestlé Purina PetCare (NPP) is the leading pet food solution for the convenience channel and has implemented some new strategies.
Working in a limited-space environment, NPP is able to narrow down its broad offerings within seven subsegments of pet food to provide valuable customer-centric solutions on the shelf.
The insights shared by the company with the retailer community have driven objective thinking, from adding large bags of dog food in rural areas to advising retailers of the alternative benefit of using cat litter for traction during the winter months.
Other non-monetary ways of driving results were proven in 2013 by moving retailers to everyday multiple pricing on wet cat food. In grocery stores, shoppers purchase an average of 10 wet cat food cans per trip. At convenience stores, the single can cost was so high that it was encouraging shoppers to leave the store with just one can. The new strategy has the category poised for two-, three- and four- can purchases, thus doubling the dollar ring and profit.
Driving awareness that c-stores carry pet food is one of the biggest challenges facing the category. In late 2013, Beneful Healthy Smile was launched as a $1 dog-treat offering for counter display and has since generated demand for the overall pet category in c-stores. Retailers are now able to capitalize on the 73 percent of U.S. households that purchase pet food each year and shop at their stores, but leave without making any indulgent pet purchases.
Initial results of this new strategy have seen wet cat food product sales increase by 6 percent.
Foodservice: Frozen Treats
Donper America helped speed the implementation of the self-serve frozen yogurt concept in the convenience store industry. The company designed the first, fully branded self-serve frozen yogurt kiosk that sought to solve two issues: the first was to visually capture the hip vibe of frozen yogurt within a self-contained, customizable kiosk; the second was to offer a kiosk that simplified the maintenance of traditional frozen yogurt concepts.
The company developed a customizable frozen yogurt kiosk featuring up to four machines (eight flavors) and 12 toppings. The kiosk was created with dry topping containers to allow c-store owners to easily maintain the toppings bar, eliminating the spoilage problems that come with refrigerated toppings. The kiosk also features two advertising screens to capture the attention of customers. The first screen is a 39-inch overhead monitor that plays a frozen yogurt slideshow. The second screen is a tablet that doubles as a training app to show and remind employees how to use the machine.
C-store operators are able to get into the frozen yogurt game with minimal investment in startup and space. Donper America?s frozen yogurt kiosks were showcased at the NACS Show in 2013 and since then, companies such as Roadrunner Markets, Kroger and several smaller c-store operators have implemented the solution. These stores have seen a profit margin as high as 80 percent, attaining the goal of increasing their foodservice and in-store revenue.
Each kiosk installation includes a complete kiosk and machine diagnostic check and a one-day training session on how to use and maintain the machines. Operators also enjoy a training app that eliminates the need for a manual and is included with the tablet that comes with the kiosk. Additionally, the video procedures featured in the app allow employees to start, stop and replay maintenance steps, making learning how to use the machines even easier.
Foodservice: Prepared Foods
Foodservice in the convenience channel is a major focus today regardless of store size. Eby-Brown?s Savory Corner Café programs are designed with a category management approach to three important c-store foodservice categories: heat and eat, roller grill and hot-to-go.
Each program consists of a comprehensive equipment and merchandising package, along with great-tasting product selections. The individual programs are designed to stand alone at retail, but they can also be merchandised together for a full foodservice presence in a c-store.
Whether the retailer is just beginning its expansion of foodservice or looking to improve its current program, Savory Corner Café has a lot of options.
The Heat & Eat foodservice solution created by Eby-Brown is a self-contained unit that includes a countertop refrigeration unit, commercial microwave and condiment/chip rack. The equipment fits together as one compact unit, requiring minimal counter space. Branded graphics featuring the Savory Corner Café logo draw customers to the foodservice products.
The Roller Grill solution is a category management approach to roller grill and offers a selection of the best-selling, quality items. The program offers a gross profit margin of 48 percent.
Finally, the Hot-to-Go foodservice solution is convenient, easy and profitable, and offers the best-selling, quality assortment of items.
Foodservice: Soups & Sides
Blount Fine Foods
Hot-to-go foodservice offerings have been heating up this past year. In the fall, Blount Fine Foods, a leading manufacturer of handcrafted artisan soups, sauces and side dishes for retail and foodservice, launched the first premium, single-serve, 10-ounce grab-and-go retail soup line in the marketplace. The entire line is shipped and sold fresh, and available for retail in cases of eight 10-ounce cups.
Blount had the convenience store channel in mind when it developed this line, investing heavily in the processing technology and equipment to make it a reality. The company used research to better understand how consumers eat fresh soup. For example, consumers don?t always want to eat restaurant-quality fresh soup the day they purchase it. Furthermore, consumer research showed the new line would appeal to the higher end of the convenience channel.
Influenced heavily by its long-successful line of Blount-brand foodservice soups, the 10-ounce offering includes a variety of flavors from New England Clam Chowder to gluten-free Chicken Tortilla Soup. Each 10-ounce cup has a 70-day shelf life.
Blount launched the 10-ounce line as a test in two established New England convenience store chains, kicking things off with limited SKUs in just 10 stores in each chain. After a better-than-expected start, both chains added additional SKUs, which also outperformed, leading to chainwide rollouts at both companies just after the start of 2014.
At about the same time, on the West Coast, Pacific Convenience & Fuels LLC rolled out Blount?s 10-ounce soups, first in Colorado, then Washington and finally Oregon. After seeing success in all three states, Pacific Convenience & Fuels continued the rollout into its southern and northern California markets in the first quarter of 2014. The offering is now available in 150 of its stores.
Other Tobacco Products
Swisher International Inc.
Category management has always been critical to the success of Swisher International and its trade partners. The foundation of the efforts has been in a balanced portfolio approach, with an intense focus on innovation, analytics and execution of winning strategies focused on the success of the entire other tobacco products (OTP) category.
One of the key pillars of category management at Swisher is the company?s training program for its associates. The goal is to provide highly trained individuals, including certified national account managers, who can develop proven category recommendations actionable for retailers. Swisher is one of the first companies in OTP to become involved in certification.
Retailers view certification as a vehicle to help drive collaboration while meeting adult consumer needs. Swisher International has 16 members of its national account team certified, with eight others currently undergoing the process. Due to the success of the certification, Swisher has achieved category captain status at many of the largest retail partners in the country.
In 2013, Swisher also launched a number of key initiatives in how it delivers category management to its customers. The company incorporated both a detailed and high-level approach to assist retailers in analyzing adult consumer preferences and purchase patterns.
By utilizing Management Science Associates Inc. (MSAi) distributor-to-retailer data, the company has been able to develop specific, tailored analytics for retail partners in an immediate way. Additionally, Swisher has employed FusionPoint to integrate these analytics into automated yet relevant business reviews. It continues to build out the platform by contracting with Toolbox Solutions to improve design and implementation of new planograms.
Expansion of Swisher?s Internal Business Analytics department is providing key insights and actionable data across all business segments and sales groups.
The Coca-Cola Co.
The Coca-Cola Co. continues to be a leader in understanding packaging innovation to drive sales. During the summer of 2013, Coca-Cola developed the Coca-Cola Chill Activated Can for an exclusive test pilot with a convenience store retailer partner.
The initiative was designed to generate excitement, traffic and transactions, and to address two of the ?portfolio? strategic priorities outlined in Coca-Cola?s 2020 Vision, a roadmap for success that takes into account the forces that will shape business in the future.
An engaging package was created that allows consumers to instantly see if their can of Coke is ready to provide ice-cold refreshment. Printed with thermochromatic ink, the Coca-Cola Chill Activated Can reacts to fluctuating temperature by changing color.
The visually appealing can drew attention at the cold vault (producing 53 percent of purchases) and at the sandwich case. Outside and point-of-sale signage about the offering helped introduce the new packaging and promoted a sandwich bundle opportunity to shoppers. Consumer appeal was further validated through guest intercepts at stores in several markets.
Impressive sales metrics highlight the program?s success:
- More than 4.3 million units sold in less than four months.
- The Coca-Cola Chill Activated Can rose to a higher position among the most-purchased nonalcoholic beverages.
- The novel package sold as many as 60 average units per store per day in some stores.
- 46 percent of purchases were made in addition to another beverage, typically not a sugar-sweetened soft drink.
In response to those results, availability of the Coca-Cola Chill Activated Can has been broadened to all convenience store retailers.
The Kellogg Co.
Kellogg, from its inception in 1906, has always been about helping consumers eat healthier and better. The company learned that 83 percent of consumers today are eating snacks for nutrition and 40 percent of them are seeking benefits beyond basic nutrition.
Kellogg understood that in order to be successful in convenience stores, it needed to be successful in salty snacks. Salty snacks are by far the most popular snack items purchased at convenience stores, and among the most popular items at every daypart.
Six out of 10 Americans have given a lot of thought to what they consume and aspire for a healthier lifestyle. With the consumer looking for healthier options, convenience retailers were interested in finding a product line from a well-established brand that satisfied consumers? cravings and provided incremental sales opportunities with a new type of consumer.
Kellogg launched two Special K Cracker Chips in the convenience channel in late 2012 and expanded the portfolio to include five products in 2013. Although a cracker by name, this was truly a different salty snack for the immediate-consumption need.
Kellogg?s Special K Cracker Chips helped put healthy snacks on the map for c-stores. Supported at retail with traditional price promotions, Kellogg?s Special K Cracker Chips also gained sales with coupons and pre-packed displays to help drive awareness around this offering.
Overall, Special K Cracker Chips grew the category and delivered incremental sales to convenience store retailers, according to the company?s entry.
?The addition of Special K Cracker Chips to our schematic was a definite win in a category not usually known as ?better for you.? With the initial addition of three flavors, we were able to appeal to women, who are not traditionally a convenience shopper, as well as anyone looking for a salty snack without the guilt! Definitely a positive addition to our stores,? said Debbie Skorupa, category manager of packaged foods for 7-Eleven Inc.