- Baby Non-Food Products
- Baking/Cooking Staples
- Household Products
- Kitchen Products
- Paper Products
- Personal Care
- Pet Products
- RESEARCH & AWARDS
Apart from 7-Eleven—which maintains a strong national (and international) presence—the C-store channel today is highly regionalized. And only 7-Eleven holds
The Bottom Line
its own with retailers across other channels based on its Kantar Retail and PLBuyer rankings in terms of total retail sales and total estimated private label sales revenue:
• Ranked at No. 33 on last year’s PLBuyer Top 35 Private Label Retailers, with estimated private label sales of $1.4 billion in 2012
• Ranked at No. 35 on the 2014 Kantar Retail/National Retail Federation Top 100 list with 2013 retail sales of $11.63 billion and 8.7 percent retail sales growth from 2012–2013
• 7,974 total U.S. stores as of 2013, with 3.9 percent store number growth from 2012–2013 per Kantar/NRF
Per NACS, over 80 percent of the fuel sold in the United States is purchased at a C-store. After 7-Eleven, (which supplies stores offering fuel via its subsidiary SEI Fuel Services) the other top players in C-stores are all connected to oil companies like Shell, BP, Chevron, Exxon and Sunoco. Gasoline is the No. 1 product sold through C-stores, and therein forms the biggest challenge for the channel—getting customers to enter the store for anything other than a pack of cigarettes (the No. 2 revenue source of C-stores).
After 7-Eleven and the myriad oil companies operating in this space, we hit upon the regional organizations like Casey’s General Stores, The Pantry/Kangaroo Express, Speedway, Circle K, Turkey Hill, Kwik Trip, Kum & Go, Wawa, Sheetz, and so on. The one aspect they all have in common? They all compete with 7-Eleven.
Creating Regional Anchors
Private label faces its share of challenges in the C-store channel. As noted in IRI’s December 2013 Times & Trendsreport, “Private Label & National Brands: Paving the Path to Growth Together,” while private label has shown some minimal growth in the convenience store channel of late, “it remains well below industry average,” posting private label share of 2.4 percent dollar sales and 1.7 unit sales. As points of comparison, IRI reports a private label unit share in grocery of 21.9 percent, and 17.6 percent in the drug store channel.
But store-branded foodservice has been on the upswing over the past decade, and the biggest share of spending increases in convenience, per IRI, has been in food categories.
Jeff Lenard, vice president, strategic industry initiatives for NACS, suggested C-store retailers integrate promotion of private label to the loyalty program, offering special double points/rewards for purchase of store brands to encourage trial. He noted that Mapco Express and Maverik have been highly effective in this regard. He said that instead of solely focusing on price pressure, loyalty is key to private label C-store growth. “The future of private label is about how to influence loyalty using a variety of customer touchpoints,” he said. Another connection C-stores can make with shoppers, he noted, is by donating a percentage of the purchase price of store brands, such as water, to charities.
Building strong, unique store branding on logical platforms—such as dairy, foodservice, beverages, snacks, candy, etc.—can give C-store operators anchors that drive repeat business. The approach some C-stores use to build a notable private label presence is through strong areas of specialization. For instance, East Coast chain Wawa has its roots in dairy—a category that remains strong for them in private label.
In the 1980s, Casey’s General Stores added pizza to its foodservice lineup—a destination product that remains instrumental for the chain today. Same-store sales of prepared foods, which includes its pizza, reported earlier this year, were up 11.8 percent. Some Casey’s units even offer pizza delivery.
As part of its extensive foodservice program—notable not only for its breadth, but also its implementation of self-service touchscreen ordering—Sheetz has a strong focus on its store branded coffee program, which includes espresso bars. Sheetz Bros. Coffeez products are also available to shoppers for at-home preparation, in bagged ground coffee and single-serve cups.
“It’s best to do an initial test at a couple stores to determine the level of interest of for-sale, prepackaged coffee before committing to a nationwide rollout,” said Jo’el Ellis, director of marketing, foodservice, Massimo Zanetti Beverage USA. “This will also give you an opportunity to see what formats best fit with the coffee blends being offered.
“Convenience stores should consider that coffee consumers are driven by attitude, not by demographics,” continued Ellis. “To gain repeat and new business, their coffee service needs to cater to all three categories of coffee consumers: ‘expert’ (10 percent), ‘indifferent’ (35 percent) and ‘preference’ (55 percent),” said Ellis. “‘Experts’ pride themselves on knowing about the different nuances of coffee and will be more inclined to look for diversity of blends, sustainably sourced options and often cross over to specialty and iced coffees. ‘Indifferent’ consumers are driven by price and convenience, so as long as there is a ‘value coffee’ that tastes good, they drink it. ‘Preference’ patrons know what they like and are driven by convenience, but are sensitive to the coffee being a quality product.”
Food—including grab-and-go packaged products and ready-to-eat foodservice items—provides a strong platform for C-stores to differentiate themselves.
As Howard Eirinberg, CEO of Kronos Foods, noted that two of the most-important factors to keep in mind when designing food products for the C-store channel are packaging and portion size. “Nothing is more important in this sector than attracting the consumer’s eye with something that is easy to eat,” he said. “Hummus and pita chips is a great grab-and-go product, and it needs to be packaged in a way that makes it easy to open and eat.”
Hummus has gained considerable traction in U.S. food circles of late, and is on the verge of becoming mainstream. “Hummus is a great option for C-store operators and shoppers, and there is plenty of room in the category,” said Eirinberg.
Another strong contender for C-store growth is flatbreads. “Mediterranean flatbreads in all their variations have the potential to make the next step,” said Eirinberg. “Consumers still look for lower-carb options, and flatbreads can help serve that need. Flatbreads are great for the convenience store sector, as operators can utilize them in the deli area, and compete with sandwich shops who serve consumer demand for unique sandwich options. We’ve had more and more C-store operators’ talk with us about flatbread opportunities, since it allows them to directly compete with the fast-casual sector.”
Several C-store chains have begun diversifying the range of the foods they carry to include new fresh, refrigerated items—often with clear “better-for-you” connections.
“It seems inevitable that convenience store chains will be able to offer a solution for the expanding demand created by evolving consumer behavior, but it is not as easy as ‘carry it and they will come,’” said Bob Sewall, executive vice president of sales & marketing at Blount Fine Foods. “Consumers need to believe that the store is capable of creating and maintaining fresh, quality foods before they will try it. Not every convenience store brand is capable of being seen by consumers as a fresh food market. Many are, but not all.”
This is a matter of cultivating appeal within demographics that perhaps haven’t previously been strong C-store customers—and often with products not yet widely seen in the channel, such as refrigerated, grab-and-go soup. “As the landscape evolves, the foodservice soup business is advancing in many consumer segments—it’s great for moms on the go, and for those who work on the road and are tuned-in to the idea of good, ready-to-eat food coming from convenience stores,” said Sewall. “Retail cups that need three minutes in the microwave is a newer proposition, and one that opens lots of opportunities.” He suggested that such products might also appeal to commuters who stop in on the way to work to grab something wholesome for lunch.
“From a selection perspective, both the hot-bar foodservice and the refrigerated grab-and-go should be complementary aspects of the food offering,” said Sewall. He also noted that from a marketing perspective, soup should be merchandised with complementary offerings—that soup and a salad, or soup and a sandwich, available at a discount when ordered together, can inspire a higher purchase. He also suggested that offering a “soup club” promotion allows the chain to reward loyalty and inspire return visits.
“What we are really talking about is getting shoppers to understand and accept that the same handcrafted, wholesome and delicious soup found in restaurants and grocery stores can come from convenience stores,” said Sewall. “Research tells us that Millennials are the demographic most open to this idea, because markets that sell gasoline have been around all their lives. As Millennials continue to embrace convenience stores’ elevated offerings, we expect others will become more open to it, as well.”
For more insight into how to best structure and merchandise a convenience store coffee program, see “Private Label Coffee Insight for C-Stores” at PrivateLabelBuyer.com during September.