Kicking Around Private Label
Growing food and foodservice, new competitors changing the face of convenience stores.
On a warm week in January, retailer buyers and suppliers in the convenience and front-end industry got together in San Antonio, Texas, for the ECRM
Others in Attendance:
Convenience and Checklane, Front End and Impulse trade shows.
And a group of retail buyers from the industry sat down to share lunch with PLBuyer Editor Chris Freeman and talk about the ins and outs of private label in a C-store and front end world.
Lee Garro of Jack’s World and Jack’s 99 Cent Stores, Betty Smith of Crosby’s, Amy Stacy of Speedway and Mike Sullivan of Target – along with a few more of Target’s buyers on hand – joined in the discussion.
They talked about the challenges of getting products in front of customers quickly, the growing influence of fresh foods and foodservice in convenience stores, and of matching up their personal preferences with knowing what their target consumer wanted and needed on the shelves.
Here’s an edited version of the discussion:
PLBuyer: Do your personal preferences get to shape the things you look for on your job?
Lee Garro, Jack’s World/Jack’s 99 Cent Stores: When I’m out I look to see what’s out there for my customers because we’re basically based in Manhattan so we’re always looking for something for them to take back to their offices. The packaging is important. They have five seconds to move their product, so if (the customer) has to pick it up and see what it is, it won’t work.
Mike Sullivan, Target: I can’t buy the same way that I shop. I think my preferences are very different than our core guests’ preferences are. We have to take a step back and say, who is shopping our category, who is really buying these things, and what is she looking for, in our case.
It’s exciting when you have general consensus, where you can say I love this and I know that our consumer’s going to love it too, but there are a lot of instances where you’re bringing in things you personally would never think about buying for yourself, but you know based on sales history based on market trends based on what the comp is doing these are items that are going to resonate with the consumer.
Amy Stacy, Speedway: I know what our consumer will shop based on data over the years.
PLBuyer: What kinds of things do you look for in packaging that makes them pop, that makes them impulse buys?
Stacy: One of the big things I look for is items that are going to stick out in a set. From a private label standpoint, we’ve been very successful with our salty line, and a lot of it is because it draws consumers in. It’s a very bright package and it shows itself on the shelf.
Sullivan: At the price points that we play at, I think packaging can go a long ways in terms of giving an item a more premium feel, which in turn can translate into a stronger value equation in the eyes of the consumer. I certainly think that applies in private label as well. I think some of the more successful private labels are the brands that feel premium and look premium, but aren’t a premium price, because the consumer feels like they’re getting a good value, as opposed to a trade down to the national brand item.
Garro: Color is important. Right now, there’s a lot of brights. We do buy controlled labels, and price then plays a very big part. For (the customers) to spend the money, they have to know it’s good. If you’re going to the off brand, it has to be cheaper for them to be willing to try it out, and the packaging – we find – is very important.
PLBuyer: If that’s the case then merchandising would be very important too, because you’re going to have to make customers aware of that price difference to try that, correct?
Garro: We’re in Manhattan; every bit of space costs us a lot of money, so the packaging is the most important thing. With merchandising, we’re just moving goods. We’ll do tastings, a lot of it ourselves, and we do it Mondays, Wednesdays and Fridays. And we merchandise the product right next to where the tasting table is, so once they get a taste of it, they’ll be able to buy it.
Stacy: For us, the merchandising is really important. We’re able to show the value right next to each other.
PLBuyer: Does the addition of fast food and foodservice in the convenience channel change the way you look for products in your categories?
Stacy: Yes, because we’re … looking for space creation ideas.
Garro: We can’t do a produce section. We tried it and we’re just not equipped to handle it. There’s too much traffic in the stores, they get bruised and banged up. Everything we buy takes a train, bus or subway ride home, so size is an issue. You can get a great buy on a 64-ounce detergent. Who wants to carry it home on a subway?
Betty Smith, Crosby’s: We’ve always been very heavily into foodservice … so that really takes up the whole front end. We’re more and more into produce, but produce is so difficult to handle because people know what fresh produce is supposed to look like. So it’s a different mindset that you have to get into. And you have to get the proper equipment as well.
PLBuyer: How do you set up a schedule for seasonal and items that change out quickly?
Sullivan: We have a research arm at our company that does lot of qualitative guest research, and I think we have really good insight into the guest mindset map and what’s important to her during different times of the year. We’re obviously very focused on Mom as our core consumer, and I think that tends to be the lens through which we build our assortments from a seasonal perspective. It is something that we revisit at least annually to make sure that we’ve got things as dialed in as we can possibly have them.
Garro: Seasonal is very important to us. We have entrances on both sides of the street, and seasonal goes in the front. Our customer knows it; it’ll flip from summer than right into back to school, then it goes into holidays, then when there’s a lull, we merchandise whatever we have coming in.
Smith: You don’t want to have too much stuff up front, so we map out what goes where when.
Stacy: We do very little seasonal. It’s all in candy.
PLBuyer: What is changing in your part of the industry today?
Garro: More food selling. (Customers are) coming in more and more, and we have adapted the store as opposed to general merchandise. We do a lot of refrigeration and freezer. And fish. Because in Manhattan there’s not a lot of fish stores. Get frozen tilapia and put it out there, and we’re not that big of an operation, but we’ll go through 5,000 pounds of it no problem. There’s not a lot of supermarkets in Manhattan, and they want food.
Smith: I think what’s changed is the competition. There’s more of the dollar stores, and you can buy pretty much anything there. The drug chains are encroaching on really the core C-store.
PLBuyer: Does that change what your store starts becoming?
Smith: I think we just have to do better at what we do. What a convenience store is is convenient. We have to be at what we do, being friendly, being quick, with the fuel, and the foodservice.
Stacy: Foodservice is the biggest change.
PLBuyer: Does providing more one-stop options for customers give you a competitive advantage?
Sullivan: To a certain degree, it’s changing how the guest perceives and thinks about Target. If you go back five years, I think the thing that immediately came to mind when you said Target was apparel, home goods, things of that nature. As we’ve expanded into more commodity businesses, particularly food, it’s changing her mindset to a certain degree about what Target is to her. When she’s shopping for clothes … she thinks of Target first, but also when she’s thinking about that convenience or grocery fill up, she comes to us.
Specific to impulse, I think what we’re seeing is she continues to be very, very cautious in her discretionary spending. And sometimes you don’t necessarily think that when an item is retailing for $1 or $3 it’s such a low price point, you think it’s that easy, no-thought add. But with the continued economic malaise in the country, I think it’s having a toll on how she spends her dollar. And unless she can justify it, there’re a lot of instances where she’s walking away saying ‘I don’t need that.’ I think she’s really focused right now on what she needs to run her household, and things that don’t fall under that umbrella, she’s – more so than maybe we’ve seen in the past – deciding to walk away.
Garro: We found that when the gas prices went up, it didn’t affect us, because (our customers) don’t drive.
Sullivan: And all of our consumers by and large are driving to the store.
Garro: And that’s another reason why if you can offer them more variety in one store, they do not have to drive to another store to use their gas. There’s so much that plays into it.