C-Store P-O-P

Want to use merchandising to drive sales of your products in convenience store chains? Think locally. According to Retailer Viewpoint III, a survey conducted last year by New York-based Yankelovich Partners Inc., successful convenience store promotions today must include a variety of P-O-P materials -- all approved by the chain -- that can meet the needs of the individual stores.Promo Edge, the Menomonee Falls, Wis.-based manufacturer of promotional materials and a division of Menasha Corp., joined a group of consumer packaged goods manufacturers as sponsors of the survey. Holly Roper, retail market manager for Promo Edge and its Retail Research Center, shared the survey's results related to convenience store ("C-store") merchandising trends exclusively with P-O-P Times.Retailer Viewpoint III covers a spectrum of retail-related issues from category management to scanner technology and shelf-space allocation. The study involved a national survey of top executives at retail chains representing four primary categories of retailing: supermarkets, drugstores, discounters and C-stores. For the C-store portion of the report, the segment's top 50 chains were included in the survey sample. All interviews took place at corporate headquarters, and were conducted with the retail chains' top executives responsible for chain-wide policy making. Independent convenience stores with annual sales below $5 million -- "the mom & pops" -- weren't included in the study.Working with Yankelovich on the methodology of the surveys, Roper sought to focus attention on merchandising effectiveness and acceptance issues. "It wasn't considered real important before, but when I got involved, I tried to change that." These charts are included on Pages 22 and 24 of this report.Roper also spent an extended amount of time personally interviewing C-store executives abouttheir attitudes to in-store merchandising efforts. Among the key trends, Roper says the survey reveals:Merchandising decision-making remains vested at C-store chain corporate headquarters, although the trend now is to allow more flexibility at the store level. Corporate determines the overall product mix, but store-level managers can determine what's best for them."C-store retailers want a consumer from Texas going into a 7-11 in Illinois to experience a similar ambiance and comfort level," Roper explains. "There's an assurance that the quality is there when the merchandising looks similar. It may be executed slightly differently based on the demographics of the region or market, but the overall feel is the same. Because C-stores are so space dependent, manufacturers should never just provide a display. Retailers want a combination of promotional vehicles. Corporate will approve a promotional product mix: a freestanding display, a quarter-pallet, a mobile, a shelf talker and a static cling; the individual stores or the regions will take on perhaps five of the nine approved elements of the promotion. But the look of the elements will be the same everywhere. In the past, corporate made all the decisions, materials were automatically shipped and the only choice a store had was to either throw it all out or put it all up. There was a lot of waste built in that way."Six-in-ten C-store retailers rate "help in developing P-O-P displays" as the top benefit of category management."Since most C-stores still do not use scanners, the other benefits of category management programs aren't as critical to them yet," says Roper. "Thus, the key is enticing consumers to make additional purchases. The average C-store basket size is only $2.89 -- a nominal expenditure. So if the retailer can get you to buy just one more thing -- and a display is a big help in reminding people to buy certain things -- it makes a big difference in their profit margins."Account-specific promotions aren't of the utmost importance to C-stores -- they're viewed as having only a minor impact on sales. Traffic-generating promotions are considered extremely valuable."Sixty percent of C-store shoppers stop in going to or from work, or drop in during the lunch hours," Roper says. "These people are in 'work mode' and they want to consume things pretty quickly. The trick is to get them to buy something. It doesn't really matter if you've added the words 'White Hen' or '7-11' to your floor display. C-store retailers want differentiation in other ways, especially special pack sizes that are created specifically for the C-store channel. They don't want smaller bottles or packages, they want smaller case sizes. They hope to differentiate themselves with 'quick-and-easy' pack sizes for people on the go. So instead of an 8-pack of 20-ounce bottles -- which consumers can get at their supermarket -- they want to offer a 4-pack of 20-ounce bottles."Assortment, replenishment and promotions are extremely important to C-stores. In fact, 86 percent of C-store executives rated "efficient replenishment" as critical and 88 percent rated "efficient promotion" as the most critical element for the future."There are four elements to ECR, and retailers rated each element in terms of its critical nature. Efficient promotion is the ability, when a consumer comes in to your environment, to get them to purchase the product. When it comes to promotions, C-store retailers want something to happen in the store. For example, a souvenir purchase opportunity tied in to another purchase. The whole reason for ECR is to drive profits to their bottom line. Seventy-one percent of all adult convenience store shoppers are purchasing gasoline. C-store operators have to capture the gas buyer's attention and sell something else. Otherwise, all they do is sell gas and they don't make enough profit on the gas alone.C-stores are considered trendsetters by the other retail channels. Consider how supermarkets are mimicking many operational aspects of C-stores: fast checkout lanes; 24-hour-a-day service; cold drinks at the checkouts."C-stores are really in an uphill battle," Roper notes. "Convenience is no longer their exclusivity. They are competing in a whole new ball game. The trend to effective merchandising and effective promotion is so important to them because they have to differentiate themselves. The C-store channel is retailing's version of the 'canary in the coal mine.' It is the first segment of retailing to feel pressures from a consumer. If C-stores can't provide the consumer with something that's immediately gratifying, consumers no longer will spend that $2.89 there, and C-stores will be out of business."There will be more tobacco promotions in C-stores in the future. With an increasing number of grocery and mass merchants taking tobacco out of their stores, C-store executives see this as a traffic-generating opportunity. Look for more counter displays and signage reminding patrons that the store carries tobacco. "Other than gasoline, tobacco is the number one product sold in C-stores. It is followed by bottle/can drinks; beer/wine; ready-to-eat prepared foods; candy; grocery/frozen; prepared foods that require some minimal preparation; dairy; general merchandise (i.e. seasonal items such as antifreeze); and packaged snacks.Window signage is declining in C-stores while refrigerator signage is on the rise. "C-store operators are trying to make the stores look more friendly. They want more of an open look in their stores. They aren't using as much of the see-through graphics either. What you see inside are a lot more static clings. That doesn't mean that every refrigerator door is covered with them; it means retailers are putting up a couple and changing them pretty regularly."More merchandising materials are being used at the pump. "The pay-at-the-pump credit card is hurting C-store sales," Roper says. "No one automatically has to come inside anymore. So luring the customer into the store is critical. That's also why C-store executives view 'multi-location P-O-P' as very important. They want reminders throughout the store and they want promotional vehicles placed in the right positions.FSIs are rarely redeemed at C-stores, and there is little use of electronic couponing as well. "Realistically, even though people like FSIs, they are in a hurry in convenience stores and tend to forget about them. Though the exception to the rule are cigarette buyers -- they use them."Other interesting findings:Retailers in all surveyed categories stated that 54 percent of manufacturers spend too much on promotions that do not work. C-store retailers were more upbeat, however, saying that only 40 percent of manufacturers over-spent on ineffective promotions.Overall, 70 percent of retailers track promotion results, while 81 percent of C-stores do so.Because of limited shelf space, C-store retailers are working hard to define the optimal assortment. There is less "dusting off" of products -- products are turning much faster, and C-stores no longer try to carry one of everything. In the past five years, the focus has shifted to profitability and volume.C-stores have the lowest time allotment for turning new items. Forty percent of C-store executives say they allow 1-2 months, as compared to 3-4 months average in other retail channels.

C-Store P-O-P

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