Channel Report: C-stores

Not long ago, a Marion, IA, convenience store owner conducted an informal study. She spent a week in the back of her store, watching customers who strode directly to the ATM or bathrooms at the store's rear, then shopped her store backwards.She soon realized many patrons had problems negotiating the maze of excess displays and other "stuff" she didn't know what to do with and simply kept on the floor. "She wound up reorganizing the store, spent less than $100 on paint and materials, and ended up doubling her sales," says Jeff Lenard, spokesman for the 45-year-old Alexandria, VA-based National Association of Convenience Stores (NACS)."In fact, one customer told her, 'I didn't know you sold food.' And she had sold [prepared] food for upwards of five years."The message, says Lenard, "is that cleanliness and uncluttered stores are very important to customers, especially female customers, and especially important if selling food."C-stores are a primary destination for products from single-serve beverages to tobacco, and many of these brands are working to fit within the restraints of clean-floor policies. It means there will be a continued focus on the cold vault and danglers on the shelf. However, new opportunities --- such as focusing more on the gas pump and improving foodservice -- will come for c-store brands as c-stores evolve. Clean StoresWhen it comes to P-O-P in its stores, North Muskegon, MI-based Wesco, with a total of 58 stores, all in the Wolverine State and seven incorporating Subway locations, takes a "less is more" approach that shuns sign pollution, says Brian Link, marketing manager."Any heavy-handed situation I've been in has never felt comfortable to me," he says. "You're bombarded with messages, your eyes don't know where to look, so you look away. I want you to feel comfortable, feel welcome, find your product and maybe buy a little more."But the right products and circumstances warrant P-O-P. In introducing new gourmet salads, soup and sandwiches to its prepared food offerings at three stores, Wesco added P-O-P throughout the stores and particularly at the foodservice location. Pump toppers and 14-foot-tall Bowhead banners, created of flag-like material that can withstand high winds, were used at the pump.A way to sidestep the clean-floor issue is to focus on packaging. Francie Patton, vice president of corporate communications at Arizona Beverages, Cincinnati, says it's the "first and foremost" instrument of P-O-P for the brand. When Arizona Beverages, maker of ready-to-drink green teas, black teas and juices, entered the market in 1992, its biggest competitor was Snapple's 16-ounce glass bottles."We came to market with a 24-ounce can in southwestern colors of pink, turquoise and yellow, and stood head and shoulders above the competition," Patton says. That look is carried into the company's P-O-P, as well. Arizona Beverages uses a colorful glide rack in a turquoise plastic gravity-feed display for cans and bottles. And its outdoor gallon displays are shelves that allow Arizona Beverages to display its plastic gallon containers outside convenience stores. "Most of our products in c-stores are sold through the cold box, so clean-floor policies don't really affect us," Patton says. "Most prominent among our displays are our many different removable cooler door stickers that show price and usually just the name of the product. Our packaging is so colorful, and our P-O-P is as well."Likewise, beermaker Scottish & Newcastle Importers, San Rafael, CA, zeroes in largely on the cold vault, using shelf danglers in a very limited way in convenience stores, says Matt Holmes, national account director. He believes the growing focus on clean-floor policies actually benefits his brands. "The clean-floor policy has helped put the focus on the cool box, which is good for Newcastle," Holmes observes. "Floor displays are owned by the Big Three on the whole, so their demise helps us."Clean-floor policies haven't yet greatly affected Skokie, IL-based Rand McNally either, because the brand works directly with retailers on displays. "Some retailers out there are redoing their stores, cleaning up their floors and creating some in-line displays that go with the magazines and hold our product," says Jon Boeve, manager of merchandising and promotions. "We have the same amount of product in the store, but it's not in one of our displays, it's in theirs. Frequently, we collaborate with the retailer to develop those displays."The company sells virtually its entire product line in c-stores, including paper folding maps, laminated folding maps and Street Guides (known on the West Coast as Thomas Guides), as well as the standard to mid-size Rand McNally Road Atlas."Usually when people are on the road and they get lost, they stop at a convenience store to ask for directions or look for a map," Boeve says. "We like [the stores] because there are so many, and we tend to have very good placement within them, either near the checkout or in a display inter-worked with the newspaper rack. It's obviously a high-impulse destination for us, so we do very well in that [channel]. We're in about 55,000 doors across the country, and many of those are c-stores."The majority of Rand McNally's P-O-P gets sold-in to convenience stores at the corporate level. Most of its displays are permanent wire fixtures, and the firm works with corporate-level buyers to determine which display will work best for their stores. The most successful Rand McNally P-O-P is its newspaper rack display, featuring four shelves that descend in a waterfall fashion, cradling Road Atlases, Street Guides and folding maps. Next best is a small, two-sided spinner display.Pump up the VolumeConvenience store P-O-P needs to accomplish several objectives distinct to this category. It needs to be high impact in certain areas, such as the cooler, to which customers make beelines in c-stores. It has to fit a trim and compact store footprint, and it has to avoid obstructing aisles or windows.But none of these strategies will make much difference if the customer isn't moving from the gas pump into the store. And when gas prices reached astronomical levels in the summer of 2006, that proved to be a problem for some stores. Manley's Mighty Mart, based in Binghamton, NY, responded in a novel and successful way by offering a free slice of pizza for every fill-up of 10 gallons or more, promoting the offer with pump toppers.Meanwhile, other chains are tinkering with higher-tech P-O-P efforts. NACS' Lenard reports Altoona, PA-based Sheetz and Franklin, TN-based MAPCO have incorporated touchscreens into their pumps, allowing customers to order custom-prepared sandwiches as they wait for their tanks to fill. They then walk into the store, purchase the sandwiches and go.Video screens designed to entertain consumers and entice them into the store are also appearing on pumps, he says. Gas Station TV is one of the companies providing a mix of advertising and localized content, such as news capsules.C-stores are also presenting coupons at the pump, some using automatic printers and some using cell phone texting. At-pump coupons typically enjoy redemption rates 10 times greater than newspapers' 1 to 2%, according to Lenard. "There's great potential there," he says.Wesco's Link views coupons printed at the pump as an idea, but a bit too expensive right now. The cash outlay and the return on investment are not yet in line, he says. "The store is going to change greatly," he adds. "It's just a matter of finding the technology that works, the displays that take over the conventional types of displays. It's going to change, but I don't see that 'store of tomorrow' here quite yet."As for digital signage, Link says Wesco has investigated the technology, but hasn't invested in it -- as of yet. "I don't think the return on investment is large enough to justify getting into it right now," he says. "That will start to change in the next year to five years, when it will be more in line. We took a look at one that would put a TV screen inside the pumps, where the display line is for prices. Not that it wasn't appealing, or didn't seem to have value, but it just seemed rather expensive."Lenard feels outdoor digital signage is growing more prevalent, as it offers convenience for store managers over manually changed signage. "You're seeing more of an interest in digital signs that allow you to easily and quickly adjust your prices not only at that store, but all your stores if you wish to." Digital signs are increasingly used for gas pricing and also to promote products in the store to customers in the lot.Some communities, however, are wary of big electronic signs that communicate more than gas prices, believing they give their towns the look of "a mini-Las Vegas," Lenard says.Spinx, a Greenville, SC, chain with approximately 100 stores, wanted exterior signs promoting in-store offers and promotions but was turned down by the zoning commission in one municipality. "The CEO went back and asked, 'What if we put Amber Alerts there when needed?'" Lenard reports. "And they were accepted. Just thinking about what they could do for the community allowed them to have their sign accepted."Fresh and Healthy Food ChoicesC-stores offering prepared foods is nothing new. But wide consumer acceptance may be, Lenard says. "Customers expect great food at convenience stores now, and, in a sense, it's been a 20-year overnight success. A lot of stores have been doing it well for a while, but a lot of consumers are just beginning to notice."Successful foodservice programs start with making your coffee the coffee to seek out, and expands to ensuring your foodservice offers taste-tempting and healthful options, he says. Quality, consistency and cleanliness are paramount.If a c-store doesn't have the ability to serve up these attributes, they need to obtain it, either by acquiring the aptitudes to do it well on a proprietary basis, or co-branding with established fast-food providers like Subway or Taco Bell.Successfully serving up coffees and prepared foods may mean a change to the traditional convenience store layout, adds Mark Dulle, Cincinnati-based vice president of sales with New York City's Meyers Research Center, a custom retail research company that taps movement data and consumer insights at the point of sale. "You're seeing c-stores that have set up for their coffee areas to be a destination almost separate from the rest of the stores, to better serve their customers." Once convenience stores do launch their food service operations, "all the senses are at their disposal" in promoting those sandwiches, burgers or burritos, Lenard says. C-store operators tend to showcase food preparation and also let tempting aromas waft through the stores. Most of the traffic to the food service operation will be from gas sales, so pump toppers and window signage are often used."But in our industry, there's a real push to minimize window signage for security reasons," Lenard says. Ever notice, he asks, the long horizontal billboards above the windows at 7-Eleven stores? The banners are effective billboards for in-store offerings like prepared food, can be changed frequently and don't obscure the view from inside.C-store P-O-P offerings have traditionally focused on space-effective elements in strategic positions, such as cooler-door clings, endcaps, corrugated floorstands and ceiling danglers. As new P-O-P is introduced, c-store retailers will embrace them, Lenard says.One trend he does see occurring is the beautification of product packaging, particularly packaging visible behind cooler doors. Bold colors, artistic graphics and compelling messaging on product packs can all serve as effective P-O-P, he notes.Brands Get in the Act For branded products to succeed in c-stores, they have to understand the distinctive challenges and opportunities c-stores face. Few are better versed in those realities than Paul Musselman, director of business development for Monrovia, CA-based Green Dot, the first and largest provider of retailer-sold prepaid debit cards, and winner of Convenience Store News' annual competition for best new product.Green Dot is a featured product at thousands of convenience retailers from coast to coast, among them The Pantry in the Southeast U.S., Cumberland Farms and Sunoco in the Northeast, Kum & Go and Thorntons Oil in the Midwest and Nella Oil in California. The company typically relies on a few key P-O-P elements in those store settings. One is the static cling/electrostatic display, preferably placed on a beverage cooler door, or in an equally high-traffic area."Creatively, we try to promote brands that match the convenience retailer's customer demographic -- such as our officially licensed NASCAR Prepaid Visa card -- in this space," Musselman says.Another display used by Green Dot is the window or door sign large enough to be noticed, but not too large to obscure sightlines. Aware of c-stores' concern about theft, Green Dot endeavors to make its signage colorful and impactful, but "with an eye to preserving visibility into and out of the door," he notes. A third element used is a discreet door sign that informs shoppers, "Green Dot Sold Here." Green Dot suggests retailers place the sign adjacent to their Visa or MasterCard acceptance signage."That way, shoppers can quickly see that their Green Dot is available at this retailer, even before they walk inside," Musselman says. "It's all part of making the consumer experience as positive and efficient as possible."Beer and Beverages"C-stores are where it's happening," says Patton at Arizona Beverages. It's not difficult for a brand to convince c-store managers to use its cooler-door decal or dangler displays if its products are brisk sellers, she says. Most Arizona Beverages products are sold in single-sell 23.5-ounce cans and 16- and 20-ounce bottles from both the cold box and shelf, and c-stores are where people buy a lot of cans and bottles."Also, it's a great place to introduce new products to people on the go," she adds. "I think people are walking into c-stores to get a beverage because they're thirsty, and I think a lot of times they're more apt there to try new products."Convenience stores are also key destinations for beer purchasers. "Convenience is a growing class of trade with a lot of energy," reports Scott Waters, director of national accounts, convenience stores at Chicago-based Barton Beers, importer of Corona, Corona Light and Modelo Especial. "High-end products are underdeveloped but growing like crazy due to consumer demand."The demographics are highly skewed toward our portfolio, and young, legal-drinking-age consumers often make lifelong brand choices in convenience stores."To land its P-O-P in c-stores, Barton Beers works to convince store owners of the additional lift in sales and corresponding incremental revenue and profit that can be generated through well-merchandised and strategically placed displays. By "strategically placed," Waters means displays that are in what he calls the "visual zone" -- the region near the front of the store with clear sight lines."Corona P-O-P has always been a critical element in our success at retail," he says. "Clean and simple [displays] with relevant connections to the brand's heritage and fun-loving nature keep the brand fresh in the minds of consumers."Clean-floor policies have resulted in fewer opportunities to display product but provide all the more reason for c-stores to enhance profit margin by displaying such high-end beers as Corona or Modelo Especial, Waters observes.Scottish & Newcastle, which imports Newcastle Brown Ale and Kronenbourg 1664, places its products in c-stores because of the "upscaling" and the consumer demand found in the channel, says Holmes.SnacksBloomington, IL-based Beer Nuts Brand Snacks is a 54-year-old, privately held firm that sells its products in drug, grocery and discount stores, but sees convenience stores as a focus. "It's where our customers are," says new business development director Thomas Foster, adding that Beer Nuts' research reveals 42% of c-store shoppers state the reason for visiting such a store was to purchase a salty snack. "The average c-store customer purchases one salty snack a week."Though "it's difficult to sell into c-stores," according to Foster, Beer Nuts Brand Snacks has been successful in doing so for a number of different reasons. Among them are its innovative displays capable of being used throughout convenience stores. The company prefers its snacks be merchandised at the counter but is also happy to have its displays affixed to a cooler door or perched atop a stack of beer.Another significant factor in its success is the brand's tie-in with Miller Beer and national themes like football and NASCAR. Beer Nuts' P-O-P looks like that of Miller Beer, providing a consistent theme and image. "Retailers like to have a consistent look, and the more consistent, the better," Foster reports.The most successful display for Beer Nuts Brand Snacks is its temporary corrugated display with litho-quality printing. "We pack the things with just six cans, and we're looking to get a quick turn," Foster reports."We hope the displays stay up for less than a week. The quality is important because in order to catch today's consumers, you need to create some call to action."Beer Nuts is also trying gravity-feed displays that can be merchandised at the counter, affixed to a wire rack or cooler door, placed on a beer stack or on a shelf.And because clean-floor policies have impacted the brand, Beer Nuts Brand Snacks is also planning to introduce a clip-strip-with-header program, Foster reports.The FutureWhat do the coming years hold for the convenience store channel? According to NACS' Lenard, convenience chains will look to "leverage their right of way," and maximize gains from their possession of some of the nation's best real estate for visibility and luring customers. While earlier efforts have centered on drawing in patrons by means of exterior design and signage, that won't be enough in the future."You can't survive with one-time customers," Lenard says. "You want to build repeat business. So you'll see more emphasis inside the store designed to get people to come back. However P-O-P fits with that, you'll see an increased emphasis on using it effectively."

Channel Report: C-stores

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