Convenience Store News

MAR 2017

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52 Convenience Store News | MARCH 2017 | WWW.CSNEWS.COM 2017 PACKAGED BEVERAGES: The Coca-Cola Co. E ven as foodservice, snacking and fresh- to-go sales continue to grow in convenience retail, 78 percent of convenience purchases include beverages only, creating an opportunity for retailers to grow sales by encouraging snack and meal add-ons via bundled offers. The Coca-Cola Co. saw the opportunity to help its retailer customers leverage the synergy between food and beverages and, in doing so, increase sales across multiple categories. Multi-category solutions appeal especially to millennials, who are 63 percent more likely to buy a meal or snack to eat right away than other age groups, according to the company. Considering that millennials are the largest shopper group in the American economy, numbering approximately 75 million shoppers, their preference for grab-and-go shopping trips is a significant trend. The foodservice, fill-in and impulse zones present particularly strong opportunities to sell bundled food and beverage items. Collectively, these three zones are visited in 38 percent of shopping trips and generate 41 percent of total store revenue. A recent Nielsen analysis found that retailers who executed "points of inspiration," such as snacking bundles, beverage racks and other similar merchandising programs, in these zones of the store achieved increased average sales per store and a stronger annual performance. Coca-Cola tested several food- and snack-based bundles in 2016, including an impulse zone-based activation for one con- venience retail customer. This retailer had a new store format featuring more than 6,000 square feet of expanded foodservice offerings, but beverages were separated from the area in the opposite, back side of the store. Coca-Cola identified an oppor- tunity to capture sales and provide a solution to satisfy both hunger and thirst by placing merchandising units in the impulse zone that brought together beverages and food items. Specific offerings included pairing snack items with smartwa- ter, Sprite, Coca-Cola, Coke Zero, Diet Coke, and Monster ener- gy drinks; and pairing breakfast items with Minute Maid juices, Simply Orange, Core Power and Monster Java. These snack- and breakfast-themed bundle activations have driven strong results. Since being introduced, the retailer has experienced a 29-per- cent increase in sales volume of all items featured in the mer- chandising units — averaging an incremental $63 in total margin dollars per store each week. Beverages and food items have shown average year-over-year increases of 15 percent and 43 percent, respectively, since the initial installation — averaging OTHER TOBACCO PRODUCTS: Swisher International O n Aug. 8, 2016, the Food and Drug Administration (FDA) began regulating the other tobacco products (OTP) category, including large cigars, premium cigars and vapor. As with any new regulation, retailers had many questions on how this will impact their business and what will be the best practices to get through the process with minimal disruption. Swisher decided that merely creating a process would not be enough to give leadership and guid- ance to the retailer. In addition to changing product assortment, FDA regulations included compliance dates, manufacturing and packaging standards (warning labels), and sampling restrictions. To meet compliance standards and the needs of its custom- ers, Swisher developed a FDA Deeming Regulations Compliance Sheet. This allowed Swisher's category management teams to be at the table for many retail- ers' long-term planning discussions. Swisher's objective was to provide its customers with the best possible product and sales experience, while also providing needed expertise in specific market dynamics. Utilizing MSAi insights, programs and planograms were customized to meet specific customer goals and adult consumer demands. The Partners in Profit program is a perfect example of the execution of the strategy. Swisher provided partners with revenue-generating products and promotions in all of its OTP lines, with the objective to grow not only Swisher sales, but the full OTP category in every store. In 2016, customers that signed up with the Partners in Profit chain program have increased volume by 17 percent in the large cigar category. Last year, Swisher also incorporated both a detailed and high-level approach to assist its retailers in analyzing adult consumer preferences and purchase patterns. By utilizing MSAi distributor-to-retailer data, Swisher was able to develop specific, tailored analytics for its retail partners. Additionally, Swisher has employed MSAi to integrate these analytics into automated yet relevant business reviews. The company also reorganized its National Account Team to provide more focus and time to each of its customers, and to grow the OTP category using best-in- class category management practices. The OTP market is characterized by multiplying SKUs and squeezed by tight margins and tax compliance. It is a chal- lenge for even the savviest marketers. However, Swisher is seeing rewarding results from its focus on quality products and category management. Based on the MSAi database, Swisher continues to outpace the industry.

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