Broadening the Snack Sales Opportunity

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Broadening the Snack Sales Opportunity

By Don Longo, Convenience Store News - 02/27/2012

MIAMI BEACH, Fla. -- After a day that revolved around discussions of social media and customer loyalty programs, the 2012 NACS Leadership Forum turned to a more traditional topic for its concluding day on Friday. The importance of the snacks category to the convenience store business was amply demonstrated by NACS Vice President of Research Dae Kim, who presented industry data on the sales growth of snacks at convenience stores.

Per-store sales of snacks, including candy and salty, sweet and alternative snacks, have grown from about $2,500 in 1975 to more than $13,500 in 2010, according to Kim. What's more, average baskets increase substantially when snacks are included in the purchase. The average convenience store basket ring of $5.70 increases to $5.79, $6.17 and $8.13 when alternative snacks, salty snacks or sweet snacks, respectively, are added.

"And, while snacks draw about 10 percent of c-store trips, snackers dominate impulse sales," said Kim, noting that snacks account for more than 35 percent of impulse sales.

Following Kim, three suppliers gave presentations showing the potential of their snack categories. Dave Onorato, vice president, general manager, global convenience stores and specialty retail for The Hershey Co., urged retailers to unlock the "potential of the quiet giant lurking in your stores."

"Candy is big, growing, impulsive and responsive to merchandising and complementary to other categories in the store," he said.

The Hershey executive projected the candy category would grow by 6 percent in 2012. Retailers can see this growth by:

• Converting candy shoppers at other high traffic points within their stores;
• Bundling candy into offers with other products; and
• Targeting a potential $250 million fair-share opportunity for c-stores in the seasonal candy business.

Patrick Cornacchiulo, vice president of sports nutrition for US Nutrition (Met-Rx), noted that consumers' increased focus on fitness and healthy foods is driving the nutritional bars category, which has grown from $209 million in 2008 to $256 million in 2011. However, he warned c-store operators that they don't own "convenience" anymore and that other retailers, particularly drugstore chains like Walgreens and CVS, are increasingly moving onto c-stores' turf.

His recommendations to c-store operators included cross-promoting nutritional bars with breakfast meals, soft drinks and lunch sandwiches. He also said retailers should be careful not to over-SKU the category and stick to core flavors and sizes, and that they should constantly test new products.

Piggybacking on the fitness and health trend, David Bright, vice president of marketing for Dole Fresh Fruit Co., pointed out that bananas are the No. 1 selling fruit in the United States. "It's a convenient, hand-held product and fits the fresh image a retailer wants to convey," said Bright.

The Dole executive noted that selling fresh fruit doesn't come without challenges, including shelf life, distribution, employee training and shrink management. Packaged fruit, he said, is an alternative that is easier to manage for c-store retailers.

All of this was a perfect setup for John Zikias, senior vice president of category management and supply chain for Thorntons Inc., the 165-unit c-store chain based in Louisville, Ky., who told attendees to broaden their view of what a snack is.

Zikias outlined several strategies for growing snack sales, including merchandising snacks near beverages, as well as fresh and packaged bakery areas; introducing new snack items like protein bars, meal replacements and meat snacks; and selling both fresh-cut fruit and whole fruit. Like Onorato, he applauded bundling efforts. "We see a 47-percent lift in transaction size when we promote candy with a cup of coffee," said Zikias.

"Snacks complement other categories and drive basket size," he continued. "For example, over half of consumers who buy cigarettes in our stores also buy snack items."

Zikias also extolled promotions and seasonal opportunities to boost the category.