C-Stores Get A Health Check

Better-for-you options are showing up on more shelves, but there are setbacks such as balancing logistics, costs and demand

It's no secret that convenience stores have received a bad junk food wrap. Even First Lady Michelle Obama criticized the channel for not having anything healthy to offer. But that generalization is slowly changing as the health and wellness push moves further into the mainstream — impacting consumers all the way to the convenience retail sector.

"More consumers than ever before tell us that eating healthy and paying attention to nutrition is important," said Darren Tristano, vice president of research at consulting firm Technomic Inc., which unveiled a new "Healthy Eating Consumer Trend Report" in January. This report showed that consumers' perception of healthy food is changing as they become more health-conscious. The study also found that consumers strongly associate with contemporary definitions of health, but balance better-for-you food choices with occasional indulgences.

Tristano explained that more consumers are gravitating toward "health halo" claims, such as local, natural, organic, whole wheat and free range. For that reason, he advises retailers to "leverage the growing interest in the health halo by developing the kinds of menu offerings that can underscore health without detracting from taste perception."

Recent research from Mintel also demonstrates the shift toward healthier eating. According to the market researcher, just over two-thirds of Americans are opting for healthier fare.

"Consumers are more aware than ever of their own nutritional deficits and what poor eating habits can do in terms of their long-term health," said John Frank, Mintel's category manager for CPG food and drink reports. "As a result, today's consumers are seeking out healthy food with greater urgency. However, skeptical or confused consumers aren't likely to pay a premium for healthier food."

Based on Mintel's research, the likelihood of adults maintaining a healthy diet increases with age. Specifically, 48 percent of Americans aged 65 and older say they pay close attention to how they eat, compared to only 32 percent of the 18- to 24-year-olds surveyed.

As for what healthy foods are gaining traction specifically, fresh fruit tops the list. Fresh fruit is the top snack food and one of the fastest-growing snacks in the United States, according to The NPD Group's "Snacking in America" study released in January. What's more, fresh fruit is consumed throughout the day, and is consumed during more snack occasions than other foods.

During the two-year period ending March 2012, fresh fruit was consumed in 10 more snacking occasions a year than chocolate, the next top snack food, and 25 more occasions a year than potato chips, the third most popular snack food.

Again, age comes into play with consumers 65 and older eating the most fresh fruit, followed by children under 12. Teens aged 13 to 17 eat the least amount of fresh fruit, NPD found.

The point to be made is that "fresh fruit is a top-of-mind snack with most consumers," stated Darren Seifer, NPD's food and beverage industry analyst. For retailers, he cited opportunities "to market and merchandise fruit around the activities during which it is most likely to be eaten."

Additionally, "usage can be expanded with packaging innovation and promotions for on-the-go activities when [fresh fruit] is least likely to be consumed," Seifer added.

IN-STORE SHAPEUP

Smart convenience store retailers are monitoring these and other consumer health trends, with some taking a more proactive role and experimenting in-store where it makes sense.

Among those making headlines recently:

• 7-Eleven Inc. introduced a line of fresh foods and downsized some of its fare by creating portion-sized items. The goal is to have 20 percent of sales come from fresh foods in its U.S. and Canada stores, up from about 10 percent currently, according to a December New York Times report. "We're aspiring to be more of a food and beverage company, and that aligns with what the consumer now wants, which is more tasty, healthy, fresh food choices," stated 7-Eleven President and CEO Joe DePinto. The c-store giant has reportedly put together a team of culinary and food science experts to study industry trends and develop new products.
• More than a dozen convenience stores joined a Kansas county's efforts to reduce the community's salt intake. Hy-Vee Convenience Store, Gas & Shop Convenience Store, Larry's Shortstop and 10 local Kwik Shops in Shawnee County, Kan., agreed to display a standalone rack of healthy, low-sodium items (chosen and customized by a dietician) in a prominent spot in their stores. This health initiative was spearheaded by the commissioners in Shawnee County, which provided the racks, promotional signage, technical assistance and advertising.
• C-store retailers in Brattleboro, Vt., joined the Healthy Retailers program, sponsored by the Brattleboro Area Prevention Coalition in collaboration with the Vermont Department of Health. In addition to discouraging tobacco and alcohol use among youth, the program resulted in vegetables, new fruit varieties, and ground beef and pork products from local farms being made available for purchase at select convenience stores in the area.

Sonja Hubbard, former NACS chairwoman and CEO of Texarkana, Texas-based E-Z Mart Stores Inc., is one convenience industry leader who has been vocal about her belief that an opportunity exists to make c-stores a more nutritious place for consumers to shop.

In 2010, Hubbard told Convenience Store News that she was initially offended by the First Lady's remarks about the lack of healthy food in c-stores, but then felt empowered to make some changes at her own chain. Now, two years later, she shared with CSNews that she thinks "c-stores are improving on the way we are promoting existing health and nutrition options, plus we are continually adding more items and trying to grow sales in the category."

Minute Market in Oregon is another c-store operator adding and testing better-for-you items like string cheese, low-sodium sunflower seeds, fresh fruit and "healthier" drinks for kids.

"As the industry changes, we are getting more options to choose from and bring in as our main distributor picks up these healthier products," said Phyllis Simpler, Minute Market's operations manager. "Over the last year, especially, a lot more products have been made available to us."

STUMBLING BLOCKS

Of course, along with supply, there's also the matter of demand.

Simpler acknowledged that at least in southern Oregon, where Minute Market operates, her customers "are interested, but only so much." Because the area is hard-hit by unemployment, many of her customers are on food stamps and she has to watch which healthier items are allowable for them. For instance, energy drinks that say "nutritional" on the package are allowable, but those that indicate they are "supplements" are not.

"We have to be the energy police; the food stamp laws are very stupid," she remarked.

Hubbard, too, has run into some setbacks in E-Z Mart's "healthier" efforts. "Overall, we added more food stamp-qualified items and healthier options, but while we saw an increase overall, they didn't necessarily fall strongly into the 'healthier' group of products added," she admitted. "We quit tracking these items on a weekly basis because, in all honesty, they just weren't showing the lift to justify the attention, and we were a bit disillusioned."

She said the lesson learned is that healthier options seem not to be about immediate return, but rather a long-term focus and evolution. "I believe that [it] is coming and consumer demand is evolving, maybe a bit slower in the 'deep-fried South,' but people are becoming aware of their health, hopefully taking responsibility, and finally we'll see action," she said. "We want to be the provider of those items, but right now, we fight balancing logistics, costs and demand."

In the end, Hubbard, Simpler and other forward-thinking retailers say shifting to healthier items will be worth it.

"I believe there is a lot of opportunity for healthier fare in the channel, and the mix and offering of products will evolve and change along with the demand," Hubbard stated. "Our industry has always been nimble and quick to react to changes in consumer demand — what we aren't as good at is forcing changes in consumer behavior."

With healthier options, she said it goes back to the classic question of the "chicken or the egg," but she intends for E-Z Mart to continue testing, offering and reacting to consumer desires.

Simpler said she will do the same, summing up her motivation very candidly: "These are our customers now, and our future customers. We want them healthy enough to be around."