Grocery, GM, Ice Cream ' HBC Decline In Share

Bright spots are perishable groceries, seasonal items and energy shots

The edible grocery, general merchandise, ice cream frozen novelties and health and beauty care categories all experienced flat to declining share of in-store sales in the past year.

Overall, sales in the edible grocery category were flat last year — declining 0.1 percent on a per-store basis and expanding by 1.1 percent on a c-store industry basis due to store count growth.

Many convenience store chains see the need to expand edible groceries, particularly produce and other better-for-you products, to meet evolving consumer needs. Indeed, earlier this year, Nice N Easy Grocery Shoppes, an 80-unit chain of c-stores based in upstate New York, revealed plans to open a new prototype store with a larger grocery department in order to fill the void left in towns that do not have small supermarkets.

In the edible grocery category, packaged dairy and deli was the largest subcategory, with 25.5 percent of sales in the category. Packaged dairy and deli sales averaged $16,652 per store last year, a decline of a little less than 1 percent from 2009. On an industry basis, packaged dairy and deli sales were up almost half a percent.

Packaged bread is the next largest subcategory, with almost 18 percent of sales in the edible grocery category. Packaged bread sales were up by half a percent last year, to $11,709 per store. On an industry basis, bread sales were up almost 2 percent due to c-store unit growth.

Frozen food comprised about 13 percent of sales in edible grocery last year. Frozen food sales declined just less than 1 percent to $8,727 per store last year. Industrywide, frozen food sales were up almost half a percent.

The perishables subcategory, including produce, was the bright spot in the edible grocery arena. Sales of perishables were up 8.9 percent on a per-store basis (and up more than 10 percent industrywide), to $5,990 per store last year. Indicative that the convenience industry has indeed made headway in its push to offer more better-for-you foods, fast-growing perishables including produce, now compose more than 9 percent of sales in the edible grocery category.

GENERAL MERCHANDISE

The general merchandise category was down about half a percent on a per-store sales basis last year and up a little less than 1 percent across the industry. Interestingly, the traditional dominant subcategories of automotive products, phone cards and batteries experienced slightly declining sales, while seasonal products, smoking accessories and toys scored increases.

Despite a 3.4-percent drop in per-store sales, automotive products still accounted for more than 20 percent of general merchandise sales. Convenience stores generated an average of $8,874 per store last year from automotive products, including both fluids and car care products and accessories. Total c-store industry sales of automotive products fell 2.2 percent last year.

Phone cards and prepaid telecomm services accounted for almost 15 percent of sales in the general merchandise category. This subcategory was also plagued by slowing sales at c-stores last year. Phone cards and prepaid telecomm sales declined 2.7 percent in sales to $6,180 per store last year. Sales dropped 1.5 percent industrywide.

Batteries accounted for about 11 percent of c-store general merchandise sales last year, declining about 3 percent on a per-store basis to $4,454, and almost 2 percent industrywide. Sales of smoking accessories, including lighters, pipe cleaners and lighter fluid, grew 2.2 percent on a per-store basis to $4,161, and were up 3.5 percent industrywide.

Items described as seasonal products — such as sunglasses, beach supplies, snow removal items and the like — were up 14 percent per store last year, accounting for about 7 percent of sales in the seasonal category. C-store retailers rang up $2,946 in seasonal sales per store last year.

Novelty toy sales increased about 1 percent on a per-store basis last year and 2.1 percent overall. C-store retailers sold an average of $2,702 per store in novelties and toys last year.

The consumer move toward digital photography continues to whack away at film/photo sales. C-store sales of film and photo declined 13.8 percent per store last year and 12.7 percent industrywide.

Convenience stores haven't yet capitalized on the growth of new technology products, such as the endless supply of car chargers, earbuds, cell phone cases and Bluetooth devices required by consumers' insatiable appetite for technology. Industrywide, telecomm hardware sales fell 3.7 percent last year and were down 4.9 percent on a per-store basis. However, some c-stores, especially those with highway locations that serve a large number of truck drivers, had some success with these products. Tedeschi Food Shops, based in Rockland, Mass., for example, reported that its No. 1 store for cell accessory sales is an interstate location.

A year ago, CSNews reported that Tedeschi was testing a wire rack program with mobile phone accessories from Mizco International in 10 stores, offering car chargers, cell phone cases, cassette adapters, Bluetooth devices and more. Mizco brands such as Cellular Innovations, Digipower and iEssentials came from Garber Bros. Inc., a local distributor, and today, more than 100 Tedeschi stores offer the products, with plans to roll out the program chainwide.

During the holiday season, the Tedeschi stores featured a combo rack with cell phones and Bluetooth devices, offering the option of a camera phone, and it sold so well the chain is planning to offer it again this year. Expect more c-store chains to test out this category in the year ahead.

ICE CREAM & FROZEN NOVELTIES

Sales per store of frozen novelties were down less than 1 percent last year to $6,710, while ice cream sales were down 3.9 percent to $4,913 per store. On an industry-wide basis, sales of frozen novelties were up 0.1 percent and sales of ice cream were down 2.6 percent.

According to consumer research by Mintel, ice cream consumers may be eating less of it due to health concerns, but when they are eating ice cream, they are spending more on it. In part, this is a result of the trend toward impulse ice cream, since bars and sticks are more expensive, liter-for-liter, than tubs and blocks. It is also a measure of the success of manufacturers in tempting consumers toward more luxury, premium and “indulgent” ice cream.

It remains to be seen how “food-service” ice cream at c-stores will affect sales of packaged freezer products. Sheetz, for example, is rolling out its Sheetz Bros. Creamery, a soft-serve and topping concept being developed at its Sheetz restaurant. As reported last year by CSNews, the Sheetz Bros. Creamery will offer two flavors by cone or cup, as well as the Shimmy, an ice cream and mix-in item; and the Swifty, which creates an ice cream float out of a smoothie base.

HEALTH & BEAUTY CARE

Energy shots, along with liquid vitamins and supplements, drove the health and beauty care category at convenience stores last year. The category on the whole, though, was flat with per-store sales up only 0.5 percent and total sales up 1.9 percent.

Energy shots accounted for almost a quarter of sales in the health and beauty care category. On a per-store basis, energy shot sales were up 36.4 percent last year to $2,541. Industrywide, sales were up 38.1 percent.

Despite tremendous growth, energy shot sales continue to skyrocket. Suppliers continue to introduce new entries into the market — some billed as relaxation or rejuvenation products — and industry leaders such as 5-hour Energy have increased their consumer advertising and marketing. Consumer acceptance of the products also is on the rise.

Just as they've done in the energy drink category, c-store retailers have begun developing private label shots. CSNews reported last year that South Carolina-based Spinx created its own line of energy shots called PUMPED. Other chains chose to increase energy shot space in their stores to make room for line extensions and test new items like Red Bull, Stacker 26 Hour Power, Mango Shot, Head Shot, Mega Shot, MetRx, Fusion Energy, Shotz Energy and Slap Energy. Positioned at the checkout to drive impulse sales, energy shots appear to be far from a mature category.

Vitamin supplements (non-liquid) also performed well last year. Vitamin supplements were up 10.4 percent on a per-store basis and represented about 11 percent of the health and beauty care category.

Meanwhile, all other health and beauty care subcategories experienced per-store sales declines last year — analgesics (down 7.6 percent), cough and cold remedies (down 18.4 percent), family planning (down 5.3 percent), stomach remedies (down 7.6 percent), grooming aids (down 6.4 percent), feminine hygiene (down 2.8 percent) and cosmetics (down 10.7 percent).

As for other in-store product categories:

■ Nonedible grocery sales were down 1.3 percent on a per-store basis to $27,327. Gross margin dollars per store were down less than 1 percent to $9,900

■ Wine/liquor was down only 0.2 percent per store to $13,203. Gross margin dollars were down 1.7 percent on a per-store basis to $2,946.

■ Publications were down 1.1 percent to $7,980 per store. Gross margin dollars fell 2.3 percent to just $1,271 per store.

■ Ice was essentially flat with a 0.1-percent decline to $6,654 per store. Gross margin dollars were off 1.8 percent, but still comprised a healthy $3,442 per store.