How Convenience Store Owners Can Combat Meltflation
Faced with supply chain strains and resulting inflation, it’s time to rethink the traditional bagged ice model.
Ben Gaskill, Everest Ice and Water Systems
The cost of goods and services in the United States continues to go up, impacting industries across the board. At the same time, supply chain slowdowns from COVID-19 have triggered services and product shortages. Supply chain strains and the resulting inflation have led businesses and third-party distributors of goods to quickly adjust prices to combat inflation rates, leading to higher consumer prices.
Convenience store owners who have lost the predictable flow of goods from their supply chain partners and have seen prices skyrocket for everyday items have especially felt the pain.
While prices are increasing, the amount of product consumers get is also shrinking. From coffee to tissues and granola bars to ice, companies are quietly shrinking portion sizes without lowering prices. "Shrinkflation" is the term coined to describe this phenomenon.
It’s taking over industries worldwide and has even made its way to bagged ice. The standard 10-pound bag of ice has quietly been reduced to 7 pounds over the last few years. Customers are getting less product but paying the same price, if not more, leading to "meltflation." This means convenience store owners are paying 30 percent more for the same — or less — amount of product than before, depending on the delivery service.
The product decline is a result of the country’s ice manufacturers facing increasing fuel costs, labor shortages and higher wages, exacerbated by the pandemic and supply chain challenges. Meltflation is a way for ice producers to quietly save money and maintain revenue while hoping consumers won’t notice.
Challenges of the Traditional Ice Model
Convenience stores across the U.S. still use the traditional bagged ice model, which comes with various challenges. Before bagged ice reaches the convenience store or the consumer, it must be made in a factory, packaged, kept cold, shipped in a refrigerator truck, and stored.
Every step in the chain increases the price of bagged ice. Whether it's to fill coolers or provide for parties, people buying bagged ice are looking for large quantities and bulk buying. Seven-pound bags aren't huge, so customers are spending more to satisfy their needs.
Not only does bagged ice present problems in terms of cost and less product, but the quality and sanitation of bagged ice aren't meeting consumer standards either. Bags can tear during transport or when customers sort through the merchandiser for selection. Traditional bagged ice is handled multiple times throughout the production and transportation process, making it difficult to ensure all product is moved in a sanitary manner.
Bagged ice also introduces stocking issues, especially in the warmer months and during holidays. Ice bunkers have limited capacity, and ice may run out of stock during peak demand.
Like most industries, the convenience store industry has faced significant labor challenges, including employee turnover and staff shortages. With limited help, convenience stores are struggling to meet customer demands. Having to deal with unloading the ice off the truck and restocking the ice bunker makes it more difficult for employees to tend to customers' needs.
Recently, a more accessible, cost-effective and environmentally safer alternative has entered the market that dispenses 10 pounds of ice per purchase, eliminates the need for third-party distribution, restocks automatically, and has the potential to significantly reduce the use of plastic bags.
Ice and water vending is a unique business model that has become a multi-billion-dollar industry. With ice and water vending, convenience store owners can sell their customers 10 pounds of ice per vend at a lower price and will not have to rely on third-party distributors to restock, eliminating the risk of running out of product. An ice and water machine will automatically restock itself, can cater to the customer rushes of the warmer seasons, and no additional employees are needed to handle the machine.
Because ice vending produces 10 pounds of ice for less than 25 cents compared to the $1.25 to $1.50 for a delivered 7-pound bag, store owners can offer economical prices for 30 percent more product, while providing a convenient experience for their customers. Owners can also put the machine outside, freeing up valuable in-store space and giving customers 24-hour access.
More importantly, ice and water vending can lighten the load on convenience store owners and allow them to focus on everyday operations while reducing reliance on the supply chain and third-party ice providers.
Ice and water vending is an exceedingly economical solution to saving both store owners and customers money.
Ben Gaskill is the co-owner and director of sales and marketing for Everest Ice and Water Systems. He has worked in the manufacturing industry for 20 years and has extensive experience in leading high-level sales strategies for capital equipment and wide-ranging product lines.
Editor’s note: The opinions expressed in this column are the author's and do not necessarily reflect the views of Convenience Store News.