Convenience stores are growing faster than any other retail channel and now represent 40 percent of the growth opportunity in the U.S. market, according to both IRI and Nielsen. This is precious growth in an era of challenged economics, and unlocking this channel has become a vital, if not required, route to growth for many major consumer packaged goods (CPG) manufacturers.
In the second part of this three-part series, I will take a close look at the point-of-purchase materials themselves, and how the best-of-breed manufacturers are maximizing facings and shelf space in this constrained, but profitable environment.
In Part 1, I looked at the issue of compliance and how to best manage that fundamental issue. In this article, we assume compliance is at, or near, its potential. This is an important foundation upon which to build the next best practice — maximizing shelf space in a constrained and unpredictable environment.
We all agree the most daunting aspect of merchandising in the convenience channel is the store size. The average size of a c-store is a mere 2,963 square feet, according to NACS, the Association for Convenience & Fuel Retailing. Adding to the challenge, these small stores are 67 percent privately operated and have little consistency in their physical layout.
In the past few years, the point-of-purchase manufacturers have responded to this challenge with modular displays that are easy to setup and flexible for the variety of store formats in the market. We’re talking about frontend merchandising units to display salty snacks, confections, gum and meat snacks; dump bins for cold beverages and larger-size impulse items; tried-and-true cardboard displays specifically designed for the nuances of the channel; and finally, the shelving and gondolas prevalent in the “center” of these stores as a main location for some products.
Square Pegs in Round Holes
Too often, the performance of our point-of-purchase materials are judged without consideration for the level of execution behind it. The reality is that no matter how creative we get with our point-of-purchase designs, we will still see non-compliance scenarios due to the physical limitations of the store or the management approach to that store.
In the convenience channel, this fallout will be more pronounced, especially when compared to other store formats and the inability to fit certain merchandising materials, coupled with the opinions of private owners who still dominate the channel.
Diagnosing this as a root cause issue is a critical best practice in improving merchandising for the convenience channel. The age-old analogy of a square peg in a round hole comes to mind here. We often spend a lot of time and money trying to force a specific concept into the c-store channel instead of doubling down on concepts empirically proven to work. Even better, we simultaneously reduce costs by cutting concepts that are not working quickly in favor of those that do.
Stop Treating the Symptoms, Start Curing the Disease
Innovative CPG manufacturers and their partners are increasingly able to diagnose and fix the root causes behind compliance in the c-store channel to increase sales and share.
There are two main reasons for lack of compliance and each has their own best-practice cure. First, as I illustrated in Part 1 of this series, we need to routinely measure and link compliance to field labor execution improvements. With that issue better understood, we can then diagnose situations where our carefully designed point-of-purchase material is a poor fit for the convenience channel.
If, after a concerted effort to increase compliance, we still see issues, then a deeper problem is at play, either in the form of a physical limitation in the stores themselves or a willingness of management to get behind the point-of-purchase material.
This best practice not only increases compliance and sales, but it also helps save money by eliminating point-of-purchase designs that are built, shipped and eventually thrown away. We can’t afford this any longer. With a data-driven focus for compliance measurement now available, there is no need to.
Editor’s note: The opinions expressed in this article are the author’s and do not necessarily reflect the views of Convenience Store News.