LAS VEGAS — Private label products offer a good value to consumers who face rising costs and a looming recession. But even beyond easing those pressures, private label can help convenience store retailers overcome shrinking margins in specific areas of the store.
In the retail industry, 17.7 percent of sales dollars and 19.6 percent of unit sales are private label. However, private label only accounts for 3.7 percent of sales dollars in the convenience channel today, Roy Strasburger, CEO of StrasGlobal, cited during the "Turning Private Label Into a Powerhouse Brand" education session at the 2022 NACS Show.
Private label sales in the convenience channel are growing — they increased 17.8 percent in 2021 vs. 2020 — and this presents a big opportunity for c-store retailers "to create products to make a profit and continually lower costs to achieve the best value for the consumer," he said.
Private Label Spotlight: Texas Born
Spicewood, Texas-based Texas Born (TXB) is one c-store retailer that currently sells private label in its stores. The offering makes up roughly 2 percent of sales at the 46-store chain, according to Benjamin Hoffmeyer, vice president of marketing and merchandising at TXB.
The decision to enter the private label space followed TXB's rebranding from Kwik Chek Food Stores two years ago. The aim, Hoffmeyer said, was to:
Build brand equity around the chain's transition;
Build sales and profit; and
Diversify its assortment with products unique to Texas.
The move into private label has not been without a few challenges, including minimum run size hurdles and supply chain issues, he admitted. Plus, as a small operator, TXB faced the question of where to start.
According to Hoffmeyer, the company partnered with RangeMe, a discovery, sourcing and purchasing platform for retailers. TXB also found cues at the Private Label Manufacturers Association (PLMA) annual show and from talks with its existing vendors.
When it came to deciding on products for its private label line, TXB followed several selection tenets — quality, local, and dietary needs such as gluten-free and keto-friendly — as well as volume and price value.
As for packaging, the retailer puts a high importance on premium. "We try to focus on premium packaging. People shop with their eyes," Hoffmeyer pointed out.
His advice to fellow c-store retailers considering private label is to be flexible, co-brand on some products, and identify local or smaller vendors.
"We have products waiting to go, but we do not have the ingredients," he said, noting that this may add two to three months to any launch plan.
Private Label Spotlight: Yesway & Allsup's
Another Texas-based convenience store retailer, Yesway, is all in on private label for both its Yesway and Allsup's convenience stores. The company took a big leap into the space with its 2019 acquisition of the Allsup's chain, which had a solid private label offering. Today, Yesway has more than 200 private label items across its 420-plus stores.
The strategy was to build brand awareness, create quality and value, grow units/dollars, and introduce Yesway brands into Allsup's stores and vice versa — helping to build a unified brand, explained Alan Adato, merchandising and procurement manager at Fort Worth-based Yesway.
As he noted, "the name of the game with private label is to sell more units." At the end of the day, there is going to be a private label product that doesn't work, and that's OK," he acknowledged. "You need to react as quickly and efficiently as you can."
According to Adato, the retailer focuses on three pillars of growth: private label, foodservice and rewards. "Private label is a very important part of our business, and it is complemented by food and rewards," he said.
When it comes product and packaging, the retailer takes different approaches for each chain. Yesway reflects premium, while Allsup's reflects value.
"Have fun with your private label," Adato urged. "You took the time to create it; embrace it."
The 2022 NACS Show took place at the Las Vegas Convention Center from Oct. 1-4. This year's event featured thousands of new products and technology solutions across 425,000 square feet of expo space, 250-plus new exhibitors, and more than 45 education sessions.