Surviving the Deep Freeze

You know that aunt or uncle in your family no one likes to talk about? In terms of convenience store operations, they are the equivalent of frozen food. The category exists, but it makes retailers uncomfortable just thinking about it and they probably wouldn't mind if it just went away.

However, there is hope in the battle to produce a winning convenience store freezer case, and it may be easier to achieve than many believe. Several chains, including Dallas-based 7-Eleven Inc., West Des Moines, Iowa-based Krause Gentle Corp. and Quik Way Foods of Dallas Inc. have built incremental sales in the freezer case with popular items such as TGI Friday's poppers, frozen White Castle hamburgers and Schwan's Red Baron, Tony's and Freschetta pizzas. Smaller chains have found success with marketing local seafood favorites and frozen meals to go, freshly prepared, and frozen on-site.

"Last year, we saw strong category growth that we attribute to the TGI Friday's items," said Steve Keane, 7-Eleven product director. "These products are good quality, with a recognizable brand name, and are meeting customer needs for immediate-use meals. We have been pleased with the sales increases this year and are looking forward to continued success with the products."

Proper management begins with understanding what customers expect from the category. According to a November 2001 focus group conducted by Frozen Food Age, a sister publication of Convenience Store News, frozen food means quick food, either microwaveable for immediate consumption or a later meal. And taste rules over both convenience and cost. Consumers eat frozen store items a minimum of three times a week, the report said.

Frozen food purchases are both planned and impulse, depending on the category. Dinners, vegetables, chicken and breakfast foods are usually planned. Pizzas, ice cream and new products are bought on impulse. The Frozen Food Age focus group found that consumers were basically unhappy with the selection of sizes. Most portions, they said, are too small.

What all of this means for convenience stores is that there is an opportunity to cultivate a consumer base by matching products with customers' needs.

However, convenience store operators have been reluctant to delve deeper into this category for a variety of reasons ranging from bad experiences to reluctance to usurp shelf space from categories that are known movers.

The 2001 Convenience Store News Industry Report attests to this reluctance. It revealed the average c-store maintained a paltry $482 in-store inventory of frozen foods — approximately .007 percent of the store's overall inventory, slightly ahead of "other dairy" ($420).

Take a Frozen Leap

Quik Way last year decided the time was right to initiate a hard core commitment to frozen snacks and entrees. After testing the many products available, interviewing consumers and adding a dash of gut instinct, the company developed a freezer planogram that includes frozen meals, such as Swanson and Banquet chicken, pastas and pot pies, Hot Pockets and Red Baron pizzas.

"The freezer is a slow-moving category until customers get acquainted with it," said Patrick Smith, a category manager for Quik Way Foods, a Dallas-based chain that operates 25 stores. "To draw customers in, the freezer has to be managed as closely as other categories. It should include a diverse range of products presented in a bright, clean package."

The emphasis on the frozen category helped drive sales an average of 20 percent chainwide, Smith said.

The popularity of frozen appetizers and snacks is growing as more shoppers seek foods that offer both good taste and convenience. Unit sales in c-stores and supermarkets gained 3.5 percent last year, to 180.1 million, on a 7.7-percent dollar increase, according to Chicago-based Information Resources Inc. The lion's share of the growth, not surprisingly, has come on the supermarket side.

Overall sales rose to $414.1 million in the channels, aided by time-starved, snack-hungry consumers eating mini-meals on the run. The top two brands are Pillsbury's Totino's and Ore-Ida's Bagel Bites, which together commanded more than 40 percent of the category in both units and dollars. Totino's Pizza Rolls, launched in August of last year, accounted for 8.3 percent of category dollar sales and 6.7 percent of units.

Bagel Bites grew by nearly 19 percent in both dollars and unit sales vs. the year-ago period, but the Totino's brand retained its position as market leader, with nearly one-third of the overall category.

Seafood Diet

A combination of creative merchandising, advertising, promotions and customer service has led to a healthy increase in frozen seafood sales at West Point Market in Akron, Ohio.

While seafood generally isn't a strong seller in c-stores, West Point Market has increased sales of frozen and fresh seafood by 7 percent to 10 percent over the past two years, following a remodeling of its foodservice department, according to Gina Turner, director of foodservice for the unit.

West Point has enjoyed steady success with its own "Take Me Home" line of prepared frozen seafood products. Pioneered 10 years ago and prepared in conjunction with a local distributor, the frozen seafood line includes such items as crabcakes, lobster bisque, seafood chowder and clam chowder, as well as pasta and soup.

The Take Me Home seafood products are packaged in microwaveable containers for customer convenience. "We've had some phenomenal sales since the seafood department was remodeled two years ago," said Turner. "Sales have surpassed those of the old seafood department in every respect."

Sales of the Take Me Home line have increased by at least 5 percent a year since it was introduced, Turner said. "It's been a big success in the winter months especially," she added. "People want good food, but don't have the time to prepare it. Basically, it's a real convenience for two-income households. This is a major trend."

"I think seafood is a great home-meal-replacement item," Turner continued. "The very short cooking time lends itself to that."
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