Perishables and produce are no longer short stories for c-store retailers
Convenience stores are writing more exciting chapters in fresh food these days â not only in foodservice, but within the grocery segment as well. Although groceries don't comprise a huge category for the channel, the fresh and perishables portion can be a real page-turner in profit, routinely experiencing double-digit sales growth.
The fresh groceries trend is a ripe one "being driven by a rise in consumers looking for healthy snacks and even take-home meals," according to Greg Tradup, category manager, perishable/supplies/ foodservice for Temple, Texas-based McLane Co.
The wholesaler has seen increased demand from a "large number" of c-stores, particularly in the areas of fresh fruit, produce, garden salads, pasta salads and mixed vegetables. "From 2009 to 2010, fresh produce sales increased by 46 percent and fresh garden and pasta salads by 720 percent," Tradup said.
Another key convenience industry wholesaler, San Francisco-based Core-Mark, also identifies fresh foods as "an essential part of our growth strategy," according to Rob Hoefs, marketing director, fresh foods. In addition to providing current customers with more, often healthier choices, a strong fresh food program enables a c-store to attract "a new customer to the store that would not normally fit the c-store prototype, such as a soccer mom," he said.
Nice N Easy Grocery Shoppes, based in Canastota, N.Y., operates 78 stores and started selling fresh produce "because [company president] John MacDougall wanted to offer his customers the opportunity to purchase healthy foods as a snack item or as an ingredient for dinner," Sam Magari, produce manager, explained.
"The presence of fresh food has had a positive effect with our customers as now they are looking for more than an apple, orange or banana," Magari added. "They are purchasing tomatoes, cucumbers and lettuce for their salads, a container of strawberries, a fruit bowl or a bag of potatoes for their weekend cookout. In some areas, we are the grocery store."
Because of its upstate New York locale, an area rich with farming, Nice N Easy has jumped on the "local produce" trend that's so popular in supermarkets these days. Items grown in upstate New York that are sold in Nice N Easy stores include potatoes, onions, celery, tomatoes and apples.
"We always use local produce when it is available. However, it is delivered to our stores by our produce vendors," he said.
Perhaps most importantly, Nice N Easy prices this produce to be as competitive or better than local grocery stores. "We price items to sell and still generate positive margins," Magari said.
Aside from Nice N Easy, other forward-thinking c-store players shared with Convenience Store News the ups and downs of merchandising more perishable groceries.
THE SUPERMARKET ADVANTAGE
Will a convenience store born out of a supermarket have an advantage in fresh groceries? United Express, United Supermarkets' first freestanding convenience store that opened this year in Lubbock, Texas, is betting the answer is yes.
"We see a growing trend in fresh food sales throughout the convenience channel, and for us, this makes perfect sense," said Chris Bridgford, director of fuel and convenience operations for United Supermarkets LLC. "We offer a variety of our Market Street fresh sandwiches, wraps, tossed salads, sandwich salad spread, grab-and-go side dishes, casseroles and desserts such as cobblers in United Express."
So far, the salads, sandwiches and wraps are the "sure winners," according to Bridgford. The company's Market Street stores are the direct suppliers of fresh groceries for United Express. Production is carried out at the supermarket locations and daily delivery is made to the convenience format.
He added that United Express is currently testing several fresh produce options with "moderate success thus far."
THE DISTRIBUTION ADVANTAGE
Jacksons Food Stores based in Meridian, Idaho with 210 stores, has been carrying apples, oranges and bananas "forever," according to Richard Levin, vice president of marketing. "While sales aren't huge, they do give our health-conscious customers an alternative to traditional snack foods," he said.
For the near future, Jacksons is looking to go beyond its very basic state of fresh, thanks to its distribution advantage. "Jacksons is self-distributed through our sister company, Capitol Distributing," Levin explained. "This will allow us to do a bigger job with fresh commissary products in the near future." Specifically, the company is looking at salads, sandwiches and an increased assortment of fruit.
Not only are c-stores creating and expanding their job opportunities in fresh food, they're hiring more experienced fresh candidates. For example, Tedeschi Food Shops Inc., based in Rockland, Mass., with 190 locations, recently hired Bob Goodwin as director of fresh foods.
Goodwin's education includes the completion of Cornell University's food executive program. Prior to coming on with Tedeschi, he was most recently director of perishables for Shaw's Supermarkets.
"As we continue to grow our fresh food product lines, Bob will undoubtedly play an instrumental role in introducing innovative ideas, finding creative solutions and positioning Tedeschi Food Shops as an industry leader in foodservice," said Joe Hamza, vice president of sales and marketing.
THE $5 OBSTACLE
Cenex Zip Trip, with 60 stores based in Spokane, Wash., recently started selling fresh salads, sandwiches and baked goods. "We've seen success to a point in some stores, but have to overcome several obstacles," Jon Fleck, merchandising manager, said candidly.
One obstacle is the $5 perception. "The Subway $5 phenomenon has made the perceived value of sandwiches to be $5," Fleck said. "We don't have a commissary for the sandwiches we sell. We buy them from Core-Mark and that adds another level for someone else to have to take their cut. We try to make mid-30s [gross margin] percent in order to stay competitive with the $5 craze."
Not surprisingly, spoilage is the greatest fresh challenge for c-stores.
For Cenex Zip Trip, "the waste factor is huge," Fleck admitted. "We try to build a 20-percent waste factor into the retails, but sometimes it is a lot higher. That is why we also sell sandwiches from Core-Mark that are guaranteed and have a higher shelf life."
At United Express, "spoilage is scanned out as incurred, so we can assign sales to purchase and shrink," Bridgford explained.
Magari said at Nice N Easy, "our product is handled by the produce coordinator or someone assigned for specific duties, usually a foodservice person. Daily, we cull the displays to remove any off-conditioned produce or out-of-date items. Displays are replenished from back stock or in the case of fresh salads, fresh cuts fruits/ veggies, they are made daily. Any off-conditioned items are recorded with the office using UPC codes or PLU numbers and thrown out."
For comments, please contact RenÃ©e M. Covino, Contributing Editor, at [email protected].