When it comes to packaged beverage strategy in convenience stores, variety is important for four reasons:
- It appeals to different shopper segments and occasions.
- It adds excitement to the category.
- It can help augment vendor contracts.
- It stimulates “trial” to a category.
These insights are from Greg Tornberg (pictured), principal consultant at Impact 21, Lexington, Kentucky, who spoke May 7 at CSP’s 2024 Cold Vault Forum in Schaumburg, Illinois.
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“Variety on the occasion part is really important because you can have a segment that crosses over onto a bunch of occasions,” Tornberg said. “And sometimes we get so focused on the segment, we forget about the occasion, so think about that.
“When you’re doing your cooler sets, has anyone ever organized a cooler set according to occasions?” Tornberg asked. “It’s a question. I don’t know the answer.”
As the industry becomes more data rich, “down to that occasion level and down to the ZIP code level and really knowing more and more about our consumers, how is that going to change the way we do work? It’s something to think about as we move forward.”
Variety also adds excitement, keeping the category from turning into a “corpse,” Tornberg said. Variety also can help in augmenting or complying with vendor agreements.
“Has anyone ever organized a cooler set according to occasions?”
“It shouldn’t be the reason, but variety can help give you leverage with vendors and drive some partnerships with them,” he said. “And then, finally, they can stimulate trial to a category, but we all know the whole space issue. We have to keep this in mind in a limited universe.”
Balancing variety is complicated because retailers must juggle six generations:
- Alpha (ages 1-11)
- Gen Z (12-29)
- Millennials (30-44)
- Gen X (45-59)
- Baby boomers (60-78)
- The Silent Generation (79-99)
“Continue efforts to attract younger shoppers,” Tornberg said, “but don’t lose sight of older generations—64% of beverage buyers are over 45 years old, and boomers will continue to outspend all other age groups.”
New on the Shelf
When adding products, Tornberg said, retailers must consider the following:
- Every item must earn its way into the assortment
- Every item must earn its retention in the assortment
- New items should be selected based on their ability to attract new business and generate incremental sales and gross profits
In making inventory decisions, it’s important to ask if everything has been done to support a product before removing it, Tornberg said.
“Have we given a lot of time to the items?” he asked. “Are there ways and things we can do to draw attention to new items or categories? And will shoppers spy something comparable that can be deleted?
“Remember, never make a decision based on one piece of data.”
“Finally, what is the impact if I take it out on my total basket in my store? What other products are going to be impacted if that consumer leaves and doesn’t buy comparable items?”
Tornberg emphasized: “Remember, never make a decision based on one piece of data.”
In managing variety and supply, be mindful that increasing delivery frequency might increase the cost of goods from the supplier as well as increase receiving costs such as invoice processing and unloading and stocking labor costs, Tornberg said.
Promotions
Turning to promoting items, Tornberg said this is done to:
- Expand basket size
- Expand consumption
- Play to a season
- Drive trial
- Introduce a new category or product/build awareness
Success is measured by examining unit growth, sales growth, profit improvement and category cannibalization, he said.
“Be sure to consider market basket, attachment rate and affinity,” Tornberg said.
Market basket is the composition of different products purchased in a single transaction. Attachment rate is the percentage of a transaction when other products are purchased along with the item being measured. Finally, affinity is the measure of the likelihood that other products are bought at the same time.
“It's important that when we measure success, we just don't look at one dimension, but we look at unit sales, profit improvement and the category in total for category cannibalization,” he said.
Other highlights:
- Consider offering shopping bags so customers can carry more throughout a store—encouraging them to buy more.
- Strategically place coolers in a store, such as at the checkout counter and adjacent to foodservice offerings.
- Dig into data to understand promotion results in a holistic manner.
- Create a beverage “halo” through use of warm displays inside and outside.
- Sprinkle new items throughout the store to leverage adjacencies.
- Consider strategic placement of additional coolers and point-of-purchase fixtures throughout the store.
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