Convenience-store retailers should understand and align with their customers to be the “authentic first choice” for immediate consumption and a conveniently distinctive destination for take-home beverages.
“Figure out what the guest wants, do what the guest needs,” said consultant Todd S. McFarland, owner of Louisville, Kentucky-based TotalMarketVision, at CSP’sCold Vault Forum last week in Lombard, Illinois. “But to achieve that vision, what are you going to do?”
What to do includes being “brilliant at the basics,” McFarland said, adding that retailers should optimize their core and have top-selling items in every cluster.
Considerations include:
- Offering product assortment and space
- Having pricing architecture in package sizes and across category segments
- Offering value, having impact and conducting messaging
- Executing quality, consistency and simplicity
Retailers also should cultivate vendor partnerships. To differentiate value, McFarland said, considerations include:
- Having multiyear vendor partnerships and team merchandising
- Offering holistic business and marketing integration
- Leveraging global scale and resources
- Having best-in-class consumer/shopper insights
Finally, there’s differentiation, which is delivery of a local, personal and influential beverage experience at the store level.
Considerations include:
- What is carried and where it’s sourced
- How items are priced, promoted and merchandised
- The way the c-store engages customers in and out of the store
- How the c-store communicates and aligns to local market occasions, events and properties
A good way to figure out what a customer is doing is to hang out in one’s store, McFarland said.
“Get coffee, sit back in the corner, listen, watch,” he said. “Ever gone to a competitor?”
Consumer Diversity
Turning to change drivers, McFarland said that a more diverse consumer is influencing product innovation, flavor and variety segmentation across all non-alcohol beverage categories.
In addition, noting the importance of health and functionality, he said, “Non-alcohol category growth metrics show consumers shifting consumptive behavior toward more healthy and functional beverage solutions.”
However, he added, while better-for-you products are growing in popularity, “taste, convenience and indulgence can and often do trump health.”
However, natural and simple products are in, while anything artificial is out, he said. Ingredient sources should include quality, sustainability and local, while labeling/packaging should include nutritional facts, ingredient relevance and environmental/social.
“Non-alcohol beverage categories have seen over 400 new items launched into the industry during the past year,” McFarland said. “Most have a better-for-you or functional benefit attached to them.”
Meanwhile, the top 200 in the industry generate 70%-plus of total beverage sales, he said.
“Shifts away from CSDs (carbonated soft drinks) toward all other categories continue with strong growth in coffee, tea, energy and water,” he said. “Innovation within beverage categories has centered around three areas: ingredient, functionality/efficacy and packaging."
Turning to localization, McFarland said, “If someone wants to build a convenience store next to a large fitness center, the fitness center will influence what you carry. You’re probably going to bring in products that are all simple listings, simple ingredients. You’re going to skew your offer to support that. That is localization and that’s customization of that particular store. If you’re next to Disney World, you’re probably going to have a different product assortment.”
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