Ice cream and dairy products, especially milk, are convenience store staples, of which U.S. consumers can’t seem to get enough.
“Essentially, the category of milk is exploding in retail health stores and with alternative milks, yet conventional grocery and c-stores are behind trend on offerings,” said Deborah Holand, a consulting partner with b2b Solutions in Lake Forest, Ill. “Combine this with the growth of bottled beverages and competitive space… (and) the milk category tends to get lost.”
Holand suggested that milk presents a major opportunity for retailers. “It is also a great category opportunity to differentiate as private label, if volume warrants and the fresh supply chain is efficient. It offers great margins when managed properly.”
According to the latest analysis from the National Association of Convenience Stores (NACS), milk made the top 10 merchandise categories in c-stores, with a per store/per month sales percentage increase of 3.8% in 2014 over the previous year. Comparably, other dairy products made NACS’ Top 20 merchandise categories, with a per store/per month sales percentage increase of 44.7% in 2014.
Alternative milk-based products, almond and coconut are doing well, Holand said.
ICE CREAM SOCIAL
“For ice cream, bringing back novelty treat sales with a fresh category plan can raise sales 20%-plus every time with focused attention. For dairy, consider private label or delivery consolidations with a fresh-food commissary.”
“Dairy is going really strong for us,” said Bailey Lyden, vice president of retail for True North Energy, based in Brecksville, Ohio. “We do about 20,000 to 25,000 single pints of milk a month. It’s a single-serve milk instead of a gallon or half gallon. We have a really good relationship with Dairyman’s (Supply Co.), and we’ve got a good cost that allows us to drive a nice two-fer: two for $2, or $1.49 single retail. It’s a great value offering for the customer. It also falls into that ‘better for you’ category, as well.”
Larger containers can’t work as well in the c-store channel, Lyden continued. “We don’t really target that audience because we’re not at that grocery store price. We have a great following, however, with our pints of milk.”
True North Energy, which operates 110 truenorth-brand convenience stores in Ohio and Illinois, recently added strawberry-flavored milk to the mix, along with chocolate, a big seller. It also takes part in National Chocolate Milk Day, as well as aggressive promotions throughout the year.
Holand’s recommendation for marketing milk and other dairy products is to adopt a theme such as fun, healthy, lively to appeal to what she called young lifestyles. “Use direct point of purchase, not passive, and weekly specials to compete with grocery.”
The Ohio-based chain is also moving a lot of cheese, using 12-foot, open-air coolers in many of its 110 stores. “It comes off as really premium with a Sargento cheese offering,” said Lyden. “That’s become one of our top-selling foodservice items. We find that people really love it to the point where we are adding more and more SKUs.”
When it comes to ice cream, the chain focused on single-serve items. Lyden characterized his promotional calendar as aggressive.
“You harvest margins all winter, and then when you get into summer you tend to focus more on volume. That’s been a strategy that has actually worked out for us, especially in the last year.”
Stay tuned to Convenience Store Decisions‘ March issue, where we delve into 38 in-store categories to identify emerging trends and garner retailer analysis to forecast what operators can expect for 2016 and beyond.