Convenience retailers are optimizing space by creating distinctive displays that draw customers into the store and maximize incremental and impulse sales.
By Lisa White, Contributing Editor
Although it may seem unconventional for a convenience store to take floor space away from a traditional gondola area, shifting the focus to higher-margin foodservice items turned out to be the right choice for Tennessee-based Git ‘N Go Market Stores.
The retailer recently remodeled its four Tennessee stores, creating space in high-traffic areas for foodservice items and fountain beverages. “We repositioned the grab-and-go area by the front door to better highlight our fresh food offerings,” said William Baine, CEO of Git ‘N Go. “The results have been positive.”
Convenience retailers are enhancing in-store displays and updating planograms to better take advantage of rising in-store sales opportunities. At the recent National Association of Convenience Stores (NACS) State of the Industry Summit, studies showed that inside sales in convenience stores grew 5.8% in 2015 to $226 billion, representing close to 40% of total convenience store sales. This was up from 29% in 2013.
Foodservice remains one of the most profitable categories in this segment, with 56% average margins. Data presented at the NACS State of the Industry Summit is preliminary and derived from company submissions as of March 31.
To better capitalize on in-store sales, displays, which have been a priority for the grocery, mass and drug channels, are now becoming a bigger emphasis for convenience retailers.
Convenience store retailers are discovering that choosing the appropriate location is the first step in steering customers to high-margin items.
The goal with Git ‘N Go Market Stores separating its foodservice area within its locations was essentially to create a store within a store.
“To accomplish this, we removed eight feet of gondola space, opened up the coffee bar and installed a self-serve dairy refrigerator in the area,” Baine said.
Amarillo, Texas-based Pak-a-Sak, a 37-store chain, achieved a similar feat by converting its fountain area into a beta test site for new soda dispensing technology. This replaced a standard 12-valve beverage unit.
The retailer is one of only five U.S. test sites for Pepsi’s Spire 5.0 beverage machines, which utilize self-service touchscreen technology to produce more than 1,000 fountain drinks, overall.
“We traditionally try to put our fountain areas in a visual location by the store entrance for impulse purchases, but most of our locations are acquisitions so the layouts are different,” said Gary Tabor, Pak-A-Sak’s director of marketing and sales.
To help ensure ideal product placement, the key is to identify the first five focal areas as customers enter the store.
“To do this, stores can have employees walk in as if entering for the first time and write down the first five things they see in 30 seconds,” said Linda Cahan, retail design consultant and principal of Cahan and Co., located in West Linn, Ore. “This helps visually define the store and experience, while providing retailers with the ability to make changes quickly.”
Another way to gauge traffic patterns and unveil the power aisle is to monitor customers’ traffic patterns.
“This will vary slightly from store to store, even if the footprint is the same,” Cahan said.
Displays can help influence customer shopping patterns. Handy Mart, a 29-store chain in North Carolina, is currently updating its older stores to accomplish this.
“In convenience stores, there is no such thing as a standard display,” said Tony Noonan, vice president of Handy Mart’s retail operations. “When bringing in new items, it’s all about maximizing linear space, and traffic drivers need to be bulked up with big displays.”
While convenience stores have become more adept at creating sub categories with specific sections, many retailers are still not modifying displays, which can lead to stagnated sales.
“Counter and floor displays should be changed at least weekly, and in some cases daily,” said Hugh “The Convenience Guru” Large, principal of Hugh Large & Associates Inc., a consultancy based in Victoria, B.C., Canada. “Planograms should always be created with the best-selling brands in the best-selling positions.”
Git ‘N Go Market Stores’ utilizes software from The Pinnacle Corp., which provides real-time sales data for all items. The bottom 10% in each product category is moved out after 13 weeks on the sales floor.
“With Pinnacle data, it has been easy to figure out what should not be in our set, which has allowed us to expand our foodservice offerings,” Baine said. “As a result, we haven’t had to compensate for lost gondola space.”
The stores also are currently testing four feet each of two salty snack brands, one low margin and another high margin, to see if customers will be drawn to purchase the higher-margin product.
In this case, the display is more about what’s practical versus what’s desirable. With any type of setup, planograms should not become so familiar that items visually disappear.
“Ideally, some displays, like those on countertops, may need to change daily or weekly, but this is difficult to manage, so good retailers will often change their displays weekly or at least once or twice a month,” Large said. “Retailers need to create a plan for changing key displays, but also use caution as to how many temporary supplier displays are used [to eliminate a cluttered look].”
The productivity of these displays also should be regularly measured, with the goal to generate additional sales.
As the competition in the convenience channel has increased and evolved, retailers such as Pak-A-Sak have focused on improving merchandising and display tactics, while also adapting interior sets.
“We’ve found groceries are a waste of space, so we’ve shifted our planograms to include more snacks and quick-serve items,” Tabor said. “The best thing we did is install front end coolers across from our foodservice court to highlight accessible grab-and-go items.”
The chain updates its planogram quarterly to stay pertinent with seasonal items and not get locked into dormant displays.
Handy Mart updates its planograms annually based on sales, yet regularly adds new items into its offerings based on customer demand.
In addition to regularly reworking planograms, convenience store retailers are relying less on traditional aisle grid patterns and including more points of interruption using attention-grabbing displays.
SETTING THE STAGE
Overall store appearance can add or take away from a well-designed display, so it’s key for retailers to pay attention to the basics.
A survey conducted by Harris Poll found that 93% of U.S. adults would not return to a retailer if they experienced some type of issue related to the facility, including dirty restrooms, surfaces and entryways.
“If the floor in the foodservice area looks like a bathroom floor, the retailer is doing something wrong,” Baine said. “Stores need to create a cleaner, fresher look, especially where customers are ordering or eating food.”
In an effort to create an upscale, inviting space, Git ‘N Go Market Stores recently added softer LED lighting.