Covering 38 categories, CSD assesses what’s hot in store, what works in the forecourt, profitable products and growing consumer trends.
A CSD Staff Report
In today’s industry, it’s a category manager’s job to differentiate customer experiences, build solid category strategies, design compelling assortments, plan productive planograms and efficiently price and promote today’s hottest offerings.
That’s enough work for anyone. However, analyzing, assessing and then acting upon the change of course that many c-store categories have taken in the last few years is a separate job, which often requires some overtime.
Not surprisingly, 2018 is shaping up to be no exception.
GIVE THEM CAKE
The face of category management is changing rapidly. That’s because the categories are fluctuating with the shifting tide of consumer demand.
Today’s c-store customers want to have their cake and eat it too—in every daypart. America’s growing penchant for healthier snacks, more nutritious food offerings, cleaner labeling and less additives co-exist with its demand for more exotic beverages, bigger portions, slicker vape pens and more indulgent chocolate candy.
It begs the question: Do you want gravy on that?
By taking a customer-centric approach, more retailers were able to identify categories in which the needs of the customer were going unmet and exploit that gap. However, filling the gap is vital to today’s convenience operation as the industry grows in size and complexity.
Consider the ebb and flow of the vaping and e-cigarette categories. Some perceptive category managers probably predicted the market success of JUUL, which surpassed VUSE during the 12-week measuring period ending Nov. 4, 2017. Wells Fargo Securities analyst Bonnie Herzog said then VUSE, made by R.J. Reynolds Vapor Co., dropped to 27.4% from 28.9% during the measuring period.
Meanwhile, JUUL, made by Pax Labs Inc., surged from 27.2% to 32.9% based on a 31.5% jump in sales.
With those kinds of figures, its not surprising that Big Tobacco is further embracing the future of a world where cigarettes—still a dominant category for c-stores in 2017—will eventually take a back seat to other tobacco products (OTP). Still, the announcement from tobacco giant Philip Morris International this past January, in which the manufacturer said it will focus on “smoke-free products,” surprised some.
The company, which makes classic cigarette brands such as Marlboro, L&M and Parliament, presented its new vision, promising a “much better choice than cigarette smoking.” They also claimed products such as vapor and e-cigarettes would eventually replace cigarettes completely in the UK.
FOOD INTAKE
For the last few years, as cigarette sales have declined, foodservice sales have risen as companies such as Casey’s, Sheetz and Stripes, which are pushing their own envelopes and own menu offerings to great a destination experience for their customers.
U.S. convenience stores experienced record in-store sales of $233 billion in 2016—and the third straight year of $10 billion-plus in pretax profits—according to National Association of Convenience Store’s (NACS) State of the Industry data. While tobacco products, including cigarettes, were 36% of in-store sales dollars, they accounted for only 18.2% of gross profit dollars. Also, OTP experienced double-digit growth in both sales and gross profit dollars.
It was foodservice holding to second place that was encouraging, according to NACS data. Foodservice contributed 21.7% of in-store sales in 2016 and accounted for 35.2% of gross profit dollars, with prepared food and cold dispensed beverages driving the category’s growth.
Other strong c-store categories in 2016 included packaged beverages and snacks.
To understand how a straightforward category is being shaped by advances in technology, look no further than the car wash. Americans pride themselves in the vehicles they drive and vehicle upkeep has become a booming business. However, meeting consumer demand for such upkeep has spurred various changes in the car wash equipment industry.
And, because car wash equipment is a significant investment, the need for retailers to do their homework—as in all the categories they include in their service sector—is as important as ever.
In Convenience Store Decisions‘ March issue, and in our newsletter in the weeks ahead, CSD will break down 38 categories that remain critical cogs in today’s convenience channel. We look at what’s hot in store, what works in the forecourt, profitable products and growing consumer trends. Again, 2017 was a stellar year for the industry. Convenience operators are positioning themselves to ensure that 2018 is even better.