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Article Excerpt
The retail world for food and beverages is a prime example of survival of the fittest -- or at least of the biggest. The world's largest retailer, Wal-Mart is the proverbial king of the jungle, feared -- or at least closely watched -- by all others. Smaller retailers have had to make the most of their unique talents to secure their places in the industry.
Having rapidly consolidated during the past few years, many retailers will digest their acquisitions this year, but don't expect the inactivity to last -- there are at least a few smaller retailers left to be gobbled up. Successful retailers, large or small, are making it by knowing their markets and their consumers, managing their categories, and providing services and promotions that can only be found in their stores.
Convenience is key
The convenience store industry is one of the most significant retail channels to beverage manufacturers, especially the beverage companies that are trying to break into the business. The c-store channel store count grew 4 percent last year, according to the National Association of Convenience Stores. NACS/Trade Dimensions Official Industry Store Count 2001 reports a total of 124,516 convenience stores in the United States.
According to NACS, there were 103,400 c-stores ten years ago, and just 71,400 stores 20 years ago. More than half of the total number of convenience stores in the United States are single-store operations.
"Convenience store shoppers more than grocery, mass merchandise shoppers or anyone else, are really open to new ideas and new products," says Travis Sheetz director of marketing at Sheetz Inc., based in Altoona, Pa.
Mike Blair, product director, beverages, at 7-Eleven Inc., based in Dallas, echoes those comments, saying his priority is to make sure his chain has products no other stores can offer.
"We see more than a thousand people every day that purchase cold beverages from us," he says. "What we've seen that speaks to them the loudest is something that they cannot find somewhere else."
According to NACS, Texas has the highest number of convenience stores in the country, with 12,775 stores. In addition, it has the highest number of convenience stores selling gas, an important draw for impulse purchasers. California follows Texas with 9,087 total stores, and 5,158 c-stores selling fuel. Florida, North Carolina, Georgia, New York, Ohio, Michigan, Illinois and Pennsylvania round out the list of states with the highest number of c-stores. Alaska had the fewest number of c-stores last year with 133.
One of the biggest factors influencing non-convenience store retailers is the decrease in the number of trips consumers are making to the store. Overall, shopping trips were down 11.5 percent between 1998 and 2001, according to Information Resources Inc. Trips to supermarkets were down 10.1 percent. But trips to convenience stores were up 7.2 percent, the most of any of the measured channels. Drug stores, which in many cases are adding more food and beverages to give c-stores a run for their convenience money, were up 2.5 percent in the number of trips made by consumers between 1998 and 2001. And mass merchandisers and club stores were up 3.6 percent each.
Leading growth
Gas and tobacco are the biggest-selling selling c-store items, with 68 percent of sales, according to the NACS/Price Waterhouse Coopers Future Study. Foodservice, candy, snacks and five categories of beverages together make up 23 percent of the remaining sales. Beverages will be the top three products to grow in c-store outlets through 2004, according to the Future Study. Fountain drinks are expected to grow 5.9 percent annually between 1998 and 2004. Hot beverages will follow at a rate of 4.8 percent per year; and packaged beverages are projected to grow 4.3 percent.
Milk and beer have slower annual growth projections -- 2.8 percent and 2.4 percent, respectively -- but are also expected to remain important product categories. Milk is expected to pick up due to the increased number of single-serve products, but beer will cause category management headaches for space-pressed convenience store operators due to the increasing popularity of imports and smaller brands.
On the packaged beverage side of the business, Sheetz says all of his company's new stores will reflect the importance of beverages to its sales.
"We're adding doors like crazy," he says. "We're going to have 20 cooler doors in our new store that opens in April, which is twice the average number. Perception-wise we're looking to be a beverage outlet of choice. We want people to know that if they see something new on TV or in a magazine that Sheetz is likely to have it," he says.
Just for me
In keeping with retailers' demands for personal attention from manufacturers, Sheetz says promotions specific to his stores tend to be the most successful ones. National promotions, he says, cannibalize other brands in the store. "We're looking for things that do not cannibalize our category, but...
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