Filling a Need | NACS Online – Magazine – Past Issues – 2015 – December 2015
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The Association for Convenience & Fuel Retailing

Filling a Need

Edible and perishable grocery offers retailers a way to provide convenient meals.

​By Sarah Hamaker

Used to be, a consumer had to stop by a supermarket to pick up a fill-in grocery item, but then convenience stores began carrying those types of products, thus making life a little bit easier. Now, more convenience stores are stocking fresh fruit and vegetables as well as other perishable grocery items, providing consumers with even more reasons to stop.

“A fresh fruit and vegetable program can differentiate your store from all the other channels selling traditional packaged food,” said Jeff Lenard, vice president of strategic industry initiatives for NACS. “It also can help highlight the freshness of your foodservice program or enhance a fresh case program.”

In addition to perishable groceries, edible grocery has also made a comeback at convenience stores, especially in canned soup and dry noodle dishes.

According to the NACS State of the Industry Report of 2014 Data, edible grocery sales were up a robust 14.4% in 2014. While the category doesn’t account for a huge portion of in-stores sales, more customers are asking for—and purchasing—edible grocery items from a convenience store.

In response to customer requests for canned soups and other quick meal solutions, manager Patrick Shannon added four feet of edible grocery to Horizon Market shelves in Bismark, North Dakota. “Since April, I basically doubled the edible grocery section,” he said. Sales in the category correspondingly lifted twofold as a result.

“More people want items that can be consumed within an hour of purchase, and edible grocery fits that with its canned soup and boxed food,” pointed out Stephan Mecklenburg, research coordinator for NACS. “Sales are up 5.9% in the canned soup and boxed food sub-section of edible grocery.”

Nearly every convenience store (99.40%) carries edible grocery, while 86.81% offer perishable grocery, according to the NACS State of the Industry Report of 2014 Data. “People are coming into convenience stores with more discretionary income, which has impacted all categories, including edible and perishable grocery,” said Mecklenburg. “With households shrinking in size, more people are doing individualized shopping more frequently. This is good news for convenience stores, which usually have single-serve edible and perishable grocery items.”

That’s a trend ConAgra Foods has seen as well. “In response to consumers’ increasingly hectic lifestyle, c-stores are offering grocery items so that they can be a one-stop shop for their shoppers. Items such as canned soup, microwaveable pasta and frozen meal options offer great, quick meal solutions for c-store shoppers,” said Mark Sumner, field director in cate- gory leadership for ConAgra Foods.

Seeing Potential
While sometimes an afterthought, edible and perishable grocery has the potential to be an integral part of a c-store’s overall merchandise plan.

To that end, suppliers are stepping up to provide more convenience-ready grocery items. For example, Goya Foods will be ramping up its c-store offerings in 2016. “Many convenience stores, especially those in rural or urban areas where super- markets aren’t as accessible, have become mini-grocery stores,” said Eric Bray, national sales director for Goya Foods Inc.

“The c-store shelf space for these products appears to be growing, which could lead to opportunities for a variety of new and innovative products that will satisfy consumer demand,” said Barbara Gannon, vice president of corporate communications and government affairs for Sargento Foods Inc.

For Horizon Markets, the growth has been in microwaveable soups, dry pasta and pasta sauces, including boxed macaroni and cheese, and boxed meal helpers. “It seems to me that this is a growth category for us, as people are coming in after work and picking up something quick for dinner while they fill up their car,” said Shannon.

Other retailers aren’t as sanguine about the category. “We’re questioning the amount of space that we have for edible grocery because it’s over-spaced for the sales it produces,” said Jon Fleck, merchandising manager for the 70-unit Cenex Zip Trip, a brand of CHS Inc.

As he looks at revamping the edible grocery section, Fleck will keep enough grocery to satisfy SNAP requirements. “We want to continue accepting SNAP customers because of the add-on purchases associated with those customers,” he said. “But we’ll scale back to our best sellers, like noodle cups and canned soups.”

“The whole grocery category has been in a big transition at our store,” said Jason Sanchez, owner of Mitchell’s Market in Farmville, Virginia. “I started five years ago with eight feet of edible grocery and cut it down to four feet when sales stagnated. Then the category started selling better, so I upped it back to eight feet six months ago, but things haven’t been going as well as anticipated.” He plans to spend time identifying key items in the category in an effort to maximize efficiency.

Packaged Freshness
Some retailers have found success in perishable grocery as well as edible grocery. “We originally didn’t carry any lunch meats or things like that, but I added packaged meats and hot dogs, as well as cheese slices and 1-ounce cheese packages, which have been very well received,” said Shannon.

Mitchell’s Market has always carried sliced meats and cheeses in its small deli. “It’s been kind of a staple for us,” said Sanchez. “However, sales have fallen off a bit because a new competitor offering similar items opened up down the road.”

Part of the appeal is the perceived health factor of perishable grocery and the single-serve packaging found at convenience stores. “Many people are looking for unique snacks that can keep up with their on-the-go lifestyle,” said Gannon. “Since items from a c-store are often purchased for immediate consumption, portion size and convenient packaging are almost as important as great taste and variety.”

For Bassett’s Market, stocking perishable grocery items is essential because of its rural location. “Our convenience store doesn’t have a lot of competition from grocery or other stores, so we have a good selection of fresh perishable grocery items that sell well for us,” said Charlie Bassett, project manager for the company, which is owned by his father.

Selling Grocery
Many times, the hardest part of edible and perishable grocery is letting the customer know the retailer stocks the category. “There’s a lot of competition with drug stores and supermarkets for this category,” said Bray.

“It’s a matter of education and having a few key items.” He suggested retailers use demographic analysis of customers to ensure the right mix of edible grocery is available. “For example, many Hispanic customers want edible grocery items with authentic Latin flavor, such as chipotle peppers in adobo sauce,” he said. If that’s a store’s customer base, Bray recommended that the retailer consider adding edible grocery products with those flavorings.

The category’s positioning in the store can help with advertising edible and perishable grocery to customers. Horizon Markets has the edible grocery section as the first thing a customer will see when he comes in the door. “That location has been really good for selling the category,” said Shannon.

Bassett stressed that knowing your customer is essential to coming up with the right product mix in edible and perishable grocery. “The section isn’t large, so you have to be careful about what you stock in order to meet the needs of who’s walking in your door,” he said. “For example, if your c-store is near a tourist area, you’re probably going to stock more picnic-type supplies rather than items for the every- day worker on his way home from work.”

“We focus on providing our retailers an objective view to ensure that they have the optimal mix of core fill-in items and quick meal solutions in this very limited space,” said Sumner. “We work with each specific retailer to maximize their shelving efficiency based on the space available, as well as the consumer demographic of each particular retailer.”

Cenex Zip Trip is in the process of examining what has been selling and what has not in the edible grocery category. “While boxed meals and noodle cups are up more than 30% overall, we still feel we have too much space dedicated to this category, and we want to be sure we’re only stocking what moves,” said Fleck.

Growth Potential
As the need for convenient meal solutions continues among consumers, convenience stores would be wise to focus on offering a variety of such products in edible and perishable grocery. NACS is developing new resources to help retailers determine if fresh is a good fit for their stores, and how to address distribution issues, waste management, and effective marketing and merchandising in stores for perishable grocery items. (Visit nacsonline.com/refresh to access these resources.)

“As more and more food companies innovate both with new items and product renovations with this need in mind, c-store retailers will win because they are a ‘convenience’ store after all!” said Sumner with ConAgra Foods.

“We’ll continually tweak edible and perishable grocery to keep what sells in front of customers, as well as bring in new items that customers request,” said Shannon. It’s that listening and response to customers that has brought success to the category for Horizon Markets.

Especially for retailers with rural stores, edible and perishable grocery will continue to be a welcome part of the merchandise mix. “Out here in a rural area, it’s expected that we’ll carry edible and perishable grocery items,” said Sanchez with Mitchell’s Market.

Fleck agreed. “Because we’re in a lot of rural areas, the category will always have a place in convenience stores as an add-on or last-minute purchase,” said Fleck. “It might not determine the overall success of a store, but the category is a necessity.”

And as more convenience stores provide more perishable items, the category might just change the industry’s image into one that offers healthy choices.

As Lenard with NACS put it, “A robust perishable grocery program can grow sales and help bring in Millennials and females who are most interested in fresh produce.”

Sarah Hamaker is a freelance writer and NACS Magazine contributor based in Fairfax, Virginia. Visit her online at www.sarahhamaker.com.