GROCERY: Sales Vary Widely

The line between grocery and convenience channels in the U.S. continues to blur, especially with the addition of mega retailers like the UK-based Tesco (Fresh & Easy) and Japan’s FamilyMart (Famima). Though neither of these retailers sell gas, both consider themselves members of the c-store channel in growing, upscale markets, such as Los Angeles, Phoenix and Las Vegas.

The convenience footprint is definitely changing, evolving into an entity probably no one would have foreseen 10 years ago. So, what does the future hold for grocery sales in the channel? The answer depends to a great extent on where you are—there’s a big difference between what sells well in different areas.

For example, last year’s best sellers for Jared Sturtevant, director of category management for Nice N Easy Grocery Shoppes in Upstate New York were bagged ice, Control Brand 20-ounce white bread and pre-priced ($5.69) 17-pound bags of dog food.

In contrast, Ben Graves (pictured), director of c-store operations for Rascals Convenience Stores in Mississippi, said his best selling grocery items last year were Solo plastic cups, Bryan Vienna Sausages, Panasonic AA & AAA Batteries, BIC Lighters, Road Tech 2 Cycle Oil and STP Gas Treatment.

Nice N Easy cereal sales are up 13%, driven by two-for-$5 promotions on packages of 11 ounces and up. "We have not seen the shift towards cup cereals yet," Sturtevant said, most likely because our stores offer upscale foodservice and are geared for fill in grocery so cup cereal is not as appealing to our clientele as in other c-store formats."

Sturtevant has recently brought in a couple of new items at customers’ request: 56-ounce light ice cream and 24-count Popsicles. "A couple items that were not requested but have been a big hit since we stacked them up in our stores are two-quart jugs of pickled eggs and pickled sausage; they both are in our top 50 for grocery dollar sales year-to-date," he said.

The chain is also working on bringing in larger packages of frozen vegetables and name brand frozen bagged dinners to sell from open coffin freezers the company has installed in its newer stores.

Grocery at Nice N Easy ranks in sixth place, behind cigarettes, beer, container drinks, general merchandise and snacks. Frozen yogurt, though only 1% of its take-home ice cream business, doubled in sales versus last year.

Coffee and tea are trending very strong, showing 33% growth behind very heavy in-store and direct mail promotion of 13-ounce and 39-ounce Maxwell House.

At customers’ requests, Graves recently began stocking Crystal Light "On the Go" packs in peach tea and lemonade flavors.

Rascals’ store category breakdown is beer, 18%; grocery, 17%; cigarettes, 35%; cooler, 15%; and deli, 15%.

"In my stores, grocery has been down slightly," Graves said. "I still think I will continue to sell the convenience items, things you don’t want to have to go to Wal-Mart or a grocery store to purchase), but I don’t see the category increasing in my stores that much."

Willard Bishop estimates that that dollar share of food and consumables sold by traditional grocery retailers will decrease from 49.8% to 43.5% while the market share for non-traditional food retailers increases from 34% to 40.3%, with c-store sales growing at a rate of 3.9% for stores with gas and 1.8% for stores without gas.

What’s more, many c-stores are looking harder at selling private-label products, and private label is most prominent in grocery sales—meaning that customers will probably be seeing more private labels in convenience aisles.

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