By David Bennett, Senior Editor
Convenience stores represent five times their fair share when it comes to grab-and-go snacking occasions, beating out grocery stores and even discount stores, according to a 2013 study by market research firm NPD Group Inc.
Part of the reason today is selection. Snack choices are as varied as the regions and cultural tastes that spawn them. There are the niche snacks with hyper-local flavors that connect people to their culinary heritage, and there are popped treats and other low-fat options that speak to more health-conscious consumers.
Though salty snacks still lead the way when it comes to overall snack sales, it’s the latter lines of alternative and healthier choices, including trail mix, yogurts and snack/protein bars, that are helping to drive c-store snack sales. A side benefit, some experts say, is that more snack offerings provide customers with a more rounded perception of your store.
“The health-conscious consumers looking for a better option have a choice on our shelves,” said Danna Huskey, category manager for E-Z Mart Inc., a Texarkana, Texas–based chain that operates 290 stores in Arkansas, Louisiana, Oklahoma and Texas.
Like the c-store industry, E-Z Mart is paying close attention to what’s hot in consumer snacking by heeding customer preferences.
Not surprisingly, more c-stores are pushing health and nutritional snacks while continually adding more items to their shelves, said April Moffa, c-store industry analyst for NPD Group, based in Port Washington, N.Y.
Analyzing c-store snack sales, Moffa found healthy snack items that seem to be performing above average are ready-to-eat popcorn, rice cakes and microwave popcorn. However, the highest 2013 sales were in the snack bar category, where Moffa observed a 2% jump, compared to 2012.
At Emmaus, Pa.-based Top Star Inc., sales in the snacks category rose significantly last year.
“We had a 22.12% sales increase in our snack category in 2012 versus 2012,” said Kera Smith, merchandising specialist at Top Star. During that period, healthy snacks accounted for almost 4% of snack category sales.
Observers expect sales of nutritional snacks to continue to increase as a younger generation of c-store consumers seeking healthier snack choices.
“I saw a little bit of stronger growth among Millennials; we know they have a healthier perspective,” Moffa said.
Still, the industry still has some distance to cover before it’s considered a go-to destination for healthy snack consumers.
“Customers are seeking (healthy snacks), but I don’t think it’s there yet,” Moffa said. “So, it’s a mindset change and how we are speaking to consumers and letting them know. There are a few chains that are trying to change that and have things like Clif Bars.”
Of course, bumping traditional snacks for healthy alternatives is probably not the best option. Rather, E-Z Mart implements snack planograms that are central to each of its stores, easy and accessible, so customers can quickly locate what type of snacks they’re searching for.
“Our planograms are diverse so that the health conscious consumers looking for a better option have a choice on our shelves,” Huskey said.
E-Z Mart doesn’t typically promote one line over another because promotions can sometimes skew public perception of what snack offerings are healthy, and which aren’t.
“Why gather everything one deems as ‘healthier’ and put it all in one place, to essentially say the rest of the items aren’t healthy,” Huskey said. “We offer choices throughout the stores. It is in the interest of each of our customers to decide what is healthy for them in their own daily diets.”
Worth Their Salt
While healthy snacks may be gaining momentum with c-store shoppers, salty snacks still rule the market.
On average, convenience stores in 2013 generated $5,975 in monthly salty snack sales, with a gross profit of $2,267—slightly down from 2012 figures, according to this year’s recently released NACS State of the Industry report. The gross margin for the salty snack category was 36.9%. That represents about 14% of total c-store product sales in 2013.
NPD research shows that consumers who purchase non-alcoholic beverages at c-stores are most likely to also purchase a salty snack, whether it’s popped, puffed, baked or stuffed.
Robust innovation in the chips category and brand extensions continue to boost overall salty snack sales, Moffa said. In fact, potato chip sales are projected to top $11 billion in 2015, including $7 billion in tortilla chip sales, according to the Beverage Marketing Corp.
Of course, the opportunity to cross-merchandise salty snacks with cold vault inventory at robust pricing is helping build snack category sales as well. NPD data shows that for every 100 grab-and-go snacking occasions, about 61% of consumers grab a beverage with their nosh. Often, the top beverages consumed with the snack are carbonated soft drinks and water.
Smith said Top Star has experienced positive sales through cross-merchandising efforts in its 39 stores. “We have been working with our manufacturers for support,” Smith said. “A lot of displays now tie in manufacturer coupons that cross-merchandise snack foods and beverages.”
The latest NACS report shows the top eight c-store categories in terms of syndicated salty snacks sales were: potato chips, other salty snacks, tortilla corn ships, nuts/seeds, puffed cheese, mixed snacks, crackers, pretzels and ready-to-eat popcorn.
“There’s a value proposition where if customers come in for sodas and see salty snacks are on sale, they’re more likely to bundle these items,” Moffa said. “We’re talking about the industry and how it’s changing. (C-stores) are competing against foodservice. We’re starting to lose our main driver of c-store traffic—fuel purchases—which are declining. By bringing the consumers in and having them see the sale—that value proposition—stores are able to bundle these products and increase the basket.”
Adding in the crucial factor of convenience will continue to make c-stores quick snack destinations, said Darren Seifer, NPD Group’s food and beverage analyst.
“C-stores work very well in terms of quick grab-and-go snacking,” Seifer said.
Millennials, Baby Boomers
There are two age groups that are prompting c-stores to rethink their snack plans—those falling into Generation Y, or Millennials, and American baby boomers entering the retirement zone.
While Millennials are young and look upon shopping as almost a community experience, baby boomers are much harder to pin down, Seifer said, because of their unique consumer needs.
“Boomers demonstrate avoidance behavior. They’re trying to avoid things with cholesterol, saturated fats, and a lot of sodium. And many of them are on medications, so they are probably going to drug stores, which are filling that gap of in terms of food that they can buy along with their prescriptions. I see that as a big challenge to c-stores in terms of getting boomers to come in.”
Social media-savvy customers now have an opportunity to receive instant alerts, coupons and special promotions available at E-Z Mart locations. However, Huskey knows that offerings must meet expectations, no matter what the age or demographic.
“Our offerings are mainstream so that Millennials who know Clif Bar, will also know the Special K brand that the boomers recognize readily,” Huskey said.
Grab-and-go snacks represent 12% of all snack-oriented convenience foods and are typically eaten between meals rather than replacing meals, according to the latest NPD Group data on snacking trends.
In a ConAgra Foods online survey, respondents said they were most likely to snack in the afternoon or later at night, with salty snacks named the most popular choice by those polled. Second was sugary snacks, followed by vegetables.
Seifer said watching customer behavior and tweaking your offerings to better align your product with those patterns is a better way to grab patron loyalty.
Retailers might even consider rotating the types of items stocked near the entrance or check-out counter to align with the grab-and-go snackers’ needs, depending on the time of day, Seifer said.