Retailers may be missing out on key opportunities to drive profits and attract new shoppers with milk.
New, in-depth research on the fluid milk category has revealed that milk is one of the most underleveraged profit drivers for both grocery and convenience stores. Milk is a traffic driver for shoppers, but there is much more that the category can contribute. Research shows that milk can be a key opportunity to drive profit, maximize sales and even attract new shoppers.
The dairy case has seen dramatic changes in recent years with the proliferation of new product segments competing with milk for space. Simultaneously, shopper behavior has changed and the retail landscape has evolved with trends changing the way Americans shop. These changes have surfaced a huge untapped opportunity for one of the most frequently shopped for products – milk.
To uncover key opportunities for milk at retail, the comprehensive research was conducted by a team of top retail industry experts at Prime Consulting Group and Willard Bishop on behalf of the Milk Processor Education Program (MilkPEP). The research team leveraged national IRI data and a major dairy milk shopper study involving in-home interviews and shop-alongs. The research found:
- Milk far outperforms on space – generating 18% of dairy department profit from 10% of the space.
- Milk remains a key category driver for shopping trips and profit – baskets with milk are 23% more profitable than those without.
- Milk merchandising hasn’t kept up with other store sections – communicating milk’s protein benefits and chocolate milk’s recovery benefits can drive purchase frequency and sales.
- C-Stores have lost ground to other channels – Sales have shifted to other channels, and c-stores have lost more than $1 billion in potential milk sales since 2008. Milk now has a very small set compared to other beverage categories, yet it delivers some of the highest profit per linear foot.
“This new research comes at an important time as retailers respond to dramatic changes that have taken place within the industry landscape, particularly in the dairy case. Shoppers are also demanding a greater in-store ‘experience,’” said Doug Adams, president of Prime Consulting Group. “There’s a huge opportunity awaiting retailers when they make even small changes to the dairy case. Whether it’s increasing milk varieties to address consumer needs or dedicating more space to fluid milk to ensure product availability the dairy case has the potential to drive greater profit for retailers and a better experience for shoppers.”
INVIGORATING THE MILK BUSINESS
The study uncovers growth opportunities, best practices and insights that have the potential to maximize milk sales and drive retailer profit. Retailers can remedy out-of-stock issues with milk, increase days of supply and increase milk product variety given the growing innovation in the milk industry. Convenience stores in particular have an opportunity to impact variety, address gaps in target needs and optimize store space.
“The findings have the power to reignite the dairy case and capture opportunities for growth and retailer profit,” said Kikke Riedel, vice president of strategy and insights at MilkPEP. “With positive trends in the marketplace, new milk brand innovations and powerful national marketing programs – the time is right to maximize the dairy case.”
MilkPEP, in partnership with the milk companies, now has high-impact national campaigns to engage shoppers and drive interest both in- and out-of-store.
- Milk Life is now an official U.S. Olympic & Paralympic Team sponsor giving milk a powerful national platform as it supports Team USA and recognizing the important role it plays, and has always played in fueling America’s athletes. The Milk Life Campaign, showcasing nutrient-rich white milk, is proud to support Team USA through the next three Olympic and Paralympic Games.
- The Great American Milk Drive is the first national partnership with Feeding America that helps deliver nutrient-rich gallons of milk to kids in need across the country while driving incremental sales at retail.
- The My Morning Protein program highlights milk’s high-quality protein in store and beyond and optimizes cross-merchandising opportunities to show how it pairs perfectly with other protein foods to help deliver nutrients Americans seek to fuel successful days.
- The BUILT WITH CHOCOLATE MILK campaign showcases the post-workout recovery benefits of low fat chocolate milk to help exercisers and athletes recover, rebuild and reshape their bodies so they’re ready to give it their all in their next workout or competition.