Private Label Not Just for Penny Pinchers

Mintel GNPD reports private label product manufacturers are staying current with the latest food trends, allowing retailers to provide more than just cheap alternatives to national brands. Shoppers are being wooed to private label items by premium ingredients, portability and health benefits.

The plethora of private label products hitting the market is astounding. As CSNews Online reported yesterday (New Private Label Products Woo Shoppers) nearly 1,800 new U.S. private label foods appeared on retail store shelves this year already. That's more than one-fourth of all of the food products introduced this year. By comparison, in 2005, private label foods made up only 13 percent of new food product launches.

Interestingly, portable, high-quality lunches are one hot area of private label development. People who want to save money by lunching at the office are finding new desk-dining entrees easy and satisfying.

These initially are doing well in grocery stores, as shoppers stock up for the week. But why couldn't these items be an opportunity for c-stores, especially those that have already launched other successful private label lines, like waters and snacks. 

A chain with a good reputation for foodservice, especially, may broaden its grab-and-go lunch options with a trendy packaged noodle bowl or microwavable, low-calorie meal that does more than mimic Lean Cuisine.

As Americans spend more time at their desks, a few convenient options outside the same 'ol, same 'ol would be welcome.

-- Barb Grondin Francella

Not Too Broke To Pay for "Green"

When I think of green marketing, I sometimes flash to images of Whole Foods' organic section: high-income shoppers thumbing over pricy organic tomatoes, or extremely committed Prius drivers tending compost heaps in their backyards.

But a recent study by retail design and strategy firm Miller Zell revealed lower income shoppers are leading the charge for sustainable product purchases. These shoppers were the most willing to pay a premium for products marketed as green. Also, women were more likely than men to pay a premium for similar products.

 

Half of the 999 consumers surveyed in March indicated a willingness to pay a premium for green products -- and are more likely to do so at a threshold for 10 cents. More than 60 percent said green product options will influence their unplanned purchases.

 

Still, despite a demonstrated interest from consumers, retailers and manufacturers are missing the mark in promoting and providing information on green products. For interested operators, this is especially true in the c-store channel -- nearly 80 percent of the shoppers said they are more likely to pay a premium for "green" in grocery stores. A little more than one-third said they would be likely to purchase green products in c-stores.

 

This may mean missed opportunities for the c-store channel, which regularly sets its sights on Gen Y shoppers. This group is the most willing to pay more for green -- 62 percent of them said they would. (Baby boomers were least likely.)

 

According to Miller Zell's analysis of the study results, “offering green products and executing related promotions could potentially create an additional positive dimension of brand perception. which ultimately impacts frequency and purchase behavior." Close to 40 percent of the shoppers said they would like more green product information at the store level. Overall, shoppers rated the availability of green information at the store level "D-".

 

Even a baby boomer like me, who still struggles to remember to take her reusable shopping bags out of the car, believes there are green marketing opportunities at stores that sell gasoline, cigarettes, snacks  and beverages. I'm at the point when I feel guilty for using a plastic bag when I make a quick run into CVS for a few items. From better marketing of biofuels where available to greener fast food containers, support of local environmental causes or plastic bag recycling stations, the c-store industry can do better.

 

 -- Barb Grondin Francella

A Good Marketing Plan Goes Wrong

Retailers across the board can adopt a recent advertising and marketing approach from quick-service food retailer Sonic, but in doing so, companies must be prepared to execute the strategy appropriately at the store level, or risk creating a negative impression with consumers.

 

It seemed like a sound advertising approach: For the past six months or so, every time I watched primetime or late night TV, it seemed I saw several commercials for Sonic. A few months ago, after seeing the 20th or so Sonic ad, I decided to find the closest location to my home in northern

New Jersey

. At that time, the only Sonic in the state was more than two hours away.

 

I continued to see Sonic commercials nearly every night, and wondered why the company would advertise in a market where there are no locations. But one day, while running some errands near my hometown, I saw it -- a newly constructed and nearly completed Sonic restaurant. Days later, a grand opening was held and a week later, I decided to make my first visit to Sonic.

 

At that time, I concluded Sonic was a very smart marketer. By running advertisements in a market where it had no stores -- but evidently had plans to build one -- the retailer built buzz in its brand. And when the store opened, it ensured there would be customers eager to visit its location.

 

Pulling in the brand new and bustling lot, I was a bit excited to discover what Sonic offered. After all, I have heard positive things about its fountain offer, and I like to keep tabs on the various foodservice industry outlets that compete with c-stores. I was shepherded into a line of cars by one employee, and followed the gestured directions given by another employee -- to what we thought would be our parking spot. (If you aren’t familiar with Sonic, it is similar to a drive-in, where cars park in spaces and place their order, and have it served to them by girls on roller skates.)

 

But where we were headed wasn't a parking space. When we passed all the cars in their spots and reached the end of the row, we asked the employee where we were to park. His response: "Come back later. We're open 24 hours."

 

Not even a "Thank you," or "Sorry for the inconvenience." What kind of way is that to make an impression on a new market? I can understand being too busy to serve all its customers waiting in line, but Sonic should have handled the situation better. Ideally, it should have handed out coupons to those customers it could not serve that day, to make sure it didn't lose their business entirely.

 

Take this retailer's actions as a lesson -- if you are going to build buzz in your brand, make sure you have the staff and resources to commit to the resulting increase in demand. And if you can't accommodate everyone, make sure you have a contingency plan and give those customers something for their troubles.

 

-- Mehgan Belanger

Less Risk Means More Brand Switching

Retailers looking to ramp up or expand private label programs may want to consider current consumer mindset. According to a new survey, Americans are more likely to move away from their favorite, usually more expensive, national brands of food, household, health and personal care products, but are much more reluctant to switch to store brands on purchases for children and pets.

The May survey of 1,530 Americans by ICOM, a division of Dallas-based Epsilon Targeting, revealed how the possibility of a move to store brands varies by category. In the last six months, nearly 60 percent of consumers have switched to store brands for food and household products. Nearly half have switched to store brands for health and personal care products.

But less than one-fourth are buying store brands for pet care products. Only 12 percent have moved away from national brands for child care products.

The less-risk-means-more-switch trend also revealed itself in over-the-counter medicines. There seems to be a direct correlation between severity and specificity of ailment and openness to switch.  For instance, in the last six months, 42.2 percent of consumers have bought store brands for general pain relievers, while only 21.5 percent of consumers made the switch for heartburn medicines.

Bottom line: private-label-minded c-store operators may want to consider the perceived risk driving consumer decisions, while product makers who want to regain or strengthen sales should promote their brands with this consumer psychology in mind.

-- Barbara Grondin Francella

Making Social Networking Work for You

We’ve been reporting a lot lately about convenience retailers tapping into the popularity and reach of social networking sites, such as Twitter and Facebook, to try and drum up more business. Among the best ideas, in my opinion, is Kum & Go’s launch of "Twitter Tuesdays." Last month, the c-store chain each Tuesday selected one Des Moines-area Kum & Go location as the "Secret Store." From 8 a.m. to 12 p.m., one clue per hour was given out via Twitter “tweets” to direct Kum & Go followers to the secret store.

The first eight people who found Kum & Go’s 1959 Ford at the secret store and provided the person in the car with the secret password each won a set of two-day passes to the 80/35 Music Festival in

Des Moines

. Kum & Go was one of the major sponsors. On June 23, the final Twitter Tuesday, the first four people who found the 1959 Ford at the secret store and provided the secret password won VIP passes to the 80/35 festival.

Talk about a fun and effective way of engaging customers!

Kum & Go’s Twitter Tuesdays is a great example of how to make social networking work for you. It’s not enough just to have a presence on sites such as Facebook, MySpace, Twitter and Linked In. You have to find unique and fun ways to connect.

After all, a new study by WorkPlace Media polled office Internet users and found while 55 percent of respondents maintained at least one social networking account, just 12 percent of respondents said their opinion of a brand changes if that brand maintains a social networking presence. And only 11 percent of the social networking users reported following any major brand through a social networking site.

The bottom line: Social networking works best when you think outside the box.

What are you doing to tap into the power of social networking?

--Linda Lisanti

 

Long on Loyalty

According to a recent Colloquy study, since 2007 participation in loyalty programs rose by 19 percent in the United States. Retailers saw the greatest shift toward rewards programs with 75 percent of consumers reporting the recessionary economy had a neutral or positive influence on their participation. (The smallest increase was experienced in the financial services segment, where 52 percent of participants said the economy had no impact on their enrollment decision.)

"U.S. consumers clearly see value in program participation, and continue to leverage their activity as an antidote to hard times — seeking added value and using rewards to stretch dollars," said Rick Ferguson, Colloquy’s editorial director, when the survey results were released last week.

A quick check of my key chain and wallet shows I'm a member of these loyalty progams: Stop N Shop, CVS, Borders, Cosi, Delia's and American Eagle; the last two for my teenage daughter. Stop N Shop, Borders and CVS get the most workout, because they offer the best, most immediate rewards and are more part of my daily habit. I also hear from these retailers the most via e-mail (a few times a week from Borders), snail mail (special mailings from Stop N Shop and CVS), and receipt (instant rewards from Borders and CVS.)

One of the most successful c-store loyalty rewards programs I've seen is operated by Q Marts, of Sheboygan, Wis. (See "Q Mart Reward Program Pays Off" on www.csnews.com.) With only 20 stores, the chain has more than 67,000 members, in a marketplace of approximately 500,000 people. More impressive, the card members actually use the cards and engage in the chain's many vendor-supported offers.

A recent analysis of the chain's business showed Q Mart Rewards members made more than 20 percent of in-store transactions and more than 24 percent of fuel gallon purchases, spending an average of nearly $50 in the store per month and buying 30.24 gallons during that time.

Much like Stop N Shop, Borders and CVS, the chain focuses on the loyalty program in all of its marketing materials -- via Outsite Networks technology at the store, in radio and cable TV ads and in print. The program offers a mix of benefits: discounts; buy-one or buy-some, get one free; and instant rewards.

Now is the time, it seems, for savvy retailers to be leveraging their loyalty programs, which, in the case of Q Marts, at least, is actually building loyalty, rather than simply attracting customers looking to cherry-pick specials.

-- Barbara Grondin Francella

Snuff: A Retro Tobacco Product Making a Comeback

As tobacco use restrictions get stricter, consumers are looking for new ways to get a nicotine fix, and the popularity of some items, including inhaled snuff, is rising. mhtwrnyqp4

It's fairly common knowledge throughout the convenience store industry that as anti-smoking laws become commonplace, smokers will seek other ways to scratch their itch for nicotine.

At CSNews Tobacco Roundtable, held in May concurrently with the Tobacco Plus Expo, attendees named the many products they see smokes trying out -- snus and other pouch products were deemed entry-points, while moist snuff was not far behind.

These products are not the only ones available for tobacco consumers to use when satiating their addiction. According to a report in Wired magazine, dry snuff -- made from tobacco leaves that have been ground into a fine powder -- s making a resurgence as a new generation of hipsters trade lungs full of smoke for a nose full of snuff.

Modern snuff comes in a variety of flavors, and is used by sniffing the product quickly into the nostrils, where it produces a burn — and a nicotine buzz, the report stated. According to a Federal Trade Commission report cited by the magazine, roughly 20 million individual packages of dry snuff were sold in the U.S. in 2005.

“For most, snuff is an alternative to smoking,” Alexander Schardt, a snuff lover from Hamburg, Germany, who runs the popular Snuffhouse.org discussion board, said in the report. “People recognize cigarette smoking is unhealthy, and you can’t do it at work or a lot of other places.”

Snuff is also cheaper than cigarettes. Dry snuff costs between $2 and $5 for a pocket-size container of about seven grams, and one tin can last a regular user several weeks, according to the report.

Innovative retailers looking for the next trend may see opportunity in this niche tobacco product, especially in an environment where smokers find themselves increasingly ostracized for their habit in public places.

What do you think?

-- Mehgan Belanger

Has New Beverage Product Proliferation Gone too Far?

The packaged beverage category may be one of the most innovative in convenience stores. In it, there's the explosion of several new segments, including energy drinks and shots, flavored and functional water, private label products, enhanced beverages, ready-to-drink teas and more.

As this category continues to grow, it is inevitable that there will be some new product success stories, and some that -- despite significant market research and hefty promotional budgets -- fall flat. And then there's the small beverage companies that are vying for space in the cooler, and those that offer some interesting, if not unusual items -- remember the energy drink Cocaine? And there was the equally offensive "Green Card" energy drink; the anti-energy relaxation beverages Malava Relax and drank; and many, many more.

And as the editor at CSNews who handles new product submissions and write-ups, I get bombarded with e-mails marketing the newest innovations for consumer packaged goods products that can be sold in the convenience store industry. So when a new product e-mail came across my inbox for something called MeatWater, I didn't immediately discard it.

The so-called product is called MeatWater, with the tagline "High Efficiency Survival Beverage," and is supposedly made by Liquid Innovation. It comes in bottles that look remarkably like VitaminWater. The press release I was sent included this promotional text for a new line called Wings:

"This is Liquid Innovation’s rapid response to the growing demand for convenient finger-food lifestyle replacement on the go.You’ll fly higher after one sip, and no need for wetnaps after you're done. Just recycle the bottle!"

Flavors for the product included BBQ Wings, Buffalo Wings and Pigs with Wings. The Web site for the product is DinnerInABottle.com, where visitors can explore the other MeatWater flavors, including Beef Jerky, Dirty Hot Dog and Peking Duck, among many others.

The Web site even states: "By drinking Meatwater you can cut down on exercising and eating time, and have more time to enjoy yourself."

Thankfully, it wasn't a virus-laden message, but I was surprised that, in the face of all these increasingly diverse packaged beverage introductions, I had to research the product to make sure it wasn't a fake. Which it was -- and that's a good thing, because I can't imagine that meat-flavored beverages would be very appetizing.

But you never know -- imagine how successful a meat snack/MeatWater cross-promotion could be?

-- Mehgan Belanger

Will Consumers Come Out for 4th of July?

More Americans are planning celebrations this July 4, even as they deal with the recession and recent increases in gasoline retails have caused many to curtail travel, according to the National Retail Federation’s 2009 Independence Day Consumer Intentions and Actions Survey.

With the holiday falling on a Saturday, 144 million people are expected to the July 4 holiday this year by attending or hosting a cookout, barbecue or picnic. (62.6 percent of those surveyed, compared to 61.2 percent last year.) That could be good news for c-store operators, many of whom have suffered through the wettest spring in recent memory.

After 18 days of rain out of the last 22 here in the NYC area, I'm more than ready to fill a few coolers with ice, soda, beer and wine and position my husband in front of the grill as family and friends gather.

But c-store have opportunities outside the ice cooler too. According to NRF's  survey, 14 percent of consumers plan to purchase merchandise this month. I've already impulse-purchased a themed T-shirt for my preschooler and glow sticks to take to the fireworks.

Also, Monday's news that gas prices have apparently peaked may put a few more drivers on the road.

When the survey of more than 8,600 people was taken in early June, the recent uptick in gas prices had caused 44.5 percent of respondents to change their Independence Day plans.

A little sun could finally put people in the mood to move -- and spend.

-- Barbara Grondin Francella

Starbucks Fans Heading to McDonald’s, but This Editor Doesn’t Know Why

A Morgan Stanley & Co. survey of about 2,500 coffee-drinking consumers -- conducted roughly three weeks after McDonald’s May launch of national advertising promoting its McCafe offerings -- found that nearly half of Starbucks heavy users said they also buy coffee at McDonald’s at least once per week. About 56 percent of Starbucks heavy users said they buy coffee from McDonald’s “regularly,” up from 51 percent who gave the same response in a similar survey last August.

Those who are hitting Starbucks less frequently are citing economic reasons. About 31 percent said they are looking for cheaper alternatives, while others, including more than one-third of heavy users, said they were ordering smaller and less expensive items.

Still, the survey found that McDonald’s leads in terms of value and convenience, while Starbucks wins in regards to taste and as “the favorite place” to buy coffee.

Yesterday, I decided to give McDonald’s McCafe a try – and boy, was I sorry I did.

My medium iced, nonfat caramel latte tasted nothing like caramel, but a lot like blueberry – and not good blueberry, I should add. Aside from the poor flavor, the price at $3.89 was just a penny less than what I usually pay at Starbucks, so tell me where is the value?

My McCafe experience was definitely bad news for my taste buds, but I think it’s good news for all you convenience retailers out there. In my opinion, unless McDonald’s improves its McCafe offering, your coffee customers are likely to stay put.

Have you tried McCafe? If so, I’d love to hear your thoughts.

-- Linda Lisanti