C-Store Report: Innovating Convenience
The image of the convenience-store channel has historically been tied to teenagers popping in for a Mountain Dew and a bag of Doritos, maybe toss in some gummy sour worms and, of course, a Slurpee and some smokes.
However, retailers in the channel seem to be on a health kick going into 2021, as well as on a path to build out their assortments overall, and they are leveraging their store brands to do it.
Casey’s, for example, is undergoing a complete overhaul of its private brand portfolio, more than doubling its store brand SKU count this year already. Eric Long, the chain’s director of private brands, said they have upped the assortment of private brands in the center store to more than 100 and plan to have more than 150 items by end of the year.
The Ankeny, Iowa-based chain of more than 2,000 stores across 16 states is undergoing a brand refresh, too, having unveiled a new store look and logo in October that will be added to the new private brand packages. The retailer said the logo gives the chain a modern feel to reflect its more modern approach to retailing with its growing assortment, popular fresh pizzas, and its digital shopping capabilities with curbside service and more.
Yet Casey’s is not the only c-store chain that embarked on elevating its brand image or began expanding its store brand assortment.
Regional chain Kwik Chek, a touch shy of 50 stores, is underway renaming and rebranding stores to TBX, also known as Texas Born. Executives at the retailer said the change was to reflect its hyper-local focus, bringing in artisan products, and it will include new private brand products starting with staples like jerky, trail mix, coffee and water but aiming for a localized assortment in the future.
Yesway, based in Des Moines, Iowa, added Allsup’s Convenience Stores’ footprint last November with the aim of growing its private brand potential.
“We are definitely building our private label program,” said Derek Gaskins, chief marketing officer for Yesway and Allsup’s. The chain, which operates largely in the Midwest and Southwest, carries more than 300 SKUs in its own brands from packaged beverages, foodervice, snacks, center-store grocery, auto supplies and more, representing about 10% to 20% of the total SKUs carried in the stores, depending on size and format of the store.
Both Yesway and Casey’s leveraged the San Francisco-based platform RangeMe this year to help source new products for its stores as well as suppliers to partner with on private label. RangeMe in general though has seen more involvement from c-stores in 2020 than ever before, according to Wayne Bennett, the company’s senior vice president of retail. While 7-Eleven has been a partner for its Brands With Heart program, this year GoPuff, WaWa, Kum & Go and Fareway joined Casey’s and Yesway, as well as hundreds of smaller independents, Bennett said.
Bennett said based on buyer engagement data and their relationships with key retailers the biggest product focus was on “better for you” confections and snacks, as well as low-sugar and keto-inspired drinks. “Sourcing for own brand initiatives has seen a lift as c-stores continue to contribute to the growth of the store brands sector,” he added.
Private Brand Upgrade
For Casey’s and its new private brand plans, the retailer is bold about its new focus and strategy.
“We have had private brand products in a handful of categories that you would expect to find in a convenience store like bottled water, candy and automotive, but quite frankly we didn’t put any energy behind them,” said Tom Brennan, the retailer’s chief merchandising officer. “We didn’t have any dedicated resources to develop and grow the brand, and it showed in our dated packaging and underdeveloped assortment.”
Going forward, the retailer made store brands a core part of its strategic plan as communicated to its investor community and tapped Long, its new director of private brands, in March. “He has done yeoman’s work in the subsequent months that our guests are beginning to see the results of now in our stores,” Brennan said.
Long said that Casey’s previous assortment of private brand product was the traditional bagged candy, bottled water and automotive products but the new center-store focus includes packaged snack cakes, snack foods, and packaged beverage, carbonated drinks, juices, teas and lemonade. He said the products are national brand equivalent or better and a way for guests to save money.
“Our guests have been used to high-quality Casey’s products coming from our strong food service operation, including our made-from-scratch pizza and other fresh food offerings. We are building on that equity to bring that brand deeper into center store,” Long said.
For Yesway, the company’s private label program develops as consumer needs evolve. “We started with packaged beverages and foodservice initially, but have expanded the past few years into an array of sub categories to drive growth,” Gaskins said. “Quality and value have always been core, and we look to improve our portfolio as it is directly correlated with improving our consumer engagement.” The company’s Allsup’s stores innovate with own brand items in the Mexican food category that complement its popular burrito.
Irving, Texas-based 7-Eleven has been a leader in the convenience store space, especially in private brands, leveraging its 7-Select food and beverage line and 24/7 Life nonfoods products into a $1 billion business. In total, the retailer produces more than 1,500 store brand products.
Amy Werth, senior product director of private brands for 7-Eleven, said current consumer trends “make it an ideal time for retailers to be investing in private label offerings,” adding that consumers are spending less time and money on dining and entertainment, and there is an uptick in cooking, baking and consumption of take-out and delivery that c-stores can leverage.
“Additionally, more customers are focused on value and are open to switching brands more than ever before based on what is easily available in stock,” she said.
Werth noted that in the last year, the retailer saw “significant growth” in its beverage portfolio, launching new products in dairy, isotonic beverages (such as its sugar-free energy drink Triton), while doubling down on staples like water and juice. It also has looked toward convenience, doubling its delivery footprint and adding a pickup option to its 7NOW app, making it easier to purchase its private brands, as well as any other items.
Innovation
Brad Van Dam, CEO of Marich Confectionery in Hollister, Calif., said looking at the food category, c-stores are pushing toward premium healthy, clean-label foods to be a destination beyond convenience, but they’re not shying away from indulgence either.
“With a long history in private label coffee, cold beverages and prepared foods, c-stores have expanded private label rapidly over the past several years and not just in their dominant categories,” Van Dam said. “The range has broadened to include more indulgent products in premium bottled coffee beverages, juices, salty snacks, confectionery and even ice cream, beer and wine.”
Altoona, Pa.-based Sheetz, a chain of 432 stores, has been collaborating with local breweries to launch exclusive craft beers infusing some of its popular store brand items. In time for the holidays, the retailer just launched Project Happy Hole-idayz, a holiday beer that infuses its store brand vanilla donut holes.
Previously, the company worked with other brewers on a beer that added its store brand coffee into an IPA and it launched a beer that had Sheetz’s own brand hot dogs tossed into the brew kettle. Similarly, for the last three years, Wawa has been collaborating with a neighboring brewer in Delaware County, Pa., to create a line of beers that infuse the retailer’s Wawa’s Winter Reserve Coffee blend.
Marathon Ventures, based in Bellevue, Neb., works with retailers on unique flavors of nuts and snacks, and director of marketing Krista Daly said many of the firm’s clients are interested in growing their private brand positioning.
“The c-store buyers we talk to are really excited about the ability to create and maintain consumer interest through innovation,” said Krista Daly, director of marketing at Marathon Ventures. “While we can’t share specifics, we know they want items that take it to the next level in terms of quality, flavor and originality. Exclusives that are ‘only available here’ are also high on the wants and needs list.”
Daly said the convenience channel has been hurt in volume and in-store traffic due to the pandemic but the retailers they work with are resilient and have been creative in finding ways to serve customers through digital technology.
“I feel that private brand manufacturers consistently lead the way in innovation and aren’t afraid to try new things, especially in the c-store channel, where impulse is king,” said Josh Sowell, senior vice president, chief customer officer for SunTree Snack Food. The company works with retailers to produce peanuts, cashews, almonds, trail mixes and some dried fruit, and some recent trendy flavors have included dill pickle, sriracha, and variations on ranch and chile limon.
But he said healthier concepts “that still scream delicious and are snacking oriented” are the products c-stores are looking to add. Van Dam of Marich Confectionery echoed and said there’s a push for better-for-you products and “treasure hunting” where consumers can find the latest on-trend items.
“We’ve been supplying grab-n-go ‘healthy snacks’ as private label items,” said Kayden Lee, executive director for Daily Nuts and Fruit, based in Palmdale, Calif. “As c-stores are getting more traffic, they’ll want to expand their selection with unique, healthy-driven items, since not only consumers are now visiting c-stores for small grocery shopping, [they] are tired of waiting in long lines at traditional retail/grocery stores.”
Future Potential
Because c-stores can work under a franchisee model, carry a limited assortment and have less shelf space, the channel presents its challenges compared to other channels.
However, Sowell believes that as c-stores grow and more consolidation occurs, the need for a consistent private brand strategy is paramount. “It is very important that c-stores market themselves both on the outside but also within their private brand strategy,” he said. “Many of these retailers know that this is where true growth lies and creating that destination of products drives customer loyalty and engagement.”
Lee said unlike supermarkets, c-store channels have previously not been a destination for shoppers looking to “treasure hunt” for unique items and have been more conventional but that’s where it’s changing. “There is so much upside for growth,” Daly noted. “Over time, we will increasingly see c-store private brands owning more and more of the snack set. It will be really exciting to see what they do with the space.”
Van Dam said as private label grows across all channels, particularly among younger shoppers, c-stores are poised to grow. “Retailers at all levels have continued to shift toward upgraded, creative, well-positioned products and — current generations (particularly Y and Z) have had a completely different experience with private label and as such they are very open to — and in many cases — prefer private label,” he said.
“Given c-store’s agility and intimate data on product performance and consumer preferences, they have an incredible opportunity to drive focused assortments, develop and differentiate and truly be market-leading innovators,” Van Dam added. “This isn’t your grandfather’s private label.”