Convenience Report: Driving Growth
Sales of private brand products across numerous categories continue to grow as mass merchants, grocery stores and home retailers among others have their respective product development pipelines running at full-speed.
Joining this movement are convenience stores. Several leading C-store chains either have in place or are ramping-up strategic plans in an effort to boost their assortment of private label products.
And their motivation is clear: They’re not looking to simply offer their shoppers lower-priced national brand equivalents (NBE). They are using this opportunity to develop proprietary products that will further build loyalty with those walking through the doors.
RELATED: The opportunities for convenience stores to further grow private label assortments.
When looking to grow private label assortments, industry experts say it’s important for C-store operators to focus on how they brand their products, and then how the products are marketed to consumers.
“It has to start with the brand and offering a clear picture of what the brand stands for,” said Kay Segal, founder partner at the consulting agency Business Accelerator Team. “Once defined, that leads right into the marketing strategy to promote the brand. And it’s important to go beyond just having an alternative water or alternative candy selection.”
Retailers were clear in their desire to develop private brand assortments that offer products not found at other retailers and provide shoppers something different than the national brand items already on their shelves.
“Our goal when developing our private label assortment was not to be necessarily sourcing products,” said Kevin Smartt, chief executive officer of TXB. “We are trying to offer products that are high quality and unique either in flavor or in packaging size. We want to offer something that gives us some differentiating factors from the other CPG brands we are selling.”
With those guardrails in mind, TXB’s private label assortment – which is sold under the TXB brand – has grown to the point that today the retailer has a strong pipeline of products that include a host of items such as meat snacks, juices, water, a rehydration beverage line and coffee.
Similar to TXB, the private brand product development efforts at Love’s Travel Stops has been focused on unique products that allow the retailer to differentiate from its competitors. But first, merchants focused on growing the company’s private label assortment developed a communication strategy to raise awareness of own brands internally, said Casey Creegan, manager of Merchandising at Love’s Travel Stops.
“We had to educate folks within our company as to why we needed private label products, their importance, and why it is important to focus on quality when we do private label, especially when we’re putting the Love’s name on these items,” she said.
A key product in its private brand assortment has been its bottled water program, sold under the Love’s brand. The water, Creegan said, has an eye-catching label design and is one that shoppers often include in photos they post to Instagram.
“It’s been a good branding and marketing piece for us,” she added.
At Casey’s, the growth in private brands over the past three years stems largely from a strategic plan that was put in place in early 2020. And inspite of the challenges the pandemic presented, the convenience store has moved forward and continues to see growth.
“We knew it was really critical for us to continue to offer affordable, high-quality choices to our guests,” said Tom Brennan, chief merchandising officer with Casey’s. “Our customers know us for our high-quality pizza that we make from scratch, so we know that anything we put the Casey’s brand on absolutely has to deliver on quality.”
Today, Casey’s has hundreds of products in more than 27 categories across the store. And differing from others in the C-store space, Casey’s opportunistically has developed sub-brands for specific product categories. For example, its selection of UP water is positioned as a premium product in the category. It also features a selection of ice cream in pint sizes sold under the Happyness By The Pint brand.
“Most of our private label products are sold under the Casey’s brand, and we also include the Casey’s name on our sub-branded products as well,” he said.
Driving Sales
With C-stores in growth mode, they are building the assortments off of recent successes. But what factors have been key to the success? TXB’s Smartt said there are several factors to the success of private brand products at his stores. They include strong packaging design, product quality and the uniqueness of flavors offered. And he’s received positive feedback directly from shoppers during his visits to stores across the chain.
“People have stopped me to tell me how much they love our rehydration products or other unique items we have developed,” Smartt explained. “It’s so exciting to get that type of input directly from our shoppers. It tells me that our team is on the right pathway.”
Echoing Smartt, Creegan said the private brand success at Love’s stems mainly from the company’s focus on providing quality products. In fact, the convenience store puts quality ahead of price as part of its effort to ensure its customers have quality products from which to choose.
“We would rather pay a little higher price and take a little bit of a margin hit to make sure we have top quality products in our private label assortment,” she said. “We also work with our analytics team to make sure we are getting the prices right on our items.”
At Casey’s, Brennan attributes the company’s success in private label to a process that is disciplined.
“You have to make sure that you have some non-negotiables when it comes to products that you’re going to put your brand on,” he said. “And that, obviously, starts with quality. And then you also have to make sure that the product pops on the shelf.”
With a focus on not just doing products that are NBEs, Brennan said Casey’s works identify white spaces across all categories that provide opportunities to develop unique items. When an opening is targeted, the company goes through a review process to see what type of products it can get in front of its shoppers.
“We know not everything is going to be a hit,” he said. “But you will never know what will be a success until we get the products in stores.”
The Future
With success comes a desire for future growth, and officials with TXB, Casey’s and Love’s are each looking forward to new opportunities to grow their respective private brand assortments.
Smartt at TXB identified several categories for growth including energy drinks, nuts and seeds, trail mix, granola bars, a new line of candy and additions to its popular general merchandise assortment that includes shirts and hats.
“We are always looking and always trying to develop as we work to expand the list of products in our pipeline,” he said. “And we’re also like any manufacturer of products. We go back and evaluate our existing products to see what is working and work to take out the slower movers. We’ll bring in new flavors to test and keep what works and remove what doesn’t.”
Creegan and her team also have their eyes on new opportunities, which includes expanding its non-consumable product offerings such as mobile comfort (neck pillows and blankets) and various items in the travel gear category. On her radar in consumables are a variety of products including jerky, cold press juice, sunflower seed and homestyle pretzels.
Brennan is bullish on what’s ahead for private brands at Casey’s, calling the future “very bright and exciting.” Store brand products currently account for more than 9% of unit sales and gross profit dollars in the company’s grocery and general merchandise unit, and that number is expected to grow.
And the next big thing at Casey’s in private brands? Liquor.
“We’re excited about what the initial launch is going to look like and the future opportunities in the category,” Brennan said. “As we continue to grow our private label assortment, we will continue to leverage our brand because we know our customers understand that products sold under the Casey’s brand provides them with high quality, affordable products.”