Convenience Stores Embrace Private Brands
Within the convenience store model, convenience remains, naturally enough, the most important element that retailers in the channel provide their customers. However, the ever-evolving retail landscape that includes more shoppers focused on the value proposition of what they buy continues to open new opportunities for growth of store-brand products.
In recent years, expanding own-brand selections within the grocery, mass merchant and dollar store channels has propelled growth across the private label industry. Now, convenience store retailers are ramping up their product development efforts to evolve their respective assortments and add more store-brand items across many product categories.
“We’re definitely seeing continued momentum in the convenience channel this year,” affirms Chelsey Capps, director of thought leadership at Stamford, Conn.-based Daymon. “While the channel is not immune to the pressures of inflation, we continue to see dollar and units in convenience outpace the total market, most notably grocery and drug.”
A growing number of retailers within the convenience channel are sharpening their focus on their private label offerings and investing more in product development. As with retailers in all channels, the goal is to provide quality products at a value, with differentiation an added key to success.
“What’s interesting in the current marketplace is that quick-serve restaurants continue to raise their prices,” says Capps. “Consumers are looking for alternative solutions that deliver a better overall value. For C-stores, this is an opportunity for them to execute their own programs and deliver with ownable product offerings.”
Quality and Value
Taking advantage of opportunities of current-day macroeconomic conditions is a factor driving private label growth at Irving, Texas-based 7-Eleven. According to Nikki Boyers, VP of private brands for the C-store chain, the retailer wants the 7-Eleven family of brands to be the convenience food destination of choice for consumers.
“This means placing an increased emphasis on our private brands,” notes Boyers. “More than 87% of U.S. consumers chose private label products. Our private brands provide a huge differentiator for us to deliver on customers’ quality and value needs.”
For its 7-Select own brand, Boyers says that the retailer’s goal is to provide its shoppers with high-quality, differentiated products at a value. Popular categories include water, sports drinks, juices, teas and snacks.
Officials at TXB are also focused on value as the Spicewood, Texas-based convenience store chain works to expand its private label assortment. Over the past year, the retailer has grown its assortment with the addition of a hydration line, new flavors to its Nitro coffee assortment and the launch of a new peanut line.
“There is definitely a trend more toward value shopping, and we are doing a lot of promotional activity through our loyalty program,” asserts Kevin Smartt, CEO of TXB. “People are shopping much smarter, given the disposable income that’s in their pockets.”
With the focus on value, Smartt adds that TXB has seen a growing demand for multipacks, particularly in beverages, and a significant uptick in products that the convenience store chain positions as high-value offerings.
“The good news for us is that we have offerings for both,” he says. “We remain focused on providing quality products and also a commitment to a positive shopping experience that has allowed us to continue seeing positive traffic.”
The Evolving Shopper
Meanwhile, Capps points out that the ever-changing behavior of shoppers, which seems to evolve at a more rapid pace than in prior years, offers convenience stores opportunities to develop unique products and further build out their private brands.
“We know the value equation is changing, but as it changes, we see retailers continuing to keep their foot on the gas pedal as it relates to bold flavor development, convenient pack sizes and finding ways to expand a portfolio offering beyond just the basics,” she says. “Retailers that are investing in private brands are also investing to keep shoppers satisfied with better overall value, and meeting shifting shopper needs that live up to the quality expectations shoppers have come to know and expect.”
At 7-Eleven, Boyers notes that the focus is on providing private-brand products that are higher in quality than national brands, at a better retail price for shoppers. With the retailer offering more than 900 store-brand items across 50 categories, the convenience store chain’s product developers source quality ingredients to create differentiated products for its assortments.
“We partner with manufacturers to produce these new and innovative items that are the first to market, the best in the market and/or exclusive to 7-Eleven stores,” she adds.
An example of 7-Eleven’s effort to develop unique, quality items that Boyers cites is the convenience store chain’s collaboration with Miracle Seltzer on the launch of a sparkling water line sold under the 7-Select brand.
The assortment, which features such flavors h as lemon-lime, green apple and sweet orange, was also used by 7-Eleven in an April Fools marketing campaign that included its Big Bite Hot Dog. The prank included hot dog-flavored sparkling water. This hoax served to generate awareness of the quality and innovation of the 7-Select line, according to Boyers.
At TXB, Smartt notes the growing trust and confidence that shoppers have in private label products has given the convenience store chain more freedom to be adventurous when developing new products.
“From the beginning, we’ve taken the viewpoint that we want to create quality products for our private-brand assortment, and we want that to be the perception in the consumer’s mind,” he says. “When developing products, we’re always looking for uniqueness in terms of flavor, package size, etc. It’s all about creating a quality brand that offers some differentiation.”
Part of the strategy to set itself apart from other retailers is TXB’s non-consumable private-brand product line. This includes such items as apparel and hard- and soft-sided coolers, among other products.
Putting Products to the Test
“We’re pretty active in seeking out new products and going through the process of testing and vetting of potential product suppliers,” says Smartt. “We not only want to get the product right but make sure other issues, such as packaging designs and logistics, are all in place.”
The momentum enjoyed by private-brand product growth seen in recent years through the convenience store channel is expected to continue. For example, 7-Eleven’s Boyers notes that the retailer is placing an increased focus on proprietary beverages and fresh food, along with private brands.
“We plan to introduce more than 200 new private-brand items across the portfolio this year,” she says. “We will also enter new categories, including energy, frozen food, sparkling wine and prosecco, and rapid hydration.”
