The Convenience channel represents an important volume footprint within the retailing environment. For some manufacturers, it accounts for a significant portion of total portfolio business that requires diligent efforts to defend and grow. For other companies or categories, it can, and very often does, represent an undeveloped growth opportunity.
When determining if the Convenience retailing channel offers growth and expansion opportunities for your product or category, there are six basic questions that need to be explored and answered. In this article we will cover two of these six foundational questions.
1. Do your core consumers even patronize the Convenience channel?
If your company has its sights set on the Convenience industry, the first question you need to ask is do your core consumers even patronize the channel, and if so, to what extent? To answer this question, you will want to know if your competitors are selling in convenience. If they are, how well are they doing and is there room and rationale for category expansion? Or, are there compelling business reasons that a retailer should stock your product instead of the competition’s product?
If the category is not represented, it is essential to invest in custom consumer research to determine if your target audience shops the convenience channel. Companies that fail often lack the insight on both their consumers and the convenience industry. Out of 140,000 Convenience sites, more than 90,000 are independently owned and operated with varying levels of consumer loyalty and distribution models.
For example, consumers who frequent Wawa or Sheetz may be loyal to those particular brands based upon their innovative coffee, foodservice, or snack offerings and may not patronize any other convenience markets. Wawa and Sheetz in the East have targeted their offerings for primarily ready to eat, ready to drink and on-the-go snack offerings. In slight contrast, Kwik Trip of Wisconsin has different positioning which includes more fill-in grocery and take-home packaged products like sirloin steaks and now take-home meals. While Kwik Trip also services the ready-to-eat market, they can stock and sell a broadened array of items due to their expanded positioning and unique consumer base. An entirely different type of consumer altogether will be the one to follow a specific fuel retailer based upon their well-known fuel brand. Understanding the nuances of a retailers consumer segmentation can help drive placements and product throughput.
Making an initial investment of time and money will ultimately save you time and money in the future. Although many industry professionals have launched credible products and categories in convenience on the basis of gut instinct, gut instinct alone will rarely, if ever, gain acceptance with a retailer’s merchandising department. Insights trump instincts most every time.
2. Are your manufacturing assets capable of producing to channel needs?
Assuming the case has been made that the Convenience channel represents an opportunity, you may move on to the next key question: Is your manufacturing footprint capable of producing the pack size needed to hit key size and price point benchmarks? Typically, the on-the-go consumer who typifies convenience shoppers will be looking for a modified, easier to consume configuration (think eating while driving). Maybe you are in the enviable position that the pack size used in grocery or other channels will fit nicely. If not, your manufacturing team will be facing an age-old packaging dilemma.
Reconfiguring packaging often requires time consuming, costly line modifications or even an investment in new production line capabilities. Then the question becomes, can we sell enough to cover the added production costs? Of course, one alternative is to pursue co-packing options but they come with their own set of management considerations such as cost, quality, production capacity, and product safety.
To revisit our examples of Wawa and Sheetz in relation to this question, their consumers are notably “on the go” whereas Kwik Trip has positioned itself as a small grocery outlet capable of selling multi-packs in addition to single servings. Understanding the retail community to that degree will help you create your appropriate go-to-market plan.
If you can give a ‘thumbs-up’ to these first two critical questions, the next set of challenges involves how to sell to the convenience channel and how to overcome logistical distribution challenges. Know this, it is an entirely different equation, or set of challenges than selling and shipping to other retail channels and will be the subject of future articles.
Jay Price spent over 30 years in the CPG industry, 21 years working for Kraft-Nabisco where he held numerous, executive level sales and marketing roles. His broad CPG industry experience lends far-reaching insight to provide Business Accelerator Team clients with a foundational understanding of production-driven, sales-development growth planning.
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