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CONVENIENCE FOODSERVICE EXCHANGE
August 2016
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• Increased Focus on Health and Wellness
• What’s Winning in Convenience
• Distribution and Shelf Life Challenges
• Recommendations
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AMERICANS ARE MORE FOCUSED ON HEALTH & WELLNESS
Prepared for: Strategic Health PerspectivesBase: All US Adults (2016 n=30049)Source: Q870: In a typical week, on how many days do you do vigorous physical exercise?; Q885: Which of the following describes your approach to eating?
Exercising 3 days a week on average
63% are trying to eat healthier
45% read food labels to make
healthier choices
49% are consciously eating more
fruits and vegetables
68% have gotten health
information online
85% have seen a doctor at least
once
HEALTH & WELLNESS DRIVERS
AGING POPULATION
RISING HEALTHCARE
COSTS
INCREASE IN CHRONIC DISEASES
DEMAND FOR FOOD
TRANSPARENCY
TECHNOLOGY ACCESS
DUE TO THE CONVERGENCE OF SEVERAL MACRO FACTORS
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FRESH AND CONVENIENT STYLE PRODUCTS ADAPT AND GROW
Source: Nielsen Homescan Consumer and Shopper Ailment Panel , Nielsen AOD, and Nielsen FreshFacts Data
% of shoppers who ranked important in influencing purchase
Fresh is growing 2.5x faster than non-fresh departments!
Products are changing to suit consumers increasing need for fresher, healthier, and more convenient choices.
Faster Fresher Better
24% One 34% Two 29% 3-4
30% Income
$50-$100K
24% No
Female in HH
LIFE
STA
GE
AN
D S
TYLE
HO
USE
HO
LD
SIZE
OTH
ERFA
CTO
RS
15% Independent
Singles
16% Established
Couples
16% Empty Nest
Couples
19% Comfortable
Country
18% Modest Working
Towns
25% Plain Rural
Living
OVER INDEX
70% No
Children
Source: Nielsen Homescan Consumer and Shopper Panel Data
2014 2016
START UP FAMILIESHHs GREATER THAN 1
CONVENIENCE HAS INCREASED $ INDEX
CONVENIENCE HAS DECREASED $ INDEX
EMPTY NEST COUPLES NO FEMALE IN HOUSEHOLD
STRUGGLING URBAN COREINCOME <$20K
YOUNGER BUSTLING FAMILIES
COMFORTABLE COUNTRYINCOME >$70K AGE +65AGE UNDER 35
2015
Source: Nielsen Homescan Consumer and Shopper Panel Data
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*alcohol omitted
Source: Nielsen AOD Data w/ Wellness Track
Highest Absolute $ Growth- All Highest Absolute $ Growth-Fresh Fastest Growing- All
Energy Drinks
Import Beer
Liquid Coffee
Fresh Pastries
Pre-SlicedVegetables
Frozen Pancakes
BreakfastSandwiches
Snack Cakes
Breakfast Sausage Biscuit
Cheese Appetizer
ChickenSalad
FrozenCustard
Refrigerated Sandwiches
19% Of Dollar Growth in Convenience is from FRESHFresh represents 11% of dollar sales*
Salty Snacks $6.5B, 2.4% ($ growth vs YAGO)
Gluten Free Salty Snacks$1.3B, 56.1%
Natural Salty Snacks$174M, 19.8%
No Artificial Colors/Flavors Salty Snacks
$474M, 37.2%
Salty Snacks
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2014 2016
FRESH CONVENIENCE HAS INCREASED $ INDEX
1/3 of Households
Spend
12% More on Total Store
per year than Average Shopper
5% More on Fresh
Spend
9% Of Total Store $s in
Convenience, but only
2% of Fresh
Spend
6% LessOf Annual spend
in Grocery
NO FEMALE IN HOUSEHOLD
AGE UNDER 35YOUNG
TRANSITIONALS
STRUGGLING URBAN CORE
START UP FAMILIESHHs 3-4
INCOME >$100
Source: Nielsen Homescan Consumer and Shopper Panel Data
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AT GROCERY, THE FRESH CONVENIENCE SHOPPER PURCHASES MORE ________ THAN THE AVERAGE SHOPPER
THEY COULD BE PURCHASING MORE _______ AT CONVENIENCE STORES
DoughnutsDecorated Cakes Bakery Cookies
Cream PiesSpecialty Desserts
Cut Up Mixed ChickenChicken Wings
Frozen PorkFrozen Steak
CatfishCrab
Shrimp
Produce Nuts/ Seeds
*Under Indexed for All Produce
Deli Prepared Hot DogsDeli Prepared Chicken
Deli DessertsDeli Prepared Sandwiches
Deli PizzaDeli Beverages (Coffee/ Soft Drinks)
Pre-Sliced Cheese- Mozzarella, Jack, ProvoloneClerk Served Bologna
Clerk Serve Mozzarella and American
DoughnutsDecorated Cakes Bakery Cookies
CupcakesCheesecakes
CroissantsCream Pies
Cut Up Mixed ChickenChicken Wings
Frozen PorkFrozen Steak
Fresh BerriesPackaged Salad
Fresh ApplesFresh Citrus
Value-Added Fruits and Vegetables
Deli Prepared ChickenDeli Desserts
Deli Prepared SandwichesDeli Prepared Salads
Pre-Sliced Cheese-Jack, Provolone, MozzarellaPre-Sliced- Bologna
Source: Nielsen Homescan Consumer and Shopper Panel Data
Distribution Challenges
• Top 50 items sold in convenience stores are
less than 1% of total items available but
equal 33% of sales dollars• Market share for fresh is small (now)
• 154,000 convenience stores in U.S.• 63% single store operations
• Most likely to pick up at cash ‘n’ carry
location
Distribution Challenges
• Issues Encountered• Cold chain break
• Out of stocks
• No lot tracking
• Hidden costs
• Labor necessary to pick up
• Pack sizes incorrect for market
• Lag time on fresh items (quality)
• Delivery is all about economies of scale• Drop size
• Frequency
Distribution Challenges
Produce
r
Cash N
Carry
Self
DistributionDistributorWholesaler
Jobber
Convenience
Store
Dire
ct S
tore
Dis
trib
utio
n
Distribution Challenges
• Lack of physical access to quality produce
suppliers
• Minimum purchase requirements
• Distance is too great• Rural stores can’t afford delivery fees
• Requires refrigerated trucks
• Price of quality produce is prohibitive
Distribution Challenges
• Owner perception that customers don’t want
produce at a convenience store
• Cultural barriers• Language barrier
• Want produce specific to cultural diet
• Understanding price fluctuations due to
market conditions
Distribution Solutions
• Develop partnerships with distributors that
already deliver non-perishable products to
store (i.e. frozen foods)
• Cooperative purchasing agreements –
“power in numbers”
• Consumer’s sensitivity to price may be
changing • Consumers willing to pay more for desirable
attributes
Shelf Life Challenges
• Produce deteriorates more quickly than
heavily processed foods
• Lack of specialized knowledge regarding
produce handling
• May not be able to predict demand for
produce
• Lack of up-to-date refrigerated equipment
• New shelf life extending packaging and
processes
Shelf Life Solutions
• Choose pre-packaged produce rather than
whole produce• Shelf life increased due to packaging
• More enticing to customers
• Looks more convenient to eat
• Requires less handling to “make it look pretty” in
display
• Food safety
Shelf Life Solutions
• Provide initial training to store owner/staff
• Provide promotional items/signage
• Healthy corner store initiatives• Provide financial incentives and assistance to
stores
• Healthy Corner Stores Network
• Health Food Financing Initiative
Recommendations
• Communicate with store owners about their
priorities• Pricing
• Initial cost outlay for equipment/infrastructure
• Ease of procurement
• Merchandising
• Come up with a plan that addresses
concerns and profits everyone
• Questions
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MOVE THE NEEDLEReach new shoppers by
aligning assortment
Grow sales with existing shoppers having the products they need
CHECK THE DATAOne size does not fit all.
What products are growing with your shoppers?
What do they purchase elsewhere?
What claims are important to them?
MONITOR THE MARKETHow shoppers shop is constantly changing
Keep an eye out for changing consumer
preferences, and adapt to the market
Source: Nielsen Homescan Consumer and Shopper Panel and Nielsen AOD Data
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