convenience foodservice exchange€¦ · •top 50 items sold in convenience stores are less than...

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


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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


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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


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


• 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


Produce

r

Cash N

Carry

Self

DistributionDistributorWholesaler

Jobber

Convenience

Store

Dire

ct S

tore

Dis

trib

utio

n


• 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


• 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

convenience foodservice exchange€¦ · •top 50 items sold in convenience stores are less than...

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