The convenience store channel has always been a vital source of customers and an essential part of market strategy for snack food manufacturers. Each year, the National Association of Convenience Stores (NACS) surveys its members to determine the pulse of the convenience-store channel, including trends, such as what areas/categories are growing, what categories are shrinking, and where are the opportunities for growth are. More than 200 convenience-store operators and owners and industry suppliers recently attended the annual NACS State of the Industry Summit, April 12-13, in Chicago, to review 2004 numbers.  

There was good news for the entire c-store channel, as well as the snack food categories. The number of c-stores increased 5.7% to 138,205 total stores across the U.S. However, the biggest news is that sales were also up 17.1% in 2004 to 394.7 billion. In-store sales alone increased 13.7%.

Last year was good for retailing overall in the United States. According to the U.S. Department of Commerce, total retail sales for 2004 were up by 7.6%. The largest increase was seen in club/warehouse stores with a 13.8% increase (in-store sales, excluding motor fuel

sales). Restaurants increased 6.3%, drug stores by 7.1%, and convenience stores by a whopping 13.7%. On the other side, grocery stores and discount department stores saw a decrease of 1.8% and 0.3%, respectively. Consumers may have lost a little purchasing power in 2004 as overall consumer prices increased 2.7% while overall food process increased 3.4%.

When reviewing the top 10 in-store categories (excluding cigarettes) in c-stores, salty snacks rank sixth, with 5.1% of sales, behind packaged beverages, foodservice, beer, other tobacco and candy. Within the salty-snack category, potato chips represented the largest category with 31.5% of sales. Tortillas and corn chips come in second at 23.5%, nut and seeds at 9.9%, pretzels at 8.0%, and crackers at 5.1%, with all other categories representing approximately 22% of c-store salty-snack sales.

So where are the opportunities for snack food manufacturers? With tobacco sales decreasing each year by nearly 5%, c-store operators are looking to consumables (including snack food products) as a way to increase profits.

NACS hosted a number of “roundtable discussions” focusing on different aspects of the convenience-store business. This presented snack food manufacturers with a unique opportunity to work with c-store operators and distributors to increase sales. I was fortunate to participate in a roundtable discussion between operators, distributors and suppliers to discuss how convenience-store operators could

increase profit of consumables. A number of snack food suppliers, including SFA members, participated. The roundtable participants made some interesting observations.

First, operation and execution are still central issues for c-store operators and their suppliers. The more retailers and manufacturers can work together, through sharing data, collaborating on new products, etc., the better chance of reducing out of stocks (particularly on weekends). Warehouse-distributed suppliers are also looking to better compete with the effective sales and marketing operation of direct-store-delivery companies by developing better end-cap display units.

Second, speed-to-shelf of new items is being lost to drug stores and mass merchandisers. To remain competitive, the industry needs to get new items on the shelf with in 30 days of introduction. And, with an industry looking to increase in-store sales in light of shrinking cigarette sales and decreased margins on motor fuel sales, there are many win-win possibilities for the snack food industry.

These are just a few areas where snack food manufacturers can better work with convenience-store operators and distributors to take advantage of the huge growth opportunities with this expanding channel to increase sales.

As always, we welcome your comments and ideas for future “Up and Down the Street” columns. Please send them to SFA’s Vice President of Communications Ann Wilkes at awilkes@sfa.org or call her at 703.836.4500 ext. 204.