An Inconvenient Truth (In Retail)

How we can continue to redefine the Convenience channel

Late last year, the largest convenience retailer in the world, 7-11, with near 72,000 stores, hit an amazing milestone of selling over $1 Billion of Private Brands annually. This is quite an achievement, and their 1500+ sku portfolio in own brands also shows great progress considering they only had 87 items just 13 years ago.

I love it, and congratulations to them and the other leading convenience store chains that are investing in Private Brands.

Now here is an inconvenient truth… The success could be far greater for Private Brands and CPG brands if they wanted to push the envelope even further. The convenience channel is full of potential and continuing to advance the sensory environment, healthy positioning, and technology in-and-out of the store will all have the effect of enhancing own brand growth.

The Environment Dictates Product

I learned a cruel lesson twenty years ago in working to develop Pathmark Preferred, which was an ultrapremium segment we were fashioning for the now defunct retailer in the New York area. Pathmark was known as a value operator, and “Preferred” was designed beautifully, both the product and packaging. The unfortunate reality was that it was really overdesigned ---- the consumer didn’t believe it could come from Pathmark.

You can apply this inconvenient truth to many Convenience Store operators. The store environment goes a long way in dictating the credibility of your offering. If your checkout counter screams energy drinks, cigarettes and candy, with a dilapidated store employee at the register, it is tough to sell a lot of healthy products and develop a reputation similarly for fresh, natural or organic (even with a bunch of bananas on the counter).

It is also tough to develop a familyfriendly environment or one where you want to linger when you don’t feel entirely safe. Well situated lighting, not just in the parking lot but inside the store itself, is a sensory element that must be created before you think futuristically about what type of product you can wedge inside the four walls.

Your store environment matters, and in the end, it must be complementary and enhance the portfolio you are trying to sell.

Destinations & Sensory

There are destinations that convenience store retailers have established that are meaningful and lead the way in the channel. Wawa and Sheetz get many accolades and justifiably so, as their destinations and private brands are intimately intertwined.

Many shoppers regard Sheetz’s coffee as a must-have destination that starts of their day, and it obviously builds a daily ritual as consumers become attached to it.

Wawa has developed a different daypart ritual around their sandwiches, which honestly put any Subway or Jersey Mike’s to shame. Clean environment, high-tech ordering, delicious product with a wide selection.

PERRY SEELERT

Strategic Partner and Co-founder

EMERGE

I also like the way 7-11 has not abandoned the Slurpee and Big Gulp as iconic brands, but taken a hugely important, high-touch category like Bottled Water (a top 10 category in any convenience store) and chosen to own it through their private brands, creating Serafina, Pure Water and Skyra. This may not be a destination per se, but it is intelligent ownership of a major go-to category. They are a leader in beverages. When destinations are intertwined with own brand and are also sensory, this is rarified air. Smelling coffee aromas, the scent of freshly baked bread all in a well-lit environment goes a long way to building loyalty, especially when many shoppers’ have negative sensory associations in their convenience store experiences that have been cultivated over time (thinking about the lingering smell of gas or chronically dirty bathrooms). Nuts, dried fruits, trail mixes, protein bars are enormous categories in grocery stores and club stores, and they should be in convenience stores too (definitely through private brands). There is no greater Yogurt section in the U.S. than in Wegmans, and I am surprised that more Convenience stores haven’t developed own brands in this category. Cumberland Farms has in the Northeast U.S., and certainly if you look to 7-11 in Asia (this example is from Taiwan), you can see the potential. I believe the key for Convenience Stores in developing private brand healthy products is ensuring that they are truly in high frequencyhighly consumable segments and don’t live too much on the fringe.

A Healthy & Fresh Future

There is an art and sequence to pushing “healthy” that the convenience channel is learning as they go. Gluten-free mayonnaise, organic cold-pressed juices and the like might be a little ahead of their time.

Technology & Speed

Have you ever been to a convenience store that is inconveniently slow, not to mention has a long line? Most shoppers have. Technology in convenience stores doesn’t necessarily mean having a cashierless store (like 7-11 has developed in Taiwan), but it can enhance ordering in the store or even through their app.

Wawa does this brilliantly in their deli-sandwich section, and the technology adds real speed and specificity (you order exactly what toppings, condiments, style that you want) to the entire experience.

Private Brands in the Convenience channel are a work-in-progress, but the potential is there for continued growth and even destination development. Remember that in this channel especially, the sensory environment dictates product, and own brands that you develop have to credibly take into account lingering equities and the realities of your presentation. You can’t create a Pathmark Preferred, as beautiful as it might be, if your sensory vibe doesn’t complement it, so give your new product pipeline a real consumer sniff test.

Pery Seelert is a retail branding and marketing expert, with a passion for challenging conventional strategy and truths. He is the Strategic Partner and Co-founder of Emerge, a strategic marketing consultancy dedicated to helping Retailers, Manufacturers and Services grow exponentially and differentiate with purpose. Please contact Perry at perry@emergefromthepack.com