C-Stores Rev Up Private Brands
Powdered sugar mini-donuts, in 10-ounce bag, are one of 15 new packaged bakery items now available under the 7-Select brand.
The leading convenience store operators in North America
are appealing to consumers on the move with new lines of
grab-and-go groceries under their own store brands.
The average time it takes a customer to walk in, purchase an item and depart is between three to four minutes, according to research from the National Association of Convenience Stores. Indeed. Convenience stores have expanded their offerings over the last few years, with stores becoming part supermarket, restaurant, gas station, and even a bank or drug store, notes NACS in its State of the Industry data.
7-Select Grows Offerings
Following the 2008 launch of its new private label line of snack items under the 7-Select brand, 7-Eleven, Inc., Dallas TX, has grown the 7-Select brand line to include 265 food and nonfood products at the end of 2009. The number of items under the brand is expected to increase to 300 SKUs in 2010.
During the 4th quarter of 2009, the c-store franchisor expanded its hot foods program to include four-cheese and pepperoni pizza –whole or by the slice – white-meat chicken tenders and three varieties of chicken wings – spicy, breaded; Asian; and barbecue. The hot foods program using new combination radiant heat, microwave, and convection ovens was rolled out to 1,400 7-Eleven stores by the end of 2009. The hot food program also includes breakfast items such as sausage, egg, and cheese quesadillas and hash browns.
“Food service is our future,” said 7-Eleven spokeswoman Margaret Chabris, in an interview with The Dallas Morning News at the time of the October launch in the Dallas market. “We realized this in the 1990s with declining tobacco sales and rising tobacco regulation.” She said hot food – which began as a test in 2007 in Salt Lake City – accounts for 30 percent of the brand’s food offerings, which also include fresh fruit, salads, and sandwiches. “Customers want speed, value, and convenience, which is our niche,” said Chabris. “We see a big opportunity with hot foods.”
New Packaged Baked Goods
Also during the last quarter of 2009, 7-Eleven expanded its 7-Select brand line to include 15 packaged bakery items including snack cakes, pies, mini-donuts, and breakfast pastries. At present, some 5,700 stores are participating in the new sweet snack line. 7-Eleven operates, franchises or licenses about 7,850 stores in North America.
To introduce the new snack cakes and sweet treat, participating 7-Eleven stores offered the single-serve items at a special discounted price of 99 cents through the end of last year. The items each have a recommended value-price of $1.19 starting in 2010. The suggested retail price for the 10-ounce bag of mini-donuts is $1.99.
The new line of bakery items has been in development for more than a year under the supervision of Joe Hermes, 7-Eleven senior product director for bakery and produce. “Customers who turn to private label are looking for better values and ways to save money,” says Hermes. “But just saving money isn’t enough to keep them as repeat purchasers. Our goal was to match or improve on the taste and quality of the baked goods by the national brands. If you can do that and save a customer money, they’re more likely to become loyal to that product.
In blind taste tests, the new 7-Select line of packaged bakery was preferred on average three-to-one over its national brand counterpart. Hermes notes that new snack cake items are also in development for introduction in 2010, including seasonal specialties.
New 7-Select Director
El Mero is Ampm’s new brand for Hispanic snacks. Seen here are mango fruit snacks.
To oversee product development for the 7-Select brand across all categories in the store, the company has appointed Tom Gerrity as the new senior product director for private label products. Gerrity played a lead role in organizing the company’s first-ever Private Label Summit held in Dallas in Q4 2009. The two-day event provided 35 private label supplier companies a forum to meet with category managers and product directors. “Our suppliers told us they’ve never had this kind of business relationship and really believe 7-Eleven wants true partnership with them,” notes Gerrity. “They are committed to grow with us, assist in bringing more new and innovative products to the market and help us find ways to raise consumer awareness about the 7-Select brand. Suppliers and 7-Eleven are focused on driving out costs to help franchisees maximize their gross profits.”
Seven & I Holdings Co., Tokyo, Japan, the parent company of 7-Eleven convenience stores, in Q2, 2009, announced plans to begin sales of its own-brand products outside of Japan through its global franchise system. Seven & I which includes 36,000 7-Eleven convenience stores worldwide and which sells own-brand items at its Ito-Yokado supermarkets in Japan, says it expects strong demand in other markets and hopes to reduce procurement costs through this expansion, according to a press report from Reuters. Seven & I expects its own-brand sales to increase 60 percent to 320 billion yen in fiscal 2010 ending in March, according to the report.
In its first foray into global merchandising, 7-Eleven in the U.S. and Seven-Eleven Japan, in Q4, 2009, announced the joint introduction of two proprietary wines – a chardonnay and a cabernet sauvignon –under the Yosemite Road label. These California wines are produced exclusively for 7-Eleven stores and its parent company, Seven & I Holdings Co.
Ampm Expands PL Lines
BP America Inc., La Palma, CA, operates the third largest convenience store chains in the U.S. under the Ampm [ampm] store banner consisting of more than 1,200 locations throughout the country.
Ampm launched its first private label offerings in 2005 with its Deluge [déluge] water brand and Unbound energy drink. From there the franchisor has moved on to develop Essence brand ready-to-drink iced tea, and Shadow Hills nuts, seeds, and meat snacks as well as multiple fountain soft drink flavors. “Our focus is deliver differential products to our consumer, giving them another reason to choose ampm versus one of our competitors, as well as to provide a margin advantage for our franchisees,” says Jon Bratta, director of proprietary brands.
Ampm stores offer private brand drinks including Deluge spring water and sports drinks, Unbound energy drinks, and Essence iced teas.
“Ampm utilizes several different methods to promote our products,” says Bratta. “We bundle them together at a promotional price, we utilize coupons, or even send text blasts to our consumer database to promote the products. We also utilize signage to draw attention or educate the consumer about our items at the point of selection for the customer.”
Ampm recently launched a private label line of snacks designed to appeal to the Hispanic market under the El Mero brand. “We will evaluate consumer response to these items and respond appropriately,” says Bratta. “We expect they will be well received, as the product tastings and branded concept testing we conducted prior to launch were very positive.”
The company also plans to launch a value-priced line of snacks under the Goodstuff brand in Q1 2010. The initial offering will include nine bagged candy SKUs. “Once we measure consumer response, we will evaluate other items to be added to that label,” says Bratta. “We also expect these items will do extremely well with our customer base.”
Ampm stores currently generate about $1.4 billion in in-store sales (not including gasoline). According to the franchisor, Ampm prides itself on being in the forefront of increased focus on private label within the convenience store channel. “An ampm store is like a snack food theme park where customers can go to indulge their cravings and snack with abandon,” says the company in a press release announcing its selection as one of the Top 10 Franchises in 2010 by Entrepreneur magazine.
The Ampm brand was founded in 1978 in Southern California by Atlantic Richfield (ARCO), which was acquired by BP in 2000. The parent company, BP p.l.c., is based in London, in the UK.
In the spring of 2008, U.S. branches of the BP Connect brand of convenience stores rebranded to Ampm, which also brought the brand under the BP banner after exclusively being under the ARCO banner, according to information posted on Wikipedia. The subsequent decision saw markets with a large BP presence such as Chicago, Cleveland, Indianapolis, Orlando, and Pittsburgh instantly have Ampm and have subsequently seen TV ads in those respective markets in order to establish the brand.
Kroger’s C-Store Banners
The nation’s largest supermarket chain, The Kroger Co., Cincinnati, OH, is also one of the country’s largest operators of convenience stores – operating five regional c-store banners across the country. They include:
- Turkey Hill Minit Markets with more than 240 stores in Central Pennsylvania and in the Scranton/Wilkes Barre area;
- Tom Thumb with over 116 stores in Southern Alabama and Northwest Florida;
- Kwik Shop with 124 stores in Kansas, Nebraska, and Iowa;
- Loaf ‘N Jug with more than 174 stores primarily in Colorado and Wyoming;
- Quick Stop Markets with over 100 stores in Northern California and in the Reno, NV, area.
Most of Kroger’s different c-store banners offer Coffee Central and Soda Central branded beverage departments and Real Time Cafes that offer a wide selection of fresh foods including salads, sandwiches, pizzas, subs, wraps and grilled options.
The company’s Tom Thumb, Kwik Shop, and Loaf ‘N Jug c-store chains also carry Kroger brand food and nonfood everyday staples including bread, pet food, cheese, coffee, condiments, spices, jellies, toppings in food and cleaning products, paper goods, and wrap materials in nonfood.
In addition to the Minit Markets, the Turkey Hill iced tea brand is sold at the Tom Thumb and Loaf ‘N Jug store banners and the Turkey Hill ice cream brand is also sold at Tom Thumb.
Of course, Turkey Hill Minit Markets carry the largest selection of own brand iced teas, drinks, ice cream and frozen yogurt available anywhere else. The branded products are produced by Turkey Hill Dairy, Inc., Conestoga, PA, which Kroger acquired in 1985. The dairy producer distributes its branded products to retailers along the East Coast of the U.S.
Supervalu’s Jewel Express
Supervalu, Eden Prairie, MN, the nation’s second largest supermarket operator, has 132 fuel/convenience food centers near its various store banners including Albertsons, Jewel, and Shop ‘n Save.
The latest Jewel Express c-store opened last December in Naperville, IL, near a full-line Jewel supermarket
The new convenience store prototype from Supervalu puts a stronger accent on upscale design, foodservice and private label products, according to a news report from CSP Daily News.
“We’re bringing product across from the deli,” Mark Schumacher, corporate director of fuel management and convenience operations for Supervalu told CSP Daily News. “This is new so we need to see what the traffic is, but our ultimate goal is to use that [the main store] as a commissary to bring product out here.”
In the grocery aisles, the new Jewel Express store is offering more private brand products including Supervalu corporate brands such as Home Life general merchandise and Chill soft drinks. The Express unit is also offering more Jewel brand products. “We’re doing motor oil, windshield solvent, candy, and some chips,” says Schumacher. “In the grocery set, we’re bringing in stuff that we make a little bit better margin on – Jewel paper plates, paper towels, and toilet tissue – to extend from that brand recognition that the people have from the main store."
