bringing products to market

“New” is a tricky term when it comes to productions in the convenience channel. Tjere are few actual unique product launches along the lines of Red Bull anymore. The majority of new products comes in the form of line extensions of already popular products.

While line extensions help to create a buzz in the marketplace, retailers contend they can be difficult to manage because they have a tendency to cannibalize sales of top-selling items, clutter shelves and, to some extent, confuse customers.

“I feel there is too much line extension going on,” said Jeff Leedy, vice president of marketing for Rutter’s Farm Stores in York, Pa. The 51-store chain is seeing approximately 10 new products a month on average.

The majority of new products at Rutter’s continues to be line extensions of popular categories, like energy drinks and flavored waters. But while bringing these product extensions to market can be an arduous process, it’s necessary to stay competitive. “The real problem is that product life cycles today are much shorter than they were five or 10 years ago. You must adjust your expectations to meet consumer demand,” Leedy said.

Carmi-Ill.-based Hucks Food and Fuel sees the same repetition, but for certain categories, it’s imperative to be open to line extensions. “Most new products we are seeing is in the candy category, and so many of them are extensions rather than new concepts,” said Tim Tilford, director of marketing for the 125-store chain. “If you don’t stay fresh with those new items, even if they’re just line extensions, then you slip. The consumer is conditioned to look for new items. It’s not cannibalization, but survival.”

But there is a fine line between innovation through line extensions and overkill, said Greg Ross, vice president of operations with Ottawa, Canada-based Quickie Convenience Stores. Knowing which products will develop great staying power and which ones will become an eyesore could be the difference between making and losing thousands of dollars in sales.

“Some products will go on to define their category, like Red Bull, and that’s what gives them staying power,” Ross said. “But line extensions can develop the same way, especially in big categories nutracueticals. There’s a lot of trial and error.”The 47-store chain has carved a niche for itself by volunteering to be a guinea pig for local distributors to test new concepts.

“A lot of times we may only pick up one or two items from a supplier and we end up being the only ones in the area to carry it,” Ross said. “The smaller unque items tend to be a cornerstone for us, whether they are beverage, confectionary or non-edible. What we try to accomplish as a regional player is A) how quick we can act on things and B) can offer the bulk of these as in-and-out items. We can always order a case per store, and if it sells well we can order more. And the smaller distributors are very responsive to the opportunity we’re giving them.”

Satisfying the Needs of Retailers
As suppliers continue crafting extended versions and entirely new items, they have to be conscious of the needs of the retail community. Any retailer would love to add an unlimited number of new products to his shelves, but the obvious challenge is that that stores have a limited amount of space to stock merchandise and an anticipated return on the shelf space the merchandise is occupying.

In order for suppliers to penetrate the valuable real estate retailers offer, category managers have developed some fairly stringent criteria. For example, when Fairburn, Ga.-based Green Oil Co. looks at a new product, there are core questions it must get answers to before it will even consider offering shelf space.

According to Jim Callahan, Green Oil’s director of marketing, the factors the chain weighs heaviest when deciding what new products to bring in are:

* Who is introducing it?

* Has the company got the clout to carry it off?

* Will there be national or strong regional advertising behind it?

* Will it complement or conflict with existing products?

* Does the projected return justify the space the product will occupy?

Similarly, Rutter’s Farm Stores not only wants definitive test numbers, but Leedy, insists that manufacturers qualify the product in his terms. Then, if the product isn’t meeting expectations, there can’t be any argument when it’s pulled.

“My main consideration is number of items sold per week per store,” Leedy said. “This will vary based on other entrants in the same category.”

He is also sure to get a clear understanding in advance what each suppliers definition of a successful product launch is and asks them to monitor it in those terms (usually per store, per week sales).

“Most of the time, I will benchmark an item’s sales at several intervals (one month, three months, six months) against other items in the same category,” Leedy said. “If it outperforms some of them, I will make the new item permanent and delete the others. We’ll then stick with a new assortment for a maximum of six months before pulling the plug.”

For Huck’s, sometimes a newproduct’s fate is decided by turns,sometimes it’s decided by profits generated. Tilford keeps an open mindand evaluates items on a case-by-case basis. "A lot also depends on the support a manufacturer is willing to putbehind an item," he said.

And experience is a factor Huck’sdoes not overlook. Input from category managers is extremely important."Sometimes an item isn’t new to theworld, but it’s new to the c-store channel, so we ask ourselves, ‘Does thisfeel like it could be a great c-storeitem?’" Tilford said. "If it’s a newretail segment for us, we evaluate itdifferently. In those cases, you have to examine the opportunity it will giveyou in the market."

But when it comes to items that fitinto the stores regular sets—likecandy, salty snacks or novelty items—manufacturers play a helpful role indeciding how long an item should betest marketed.

"If a manufacturer manages to geta new product in our stores, theywant to make sure it’s selling—theydon’t want dead space when theycould just as easily put something inthere that moves," Tilford said.

Huck’s will typically let a productrun its course for six months beforemaking any decisions, but there aresome items that it purposely sets upon a shorter cycle. "With noveltyitems, you want kids begging for thembecause they are such high marginitems, so we may switch them outevery two months or so."

Placement Procedures
For many retailers, it’s not a matterof whether they want a new item ornot, but how they are going to fit it intheir stores. Some set up specific locations or end-caps for these trials.Green Oil’s Callahan offers its "miracle mile" display right next to the register where "you can put yesterday’seggs and they’ll still sell," he said.

With the way beverages in the coldvault are multiplying, Huck’s willoften utilize additional reach-in coolers to compensate for new and innovative items it wants to showcase.

For Tilford, it’s not always howinnovative an item is, but the presentation possibilities manufacturers offer that helps him decide whetherto give a product a shot. For items that are expected to goin everyday sets, he admits it’s difficult to work them inbecause planograms are only adjusted at certain timesthroughout the year. It’s when a company offers viablemarketing solutions that his attention is piqued.

"Very few manufacturers come up with great alternatives for introducing new items or working those itemsinto sections," Tilford said. "Major manufactures likeHershey, Keebler or Wrigley will come out with displayoptions for their limited editions and new items. Smallervendors may have a really innovative item, but they havelittle in terms of
support.

"Ultimately, manufacturers help determine if somethinggets in my everyday sets with the special offers and support they are willing to provide. Strong sales support iswhy we started testing white chocolate Kit Kat andReese’s, and today they’re staples in our candy aisle."

With all the candy expansiongoing on, eye-catching graphics and displays are equallyimportant. Huck’s uses a lot ofsecondary locations for itemslike theater candy, which hasreally taken off. "We’ve addednew placements like a jerky rackthat takes the item out of inline.Sometimes it’s not just the item,but the presentation that mattersmost."

The Birth of a Product

Shock Coffee, a coffee/energy drink hybrid that has 1.5times the caffeine of an average cup of coffee, is the result of sixmonths of research and development on the part of Jeff Rosen,president of Shock Coffee LLC out of Queens, N.Y. A subsidiary ofparent company Price Master, which sells everything under thesun that could be found in a convenience store, Rosen found itodd that Prime Master didn’t sell coffee, cigarettes or gas, whichare the top three categories in the industry. So he decided to zeroin on coffee, but quickly realized he had a great deal of competition.

“We knew we’d need an edge,” said Rosen. “I had recently finished an energy drink project and saw how that segment wasbooming, so why not put the two together? There may have beenan existing demand for energy drinks, but we’re the ones that created the demand for hyper-caffinated coffee.”

Rosen researched further and found a smallcompany that roasted hypercaffeinated coffeethat had limited distribution—appearing inapproximately 200 stores nationwide. Ratherthan simply distributing their product, he decided to buy out the company and absorb the product.

Shock didn’t sell its product to coffee distributors at first; it went to market through smallerwholesalers that didn’t have coffee programs.Shock designed a point-of-sale metal rack thatgave its product real estate in stores. It alsoinvested in equipment, offering airpots if that’s

what companies were using, and yellow and red glass pots for old-fashioned brewing.

As line extensions, Shock Coffee has also come out withhypercaffeinated candies as well as Shock-a-Cino, a hot dispensedcappuccino product, created from customers expressing interestto retailers.

“It’s great because store-owners think outside the box withtoday’s competition and that gives us ideas for new products thatwill appeal to them,” said Rosen.

Driving it Home
With two truck stops in its family of six company-operatedstores, Jim Callahan, director of marketing for Green Oil, wasintrigued with the idea of a hypercaffeinated product. Little did heknow that it would catch on in his regular stores as well, especially after a promotional kick comparable to the caffeine kick delivered from the products.

S&D Coffee first brought the product to Callahan and hethought it would be a good fit for his stores. Butit was the intense marketing approach that soldhim and his customers.

“Shock Coffee and Candy have done very well, especially in our truck stops,” saidCallahan. “As part of the deal we just got them tobring the Shock Coffee Hummer to each storeduring morning drive time for several hours. Wegave out free coffee—S&D furnished the product,we forgoed the profit.”

To sweeten the promotion, customers werealso given free Shock hats and t-shirts when theypurchased the company’s candy or a refrigeratedShock Coffee.

NACS TOP 10 New Products

Ottawa, Canada is a long way from Las Vegas, but Greg Rossmade the trip for this year’s NACS Show with the hope of finding newand exciting merchandise.

“One of the key reasons we go to shows is to look for new product innovations,” said Ross, vice president of operations for QuickieConvenience Stores. “Being in Canada, our supply network is smaller, so NACS gives us exposure to things that we may not see.”

And there was no shortage of innovation at the show. The following are the top 10 scanned items from the show’s New ProductsShowcase.

1. Lunch Boxers (Norwegian Jake’s) Consumers often categorize grab-n-go items as beingunhealthy, unfresh, unfulfilling or allof the above. This is the voidNorwegian Jake’s is attempting tofill with its Lunch Boxers—the pre-packed lunches that feature a variety of individually sealed name brand meats, breads, cheeses,drinks and snacks.

While the Lunch Boxers have already sold well in grocery outlets,Norwegian Jake’s President Mike Skinner realized through researchthat the c-store industry could also benefit. By talking to retailers inthe c-store business—particularly ones that offer fresh sandwiches—the company realized that typical sandwich and lunch offeringsleft a lot of room for margin decreases.

Seeing this negative trend, Norwegian Jake’s decided to branchout into the c-store market, providing popular foods to consumers insealed packaging to reduce waste and benefit the retailer.

2. Ready to Go Snack (Ready Pac) Ready Pac offers taste,convenience and nutrition with its line of pre-packaged snacks,which range from packaged fruits and vegetables with dipping sauceto meal-sized salads.

3. ItzaGasCa (L&WInnovations) L&W Innovations adapted a burgeoning hot beverage item in order to create a one-time-use gas container—using bag-in-box technology to safely store and transport gasoline. Because of its compact size, low price (SRP—$4.99), andease-of-use, L&W feels that ItzaGasCan will fill a niche in the c-storeindustry.

4. Produce Foam Basket (JSI Store Fixtures Inc.) An attractive alternative to typical metal and plastic displays that oftendamage produce and cause spoilage. The package is made entirelyof foam except for the outer wooden display, which is made frombamboo.

5. Altoids Dark Chocolate Dipped Mints (Wm. WrigleyJr. Co.) The "curiously strong" mint has been dipped in darkchocolate and will be available in peppermint, cinnamon and ginger.

6. Gas Station TV Gas Station TV was developed to provideentertainment during the average four minutes consumers arefilling up at the pump while allowing retailers to advertise specialproducts in the store.

7. E6Mu Espresso/CappuccinoMachine (Schaerer USA Corp.) Theidea behind the E6MuEspresso/Cappuccino machine was tobring a European brewing approach toAmerican c-stores.

"Since a typical, European-stylebrewer requires a lot more manpower,cleaning and maintenance than mostc-stores can invest, powdered coffeedrinks are usually the only option," said Steve Eckenhausen, president of Schaerer USA Corp. Theproblem with the powdered drinks, Eckenhausen said, is thatthey don’t provide the same flavor and quality as the traditionalmachines in order to make things more convenient. The E6Muis an attempt to combine both quality and convenience.

8. Chiquita to Go (Chiquita Fresh North America, LLC) Bananas are the perfect grab-n-go item, but that didn’t stopChiquita from taking it to the next level when developing theChiquita To Go banana transportation packaging. Chiquita To Gois a banana-preserving packaging that keeps the ripe, hand-pickedfruits fresh by stabilizing the amounts of O2 and CO2. The product was developed specifically for the c-store segment.

9. Too Tart Sour Wave Juice Drink (Innovative CandyConcepts/American Beverage Corp.) After already havingsuccess with its healthy, diabetic-f
riendly candy,Innovative Candy Conceptssought to bring the samesour flavor to juice drinks with Too Tarts Sour Wave.

With an existing flavorprofile, Innovative CandyConcepts collaborated with American Beverage Corp., butwould it be as successful as its candy counterpart?

To find out, the companies went directly to their prime consumer. More than 400 children and young adults were surveyedduring the conceptual phases of the product to make sure thetransition of the flavor profile went just right. On top of that,many parents were surveyed as well in order come up with abetter product—in fact, it’s these surveys that led to the addition of a sports cap on the design of the bottle.

10. Hudson’s Famous Brew (Leramo/Hudson Corp.) Bag-in-box tea product that uses whole tea leaves to better oxidize the brew and remove astringencies and bitters.

TeenTrendspotters

At the National Association ofConvenience Stores (NACS) Trendspottersessions, teen volunteer participantsadmitted to being frequent c-store shoppers, spending anywhere from $20 to$100 each week on a gamut of items,including energy drinks, candy, saltysnacks and other c-store staples.

In order to research the rationale behind why teens pick certainproducts over others, theTrendspotter panel allowed the sixteen participants—one male andfive females, ranging in age from18 to 24—to run the showroomfloor to find items that appealedto them in three categories:snacks, candy and non-alcoholicbeverages (dispensed and packaged).

First, each of the panelists broughtback their favorite beverage to discusswhat made them pick it. Not surprisingwas the fact that half of the panelistbrought back energy drinks: Rip It Chic(National Beverage Corp.), Full ThrottleBlue Demon (Coca-Cola) and Nos (HighPerformance Beverages Co.). Whenasked why they picked these particularenergy drinks over the myriad of othersavailable, two out of the three revealedthat the sleek looks and packaging luredthem in; the third revealed that taste wasthe deciding factor. The other half of thepanel brought back milkshakes (Ben &Jerry’s Milkshake), tea (Teazzers) andjuice (Tampico).

For the second part of theTrendspotter session, panelists wereasked to pick their favorite candy andsnack items.

“Packaging sells the product,” saidone panelist, who claimeded that hepicked at least one item based on theunique look and colors of the packaging.

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