Understanding Consumers Key to Salty Snacks

chipsWhether it’s embracing healthy snacks or sticking with tried-and-true brands, convenience stores must closely monitor sales data to track what their customers are buying in this important core category.

By Howard Riell, Associate Editor

Recent consumer research seems to suggest that many convenience store customers looking to buy salty snacks leave the store empty-handed. Knowing why, and what to do about it, is critical for operators looking to maintain sales in this core in-store category.

The Chicago-based global consumer research firm Mintel estimated in January that sales of salty snacks broke the $17 billion mark to reach an estimated $17.1 billion in 2012—a crisp 30% sales increase since 2007. The category is expected to grow another 17% from 2012 to 2017.

“Salty snacks fared well through the recession, evidence of consumers’ investment in the products in the category,” the Mintel salty snacks report noted. “While the trend is still toward positive growth, the rate may be slowed due to market challenges, such as the proliferation of lower-priced private-label offerings, a growing interest in health that may lead to reduced category participation, and rising commodity costs that may limit the production capability of some manufacturers or require price increases that could edge some consumers out of the market.”

Understanding and Projecting
“You can’t operate in the c-store business without understanding what’s going on in the salty snack business. It’s seminal to your business,” said Tom Pirko, president of BEVMARK LLC, a retail consulting firm in Buellton, Calif.

Listening to suppliers and distributors may or may not provide the best information, Pirko noted. “If you really want to understand how to get the best out of your business you really need to monitor what’s going on out there in the world with the media and how people regard sugar, fat and salt,” he said. “The controversies have been swooping over us like a tidal wave.”

BEVMARK makes sure its c-store clients understand that the way consumers view salty snacks is changing rapidly. “Before, they were mentally easy to just pick up, grab and throw into your mouth. But now there is this sort of growing consciousness, and this new kind of body consciousness is making people hesitate,” he said.

Suppliers have responded by trying to reframe and reformulate products with health in mind. Politically correct or not, Americans love snacks. “We crave sugar, fat and salt, and these products are part of the American way of life. Nothing is going to change that,” Pirko said.

Still, varying the message according to the market segment only makes sense. “We’re trying to break the market down according to sex, ethnic group and age and where you find your heavy salty snack users,” Pirko said. “Those are the ones who are most important to us in moving our numbers forward in the category.”

The heavy users tend to be males under the age of 25, a group well known for putting health considerations second. “We’re still able to play to them in a way that leads them to make that positive purchasing decision,” Pirko said. “This is opposed to those customers that are being spooked by healthy snack trends.”

Tailoring the message to appeal to females, however, has proven trickier. “We’ve been trying so hard to continue to build the business with female customers, and we’re really having problems,” Pirko admitted. “Women are more body conscious and health conscious in ways that men aren’t, and they are the ones who are causing some of these reactions in the stores. ‘How do we change that? How do we deal with that? Are their any kind of promotions that we need to have to get them to abandon that kind of reticence?’ These are all valid questions that we continue to evaluate.”

The unenviable task for salty snack makers and retailers, then, is to move in two directions at once. As Pirko put it, “We are faced with a situation where we need to continue pitching as hard as we can to male customers—to put the foot on the gas for them—while in some ways putting the foot on the brake for the females that may not want these high calorie snacks,” he said. “And then it breaks down according to age, according to ethnic group, so it’s become a much more complicated game.”

Trending Up Nicely
Salty snacks are trending upward at Plaid Pantry stores, aid Tim Cote, vice president of marketing for Plaid Pantries Inc., operator of 103 stores in Beaverton, Ore. “It is stealing share from sweet snacks, especially from candy.”

In order to maximize sales, Plaid Pantry’s management team has, according to Cote, looked to its supply chain. “We started with developing a win-win distribution plan with our warehouse supplier that would allow a broad assortment of brands to get into our product mix with lower supply-chain costs, single-pick capability and a good spoils program,” he said. “Additionally, we did not try to make excessive margins on non-pre-priced items versus pre-priced items.”

What the chain also did was take a category approach to promotions and point-of-sale displays not giving any one supplier dramatic advantages over another based on delivery methods or participation in a pay-for-space driven multi-vendor end cap program. “Items should be displayed and priced based on actual sales and each item’s mission in the store,” Cote explained.

For c-stores to jump start salty snack sales, they need to broaden their assortments. “Find a supplier partner that will work with you to bring in non-DSD brands, and to order quantities that make sense for c-store,” Cote suggested.

Frequent and ongoing price promotion is also essential, as is executing frequent resets. “Having the flavor of the month is important here. It is very important to partner with manufacturers that understand flavor refreshing needs to be a more than a once or twice a year event,” Cote said. “Frito Lay is fantastic at this. Others need to learn from them.”

Avoiding Mistakes
Chief among the mistakes to avoid within the category is becoming too single-vendor focused, Cote insisted. “DSD suppliers have great brands in this category that are important to salty snack success, but the warehouse has some great brands, too,” he said. “As long as your warehouse supplier understands the requirements to compete in this category, a wide variety of warehouse brands should be in your stores—and a key part of your promotional strategy.”

Due to weak holding power, poor ordering practices and out-of-code issues because of supply chain issues, the category tends to see more than its share of out-of-stocks.
Supply chain issues aside, projecting the proper image to consumers appears to be a crucial task. Suppliers who also craft marketing plans to suit the prevailing popular sentiment are those with whom retailers will find success.

“You want to look for those products that somehow have all the taste and attractiveness, but at the same time have all the other ways of making them not look like they’re going to make you adversely impact your overall health,” Pirko said. “Look for products that can begin to reposition themselves to be not as bad for you, or even more nutritious, and those are the ones you feature. You’re taking the edge off, especially for those female consumers.”

Co-marketing and co-branding are also effective strategies. “But everything gets back to what is it in the consumers’ heads,” Pirko concluded. “It all comes down to what they think or feel. If consumers go into a 7-Eleven, the attitude that they have is going to determine what they are going to buy and how much they are going to pay for it. If you don’t understand that psychology you can get left behind, and your competitors who do understand it will take advantage of you by stealing your customers.”

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