Merchandising By Design, Inc. , 2633 Elmbrook Dr., Carrollton, Texas 75010
Phone (214)-883-5013 * Fax (972)307-3180 * merchandisingbydesigninc.com
K E Y T R E N D S :
C H A N N E L B L U R R I N G
D I V E R G I N G F O O T P R I N T S & S T O R E D E S I G N S
“ W H A T ’ S U P ” : G R O W I N G C A T E G O R I E S
K E Y S T R A T E G I E S :
H E A L T H & W E L L N E S S - F R E S H F O O D M O R E C O N V E N I E N C E - F O O D S E R V I C E
H I G H D E M A N D / H I G H D E S T I N A T I O N - B E E R C A V E S
“The future will require owners to offset
declines with new category opportunities and
merchandising strategies”
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WHO IS PLAYING IN YOUR SANDBOX?
99 Cents Only Stores
“More Booze on Dollar
Store Shelves”
“We want to be a
convenience store”
CHANNEL SHIFTS
1. Critical Driver (solve a problem)
2. Speed & Convenience
3. Self Expression
4. Thrill of the Hunt
5. Low-Cost Replenishment
(heading for extinction)
6. Endless Aisles
SHOPPING MODES & CHANNEL BLURRING
Limited
Asst. Drug
Store
Dollar
C-Store
Traditional
Price
Impact
Small
Grocery
Club
Fresh
3 -10 – 8- 5+
E-Commerce
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WHAT WE KNOW….
• 93% of retailers say labor is getting more expensive
• 83.4% cost of construction materials has increased
• 71.7% cost of construction labor has increased
• Use of “green materials” important to100% (responding) (LEED
only 8%)
• LED now used by over 100% of retailers (83% all retailers polled)
• Retail expansion is edging up…
• Wait…………..WHAT?
Chain Store Age SPECS 2012
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SUPERMARKETS GLOBAL SHIFT TO SMALLER STORES
• In both urban and rural areas
• Across all channels (electronics, home stores, food stores, etc.)
• Fresh focused
• Flexible
• Select assortments; differ by city
• Faster development
• Many more available sites
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C-STORES SHIFT TO LARGER STORES
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NOCO Express State-of-the-art C-Store
Demolished 1530 SF to build 6300 SF to accommodate the needs of its customers
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Caltex FreshStop Named International
Convenience Retailer of 2013 9/25/2013 Insight NACS Convenience Retail Awards
The convenience and fuel retailer was recognized
for its new approach to convenience retailing at its
Airport City store located near Cape Town
International Airport.
Page Content
South African-based convenience and fuel retailer
was recognized for its new approach to
convenience retailing at its Airport City store located
near Cape Town International Airport in South Africa.
The two-story FreshStop store caters to travelers and
commuters alike, offering a wide range of products :
full kitchen and bakery
large seating area
free Wi-Fi
car wash & car repair
valet services
boardroom and meeting room facilities for
business travelers
ANACHRONISTIC DESIGNS
Casualty of the recession is “schmaltzy” architecture
Move away from dramatic looks/lighting
Eliminate contrived, fake, illusions and tchotchkes
Millennials and boomers like pure, clean, regional designs
Nothing extraneous, eliminate costs of “stuff”,
redeploy capital where it really influences!
Migrating from green to lean
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CUSTOMER POLL
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FORGET THE
FRILLS
SIMPLE TO SHOP
ACTIVATE THE SPACE
RIGHT INVESTMENTS
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SHIFT HAPPENS
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DECLINING SALES CATEGORIES EAT INTO PROFIT POTENTIAL
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% Change 2012 vs. 2008 (Dollar & Unit Sales)- Growth Categories
Category Dollar Sales
Unit Sales
Avg Price Change vs.
2008
Energy Drinks 56.4% 56.4% 2.1%
Cigars 38.1% 30.6% 5.7%
Smokeless Tobacco 34.3% 31.2% 2.4%
Chocolate Candy 27.8% 1.5% 19.8%
Salty Snacks 22.2% 3.1% 21.6%
Cigarettes 18.5% -2.8% 34.6%
Sports Drinks 16.4% 14.9% 1.4%
Beer/Ale/Alcoholic Cider 9.1% 3.5% 10.5%
Bottled Water 2.9% -3.1% -3.3%
Carbonated Beverages 0.4% -1.2% 13.0%
Top 50 C-Store Categories 17.0% 4.8%
*Source: IRI AllScan
COMPARING GAS PRICES? THERE'S AN APP FOR THAT
• Get a GasBuddy App for your Phone!
Find the cheapest gas on the go – for
free!
• Locate gas stations near you and see
their current gas prices.
• For every gas price reported, you’ll earn
points towards our prize give-away.
• GasBuddy is a community of users
working together to update gas prices.
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KEY GROWTH CATEGORIES
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% Change in Sales ($)
Category C-Store/Gas All Retail Outlets
(incl. C-Store/Gas)
Yogurt 57% 10%
Soft Drinks (Non-Carbonated) 50% 6%
Fresh Produce 38% 5%
Tea 24% 10%
Pizza/Snacks- Frozen 22% 0%
Juices & Drinks- Refrigerated 18% -1%
Medications/Remedies 18% 3%
Dressing/Salad/Prepared Food- Deli 18% 4%
Diet Aids 17% -5%
Packaged Milks & Modifiers 17% 7% *% change in dollar sales during the 52-week period ending 8/4/12 per Nielsen Research
Prepared foods
Ref. meals
Beverages
Produce
Dairy
Health/wellness
Beer
BY 2015 TRADITIONAL GROCERY MARKET SHARE -3.0%
Expected Annual Growth
Traditional Grocery -3.0% Traditional Supermarket -1.4%
Limited Assortment 12.5%
Fresh Format 9.4% Supercenters 5.9% Drug 3.4%
Dollar and Wholesale 2.2%
C-Stores 2.4% Wholesale/Club 4.0%
Mass -7.0%
The Future Of Food Retailing Report
28% growth by 2017
HISTORICAL FOCUS
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What type of restaurant brand concept would you like to
see available at convenience stores? % Fast food sandwich 31%
Coffeehouse/Donut shop 31%
Fast food burger 27%
Fast food pizza 26%
Fast food chicken 26%
Bakery/Café fast casual 23%
Better burger fast casual 23%
*Source: Mintel
ENGAGING WITH MILLENNIALS
• Consider them Gen Frugal
• They have GREAT filters (see what
they want to see)
• Brand is not important, will only
engage in what they care about
• They do not respond to marketing
• They have a trusted board of
advisors- it’s the universe!
• They are tech-dependent (way past
savvy)-digital natives
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More than 50% of C-Store
shoppers are younger
than 39
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“The fly-wheel affect we have created across Starbucks Rewards loyalty card, our mobile app, adjacent extension of our core
brand beyond coffee ….. And continually enhancing our store
environment (wireless charging and Wi-Fi) ……..365 days a year.
Howard Schultz, CEO Starbucks
Consumers can buy anything, at anytime,
anywhere, and on any device.
Food is everywhere, prepared and delivered
when, where, and how you want it.
Competitive Edge, WB 8/2013
Unfortunately, this new, highly competitive landscape has left most
retailers with technology, personnel, and an organization designed for
the past not the future.
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BUILDING FOR BOOMERS
• 80 million of strong spending power
• “Digital immigrants” – embrace technology
• Perceive themselves as 10 years younger
• Prefer an emotional connection
• They pull away from noisy, busy, cluttered stores
• They would love store lighting to be improved
PepsiCo’s Center Human for Human Understanding
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Experience
&
Convenience
The #1 And #2
Reasons Why
Consumers
Remain Loyal To A
Particular Retail
Brand
Convenience Re-Defined
I don’t want it fast....
I want it NOW...
HEALTH & WELLNESS BEYOND LIFESTYLE TO WHOLE LIVING
• Transparency-trust-authentic
• Artisan, hand crafted & sustainable
• Town center/near hubs (back to Main Street)
• Local history, local products, local architecture
api (+) store design
& architects
ALL STAR FOOD TRENDS
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Hand held/cup holder foods
Beyond donuts – artisan foods
Ethnic varieties
Family friendly foods and sizes
IRI Times & Trends
ALL-STAR FOOD TRENDS
• Demanding transparency in production, handling, business practices, local &authentic
• Service and self-service balance
• Women are big spenders-outspending men by $14.31 per trip to supercenters and $10.32 per trip in grocery stores; will control 2/3 of consumer wealth in next decade
• Customers want “ME” commerce,
customized and individualized
api (+) store design & architects
Prepared foods purchases from all channels outpaces restaurant visits SN, July 2013
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U.S. WOMEN CONTROL THE PURSE STRINGS
AND THEY DON’T FREQUENT DUDE FOOD
C-stores continue to struggle
to attract the female consumer
WAWA’S SUMS UP FRESH OPPORTUNIES
"Consumers are looking at us not as a
convenience store,'' he said. "They are
perceiving us as a food service establishment” Howard Stoeckel, CEO, Wawa
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made-to-order hoagies, coffee drinks, dairy products, breakfast sandwiches,
wraps, baked goods, salads, fruits….
and cool, self-service ordering technology
that super sizes orders…….
S/S Ordering
Terminals
Capturing
QSR Sales
Convenience foods
driving the demand
in every channel
25% INREASE IN THE NEED FOR REFRIGERATED MERCHANDISERS
EQUIPMENT, PROGRAMS, PACKAGING SCALED TO SMALLER FOOTPRINT
FRESH FORMATS
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Right sized
Right features
Merchandising focused
Flexible
Quiet and compact
BEYOND BEER BEER CAVES DRIVE DEMAND, PROFITS & LOYALTY
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Inviting-interesting
Colder-cool factor
Fun-thrill of the hunt
Influencing-self expression
Endless aisles- endless
assortment
Less OOS
Bigger packs
High destination
Can
increase
sales by
over 50%
• The big picture: large beer brands are down,
craft beer labels are up. The beer industry as
a whole had four straight years of sales
decline as of 2011, with big brands taking a
heavy hit.
• NBC reports that Budweiser lost 30% of their
sales from 2006 to 2010 while Michelob and
Milwaukee’s Best have also lost upwards of
half their sales during that time. Yet craft
beers are on the rise, with sales rising 15% in
2011. Even more exciting–the craft beer niche
claimed more than 5% of the national beer
volume for the first time ever this year.
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MILLENNIALS ARE 21% OF THE ADULT POPULATION, BUT DRINK 29% OF CRAFT BEER VOLUME
Millennials will propel this category
for the next decade and beyond
MAIN CHEERLEADERS BEHIND CRAFT BEER GROWTH? YUP, THOSE MILLENNIALS
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Good craft
beer is
becoming
such a luxury
purchase–
equivalent to a
nice glass of
wine….
One high-
quality craft
beer instead of
two bland
beers
comprises their
night out….
Craft beer is
just cooler.
Perhaps
more than
any other
generation,
Millennials
love
presenting
themselves
as
individuals.
Big brand
advertising
lately has
focused
primarily on wit
and humor
over quality–
and it’s not
doing them
any favors with
Millennials.
Social media
adds to craft
beer’s “cool”
factor. It
allows users
to connect
beer brands
with their
identities in a
fun way.
CAVE RULES ITS ALL ABOUT
THE EXPERIENCE
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Define a unique cave experience
No clutter
28 degrees
Meticulously clean
Constantly reflect latest trends-craft beers
C-store advantage-satisfy “I want it now”:
Location
Longer hours
67% consumers enjoy trying
seasonal craft beers
(especially women)
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1. Ceiling heights – 12’ with coils mounted in center of cooler space
2. Windows-minimum - 10’ making the part of the retail space
3. Graphics, signage, flooring, etc. - seamless from from store to cave
4. Lighting levels - 30% brighter than store ambient
5. Pallet racking - 3 shelves high for maximum impact & SKU mix
Mike Lawshe, CEO Paragon 4 Design, Fort Worth Texas
Five Key
Design Elements
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Ethnic
Cold
Beer
Cave
Health
&
Wellness
Local
&
Authentic
Fresh
Food
Fast
Women
Welcome
AS THE GO-TO BAIT FOR DRIVING PRODUCTIVITY &
SHOPPER FREQUENCY, FOOD CONTINUES TO CROSS
CATEGORIES AS RETAILERS LOOK FOR WAYS
TO BUILD THE BASKET.
27% of convenience store gross
profit dollars in 2012 were
foodservice
NON TRADITIONAL GROCERY WILL SURPASS TRADITIONAL BY 2018
WHY WE BUILD MORE FRESH FORMATS……….
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% change
+ 4.7%
+5.6%
+ 6.0%
+7.0%
+6.9%
70% of respondents buy
prepared food
at C-Stores
THANK YOU!
PARAGON 4 DESIGN FOR PHOTOS AND CONTENT
Merchandising By Design, Inc. , 2633 Elmbrook Dr., Carrollton, Texas 75010
Phone (214)-883-5013 * Fax (972)307-3180 * merchandisingbydesigninc.com 43
Presentation available on merchandisingbydesigninc.com
Attract & influence wider customer base: women, Millennials,
Boomers, Hispanic…..through store design & product offerings…
Fresh food offerings to satisfy health & wellness trends…
Capitalize on key trends FAST; craft beers/beer caves, expanded
dairy, produce, fresh-foods-fast ...
Store designs that are “local”, uncluttered, flexible, interesting,
influencing & sustainable…
THANK YOU!
ANHEUSER BUSH BEER CAVE INPUT