In an era when the demand for convenience foods isn’t expected to ever backslide, it behooves processors to look beyond traditional foodservice and retail customers for growth opportunities. Offering prepared foods in alternative channels is becoming the norm for many food companies, including meat and poultry processors. Convenience stores, dollar stores and drug stores are diversifying to meet the demands of consumers whose eating patterns and habits are anything but traditional.
“Americans are looking for what they want, when they want it,” says Eric Le Blanc, Tyson Foods’ vice president of marketing for deli and convenience-store foods.
“Who would’ve thought several years ago you’d be going to your local drug store to grab a sandwich?” he asks.
During an August media conference call, Donnie Smith, president and CEO of Tyson Foods told Meat&Poultry that tapping into non-traditional retail venues is a priority and the focus extends beyond mini-marts and gas stations. “We also view alternate channels, whether it be dollar stores, drug stores, whatever – to be a great opportunity for us,” he said.
What Tyson offers is an expertise in the area of offering foodservice in a retail environment. It’s somewhat of a blended approach, Le Blanc says. “It’s really different than classic foodservice and very different than classical retailing,” he says.
According to IBISWorld’s 2013 industry report on convenience stores in the US, which doesn’t include gas stations, the segment has grown at an annualized rate of almost 2 percent over the past five years. C-store locations are expected to top 42,800 in 2013, with sales of $40.1 billion.
In just the last few years, the profile of the typical consumer of convenience stores has evolved significantly, based, in large part, on their location.
“We use the term ‘urbanicity’ to describe these different geographical and demographical distinctions,” he says. Customers shopping alternative markets based in larger cities, for example, tend to be frequented by younger, urban, single males with a surprising amount of food sophistication.
A 2013 study by Social Science Research Solutions concluded that approximately 25 percent of adults shop at convenience stores as frequently or more than at supermarkets and grocery stores. Of those, 63 percent are employed and 50 percent are married.
According to Le Blanc, suburban and rural-based locations tend to attract more females who are often college-educated mothers or soccer moms, from middle- to upper-income households. It is this customer category that provides the most upside from a growth potential standpoint.
Inside today’s c-stores, operators endeavor to become more diverse in their offerings, to be more competitive with quick-service restaurants and supermarkets. The diversification extends to dayparts, too, Le Blanc says, and as long as the stores have invested in the assets to offer food geared toward all mealtimes, the ability to drive sales and eliminate downtimes can become a reality.
Unlike QSRs or supermarkets, the reason for many customers pulling into the parking lots of the alternative markets is not to purchase food. Converting those customers from non-food buyers to food customers is a challenge.
“The conversion of customers is going to be driven most by how bright and clean the interior of the store is. That drives purchase intent more than anything else,” Le Blanc says.
When partnering with companies in the alternative channels, Tyson doesn’t necessarily target the companies with the most locations. “There are certain chains that really have a focus on how they do foodservice and how to grow that,” Le Blanc says. “Those are the folks that make the best partners for us and where we can add the most value.”
Tyson is working side-by-side with some of the chains to develop strategies to grow their offerings and expertise in the prepared foods segment.
“The best opportunity is for immediate-consumption food,” Le Blanc says. He adds when he first began working in this alternative channel, he was surprised to learn that one of the most common locations for eating food purchased in the store was in the car, in the parking lot. “That was a new one to me,” he laughs.
He points out that some of the chain drug stores are offering refrigerated, pre-packaged food products that are high quality and are designed for eating later. “That delayed consumption, I think, is a big avenue for growth for those in this channel,” he says.
For c-stores, however, “There are only so many things they can carry that are hot because hot foods have a limited shelf-life,” he says, not to mention there is limited display space for these items. Perception of the hot-item displays also plays a role. “That heat lamp, in the consumers’ mind is often a negative,” Le Blanc says.
The windshield factor is critical when it comes to appealing to the immediate-consumption consumers. Offering the handheld, portable food that can be eaten on the road is very much a trend in the c-store segment. “We make hot dogs for some of the folks that play in the channel here; there are handheld items like the popcorn chicken that often is sold in a cup that people can put into their car’s cupholder and eat that as they’re driving down the road,” Le Blanc says.
Equipped for success
Many customers in the alternative markets are looking to new opportunities where cooking equipment can be used to take their foodservice offerings to the next quality level while becoming more diverse. An impingement oven, for example, installed in-store to make pizza can become an avenue to create other items. Many c-store operators will come to Tyson before investing in this type of equipment to find out if there are other options that make the equipment a flexible asset to their menus.
Le Blanc says opportunities for new product offerings as alternative markets become more foodservice minded will likely include the evolution of chicken sandwiches and hearty items appealing to the steady stream of blue-collar customers frequenting the stores. Meanwhile, expect to see cold items continue to evolve, specifically salads.
“There are certain chains that are looking toward the day when they don’t have a roller-grill,” Le Blanc says. “I think you’ll see the microwave and the roller-grill for our target accounts become less important over time,” he says.
Working with commissaries used by many of the larger chains is an area where Tyson has a vested interest in the c-store segment. Often, commissary chefs will come to Tyson’s Discovery Center and work alongside chefs there to develop new products. Tyson’s approach is to not only supply the protein for sandwiches and other offerings but serve as culinary consultants to the companies’ product developers to produce something new and “craveable,” says Le Blanc.