End Cap A Big Winner
By James Echeandia
Best-of-the-best warehouse-delivered snacks end cap
boosts retailer total snack category sales and margins.
In an era of intense
pressure on profits and declining gasoline sales, a study concluded over
six years ago is today providing major sales and profit boosts for over
20,000 convenience retailers. And as more retailers see the program, they
want to capitalize on the opportunity it represents.
The attraction is a Snack Multi-Vendor Endcap (MVE for
short), which has been shown to add $10,000 a year in sales and more than
$4,200 gross profit dollars in an average convenience store. The Snack MVE
features fast-selling national brands such as Oreo, Cheez It, Pringles,
Jack Links, Slim Jims, Combos, Chex Mix, Hershey’s, Planters, Ritz,
Rice Krispies Treats, Gardetto’s and Nature Valley. At the same time
Warehouse-Delivered snacks are gaining sales on the MVE, DSD snack sales
are not impacted so the warehouse snacks’ growth represents true
‘plus sales.’ In fact, the potential for a 100-store
convenience store chain is a sales increase of over $1 million and a gross
profit increase of $420,000. Those kinds of numbers garner attention!
Cooperation pays dividends
The MVE is a convenience channel distributor
initiative born out of a joint study by the National Association of
Convenience Stores (NACS) and the American Wholesale Marketers Association
(AWMA). Once the joint NACS/AWMA study highlighted the opportunity, a
Warehouse-Delivered Snack Committee — consisting of convenience
channel warehouse distributors and leading warehouse-delivered snack
manufacturers — was formed by AWMA to develop a model program for use
by all distributors, and the results are now on display at 20,000
convenience stores, in racks placed by 70 distributors.
“We think there is a potential for about 70,000
MVEs out there,” says Kit Dietz, president of Dietz Consulting,
consultant to, and member of the WDSC committee and a driving force behind
the program. “In fact, as we watched the program evolve, it is clear
that the potential is even greater than the early tests indicated. The
magic of increasing sales of higher-margin items without any
cannibalization adds up to an irresistible business proposition,”
Based on a pilot study at FasMart stores, the MVE
Warehouse-Delivered snacks program delivers across-the-board —
meaning both warehouse-delivered and DSD — snack category sales
growth of 18.5% and profit growth of 22.3%. In fact the entire sales and
profit growth came from the warehouse-delivered snacks component, including
snacks like cookies, crackers, chips, meat snacks, snack nuts and the like.
Warehouse-delivered snack sales and profits increased by 50% in the study
period. Direct-store-delivered (DSD) snack sales and margins were stable
over the test period, so there were obviously true incremental sales of
warehouse-delivered snacks and no cannibalization of DSD snack sales. And
since warehouse- delivered snacks offer 10% to 20% higher margins than DSD
snacks on average, growth in warehouse snacks pulls up profits for the
snack category in total.
Focusing on top sellers
There are two key elements in the MVE snack product
program. The first is a high-impact multi-vendor end cap display (MVE)
designed to offer a “best-of-the-best” top-selling snacks
assortment. The specific item assortment is recommended by the distributor
based on local market knowledge and preferences as well as profitability.
Thus the assortment varies from distributor to distributor, depending on
H.T. Hackney Company, for example, has two size racks;
a large MVE holding about 90 items, and a “mini” holding about
55 items, according to Tommy Thomas, corporate director of sales and
marketing for Hackney. “We monitor turns and profits and planogram
the MVE at least twice a year to keep it current and up-to-date with the
best-selling items. It’s key to make sure the MVE is updated and has
fresh appeal. This is the best thing we have ever done for the salty and
sweet categories,” Thomas said. Thomas is chairman of the
Warehouse-Delivered Snack Committee. In fact, Thomas mentions that Hackney
now patterns every end that they do on the MVE approach — it works so
Multi-vendor end caps are “nothing new” to
Core-Mark International, according to Greg Kaminski, director of category
management at the company. “We started out in the 1990s with an all
Nabisco rack, and as the years went by we added manufacturers and added
products such as ‘healthy’ bars. Eventually, we made the rack
bigger and even more powerful,” Kaminski said. Today, 5,000 of the
MVE units are serviced by Core-Mark personnel as part of the ‘Smart
Stock’ program. “We update the sets quarterly, and at year end,
we’ll have a major reset,” Kaminski said.
The Grocery Supply Company division of GSC Enterprises
has about 1,100 MVEs out in its Southwest locations. “It’s a
great program — we call the assortment ‘BOBS’ for Best of
the Best Sellers,” said Howard Stroud, director of merchandising and
purchasing for Grocery Supply. “The racks are mostly with
independents, but they are starting to go to retail chains. We ask for an
annual reenlistment by our customers, and we get it in most cases. We offer
a single size rack, with about 80 items, and about 20% of the racks are on
service. If we see that the retailer is not ‘with the program,’
we just don’t reenlist them,’ Stroud said.
It goes without saying that distributors are a key
component of the program. “This Snacks MVE concept is showing
explosive growth right now,” according to Marty Monserez, convenience
channel leader of Procter and Gamble. “For years, the manufacturers
unsuccessfully pushed single-vendor end caps, but they lacked the selling
scale to warrant such display space. However, distributors have now
combined the strength of a variety of fast-selling, high-margin SKUs onto a
multi-vendor end cap display, providing outstanding selling power on one
display rack. The key is putting strong items that consumers want to
buy where they can find them,” Monserez concluded.
“Wholesalers are our life blood,” said
Dave Onorato, vice president of convenience stores for The Hershey Company.
“They’re a critical component in the equation, and help do
everything ‘in-between’ us and the retailers. The MVE program
has been gaining traction for the last 18 months,” Onorato concluded.
According to Randy Roche, manager of category development for c-stores,
“the MVE is an important vehicle for Hershey to sell its cookies,
Really Nuts!, Snack Barz, and granola bar items.”
It’s no surprise that manufacturers were quick
to get behind the program, considering the boost in sales the MVE provides.
Many of the items in the multi-vendor rack were in-line on shelves in the
test stores, but when included in the MVE, previously existing items had a
sales growth of 65% in same-store comparisons.
The second key element is that the end cap is located
in a high store traffic location where the impulse purchase power of
branding can go to work driven by the variety of snack items and sizes
designed for wide appeal. “Impulse purchase is crucial to snack
sales, and when you take good brands and put them in high traffic
locations, they sell even better,” says Tim LeBel, vice president of
customer development for Masterfoods USA. LeBel went on to say that:
“We’re very pleased with the program … it has helped
Masterfoods gain distribution in new areas, allowing us a relatively easy
means for expanding Combos to the West Coast.”
It’s obvious that the rack brings together
powerful brands and thus exhibits a combined stopping power which exceeds
that of any single brand. That’s why leading warehouse-delivered
snack manufacturers, accustomed to ‘going it alone’ are happy
to cast their lot in with other leaders — everyone sells more product
when the placement is multi-vendor.
Kraft has been involved in the program “from
the beginning. Our interest is to support the distributors, so we included
all of our immediate consumption, on-the-go snacking products,”
says Jeff Joynt, customer marketing manager for Kraft Convenience.
“There is great enthusiasm from the retailers, and the participating
store count to date is impressive, especially what’s happened over
the past 12 months,” Joynt added.
Nestlé is on board with the program. “We
are enthusiastic about the … initiative. It allows for a better
degree of balance between warehouse-delivered snacks and
direct-store-delivered snacks. This program … is making a difference
in the marketplace,” said Jeff Lozito, divisional vice president,
Nestlé Sales Division, Nestlé USA.
But the proof of any program is performance in the
real world. Here’s what Rich Rodriguez, director, General Mills
Convenient Solutions Team, said: “The story just keeps getting better
and better as more retailers put these racks into their stores. There are
currently more than 70 distributors that are part of this program, and they
are sharing success stories with retailers every day. This is a huge
opportunity for retailers to improve their return on investment for display
space in their stores.”
The payoff for everyone appears to be sales and profit
increases of a serious nature.
John Scardina, vice president of merchandising at the
Eby-Brown Company, is high on the MVE program. “The MVE allows us to
offer our customers a program that is designed to increase sales and GPM
within their stores’ snack category. The program that exists today
has a proven track record with supporting data that is compelling to any
retailer that reviews it. When the MVE was first brought to market we were
presenting a new concept, a new way to look at the snacking opportunities
and their associated profits. Today we are no longer presenting a concept.
We are, in fact, presenting an established program that delivers positive
and profitable results for our retail partners,” Scardina concluded.
Eby-Brown was one of the original members of the Warehouse-Delivered Snack
Committee of AWMA.
Built to last
So just how good is the MVE program? Does it have
staying power? To find out, Confectioner spoke to Russ Quick, vice president of marketing for
Virginia-based FasMart Convenience Stores where the MVE concept was
initially tested two years ago. According to Quick: “This is a great
program, and getting better as we learn and manage it. We have eliminated
all DSD items that are ‘duplicates’ of those on the MVE. Every
month we monitor every item and eliminate the bottom 10% selling items and
replace them. Our average margin on the MVE rack is just shy of double
the average margin on DSD snacks.” Quick concluded, “You bet
it’s a great program.”
Perhaps Bob Pignato, vice-president marketing,
membership & industry affairs at AWMA, put it best when he told Confectioner: “It’s
not easy for our members to grow sales and profits in this environment. The
best way to do it is to create and test programs which they can
enthusiastically recommend to their retailer customers because they are
proven to work … to add real sales and real profits. From the
NACS’ point of view, their time and energy was well spent on an
undertaking which benefited their retail membership where it counts …
on the bottom line. This is truly a ‘four wins’ program …
for the manufacturer, for the wholesaler, for the convenience retailer and
most importantly the consumer because they’re getting the great
brands they want in convenient sizes at a convenient place to
Based on the success of the MVE warehouse snack
fixture, there’s a lot of sentiment among the people Confectioner interviewed for a
MVE candy rack, especially a new-item rack. The Hershey Company,
Kraft, Masterfoods USA and Nestlé Confections have expressed
interest in such a rack. With that kind of start, it shouldn’t be
hard to get going!
Grocery Supply Company
The H.T. Hackney Company
The Hershey Company
Jack Link's Snacks
Procter & Gamble
CONVENIENCE STORE ALLIANCE
National Association of Convenience Stores
For more information on Warehouse-Delivered snacks and
the Joint Industry Warehouse-Delivered Snack Committee, contact Bob Pignato
at AWMA at 800-482-2962, ext. 642, or email@example.com.