Open to Change

September 1, 2006
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Open To Change
By Mary Ellen Kuhn
No old-school c-store retailing for Wisconsin’s Open Pantry. The chain’s elegant new format addresses the needs of discriminating female consumers without alienating core male shoppers.

New Berlin, Wis. — Chances are that your average working mom in this pleasant, upper-middle-class suburb doesn’t spend much time hanging out in bistros or martini bars. But thanks to the inviting, casually elegant décor of the Open Pantry convenience store here, she can sample that sort of ambiance each time she darts in to buy a gallon of milk, a cup of coffee or a candy bar.
The store, which opened early this year and has become a prototype for the chain, features a streamlined, Frank Lloyd Wright-inspired red brick exterior. Inside teal blue eaves provide an appealing complement to walls that are sponge painted in warm shades of blue, orange, yellow and green. The expansive coffee bar boasts real wood cabinetry; the flooring is slate. The piece de resistance is a striking stone fireplace surrounded by red leather armchairs and wooden tables and chairs. The store has a wi-fi connection and two computer terminals that allow for easy, complimentary Internet access.
Call it the coffee house of convenience stores. It’s all part of a bold retailing experiment launched by Pleasant Prairie, Wis.-based Open Pantry Food Marts, a privately held company with 33 corporately owned stores and four franchise stores. Open Pantry was founded in 1966, and for most of its history operated in traditional c-store mode, supplying residents of  Southeastern Wisconsin with the convenience-store staples of beer, cigarettes and snacks.
A couple of years ago, however, Open Pantry president, Robert Buhler, who had acquired the business from his father in 1996, decided that the time had come to try something different. Enter convenience retailing veteran Jim Fiene, who had spent 17 years with Louisville, Ky.-based Thornton Oil Co. and joined the Open Pantry team in 2003 as senior vice president of sales and operations.
Courting Customers Maintaining a strong base of happy, loyal shoppers is a priority for Open Pantry, which is one reason for the free wi-fi service and computer terminals for complimentary Internet access.

The loyalty such offerings generate “costs a lot more money than it does to maintain a couple of terminals inside the stores,” says Fiene.

The company also reports good results with its loyalty card program. During the months of May, June and July, Open Pantry distributed about 80,000 loyalty cards across all of its markets.
Vendors were invited to participate in loyalty card promos, and most companies that did so saw sales spikes of from 40 percent to 50 percent on promoted products. The 2007 schedule of loyalty card promotional sponsors is fully booked, Fiene reports.

During summer 2006, a promotion that offered loyalty card holders a free candy bar with sandwich purchase generated about 2,000 incremental sandwich sales weekly across the chain.
A new vision
“When I came on board with Open Pantry, it really was a fresh slate,” says Fiene. “So Robert and I spent a lot of time together (some of it in upscale coffee shops) … making very clear decisions about what we wanted to become and who our customer was going to be.”
The two men concluded that there was an opportunity to woo busy female consumers — a target audience whose needs already were reflected in the words of Open Pantry’s longtime slogan, “You need time. We can help.” They also acknowledged that convenience stores had been losing coffee sales for years to Starbucks and other upscale coffee brewers.
Thus their plan to reinvent Open Pantry included upgrading the coffee offer with a proprietary, gourmet brew they christened Willow Creek, adding a burrito bar as a foodservice option, and expanding the in-store seating area. At the same time, the chain revamped its product assortment to better address the needs of moms seeking a last-minute dinner ingredient or lunchbox item.
“If we wanted to be a grocery store alternative, we needed to have a choice of three or four mayonnaise offerings on the shelf and two or three ketchup offerings,”  explains Fiene. The challenge, of course, was allocating 600 square feet for seating and the coffee bar while simultaneously adding new grocery SKUs — but still keeping the store’s footprint to just over 3,000 square feet.
To accommodate that, the chain did some SKU rationalization in categories including snacks, “which created a bigger demand on our snack providers to keep us in stock,” says Fiene. Fortunately, he continues, Open Pantry’s direct-store-delivery vendors have been up to the challenge. “We get great support from our business partners,” he says. “If it’s twice-a-week deliveries, they do it. If it’s three times a week, they do that.”
What Works for Open Pantry —and What Doesn’t
Jim Fiene, senior vice president – sales and operations, is a man who knows what he wants in a convenience store — and what he doesn’t want to see in the upgraded Open Pantry stores.

Display shippers.
Despite the emphasis on ambiance inside Open Pantry stores, Fiene doesn’t embrace a “clean floor” policy when it comes to display shippers. Just the opposite. You’ll find two to four candy display shippers on the store floor most of the time.

“When somebody sees a display with Pirates of the Caribbean, [featured on signage and product], that denotes fresh and contemporary in their head,” says Fiene.

Leftover seasonal candy.
The chain stocks a small selection of seasonal candy, but is hyper-vigilant about disposing of it after the holiday. “We mark it down the day of the holiday to 50 percent off,” says Fiene. “Then we write it off and throw it away right after the holiday. We try to be very disciplined about that. When you walk into a store in February and see Christmas candy out, that’s not fresh. And then people start to consider everything in the store not fresh.”

Tacky, vendor-supplied fixtures.
 Fiene gets a bit incensed discussing some of the vendor-supplied shelving fixtures currently available. “I think a lot of fixtures that are offered today are gaudy and old-school. I don’t think they’re high- end and rich-looking. I’m not looking for a big cartoon character in the middle of my store promoting a brand. We spend a lot of money for marble and granite and cherry, and we don’t want to put a big cartoon character out there in front of it.”

Sexist point-of-purchase materials.
 You won’t find a cardboard cutout of Miss Budweiser or Miss Miller — or her ilk — inside an Open Pantry store. “We are not your corner liquor store,” Fiene emphasizes. “We made a very clear decision: We don’t allow any beer advertising or signage with any sexist pictures featured on them inside our stores.”

Female-friendly bathrooms.
Think super-clean, nice soap dispensers, marble and baby changing tables.
Also on the good news front, c-store patrons quickly warmed to the upscale, but reasonably priced Willow Creek brew. Currently the average Open Pantry store that has been “fully Willow Creeked,” as Fiene phrases it, sells between 150 and 225 cups of coffee daily.
Strong Supportfrom McLane

Open Pantry has teamed with McLane Company Inc. for three years, and recently re-signed its service contract with the nation’s largest distributor. The scope of McLane’s operation has proven advantageous for the mid-sized retailer, particularly when it comes to competing for the sometimes limited supply of new candy SKUs.

It’s a fact of life that convenience store giants like 7-Eleven are typically able to get new products to the shelf very quickly and sometimes with “exclusive” introductory periods.

But thanks to McLane, says Fiene, the Open Pantry chain has a better shot of getting new items into the stores in a timely fashion.

“McLane has really made an effort for us not to be the last to get something … to have the newest candy bars on time, when the movie comes out, not a month after the movie comes out,” he observes.

Working with McLane also provides access to substantially more data than the chain would otherwise have. This can open up new horizons in product assortment, for example, giving Open Pantry access to data on items that are proving successful for other retailers in the region — or even outside of it. As Fiene observes, “I can tell you the most profitable stuff I have in our stores, but I can’t know the stats on what we might be selling in our stores.”
Plenty of room for candy
The new store design affords ample space for candy, thanks in part to Open Pantry’s space-efficient system of 72-inch-high chrome shelving on wheels. The inline candy section is located across from the checkout. The aisles are relatively short, with the shelving positioned on a diagonal, which makes the candy assortment both easily visible and readily accessible to store patrons.  
At the checkout, two sets of wooden shelves extend out from the register, thus accomplishing the dual goal of providing a great home for the impulse candy and gum assortment while also encouraging shoppers to queue up. In addition to candy bars and gum, the checkout display in the New Berlin store features a selection of branded peg bag candy, which makes sense, says Fiene, because the store is located near an office park. He adds that the checkout candy and gum displays are plan-o-grammed on a store-by-store basis, taking the needs and opportunities of the local market into consideration.
 Theater box candy is a particularly strong confectionery performer for Open Panty, as are licensed movie tie-ins. In addition, as the chain’s Willow Creek coffee sales have picked up steam, so has its gum and mints business.
“We knew that coffee consumers wanted gums and mints, so we wanted to expand that category,” says Fiene. “That’s been one of our true success stories — gum and mints,” he continues, noting that price points range from $1.29 to $2.19 for the more upscale offerings.
To further capitalize on the breath freshener/coffee pairing, the chain has partnered with Wrigley on a customized display fixture built into the Willow Creek coffee bars. “We display their products exclusively at our coffee bars,” says Fiene. “And they determine what goes into that space. … They really pump in the new brands,” he adds.  
Given the chain’s objective of targeting female shoppers, it’s also been important to stay well-stocked with energy bars and other products positioned for the health-conscious. That too, has been a “great market,” for Open Pantry, Fiene reports.  
Interestingly, one subset of the confectionery category that Open Pantry has opted not to embrace is kids’ candy, despite the fact that the chain is actively targeting moms. “We made a conscious decision to take that out of our sets,” says Fiene. “Something had to go.” Although the stores get plenty of kid traffic, many parents are happy to avoid being pressured to purchase the latest novelty product, Fiene contends.
You also won’t find any bargain-priced peg candy (i.e. two for $1 products) in the upgraded Open Pantry stores. “We don’t offer a budget alternative inside of our stores,” says Fiene.
“If a shopper is low-price-driven, we’re not going to get him,” Fiene acknowledges. “We have to allow someone else to get him.”
Taking that stance appears to be working well for Open Pantry. One notable measure of success is a nice increase in the size of the average register ring. “Our average ring today is about $2 higher than the price of a pack of cigarettes, while in the past it was about the price of a pack of cigarettes,” says Fiene.
More evidence of the company’s commitment to its new convenience-store model came late this summer when company president Buhler announced he was putting 10 existing sites up for sale in order to generate revenue needed to develop between 10 and 30 of the new Open Pantry formats in the Madison, Wis., and Milwaukee area markets.
Currently, eight stores, including the one in New Berlin, feature expanded/upgraded foodservice seating areas, and 18 boast the full Willow Creek coffee bar. The company has three design prototypes for its retail outlets. In addition to the Prairie-style New Berlin neighborhood store, there is a model designed for more commercial settings and a third, very contemporary-looking prototype design.
What Women Want(in C-Stores)
Research conducted by Austin, Texas-based Clickin Research suggests that Open Pantry’s initiatives focused on attracting female consumers are right on target.

“Female consumers are definitely attracted to the quality of the experience,” says Martha Russell, Ph.D., Clickin Research president.

Safety, store layout, food quality and motorist services are all priorities for female c-store shoppers, according to the company’s research.

And a pleasing environment can also help loosen their purse strings. “When a person’s self-esteem is enhanced, we know that they tend to spend more,” says Russell. “So all of the things a store can do to enhance a person’s self-esteem — making them feel that I’m glad to be here — are good for business.”

The company’s research also affords some good news for c-store candy marketers.

Among women polled in a recent Clickin study of 8,500 shoppers, 59 percent said they usually buy candy. That compares with 45 percent of men who said they usually made a candy purchase. For gum and mints, the percentages also were higher for women — 61 percent who reported “usually” making such a purchase vs. 45 percent of the men.

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Gregg Williams
August 30, 2012
This is a pretty neat store. I was in there before opening when they were installing their epoxy floors. It's a different kind of store. A cool idea.

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