March 27, 2008
CSD: Coffee’s Hotter Than Ever
By CSD Staff
Through a special arrangement, presented here for discussion is an excerpt of a current article from Convenience Store Decisions magazine.
Baristas, costly specialty brews and professional ad campaigns are all well and good for large chains that have the financial wherewithal to make aggressive market moves at the growing coffee market. But how can small c-store retailers, many of whom only have only one store, boost coffee sales?
According to Dawn Molski, Sara Lee Corp.’s senior customer marketing manager for convenience stores, big chains don’t have a monopoly on coffee program success by any means. The over arching theme should be thinking “beyond the cup,” Ms. Molski said.
She advised smaller chains to take the following steps to ensure that their coffee offerings succeed:
1)
Create a serious “coffee destination” look. Boosting coffee sales requires changing customer mindset from, “this is a gas station with coffee” to “this is a coffee shop with gas” by giving the coffee service area a coffee destination appearance – even with self-serve coffee programs. Just create a consistent look across all beverages regardless of whether they are house or manufacturer brands. Ms. Molski said, “Basically, you want every beverage station to have a uniformly serious, neat appearance and be scrupulously clean.”
2) Employ every cheap advertising measure you can. Signage is important, of course, but convenience retailers can also have employees wear buttons or shirts that promote your beverages.
“Encourage your employees to get to know the people who walk through the door,” Ms. Molski added. “It’s the whole ‘Hey, Norm, how’s it going?’ type of thing. When you know that Norm loves his morning coffee, letting him know you just made a fresh pot makes him feel special.”
3)
Push technology to the max. Innovative equipment exists that can provide high-quality coffee beverages 24/7. Suppliers can often provide more upscale products for existing equipment. Give consumers more diverse options by adding teas and meal replacement beverages to your coffee lineup.
4) Use food to boost overall sales. Complement morning coffee service with items such as breakfast sandwiches and pastries, switch to sandwiches and sweet snacks available at lunchtime through mid-afternoon. Ms. Molski pointed out. “Food aromas send the message that customers don’t need to go anywhere else because everything they want is right there.”
5) Let customers know coffee now stands out as a healthful beverage choice. Numerous studies have shown that chemicals in coffee may inhibit the cellular damage done by free radicals and protect against cirrhosis of the liver, diabetes, Parkinson’s disease, gallstones and mood problems. Moreover, researchers have found lower incidence of Type II diabetes among regular coffee drinkers.
6) Give them a taste. There is no better way to show off how much confidence you have in your coffee program. Plus, it gives customers a chance to sample the quality for themselves.
Discussion Questions: How can smaller c-stores best compete in the coffee category against larger c-stores and coffee/fast food chains? On a personal level, what drives your purchasing decision to buy coffee at a local c-store versus a larger chain?
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I think the suggestions are right on point. If you look at how the product is presented at the POS and in advertising, it tells you a lot about how the seller thinks it should be positioned. This is almost an exercise in marketing 101. While the gourmand will not go to a convenience store for his high-end coffee fix, that should represent a relatively small segment of the population. There are a lot of folks who are willing to pay much less than the Starbucks price and get a decent cup of coffee.
Her most important suggestion is probably “give them a taste.” Starbucks and other franchises succeed in part because of the consistency of the experience. You can be pretty confident that a latte at any Starbucks is going to taste as you expect it to. A McDonald’s hamburger is pretty much the same anywhere in the world.
To capture business, a c-store, which will have a mix of regular and transient customers, needs to overcome the reluctance to waste money on coffee that might taste horrible. A “shot” of free coffee, if the quality is indeed up to par, removes that barrier.
Great suggestions from Dawn. Most important to repeat business–cleanliness and some personal interaction with the service staff. Coffee is a conversational category, so give the staff some “stories” to tell to keep the conversation going. Douwe Egberts is great coffee, but what’s the story?
To get me in the door, I gotta know it’s fresh and I gotta have some flavor options. It’s all about taste!
I don’t see anything about price here. Some may be of the opinion that coffee, lattes cappucino, etc…is one of those little indulgences that people will continue to buy.
However, the more bad news we hear about, the more nervous people get about their immediate futures, the more they will be inclined to shy away from $4.50 specialty coffee drinks–or at least cut back. Great opportunity here for even a one-unit C-store to do some value pricing–or maybe the old bagel and coffee special.
Great product, good location, good price, great people, and great service. If you do this with any product you can be successful.
The c-store industry has good location, and they can have great product and a good price. Now all they have to do is figure out how to hire great people to deliver on the promise.
I suppose given a clever operator the answer would be “Yes.” Smaller is supposed to equal more nimble. On the second part of the question, I’m not qualifies to answer. I don’t ever buy coffee in a c-store.
There is one c-store in Scottsdale where I always buy my morning coffee. The c-store is on a convenient corner attached to a gas station. However, I do actually go for the coffee. There are several choices of coffee (flavored decaf, and flavored regular), fresh and hot in the morning. I can choose the type of coffee, size of container, AND from a variety of flavored or non-flavored cream, powder, sugars, or honey. The choices are great, the coffee is fresh, the service is fast, and the prices are great–I normally buy the $1.09 size and have exactly what I want. This is a combination that works for me. Even after several owner changes, this c-store has kept this coffee formula and I keep returning.
If a convenience store has a great coffee aroma, folks will love it. If the store smells like a combination of gasoline and floor cleaner, coffee won’t be top of mind. And for goodness sake, throw out the stale product several times a day. It shouldn’t be a surprise that C-store coffee has a lousy reputation.
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I think the suggestions are right on point. If you look at how the product is presented at the POS and in advertising, it tells you a lot about how the seller thinks it should be positioned. This is almost an exercise in marketing 101. While the gourmand will not go to a convenience store for his high-end coffee fix, that should represent a relatively small segment of the population. There are a lot of folks who are willing to pay much less than the Starbucks price and get a decent cup of coffee.
Her most important suggestion is probably “give them a taste.” Starbucks and other franchises succeed in part because of the consistency of the experience. You can be pretty confident that a latte at any Starbucks is going to taste as you expect it to. A McDonald’s hamburger is pretty much the same anywhere in the world.
To capture business, a c-store, which will have a mix of regular and transient customers, needs to overcome the reluctance to waste money on coffee that might taste horrible. A “shot” of free coffee, if the quality is indeed up to par, removes that barrier.
Great suggestions from Dawn. Most important to repeat business–cleanliness and some personal interaction with the service staff. Coffee is a conversational category, so give the staff some “stories” to tell to keep the conversation going. Douwe Egberts is great coffee, but what’s the story?
To get me in the door, I gotta know it’s fresh and I gotta have some flavor options. It’s all about taste!
I don’t see anything about price here. Some may be of the opinion that coffee, lattes cappucino, etc…is one of those little indulgences that people will continue to buy.
However, the more bad news we hear about, the more nervous people get about their immediate futures, the more they will be inclined to shy away from $4.50 specialty coffee drinks–or at least cut back. Great opportunity here for even a one-unit C-store to do some value pricing–or maybe the old bagel and coffee special.
Great product, good location, good price, great people, and great service. If you do this with any product you can be successful.
The c-store industry has good location, and they can have great product and a good price. Now all they have to do is figure out how to hire great people to deliver on the promise.
I suppose given a clever operator the answer would be “Yes.” Smaller is supposed to equal more nimble. On the second part of the question, I’m not qualifies to answer. I don’t ever buy coffee in a c-store.
There is one c-store in Scottsdale where I always buy my morning coffee. The c-store is on a convenient corner attached to a gas station. However, I do actually go for the coffee. There are several choices of coffee (flavored decaf, and flavored regular), fresh and hot in the morning. I can choose the type of coffee, size of container, AND from a variety of flavored or non-flavored cream, powder, sugars, or honey. The choices are great, the coffee is fresh, the service is fast, and the prices are great–I normally buy the $1.09 size and have exactly what I want. This is a combination that works for me. Even after several owner changes, this c-store has kept this coffee formula and I keep returning.
If a convenience store has a great coffee aroma, folks will love it. If the store smells like a combination of gasoline and floor cleaner, coffee won’t be top of mind. And for goodness sake, throw out the stale product several times a day. It shouldn’t be a surprise that C-store coffee has a lousy reputation.