Frozen: Ice cool customers

Frozen food has undoubtedly had its fair share of demons in recent years, but ultimately its sheer convenience has enabled it to gain a strong foothold in the convenience channel. “It’s a £4.9bn category in the UK and is bought by virtually every household,” says Birds Eye marketing director Steve Chantry. “While overall sales are in decline, it is a key category in the convenience sector with shoppers opting for more frequent ‘convenient’ shops that lead them to the frozen aisle due to its accessibility and ‘ease-of-use’ products on offer.”

“Frozen food is brilliant for me,” says Meten Lakhani, who owns two Premier stores in Southampton. “These days people leave the house early in the morning and they get home late; they want to cook food quickly and then enjoy their evening,” he says. “We have 12m of freezers in my St Mary’s store – it’s a big line for us and there’s good profit. We sell £1,500-worth of frozen a week and make an average margin of 25-30%.”

He has opted for chest freezers in the store as he feels they give the fixture more visibility and enable him to stock a better selection. “Uprights look tidier, but you can’t fit as much range in them. We sell 200-250 lines of frozen.”

Although the frozen section is situated at the back of the store, Meten claims that the nearby ATM draws plenty of customers to the category. “Our ATM is near the back of the shop and everyone in the area comes in to use it. We put a second siting of baskets there and after using the ATM, people often turn left, pick up at basket and then go the frozen section.”

 

Pippa Heritage, who owns Barns Green Village Store in West Sussex with husband David, also prefers chest freezers. “Frozen food performs well for us. We used to have a two-door upright freezer and we sold hardly anything from it – we began to wonder if it was worth having frozen food at all. Then we got a glass-top chest freezer where people could stand over it and see all the products clearly, and our sales doubled. You lose space with a chest freezer, because you can’t put anything above it, but it works for us.”

It’s a different story altogether for Shelley Goel, who owns two One Stop stores in Birmingham, West Midlands. “We moved from a chest freezer to a 1.25m double door upright at our Acocks Green store so that people could see the frozen fixture more easily. It’s alright to use a chest freezer if you have space for a big frozen range – then people will go to the area. But if you have a store like ours, then people are only in for five seconds for milk and bread. We locate our freezers next to the milk to ensure good visibility.”

Shelley claims that McCain Home Chips are one of his bestsellers.

“Frozen potato is seeing significant penetration in convenience, increasing by 12.5% since last year (Kantar, Total Convenience data to 52 weeks ending 24 April 2016),” says McCain category controller Naomi Tinkler. In fact, she claims that McCain Home Chips, McCain 5% Fat Oven Chips and McCain Micro Chips (now known as Quick Chips) represent more than 40% of category sales in convenience.

Pippa also claims that chips are a winner, along with pizza, while Meten states that ready meals and pizzas are his biggest sellers, thanks to their ease of preparation.

“We have Findus ready meals pricemarked at £1.29, Ross pricemarked at £1 and Birds Eye at £1.75. The fastest sellers are usually the cheaper ones.”

The store also boasts a huge pizza offering. “I’ve got 28 different types of pizza at St Mary’s, compared with a Tesco Express which would probably have five. We have a big student population, they just want to come home, put something in the oven for 15 minutes and eat – it’s hard to burn a pizza!”

Within the convenience channel, frozen pizza is performing well with a growth of 4% year on year, claims Dr Oetker. “The Chicago Town brand is performing particularly well with a 10.1% increase year on year, specifically within this channel,” says head of marketing Jan McKee.

Meten claims that all the big pizza brands are popular with his customers, but that there is little in the way of loyalty. “We sell a lot of Goodfella’s. We have a thin-based one which is normally £2.79, and is currently on offer at £2. But next month Dr Oetker’s Ristorante might be on offer and people will switch to that. People just want the best value. Everyone likes branded products, but they don’t mind which brand. The pizza companies are cutting each others’ throats competing for deals – customers love it.”

He adds that pricemarked packs (PMPs) make a big difference to customers’ value perceptions. “Within my frozen fixture, everything is pricemarked – customers think it’s better value. If I price one product up on the barcode shelf at £1.25 and a similar product is pricemarked £1.25, the PMP will sell. Customers think they’re getting ripped off when it isn’t pricemarked, whereas with PMPs they know they’re getting the same price everywhere.”

Pippa has also witnessed demand for PMPs. “We’ve stopped ordering from Palmer & Harvey and started sourcing products from Consort Frozen Foods in Burgess Hill. A lot of their products are pricemarked, so you don’t make as much money, but volume is higher.”

According to Birds Eye’s Chantry, PMPs are “an essential tool to enable retailers to overcome the perception that products are overpriced”. Bespoke Birds Eye & HIM Frozen Shopper Research shows that 41% of shoppers see price as a key barrier to purchase, he notes.

Tinkler agrees that PMPs are beneficial. “PMPs remove the need for shelf labels that can take up space and often add confusion to shoppers. They also give shoppers visibility of price and confidence in the value that is being offered by the retailer. Clear pricemarks can also drive impulse purchase, especially during promotional periods.”

McCain offers pricemarked packs across a number of products in its core range. “PMPs have been proven to generate more sales than standard packs in the convenience sector,” says Tinkler.

But not everyone is a fan of PMPs in frozen. “The issue is that once you introduce PMPs, you’re stuck with them,” says Shelley. “People don’t trust the pricing of other products and you lose your flexibility.”

Instead, he is giving customers value for money – and boosting basket spend – with frozen meal deals.

One Stop launched a frozen meal deal last September, offering customers ‘any four for £5’ from a selection of more than 50 frozen lines, plus a 1.25ltr PET soft drink. Following on from this, the group has relaunched its frozen range with bigger packs to better cater for families. The new products are being launched with a £5 meal deal.

“People think frozen food prices are too high, but as part of a meal deal it sells,” says Shelley. “We’re about to launch a £5 meal deal with Chicago Town Takeaway Four Cheese Melts, McCain Home Chips and Aunt Bessie’s Onion Rings. We’re expecting it to be popular.”

Charlotte Hambling, UK head of marketing at R&R Ice cream, claims that meal deals including frozen products are a key driver of growth within convenience, noting that the Co-op’s £5 meal deals have been a roaring success. “It’s been phenomenal at the Co-op and we’re recommending c-stores use this mechanic to breathe life back into frozen,” says Hambling. “It makes frozen food more accessible and often ice cream is the hero of the group.”

Cross-category merchandising can also be effective, notes McKee. “Stores should also exploit cross-category merchandising to provide time-pressed shoppers with convenient solutions.”

Meten claims that having his naan bread display near frozen curries works well. “We sell fresh naan breads next to the freezer and people often pick them up, and if they don’t then we’ll recommend it at the till.”

Pippa concludes that frozen is a key category for c-stores. “With more people working and not having time to cook, frozen food is in demand,” she says. “You have to have frozen.”