A Convenience Store survey has identified a growing desire for non food expansion among c-store retailers. But where do they start? Nicola Cottam investigates.

Retailers are keen to expand non food ranges. A survey carried out for Convenience Store found 43% of retailers had expanded their non food range in the past 18 months and 50% believe there is more consumer demand for non food products, including DIY items, DVDs and CDs, flowers, cutlery and toys. Crucially, 67% of respondents also said that having a broader non food range would help them compete more effectively with the multiples. Add to this the high margins from non food products and retailers have a pretty strong incentive for expansion.

Building on existing ranges is a good place to start. Stationery, for example, is a category often treated as an afterthought. The Premier Group’s non food trading controller Jonathan Romans says that although stationery can be found in most c-stores, retailers’ approaches to the category are variable. He says: “Retailers in the UK either tackle stationery very well or very badly. The majority have a minimal range and pay little attention to it on a day-to-day basis.” Romans stresses the need for independents to rethink their approach, particularly with the multiples closing in on sales. “The multiples’ entrance into the c-store sector has had an effect on stationery sales - Tesco in particular is impacting on the sector with its low prices,” he says.

The group is rolling out a planogram scheme in response to changing market conditions and to motivate retailers. Romans confirms: “Retailers want a solution from us to raise standards and we aim to target as many of them as possible.”

Non food categories equate to significant profits, with average margins of between 35-40%, and are largely brand-driven, so competition with multiples tends to be less fierce than with grocery, for example.

Romans concurs: “Consumers demand the major brands, which is a good thing because it means prices in smaller stores are generally on a par with the multiples. Key stationery brands include Bic, Sellotape, Parker pens and Helix products. The Premier Group also supplies own- label products with very competitive prices.”

Health & beauty (H&B) is another category that is often under-represented in c-stores. Not all H&B products are suitable for the c-store market but as a £7.3bn category there are profits to be made.

Planet Retail analyst Robert Gregory agrees the scope for H&B in c-stores is fairly constrained. He says: “I don’t think there’s a market for cosmetics in c-stores, and premium designer H&B brands are probably out of reach as well - they just don’t have the same buying clout as the multiples. In my opinion, their best bet is to stick with key impulse lines like toothpaste, deodorants and shaving equipment, for example.”

DCS Europe supplies household and H&B products to cash & carries and retailers across the UK. The company’s chairman and chief executive Deny Shortt believes there is a strong case for stocking both premium and budget health & beauty brands in c-stores. “It’s necessary to satisfy consumer demand for the premium end of the market, but budget lines are where the volume business is generated. Of the top 100 items sold in c-stores, I’d say a high proportion are discounted brands,” he says.

DCS Europe has a solution that satisfies consumers’ desire for premium brands but at affordable prices. The company has devised a 99p zone, which is being rolled out with Blueheath and various cash & carries, and gives c-store retailers access to the high volume budget market. Shortt says: “We developed the 99p zone a year ago specifically for the c-store market. It offers a large range of branded products under the 99p price point, including Procter & Gamble and Unilever products. We supply a 99p zone merchandising unit and pos. The concept needs a lot of merchandising support to get the message across to customers. However, retailers get very good margins.”

Of the 500 99p lines available, 5-10% are discontinued lines, so the range is constantly changing. The rest consists of the bottom 10 brands - but don’t let this put you off. With household names like Organics shampoos and conditioners, Imperial Leather soap, Cif active gel and Dove soap on the product list, it still represents an impressive line-up. DCS Europe also supplies its own budget brand, Enliven. It was launched in 1998 but is relaunching this month with packaging that gives the brand a premium feel. There are 16 products in the line-up, including bestsellers, shampoo and handwash.

Says Shortt: “The relaunch introduced modern packaging and new formulations containing natural fruit extracts. Enliven is stocked by retailers in 45 countries worldwide. In the UK it’s listed with Spar, TM Retail, P&H and Bestway and it’s pretty popular. To promote the brand in store and raise awareness, we supply retailers with Enliven branded display units.”

Toys was mentioned as one of the ‘in demand’ non food categories in C-Store’s survey, but it’s a category many retailers shy away from. Even if retailers are not interested in selling toys all year around, it would be worth stocking seasonal best sellers.

The Premier Group’s senior non food trading controller Colin Atkin concurs: “Retailers don’t need a lot of space to sell toys. There are a lot of small pocket-size toys on the market that don’t take up much space. For example, we offer a silo bin of Mattel Hotwheels cars for 99p, and for stores with less space we have crisp box counter displays. These are popular with retailers because they’re an easy-win product. Toys are easy to get in store, and with a good footfall, products sell well.”

Keeping abreast of the latest kids fashions is a clever way of making a quick profit. Like toys, fashion items can usually be merchandised on the counter and attract plenty of attention. Atkins says: “At the moment, Scubie fashion strings are the latest thing. They are used to make wristbands or necklaces. We offer 79p and £1.99 packs. I know of one retailer who sold £1,000 worth of Scubies in a week. Another type of wristband, or word bands as they’re called, are also popular. These retail for 49p, 99p and £1.49.”

Identikids produces wristbands designed to quickly identify lost children and re-unite them with parents or carers. They can also be used to alert teachers and carers to medical conditions, like allergies. A recent survey commissioned by Identikids found that 89% of all parents felt the identification bands were useful as a means to protect their child. Forty-four per cent of parents said they would like to be able to buy the wristbands from high street stores.

Identikids managing director Nadine Lewis says: “We want to make sure the wristbands are as accessible as possible to minimise incidents of accidental separation. For this reason we’re very keen to break into the c-store market.”

Lewis is keen to stress that the Identikids wristbands are not fashion items that could be ditched as soon as the next trend comes along. “The wristbands have a very important purpose, so their longevity should be secure. We did launch a silicon version of the band - similar to the charity bands you see - but we withdrew them for the simple reason we didn’t want them to become just a fashion accessory,” she says.

Identikids wristbands are made from yellow PVC and have ‘If I’m lost look inside’ inscribed on the outside. Parents then write a mobile or telephone number on the inside so they can be contacted if separated from their child.

Wristbands are sold in packs of three reusable bands with an indelible pen. Single use bands are also available and display boxes are supplied. There is a minimum order quota of £75.

Says Lewis: “We are selling 1,400 wristbands a week through our website and they’re also being distributed through nurseries, Boots and Mothercare, so sales are increasing every week. “This is our launch year so we are very marketing-focused, with advertising in parenting magazines like Junior and Right Start, as well as on 10 radio stations nationwide. This activity will continue through next year.”

The non food boundaries are widening and the possibilities represent an exciting challenge for retailers to experiment and engage consumers - and perhaps even beat the multiples at their own game. SURVEY RESULTS

Of the retailers involved in the survey, 75% dedicated five metres or more of shelf space to non food ranges. Retailers confirmed the sector is mainly brand-driven, with 78% of lines branded and 67% of consumers seen as ‘brand- conscious’.

More than a third of retailers cited household goods as their best selling non food category, followed by paper goods (31%) and health & beauty (15%).

When asked which non food products they’d like to stock if they could get hold of them, 9% said DVDs/CDs, 5% said toys and 4% health and beauty. Other products quoted included picture frames and gifts, glasswear, footwear, electrical products, perfumes and cosmetics.

1. How many metres of non food products do you stock, including health & beauty, household and paper goods etc?

One metre - 3%
Two metres - 22%
Five metres - 75%

2. What, if any, non food categories have you expanded in your store in the past 18 months?

Audio/visual - 2%
Stationery - 2%
Cards - 3%
Health & beauty - 7%
Pet food - 3%
Paper goods - 5%
Household - 13%
Nothing - 57%
Other - 6%
All - 2%

3. Do you think there is a demand among consumers for a wider range of non food products? If yes, which products?

Household - 9%
Health & beauty - 9%
Other (flowers, toys, DIY) - 26%
Don’t know - 6%
No - 50%

4. Which non food products would you like to stock in your store if you could get hold of them?

Audio/visual - 9%
‘Kids stuff’ - 5%
Health & beauty - 4%
Phasing out non food - 1%
Happy with range - 72%
Other - 9%

5. What is the average margin on non food purchases?

15-25% - 45%
26-35% - 30%
36-45% - 6%
46%+ - 3%
Not sure - 16%

6. Does your wholesaler/C&C stock an adequate range of non food products and brands?

Yes - 80%
No - 20%

7. Do you think consumers are more brand-conscious when it comes to non food lines?

Yes - 67%
No - 33%

8. Do your non food products tend to be branded or own-label?
Branded - 78%
Own label - 17%
No response - 5%

9. What is your best selling non food line?

Household - 36%
Paper goods - 31%
Health & beauty - 15%
Stationery - 10%
Batteries - 5%
Other - 3%

10. Have any of your customers requested a product you can’t get hold of? No - 85%
Yes - 15% (of which half were household goods)

11. Do you think a more comprehensive non food offer would help you better compete with the multiples’ c-stores?

Yes - 67%
No - 33%