2019

Recipe A Plateful of Potential The multi-billion-dollar snacking industry is in a constant for Success. state of change. In 2017, Americans Whip Up Smart Snacking Category consumed over 180 billion ,1 Management in 5 Easy Steps on average 2.8 snacks per day!2

Snacking Outside the Lines Snacks were once boxed-in as an option to fight hunger between three a day or as the occasional sweet treat. But a more out-of-the box approach to snacking has gone mainstream. As many consumers shift away from the typical 9–5 job to a more on- the-go lifestyle, they turn to snacks as convenient replacements that aren’t scheduled at any point during the day.4

Consumers surveyed say they often replace a meal with snacks: 47% at and another 53% for .5 From 2016 to 2018, the number of survey participants who typically skip or replace one meal a day with a has increased from 27% to 32%.5 The roles of consumers who routinely skip or replace two The largest percentage of meals a day with snacks have snackers do so for a treat7 Key Ingredients: 5 increased from 4% to 9%. A Measured 50% SNACK TO Approach to Sales Treat Myself SMART COOKIES Audience. Time of day. SHOULD KNOW Type of treat. What’s in reach. More than two thirds of 37% SNACK TO All of these variables factor the population snack at Give Myself a Break into the purchase decision. least twice a day!6 During the Day Staying in tune with trends 6% and planning ahead with the Other right product mix can help 15% 27% SNACK TO set up your operation to win 4+ times the snack segment. per day 55% Eat on the Go 2–3 times per day Keep reading for our 5 Steps 24% for any operator to promote 1 time 26% SNACK TO per day sales in their given segment. Eat Healthier

1 STEP 1. Identifying and understanding your consumer is one of the most important steps in effective category management. Identify Your Analyze your current traffic’s demographics, dietary habits Consumer and purchase motivators. DEMOGRAPHICS DIETARY HABITS MOTIVATORS Age, gender, Health-consciousness, Taste, convenience, income allergies price, habit

Four core age groups serve up a feast of potential snack sales. Get to know what each brings to the table.

Boomers (54–72) • Seek snacks with low or no saturated fat and reduced sodium and are more likely to choose confections with protein, antioxidants, reduced sugar and no or low caffeine8 • Prefer three square meals a day9 • Focus on value, not price, when dining out9 • Have the largest spending power of all the generations —$2.3 trillion, compared to Gen X’s $125 billion, millennials’ $200 billion and Gen Z’s $43 billion10

Gen X (42–53) • Seeks made with premium ingredients11 • Transparency is key: They believe it’s important to know the story behind a item11

Millennials (23-41) • Culinary explorers; 48% will try a new menu item because it sounds interesting12 • Highest consumption during the afternoon snack daypart13 • Millennials purchase one-third of their meals away from home compared to 25% of the overall population14

Gen Z (8–22) • Less concerned where their food comes from15 • 56% of Gen Z agrees that taste and flavor is most important15 • $44 billion in buying power, poised to spend more as they age16 • Increased frequency of trying new foods17 • One-fifth of Gen Z’s budget currently goes toward food18

2 STEP 2. Review Your Performance

The Competition Efficiency/Effectiveness Another great way to review your performance: Assessing the overall efficiency and compare it to the performance of the effectiveness of your operation can help competition. you identify areas in need of improvement and create a better-informed sales strategy. • Consider an operations tour with your manager to observe similar stores to • Study your layout, traffic flow, product discover potential new best practices. DID YOU KNOW: offerings, business hours, product and • Review their layout, signage and category gaps. Rotating products based on daypart product offerings. and traffic can • Be cognizant of customer patterns during • Look at their bundle and value meal morning, noon and evening time periods help promote purchase. options to determine if certain offers or and whether purchase behavior varies. pairings resonate with consumers more • Consider whether you should open earlier than others. in the morning or later at night, or if you • Observe foot traffic and gauge if products should offer a different product mix. similar to yours move quicker or slower • Gauge purchase patterns not only because of their relation to associated by looking at sales numbers, but by products on the racks. interacting with customers. • Bear in mind that a breakfast biscuit may • Ask customers if there are any products perform better next to yogurt in one store, they would like to see and if the hours but sell more next to a coffee machine in are suitable for them. another based on the clientele.

3 STEP 3. Brands play a key role in the snack purchase decision20 Tailor Snack 44% PICK A SNACK BECAUSE My Favorite Brand Choices 36% PICK A SNACK BECAUSE Offer the top-selling snacks in each segment. Brands customers enjoy at On Sale/Special home play a key role in the purchase decision—44% say their choice was 15 35% PICK A SNACK BECAUSE influenced by their favorite brand. SWEET FACT Lowest Price Weed out slow movers in favor of the Candy is #1-selling snacks they want. Don’t be afraid among the to reach out to manufacturers—they can top snacks 26% PICK A SNACK BECAUSE give you information on products that do purchased Made With better during certain dayparts and those 19 that skew toward certain demographics. overall Natural Ingredients

STEP 4. Maximize Profitability Having the right product, at the right time and in the right place, is critical to capturing more snack sales. Customers’ habits change throughout the day, so it’s important to rotate your product offering based on the daypart:

TODAY Consumers’ top Location, Location, Location: choices across Where you sell is as important as when you 8 AM sell. Help bag bigger sales with top-selling BREAKFAST the day vary21 brands displayed in exactly the right place. Bring out 9 AM products such Morning • Use product merchandisers to as breakfast Energy Bar, Fresh pair products next to each other. biscuits, coffee, Fruit, Yogurt, Bakery Place a rack near your coffee 10 AM fresh fruit and Snacks, Dairy/Yogurt • kiosk and yogurt cooler with Based Beverage yogurt. snacks that pair well. 11 AM • Use a stand-up basket rack or fruit stand rack next to your deli LUNCH Lunch counter, beverage cooler or grill. Salty Snacks, Crackers, 12 AM Swap in salty • Place a gum rack at the register snacks and Fresh Vegetables, Fresh to capitalize on the last-minute crackers to pair Fruit, Dried Meat Snacks impulse sales. 1 PM perfectly with , Afternoon 2 PM or sandwiches. Salty Snacks, Crackers, Additionally, keep all items forward-facing Chocolate Candy, Snack and restock throughout the day to ensure 3 PM Nuts, Fresh Fruit the display remains plentiful. If you see PM PICK-ME-UP a product is not moving, make sure you Display sweet replace it with a new product to try to 4 PM snacks like Evening increase impulse sales. Small additions and cookies and Cookies, Chocolate modifications will help you maximize the candy. Candy, Salty Snacks, 5 PM profitability of your operation. Crackers, Ice Cream

4 HORIZONTAL STEP 5. Merchandise and Promote! An operation is not guaranteed sales even if it has identified its consumer and stocked the perfect mix of products. Operators still must merchandise! Eye-catching displays, custom merchandising and promotions whet your customer’s appetite for the great brands you’re selling. They also let you highlight products with higher profit margins to generate more revenue. Below are a few merchandising tips to get your operation moving forward:

Brand Sections Create Stopping Power While setting up your micro market, you will be faced with VERTICAL the question: “How do I lay out my product?” There are NEW two main types of merchandising: Horizontal brand blocking The same type/brand of products displayed horizontally across a shelf. Usually utilized in bigger stores to maximize the number of top products sitting at eye level.

Vertical brand blocking All of one type of product displayed vertically forces customers who naturally look at products at eye level and from the left to right to stop and focus on the variety of brands stacked vertically. Ideal for small- footprint stores that want customers to pay attention to overlooked brands on the top and bottom shelf.

Hungry for Impulse Sales? Try a Little Eye Candy Displays are the first thing customers see walking into your store and the last thing they see before checking out. Displays are a great way to draw in a shopper’s attention. They can highlight a new product, show product pairings, or drive last-minute sales on small items such as gum. Always make sure your display is clear, and keep it organized and well stocked with products. Finally, don’t let the display get old—switch up the display type or products in the display to test what sells best and give consumers new options.

Feast Their Eyes on Digital Signage DID YOU KNOW: 80% of brands Use digital signage to draw in customers and inform experienced up to them about new products and promotions. You can easily 33% in additional change and update daily to promote special offers such sales through the use of digital as breakfast and lunch happy-hour specials or to display signage.22 menu daypart updates.

5 Merchandise Cross Merchandising and Promote! Sweetens Snack Sales. Use cross merchandising to help Bundle Up to consumers quickly find related products. Make sure to pair Help Sales Sizzle related breakfast items next to Bundling up is not just for each other—e.g., coffee and a staying warm on a cold winter breakfast biscuit or yogurt and day. Offer a discount on paired fresh fruit. To do this, utilize items to increase check size. In the snack racks next to a coffee morning, offer fruit and a granola machine or on top of a cooler to bar at a discounted price. At lunch, make sure the products are close increase ticket size with a value to each other. At lunch, add chips meal bundle promotion: When under or over the cooler holding customers buy a sandwich and the fresh-made sandwiches and chips, throw in a free . Or give try adding fruit next to the pre- them their choice of free made salads. with purchase of drink and chips. Size Matters. Consumers Eat Up “Free” So Do Flavors. Don’t shy away from product You could wind up eating a loss sampling. Offering a free sample if you buy into a one-size-fits-all of a new or existing product snack mentality. Rotate products increases the chance of a to offer the best option for every customer trying the product daypart. No two customers are and being a lifelong purchaser. the same; some may prefer a A study shows that “those larger snack of one flavor in the who sampled an item were 11% morning and a smaller snack of a more likely to purchase it again different flavor in the afternoon. during the 20-week period that By offering a variety, consumers followed” the sampling event.23 are likely to keep coming back.

Category Management: 5-Step Recipe for Success Recap When it comes to wrapping up the sale, category find the products they love by displaying their favorites management is key. Once you understand who your in the right place at the right time. Finally, to raise consumer is and what their purchase preferences are, consumer awareness it’s critical to merchandise and you should constantly review your sales performance promote. By understanding and incorporating the 5 and tailor your products to their preferences. To easy steps above, your operation can carve out a bigger maximize profitability, make it easy for customers to slice of the pie in the multi-billion-dollar snack industry.

SOURCES: 1. The Hartman Group, Out of Home Snacking (Nov. 8, articles/11896-snacking-innovation-for-the-older- now-time--court-gen-z 2017), p. 11 generation 19. Technomic, Snacking Occasion Consumer Trend 2. Technomic, Consumer Hot Buttons (June 2018), p. 7 9. Technomic, Consumers Fuel Industry Change (2018), p. 7 Report, p. 89 3. Mintel, Snacking Motivations and Attitudes—US (May 10. Business, “Restaurants Shift Focus 20. Mintel, p. 9 2017), p. 2 Back To Baby Boomers” (Jan 23, 2018). Retrieved 21. Wyatt, Sally Lyons, State of the Snack Food Industry, 4. The Hartman Group, “Snacking: The Great from https://www.restaurantbusinessonline.com/ iRi (Mar. 28, 2018), p. 19 Change Agent Disrupting Food Culture,” Forbes consumer-trends/restaurants-shift-focus-back-baby- 22. Johnson, Nick, White Paper: Digital Signage vs. (May 16, 2017). Retrieved from https://www. boomers Printed Posters—All the Answers to Your In-Store forbes.com/sites/thehartmangroup/2017/05/16/ 11. Technomic, Consumers Fuel Industry Change, p. 8 Retail Questions, Digital Signage Connection snacking-the-great-change-agent-disrupting-food- 12. Datassential, FoodBytes: Millennials (Feb. 2018), p. 5 (July 18, 2017). Retrieved from https://www. culture/#75ceecfc3069 13. Technomic, Consumers Fuel Industry Change, p. 9 digitalsignageconnection.com/white-paper-digital- 5. Technomic, Snacking Occasion Consumer Trend 14. Datassential, p. 3 signage-vs-printed-posters-answers-store-retail- Report (2018), p. 49 15. Technomic, The Gen Z Selfie (June 2016), p. 6 questions 6. Mintel, p. 3 16. NPD Group, Guide to Gen Z (2017), p. 3 23. Hein, Kenneth, “Sampling Inspires Repeat 7. Mintel, p. 7 17. Technomic, Consumers Fuel Industry Change, p. 10 Purchases,” Adweek (Aug. 4, 2009). Retrieved 8. Watrous, Monica, “Snacking innovation for the older 18. Valdez, Kevin, “Why Now is the Time for Restaurants from https://www.adweek.com/brand-marketing/ generation,” Food Business News (May 30, 2018). to Court Gen Z,” QSR (Jan. 2018). Retrieved from sampling-inspires-repeat-purchases-99961/ Retrieved from https://www.foodbusinessnews.net/ https://www.qsrmagazine.com/outside-insights/why- 6