Private Label's Potential Huge at C-stores, Says Nielsen

Sales of private label products are growing faster in convenience stores than other types of  stores, and represent a tremendous growth opportunity for the convenience channel, according to new research previewed today by The Nielsen Company.

The Schaumburg, IL-based retail data wrangler will unveil more of its c-store channel analysis at the NACS (The Association for Convenience and Petroleum Retailing) Show in Chicago October 4 - 7.

Nielsen said its research shows that sales of private label products rose over the last year nearly 20 percent to $826 million in convenience stores, compared to a 15 percent increase in drug stores, and just under 10 percent in supermarkets.

Overall, however, private label share is significantly lower in convenience stores - only 1.5 percent - compared to a 13 percent share of drug stores' dollar sales and a nearly 18 percent share of supermarkets' dollar sales.

"Convenience stores are just starting to see the potential of private label, said Tom Pirovano, director of industry insights, The Nielsen Company. "While private label dollar growth has been driven more so by higher unit prices, versus a shift from traditional brands, we do see private label unit sales up in recent weeks. The convenience channel has an opportunity to develop their own store brands using private label benchmarks at supermarkets and drug stores."

Nielsen said its analysis of the segment showed six out of the top-selling product categories in convenience stores, such as carbonated beverages, snacks and candy, are significantly underdeveloped in private label.

"These products are generally considered strong sellers for convenience stores yet are very underdeveloped in terms of private label share," said Pirovano. "Now more than ever is the perfect time for convenience store operators to expand their private label offerings. Although store brands generally deliver higher margins, private label products can also convey a value image that many shoppers are looking for during times of economic uncertainty."

Other key findings include:
* Nationwide, convenience store sales are up 4.1 percent.
* Little Rock, San Antonio, Richmond/Norfolk, Boston, and Seattle show the biggest growth in convenience store dollar sales.
* The least amount of growth in convenience store dollar sales is in Tampa, Chicago, Houston, St. Louis, and Phoenix.
* Convenience stores sell more beer, cigars, and chewing tobacco than grocery stores, drug
stores, and mass merchandisers combined.

Nielsen said Pirovano will present a more comprehensive look at the research at the NACS Show on Sunday, October 5, in a talk entitled, "Categories, Packaging and Pricing in the Convenience Store Channel."

Nielsen is a global information and media company offering marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows, and business publications. (Progressive Grocer is part of Nielsen Business media.)
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