Archer Farms: a Target brand

Private-label products, or store brands, are growing faster in convenience stores than other stores and represent a tremendous growth opportunity for the convenience channel, according to research by The Nielsen Company, writes Retailer Daily.

Sales of private-label products rose over the last year nearly 20 percent, to $826 million, in convenience stores, compared with the 15 percent increase in drug stores and just under 10 percent in supermarkets, Nielsen's research found.

Overall, private-label share is significantly lower in convenience stores - just 1.5 percent - compared with 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."

Opportunity Knocks

Six of the top-selling product categories in convenience stores, including carbonated beverages, snacks and candy, are significantly underdeveloped in private label, representing opportunities for convenience store retailers, Nielsen's analysis shows.

"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."

Additional Findings

Other key findings:

• Nationwide, convenience store sales are up 4.1 percent (Nielsen Convenience Track, YTD dollar sales ended 8/9/08 vs. one year ago).
• Little Rock, San Antonio, Richmond/Norfolk, Boston and Seattle show the biggest growth in convenience store dollar sales (based on 30 markets tracked by Nielsen Convenience Track; YTD dollar sales ended 8/9/08 vs. one year ago).
• 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.