Balvor 2011 convenience retail outlook

December 2010

Copyright © 2010 Balvor LLC. All Rights Reserved.

117 South Cook Street #339

Barrington, Illinois 60010

phone: 847.722.2732

fax: 847.382.1801

[email protected]

Summary of Survey Results

2011 CONVENIENCE RETAIL OUTLOOK


Composition of Retailer Respondents(Retailers completed online survey between 11/9/10 and 11/22/10)

1- 10 Stores,

54%11 - 50 Stores,

21%

51 - 200 Stores,

10%

201 - 500 Stores,

11%

500+ Stores, 4%

Number of Stores Operated(Percent of Retailers)

Top-Line Characteristics

# of retailers: 113

# of store represented: 10,510

1-10 store operator share: 54%

Source: Balvor 2011 Convenience Retail Outlook Survey, Balvor LLC, November 2010.

2


4.2%

2.8%

Foodservice Merchandise

3

2010 Dollar Sales Trends YTD - PCYA(Weighted Average*)

* Based on store countSource: Balvor 2011 Convenience Retail Outlook Survey, Balvor LLC, November 2010.


0.9%

2.3%

5.3%

4.3%

1.0%

3.7%

5.1%

2.5%

1- 10 11 - 50 51 - 200 201+


4

2010 Dollar Sales Trends YTD - PCYA (Weighted Average* – Grouped by # of Stores Operated)



9%

21%

18%

27%

24%

38%

33%

44%

48%

56%

Drug stores offering commissary-driven fresh foods

Drug stores selling beer in more locations

Foodservice operators expanding into morning day-part

Grocery stores partnering with specific convenience chains to offer fuel discounts

Other convenience stores offering fuel discounts

Very Concerned Somewhat Concerned

5

2011 Competitive Threats – Level of Concern(Percent of Retailers*)

* Ranked in descending order based on percent concerned.Source: Balvor 2011 Convenience Retail Outlook Survey, Balvor LLC, November 2010.


14% 15%

10%12%

7%9%

38%

25%

23%18%

11%7%

11%

16%25%

11%

7%6%

Raise retail prices on hot dispensed

beverages

Upgrade hot dispensed beverage

equipment

Add iced coffee to the offering

Consider re-branding hot

dispensed beverages

Adjust cup sizes offered with cold

dispensed beverages

Introduce a smaller cup size in hot

dispensed beveraes

No, Already Did in '10

Somewhat Likely

Extremely Likely

6

Potential Changes to Dispensed Beverages in 2011(Percent of Retailers*)

* Ranked in descending order based on percent likely to change in 2011.Source: Balvor 2011 Convenience Retail Outlook Survey, Balvor LLC, November 2010.


9%

13%

7%4%

9%

32%

13%

15% 17%10%

9%

13%

12%

3%

10%

Expand range of products on roller grill

Develop private-label offerings

Install a wholesaler, fresh-food express case

Change product suppliers

Franchise with a branded foodservice

concept


Somewhat Likely

Extremely Likely

7

Potential Changes to Foodservice in 2011(Percent of Retailers*)



8% 9%7% 8%

5%

11%

37% 36%

31%

22%

21% 14%

8%6%

5%

4%

4%4%

Add new product categories

Leverage multi-vendor displays

Use more manufacturer floor

shipper displays

Reduce SKU counts Introduce new services

Introduce private label across categories


Somewhat Likely

Extremely Likely

8

Potential Changes to Packaged Merchandise in 2011(Percent of Retailers*)



44%

14%

3%

40%

58%

25%

Your Company Convenience Industry US Economy

Somewhat Optimistic

Extremely Optimistic

9

Retailer Outlook for 2011(Percent of Retailers*)

* Ranked in descending order based on percent optimistic.Source: Balvor 2011 Convenience Retail Outlook Survey, Balvor LLC, November 2010.


29%

54%

64% 64%41%

42%36% 36%

1- 10 11 - 50 51 - 200 201+

Extremely Optimistic Somewhat Optimistic

10

Retailer Outlook for 2011 – “Your Company”(Percent of Retailers - Grouped by # of Stores Operated)



Negative, 30%

Positive, 70%

Classification of Comments(Percent of Retailers Responding)

Positive themes• Competitive positioning (delivering value in

more ways today)

• Customer service (focusing on better satisfying needs of customers)

• Foodservice (becoming better at serving up a quality lineup of fresh products)

• Economy (getting better – albeit slower than expected)

Negative themes• Competitive threats (discounting is helping

sales, but hurting profits)

• Economy (creating an on-going drag on consumer spending)

• Supply-side inflation (higher input costs –especially in foodservice)

11

Retailer Outlook for 2011



36%

19%

42%55%


Somewhat Optimistic

Extremely Optimistic

12

Retailer Outlook for Company’s Prospects in 2011 (Percent of Retailers)



22%

46%

64%

50%

49%

42%27%

29%

1- 10 11 - 50 51 - 200 201+

Foodservice


10%

25%

36%

29%

51%

54%

64%

64%

1 - 10 11 - 50 51 - 200 201+

In-Store Merchandise


13

Retailer Outlook for Company’s Prospects in 2011 (Percent of Retailers - Grouped by # of Stores Operated)



5.1%

4.2%


14

2011 Dollar Sales Targets – v. ‘10(Weighted Average*)



36%34%

23%

4% 1%2%

20%

42%

30%

4%2% 2%

Up more than 6% Up 3 to 5.9% Flat to Up 2.9% Flat to Down 2.9% Down 3 to 5.9% Down more than 6%


15

2011 Dollar Sales Targets – v. ‘10(Percent of Retailers)


Copyright © 2010 Balvor LLC. All Rights Reserved. 16

Public Accomplishments

White Papers

• Convenience Channel Opportunity: Insights for the Dairy Industry, Dairy Management Inc., 2010.

• Are Retailers Doing Enough? Preventing Underage Access to Tobacco at Retail, Center for Responsible Tobacco Retailing, Inc., 2009.

• Accelerating Cigar Profits Through an Increased Strategic Focus, John Middleton Inc., 2008.

• How to Succeed in Convenience Retail:A Practical Guide for Product Suppliers, NACS, 2007.

Industry Research

• SKU Rationalization Survey, NACS/Balvor, March 2010.

• Motor Fuels Retailer Survey, Balvor/NACS, January 2010.

• State of Foodservice, Convenience Store Decisions, 2008 - present.

• Tobacco Retail Survey, Convenience Store News, 2008 – present.

Current Industry Affiliations

• Convention and Events Committee, NACS, 2007 – present

• Supplier Advisory Board, Convenience Store Decisions, 2006 – present

• NACSPAC Member, 2008 - present

Biography

David is the managing partner of Balvor LLC, which is a sales and marketing firm that provides consulting, sales support, research, and analytic services to retailers, product suppliers, financial analyst and other organizations.

Balvor’s services support various food channels, covering both foodservice and retail classes of trade.

David has helped many leading retailers evaluate new retail concepts, enhance annual category planning processes, and develop new business support methods related to assortment rationalization, space allocations, or branding strategies.

He helps product suppliers improve their competitive positioning, trade programs, and category management capabilities by better understanding what retailers’ value while also benchmarking versus peer companies.

David also has extensive experience with activity-based costing, channel sales strategy, merchandising assessments, trade communication, and custom analytical support for both consumer packaged goods and foodservice industries.

Prior to founding Balvor in 2008, David spent 12 years at Willard Bishop in various positions, including most recently as partner. David began his career with The Levy Restaurants in operations for new store concepts where he focused on beverage and financial programs.

David Bishop Managing Partner, Balvor LLC

P: 847.722.2732

[email protected]

mailto:[email protected]

Balvor 2011 convenience retail outlook

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