Leading convenience store operators are ramping up their activity in the private-label merchandise space, driven by improved profit margins over branded items and increased consumer demand for products that deliver both value and quality. While private label’s share of overall c-store sales pales in comparison to other trade channels, convenience retailers see opportunity ahead in marketing proprietary items that draw customers to their stores, ensuring loyalty, while also providing chainwide operational efficiencies and improved bottom lines.

In just the past year or so alone, several major c-stores dramatically increased their private-label offerings and publicly expressed their recommitment to the segment. 7-Eleven, for example, recently unveiled a new line of private-label items under the 24/7 LIFE banner, as well as a number of its own packaged beverages, buttressing its already-long-established 7-Select line of merchandise. Indeed, the Irving, Texas-based chain now markets some 1,500 private-brand items, sales of which the company expected to top $1 billion last year.

Casey’s, meanwhile, relaunched its private-label program in late 2020, and this year expanded its offerings to more than 150 items. And Love’s Travel Stops & Country Stores expanded its year-old Love’s Travel Snacks line in 2020 with new candy variants, while also introducing its own enhanced bottled water.

Value Proposition

According to 7-Eleven, about eight out of every 10 Americans buy private-brand products to save money. Millennials have a particular affinity for the value and quality that the brands offer, the chain said, and are contributing to the growing popularity of retailer brands. In late 2019, the chain launched the 24/7 LIFE line, comprised of more than 200 non-food products, including electronic accessories, over-the-counter medications, health and beauty aids, cleaning supplies, paper goods and travel-size accessories. That was followed by the company’s own Skyra Icelandic spring water and Triton sugar-free energy drink last year. “7-Eleven is one of the leading beverage sellers in the U.S., and our private-brand drinks are a growing segment of that business,” said Jack Stout, senior vice president, merchandising and demand chain. “We’re always looking for ways to improve quality and offer taste profiles that are new and trending at a great value.”

Iowa-based Casey’s rolled out a line of own-label soft drinks, juices and ready-to-drink iced teas and lemonades, as well as packaged snack cakes, in November 2020 as the chain relaunched its private-brand program. This year, salty snacks and jerky products were introduced. Tom Brennan, chief merchandising officer, conceded that while Casey’s has offered private-brand products in the past, “quite frankly, we didn’t put any energy behind them. We didn’t have any dedicated resources to develop and grow the brand, and it showed in our dated packaging and underdeveloped assortment.”

Eric Long, director of private brands at Casey’s, described the new products as “national-brand equivalent or better and an opportunity for our guests to save money without sacrificing quality. In only the first month on the shelves, our products are being well received by guests. They’re already asking us for more choices.” The chain also markets its own bottled water, bagged candy and automotive items.

The new products allow Casey’s to leverage the brand equity it’s already built from foodservice items like its pizza. “We’re building on that equity to bring that brand deeper into center store,” Long said. “We continue to dig deeper to identify more categories where we can bring our guests additional value by providing a great quality private-brand product offering.” The renewed focus on private-label brands at Casey’s coincides with the chain’s recent unveiling of an updated logo.

Eight out of every 10 Americans buy private-brand products to save money.

Listening to Customers

Love’s c-stores added several new candy options to its Love’s Travel Snacks line, along with Love’s premium water containing electrolytes, last summer. “We listen to what our customers want, and what they want is superior products at competitive prices,” remarked Mark Romig, director of merchandising for the Oklahoma City-based chain with 520 locations in 41 states. New additions to the candy line, first introduced in June 2019, include sour watermelon jacks, saltwater taffy, apple rings and frosted heart pretzels. They join the already-established French burnt peanuts, starlight mints, gummy bears, fruit slices, peach rings, cherry sours, sour worms and orange slices.

According to Love’s spokesman Caitlin Campbell, more private-label offerings will launch this year. A Love’s spring-water line “will greatly expand the Love’s branded presence in our cooler doors,” Campbell said, while nut mixes, priced at two for $5, will be added to the Love’s Travel Snacks line. Nut mixes are a “core item for our customers,” she noted, “so incorporating the Love’s brand brings the customer a better value and allows us to react more directly to our customers’ feedback and requests.” The spring water and mixed nuts are scheduled to be in store by the end of May, Campbell said.

A number of other c-stores market their own lines of merchandise. New York-based Stewart’s Shops, for example, offers a vast array of items under the Stewart’s banner. “We distribute three-quarters of the products we offer in our shops,” with deliveries every three days, said spokesperson Erica Komoroske. “Vertical integration allows us to be nimble and efficient and avoid disruptions,” she noted. “Our vertical integration plays an integral role in our success.” When it comes to adding new product categories to its private-label lines, Stewart’s Shops assesses product trends with the ability to offer quality products at a value price, Komoroske remarked. Other c-stores with extensive private-label offerings include Buc-ees, Cumberland Farms, Kwik Trip, Sheetz and Wawa.

Profit Motivator

The opportunity for improved profits is a big motivator for retailers considering private-label products. “In some cases, margins could be 25% versus 18% for a national brand,” said Roy Strasburger, president of StrasGlobal, a Temple, Texas-based convenience-store operations and consulting company. Marketing and promotional control over the brands is another benefit, allowing c-stores to become destinations for products not available anywhere else. “If done successfully, it’s not the store pushing the product, but the product pushing the store,” Strasburger said.

Matthew Haskell, vice president of marketing and product innovation at Duke Brands, which produces items like prepared refrigerated dips and protein salads for c-store private-label programs, said own-label products can work as an extension of already-successful in-store programs, such as foodservice. “People are starting to view the c-store as a restaurant, grocery store and convenience store all in one,” he remarked. “More and more are getting full meals and look for fresh snacks for either their workday or a trip. With the advent of full-service food stations in many c-stores, having own-brand or private-label products makes them a destination and gives them an edge over other c-stores.”

Strasburger cautions that private-label programs aren’t designed for all c-stores. “Private label is always difficult for a c-store that isn’t one of the top 10 players,” he remarked. “The economies of scale are very difficult. It’s a big time and money commitment,” often requiring upfront fees to manufacturers. Even for medium-sized chains of 200-300 stores, “most private-label items don’t move enough volume to justify the cost,” he said. While small operators with a “well-respected brand name” can be the exception, Strasburger advised that independent and single-store operators consider control labels offered within buying groups, rather than their own private labels.

Most importantly, Strasburger emphasized, retailers must have a plan and a strategy for a private-label program. “Private label is about building and leveraging a brand,” he said.