AAFES Retail Food

New Frozen POG, Candy Pump Top Sales R As we go forward,

Arens

Fast and Fresh,

etail Food continues its strong growth as Army & Air Force Exchange Service (AAFES) patrons opt to satisfy more of their snacking and meal occasion needs inside the gate. The exchange service and its business partners continue to develop new promotions around Retail Food that add value and convenience for the patron at multiple points across AAFESs Express, specialty and main store network. In Mid-March, E and C News spoke with Retail Food Divisional Merchandise Manager (DMM) David Arens about the recent surge in sales in AAFESs food and snack categories, and the multiple new programs and initiatives that the Exchange is rolling out to provide patrons a greater array of convenience, frozen, fresh-to-go and other healthful meal and snacking options. Association of Convenience Stores (NACS). Business has been good our only major challenge is the Operation Enduring Freedom (OEF) supply chain to Afghanistan, Arens noted, and the DMM was encouraged by the success of recent initiatives, and the promise of a full slate of new programs that are either on the drawing board or currently being implemented in this dynamic segment. ISLAND COOLERS One of the most significant of these, Arens said, is the introduction of the Exchanges Fast and Fresh Island Cooler Pilot Program. These 14foot by 10-foot refrigerated island displays will be packed and stacked with an abundance of snack, beverage, deli and other packaged food selections that will allow servicemembers to build a wide variety of on-the-go meals. The program, he noted, would likely be limited to stores that have the square footage available to accommodate the islands, which will be located adjacent to the stores Snack Avenue sections. As we go forward, the customer will be able to shop the Island Cooler and Snack Avenue areas together for a more one-stop-shop food selection experience, Arens pointed out. The 40-SKU Island Cooler assortment will include Ruiz butcher-wrapped Burritos; Chobani Greek Yogurt; Laughing Cow and Baby Bell Cheeses; Kraft and Oscar Mayer fun packs; Holy Guacamole and Salsa; Big Papa/Hot Mama Pickles; Deli Express sandwiches; sushi from Gateway Military; foot-long subs; wraps; hardboiled eggs; and fresh fruit. To wash their choices down, patrons will also find a variety of beverages in the Island Coolers, Arens said, including Smart Water, Fuji, Naked Juices, Pure Premium Tropicana, and more. As far as salty snack complements to these meal options are concerned, the DMM noted that AAFES is merchandising a seven-SKU Frito-Lay set on top of the cooler. The first cooler display concept, Arens said, was just launched at Fort Bliss, Texas, Freedom Crossing, and was piloted in six other stores throughout March, including the Fort Lee, Va., PXtra/Troop Mall; Express stores at Fort Stewart, Ga.; Fort Lewis, Wash., and Fort Riley, Kan.; the Fort Carson, Colo., Gate 3 Express, and the Fort Hood, Texas, III-Corps Express. We have so much volume that we think its going to be a great
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the customer will be able to shop the Island Cooler and Snack Avenue areas together for a more one-stop-shop food selection experience.
David Arens, AAFES Retail Food Divisional Merchandise Manager (DMM)
AAFES Photo

RUN RATE RUN! AAFES Retail Food sales not including gas continue to grow at a run rate of about 6 percent, Arens observed. We just finished the year at $413 million, up 6.17 percent to last year, and gross profit came in at $85.5 million, up 7.34 percent from prior year. In the civilian marketplace, meanwhile, instore convenience store sales grew 2.4 percent, according to data recently released by the National

AAFES DMM David Arens expects the Exchanges newly introduced 40-SKU Island Coolers to be a big hit, as they help transform Express stores into more of a one-stop solution for on-the-go food, beverage and snack products.

36 | MAY 2012

AAFES Retail Food

FIlE Photo

solution for patrons. During the pilot, he added, were monitoring the assortment lift and sales, gross profit, and comp sales of the store, and transactions. IMPULSE IMPACT One of the landmarks in AAFESs Retail Food segment in 2011 has been the popularity among patrons of its free-with-purchase Pump-Topper programs. Each month we give away a free item with a gasoline fill up of eight gallons or more; in January, Kit Kat was the featured item, in February it was a Lindt Truffle 3-pack and in March it was Twix. In December, AAFES had a blockbuster PumpTopper promotion involving its No-1 candy SKU, which resulted in a total of 1.1 million Snickers sold and on promotion as part of the Pump Toppers program during the month of December (see E and C News 3/12). From that we have developed a Million Bar Challenge promotion, Arens said. Were going to have another Million Bar Challenge in April, with Reeses Peanut Butter Cups, which will feature a two for $1 Reeses special offer Reeses is the No.-2 selling candy item in AAFES stores, so that should be exciting. Another program that has yielded results for AAFESs Retail Food channel is the Exchanges Impulse Item of the Month program. Typically this promotes the pump-topper free giveaway item, and has high visibility at all the checkouts. The featured items in this program, Arens said, have the highest attachment rate, often leading to the purchase of one or more of the sale price items, because of the good value they offer, and because they are easy to access at the time of purchase at the register. COMBO DEALS Combo Deals, for example, light snack and beverage combos, and other strong combinations, have been strong sales and traffic drivers in Express stores. This year, were moving it into a quarterly change-out, he said. It is doing well within Snack Avenue; It gives us a solution for the customer that is similar to Quick Serve Restaurants (QSR), basically giving you the value-meal bundling opportunity. This mirrors a trend among civilian C-stores to provide more QSR-type options. Among the combo deals popular with patrons, Arens said, are the top-performing Ruiz Tornados with fountain or coffee; hot dog with fountain or coffee; sandwich and chips; candy bar with fountain beverage, coffee with breakfast sandwich, and Ruiz Butcher Wrap Burrito and Roller Bites with a beverage. In addition to driving sales and traffic, Arens noted, Combo Deals help to market and advertise brands within our foodservice entities. Increasingly with the success of retail food and Snack Avenue, its become a nice growth area and solution for the customer. As a result, the Combo Deals, he said, have now penetrated around 600 stores, including Express stores, Troop Stores, Four Seasons stores, and other smaller venues that provide convenience-type foods. OATMEAL AND JAVA AAFES patrons will soon notice a change of appearance in their Snack Avenues, beginning in July, as the Exchange rolls out new, redesigned signage and dcor for its Premium Java Coffee counters and 38 | MAY 2012

equipment. Weve been working internally with our marketing department on the total signage package from the main coffee area, to wraps for all of the coffee containers. That should be really exciting, and will also refresh the overall look of the Snack Avenue, Arens said. In addition, he noted, We are also expanding Premium Java to some of the Exchange-owned foodservice operations, so the great coffee in the Express can be shared in some food court locations. Also from S&D Coffee AAFESs premium Java provider Arens said, We are launching a new self-serve oatmeal concept in 100 stores, which aligns with growing trends and with our focus to offer healthy options on-the-go. The oatmeal is dispensed from a machine and will offer three popular flavors, as well as toppings options such as raisins and nuts.

FROZEN FOOD PLANOGRAM Another potentially gamechanging initiative for the Retail Food Division will be the worldwide launch of a Frozen Food Planogram to replace and standardize the two different sets that previously existed for CONUS and OCONUS. Weve segmented it by the key categories, for example, Pizza, Grab n Go (GNG) entrees, hot pockets, ice cream and desserts, and weve also stepped into Meals To Go products some of the brands in that part of the planogram include P. F Changs, Bertolli and the Tyson line of Anytizers.

AAFES is planning several new initiatives to drive candy sales, including Chocolate Fest 2012, which will be highlighted in-store with a full signage kit.

FOUNTAIN DRINKS Broadening the fountain drink assortment in food service and convenience-type stores has been a work in progress for a number of years. We recently added Mountain Dew and Dr Pepper to the fountain beverage assortment, giving us two of the top fountain products along with six top SKUs from Coca-Cola. To draw attention to the new offerings, Arens said, Well be conducting a new Dr Pepper Cup Promotion Sweepstakes in June 2012. SAMPLING PROGRAM AAFESs efforts to think out of the box are evident in its new in-store sampling program. Arens explained that different vendors and food segments would be featured each month, starting in May, in all Main Stores, and in the top 350 locations. Using a sampling program kit, Arens said, stores can print out signage for the time of day the sampling will occur. Among the first vendors slated to participate in the program, Arens said, are Ruiz (Tornados); Gateway Military (sushi, salads and fruit cup offerings); and top candy and snack vendors including The Hershey Company; Mars, Incorporated; Frito Lay; and Kellogg Company. In the candy category, the DMM pointed to several new initiatives; Seasonal Candy Year-Round which he said would launch right after Easter and

a new program, Chocolate Fest 2012, which would be highlighted in store with a full signage kit. The intention, according to Arens, is to create opportunities for incremental sales, and to enhance merchandising and advertising for candy sales promotion peaks and other relevant occasions this month. In June and July, AAFES continues emphasizing the candy section with its Summer Sweets promotion, highlighting everything fun about summer, from road trips and vacations to trips to the ballpark and outdoor celebrations. Were working with Welchs on a Smart Car giveaway promotion. The products featured during Summer Sweets will include Welchs Fruit Snacks, cotton candy, taffy, Skittles, licorice, and other fun novelty and snacking items. The Exchange confectionery fun continues in August, Arens said, when we begin to set Halloween, and advertise for Back-To-School. Adding a frothy top to a slate of promotions and initiatives already guaranteed to set taste buds tingling year-round, Arens noted, will be the introduction of FReal Smoothies to 96 more stores. A new item, Double Fudge Brownie, will also be added to the FReal planogram. Through 2012, well have that in approximately 200 locations, he added. LOOKING AHEAD Asked about metrics related to footsteps and patron purchases, Arens said that, From a transactions point of view in Express stores, we can now access business intelligence (BI) to analyze the Express retail vertical. We want to evaluate that point-of-sale data on an ongoing basis, so that we can see the connections between the strategies that we are trying, with the store traffic and basket size. One example, Arens noted, was from the December time frame, when Express stores were up 13 percent in transactions, and up 13 percent in basket size. E and C NEWS
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