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Wholesalers Find Profits By Expanding Sales

Oct 1, 2011

In this continually slow economy, shoppers are not flocking to department stores or high-end shops like they once did. The current top shops are convenience stores and kiosks, where shoppers can quickly get what they need for less money.

"People run in and out of convenience stores. They are there everywhere you go. They are busy, and they've been successful," says Stephen Stern, vice president of sales at Mister Snacks. "Our product has a good shot at being successful there," he adds, citing the product assortment at convenience stores. Mister Snacks makes and distributes a wide range of snack products for a broad range of retailers, but is popular among convenience stores. We sell to distributors who put us into convenience stores in many parts of the country," Stern says. The company, however sees a growing opportunity in mall carts too. "We are getting more and more inquiries from kiosks," Stern explains. "For example, I have a route manager in Buffalo and Rochester; in every mall he finds a kiosk that wants our products. A lot of people walk those malls."

Mister Snacks' recipe for success includes value pricing and a large product assortment. "Our products are priced to sell, and when a rack is set up there's something for every taste, from chocolate to yogurt to fat free," says Stern. "Our new mixes with strawberries and blueberries have gone from zero to hero. They both landed in our top ten items, almost overnight, and that's unheard of." Expanding their demographic, the company is now unveiling a line of "cherrito" spicy snacks.

The Internet is another strategic part of Mister Snacks' growing business. "I find that we get more and more replies from our website, so it is a real necessity," emphasizes Stern, adding that the site is a great source of information. Still, the company prefers the human touch. Mister Snacks customers can track and place orders online, but the company also follows up with a phone call. "We still are old fashioned, and we prefer to speak with our customers," Stern says.

Ike Patel, the owner of Leeds Wholesale, is realistic about the current economic climate. He sells herbal incense on a wholesale basis to retailers, and he also owns a small chain of convenience stores, so he sees the industry from both sides. "The convenience store market is down about 25 percent." Still, Patel sees an upswing. "About six or eight months ago, sales were down 35 percent. It's a little bit better now," he says. "People are more careful with their money." Looking ahead, Patel thinks this recovery will be a long time coming. "The trend is steady and will be the same for at least four or five years down the road."

For now, Patel is focused on selling his wholesale herbal incense product exclusively online through Wholesale Central, the official site of Web Wholesaler magazine. "For the wholesale side, the website is very important. A lot of buyers are aware of the site, and it offers a variety of products. Everything I have is always up on the web, and the people who buy regularly go through my site," he says. "If they have any questions they will call me or email me. Wholesale Central is the only site I sell through." Leeds Wholesale sells through the directory of wholesale products because it offers an umbrella assurance to customers that the company is a reputable supplier. "A lot of retailers have an issue with paying with a credit card upfront and not getting their products," Patel explains. "But Wholesale Central legitimizes the sellers that are on there."

Shannon Miller of Y Weng Wholesale and Trading, mostly sells to deep discount stores, but more and more convenience and kiosk customers are finding reasons to deal with her company. "We specialize in dollar store items, but we have convenience store items as well, and our hats are good kiosk items," she says. "Our hats, belts, and crystals sell for low prices." According to Miller, it is a matter of putting the retail space available to the best possible use. "Just like everyone else, convenience stores are broadening their offerings to get as much money out of their building as they can," she says. Looking ahead, she thinks that bomber hats and plush animal hats will do well in these arenas this winter.

Y Weng also does a brisk online business using Wholesale Central, with 1,400 to 1,500 items for sale there. "It is very user-friendly for our customers. It's been great for us," Miller says. About 80 percent of all Y Weng customers come through the site. "We have some walk-ins, but they check the website before they come here to see what they'll buy." The flexibility and ease of using the Wholesale Central back end is a key factor for Miller. "The strongest point is that we can add and take away as we need to. It is easy to navigate, customers don't have to log in, and there are pictures," she says.

The time is right for a move into the convenience store market, according to Greg Singer, vice president at Budpak. The company is known as a manufacturer and distributor of medical creams. "We recently got into the convenience store business more heavily," he says. "That market is really booming right now. It's our biggest growth area. We're starting to see some real traction in people coming to us, especially on the Northeast coast. We just tapped into a client base that has 10,000 convenience stores, and we're working on others."

Why convenience stores? Singer credits people looking to save money in tough times, and his company sells cheaper alternatives. "When someone goes into a convenience store and they have kids, and they need some Neosporin, for example, they may see that Neosporin is $6 to $8," he notes. "Then they see there's an alternative that's $2. In our economy right now, people go for the $2 brand. So we've been doing a real decent amount of business." People in general are working harder for less money, and that makes them look for deals. "Our business has picked up dramatically, and its partly due to the economy and partly because people are being more frugal," Singer says. "With their hectic schedules, it's easier for people to jump into a convenience store and pick up a few items than to spend a half hour in a supermarket, getting the same items and waiting on lines."

Budpak is purely wholesale, and the company uses its website for product knowledge rather than ecommerce. "Our site is not a retail site," Singer explains, "but our products are there, and their specs and active ingredients. It is set up for someone who is looking for information and alternatives to more expensive national brands. It's easy and well mapped out. Information is our best asset." Budpak keeps in touch with customers through email and social media.

Wally Lee, director of marketing and technology for JC Sales, sees a path for growth outside the usual convenience store product lines. "The trend is towards general merchandise, beyond the traditional candy and food," he says. "Independents especially tend to carry higher priced general merchandise items that they can make money on." JC Sales is a large wholesaler moving huge quantities, so the company can offer customers some great deals. "Because we are more of a volume dealer, our prices per unit are probably lower than a convenience store's current sources," Lee explains. "Convenience store chains tend to come to our cash and carry location to buy stuff, and they can make higher margins. They can buy the fast moving items we carry for the dollar-store market, and that's where the real advantage is. It is even more cost effective to order pallets from us and distribute to their stores," he adds.

To give an example of the volume the company handles, consider that JC Sales turns its entire inventory once a month. For 11,000 stock units, that's a big business. "With our food and our international division, we have about $250 million in annual sales. Just the main part is about $180 million," says Lee. About one percent of that trade is handled through ecommerce, but one percent of hundreds of millions is still significant. JC Sales is in the middle of rolling out an improved ecommerce wholesale site. The new site will offer improved search tools, a new arrivals section, wholesale prices by the pack, and better photos. The company's back end inventory system will be linked into the new website for more timely updates on new items and out of stock alerts. "We have an ERP system that links to it," Lee says.

If you wanted to translate the catchphrase, "Follow the money," into the language of retail, it would come out, "Follow the customer." Suppliers and wholesalers are doing just that, offering dollar store goods and flea market pricing to convenience store owners and mall kiosk retailers. Even in a down economy, the merchant who can serve the customer's actual needs is the one who will achieve a solid bottom line.

For more information:

Mister Snacks Inc.
500 Creekside Drive
Amherst, NY 14228
Toll Free: 800-333-6393
Fax: 716-210-1010

Leeds Wholesale
7680 Parkway Drive
Leeds, AL 35094

Y Weng Wholesale
4770 Navarre Rd SW
Unit B, Canton, OH 44706
Tel.: 330-479-9950
Fax: 330-479-9951

Budpak Inc
100 North Drive
Ronkonkoma, NY 11779
Tel.: 973-477-6265
Fax: 516-908-4917

JC Sales
2600 S. Soto St.
Los Angeles, CA 90058
Tel.: 323-260-8789
Toll free: 877-500-9994
Fax: 877-500-9952

Topic: Product Trends

Related Articles: C-store  convenience stores  kiosks 

Article ID: 1501

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