Alternative fuel retailers – supercenters, supermarkets, warehouse clubs and the like – are chipping away at the convenience store industry’s gasoline shopper base, a TNS Retail Forward report shows.
Results from the most recent TNS Retail Forward ShopperScape survey indicate that a third of shoppers are buying most of their gas at alternative outlets, up from 22% just three years ago.
“Fewer shoppers filling their tanks at convenience stores mean fewer shoppers filling their stomachs with higher-margin goods inside the store,” said Jennifer Halterman, senior consultant with TNS Retail Forward. “Sky rocketing gasoline prices also leave little change in shoppers’ pockets for in-store purchases.”
Alternative gas retailers now capture an estimated 13% of gasoline sales in the U.S., the report said, a figure that TNS Retail Forward projects will grow to 16 to 17% by 2012.
“Continued high gasoline prices are making alternative players’ cents-off promotions very attractive,” Halterman said. “As a result, we expect more shoppers to take advantage of the increasing number of fuel-reward programs. Aggressive fuel-reward programs combined with the convenience of one-stop shopping makes it no surprise that more shoppers are filling up at these alternative outlets.”
Gasoline sales help generate traffic and boost inside sales at alternative gasoline retailers, a group TNS said will be successful if it highlights campaigns that “tie fuel rewards to high-margin purchases such as private brands, non-grocery general merchandise items or in-store services.”
Convenience stores, however, must reduce reliance on gasoline and focus efforts inside their stores. “Convenience will remain key,” Halterman said. “However, adding destination appeal with unique product offerings, innovative marketing and new service offers will help drive traffic, retain shoppers and increase profitability.”
Convenience stores also need to pay attention to the growing number of small-store food concepts rising on the scene. “C-stores must prepare for a future retail landscape that will be filled with an increasing number of small-store concepts that home in on convenience,” Halterman said. “C-stores must deliver a differentiated offer that not only delivers convenience but adds destination appeal.
“Ultimately,” Halterman said, “convenience stores that reduce their reliance on gasoline by focusing efforts inside the store will be best positioned for the future.”
The TNS ShopperScape survey is conducted monthly with a nationally representative sample of 4,000 U.S. primary household shoppers.