“Consumers are back in the game,” James Russo, vice president of global consumer insights at Nielsen, assured the crowd of retailers at the NACS State of the Industry Summit in Chicago this week.
Russo shared the top consumer behaviors c-store operators should watch for this year, noting that while consumers were on the sidelines in 2008 and early 2009, consumer confidence is finally improving.
Convenience store in-store sales grew 4.9% in 2009, even as overall retail sales in the U.S. dropped 7%.The increase comes as no surprise to some retailers who have already felt the return of consumer confidence at their stores.
Double Quick, which operates 44 stores in northwest Mississippi and southeast Arkansas, for example, has seen an in-store growth slightly better than the 5%, noted Scott Shafer, director of operations for Double Quick. OTP is among the categories that are up at his stores.
But even as customers start shopping more, don’t expect a return to a pre-recession environment. Changing consumer behaviors abound. For example, trends show a 12% increase in canning and freezing and a 9% increase in cookbook sales as more shoppers save money by eating at home. A “new normal” has emerged among consumer trends, with shoppers expressing signs of more discretionary spending. For these consumers, value is defined by what they want, when they want it—but at a price they can afford.
Trends To Watch
Looking to the long term, Russo pointed out a number of trends that should have a strong impact on consumer behavior in the future. Already, No. 1 brands and store brands are holding steady as sales of mid-level brands decline. While consumers want core brands, they want a good price point. After 2020, household spending on packaged goods is expected to begin to fall.
By 2028 U.S. women on average are expected to earn more than men. Already there are 6.2 million more women in university than men, which is sure to have a strong impact on business in the future. This could mean with more women in the work force, causing more men to become the primary shoppers—something sure to be beneficial to the c-store market. With more male shoppers also expect less stock up trips and more frequent fill-in trips.
By 2020 the global middle class will be a staggering 52% of the world’s population, which will have a significant impact on shopping habits.
Technology is also an area to watch. Social networking is becoming more important in the way people do business. Already one out of every four people on the planet has access to the Internet. By 2015 mobile phones will over take PCs, and the main language by which we will communicate online will be video.
Outlining near-term recommendations for growth, Russo advised his audience to target ongoing consumer need states – the essentials, consumable foods, value and deep-rooted trends; to capitalize on weaknesses in the restaurant market; stick to strengths in the breakfast daypart, afternoon/evening snack occasions – all while pursuing dinner opportunities; optimize assortment mix; get in on the social media conversation and use it to your advantage.
Looking ahead to the long-term, Russo recommended: focusing on overseas opportunities; understanding that today’s demand economy is focused not on more choices but on the right choices; accept that store brands are here to stay; align with the aging population, which makes up a large portion of the consumer segment; leverage the changing role of women; and once again, get connected via social media.