Whether it’s implementing emerging technology or promoting a host of new foodservice items, 2013 promises to be an exciting year for convenience stores.
By Marilyn Odesser-Torpey, Associate Editor.
Thirteen isn’t usually regarded as a fortuitous number, but it takes more than luck to grow a business. Industry experts offered Convenience Store Decisions insights into some of the trends that are likely to have a significant impact on c-store retailers in the coming year.
More than 90% of adults own mobile phones, revealed a just-released November 2012 report by Packaged Facts market research company. And more than half of those are smartphones, making today’s consumers more connected and able to manage everything from their wealth to their health, as well as make purchases and payments from their hand-held devices, said David Morris, the author of the report.
A recent study by Paradigm Sample research firm showed that 71% of convenience store shoppers would be willing to use mobile wallets to pay for items using their mobile phones and tablets. “Increasing consumer receptivity, and a greater sense of security when using their mobile devices for financial transactions, has radically shifted,” said Sima Vasa, partner and CEO of New York-based Paradigm Sample. “C-store shoppers are already comfortable making online purchases, so using their mobile phones as a mobile wallet just doesn’t faze them.”
In a survey of mobile users across the U.S., Paradigm Sample found that early adoption of use for conducting financial transactions is highest among those in the West (almost 77%) and Northeast (close to 71%). But the rest of the country is not far behind, with close to 70% in the Midwest and 69% in the South.
“The seeds are sown, and once consumers are exposed to something and accept it, there comes a tipping point when they come to expect it,” said Morris, who is also the owner of Kaleidoscope Research Consulting, a foodservice and financial services market research firm. “We are foreseeing that widespread adoption of the mobile payment platform will move quickly over the next two to three years, and, with entities such as PayPal, Google Wallet and Square laying the foundation, retailers should be watching closely to see which of these platforms will reach mainstream audiences.”
You’re Near, Come Here!
Consumers’ attachment—literally as well as figuratively—to their mobile devices also gives retailers a chance to establish some solid one-on-one relationships through location- and buying history-targeted promotions.
Morris explained that since the convenience store channel is based on speed, convenience and impulse purchasing, targeted and location-based mobile advertising can be a simple, economical way to attract new customers and reward loyal ones. “You can target consumers with deals on specific products they are interested in when they’re within the vicinity of your store,” Morris said.
Vasa agreed that, particularly with the “always plugged in Millenials,” mobile communication can help forge strong bonds. Electronic coupons, for example, can give c-store customers a heads-up on what’s new and exciting plus the impetus to try new items. For retailers, redemption information gleaned from that coupon can provide important feedback as to how and by whom the new product might be accepted, she said.
To attract new customers and add to the market basket of current ones, Morris suggested that retailers take the concept of bundling way beyond the specially priced coffee and a doughnut or sandwich or BOGO (buy one, get one) snacks. Many supermarkets across the country are getting the idea by teaming up with gas stations to offer discounts on fuel with food purchases. C-stores can do the same by bundling across their product segments.
In a recent survey on prepared and ready-to-eat foods at retail by Packaged Facts, Morris found that most customers do not usually plan on purchasing foodservice items when they visit c-stores. In fact, only 22% of respondents who bought prepared food from a c-store had come to that store for that primary purpose.
That leaves a lot of room to grow in terms of making foodservice top of mind for c-store customers, and plenty of opportunity to cross-market with other items they already come in to buy. “Why not tie in a sandwich offer with the purchase of gas?” he asked.
Vasa said cross-promoting through bundling might be one of the best ways to introduce women to c-store categories and products they might not know existed. “Retailers should let them know that there are baby care, feminine care and oral care products right in the store, so they won’t have to make a separate trip to the supermarket to get them,” she said. “Professional women especially appreciate the fact that they have to make only one stop to get everything they need from dinner to diapers.”
Bold is Beautiful
For many consumers, especially younger ones, snacking is more than just a way to curb hunger pangs. It’s an adventure. And in the coming year, palates are going to get fired up from a whole new array of inflammatory items, such as Spicy Buffalo and Zesty Salsa Wheat Thins, Doritos Jacked Enchilada Supreme and Smoky Chipotle tortilla chips, and Cholula Hot Sauce-spiked Jack Links.“There’s nothing subtle about these snacks,” said Jim Hachtel, senior category manager, center of store for BP/ARCO ampm stores. “They’re hearty and they’re flavorful, just the right combination for our target c-store customer.”
The convenience store channel was the first to capitalize on coffee, before everyone from Starbucks to Walgreens threw their urns into the ring. Tim Powell, director of c- store programs for Chicago-based Technomic research company, predicted that more c-stores will launch proprietary label coffees to help them stand out from the caffeine crowd. “It’s like going from a mass-produced beer to a craft beer; flavors will be better and bolder,” he said.
But offering a premium roast is no longer enough, Morris observed. Consumers have come to expect more in the line of cappuccinos, lattes and other fancier espresso drinks. He added that tea is also trending in limited service environments, “so c-store operators would do well to look at expanding their offerings in that category, too.”
Although consumers are not always totally honest about their eating habits, at least some of the hype about making healthier choices is penetrating, according to researchers. But, said Morris, c-stores are still lagging behind their quick-service competitors, at least perception-wise, when it comes to offering better-for-you options.
In his report for Packaged Facts, Morris found that only 38% of c-store prepared food users said they felt these foods were more healthful than those offered at quick-service restaurants. “I have heard some retailers say their customers just aren’t ready to trade up to more healthful foods, but, our research has shown that a growing segment of customers, particularly females, are looking for fresh-cut fruit and salads,” he said.
Morris also pointed out that providing more health-conscious food options can boost incremental sales. “You can certainly still offer your usual roller grill and fried products, but try putting some chicken or turkey items on the menu,” he suggested. “It’s not an either or proposition; it’s just broadening the appeal of your menu.”
Snacking remains increasingly important as consume
rs look for foods with a “better-for-you” halo to replace standard mealtimes, but “better-for-you doesn’t necessarily mean good for you,” Hachtel pointed out. Many consumers are gravitating toward nuts and seeds and energy and nutrition bars for themselves and for their children. Even when they go decadent, they still want to feel in control. “For many consumers, that means smaller portions, so it make sense they would go for a two-piece ‘sharing’ package of candy rather than one king-size bar,”Hachtel said. “If they buy the sharing package, they don’t feel as guilty.”