Shoppers come to convenience stores to get their needs met. But if retailers don’t fully understand what shoppers want, efforts to capture more of their business will probably miss the mark.
In these tough economic times, where c-stores are already facing stiff competition, it is critical that c-store operators have a solid understanding of their customers’ buying habits, particularly their high-frequency shoppers.
Armed with these insights, operators can take the necessary steps to attract and retain brand loyal customers. On the pages ahead, CSD examines more than 30 in-store categories to identify emerging trends and garner retailer analysis to forecast what operators can expect over the coming year. Several categories experienced strong growth in 2013 and have an equally bright outlook for 2014.
Electronic cigarettes, smokeless tobacco, iced teas, frozen dispensed beverages, foodservice (most notably sandwiches and pizza) and coffee all experienced solid sales gains and are expected to remain hot over the next 12 months. Sales of sports drinks, bottled water, milk and juices all remained lukewarm in 2013. Energy drinks, energy shots, after years of meteoric rises dating back to 2008, were flat for 2012.
Energy shots and cigars were specifically identified by industry observers as categories poised for a strong bounce back year in 2014.
Understanding what your customers want and how to sell it to them is more important than ever. Competition for the convenience customer’s disposable income has never been higher. Supermarkets are redesigning their stores to accommodate busy customers with more front door parking spaces and emphasizing the front end to get people in and out quicker.
Plus, chains like Walmart and Target are actively pursuing small-store formats. This might not affect convenience stores in the short term, but it certainly won’t help.
Another cause for concern is fuel. As cars get better gas mileage, trips to the c-store to fill up are dropping. The fuel purchase has long been the industry’s wild card. If you drive, you buy fuel. But if sales drop off by as little as 2%, it could cost the industry millions in sales.
Furthermore, after a year of sluggish economic growth in 2013, consumers are beginning the new year with a conservative outlook. In fact, Information Resources Inc.’s MarketPulse survey found that shopper sentiment dropped in the fourth quarter of 2013, and this gloomy attitude is spilling over into 2014 across all age groups.
Going into the fourth year post-recession, consumers are still finding it difficult to maintain their desired lifestyles and are struggling to make ends meet. The MarketPulse survey results clearly point to why many consumers continue to face tough times:
• 83% of consumers are having difficulty affording their regular groceries;
• 39% feel their financial situation is worse today than one year ago;
• 43% say their financial position is unchanged versus one year ago.
As a result of these ongoing difficulties, consumers will continue to trim expenses by following conservative usage patterns throughout 2014:
• 53% are working to make personal care products last longer;
• 49% are cooking from scratch more/using fewer convenience items to save money;
And, it doesn’t stop there. When making purchases, consumers also are demonstrating adeptness for saving that has been honed over the course of the downturn. For instance, 90% are eliminating unnecessary purchases, and 67% are making shopping lists prior to going to the store. This will almost certainly impact impulse sales at c-stores.
This all adds up to another challenging year for convenience stores, but it’s nothing this mature, battled-tested industry can’t handle. I hope you can use the data in our Category Management Outlook to your advantage as you grow your business.