Convenience / Channels
Lynn’s Lowdown

Well, Isn't That Convenient?

April 10, 2012
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Lynn_In-Body.jpgThis issue, the cover story focuses on what’s happening with private label at convenience stores.

The convenience store industry is a highly-competitive, multi-billion dollar industry. C-stores are competing against anyone that is a convenient retailer and that is to say everyone.

Consumers aren’t necessarily looking for rock bottom prices and will pay a modest premium for the convenience.

While interviewing c-store experts for the article, I learned something interesting. I spoke with David Portalatin from The NPD Group, a market research company. NPD’s Convenience Store Monitor tracks the purchasing behavior of more than 49,000 convenience store shoppers.

Portalatin shared that in Convenience Store Monitor, they are pretty specific about defining a convenience store purchase occasion for the consumer so that they can answer accurately for them about that. Yet, in spite of that, Portalatin says that they see a growing number of consumers who tell them about their most recent convenience occasion and when asked what store they were referring to, it ends of invariably being a grocery, mass, drug or dollar channel store.

Consumers’ perception of convenience is different than the industry definition. It would seem that consumers’ definition of convenience is a retailer that saves them time and makes things easier on them.

Portalatin notes that non-traditional convenience stores now are capturing about 10 percent of consumer product purchases at that’s on the rise.

I also had an interesting conversation with Jeff Lenard from the National Association of Convenience Stores (NACS). He said that last year the Associated Press called him up and said they were doing a story on cooler wars, or all of the places that sold beverages. So he told them he would go out and take some pictures and send them back. Lenard found that pretty much every place he went had a beverage cooler and he was astonished. Places such as Best Buy, Home Depot, Michael’s and Petsmart, where food isn’t the primary product, sell food and beverages. This emphasis on non-food retailers selling food and beverage items seems likely to make the competition even more intense.

Lenard also shared that there are two different types of c-store customers. First is the cash customer. If the cash customer typically spent $20 and maybe picks up something inside the store, now that $20 is getting that customer less gas. So, the good news is that now that customer probably has to come back more frequently. The bad news is that cash customer may have spent all of his/her cash and has no money left for a snack, drink or sandwich.

The credit customer is more predictable in terms of how they buy things, but because they are paying at the pump, you need to get them inside the store.
Whatever retail channel you might be involved with, your number one rule should be to listen to your customers.
 

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