Private Label Buyer

Nielsen: Private Label With Room To Grow In C-Stores

October 24, 2012

A study this month from Nielsen Co. says that convenience stores have the smallest share of sales in retail channels tracked by the company, providing opportunities for suppliers and retailers for growth in the space.

The report, “Growing Appetite For C-Stores,” says that private label sales accounted for just 2.4 percent of all sales in the convenience channel, compared with 19.1 percent at supermarkets and 15.6 percent at drug stores.

“Name brands in several categories rely on C-stores for a significant portion of their sales,” the report says. “For example, C-stores claim 85 percent of all tobacco and accessories sales in the U.S., and 53 percent of all beer sales.”

However, the report also points out the convenience channel is facing challenges as consumers drive more fuel-efficient vehicles – leading to fewer trips to the pump, often attached to the C-store – and taxes and health education driving down cigarette sales.

“With fewer consumers needing fuel and tobacco, what will motivate consumers to visit C-stores?” the report asks.

Among the fastest-growing categories in convenience stores the past year are yogurt (57 percent growth in the 52 weeks that ended Aug. 4), non-carbonated soft drinks (50 percent growth), and fresh produce (38 percent growth), all areas with plenty of private label opportunities for C-store retailers.

The report suggests that the U.S. convenience stores could find growth opportunities by following overseas models. It says that healthy, ready-to-go options in countries such as the United Kingdom could find a home in the U.S.

“The trend is gaining traction across the U.S. and can draw higher income shoppers,” the report says. “C-store drive-thrus are also gaining in popularity with Americans, making most store items (including grocery staples such as bread, eggs and cereal) available without leaving the car.”

Other possibilities it mentions are self-contained fully automated C-store machines with refrigerated vending that accepts cash, debit and credit cards, and following Asian Pacific retailers who have added in-store technology to allow payment of utility bills, movie tickets, and receiving money transfers.