Today’s convenience-store landscape is ever-changing, especially as retailers seek to stay relevant while foodservice segments continue to blur. Competition from the QSR and fast-casual segments means that every foot in the door counts. So how can c-stores drive customers from the pump into the store? And once they’re inside, how can retailers influence them to make a purchase?
“Convenience stores make most of their margin on sales from inside the stores as margins on gas are razor thin,” said Patti Morehouse, managing partner at Match Marketing. “Therefore, c-store retailers are working hard to reposition themselves from gas stations that sell food to fresh/convenience stores that just happen to sell gas. These retailers want their customers to come inside the store as a first priority because of the great assortment and buy gas on [the] way out as an added convenience.”
Understand the ‘Why’ Behind the Buy
Adam Meshekow, executive vice president of strategy and national sales at SITO Mobile, a producer of location-based advertising technologies, said that according to NACS, the average convenience store gets about 300 visitors to its gas pumps per day, and about 35% of those customers go inside the store.
“That’s 105 customers a day going inside to make a purchase,” Meshekow said. “Even if they bought a pack of gum for $1, that’s an extra $105 per day in additional revenue, or almost $40,000 extra a year. That’s why it’s so critical to ensure that consumers who walk in to the store are spending money.”
So why are the majority of customers not entering the store to purchase items? According to a recent study from VideoMining, for every 100 gas customers, 63 pay at the pump, and 18 of those customers purchase an item in store. Thirty-seven pay inside the store, and 11 of those customers purchase and item in the store. Customers who paid for gas and left cited lack of need and lack of time as the two main reasons they don’t enter stores when filling up.
Meshekow said customers’ decision to enter the store often depends what the store is offering. “It also depends on the experience,” Meshekow said. “For example, companies like 7-Eleven and Wawa drive people in the morning for coffee and other baked goods, but most gas stations don’t focus on that.”
Seize the Breakfast Opportunity
A marketing-by-daypart approach such as Wawa’s is especially important, given that different dayparts represent different opportunities for c-stores. VideoMining’s study found that breakfast represented the largest percentage of foodservice traffic (28%), but it also had the smallest basket size at $6.47. Conversely, the late-night hours had the fewest purchases (9%), but the largest basket size at $7.79.
Click here to see an infographic of the VideoMining study results.
But even with a smaller basket, breakfast items are viewed by retailers as the menu category with the highest sales growth potential, according to the 2015 CSP-FARE State of Foodservice study. As such, 89% of c-store retailers currently offer breakfast items.
Which breakfast items they’re offering, though, can vary from store to store, especially since consumers look for options that fulfill different needs in the morning. For example, while some consumers say that better-for-you options are important to them, 35% say that it’s important for operators to offer indulgent breakfast items, according to Technomic. This means that shoppers are seeking pastries and other sweet treats with their morning coffee.
And while 64% of consumers say they eat these breakfast items during traditional breakfast hours, morning menu items, especially baked goods, can be promoted during other dayparts as well. According to the CSP-FARE study, the three most common snack items at c-stores are doughnuts (with 53% of operators offering as a snack), muffins (58%) and pastries (43%).
Promote at the Pump
In today’s media-saturated world, people have come to expect visual and verbal stimulation throughout their day. And c-stores are following suit, installing media stations at the pump to entertain, inform and engage customers in their purchasing decisions and, most importantly, lead them into the store.
A recent Mintel study found that consumers who have visited gas stations or road-based convenience stores in the last three months have done so primarily to get gasoline. Among those who visited a convenience store in the last three months, most did so to buy food or beverage items.
As more than half of all respondents indicated buying these items as a primary reason for their visit, c-stores have an opportunity to tailor media station messaging at the pump to cross-promote food and beverage items even before a customer enters the store.
Priya Baboo, president of client solutions at VideoMining Corporation, says a bakery message could be cross-promoted with destination categories, making it more influential. “During breakfast and after-work hours, bakery items could be bundled with coffee for a combo price. And during mid-evening, promote it with fountain. Baboo also mentioned emphasizing better quality of food and bakery items, or that items are locally sourced.
Appeal to Consumer Preferences
Of course, appealing to customers’ buying behavior is paramount to making cross-merchandising and promotions effective. Mark Harrington, vice president of marketing at Clutch, said the key is identifying each consumer’s preferences and tailoring offers to each individual’s buying patterns.
“Statistics and demographics vary by store brand and even location,” Harrington said. “Too many businesses rely on industrywide statistics that don’t end up actually applying to their own locations accurately.” For example, if a customer is purchasing coffee every day, it does not make sense to discount the coffee. Instead, retailers should discount a breakfast sandwich or a bakery item for that consumer, motivating them to make the additional discounted purchase.
Harrington said that operators can increase the number of visits by providing high-frequency products that customers need beyond fuel.
Coffee, ATMs, and lunch and breakfast items, such as bakery items, and are all diversified offerings that make a location valuable to consumers beyond fuel. Communication also is important for motivating store visits. Leveraging in-pump screens, fuel-station speakers, and receipt backs to communicate product availability and offers are also effective ways to motivate store visits and increase additional purchases after fueling.
“The key to increasing frequency is delivering quality, convenience and reliability that will get customers wanting to come back again and again in between fill-ups,” Harrington said. “If a location is able to deliver [this] quality and value around desirable high-frequency products, there are tremendous opportunities to increase basket size and frequency though timely and relevant data-driven promotion.”
This post is sponsored by Prairie City Bakery