Convenience Store Visits, Spending Increase

Rewards, loyalty gaining traction among traditional, major oil chain shoppers, says NPD

HOUSTON -- Consumers are finding value in convenience stores as evidenced by a modest 2% gain in consumer traffic, which led to an increase of nearly 6% in dollars compared to the same quarter a year ago, said The NPD Group Inc. NPD's c-store research reports that visit frequency grew quarter-over-quarter to 6.1 visits in a 30-day period for the average conventional c-store shopper.

Traffic gains in the first quarter were concentrated at traditional c-stores, which experienced a visit growth of 9 percentage points over a year ago, while visits to major oil and small c-store chains declined 5.0 points and 1.1 points, respectively, according to NPD's Convenience Store Monitor. Rising gasoline prices in the quarter, $3.37 per gallon at the beginning of the quarter and $3.74 per gallon at the close of the quarter, contributed, as is historically the case, to a c-store penetration decrease. Close to half the U.S. population (48.8%) reported a c-store visit in the past 30 days, down slightly from a year ago and also from the last quarter of 2012, when penetration was 49.5%.

Rewards and loyalty programs are gaining more traction among traditional and major oil chain shoppers; 7% of conventional c-store shoppers now cite rewards or store loyalty as a reason for chain selection. With the addition of 5% of shoppers who give coupons, discounts, sales and promotions as a chain selection reason, one-in-10 c-store shoppers now select a store for deals.

"Right now, consumers are generally a little less sour, but there is not a lot of consumer exuberance," said David Portalatin, NPD c-store industry analyst. "They still feel financially shaky and are cautious about what they spend, which is why c-store rewards and loyalty are increasing in popularity. As discounts become the new normal, and consumers continue to seek them, conventional convenience retailers will have to offer overall value for the experience in the coming months to entice repeat visits and overcome consumer spending hesitations."

The traffic gains also came as shoppers in the mid-day and afternoon dayparts turned to c-stores for a snack on the go. Both salty snacks and alternative snacks gained in consumer-reported purchases, while more consumers also opted for single-serve, pre-packaged foods. Consumers purchasing food prepared on site, a recent driver of growth in some sectors of the convenience landscape, held steady. Overall, these findings illustrate that today’s consumers continue to find value and quality in the food and snack offerings becoming more available as the c-store industry emerges as a serious contender for Americans’ meal and snack dollars.

The recent gains in convenience store traffic come in the face of some challenging conditions. Consumers continue to modify driving habits and fuel consumption, which limits demand for many fuel-oriented convenience occasions. In addition, persistent high unemployment and threats from competitive channels ensure future traffic growth will have to be earned.

NPD's recent report, Redefining Convenience, highlights the threat of drug, dollar, grocery and mass retailers that are encroaching on traditional convenience-oriented purchase occasions. In 2012, these retailers captured 9% of the convenience market.

But there are positive trends manufacturers and their retailer partners can leverage to keep traffic gains coming. Two recent NPD studies focused on these trends.

Making the Grade, a report focusing on the student segment, revealed students may only represent 7% of the population, but they account for 15% of c-store dollars. Demographic trends suggest student populations will be a force in the market for years to come.

Hispanic C-Store Report delves into the unique purchasing patterns of the growing U.S. Hispanic population with a specific focus on differences by acculturation level. For example, it reveals that while Hispanic consumers over-index for a wide variety of categories, Spanish-language-dominant consumers are especially prone to buy candy, gum, fresh prepared foods and dairy products. The value of Hispanic consumers is demonstrated not only in their growing population, but also by their propensity to spend significantly more per transaction in c-stores.

The NPD Group, Houston, provides global information and advisory services to the automotive, beauty, consumer electronics, entertainment, fashion, food, foodservice, home, luxury, mobile, office supply, sports, technology, toy and video game sectors.