The Effect of CPG on CPG
IRI examines how gas prices affect consumer-packaged-goods buying behavior
CHICAGO -- Volatile gasoline prices cause convenience store shoppers to think twice about fueling up and making in-store purchases. Unfortunately for c-store marketers, control over gasoline price fluctuations is out of their hands; however, according to the latest IRI Point of View, "Gas Price Fluctuations Fuel a Convenience Channel Opportunity," marketers do have the power to use innovative strategies to not only reduce the negative impact of gasoline prices, but also entice even more shoppers to walk through their doors and put additional items in their baskets.
Even a one-point increase in converting a shopper from fuel to inside the store will bring more than $700 million to the industry's bottom line in a single year, according to IRI.
"Since more than 80% of convenience stores sell gas, and changing gas prices affect shopping trips and basket size, convenience store decision-makers must develop approaches for rapidly adapting their offerings and promotional strategies in an environment of variable and generally upward trending fuel prices," said Carl Boraca, author of the IRI Point of View and vice president of content product management for IRI, Chicago.
"Doing so requires a solid and granular understanding of how to draw more shoppers into the store, even in the face of high gas prices, and knowing which categories are most impacted by fluctuating gas prices," he said. "Connecting these dots could boost industry earnings by millions--possibly even billions--of dollars annually."
IRI's second-quarter 2013 MarketPulse survey, which provides insights regarding the effect of fluctuating gasoline prices on consumer packaged goods (CPG)-related behavior, found that 44% of consumers are likely to cut spending on groceries if gasoline prices rise by 50 cents per gallon. More than half (57%) of consumers will reduce trips, and 52% will switch spending to stores that are closer to home, which may or may not include grocery stores.
The largest single c-store shopper group is millennials. Because they are generally on strict budgets, an increase in gasoline prices affects them greatly. In fact, 49% of millennials say they will make fewer, larger trips to reduce fuel consumption; 49% will become heavily focused on price; and 40% will reduce the number of stores they visit.