SCHAUMBURG, Ill. -- Private-label products, or store brands, are growing faster in convenience stores compared to other stores and represent a tremendous growth opportunity for the convenience channel, according to new research by The Nielsen Co. The research shows that sales of private-label products rose over the last year nearly 20% to $826 million in c-stores, compared to a 15% increase in drug stores and just under 10% in supermarkets. Overall, private-label share is significantly lower in c-stores—only 1.5%—compared to a 13% share of drug stores' dollar sales and a nearly 18% [image-nocss] share of supermarkets' dollar sales.
"Convenience stores are just starting to see the potential of private label," said Tom Pirovano, director of industry insights for Nielsen. "While private-label dollar growth has been driven more so by higher unit prices, versus a shift from traditional brands, we do see private-label unit sales up in recent weeks. The convenience channel has an opportunity to develop their own store brands using private-label benchmarks at supermarkets and drug stores."
Nielsen's analysis shows that six out of the top-selling product categories in c-stores, such as carbonated beverages, snacks and candy, are significantly underdeveloped in private label, representing opportunities for c-store retailers.
"These products are generally considered strong sellers for convenience stores, yet are very underdeveloped in terms of private-label share," said Pirovano. "Now more than ever is the perfect time for convenience store operators to expand their private-label offerings. Although store brands generally deliver higher margins, private-label products can also convey a value image that many shoppers are looking for during times of economic uncertainty."
Other key findings include:
Nationwide, c-store sales are up 4.1% (Nielsen Convenience Track, year-to-date dollar sales ending Aug. 9, 2008, vs. one year ago). Little Rock, San Antonio, Richmond/Norfolk, Boston and Seattle show the biggest growth in c-store dollar sales (Based on 30 markets tracked. Nielsen Convenience Track, year-to-date dollar sales ending Aug. 9, 2008, vs. one year ago). Least amount of growth in c-store dollar sales is in Tampa, Chicago, Houston, St. Louis and Phoenix. C-stores sell more beer, cigars and chewing tobacco than grocery stores, drug stores and mass merchandisers combined.Pirovano will present "Categories, Packaging & Pricing in the Convenience Store Channel" on Sunday, October 5 at the National Association of Convenience Stores' NACS Show 2008.
Nielsen, based in New York City and Schaumburg, Ill., is a global information and media company with marketing and consumer information, television and other media measurement, online intelligence, mobile measurement, trade shows and business publications.
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