AUSTIN, Texas -- The effect of high gasoline prices, competition from mass merchants and lack of manufacturer focus on the convenience channel were among many topics on the minds of retailers meeting in Austin, Texas, yesterday for the two-day Advantage Sales & Marketing Retail Forum co-sponsored by CSP.
During the opening session attended by 32 suppliers and retailers, speakers revealed data on industry trends involving record-high gasoline price postings as well as demographic and product trends affecting the industry. David Portalatin, senior [image-nocss] industry analyst with Houston-based The NPD Group, said consumer research shows that while gasoline demand slowed in September and Octobermonths of unusually high street pricesconsumption in November rebounded, increasing over figures from a year earlier.
We did not get to the point where people fundamentally changed their driving behavior, Portalatin said. We don't change what we drive, where we live or where we work overnight. You don't see change from short-term [price spikes]. We didn't reach that threshold.
Consumers would have needed to experience 12-18 months of high prices to have changed their behavior, Portalatin noted. Incidentally, he said that even though prices may have hit all-time highs last fall, many in the financial community believe the last three or four years have been a correction in a 20-year inflationary trend with regards to gasoline.
The dozen retailers in attendance tended to agree with Portalatin's assessment, noting that higher prices did not appear to affect inside sales. John West, senior category manager, Southwest Convenience Stores, Odessa, Texas, said that while people were buying less fuel per visit, they were increasing their frequency of visits. We saw opportunity for growth in inside sales, West said. But we felt it on the expense end with [increased] credit-card fees.
Paul Reuter, president and editorial director of CSP Information Group, Oak Brook, Ill., said according to data compiled by CSX LLC, Columbia, Mo., the industry is tracking to have a financially successful 2005. The overall health of the industry is extremely good, Reuter told retailers and the 20 supplier attendees present.
Portalatin and a third speaker, Scott Metcalf, vice president of product management for the Chicago-based Information Resources Inc. (IRI), also covered other issues including the impact of big-box retailers and other trends involving product and supply. Regarding big-box retailers, Portalatin made two points:
The big-box customer still shops convenience stores. While big-box customers shop c-stores five times a month vs. the average consumer at six times (and has a slightly lower ring at $5.50 vs. $6.82), Portalatin's research says they are still an important customer segment.
The big-box share of gasoline sales keeps rising. Portalatin said in markets such as Seattle, Houston and Nashville, market shares for mass merchants is hitting 24%-26% with no indication of leveling off.
Shedding light on product trends, Metcalf of IRI noted that factors such as the absence of a significant amount of scan data, a disconnect between shipping and actual sales information, and how stores change owners relatively quickly are all barriers for manufacturers. As a result of these challenges, good c-store data from which to base investment or new-product development on is hard to come by. He said that communication needs to improve for trading partners to better service each other's needs.
Metcalf also addressed trends in non-food items, noting that the growing importance of personal appearance among men is stimulating a demand in healthcare items such as teeth-whitening and skin- and hair-care products.
We've always had the female piece [of this market], Metcalf said. Now more males are interested in their appearance.
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