NEW ORLEANS -- Location, location.well, maybe not location. The old joke identifying the three most important attributes of a convenience store is changing. In a presentation packed with charts, graphics and grids, David Portalatin, who tracks customer behavior in the c-store arena for The NPD Group, said location and convenience no longer are the certain anchors of success.
Not so different from the era when the twinning of department stores ensured fortunes at a shopping mall, the age-old elixir for c-store satisfaction, said Portalatin, is shifting [image-nocss] from location and convenience to price and product offering.
Driving this shift is the state of gasoline prices. In short, while $2 and higher per-gallon fuel prices have not dramatically stunted growth at the c-store, it clearly has altered consumer habits, particularly among less-affluent segments increasingly dependent on credit-card debt to meet daily needs.
Consumers are starting to make that shift, of driving more selectively, Portalatin told 400 executives at the annual NACS State of the Industry Summit in partnership with CSP. We're not going to grandma's this weekend.
Consumers spent $47 billion more on gasoline in 2006 than the previous year, an increase attributed to significantly higher street prices. At the same time, Portalatin said, all data indicates that the same motorist is actually driving less. We believe that for the first time that overall miles [per driver] per car declined, he added.
In an industry where the value proposition is convenience, how else are we going to drive business into our stores? wondered Portalatin, pointing to a decline in discretionary spending and driving. You've got to find other ways to get them through the door.
Portalatin exhorted retailers to seize on foodservice, but not limit their definitions necessarily to meals prepared on site. Bundling, resetting stores, simplifying day-part combinations should weigh into an operator's decision-making to make a store not just a convenient stop, but a destination.
We have to recognize for some segments of consumers there's a real economic impact, he said of the high price of fuel. While the economy showed it can withstand $3-a-gallon on a national level, Portalatin is quick to counter that $110 billion has shifted from savings and general spending to the pump.
That said, the time may be arriving when location isn't the driving force for most purchases. I'm not saying there is no longer value in the convenience proposition [of location]. There is. But we may be at a point where it doesn't just automatically grow year after year, he said.
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