The Two C-Store Industries
Who are you really serving? Time to figure it out
LAS VEGAS -- According to the "Shopper Behavior in Challenging Times" at the NACS Show 2009, it turns out it's not really what consumers say, rather what they do. According to David Portalatin, director of industry analytics for The NPD Group Inc., consumers are saying they are watching what they spend and cutting back on c-store shopping trips in this challenging economy; however, retailers are growing their business in the recession, and consumers are actually spending more per trip, though they are stopping in less often.
In research conducted by Port Washington, N.Y.[image-nocss] -based NPD, 62% of consumers report they are cutting back on their c-store shopping, with 45% shopping c-stores less than three times per month.
"We have to look at the reality that consumers are cutting back," Portalatin said in Las Vegas Wednesday morning. "[Gas prices] have forced consumers to make some fundamental changes in their shopping behavior."
Some retail chains have seized this opportunity, recognized the changing consumer, and adjusted their strategy to accommodate the recessionary shopper. Portalatin said "there are almost two c-store industries right now": A modern, vibrant and innovative group that is gaining traffic "by leaps and bounds." And the remainder that are not innovating, "where traffic loss is most profound."
The NPD study shows that the first, more innovative group of stores, about 7% of the industry, are actually enjoying increased market share in this volatile economic environment.
Wawa is one of them. Lisa Wollan, head of consumer insights and brand strategy with Wawa, Pa.-based Wawa Inc., said the chain is concentrating on value messaging, and that it has "helped us buck those [negative] trends."
She said Wawa is innovating through a shift in strategy: "We are trying to take ourselves out of the convenience definition and trying to figure out how to take that customer from Dunkin Donuts or McDonalds. It's all about, how do we satisfy needs?"
Another retailer on the workshop panel, Dave Carpenter, president of J.D. Carpenter Cos. Inc., Urbandale, Iowa, agrees that it is all about "staying relevant." He added, "You don't have to have [an environment] of market growth, you just have to offer the customer what they want."
Figuring out who these customers are is key in determining how best to market to them.
Portalatin said that 30% of high-frequency consumers are worth 74% of c-store dollars, that only 7% of shoppers in c-stores are spending more than $10 per visit and represent 40% of all dollars spent.
These shoppers are looking for:
Friendly employees. Fresh food. A variety of services. While these shoppers are more likely to be in the lower-income bracket, 2.5% of them are more likely to buy cigarettes and alcohol. Other prominent categories include OTP and energy drinks.
"Understanding these shoppers is the primary tool in your tool kit to [figure out] how to serve their needs," Portalatin said.
[The NACS Show kicked off this week with more than 1,000 exhibits filling 350,000 net square feet of floor space, showcasing the newest products and services for the $624 billion convenience store industry. NACS said it expects approximately 22,000 attendees to participate in the annual event. Check the CSP Twitter Feed for frequent updates and insights from the sessions, the show floor and more, including the fun and Vegas nightlife.]