Hitting the Hot Buttons
Nielsen's Hale encourages operators to think outside the c-store box.
Shoppers Who Matter
Per Nielsen’s numbers, it’s not millennials that retailers need to connect with; the younger generation spends less and makes fewer shopping trips than ever before. Hale believes the two groups who matter most to retailers are also often the most underrepresented groups in terms of advertising:older and multicultural shoppers. “You can’t wait any longer to realizethat multicultural populations have to be a big part of what you do, because that’s where the growth is,” he said. “In certain markets, multicultural populations are already the majority. It’s not just in 2043—it’s now.”
Bilingual packages are one way to appeal to multicultural consumers.Advertising is another: Research shows multicultural shoppers respond well to ads featuring their peers, Hale said. In fact,so do baby boomers, despite the fact that they’re also underrepresented in the current environment.
“The boomer market is huge; we spend a lot of money because we have a lot of money,” said Hale. “As a matter of fact, we account for about 50% of spending that goes on in this country. Yet we only get about 10% to 15% of the advertising focus against us. Something is wrong there.”
Of course, it’s not just advertising that draws boomers in. Hale suggested health-conscious convenient alternatives, such as portion-controlled food offerings, which boomers are willing to pay a premium for.
“Opportunities for you to think about: how you deal with the age of shoppers in your stores and how you go after them,” Hale said. “There are some big spenders out there.”
“In terms on convenient consumer solutions, look at what Amazon has done in a year,” said Hale. “They grew their online global business from $48 billion to $61 billion in one year. They’re 10 times bigger than their next 10 closest competitors.They’re 10 times bigger than Walmart. They’re a real force to be reckoned with. ”While Amazon may not seem like a real threat to the c-store industry, the popularity of online shopping could ultimately have an effect on the channel, Hale said.“I can see a day when supermarkets are going to see their center store shrink even more because more and more people are going to buy those products online,” said Hale, predicting grocery stores will put more of a priority on foodservice to make up for the losses. “That’s going to be competition for you, long term.”
Health and Wellness
Healthy options may seem an odd fit forthe c-store industry. And, at first glance, Nielsen’s research seems to support such thinking.
“We have a segmentation scheme we use at Nielsen that comes from the National Marketing Institute that segments consumers into how engaged they are with health and wellness,” said Hale. “It ranges from the ‘well beings,’ who arevery engaged in making sure what goes in them is good for them and are also very green in how they live, to the ‘eat drink and be merries,’ who really couldn’t careless about being healthy.”
Not surprisingly, it’s those on the less conscious side of this health-and-wellness spectrum that tend to shop at convenience stores, but Hale believes the “well beings”could present a very profitable opportunity for the channel.
“The people who are engaged in health and wellness spend a lot more and make a lot more trips,” he said. “They’re veryimportant but tend to make more trips togrocery and club.”
The growing market of health-conscious consumers has driven retailers such as 7-Eleven to commit to offering healthier, fresher fare at its retail locations. This kind of commitment won’t work for all retailers; it’s a matter of looking at a chain’s shoppers to determine what kind of health-and-wellness mix will best drive profits in their locations.
“You have some flexibility here,” Hale said. “Healthy options are something you can win with, but you need to be judicious about where and how you do it.”
“Here’s an area where I think you guys really need to pay attention,” said Hale, introducing his final retail hot button. “I call it cool-factor retailing.”
By the very nature of its name, experimental retailing varies based on the strengths and market of each retailer. Hale described grocery stores that have embraced “foodie entertainment” in their locations with sports bars, outdoor seating and food sampling. Beer and wine sampling is another way he’s seen retailers experiment with creating a “cool factor” int heir stores—and sales increases have gone along with it.
“With all of these retailers focusing a lot of energy around cool, is there some way you can do that?” Hale asked. “I don’t think you have to go overboard. I think beer caves provide that to some extent, but is there a way to provide more coolness to what your stores look and feel like?”
With the competitive threat of grocery, drug and dollar continuing to increase, it’s a question worth asking.