The Other 1%
Auto-care category gets a jump from the recession.
The ground has thawed, the school year’s nearing its close, and Clark W. Griswold types across the country are prepping the family roadster for trips to the beach, the cabin, maybe even Walley World. And with that, presumably, will come a nice boost in auto-care product sales.
But there’s something else at play that’s already given the category a slight boost over last year: the recession. About 1% of c-store shoppers bought automotive products on their last visit to a c-store, according to data from The NPD Group. This is up slightly over last year, likely due to more consumers today driving older cars and taking on minor auto maintenance themselves.
The category is a small piece of the c-store sales pie, but anyone who has been part of that 1% knows that when you need a quart of oil, you need a quart of oil. Understanding the motivations of the category’s shopper—be it pennypinching or pure necessity—will help retailers capture more sales.
David Portalatin, executive director of industry analysis for The NPD Group, Port Washington, N.Y., is seeing significant increases in the percentage of cars that are at least 10 years old.
“Consumers on average tell us they will keep these cars another five years,” he says. “Older cars are also more likely to consume a quart or two of oil between changes and may have other performance issues that consumers address inexpensively with a fuel or oil additive.”
Other consumers, regardless of their cars’ ages, are cutting back on visits to the mechanic for an oil change by doing it themselves or deferring maintenance altogether.
“In a difficult economy, adding fluids or chemicals with each fill-up at the c-store is more appealing to some consumers than a costly visit to the mechanic,” says Portalatin.
Joey Hobson is seeing such activity in Maverik stores.
“In our current economy, customers are choosing to stay with their cars a little bit longer, which creates a trend increasing the automotive-category shopping in our stores,” says Hobson, who is responsible for the automotive and general merchandise categories for the North Salt Lake, Utah-based chain.
Maverik stores carry oils, additives, air fresheners and other automobile novelties. While he wouldn’t provide specific numbers, Hobson says the category does a “fairly good business for us,” so it’s merchandised toward the front of the chain’s 230 stores.
But not all retailers have experienced this shift. Tim Grossi, category manager for equipment, general merchandise and other income for Dash In Food Stores, La Plata, Md., reports level sales, and believes newer generations of cars tend to be built better than older models. While oil and antifreeze continue to sell well for the do-it-yourselfers, Grossi hasn’t felt any effects of consumers keeping their clunkers. Without providing specific numbers, Grossi says oils represent the bulk of unit and dollar sales in the category for Dash In, specifically 10W-30 and 10W-40. Antifreeze dollar sales follow, and top-selling accessories are air fresheners.
McLane Co. of Temple, Texas, shows an increase in total average per store per week sales in 2011 over 2010 in all subsegments of automotive, with the exception of windshield wash. According to Cassandra Matos, McLane’s category manager for automotive, general merchandise, and health, beauty and wellness, 2011 showed a decline in both the antifreeze and windshield-wash subsegments, which is attributed to the very mild winter season experienced this year.
Matos says 2011 saw increases in motor oil (branded and private label) and accessory-type items such as air fresheners and appearance products. High-mileage items within the motor-oil subsegment are showing the largest percent growth, making them something to watch even though they’re still a small sliver of overall motor-oil sales. Private-label motor oil is seeing an increase in units and faring very well. The increase in accessory-type items is because these are “impulsive items consumers are still spending money on,” she says.
Promoting … Or Not
Recession or not, most shoppers visit the auto-accessory aisle for a purely in-the-moment need.
“They are coming in because they have an immediate need for a fix. They have a flat tire, a leak, or they forgot to pick up their additive when they were at their last visit of, say, a mass merchant,” says Tom Bingham, director of marketing for Gold Eagle, Chicago. The company makes a number of automotive products, including STA-BIL Fuel stabilizer and HEET gas-line antifreeze.
To ensure you’re pricing right, understand that you’re offering value by being close and easy. “You don’t necessarily have to price right up against those specialty stores or mass merchants, because that’s a trip out of the way,” Bingham says. “With the price of gas as it is, if you can link those trips together, you can actually be a little more profitable than those other stores, and that’s a way to boost your bottom line.”
According to NPD research, availability and the price of fuel are the key drivers of why an auto-accessory shopper chooses any particular store. Paired with that immediate need, it often renders special promotions unnecessary. “Automotive products are planned purchases. The only impulse items could be air fresheners or some other type of cleaner. However, most are inexpensive and not worth the promotion,” says Grossi of Dash In.
Meanwhile, less need-based items, such as gas-line antifreeze, ice scrapers and water removers, could benefit from promotion-based activities, says Bingham.
Matos of McLane says she has noticed a trend of retailers looking to conserve space by combining some general-merchandise product such as car chargers and ear buds with their automotive set. She recommends retailers who are combining categories keep 4 feet dedicated to motor oil and 4 feet for accessories and other items. Dropping the total set to less than 8 feet while adding items from general merchandise can shortchange the potential of the categories, she explains.
Matos also recommends retailers re-evaluate their plan-ogram to offer only the top-selling items in fuses, bulbs and tape instead of the historical standard of two to three SKUs each. Doing so “makes room for items that have better sellability and a greater profit-margin potential,” she says.
’Tis the Season, and the Region
Naturally, spring and summer mean an increase in driving, and cold climates especially see an increase in maintenance needs as the temperature rises. So ensure you’re well stocked according to the season.
One issue spreading beyond the Midwest and into the rest of the country comes from ethanol. Gold Eagle has been focusing its marketing efforts on educating retailers about the damage ethanol-added fuel can do to a car.
“Many people in the U.S. in just the past 18 months have been exposed to ethanol as a fuel additive, while we in the Midwest have had ethanol for many years and are used to handling our fuel differently,” says Gold Eagle’s Bingham. Gold Eagle has an ethanol treatment product that helps mitigate some of that damage.
McLane is also seeing a small increase in sales of ethanoltreatment products. “It’s still not a significant increase. But there has been steady growth, so we recommend retailers look at it for their sets,” says Matos.
However, be careful not to overgeneralize your stores’ regional needs. Survey each store: Is it near a waterway, off a major highway or close to a recreational area? These factors will help shape the set. For Maverik, factors such as distance from recreational areas fit well into the company’s brand image, which is centered on adventure. The chain is expanding its private-label branding across oil and additives to capitalize on the adventure theme of the stores.
Hobson also considers adjacencies across the categories, including apparel items such as T-shirts that could appeal to that antifreeze shopper. Hobson says Maverik also is looking at ways to provide supplies for participants of adventure events that occur near stores, such as the annual Moab Jeep Safari.
“Our customers are really gravitating toward our Maverik brand and the adventure that we espouse,” he says.
- Most purchases are need-based, and promotions oftenaren’t necessary.
- Understand the needs of each store based on region and season.
- Research the effects of ethanol and the products available to mitigate its damage.
- Consider whether your brand or location offers opportunities for category differentiation, such as proximity to recreational areas or waterways.