How C-Stores Can Create Space, Plan for Post-COVID-19

NEW YORK— The nature of convenience is changing as the COVID-19 pandemic progresses.

And while the path to normalization is evolving, Nik Modi, managing director of New York-based RBC Capital markets, gave retailers insight to this timeline as well as other consumer data as part of the McLane National Tradeshow.

Click through to see how retailers can better plan, create more space in their stores and better understand their customers. ...

While it’s not clear what a path to normalization will look like after the coronavirus crisis, winter will make it more challenging.

Colder weather will further limit outdoor dining and making indoor capacity at restaurants that much more important, Modi said during a tradeshow webinar.

Confusion will also rise on whether a fever is a symptom of COVID-19, the flu or even allergies.

“Even if you’re running a small fever, you may not go out, you may not be mobile,” Modi said. “That’s one less consumer consuming.”

That’s only half the battle though, Modi said. Even when there is a COVID-19 vaccine widely available, only 42% of the U.S. population indicated they’ll get it, he said.

Modi predicted he won’t speak at a live event again until September or October of 2021.

Knowing the possible timeline of what the new normal could look like is important so c-stores can plan inventory and categories they want to lean heavily into, he said.

Retailers need to create more space in their c-stores to pivot to faster-growing areas, like sanitizing products amid the COVID-19 pandemic, by reducing assortment, Modi said.

“Variety doesn’t equal more sales,” Modi said.

Modi cited a study from abandonment recovery solution company CartStack that compared a display with 24 jams and one with six jams. Sixty percent of shoppers stopped to sample the larger jam selection and 40% stopped to sample the smaller one, the study found; however, 30% of shoppers who stopped at the smaller display bought the jam, compared to 3% at the larger display.

“It’s upon you, the convenience-store owner and category manager, to use data to make better choices on what you put on the shelf,” Modi said.

This can be tough to do when the innovation pipeline is always moving. But just because a new item is out doesn’t mean a retailer needs to take it, Modi said. Retailers need to understand the data on the new item and how it can be incremental to their business. They also need to make quicker decisions on removing a new item if it’s not contributing to sales, he said.

“At the end of the day, if you have a robust data set—that’s why investing in data and technology is so critical right now for the convenience store industry—you can make better choices,” Modi said. “Then you are not subject to or the victim of all these new products. You can now be the dictator of what goes on to the shelf versus what doesn’t make it onto the shelf. And it can be a regional decision as well. The market needs to get more complex. Assortment needs to become more complex and more local. That’s how you’re going to win going forward.”

What we’re finding is that lower income consumers are actually spending more than higher- and middle- income consumers.

“Personal savings rates have come down [and] household debt has gone up. This is not a good combination,” Modi said.

The c-store consumer, the lower-income consumer, is affected more negatively than those in higher income brackets, so that’s something c-stores need to be aware of, he said.