Securing Share of Wallet

"Pickier" consumer, multiple trends mean retailers must differentiate to win loyalty, says BCG

Jennifer Bulat, Group Director of Editorial Production, CSP

Dylan Bolden

Dylan Bolden

SCOTTSDALE, Ariz. -- "Channel blurring" may be the watchword in the ever-evolving retail landscape, but convenience stores captured a larger share of the overall retail market last year vs. 2012. That was one of the many insights shared by Dylan Bolden, a partner in the Dallas office of Boston Consulting Group, at CSP's 2013 Outlook Conference in Scottsdale, Ariz., as he detailed results from a convenience tracking study his company performed this summer.

In examining changes in spending at c-stores vs. other formats, the study showed that c-stores are reaping the largest gains via folks switching from QSR, specialty and club stores.

Also, consumer needs and choices are rapidly growing and evolving--they're "getting pickier," Bolden said--and six consumer trends are affecting convenience stores:

1. Macroeconomic volatility, including job market uncertainty.

2. More discerning customers, who are trading down in some categories to private label and also trading up to "feel-good" categories because they're not willing to compromise on quality.

3. Growing demographics such as the aging population, Hispanics and millennials.

4. "No compromise" consumers, who won't make tradeoffs when it comes to quality and health, and who are concerned about sustainability but don't want to pay for it.

5. The reformation of the retail landscape, in which nontraditional formats are putting pressure on c-store sales and share.

6. Rise of the digital economy, which moves some of the power to the consumer.

The study also showed that brands outperforming on what the company calls "differentiating attributes" have a higher share of the consumer wallet. Those that score highest on differentiators have a nearly 40% share of wallet; those who scored lowest have only 15%. The top five brands average two times the share of wallet as other brands in the study.

Among these differentiating attributes are cleanliness and a safe environment, a friendly staff, convenient location and easy in-and-out. Share of wallet has been linked to stores' cleanliness ratings, Bolden said.

"A lot of it involves managing perception [of cleanliness]," he said. Interestingly, BCG research shows that consumers link cleanliness with features such as up-to-date fixtures, displays and equipment.

Conducted since 2009, the convenience tracking study polled 2,000 customers on 35 brands, asking them what matters to them and what drives their brand choices.

For more, watch for the December issue of CSP magazine.

By Jennifer Bulat, Group Director of Editorial Production, CSP
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