ROSEMONT, Ill. -- When Speedway's Glenn Plumby presented this year's NACS State of the Industry (SOI) Summit numbers, he joked that the convenience store channel had clearly entered the Twilight Zone. According to Todd Hale, Nielsen's senior vice president of consumer and shopper insights, it is not alone.
"You guys aren't the only industry in the Twilight Zone right now," Hale said as he kicked off his "Understanding the Convenience Shopper 'Superconsumer'" general session at the event in Rosemont, Ill. "Retailing in general is having some tough times."
Science-fiction metaphors aside, it has been a tough road for retailers of consumer packaged goods (CPG): While the unemployment rate is improving and the housing and automobile markets seem to have rebounded, robust growth continues to elude not only the c-store channel, but competitors in the grocery, drug and value channels as well.
"Growth is tough today," said Hale. "We've seen some great examples of innovation in your industry and other retail industries, that for whatever reason is not leading to the kind of growth we'd expect."
From 2009 to 2013, Nielsen's data on the convenience, grocery, drug, club stores and dollar/value channels paints a confusing picture: Dollar sales grew slightly, with 4% growth in 2011 and 3% growth in 2012 as the standouts--although Hale said that was largely due to inflationary pressure; unit sales however have stayed essentially flat.
"It's not a simple story," said Hale of the lack of CPG growth. "There's a lot of positive and negative stuff going on that's impacting the ability of consumers to spend these days."
Some positives for consumers' wallets included increases to the minimum wage and Social Security benefits (though last year's 1.5% increase probably won't lead to much growth). On the negative side, Hale expressed concerns over a shrinking population and wages that continue to drop.
"Is it any wonder that our total stores are only growing by 1%?" he asked. "I don't think so. I think we're getting what we're asking for: slow population growth, low wage growth and therefore, very little growth in our industry."
Unfortunately, these are issues are not going away: Hale predicted that, like 2013, 2014 will be a tough year.
"The financial headwinds we face are no different," he said. "Stagnant and slowing population are going to continue to limit spending power this year and probably many more to come."
Which means the competition between channels is only likely to increase. But Hale warned retailers against focusing too much on their competition: in this economic Twilight Zone, the focus needs to be on the consumer.
"Ronald Lunge says 'chase the customer, not the competition'," Hale said. "It's very easy to get caught in what the competition is doing--but I think you need to think more about what your shopper wants. Now more than ever, it's not just about chasing customers, but chasing the right customer who really drives sales at your stores."
For more on the economy from the National Association of Convenience Stores' 2014 SOI Summit in Rosemont, Ill., see Related Content and watch for additional coverage in CSP Daily News. CSP Business Media is the exclusive media partner of the event.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.