TEMPLE, Texas — The coronavirus pandemic changed consumer behaviors, but what will stick around when it subsides?
Nik Modi, managing director at RBC Capital Markets, New York, answered this question and more during the McLane National Trade Show, which was held virtually on Oct. 20 and 21. Modi advised convenience-store retailers on what behaviors are here to stay, the challenges the industry is facing and how it can redefine convenience going forward.
Click through for highlights from his presentation …
The Effects of Working From Home
Some level of flexible working from home appears to be here to stay, and this is especially true for white-collar employees, Modi said. Ninety-one percent of work-from-home employees said they are hoping to keep their ability to work from home after the pandemic, and 54% said their ideal would be a hybrid arrangement.
Of those workers who want a hybrid or full remote work environment, the top reason is to avoid the daily commute, Modi said, citing Gallup polls. Prior to the pandemic, the number of Americans who commute more than 90 minutes to work each way was on the rise, he said.
The daily commute was a driver of people skipping breakfast, but now people have more time to put toward meal making.
“When you really think about the stickiness of this hybrid work situation, it’s giving people a lot of their time back, which they’re redeploying to stay at home and prepare their meals,” he said. As a result, consumers have rediscovered how much money they can save cooking at home.
Wellbeing is another driver of why people want to work from home or have a hybrid work situation.
“So when you think about assortment in your stores, health and wellness, vitamins, supplements, probiotics, prebiotics, I think are an increasingly important area to be playing in as we think about the future,” Modi said.
COVID-19 Cases and Consumer Behavior
RBC analyzed the Get Out and Travel (GOAT) index, which illustrates the recovery in domestic U.S. travel across several major mediums, including air, road and rail, to quantify societal behaviors.
What the group’s analysts found was that when COVID-19 cases rose during July, the GOAT index retracted, showing that society was being cautious and sensitive to pandemic trends. COVID was on people’s minds, in the news and on social media, causing many to change their behaviors.
However, consumer behaviors are changing with the vaccine rollout and overall COVID-19 fatigue, Modi said. Regardless of whether COVID case counts spike or fall, societal behavior is becoming measurably less elastic to the case count—whether it’s going up or down.
That means even if COVID cases are spiking or falling, that may not necessarily create behavioral shifts by consumers, Modi said.
“It looks like that relationship is breaking down, which means we are now progressing back to normal. And we’re going to just have to live with COVID almost as like a secondary flu,” Modi said.
There may be pockets of panic, though, from the flu season this year, he said, because people may not understand if they have COVID-19 or the flu.
Gig Economy Affecting Labor Shortages
The labor shortage c-stores and other businesses are facing isn’t as simple as stimulus money and COVID-19, Modi said.
Half of states, accounting for about 44% of the U.S. population, ended enhanced unemployment benefits this summer, and there are mixed messages from those markets about whether the unemployment situation improved, Modi said. But while some expected to see some relief to labor tightness as enhanced unemployment benefits came to an end, quit rates have worsened.
Some of this could be due to blue-collar workers going into the gig economy to give them the flexibility they’re looking for. There are more gig jobs than just being an Uber driver now, Modi said. Other players include giving professional services through Upwork or Guru, selling homemade goods on Etsy, or sharing assets on sites like Airbnb or Boatsetter, for example.
Modi said he doesn’t think people have recognized yet how disruptive the gig economy is to the labor market.
“This is structural; this is not transitory,” Modi said. “COVID is transitory. Stimulus is transitory. When that cash runs out, when they’re going to have to pay their rents again, they’re going to have to work. But are they going to come and work in a labor job, or are they going to come and work in the gig economy? That is the biggest concern that I have from a labor standpoint.”
The amount of gig workers globally is expected to grow by more than 80% by 2023, he said.
“That’s a lot of talent ... going to the gig economy that could be going to your organizations,” Modi said.
How Core Shoppers Have Changed
As pandemic limitations ease, it's important to recognize that even among regular shoppers, c-stores are competing with retailers across all channels for quick trips, Modi said.
C-stores rank fourth among retail channels for a quick way to pick things up, he said, citing a Numerator Quick Pulse Instant Survey collected in September. When asked which retail channels they consider when needing a quick and easy way to get everyday items, consumers chose grocery store first, followed by mass retailer, drug store and then gas station/c-store.
Part of what’s changed is the demographics of a c-store shopper, Modi said. The heaviest c-store shoppers (who make 65-plus trips a year) are trending younger, higher income, more female and families and overnight trip makers.
These shoppers give clues to new assortment and marketing possibilities. One of these is to improve the assortment of on-the-go over-the-counter medications because there are an increased percentage of shoppers with health issues. Shoppers are also more likely to have dogs than they used to, Modi said, so c-store retailers could consider a section of pet essentials.
C-stores can also add Mexican heritage brands to capture a growing population of Mexican origin among shoppers. Meanwhile, gameday promotions and football sponsorships are becoming less appealing, with some exceptions. Promotions for the Bills, Packers or Vikings still work, Modi said.