It’s a weird time to be in the convenience-retailing business.
That’s according to Donna Hood Crecca, a senior principal at CSP Daily News sister research firm Technomic, who has followed the industry for many years.
Hood Crecca helped kick off the first day of CSP’s Convenience Retailing University Tuesday in Austin, Texas, detailing the “five consumer conundrums” shaking up category management today.
“The consumer is really exhibiting some behaviors, some preferences, some demands that are kind of contradictory, maybe a little confusing and don’t always stand up to historical norms about their behavior,” she said.
Traffic isn’t behaving like it’s supposed to
Gas prices are low and consumers are returning to the office en masse after years of working from home after the pandemic.
So, why isn’t c-store traffic up?
Consumers continue to feel an “unprecedented level of financial pressure,” Hood Crecca noted.
That means convenience retailers need to fine tune their rewards programs, creating targeted, ultra-personalized offers. This is a prime use case for retail media networks, she said, as well as promotions that are tied to fuel purchases and foodservice.
Consumers are loving c-store food, but it needs to stay high quality
C-stores are closing the foodservice quality gap with fast-food restaurants, and consumers are taking note in a big way, Hood Crecca said.
Many convenience retailers are now selling restaurant-quality food at significantly lower prices. A c-store chicken sandwich, for example, averages 39% less expensive than one served at a quick-service restaurant, according to Technomic data. And cheese pizza is about 23% cheaper at a c-store.
“But it’s really challenging to maintain,” she said, given the rising cost of ingredients, packaging and more.
C-stores need to be diligent about marketing their high-quality food, while also working with suppliers to keep costs down, she said.
Balancing health and indulgence
The growing use of GLP-1 weight loss drugs is transforming consumer behavior, Hood Crecca said. C-store customers who take the medications report wanting foods and beverages, both packaged and prepared, with attributes like higher protein and fiber. They also want smaller portion sizes.
“We need to get ahead of this growing trend,” she said. “But the good news is, you don’t have to do a complete reset and blow up everything that you’re doing.”
Call out existing products like yogurt and protein bars that are already nutrient dense, she said.
Don’t sleep on hemp-THC beverages, but know what you’re getting into
Despite a looming federal ban, there’s an opportunity for c-stores in the emerging hemp-THC category, Hood Crecca said. But retailers also need to be prepared for the potential that bringing them in could put a damper on alcohol sales.
Technomic research found that 87% of ready-to-drink cocktail consumers and 83% of craft beer drinkers also consume THC beverages.
“It’s an exciting opportunity, but it does present potential compression of alcohol sales,” she said. “So, a risk assessment has to be done here in terms of the overall business.”
How much tech is too much?
Consumers say they want high-tech offerings like contactless checkout, mobile ordering and touch-screen kiosks. But there has also been recent evidence of pushback on these high-tech touches, Hood Crecca noted.
Starbucks, for example, recently pulled back on the pick-up only models it launched during the pandemic, returning to its roots as a “third-place” community destination and adding seating back in. Amazon also recently closed its frictionless Amazon Go convenience stores.
“Consumers did like the speed, the ease, the convenience of Just Walk Out technology,” she said. “But they missed the sense of connection … Let’s automate. But not alienate.”
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