CHICAGO — Convenience-store food and beverage sales are essentially driven by three factors: disposable income, housing and construction activity, and gas prices, but in 2020 a fourth factor, mobility, dominated the scene in a way no one ever thought possible.
This insight comes from Krishnakumar Davey, president of strategic analytics at Chicago-based IRI, who spoke during a recent webinar examining convenience retail in 2021.
Since the pandemic began, consumers have been shopping more in large-format stores to minimize trips, and fewer trips has meant less popping into c-stores. This lack of mobility in 2020 dramatically affected c-store sales, whose growth depends on a pandemic recovery and consumer mobility.
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While disposable income is straightforward in how it affects c-store food and beverage sales, housing and construction activity is an indicator of the gross domestic product and economy.
“As it goes up, c-store sales go up,” Davey said. “And if gas prices go up too much, people who come to buy gas don’t have the money to buy a soda or chips or candy.”
The most recent IRI data, highlighting the cyclicality of convenience channel growth and how it’s often driven by macroeconomic trends, offers hope, Davey said. In January 2021, there was growth of about 7%.
“It can’t be all Lotto sales,” he said. “It goes beyond that. There is pickup.”
This upturn comes after convenience channel edible sales dipped into the red in recent years: for four quarters in 2009-2010, two quarters in 2013 and one quarter in 2017.
To maintain momentum for the long term, c-store operators must rebuild foodservice, once a reliable traffic driver, and focus on new daypart and technology solutions.
For instance, Davey noted ...
Drive-thru and more
High-margin offerings including fountain sales, coffee and baked goods were hurt during the pandemic because of suspensions to implement safety protocols and declines in customers.
To combat this, operators can increase customer service by hiring more personnel to staff fresh food offerings, support in-store cleanliness and offer curbside and drive-thru fulfillment.
Operators also should consider implementing new technologies to accommodate online orders, curbside pickup and perhaps even delivery.
Operators should shift the focus from the morning commute to other dayparts to accommodate work-from-home and school-from-home breaks and evening hours.
In urban areas, factor in lost commuter traffic and instead focus on urban dwellers. In suburban and rural areas, cater to larger populations working and studying at home.
Package food items ahead of time into kits and bento boxes to support dining at home and on the go. This is a chance for c-stores to reignite America’s love of road trips with signature offerings.
Davey cited Irving, Texas-based 7-Eleven’s 7Now delivery app, which aims to make life easier and more convenient for shoppers with features such as 30-minute delivery.
In fact, since the pandemic began, 14% of c-stores have added delivery, with the same percentage focusing more on the drive-thru. Elsewhere, 21% have added curbside pickup and the same percentage contactless payment.