ATLANTA — Cigarettes, alcohol, energy drinks, carbonated beverages and smokeless tobacco fuel nearly two-thirds of convenience-store sales, according to data from Chicago-based IRI.
While top brands—Altria, British American Tobacco, PepsiCo, Anheuser-Busch InBev and Coca-Cola—drive nearly 55% of total business, the companies have lost 1.1% of market share because of what’s happening elsewhere, the company said.
Larry Levin, executive vice president of IRI, explained this loss, and what c-store operators should consider to help drive sales, at an education session at the NACS Show in Atlanta.
Forty-three percent of heavy c-store shoppers are shopping more now than a year ago, but 29% of light to medium shoppers have reduced their trips, Levin said. Reasons customers gave for why they were going to c-stores more, according to IRI, include that CVS stopped selling tobacco; the store is close and has what they need; the store has great sandwiches; it’s easy to get in and out; and the customer is driving more.
About 50% of consumers said they chose other channels in which to shop because c-stores are too expensive, Levin said. Other barriers and c-store perceptions included consumers buying carbonated soft drinks at grocery stores, preferring fast-food restaurants and visiting c-stores only when they need gas and coffee.
The good news for c-store operators is that fresh food, innovation and higher-quality products can help grow purchases. While 64% of heavy c-store users are using the stores when they’re in a hurry, 59% would go more if the quality of fresh food and coffee were better, according to IRI.
The introduction of new products can also help boost sales, which happened with Kinder Joy from Ferrero and M&M's Caramel, Levin said. “Remember that consumers still have an indulgent mindset,” he said.
Some of his tips for how c-store operators can win in the future:
- Understand the importance of millennials and Gen Z as the new wave of c-store shoppers.
- Leverage promotions and healthy eating to drive future trips.
- Remember the channel is an incubator for niche innovation to drive product development.
- Focus on trip drivers to build on the power of the channel.