Blischok Therapy

IRI's innovation chief urges retailers to work toward rewiring convenience

Linda Abu-Shalback Zid, Senior Editor

PHOENIX -- "Seize the second," Thom Blischok, president of consulting and innovation for Chicago-based Information Resources Inc. (IRI), urged c-store retailers on Monday. In his speech before a full house at CSP's Convenience Retailing Conference, Blischok spoke about the troubled economy's effects on potential customers-and urged a rewiring of convenience. "What's important is we have to drive people back to stores," he said. "Shoppers are saying they can't afford to shop in c-stores. We need to reposition the fundamental role of the c-store."

Blischok shared several videos [image-nocss] featuring consumers speaking about how and why they shop in c-stores. The videos, combined with a full year of shopper studies, revealed modified shopper behavior, such as changes in eating rituals, emergence of the "downturn diet," saving through self-reliance and giving private label a seat at the table.

For changing eating rituals, he revealed that 53% of surveyed shoppers said they cook more at home, 36% said they take snacks to events and 33% said they take lunch to work or school. Other finding included 30% saying they spend more time with family, 20% saying their family eats meals together more, and 10% saying they socialize in homes with friends. All of those rituals are likely to continue through 2009, according to the research.

For savings through self-reliance, 35% of respondents said they stretch personal-care items, 26% go out less with friends, 24% participate in hobbies more cheaply, 15% go to the doctor less and home-treat, and 11% use home beauty treatments. Of those behaviors, stretching personal care items, participating in hobbies more cheaply and using home beauty treatments were like to continue in 2009, according to Blischok.

The "downturn diet" means that 31% of consumers are trying to eat smaller portions, 24% are cutting out junk food from their diets, 12% are having a beverage instead of a snack, 11% are having a snack instead of a full meal and 11% are skipping meals to save money. All but the meal skipping are trends that are likely to continue in 2009.

Blischok referred to private label as the "big elephant in the room." The majority of consumers, he said, are willing to buy private label-especially in this transforming economy. "Private label has arrived, with shoppers voting with dollars," he said. The verdict is still out on consumer propensity to buy private label in c-stores; however, he said, evidence suggests that all income segments try private label, with lower-income shoppers tending to purchase it regularly.

IRI's research also found that in the beginning of 2008, 60% of consumers made their buying decisions at home (rather than in the store), but by the end of 2008, that number rose to 75%. That figure be affecting the purchase of new products, with 63% of consumers saying they typically don't look for new products in the c-store.

The news isn't all bad, however. Blischok also revealed the three new top c-store brands, including Bud Light Lime domestic beer/ale, with sales of $151.6 million; Camel Crush cigarettes, with sales of $133.3 million; and Starbucks Doubleshot energy and coffee, with sales of $54.3 million.

Blischok also revealed the products that gained and declined in fourth-quarter sales in 2008 vs. fourth-quarter 2007. Vitamins were up 105%; weight-control liquids/powders were up 80%; refrigerated teas/coffees were up 18%; refrigerated entrees were up 17%; and frozen pizzas were up 16%. Batteries and tea/coffee ready-to-drink were first and second in the top five sales laggards, with both down 8%. Lighters and milk were next, with each down 7% and weight-control pills saw a 6% decline.

So how can retailers compete? Blischok recommended that retailers consider the seven P's of shopper strategies in their efforts, including planning (with decisions being made before entering the store); purpose (with decisions complementing ritual changes); price (with shoppers looking for good prices and quality); product (shoppers buying what they are familiar with); promotion (with shopper direct marketing having arrived); place (looking for the best deals); and permanence (shoppers are scared about the financial future).

Blischok warned that the shopper "has never been more disloyal and more opportunistic than they are today." Still, he said to attendees, "Each of you has an opportunity to win in this market." In closing, he said, "I believe that 2009 is going to be very tough and is going to be fraught with involved risks, but I also believe that this is the most fantastic time in the history of c-store retailing for tremendous opportunity and growth.

"It is probably the best time I've ever seen in retailing for the chance to reset the economics and the relationship with the shopper," he said.