Jones described a growing retail “bifurcation,” with successful brick-and-mortar locations catering to either low-income households with “value” formats or higher-income shoppers with “premium” formats. While both are valid, he said, the convenience and dollar channels tend to fight for value shoppers. Citing Nielsen, Jones said 40% of convenience-store and gas-station shoppers live in households that make less than $29,000 a year, while 43% of dollar-store customers are in that same income bracket. In comparison, people in the lower income segment make up 23% of the online shopper base, he said.
“All of us are chasing the same customer, and that space is getting really crowded,” Jones said, specifically citing Seattle-based online retailer Amazon’s reach into “our space” by selling gift cards, health and beauty care items and automotive products.
“The big are getting bigger, and the best are getting better," added Kevin Smartt, CEO of Kwik Chek Food Stores, Austin, Texas. "After four years of record profit, our competition is all taking notice, and they are not staying still. So we can’t either.”