This is a month when we see how our new year’s resolutions play out. Based on the recent CSP Outlook Survey in our December issue, retailers were more bullish on business in the year ahead than they have been over the last few annual surveys. In fact, the survey reported that 60% said current business is good, and almost as many expect business to show “great” or “some” improvement. The retailers I polled top their resolution list with a focus on growing inside sales.
As our friend David Portalatin reminds us, there are three ways to grow: reach more customers, get customers to shop more often and/or get customers to “buy more stuff.”
As I looked at NPD’s reports, David told us that “traffic in Q3 was down 2.1% from the year prior. The third-quarter weakness can likely be attributed to rising gasoline prices (nationally in Q3, prices approached $4), and historically that leads to diminishing share of wallet. We also continue to see the effects of channel blurring, especially from drug, club and dollar stores.” In fact, Dollar General recently announced plans to roll out tobacco to the majority of its 10,000 discount stores by the end of the second quarter. Dollar stores have also been aggressive in beverage and beer, among other c-store best sellers.
Overall, however, our industry will show another solid sales increase, especially when compared to most other retail channels. Regardless, I think it’s also important as we review general industry statics that we understand they do not tell the whole story.
Nielsen reports our store count to be a bit under 149,000, but we are a bifurcated industry. We still see way too many stores primarily focused on gasoline and tobacco.
Michael Powell of Charlotte, N.C.- based Shook Kelley told us at CSP’s recent Shopper Insights & Engagement Forum that “creating a customer experience is still part of the prize, and to do so you need to be clear to the customer: what does the store mean, along with the brand and the products you offer.”
So just as NACS data cuts the retail universe into four performance quartiles, so too must we look at the results from those retailers that have been focused on what Michael suggests. They are indeed attracting more customers more often and are “selling more stuff.” I would wager they might not be part of that third-quarter decline NPD reports overall and are the drivers of our Outlook Survey’s rosy forecast for the year ahead.
We know the top performers have a solid, growing foodservice offer, and they price gas and merchandise competitively—and market it. They are into loyalty and social networking, and they understand the future of mobile technology.
And today, more than any time I can remember, they are looking at shopper segments. For example, they’re putting in more wine and tea beverages to attract millennials. Wine sales are among the top five growth categories (and for you chocoholics, chocolate wine is the No. 1 growth wine). Wine customers spend more time in the store than the average purchaser. Tea equipment and blends still have a long way to go to be understood, but those who do are posting terrific results. Beer vaults let our core beer customer know we are the place to buy beer. Drive-thrus are also on the rise.
Value offerings, bundling, offering coupons (both digital and paper), mobile and loyalty marketing: Those who are doing it well are succeeding in turning around the perception that their stores are too expensive to shop.
And all of us need to do what the Republicans failed to do in 2012—really focus on Hispanic shoppers. They made a difference in key states such as Florida, Nevada, New Mexico, Colorado, Arizona and Texas. And for those retailers who understand that they shop more frequently, are more brand-conscious, are more likely to cash checks in store and buy our core categories (especially in grocery), and are the fastest-growing segment of our population—well, you have done what Mitt Romney’s camp did not.
Understanding why is obvious. It’s the “how” that is the differentiator.
Bottom line: As we work on keeping our resolutions to grow inside sales, the industry has more tools and opportunities than any other time I can recall. The winners are seizing the day, and the rest of us can, too.
Happy 2013 to everyone!
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