Store-Traffic Data Reveals Dual Challenge for C-Stores
By Steve Holtz on Sep. 27, 2022STATE COLLEGE, Pa. — A new report from shopper-behavior monitor VideoMining shows strong gains in convenience-store traffic in the second quarter of 2022, but poor pump-to-store and in-store sales conversions.
The second quarter saw a 15.4% increase in c-store traffic relative to the previous quarter, amounting to a 11.4% gain from the same quarter last year, the service reported. Average lot traffic, which includes all fuel buyers, was up significantly in the second quarter, posting a 13.3% quarterly and 8% yearly gain, according to VideoMining C-Store Shopper Insights, a tracker of consumer behavior of 100 million shopper trips per quarter.
Driving Traffic
The big boost in store traffic was an overdue relief for the convenience industry weighed down by pandemic-related challenges for the past two years. It reflected the increased fuel consumption as more people returned to work and engaged in more activities away from their homes, the report said. Even with gas prices at record highs in the second quarter, there was increased fuel traffic with shoppers filling less of their tank on average and returning to stores more often.
The traffic bump helped the weekly in-store sales per store rise 11% relative to the first quarter, but that represented a 2% decline in sales/store relative to the same quarter last year. Whether it was due to sharp inflation, record gas prices or shifts in work/leisure patterns (or all of the above), the in-store sales was far below the potential from the higher traffic, VideoMining reported.
A closer look at the behavioral data reveals that two key performance indicators—pump-to-store conversion and in-store conversion--remain substantially below the pre-COVID levels. “These two conversion rates encapsulate the current challenges and opportunities for the convenience-store operators and suppliers,” the report said.
Pump-to-Store
The average pump-to-store conversion rate in the second quarter was 26%, unchanged from the previous quarter, but significantly lower compared to pre-COVID levels of 32% in 2019. The solid loss of in-store sales from 6% of all fuel customers represents a huge missed opportunity for the c-store industry, VideoMining said.
“Our analysis suggests that there may not be one simple answer (for example, inflation or high gas prices) that can explain the depressed pump-to-store conversion rates,” the report said. “We see a huge variation in the pump-to-store conversion rates for different retailers, as well as for different stores from the same retailer.
“The top performers did substantially better in attracting the gas customers to step into their stores and buying from a range of product offerings, including foodservices. It also indicates that it is possible to improve pump-to-store conversion rates with effective marketing.”
In-Store Conversion
The second insight from VideoMining’s analysis is that the in-store conversion rate, or the percentage of all store visitors who purchased any in-store product (excluding fuel, gift cards and money orders), was only 56% in the second quarter. This was slightly below the 57% conversion rate in the first quarter, but significantly below the pre-COVID levels of 64% in 2019, it said. “A decline in conversion rate by 8% really impacted the overall industry performance.”
The in-store conversion rates were most likely caused by the high inflation and record gas prices, the retail insight company said. “More people came into the store to pay for gas or use one of the free services, even browsed some of the products, but left empty-handed. The price hikes made it significantly harder to get fuel shoppers to spend money on other products in the store. We also noted an increased frequency of fuel purchases compared to any quarter in the past two years.”
Visit Duration
Visits to stores also got shorter in the second quarter, VideoMinding reported. The average time for the complete in-store trip was 181 seconds, 7 seconds faster than the same quarter last year.
The low in-store conversion rate reflects the inability of most stores to engage and convert shoppers under the current market dynamics, the company said. “However, there was a very significant variance in the conversion rates between best and worst performing stores. This suggests that the right store design, assortment, merchandising and marketing strategies can make a difference in improving the conversion rates.”
Driving Sales
The top in-store revenue generators during the second quarter were cigarettes, lottery, other tobacco products and beer. However, the increasing popularity of other top categories indicate that stores are becoming more diverse, VideoMining said. “Salty snacks saw its share of sales increase 11% in the second quarter compared to the same quarter in the previous year, the largest yearly gain storewide. Additionally, energy drinks, prepackaged food and bottled water all saw year-over-year growth of 8%.”
The breakfast daypart remains the most popular period for the convenience channel. It accounted for 19% of all convenience-store buyers in the second quarter, up 5% vs. the previous year. Refreshment, snacking and caffeine boost continue to top the list of strongest trip missions, while meal building gained the most ground relative to last year.
VideoMining concluded the report with some suggestions for retailers to improve their store traffic and conversion rates:
“Even simple tweaking of merchandising and promotions to drive impulse purchases can go a long way. There are also plenty of opportunities for retailers and manufacturers to partner strategically to understand the current conversion barriers and address it with a targeted strategy.
“There is unlikely to be an approach that works for all retailers or even for all stores from a retailer. It may require experimenting with different approaches through a test-and-learn process to understand and effectively lower the conversion barriers. But the financial incentives from improving conversion rates are really compelling.”