Consumer Insights Can Unlock C-store Success

NEW ORLEANS -- In the fast-changing world of convenience retailing, it has become more important than ever to stay on top of trends, and the "key to the puzzle" is better understanding the consumer. Those were the words of advice given by Scott Ramminger, president and CEO of the American Wholesale Marketers Association (AWMA), to open the AWMA C-Metrics Convenience Industry Outlook Forum in New Orleans this morning.

Using current industry data to see where convenience store categories stand today and where they are heading is one tool for staying in sync with consumers. But in order to translate those insights into growth, he said the players in the supply chain need to build stronger partnerships.

That is the key goal of the AWMA C-Metrics Convenience Industry Outlook Forum -- getting distributors, manufacturers and retailers under one roof and providing timely and relevant information, plus insights from industry leaders, according to Viv Penninti, president and CEO of InfoRhythm Inc., which partnered with AWMA on the event.

Tying all those together will improve the convenience channel’s profitability and sales, Penninti said.

The big question then becomes: Who is the c-store industry consumer? According to Sandy Skrovan, U.S. research director with Planet Retail, the younger generation will account for a higher percentage of c-store shoppers in the next five years. With that generational shift will come an increase in diverse ethnicities; an increase in reliance of smartphones and technology; and an increase in the importance of social media.

The consumer of the next five years will be combining these factors to be armed with more information when shopping, leading to higher price transparency, Skrovan said.

As of May 25, year-over-year growth of warehouse-delivered convenience retail sales was projected to hit approximately $36 billion. That translates into growth of 1.5 percent, which "from a historical perspective is a little soft," as Penninti pointed out. Broken out, the categories experiencing some softness include cigarettes, candy, health and beauty care, and packaged beverages.

On the flip side, the categories experiencing growth are other tobacco products, foodservice, alternative snacks and salty snacks, he said.

While c-stores in the past competed with other c-stores for consumers, operators today are facing increased competition from other retail channels, especially dollar stores. That being said, convenience stores do have their own inherent strengths, noted Penninti. For example, convenience fits with consumers' lifestyles; c-stores offer a simpler assortment; they sell gas; and consumers build relationships with store employees through the high frequency of their trips.

At the same time, convenience stores do have some weaknesses -- limited space, high transportation costs to multiple store locations, high out-of-stock levels, and high employee turnover.

Still, convenience stores are forecasted to see 3.4-percent growth by 2017, which Skrovan said falls somewhere in the middle of the grocery retail spectrum. Warehouse clubs and value (or dollar) stores are forecasted to see the highest growth at 4.9 percent and 8.4 percent, respectively.

Retailers on the West Coast especially should be on the lookout for dollar stores, she said, adding that this region presents "wide open territory for dollar stores right now."

The end result by 2017 will be a shift in market share across the overall grocery retail channel, Skrovan concluded.