JERSEY CITY, N.J. — Convenience stores are traditionally known for tobacco, snacks and beverages, but more consumers are turning to the channel for non-perishable items, particularly in times of emergency.
The U.S. convenience store industry is coming off one of its best years ever in 2015, as the latest Convenience Store News Industry Report showed. And while key product categories like foodservice, packaged beverages and snacks continue to drive the channel's in-store sales performance, c-store retailers are also keeping an eye on the future as fuel margins decline and prices at the pump increase, CSNews Editorial Director Don Longo explained.
"While other product categories [like foodservice and packaged beverages] get more attention and hype, non-perishable products — such as household cleaning, paper, health, beauty and personal care items — are also key products to have on hand to attract convenience store shoppers, especially those who might otherwise go to a supermarket, drug or mass retail store," said Longo, who moderated a free CSNews webcast on the topic, held Wednesday.
Entitled "Why Non-Perishables Are Key to Retaining Shopper Loyalty at the Convenience Store," the webcast was presented by CSNews and its sister company Carbonview Research, and sponsored by Procter & Gamble.
Carrying name-brand products is "especially effective at driving future visits to the store," Longo noted.
Many convenience store retailers are not fully unlocking the opportunity in the health and beauty care (HBC) and personal care aisles, according to Tanner Van Dusen, vice president of research at Carbonview Research. The HBC category has stagnated in c-store industry sales over the past few years, but margins are on the rise — from 48 percent to 52 percent in the past two years.
And now is not the time to be stagnant, as other retailers like Amazon, CVS and Walgreens are making a bigger push behind HBC, she said.
Where does this leave convenience stores? Based on Carbonview's findings from c-store shopper surveys and a discussion group, consumers indicate convenience is their channel of choice when it comes to need: when they have an immediate need, a need during off hours, a need for an easy in-and-out experience, and a need for a convenient location.
One-third of convenience shoppers reported purchasing a non-perishable item in the past three months. Among these non-perishable shoppers, 74 percent purchased personal, health and beauty products; 66 percent purchased household products; and 25 percent purchased baby care products.
As Van Dusen pointed out, convenience stores are differentiated from other retail channels by a sense of urgency. Almost half of purchases were made within an hour of identifying the need. In addition, 68 percent of c-store shoppers said they depend on the convenience channel to have these items when they have an urgent need.
In fact, nine out of 10 participants think it is very important that a convenience store carries these products. Shoppers also think a higher price at a c-store is worth it.
However, with only roughly three to six feet of selling space set aside for non-perishable items, convenience store retailers are faced with carrying a limited assortment. The right mix, according to the shoppers surveyed by Carbonview, must include name brands — which often carry with them the perception of quality.
"Getting the right brand mix is incredibly important," Van Dusen said, citing that 62 percent of the shoppers said it is very important their c-store offers a branded option.
Even more notable, one in five say they would leave a store without making a purchase if they cannot find a name brand on the shelf. That number jumps to 30 percent among millennials.
C-store shoppers told Carbonview they have a few recommendations for operators that want to draw in more non-perishable shoppers:
- Whenever possible, lower prices.
- Increase product assortment.
- Increase product selection.
- Improve merchandising.