Frugality's Staying Power
Caught in transition from economic recession to recovery, convenience store owners and grocers are constantly looking for ways to better understand and reconnect with the post-recession consumer. These organizations must avoid a common pitfall: assuming customers' behavior will go back to the way it was before the economy suffered.
Unfortunately, patrons appear to have been permanently changed and are sticking to low-budget spending habits due, in part, to escalating gas prices thereby reshuffling the role of the convenience store within their lives. By analyzing consumer behaviors and market changes, and implementing category and space optimization tools, convenience store owners can ensure they are turning the new frugal consumer into a loyal customer.
According to a study from Acosta Sales & Marketing, only 23 percent of shoppers expect to spend more this year compared to 2010, while 13 percent will cut their budgets and 63 percent will spend about the same. This is why consumer analytics are more important than ever. C-store owners now need real-time visibility of customer spending habits, average sales, customer loyalty, supplier product performance and inventory levels to cater to their customers' needs.
For example, store owners located in an area where 76 percent of consumers don't intend to increase their post-recession budgets need to understand this and tailor their product price points to keep customers loyal. If the store is located in the Hamptons and has shown resiliency to the economic changes, the selection should reflect that.
Gas prices weigh heavily on purchasing decisions, as consumers are looking to buy more in one place so they can drive less. They are also looking to avoid long trips to larger stores that tend to be located on the edge of town. This puts pressure on convenience stores to move out of their comfort zones and carry everything from fresh fruit to gift cards to keep customers satisfied.
Now that they are competing with larger discount chains, convenience stores have to take a hard look at their product assortment and tailor it to meet the personal needs of their customers. By implementing category and space optimization solutions and processes, convenience store owners can ensure their product mix meets consumer demands, securing their position as the first and final stop for customer purchasing needs.
Implementing customer analytics tools allows store owners to hone in on the needs and desires of consumers and in turn, gives headquarters greater visibility and insight into the needs of each individual store location. For instance, combining performance analytics with market research on a particular product category can help retailers predict which products will be difficult to sell and which will fly off the shelves, allowing headquarters to ensure the correct product mix arrives at each store at the right time. This means fewer customers will deal with the inconvenience of arriving at a store only to find the product they need is out of stock or not even sold in the first place. Creating and maintaining a demand-driven, customer-centric assortment and planogram for each store increases operational efficiency for store headquarters while maximizing customer satisfaction.
Consumer behavior is not the only area affected by post-recession buying habits. Category and space optimization tools not only improve the store's relationship with customers, but with their suppliers as well. Accurate regional assortments and store layout variations help individual store owners sell more of a supplier's products and make space for new products to enter the market. Truly understanding consumer behaviors and business operations allows suppliers to collaborate with headquarters, offering the correct products for each individual store location and increasing the return on investment for both parties involved.
At the end of the day, convenience stores' advantage is in their name. In this economic state, consumers want to go to one local store to address all of their shopping needs, rather than driving to multiple locations. Understanding who this post-recession consumer is by monitoring spending habits, preferences by region and market changes will give c-stores an advantage over their larger, less-accessible counterparts.
However, if the proper tools are not implemented, convenience stores risk missing the opportunity to connect with these consumers. Providing the correct product mix and accurately controlling inventory allows c-stores to capitalize on consumers' impulses to spend money when confronted with the items they need. As long as the price is competitive with large retailers, knowing who you are selling to and what they want is the best way to create loyal customers and ensure improvement in your bottom line.
Shaun Bossons is senior vice president at Aldata Solution. He is responsible for new business development in North America and his current role encompasses the supply chain, customer loyalty, logistics and category optimization. Prior to joining Aldata, Bossons held senior positions at IRI and Galleria Retail Technology, specializing in retail optimization. He has been a featured panelist at several conferences and industry group meetings.
Editor's Note: The opinions expressed in this article are the author's and do not necessarily reflect the views of Convenience Store News.