Opportunity Knocks for Convenience Stores

CHICAGO -- As convenience stores continue to battle other channels in a space that has traditionally been their own, the competition can seem daunting. But a new report shines light on some opportunities for c-store retailers.

According to Information Resources Inc.'s (IRI) latest Times & Trends report, "Convenience Stores: Keep the Core; Appeal to More," c-stores are beginning to stray from the one-size-fits-all store model. Instead, they are replacing long aisles with kiosks, experimenting with larger footprints and adding "good-for-you" products next to the candy bars.

"Despite new innovations, the convenience channel faces several challenges," said Kelley Vacca, principal, Client Insights, IRI. "Many convenience stores sell gasoline, so sales are somewhat tied to gas prices. Even though these prices have been stable during the last year, they are still high and impacting shoppers' wallets, particularly those of young shoppers, which are a key target for convenience store marketers. In addition, convenience store sales are concentrated in a relatively small number of categories, with three of the top six categories tobacco related."

The new report, however, does highlight areas where c-stores can grab consumers' attention and hence, their dollars. According to the researcher, these growth opportunities are:

• Electronic Cigarettes: The convenience channel accounted for two-thirds of this category's sales in 2012. Channel growth of electronic cigarettes is increasing in 2013, bolstered by deflationary pricing trends. The continuation of favorable pricing-related trends is key for retailers that seek to ride the wave of growth in this up-and-coming category.
   
• Health and Wellness: With two-thirds of consumers indicating they are trying to eat healthier, convenience store marketers have a great opportunity to help consumers strike a balance between wellness and indulgence in their lives. Even in traditionally indulgent categories, such as salty snacks and cookie and bakery snacks, healthier options are available and being well received. C-store marketers must develop consumer-centric, 360-degree health and wellness programs, stated IRI.
   
• Foodservice: Although many consumers are already buyers of c-store foodservice offerings, the desire for better quality offerings is high. This may include customizable and freshly made options, or selections provided by local and/or well-known restaurants.
   
• Outdoor Advertising: Since many consumers pay at the pump at convenience stores, outdoor advertising is crucial to luring shoppers inside the stores. In fact, product growth rate is twice as high with outdoor causal advertising compared to doing no advertising.

"To be successful in today's marketplace, convenience stores need to keep the core and invest to develop value offerings across key categories, particularly in markets where tax increases threaten to impact tobacco users' wallets," said Susan Viamari, editor of Times & Trends. "They also need to utilize outdoor advertising as an in-store visit hook by emphasizing value, particularly during periods of high or rising gas prices. To keep the momentum going, convenience stores simply need to appeal to more. A great first step in this appeal is to develop a comprehensive health and wellness strategy targeted to the needs and wants of core shoppers."