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11/16/2021

Pricing Sensitivity May Have Widespread Adverse Impact on C-stores Into Start of 2022

Retailers can offset the impact with loyalty offers that meet customers' trip missions through occasion-appropriate bundles, according to the latest PDI C-store Shopper Trends Report.

ALPHARETTA, Ga. — As temperatures begin to cool, so will consumer behaviors. 

As of late, however, convenience stores have managed to hold steady even in a climate where rising costs and supply chain shortages are exerting pressures beyond the already-delicate balance of changed shopper behavior that's been sustained well into 2021, according to the October 2021 C-store Shopper Trends Report from PDI, powered by PDI Insights Cloud data.

This month's installment of the insights report examines the opportunities in the c-store industry to leverage technology, data and shopper insights to drive consumer engagement and increase conversion from the pump to the store.

According to overall trip patterns, morning rush, lunch and afternoon in-store foot traffic at convenience stores is consistent with pre-pandemic behavior, signaling that consumers are still holding true to their pre-pandemic routines.

However, overall store trips have leveled out over the past few months, signaling that consumers are being more deliberate with their trips. This makes the pump-to-store conversion even more critical for shoppers already on-premise, according to PDI. 

Retailers should expect consumers to continue being more deliberate with their shopping trips as it is plausible that customer pricing sensitivity will have a widespread adverse impact on c-stores into the start of 2022 given the rising costs and supply chain shortages. 

To offset the impact, PDI recommends convenience retailers focus on driving customers to their forecourt with fuel savings at the pump, and provide loyalty offers that meet shoppers' trip missions through occasion-appropriate bundles. These bundles can deliver value beyond price discounts, helping operators mitigate cost-of-goods pressures and, in turn, increase in-store traffic and basket spend, the company noted. 

The greatest opportunity to convert fuel trips, according to PDI, is between lunch and early evening as consumers head home from work, so retailers should consider offering fuel discounts for in-store purchases to drive in-store traffic in the early evening.

Category Analysis

Dollar sales in the convenience channel were slightly higher this month vs. a year ago, but not all product categories are experiencing growth.

The packaged beverages category is a bright spot, maintaining a strong growth path with energy, water and sports drinks leading for the month of October. In fact, since 2019, packaged beverages and beer have experienced double-digit growth driven by larger basket spend and only a 2 percent loss of trips, compared to a 13 percent loss for other categories.

Alternative snacks, which performed strongly even in 2020, have shown signs of softening growth in the last five weeks. Chocolate candy has also shown signs of weakness fueled by smaller baskets. Meanwhile, mixed results for salty snacks continue, though the large potato chips segment has started to regain some of its lost trips. 

Declining units in the basket may be a direct result of pricing pressures. Therefore, PDI suggests that once shoppers are on-premise, it is vital to create more engaging experiences to increase basket spend per trip. Retailers must consider opportunities to adjust promotions and placement to increase product engagement and spend.

PDI's monthly C-store Shopper Trends Report combines consumer buying data from 5,500 mid- to large-sized convenience retailers across all key U.S. geographic locations. Alpharetta-based Professional Datasolutions Inc. (PDI) helps convenience retailers and petroleum wholesalers thrive through digital transformation and enterprise software.