Promotions and Innovation Are Key to C-store Success

NEW YORK -- In a difficult economic climate, the convenience store industry has remained one of the most successful retail categories. More than 8,100 c-stores have opened in the last seven years, and there are more c-stores operating within the U.S. than warehouse clubs, supercenters, dollar stores, supermarkets and drug stores combined. Additionally, year-over-year sales increased by 4.9 percent in the year ending August 4, 2012 compared to the overall marketplace. To continue this growth, c-store retailers can look ahead to certain trends and effective business strategies, according to Nielsen's new white paper, “Growing Appetite for C-Stores."

While c-stores currently have the most locations, competing small-box formats such as dollar stores and drug stores are working to catch up, and demand for fuel and tobacco products could go down due to increased fuel efficiency, cigarette health education and taxes, according to Nielsen. To compensate, c-store operators must turn to new methods of attracting customers.

C-stores are increasingly becoming a viable choice for quick and/or healthy on-the-go meals, according to the paper. Items such as yogurt and fresh fruit and vegetables have jump in sales at c-stores by 57 percent and 38 percent respectively. This growing trend could attract higher-income shoppers. C-store drive-thrus are also becoming more popular.

Promotions are another major cause for the growth in c-store sales. Temporary reductions in prices drove growth by 8.1 percent in 2011 and 11 percent in 2012, but product displays increased sales by 30 percent and 27 percent in those respective time periods. The 14-percent growth in promoted unit sales, more than four times greater than non-promoted sales, shows that consumers respond strongly to promotions. New and expanded Nielsen casual facts are available for product and retail teams to analyze, the company reported.

Innovative partnerships between c-stores and other retailers and manufacturers, such as Amazon.com's installation of delivery lockers at certain c-stores, are another growth accelerator. Providing a secure location for deliveries lets merchants cut shipping costs and c-stores attract customers for a win-win situation. U.S. retailers could also follow the example of overseas businesses and consider in-store technology for paying bills, buying movie tickets and receiving money transfers as new revenue streams.

While the industry faces many challenges, there are just as many opportunities to achieve positive growth through innovation and analysis of what drives sales, according to Nielsen. To view and download the white paper, click here.