A Tale of Two Convenience Channels
The 2020 results are in. Whether you are using IRI, Nielsen or NACS SOTI, it was a tough year for many categories in the convenience channel. Optimized to focus on immediate consumption and its namesake “convenience,” grab-and-go eating occasions were put on pause when the United States, and the world, abruptly locked down, forcing most of the population to stay home.
The convenience channel, of which 80 percent sell fuel, faced plummeting traffic as the majority of the population not employed by essential businesses stopped driving, therefore reducing the frequency of a fill-up.
In aggregate, things looked bleak and then began showing signs of recovery. Categories like tobacco and alcoholic beverages experienced growth that kept the channel above water, while categories like candy, salty snacks, baked goods and breakfast/energy bars — typically, drivers for growth — softened.
However, within the channel, there is a segment that thrived in 2020 and continues to thrive today: the inner-city independent segment.
Tucked into corner storefronts in densely populated city neighborhoods, these call-them-what-you-want convenience stores, bodegas, neighborhood markets, small-format, independently owned, high-frequency outlets watched their foot traffic build and their basket sizes grow throughout the months following the COVID-19 orders for the same reasons that the convenience channel in aggregate saw the inverse.
These stores are located a few yards away from millions of urban dwellers who were now working, studying or applying for unemployment from home.
The bodega or neighborhood market has always acted as the pantry for the inner-city consumer and because of that, has carried a broader product assortment, including grocery, household and health and beauty care items. They were ideally suited to immediately satisfy the new requirements of their shoppers.
These stores deemed “essential” became more than just essential over the last 12 months. They became preferred destinations — a behavior change that will likely stick for months, if not years, to come.
According to our data, 2020 same-store sales at these neighborhood markets grew 18 percent over 2019, compared to channel growth of 6 percent as reported by Nielsen. National Retail Solutions (NRS) operates more than 10,000 point-of-sale systems in these independent, small-format outlets.
Nearly all categories enjoyed significant growth within the NRS network, and some even doubled and tripled in size. Across the board, these inner-city outlets outperformed conventional convenience in aggregate.
Brands that have recognized this and are mobilizing around the Independent Urban Segment are seeing those efforts pay off with increases in points of distribution and even greater sales in stores selling their product. NRS licenses its store-level data to CPG manufacturers to expose these opportunities, and offers solutions to inform and engage the merchant, as well as advertise to the shopper.
Brands that have not pivoted and are simply waiting for the channel to recover are missing out on an immediate and sustainable growth opportunity.
Suzy Silliman is senior vice president, data strategy and sales, for National Retail Solutions (NRS). She works with CPG clients and third-party partners to unlock the potential of the exclusive NRS point-of-sale scanner data set collected through approximately 11,000 independent, small-format stores. By providing a lens into a previous retail blind-spot, Silliman helps organizations glean insight and activate at retail to realize sales and profit growth throughout NRS' nationwide network.
Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News.