C-Store Hot Spots: Health-Wellness, Foodservice, Electronic Smokes
Facts, Figures & the Future
Supermarkets need their head on a swivel these days. Supercenters, clubs and dollar stores aim to outflank them on price—while c-stores and drug stores hone their convenience edge with easy-to-reach locations and fast, efficient shopping experiences.
Convenience stores, in particular, meet immediate-consumption needs with steadily improving prepared foods and a high-turn, high-impulse mix designed for on-the-go lifestyles. Think cold beverages, hot coffee, tobacco, energy drinks, snacks (increasingly healthful ones), lottery tickets, gift cards and gasoline.
This formula helped c-stores stand out in 2012 vs. grocers and drug stores. Of these three trade classes, c-stores were the only channel to show both dollar and unit sales growth last year, notes a new IRi report, Convenience Stores: Keep the Core, Appeal to More.
Another reason c-stores could keep rising long-term is their appeal to younger, educated shoppers. F3 previously cited an NPD study that showed college students between 18 and 24 spent $5.2 billion on 351.4 million visits to c-stores during the 12 months ended June 2012. The high-visibility style of c-store merchandising stimulates their purchases too: 31.9% of c-store purchases by college students are impulsive vs. a 22.7% proportion of impulse buys by other c-store shoppers.
Lessons for supermarkets reside in this c-store performance with the next generation that will be forming millions of food-shopping households.
The IRi report adds insights into some of c-stores’ biggest category opportunities, growth drivers and challenges. Though the report isn’t data-rich, it is directional. For example, IRi expects three areas to grow in c-stores:
- Electronic cigarettes. C-stores rang up two-thirds of this category’s U.S. retail sales in 2012, which continue to “escalate in 2013” as pricing moderates. Retailers that want to “ride” this growth wave need to continue this wallet-friendly price trend, suggests IRi.
- Health and wellness. Two-thirds of consumers say they try to eat healthier—and c-stores can “help them strike a balance between wellness and indulgence in their lives,” adds IRi. It notes good consumer acceptance of healthier choices even in categories such as salty snacks, cookies and baked goods.
- Foodservice. Higher-quality choices are either freshly made or brought in from area restaurants. Toss in healthier choices too, and c-stores have more on hand to draw significant female traffic as well.
Energy drinks supplied the highest percentage growth of all in c-stores in 2012—56.4% in both dollars and units, according to IRi. Also up in recent years are weight control/nutrition liquids/powders sales—c-stores carry more of them and raised the channel’s share of category distribution by nearly 78% since 2008.
By contrast, unit sales fell in 22% of the Top 50 c-store categories between 2008 and 2012, notes IRi. Among them are heavyweights cigarettes, carbonated beverages and bottled water; the latter slipped 3.1% during this period despite price drops and extra promotional efforts.
One ongoing challenge for c-stores is when gas prices rise—it directly thins wallets of potential c-store shoppers. Also, supermarkets and wholesale clubs have had success competing against the gas pump/c-store tandem by offering their own loyalty discounts on gasoline purchases.