By Hannah Prokop
ALEXANDRIA, Va.—Convenience stores saw incredible growth in trips and sales in 2019. Larry Levin, executive vice president of consumer and shopper marketing for Chicago-based market research firm IRI, spoke to this and more during the NACS State of the Industry (SOI) Virtual Experience, which went live last week.
More than 17.7 billion trips—or times a consumer came in a store and bought something—are made in the total U.S. market every year, and total trips were up 1.8% overall in 2019.
C-stores accounted for 2.8% of total trips in 2019 and saw trip growth of 6.2%, Levin said. That compares to trip growth online of 3.3% and at dollar stores of 6.5%. Both mass retailers and drugstores have seen a decline in trips.
“As we look at revenue, trips are really sparking growth in the industry,” Levin said. C-store dollar growth is dramatically higher than the rest of market competition, he said. “I think it’s really important for the channel to recognize the success that it has had because dollar growth is up 3.3% [in c-stores] compared to the rest of CPG, which is up 2.2% [in dollar growth,]” Levin said.
Edibles continue to gain strength in the c-store channel, now accounting for nearly 16% of sales and almost a quarter of the channel’s growth, Levin said.
“It’s showing that there are products in the assortment that are really triggering opportunities with consumers who want to fill some snacking needs or fill some other needs,” Levin said.
Edible dollar growth for the total market is at 2.3%, versus 3.9% for c-stores, which have the right product to hit the right consumer at the right time, Levin said. This data, however, was collected at the end of 2019, and will be impacted by COVID-19 in 2020, he said.
Levin also went over highlights of IRI’s interviews of more than 600 recent c-store shoppers. The first wave was done in 2018 and the second in 2019.
During that time, there has been growth in frequent c-store shoppers, with 15% of respondents identifying as heavy shoppers in the first wave and 25% identifying as heavy shoppers in the second wave. Not only are heavier shoppers increasing, but there is also a decline in lapse shoppers, or people who haven’t been to a c-store in the past three months.
In the first wave, 37% of heavy shoppers were millennials and Gen Z consumers, but by the second wave, millennial and Gen Z made up about half of the heavy c-store shoppers, Levin said.
“They are coming into the channel because the channel is responding to needs that they have,” Levin said. “And I think that that’s again a very important opportunity for us to hold on to and begin to cultivate that relationship with this group.”
Twenty-nine percent of light to medium shoppers have reduced the number of trips made, so c-stores need to think about what they can do to rebuild that relationship, Levin said.
C-stores also need to find ways to draw in female consumers. About 25% of women said they were going to c-stores twice a week and 16% are going more now than they were a year ago. Twenty-five percent of women who are going less to c-stores are going to dollar stores instead, Levin said.
Up until COVID-19 became widespread, more than half of consumer packaged goods dollars were spent outside the home. The new COVID-19 environment could be an opportunity to provide sandwiches and other meals people can pick up on the go in c-stores and consume at home, Levin said. Many restaurants have been doing this by selling products consumers can cook at home.
“There are opportunities to captivate on the new normal,” Levin said.
During the coronavirus crisis, more people are coming to c-stores to buy eggs, milk and produce and realizing grocery products are more easily available in c-stores than in some of the bigger channels, Levin said.
Data suggest that drug and c-store channels have an opportunity to increase assortment of staple and fresh items to accommodate consumers sheltering in place and the continued social distancing lifestyle. The c-store share of dollar growth in the four weeks ended March 22 has not been growing as fast as the rest of the market, Levin said.
The total U.S. market has seen a growth of 28.5% in the four weeks ended March 22, the time when the spread of the coronavirus accelerated in many states, and 29.2% compared with the previous year. C-stores have seen 6.2% growth in sales in the same four-week period, while grocery channel sales climbed 39.2% and drugstore sales rose 21.5% in that same period.
“Some markets saw sales growth in the past four weeks, suggesting that convenience stores might see heavier traffic as other channels reduce hours and or continued low to out-of-stock items,” Levin said.
Markets including Buffalo and Rochester, N.Y.; Cincinnati, Toledo and Dayton, Ohio; New York; Tampa and St. Petersburg, Fla. and Houston have seen significant growth during the four weeks leading up to March 22. Markets including San Diego, Boston and Birmingham, Ala., were down.
This is something that the industry should continue to watch and see how it changes as shelter- in-place rules become more of a phenomenon, Levin said.
When it comes to how consumers are feeling about the economy amid COVID-19, 23% were cautious and worried about it in 2019. At the start of 2020, 32% were cautious and worried.
“That is a signal that is really scary,” Levin said.
A total of 41% of consumers said they were downtrodden and cautious and worried, which is akin to the number coming out of the 2008 recession, Levin said. “We have a population that’s really scared about what the future holds,” he said.
About one-third of the U.S. population thinks it will be at least four months until health concerns return to normal. Thirty-seven percent of the U.S. population thinks it will take at least a year before the economy recovers.
“We really as an organization have to broadcast the power of this channel coming out of COVID-19,” Levin said. “ … We want to make sure we’re there with an empathetic ear because a lot of people are physically, mentally and financially challenged.”
(View The Convenience Consumer and the complete NACS SOI Summit Virtual Experience on demand by clicking here. Video presentation viewing is available for download until September 1, 2020.)
Hannah Prokop is an associate editor at CSP Magazine, covering snacks, candy and general merchandise.
NACS has compiled resources to help the convenience retail community navigate the COVID-19 crisis. For news updates and guidance, visit our coronavirus resources page.