C-Stores Face Consumer Disinterest Due to High Prices, But Can Private Label Turn Things Around?

It looks like convenience stores could be facing a bit of customer pushback, particularly given the challenging state of the U.S. economy. According to NieslenIQ data presented by C-Store Dive’s Jessica Loder, high prices (and lower demand for nicotine and alcohol products, alongside the tertiary spend from customers normally buying these products) have curtailed demand, with dollar sales down around 0.5% YoY in March and unit sales down 2.6%.

“The convenience channel is more expensive to buy these sorts of products in, and that’s likely driving down some of that unit consumption,” said Chris Costagli, VP of food thought leadership at NielsenIQ.

Data pulled from the Nielsen report included:

• The average price of chocolate and confection items at c-stores were a significant 67% higher than all retailers over the course of the 52 weeks ending on March 21.
• Products such as chips, crackers, and popcorn were about 50% more expensive at c-stores, and cookies were, on average, 34% more expensive than at all other retailers.
• Of all categories encompassed by the study, only candy, gum, and mints saw dollar sales growth.
• The above stats lead to one conclusion — half of the survey respondents indicated that they were trimming their spend at c-stores due to inflated shelf pricing.

“We know that with transportation getting more expensive, shoppers are cutting back on the products that they don’t deem to be essential,” Costagli said. “Forty four percent are cutting back on snacks. They’re cutting back on those premium, those indulgent options.”

Could Private Label C-Store Products Drive Interest and Spend From Stressed Shoppers?

In a separate report, C-Store Dive’s Danielle McLean made the case for an emerging assortment of private label opportunities around the convenience store space. Casey’s General Stores, Love’s Travel Stops & Country Stores, Circle K, and Wawa were all highlighted as examples of this growing trend, and most shoppers are familiar with the Buc-ee’s craze that appears to have no end in sight.

“Own brands are no longer a defensive strategy. It’s become a growth engine and a brand-building tool for today’s convenience retailers,” Peggy Davies — president of the Private Label Manufacturers Association — said, per McLean.

There’s a bit of a Wild West going on in the c-store segment on private label, with some chains holding no own brands while others heavily promote their private label products. Popular categories prime for (or already engaged in) expansion are: energy drinks, with customers being ready and raring to experiment; ready-to-eat and (somewhat) healthy snacks, such as protein-laden jerky, chips, and pretzels; and even chocolate, which has seen such a price surge as of late that less-expensive own brand competition could be a value buy.

A little bit of research is also called for — particularly as to how many younger, value-oriented customers a c-store location or chain attracts, as these customers are more likely to take a gamble on an attractive private label offering — as well as the capability to actually break in on the private label market from an operational scale and supplier capabilities perspective.

“If your private label is better — it’s better quality and the packaging is compelling — you’ve got a definite viable alternative to that national brand. It’s a great weapon to have in their arsenal.” said Isaac Krakovsky, consulting retail sector leader at EY Americas.