C-Stores Substitute for Costly Stock-Up Trips
By Bernice Hurst, Managing Partner, Fine Food Network
Once again, poor people are looking for ways of stretching limited funds. Buying in bulk, especially when getting to the store involves an expensive car trip, may not be an option. Even scraping together the cash for a weekly shop can be unrealistic for many. One alternative to stretching the food dollar may seem counter-intuitive – convenience stores.
A recent report in The Washington Post about a convenience store in Arlington, Virginia outlines customers’ changing purchases.
Zulfiqar Ali has recently added a range of grocery basics to the more usual newspapers and magazines he sells in his 7-Eleven store. Customers who usually pop in for the odd container of milk are now coming in more frequently and buying a much wider selection of products including fresh fruit, pancake syrup and black beans. Responding to “popular demand,” he has increased staples such as salt, sugar and cooking oil as well for shoppers who have been spending as much as $150 on a single visit to the store. Nor is he alone in noticing the change.
Tom Gerrity, director for processed foods in 7-Eleven’s Washington region, said they are seeing more customers “buying products that would typically be purchased at a supermarket or club store…throughout the month at a 7-Eleven.” At 7-Eleven stores in the Washington region, grocery sales were up 2 to 3 percent last month compared with last year, he added. Frozen food sales grew 7 percent, and ready-to-eat meals jumped 9 percent. Other regions across the country are seeing similar growth. The shift in focus reflects people going for what they need when they need it rather than buying in bulk or stocking up.
7-Eleven ranks impressively against grocery destinations in the DC market, according to Food World magazine. The chain comes in ninth, just ahead of chains such as Harris Teeter and Whole Foods, with a 3.3 percent market share. That’s largely due to 7-Eleven’s nearly ubiquitous availability, with over 400 stores in the region.
Researchers TNS Retail Forward say that most people still go to convenience stores as an incidental when filling up with gas, citing grocery shopping last as a reason. But, as their senior consultant, Jennifer Halterman points out, “It’s important to add destination appeal so that shoppers think of them not only as convenience. Adding that second layer can help them in the future.”
Discussion Questions: Do you expect a significant shift from major grocery store stock-up trips to more frequent convenience store trips? How can small stores and c-stores adjust to meet the needs of economically struggling customers in these times?
Author’s comment – perhaps this is an inner-city phenomenon but it is kind of sad, really. People pay more for individual items because they can’t afford to drive to a stock up store and shop economically. Also, people live hand to mouth and don’t have the money to do a full-week’s shopping trip.
If there’s a supermarket nearby, the overwhelming grocery volume will go there. Grocery volume in most convenience stores is pitifully low because the prices are higher than supermarkets and the selection is tiny. Convenience stores can’t afford dozens of loss leaders listed in weekly color newspaper inserts. Many convenience stores have such modest grocery assortments that their entire selection would barely fill one weekly supermarket flier.
And if convenience stores had to pay a living wage with a medical plan (like union supermarkets) there’d be 80% fewer convenience stores. All too often convenience stores are minimum-wage (or less) family businesses with no employee benefits.
In a word…no! Convenience stores offer just that…”Convenience.” Shoppers understand what they pay for most items in their grocery basket and the added expense of convenience makes it budget prohibitive to shop for a range of consumables in the convenience format. Just do a basket ring analysis and see what the added shopper expense would be on a weekly home consumption of products, and cash strapped shoppers; while they want the convenience and quick stop benefits, simply can’t afford the added expense for the majority of their consumables.
C-stores can sell more items in smaller quantities. My grandfather did quite well during the depression selling sundries like aspirin, razor blades, etc, in small packs. Poor people could not buy a bottle of 200 aspirin so he sold them a packet of 10. There is an old saying “the poor pay more.” If the banks can get away with charging higher interest rates on the poor then grocers need to find a way to charge them more at retail as well. By expanding their selection of small quantity products, they can expand their sales.
I think it may be an inner city phenomenon–for now. It is sad but it’s been that way for years. It’s easy to lose sight of the fact that many Americans are still trying to feed their families on $40 a week. They shop when–or if–they have money.
Convenience stores rely on frequent (40 times a month) visitors making small purchases of a soft drink, coffee, beer, cigarettes, snack food, etc. They might be able to capitalize opportunistically on a few staple items to forestall a grocery store trip for a day or two, but will never be able to offer the variety or the prices to replace supermarket trips in this economy or any other. Back in the 80s, C-stores tried some expanded concepts–didn’t work then, and won’t work now.
I don’t see this as a major shift from supermarket trips to convenience store trips. But still convenience is a key element in determining where consumers shop, especially considering the price of gasoline. C stores would do well to carry an increasing array of fresh and packaged products to appeal to consumers on the go. I would also like to see them provide unit pricing on the shelves so consumers can determine not only the price of the item but also the price per unit (pound, quart, etc.) This would enable clearer comparison shopping. Currently unit pricing is not required for smaller retailers.
Not necessarily. C-stores offer a limited assortment of goods, and besides, many consumers are using credit to buy groceries at supermarkets. Credit cards mean unlimited cash flow for many consumers albeit temporarily.
Talk about false economics! Do these buyers really believe that buying fewer items per trip, that are on average more expensive, will save them money in the long run? All I can say is more power to the convenience stores who are able to profit from the ignorance of these shoppers.
On the upside, now someone can buy the latest issue of Maxim, a jar of maple syrup, and a bottle of JD all on a single trip.
I doubt there’d be a significant shift from grocery to convenience. The cost will be prohibitive, even if they improve their selection of staples, by definition of a c-store, assortment needs to be small, with little variety.
I do wonder if the growth figures reflect changes of a very small base, making any improvement look big. Also wonder how much of the increase is related to quick, eat-it-now food, even the frozen food? If so, this may be more of a concern for fast food restaurants rather than grocery stores.
A switch in shopping habits is more complex than choosing a convenience store rather than a superstore or grocery store. In some cases, the cost of gasoline or lack of transportation compels consumers to shop at whatever store is within walking or biking distance. If walking or biking to a store, consumers can not purchase large packs of products. Those consumers who are within walking or a short driving range of a dollar store may change their shopping habits and meal planning to purchase what is available for a good price during that trip. Size of product, proximity to home, cost of gasoline, and availability of transportation are all reasons for switching shopping habits.
What the C-store industry needs is marketing and merchandising. The world and market have changed due to the price of gasoline. The C-store industry is missing the opportunity to significantly increase sales and profits. Currently, the most profitable year for a new c-Store is its first year of operations. They tend to go down from there. When the American consumer did not have cars, A&P operated over 2,000 stores. Most were only slightly larger than the typical C-store of today. Tesco, Walmart and Safeway are all opening smaller formats.
C-stores have the locations with gasoline. They have the opportunity to get into answering the “What’s for dinner tonight?” question. Yet most are focused on cigarettes and lotto tickets with merchandise sitting on the shelves that is one to two years old. C-stores will not go away, but as these new smaller formats expand, the number of stores can be expected to decline.
I wonder how much of this is simply the lack of urban grocery stores? Consumers have been forced by supermarket operators to travel to the suburbs (or at least considerable distances within the city) for their “stock up trips” for decades. Part of this is due to urban flight, part escalating real estate prices and part higher operating costs (yes, including higher shrink) in urban areas. But with energy prices forcing those who live in the city to shop closer to home, and encouraging exurbanites to move closer to work, the time for the resurgence of “the corner grocery store” is now.
As an addendum to the Post story, have a look at this in today’s Guardian; communities encouraging corner and convenience stores to include more fresh fruit and vegetables in their range, especially those located in poor neighborhoods.
There are whole wards of some cities that aren’t served by grocery stores. DC’s Ward 8, which comprises almost 15% of the District, just got its first grocery store last year. Ward residents either bought food in small neighborhood stores, or took the bus to a grocery store elsewhere. Buying food this way costs a lot more!…but additional options for urban residents is probably a good thing.
People aren’t that stupid! Stupid people aren’t that stupid. C-store sales are mostly based on sales to single male impulse shoppers and people without transportation. No one has ever depended on C-stores for anything unless they absolutely had to do so.
C-store sales should decline as people cut back on the use of the automobile for unnecessary transportation. The fact that people are cutting back on driving in no way translates into an increase in sales of groceries for C-stores. Questions like this seem to be posed simply as a means of creating business for consultants. Counterintuitive! Give us all a break.