Defining Convenience

Oct 17, 2003

Report and Commentary by Al McClain

Naturally, we all define convenience differently, but at the recently concluded National Association of Convenience Stores (NACS) convention, consulting firm srcg attempted to help c-store operators identify what they could do to become more convenient.

The study results are available at (free registration). What follows are some highlights and thoughts. The base research was funded by PepsiCo and other suppliers, included over 8,000 shoppers in places such as the U.S., U.K., Europe, Hong Kong, etc., and retail chains involved included BP, Exxon Mobil, Shell, Marks & Spencer, Boots, Speedway, WaWa and 7-Eleven.

Key Points and Observations (my observations in italics)

Shopper demand for convenience is growing rapidly, yet convenience stores are under pressure because supermarkets and big box stores are increasing their fuel share, pay-at-the-pump is reducing in-store traffic, and the cigarette category is declining. Also, c-store operators as a group have not developed strong brand propositions, or innovated enough to keep up with changing shopper needs. Alternative channels, such as dollar stores and super centers, are growing rapidly, while drugstores and supermarkets are flat. The c-store channel, however, is losing traffic and profits.

Perhaps the biggest problem is that shoppers know what they want (items in-stock, fast, friendly service, easy selection, grocery store quality, fresh prepared food, etc.) and c-stores generally are under-delivering. One finding that must make operators shudder is that consumers rated c-stores closer to vending machines than drug or dollar stores, in terms of function and experience.

What areas can c-stores focus on to reverse their decline? Some suggestions included fresh food, real category management and driving customers from the pump to the store.

C-store operators need to not only revamp their fresh food offerings, but change their image as well. Anyone wanting to do this should spend a lot of time in WaWa.

Real category management is defined as being total-store oriented, and not by putting programs in the hands of suppliers who leverage them to their own brands’ or category’s advantage.

The Pay at the Pump problem will never be solved by the advertising that runs while one pumps their own gas. (Well over 50% of c-store customers now pay at the pump, versus only 34% in 1998.) What’s needed is a real overhaul of the store itself, so that when people venture in for an occasional item of need, they’re motivated to come back.

Another problem identified is that c-stores “rent” their space to suppliers to manage, which is inefficient, and takes control of the store away from the retailers. Obviously, it makes sense to be more in control of one’s own destiny, but this seems to go against the grain of the store-within-a-store trend that’s popping up everywhere now.

The real bottom line seems to be that many traditional convenience stores are totally out of sync with consumer needs of today. C-stores were set up to sell cold drinks, coffee, cigarettes, gas, magazines, snacks, lottery tickets, candy, etc. Yet, today’s “new” shopper is paying at the pump and going elsewhere to get grab and go foods for the car and/or prepared meals for later, because the food elsewhere is better, or perceived as better.

If c-stores (and other small format operators) are to remain relevant and capture their “fair share” of convenience shopping, they have to offer more and better quality fresh food, hire friendlier help, be in-stock on fast-moving items, and have “big box standards” for everything.

Suppliers are part of the problem and the potential solution, too. Pepsi has realigned its operation to work with the channel on more specific initiatives and present Frito-Lay, Pepsi, and Quaker ideas and initiatives in a synchronized fashion.

To succeed, the convenience channel needs to present itself in a new way, take advantage of its small formats, and show it is a viable destination for shoppers seeking fresh foods.

Moderator’s Comment: What’s your gold standard for convenience stores today? What suggestions do you have for retailers with smaller stores, such as
this channel, to compete more effectively?

WaWa and Trader Joe’s (isn’t TJ’s really a modern c-store?) are my gold standards. My suggestion for poorer performing stores would be to get to know your
mop and broom better.
McClain – Moderator

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