The Challenge: Fill Up Tanks and Carts
By George Anderson, Editor-in-Chief, RetailWire
Here’s something to add to the definite events in life. You will die, pay taxes and eventually spend more at the gas pump.
Gas prices have risen over the past two weeks, according to various sources including the Lundberg Report and AAA. The average price for a gallon of regular was $2.22 nationwide at the roughly 9,000 gas stations included in recent numbers released by Lundberg.
While the past couple of weeks do not represent a sudden spike in prices and it may be true the cost of fill-ups have been relatively stable over recent months, everyone knows warmer weather, vacation trips and higher prices are only a few months away.
It has been suggested in some quarters that consumers have become acclimated to the high prices paid at the pump, but research suggests the truth is more complicated.
Fuel prices on the national level are 50 percent higher (a conservative estimate) than five years ago.
Back in June and July of 2005, ACNielsen asked consumers how high gas prices were affecting their driving, shopping and other habitual activities. At that time, 61 percent said they were combining trips to run errands, 31 percent were eating out less and 30 percent were spending more time at home.
A year later, all those numbers had increased between seven and nine percent and nearly half of all consumers said they would reduce spending by a small or great degree.
In addition to combining errands, consumers are also looking for other ways to offset the high price of gas. They report buying larger pack sizes to last longer before needing a replacement and increasing the frequency and the amount of item they buy online.
Warehouse clubs and supercenters have done best during the high gas price era while store counts in supermarkets have remained relatively flat. Dollar stores, drugstores and mass merchants have seen counts head southward.
In terms of trips, all channels with the exception of clubs have seen a falloff. Indicative of the combining errands and limited trip tendencies, stores across all channels have seen the value of market baskets rise.
It’s worth pointing out that one off the lynchpins of one-stop shopping is general merchandise and health & beauty care. More than representing seven to eight percent of the store sales, these product classifications open up to customers the option of combining shopping trips and eliminating extra stops at other stores.
So what does this mean for retailers, specifically those with a one-stop shopping profile?
Todd Hale, senior vice president – consumer analytics for ACNielsen, believes retailers have a number of strategies and tactics to become the first and only stop on the reduced shopping trips being made by consumers.
“Adding gas pumps to grocery store parking lots and/or providing gas discounts (to buy gas at a gas operator) based on spending in stores turned out to be a good thing for many grocers this past year,” he said. “In our ever increasing ‘fast-paced’ life, advertising messaging around saving consumers time and money should be a real focus.”
Even though GM/HBC growth has been slow, these product classifications are superbly positioned to play a key role in stimulating increases in market baskets: high-volume, high-profit products available in a wide variety of store.
Discussion Questions: What steps should retailers make to become the preferred one-stop consumers choose when gas prices rise? Should GM/HBC play a major role in programs designed to prompt one-stop shopping in a costly-gas world? How should that role be fulfilled?