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Tour a few college campuses, and the first thing that becomes apparent is that there’s no such thing as a typical college convenience store. Some are kiosks, measuring hardly more than a few square feet, offering packaged beverages, coffee and snacks; others have full grocery sets and foodservice. They are in libraries, in student centers, in athletic facilities, in classroom buildings. But there’s one thing to be found in every campus c-store: hungry students.
“You can’t have better consumers than college students,” said Brian Barker, convenient store coordinator at the Bloomington campus of Indiana University. College students have almost $33 billion in discretionary spending power per year, or $246 per student per month, according to youth marketing agency 360 Youth, and many of them are making their own purchase decisions for the first time. They’re willing to try new items, they offer frequent and voluble feedback and they are willing to a pay a premium for convenience — just ask anyone who has seen a college student bolt the 10 feet from her dorm to a campus c-store in her pajamas, rather than get dressed and venture off-campus.
However, college c-stores face some unique challenges. They mainly employ students, who may view their jobs as just one among many commitments, from academics to sports to extracurricular activities. They face competition from numerous other eating locations on campus, from dining halls to vending machines, not to mention off-campus c-stores and the pizza places and sandwich shops that sprout up around most universities. And for the most part, they do not sell three of the biggest c-store items: gasoline, beer and cigarettes.
How, then, are college c-stores racking up sales? By constantly refreshing planograms, responding quickly to student feedback, staying on top of trends, hosting frequent promotions and — perhaps most importantly — being in the right place at the right time.
"Our best advantage would probably be our selected locations," said Mike Mitroi, assistant director of student dining services at Miami University in Miami, Ohio. "Many of our market locations have been chosen so that they are in close proximity to our traditional dining facilities, where students go either two or three times in a single day. This traffic is conducive to extra sales that may not have gone to standalone operations in odd areas of the campus."
Students may grab convenience items from the retail locations before or after eating in the dining halls, or they may head for the dining hall and then change their minds and opt for the faster foodservice options in one of the college's six retail locations (see "Snapshot: Miami University C-Stores," Page 32).
The stores offer proprietary foodservice and other self-branded concepts including Uncle Phil's Deli (bagels, wraps and subs); Uncle Phil's Express (salads, gourmet sandwiches, sushi, fruit cups, veggie platters and parfaits, which are made and packaged in a central location on campus and delivered to retail outlets); Campus Grill (burgers, hoagies, veggie burgers, ribeye steak and chicken sandwiches); The Bakery (brownies, muffins, scones, breads, cookies, cinnamon swirl rolls, custom-decorated cakes and doughnuts); Miami Twister (pretzels that are handmade daily, with a variety of dipping sauces); Bell Tower Coffee Company (espresso, flavored coffees, cheesecakes, scones and custom-made smoothies); and Nature's Nook (packaged foods that are locally grown, organic, vegan and/or are produced with all-natural ingredients).
Indiana University's Barker also sees the c-stores on his campus as having a symbiotic relationship with the other dining options. "We try to put food in communities," he said. "The dining halls on campus only have three dayparts, but the convenience stores, food courts and kiosks are available all day."
The Bloomington campus has four convenience stores, all in proximity to dining halls, as well as five kiosks in various areas around campus. The four stores combined had sales of $8 million to $9 million last year, Barker reported, with an approximate growth rate of 5 percent per year; they have weekly sales averaging $312,000 and average daily sales of $62,400, with an average basket of $8 to $10. Of the meal points that students purchase at the beginning of the year, which can be spent anywhere on campus, 34 percent are spent in the convenience stores.
Step Right Up
How are c-stores luring students away from other buying opportunities? Promotions are a major factor in bringing students into the stores and turning them on to new items. Vendors, recognizing that college students are an ideal demographic for building brand loyalty, frequently sponsor events within stores, as well as running price reductions and offering giveaways. Coca-Cola recently ran a promotion tied to its Dasani water at Indiana University, giving away a pair of mountain bikes; Barker placed the bikes in the store next to the Dasani cooler to drive interest.
At Cornell University in Ithaca, N.Y., vendors also go to great lengths to catch students' eyes. Cornell has two c-stores on campus: Bear Necessities, which offers foodservice and has annual sales of approximately $3 million and foot traffic of about 2,500 students per day, and J's Express, which does not offer foodservice and has annual sales of slightly over $900,000 from about 500 students per day. In January, Cornell Dining hosted a food show in the student center outside Bear Necessities where suppliers offered samples to approximately 2,000 students. Participating vendors included Campbell's, Frito-Lay, Herr's, The Hershey Co., Hot Pockets, Kellogg's, M&M/Mars, Nestlé and Pepsi.
"We build their tastes," said Harry Ashendorf, Cornell Dining retail manager. "They're here now, and they're going to acquire their tastes for the rest of their lives and build their buying habits." Ashendorf maintains a Web page that lets students know about the bi-weekly specials in the two stores. "We'll run a 2-liter bottle of Pepsi for $1.29, or 32-ounce Gatorade at two for $3," Ashendorf said. "We always have specials on beverages, salty snacks and candy." The Web site also acts as a mechanism for students to give feedback, in addition to the comment cards within the stores.
Miami University also offers online and in-store opportunities for student feedback, as well as sending out a 70-question survey to each student customer every November. "Last November we had several thousand write-in comments from the survey," Mitroi said. "We have been doing a form of this survey for more than 20 years and it has proven to be a key source of feedback from our customers."
Indiana University, in addition to soliciting comments from students, has occasionally run across some unsolicited feedback. "I saw an editorial in the student newspaper saying our prices were too high!" exclaimed Barker.
For the most part, though, student feedback acts as a valuable resource for campus c-store operators as they evaluate their planograms. At Miami University, Mitroi continually reevaluates the product mix in the stores, which ranges from more than 4,000 SKUs in the largest store to 1,500 in the smallest. "Customer feedback is a guiding force for new products and operational improvement. The hottest items that are added from customer feedback usually involve beverages," Mitroi said. "Energy drinks such as Amp and Red Bull have been big sellers. Twenty-ounce bottled soft drinks, teas, Gatorade, water, snacks and candy are big sellers, too."
Miami University also has developed new concepts in response to student demand. Nature's Nook, which is currently available in one store and will debut in another store this fall, taps into students' interest in healthy food. "Nature's Nook certainly has a demand that is growing," Mitroi said. "Many of today's college students have become sophisticated consumers and they are more aware then ever about nutrition and dietary analysis." For the same reason, all of the stores carry fresh whole and cut fruit.
At Indiana University, Barker also relies on student feedback in developing new products: He has added organic foods, Passover items and low-carb products based on student suggestions. The university's meal planning committee, which consists of staff and students, contributed to the development of "Cream and Crimson Creations," a line of pastries that is made fresh on campus daily. "'Made from scratch' still exists at IU," Barker said.
He cites those pastries as popular items, as well as bagels from a local bakery, but adds that the best sellers are packaged beverages, salty snacks, sweet snacks and frozen entrees. The items with the highest margins, in contrast, are frozen entrees, ice cream and frozen novelties, fountain beverages, HBC and laundry supplies. "I look at new items in the summer, in October and after the first of the year," Barker said. "That's when students start to get bored." Each of the four stores carries approximately 1,500 SKUs.
Cornell's two stores carry more than 3,000 SKUs each, plus foodservice in Bear Necessities. "I add new SKUs as new and sellable items become available. Vendors contact me to show me new items, and if it sparks an interest for the students, then I add it," said Ashendorf. "Bottled water is by far one of the leaders in both stores, and our single-serve bottle beverage category has one of the higher margins. Both six-packs and single-serve bottles of Aquafina lead the way in both sales and margins."
Ashendorf gets valuable support from Cornell's dining commissary when adding new foodservice products. In January, the stores switched from 4.5-ounce frozen muffins to 7-ounce fresh muffins developed by chefs in the commissary. The muffins, which come in nine flavors, retail for the same price as the old muffins: $1.49 or $1.99 with a cup of coffee. The commissary also developed a line of sandwiches for Bear Necessities — "from your basic ham and Swiss, to a ranch chicken wrap, to the Tuscan Chicken Sandwich (focaccia bread, chicken salad, pesto, tomato and lettuce), which is one of the best sellers," Ashendorf said.
Timing Is Everything
For managers who make the jump from running a traditional c-store to running a college c-store, a major adjustment is realizing that the summer — a time of major activity in traditional stores — is the time when college c-stores are either closed all together or running with a skeleton crew and greatly reduced volume.
There are some c-store executives, though, who would not be surprised by the change — like Kent Raphael, vice president of merchandising for Village Pantry, a division of Indianapolis-based Marsh Supermarkets Inc. Village Pantry has several stores that border the Indiana University campus in Bloomington. "You have to know the college schedule, when school starts, ends, exam week, holidays," Raphael said. "District managers work with the store management to help remind them when to cut back and when to expand, based on historical business trends and experience."
For traditional c-stores that border campuses, it also helps to be aware of what products sell better with students than with other customers. While Raphael says the product mix in stores near campuses is basically the same as in other stores, there are some differences. "College campuses in Indiana do have a slightly different mix regarding tobacco," he said. "One example is the cigarette brand Parliament, which is strong near college campuses and not in other areas. Marlboro and Camel in a box are the main brands, and very little business is done with discount brands." The mix also depends on whether the store is near a dorm or a parking lot, he added. Stores that are near apartments tend to get students looking for groceries, while stores near campus parking lots or academic buildings see more students coming in for snacks before or after class.
The college schedule is also an important consideration for student employees. Exam week, for example, is the busiest time for college c-stores, as students cramming for finals come in seeking quick pick-me-ups from caffeine, energy drinks and sugary snacks. Unfortunately, it's also the time that student employees are least willing to work as they study for their own exams.
"I'll never be the one to say we need to be open until the wee hours," said Barker. "Our workers are students and their priority is to graduate from this school." Of his operation's 500 employees, 70 percent are students, with a turnover rate of 10 percent. He offers incentives to students who stick it out through the end of the semester: If they make it through training, work all of their allotted hours and show up on time, they will receive a bonus at the end of the semester of one dollar for every hour they worked, up to $200.
And for graduating seniors, perhaps, that $200 will go with them out into the world — where they can buy the brands they came to trust during four years shopping in their campus c-store. n
Snapshot: Miami University C-Stores
Spring Street Market