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    C-store Operators Face Fast-Paced Change

    AWMA Expo addresses the catalysts, competitive threats.

    By Melissa Kress, Convenience Store News

    LAS VEGAS — It's ironic, but change is the one constant in the retail industry today. 

    "Change is happening at a faster and faster pace," Kelly Tackett, research director, U.S. for Planet Retail, said Wednesday at the AWMA Marketplace Solutions & Expo in Las Vegas.

    The catalysts for change include consumer demographics, lifestyles and technology. One big factor is the rise of Millennials. Some may view Millennials as just a buzzword, but Tackett said there is a reason everyone is talking about them: they are the biggest generation since the Baby Boomers.

    Despite ongoing macroeconomic pressures, retailers need to address emerging shopper demands. For example, there is an increased emphasis on convenience as U.S. consumers move away from three square meals a day. Notably, 20 percent of all meals are eaten in a car and one in four people are eating fast food every day.

    At the same time that c-store retailers are dealing with new shopper demands, they are facing increased competition from other sectors and channels looking to win that "quick trip," she explained.

    The competitive threats include small-format food stores, small-box convenience-oriented fresh stores, and dollar or value stores. Competition has heated up as traditional supercenters have started to face their own obstacles like saturation and one-stop shopping fatigue, she noted.

    "It's a challenge with the big-box [retailer] to find what purpose they are going to serve," Tackett said. "After years of building larger stores to stock more products, some leading retailers are realizing that future success might be associated with going smaller."

    Case in point, top retailers around the global like Walmart, Tesco and Carrefour are moving to smaller formats. While Walmart has run up against some problems with its smaller formats — namely merchandising its smaller stores the same as its big-box stores —  the retailer is finding some success with its Walmart to Go and Walmart Campus concepts, she pointed out.

    The biggest competitive channel threat, though, is the value retailers. "They are the new convenience stores," she said, adding that they are no longer just attracting low-income consumers as they expand into the suburbs and redesign their stores to be more shoppable. "They have strong sales growth and a huge amount of runway left. Pretty soon, they will be on every corner." 

    In light of these shifts, convenience retailers must adapt. Tackett offered the following tips:

    • Build a higher-margin mix with foodservice, which accounts for 18 percent of sales but 29 percent of gross margin.
    • Localize the assortment.
    • Capture the expanded shopping trip. More than three-quarters of consumers have purchased groceries at a non-grocer in the past 12 months.
    • Grow the private-label assortment. 
    • Connect with tech-savvy consumers as smartphones are becoming the ultimate shopping companions. 
    • Use technology, like self-checkout and touchscreen ordering, to improve the in-store experience.

    "Change really is the only constant," Tackett said. "...Convenience has replaced location. It is no longer location, location, location. It is convenience, convenience, convenience."

    Retailers will be looking to their suppliers and wholesalers to help them through the changes. Flexibility and collaboration, she said, are the key watchwords in this new retail landscape.

    By Melissa Kress, Convenience Store News
    • About Melissa Kress Melissa Kress joined EnsembleIQ's Convenience Store News and Convenience Store News for the Single Store Owner in November 2010. Her primary beats include alcoholic beverages and tobacco. Kress has been a professional journalist since 1995. A graduate of West Virginia University, she began her career in community journalism before moving to business-to-business publishing in 2000, covering commercial real estate.

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