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    By Don Longo, Convenience Store News

    CHICAGO – Convenience store retailers need to think about selling more fresh food and optimizing their core destination categories to combat competition from other channels of retailing.

    Todd Hale, senior vice president, consumer and shopper insights for Nielsen, the research giant, told retailers and suppliers gathered at the 2014 NACS State of the Industry (SOI) Summit that despite a lot of concept and product innovation, retailers are having “a tough time” achieving growth.

    He acknowledged that the economy is improving, but noted that not everyone is sharing in the better times. For example, lower-income households, which skew more toward convenience, dollar and automotive stores, are still having a tough time. All demographic groups have lost household income since 2000, Hale said, noting African-American and Hispanic households have suffered the most.

    However, he did cite that research shows consumers will pay more if the benefits outweigh the price, and consumers are definitely flocking to “anything fresh” -- bakery, deli, foodservice, etc.

    On the matter of competition, Hale predicted more headaches for c-stores. Large-format chains such as Walmart and Target are using smaller store sizes to drive expansion. Walmart to Go, which debuted in Bentonville, Ark., last month, is an example of a c-store with Walmart pricing. Target has also opened its own “Express” stores that are 15 percent of the size of a typical Target department store.

    In addition, drugstores such as Walgreens are “really shaking up the box” and competing more directly for the convenience store customer. And then there’s dollar stores, an already huge retail segment that has the opportunity to open as many as 14,000 new stores in the United States. Hale pointed out that Dollar General is already testing fuel sales and all of the dollar stores are targeting key c-store product categories such as cigarettes, beer and other cold drinks.

    Winning the Trip

    Amid stagnant consumer spending, winning retailers will be those that “win the trip” by making “superior shopper connections.” In a breakout session, another Nielsen executive Laurie Rains, vice president of retail consulting and analytics, gave c-store retailers some ideas on how to win that trip.

    She prescribed that retailers look at their top product categories as key destinations and optimize those categories by taking advantage of the changing trends within them.

    For example, while tobacco sales continue to be imperiled by taxation and regulation, c-store retailers must recognize that tobacco customers are very valuable to them. Eighty percent of adult smokers purchase another item when they buy cigarettes.

    In the beer category, retailers must balance their mix by not only selling the large premium and below-premium brands, but also mixing in fast-growing subcategories like craft beer, flavored malt liquor and ciders.

    Packaged beverages, another destination category, is likewise evolving with the growth focused on alternative beverages (energy drinks) and other beverages (ready-to-drink coffee, enhanced waters, iced tea).

    C-stores must also look at emerging categories like foodservice, Rains advised. “Roughly a third of consumers who purchase fresh food at c-stores do it about three times a week,” she said. “You need to balance traditional with emerging categories.”

    By Don Longo, Convenience Store News
    • About Don Longo Don Longo is editorial director of Stagnito Business Information's Convenience Store News, Convenience Store News for the Single Store Owner and Hispanic Retail 360 media brands. He has covered retailing for more than 30 years as a reporter, editor and publisher. Previously, he spearheaded the editorial efforts at a variety of business publications focused on mass, drug, grocery and specialty store retailing. Convenience Store News won American Business Media’s Jesse H. Neal Award for Best Issue of the Year in 2008 and 2012. Longo has won numerous other editorial awards over his career and is frequently quoted in the national and local news media on the subjects of retailing and consumer trends.
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