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NATIONAL REPORT — Supermarket, drug, dollar and big-box stores continue to compete against convenience stores for customers in a variety of product categories. While c-stores are missing the mark in some ways, they are coming out on top in many other ways.
The convenience channel continues to gain market share in dollar sales and unit volume across all major categories with the exception of beer/malt beverages and fluid milk products, according to a Convenience Store News analysis of Nielsen data for the 52 weeks ended Nov. 21, 2015. In fact, in both these categories, only supermarkets saw a gain in market share.
“Craft beers are growing and unfortunately most c-stores are not well positioned to handle their explosive growth. To grow craft beers, the customer has to be exposed to a large variety and that requires display space,” Steven Montgomery, president of b2b Solutions LLC, a c-store consulting team based in Lake Forest, Ill., reasoned as to why c-stores are lagging in this area.
“Supermarkets can do this with both warm and cold displays, while most c-stores have limited cooler space and much of that is allocated by actual or implied contractual obligations. Furthermore, few c-stores display warm beer in six-packs because of concerns regarding minors and other issues.”
Supermarkets also are sometimes more aggressive with promotional activity and discount levels to drive traffic around beer/malt beverage purchases. They are focused on driving traffic vs. profiting and will offer competitive prices on cases, noted David Bishop, managing partner at Balvor LLC, a sales and marketing firm based in Barrington, Ill.
“There has been a shift toward ciders and malts and c-stores just don’t have the space to present and merchandise the same assortment or package sizes as supermarkets, so they tend to focus on the best-seller,” Bishop added.
Still, convenience holds the largest market share of beer/malt beverages at 60.6 percent of dollar sales and 72.4 percent of unit volume. But the channel saw a .04-point decrease in share of dollar sales and no change in share of unit volume for the 52-week period analyzed.
In the milk category, c-stores come in second place to supermarkets in terms of overall market share, followed by drugstores. For the 52-week period examined, the convenience channel saw a .09-point decline in dollar share and a .19-point drop in unit share.
C-stores often sell more single-serve milk than gallons, and when the price of milk goes up, consumers become more sensitive to price changes and will go to supermarkets which tend to have the best prices, according to Bishop.
He also noted the lack of volume movement in the gallon sizes will often effect sales because the expiration dates will not be as far out in a c-store.
Midwest convenience store chain Kwik Trip Inc., based in Wisconsin, owns its own dairy farm and has a strong dairy program. It can offer 14 days before expiration on milk, whereas other c-stores may only be able to offer half that, said Bishop.
“The code date perpetuates the volume and the volume dictates the code dates,” he explained. “It’s a vicious cycle and c-stores need to look at their supply chain and find ways to get milk to the market faster or more economically.”
For the full findings of our cross-channel category analysis, look in the Convenience Store News Guide to Category Management, published this month.