Convenience Channel Experiences Above-Average Growth

NACS Online
June 12, 2013

A new IRI report finds that the convenience store channel, when compared to grocery and drug stores, was the only channel that enjoyed both dollar and unit sales growth in 2012.
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CHICAGO – The convenience store channel continues to be a destination for immediate consumption and impulse purchasing. However, the channel is undergoing a bit of a metamorphosis these days. Competition is heating up as convenience stores are pitted against other channels, particularly dollar and drug channels, for share of spending. In addition, two major sources of revenue and trip behavior for convenience stores — gasoline and cigarettes — are facing their own challenges with high prices, increased taxes and, for cigarettes, changes in consumers’ lifestyles.

Today, there are more than 149,000 convenience stores in operation. About two-thirds of those stores are independently owned, and the remaining are chain store operations, according to Information Resources Inc.’s (IRI) latest Times & Trends report “Convenience Stores: Keep the Core; Appeal to More.”

“Despite new innovations, the convenience channel faces several challenges,” said Kelley Vacca, principal for client insights at IRI, in a press release. “Many convenience stores sell gasoline, so sales are somewhat tied to gas prices. Even though these prices have been stable during the last year, they are still high and impacting shoppers’ wallets, particularly those of young shoppers, which are a key target for convenience store marketers. In addition, convenience store sales are concentrated in a relatively small number of categories, with three of the top six categories tobacco related.”

While convenience stores of the past had a rather homogeneous look and feel, today’s stores are much more varied. Furthermore, some convenience store owners are replacing long aisles with kiosks, experimenting with larger footprints and adding “good-for-you” products next to the candy bars. Shoppers have rewarded convenience store management for these innovations. When compared to grocery and drug stores, convenience stores were the only channel that enjoyed both dollar and unit sales growth in 2012.

“To be successful in today’s marketplace, convenience stores need to keep the core and invest to develop value offerings across key categories, particularly in markets where tax increases threaten to impact tobacco users’ wallets,” said Susan Viamari, editor of Times & Trends at IRI. “They also need to utilize outdoor advertising as an in-store visit hook by emphasizing value, particularly during periods of high/rising gas prices. To keep the momentum going, convenience stores simply need to appeal to more. A great first step in this appeal is to develop a comprehensive health and wellness strategy targeted to the needs and wants of core shoppers.”