C-store Traffic Remains Low, But Convenience Is Still King

Convenience Store News, 12^th February, 2021

NEW YORK — The return of normal levels of customer foot traffic to convenience stores is directly correlated to the rollout of the COVID-19 vaccines, according to Eric Dzwoncyk, global co-leader of the restaurants, leisure and hospitality practice at AlixPartners business consultancy.

In a new survey of 1,001 adult U.S. consumers, released late last month, AlixPartners reported convenience store visits continue to be very low as 29 percent of respondents said they didn’t make even one visit to a c-store in the past week.

Even looking ahead to the next six months, 26 percent said they will stay away from c-stores, while 20 percent said they will visit three to four times a week, and just 15 percent said they will visit at least daily. The highest percentage — 39 percent — said they will make one to two visits per week.

CONVENIENCE STORE VISITS PER WEEK

Source: AlixPartners October 2020 Convenience Store Consumer Survey

“The good news for c-stores is that the pandemic has squeezed five years of progress into seven months,” Dzwoncyk told Convenience Store News. “By focusing on loyalty programs and delivery services, c-stores have closed the gap with other retailers, especially QSRs [quick-service restaurants].”

The AlixPartners 2021 Convenience Store Industry Outlook study, fielded in October, found that c-store consumers across all age groups expect to order more deliveries over the next 12 months than they did in the previous 12 months. The biggest increases were found among those aged 18-24, up 17 percentage points, and those aged 25-34, a jump of 16 points over the previous year.

“As a megatrend, convenience is only going to get bigger. Who’s better positioned than a good convenience store,” noted Dzwoncyk, adding that consumers have become “Amazon-ized” and expect to receive the goods they purchase almost immediately.

He believes c-stores are catching up to restaurants in delivery. High-frequency users of c-store deliveries (three or more times a week) said they used Uber Eats 39 percent of the time and DoorDash/Cavier 37 percent of the time over the past 12 months. While c-stores, like restaurants, are hardly happy about “pimping their brand” to a third-party delivery service, Dzwoncyk believes that fees will be reduced as the delivery services industry matures and clear leaders emerge.

The AlixPartners consultant also pointed out that c-stores have made great strides in improving their loyalty programs. In the past, most c-store loyalty programs were associated with fuel discounts.

“They aren’t cookie-cutter — save 3 cents on a gallon of gas — programs anymore,” he said. “Now, c-store loyalty programs are more sophisticated, more like Panera Bread or Starbucks.”

According to the study, 36 percent of consumers say loyalty programs are c-stores’ best lever for driving online-ordering frequency. This is particularly true among younger consumers. Sixty percent of those aged 18-24 and 51 percent of those aged 25-34 say loyalty programs are important to them.

However, only 40 percent of all c-store consumers are satisfied with their current loyalty program, with “achievable,” “flexible” and “special awards” leading their list of most desired program attributes.

Nevertheless, 50 percent of high-frequency c-store consumers (three or more visits per week) say loyalty programs are “very” or “extremely” important, and they over-index compared to low-frequency shoppers in term of valuing special offers (50 percent vs. 41 percent, respectively), online ordering (38 percent vs. 29 percent), and online payments (37 percent vs. 29 percent).

Another new service that has gained appeal with c-store customers is curbside pickup. Twenty-three percent of the consumers who participated in the study said they used curbside pickup in the past six months, and 33 percent said they used curbside pickup for foodservice.

In summary, the study concluded that in 2021, c-stores will need to adapt to these seven trends:

1. Customers coming back, but slowly;
2. Delivery anytime and anywhere;
3. Evolving formats;
4. Acceleration of mobile and loyalty programs;
5. Industry consolidation;
6. Regulatory uncertainty; and
7. Localized customer experience.

Among the recommended ways to adapt are optimizing their offerings, including focusing on higher-margin products and services to protect profitability. Other recommendations include:

• Differentiating on technology and innovation with “frictionless transactions” as the goal;
• Reimaging formats, including looking to restaurants for inspiration; and
• Leveraging opportunities for consolidation (a number of mid-tier chains appear to be in attractive market positions with strong foodservice capabilities and fueling station reach).