Jennifer Kim
Valero corner store 123 Main St. Houston, TX 77002
Executive summary
Jennifer Kim
Valero corner store 123 Main St. Houston, TX 77002
Executive summary

Purpose
This report examines the effects of the recession and competition on visiting traffic to convenience stores (c-stores) and offers recommendations on opportunities to increase stops.
Key Findings
From 2007-2009, traffic has reduced from 491K to 373K visits in an average 30-day period. Additionally, the convenience channel has blurred as other outlets, such as supermarkets, warehouses, and drugstores sell gas and grab n’go options. Therefore, the research draws attention to the changing c-store landscape. * The demographic of c-store consumers are 65% light, 25% moderate, and 10% heavy users. Top reasons for visits are convenience and quick shopping. Product selection, price, store appearance, and restrooms are lagging but rising in importance. * How people are using c-stores has changed also. Specifically shop only visits are increasing and dual visits for gas and shop are declining. Furthermore, time of day effects consumer visits with each time slot having distinctly unique priorities and product selections. Another key aspect effecting c-store landscape is competition from quick service restaurants (QSRs). Consumers perceive that QSRs offer better food, flavor and quality.
On the other hand, c-store competition in the beverage arena varies based on category due to consumer priorities and the cross purchasing of food and drink. C-stores hold 3% dispensed, 20% packaged, and 8% hot beverage sales. This report uncovers consumer beverage habits. * Dispensed beverages are primarily sold from the 10am-6pm slot in c-stores, but QSRs own the 10am-2pm slot. Also, QSRs draw more “out-and-about” errand traffic, while c-stores gain more “coming from home/work” traffic. The majority reasons for dispensed beverage sales at c-stores are convenience, quick shopping, and availability of gas, while food purchases seems to be an afterthought. * C-stores, at 20%, compete with a variety of outlets for packaged beverage sales, but QSRs, at 50%, own the biggest share- and a bigger share of the 10am-2pm time slot. Top reasons consumers visit a c-store when purchasing packaged beverages were convenience, quick shopping, and availability of gas. At the same time, snack and food purchases are low on the list of reasons. * Hot beverage sales are strong from 10am-6pm and growing with competition. The growth of specialty coffee at QSRs are pushing c-store specialty coffee sales up by 3%. However, traditional coffee accounts for the majority of sales at 65%, while specialty coffee only accounts for 26% of sales. Main reasons consumers choose c-stores over other outlets when purchasing hot beverages are convenience, quick shopping, and value. Nonetheless, QSRs out-compete c-stores when it comes to consumer’s perception of food quality and offerings.
Prepared foods have become another arena in which c-stores can increase traffic. Due to the recession, consumers have replaced full service restaurants with meals at QSRs and c-stores with quality offerings. * The average consumer ate prepared foods from a c-store 90 times last year, which accounts for 7% of all purchases. Although, they win on convenience and routine, consumers say they lag in food quality compared to QSRs. Furthermore, the recession has made prepared food purchases with deals more appealing. 20% of c-store, and 29% of QSR, prepared food purchases involved deals. * Additionally, overall packaged snack foods have been down since 2007. And yet, c-stores hold the competition in immediately consumed snack food occasions at 18%. The trend for c-store sourced snacks to be consumed away from home is 67%, while in other outlets the proportion is 36%. Also, types of snacks sold vary between outlets. C-stores tend to sell more chewy candy and chocolate candy/bars, whereas supermarkets tend towards fresh fruit and “better for you” snacks. * Special c-store demographics: teens. Teens buy from c-stores more often than anywhere else. 20% of them consume their snacks during social activities, as opposed to 12% of the total population. And, half the time, beverages are consumed along with snacks.
Recommendations
* Find alternative ways to build traffic around higher net margin products. C-stores should improve product selection and pricing. Also, renovate store appearance and restrooms to be more attractive. In this way, convenience stores can begin to capture “out-and-about” errand traffic. * Also, c-stores can convert some pay at pump traffic to dual visits that include store shopping. Food/beverage deals, like food and drink bundling programs, will entice customers into the store. * To further aid in the successfulness of food/snack bundles, c-stores can improve top of mind food cues. Expose consumers to c-store food/snacks with bundles in order to increase consumer perception of variety and quality. For example, offer breakfast foods with the purchase of a hot beverage. * Additionally, expand specialty coffee selections to drive more visits. * Furthermore, with increase traffic, convenience stores have a unique opportunity to define themselves as a good source of quick, quality, and cost-effective prepared foods. Align with consumer’s trends towards healthier alternatives, c-stores should stock up on cold cut combos, grilled chicken, Mexican dishes, and the like. * Not only do consumers prefer healthier alternatives in prepared foods, but also in their snacks. C-stores can increase stops by offering fresh fruits and “better for you” snacks. * Finally, target the teen demographic.by increasing inventory of gum, salty snacks, non-chocolate candy, breath mints/strips, and chocolate candy to capitalize on teen purchasing behavior..