The changing face of convenience
June 12, 2013
by Eric Schroeder
CHICAGO — The convenience store channel is undergoing a metamorphosis, with some store owners replacing long aisles with kiosks and others experimenting with larger footprint stores featuring expansive product offerings, according to a new report from Information Resources, Inc., a Chicago-based market research firm.
In its latest Times & Trends report, “Convenience stores: Keep the core; appeal to more,” I.R.I. identified several categories as being key to the growth within the more than 149,000 convenience stores operating in the United States. In fact, when compared to grocery and drug stores, the convenience channel was the only channel that posted dollar sales and unit sales growth in 2012, I.R.I. said.
While most consumers stop by convenience stores to fuel up with gasoline, many also make other purchases.
In examining category and department growth trends within the 10 largest convenience store categories, energy drinks showed the strongest growth between 2008 and 2012, increasing 56% on both a dollar and unit sales basis during the period, according to I.R.I. AllScan data.
“The category is clearly benefitting from lifestyle trends and associated high levels of popularity,” I.R.I. said. “During the past year or so, this category is also benefitting from high levels of innovation. In fact, Rockstar Recovery, one of last year’s I.R.I. New Product Pacesetter products, amassed more than $60 million in its first year, and helped to boost overall category performance.
“In addition to this sizable new product, energy drink marketers have been steadily bringing to market new pack sizes, many of which are larger packages, which tout a lower price per oz. This is helping to drive appeal among consumers looking to lower their C.P.G. expenditures.”
Ranking just behind energy drinks in terms of dollar sales growth during the period were cigars and smokeless tobacco, at 38% and 34%, respectively, according to I.R.I. Chocolate candy saw dollar sales grew 28%, while salty snacks increased 22%, sports drinks rose 16%, and bottled water grew 3%. Despite the marginal dollar sales growth, unit sales of bottled water were down in the 2008-12 period.
“This is a category that has struggled during the past several years in the face of consumer efforts to rein in spending,” I.R.I. said. “From 2008-2012, bottled water unit sales slipped 3.1% despite beefed-up promotional efforts and associated price deflation.”
Immediate consumption and indulgent products stand out as key attributes among the top 10 growth categories (in terms of unit sales) in the convenience store channel during 2008-2012.
Weight control/nutrition liquids/powders was the fastest growing category during the period, registering 146% growth, according to I.R.I. Shelf-stable canned juices ranked No. 2, at 105%, followed by shelf-stable non-fruit drinks at 65%, energy drinks at 56%, and ready-to-drink coffee/tea at 47%. Refrigerated entrees posted unit sales growth of 34% during the period, I.R.I. noted.
The category exhibiting the sharpest decline between 2008-2012 was fresh bread and buns, which experienced a 39% decrease in unit sales, I.R.I. said. Other food and beverage categories showing unit sales declines in the period were milk, down 25%; gum, down 20%; bakery snacks, down 11%; and cookies, down 9%.
“Within the channel, milk sales are being negatively impacted by several forces, but price/value is a huge factor,” I.R.I. said. “Convenience stores are facing serious pressure from other channels, particularly drug and dollar, which are perceived as offering better value. Drug and dollar are winning milk trips and overall share as a result, particularly on take-home sizes (gallon and half gallon).”