18 minute read
The Summer of
from CSN-0521
by ensembleiq
The Summer of the Road Trip?
IT’S BEEN MORE than a year since consumers worldwide have been forced to change their shopping habits due to the COVID-19 pandemic. As we pass the oneyear anniversary of economic lockdowns caused by the pandemic, there’s no shortage of talk about how consumer shopping habits have changed, and how many of these changes will persist after the pandemic is over.
Let’s look at some of the post-pandemic trends being talked about at this time.
Deloitte noted that pandemic-related anxiety levels in the U.S. have dropped by 10 percent and that worldwide anxiety is at its lowest level since April 2020. Despite the increase in safety perception, financial stress and employment continue to be the second and third leading drivers of anxiety in most countries.
Deloitte’s research also found that discretionary spending is on the rise, with three in four U.S. consumers planning to spend the same or more on apparel and restaurants in the coming weeks, while also expecting to avoid congregating with strangers and continuing to consume at home and shop online.
A recent study by Toluna reports that two-thirds of respondents plan to return to their in-store shopping habits because half of them feel they have more control over what they buy, and 41 percent think in-store is easier and more convenient.
One out of two consumers say their buying habits have been permanently changed by the pandemic, according to a new study by AlixPartners, an international consulting firm. The study also found that internationally, consumer concerns about health (both mental and physical) and finance are key drivers of these permanently changed purchasing habits.
The AlixPartners study points out that the pandemic accelerated existing trends — such as digitization and channel-shifting — but it also has led to new habits, such as more local travel by consumers. And the research notes that while some online purchasing habits developed during the pandemic will remain very strong, such as shopping for beauty products, clothing and footwear, some are likely to “snap back to store,” such as for grocery shopping.
I sense there’s a lot of consumer optimism about the vaccines, and I think c-store retailers will enjoy a significant boost to store traffic and sales this summer, especially from summer family road trips. U.S. consumers are likely to eschew international travel for summer vacations closer to home.
For comments, please contact Don Longo, Editorial Director, at (201) 855-7606 or dlongo@ensembleiq.com.
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Brett Atherton
Bolla Management
Laura Aufleger OnCue Express
Rick Crawford
Green Valley Grocery
Edward Davidson
ER Davidson & Associates (7-Eleven Inc., retired)
Jim Hachtel
Eby-Brown Co.
Chris Hartman
Rutter’s
Ray Johnson Speedee Mart
Jack Lewis
GPM Midwest
Joe Lewis
ExtraMile Convenience Stores
Ruth Ann Lilly
GPM Investments
Danielle Mattiussi
Maverik Inc.
Vito Maurici
McLane Co. Inc.
Matt Paduano
Lakeport Markets
Jonathan Polonsky Plaid Pantries Inc.
Greg Scriver Kwik Trip Inc.
Bill Stein Core-Mark
Roy Strasburger
StrasGlobal
7 OUT OF 10 USERS SAY
NICORETTE GUM TASTES BETTER THAN STORE BRAND*
*Overall taste preference between coated gum flavors based on initial taste (1 minute of use).
Now Available At
The consumer profile of convenience stores continues to shift to a younger demographic (Millennials (22%) and Gen X (22%) now make 44% of C-store shoppers), and those consumers are increasingly seeking healthier options at convenience stores from food and beverage to products to improve their health and well being. As a convenience retailer that prides itself on having a variety of products for everyone, Wawa has been expanding options for customers, now including access to a full-line of smoking cessation products.
Since early July, Wawa now stocks a robust lineup of Nicorette smoking cessation products in 900 stores, including Nicorette Gum (4mg) in Cinnamon Surge, Fruit Chill and White Ice Mint and Nicorette Coated Ice Mint Lozenges (2mg and 4mg). Wawa is the first convenience store to provide a full chain launch with five Nicorette SKUs.
For more than 20 years, Nicorette has been a leader in helping smokers fight cravings so they can successfully quit. Studies show that nicotine replacement therapy (NRT) products combined with behavioral support can double one’s chances of quitting smoking and the availability of Nicorette products at Wawa may help consumers finally start on their quit journey.
Behavioral support program increases chances of success. Read and follow label directions. ©2020 GSK group of companies or its licensor. All rights reserved.
COVER STORY PAGE 38
FEATURES
COVER STORY
38 A Bumpy Road Foodservice remains an important category for c-stores, but recovering from the COVID-19 pandemic will take time and effort.
46 Looking Back & Moving Forward Convenience foodservice leaders are using lessons from the past year to build a stronger post-pandemic future.
FEATURE
70 Mastering On-Demand Delivery Third-party apps and in-house offerings for delivery continue to explode in the c-store market.
28
DEPARTMENTS
VIEWPOINT
4 The Summer of the Road Trip? Vaccine optimism and still-cautious consumers could lead to breakout year for summer car travel.
14 CSNews Online
28 New Products
SMALL OPERATOR
32 Past Experiences Ignite Future Endeavors Lakeport Markets’ Matt Paduano believes small, regional operators can succeed in today’s climate.
NEW HORIZONS
82 Creating a Pipeline for Success Women need support at every level of their careers to reach the C-suite.
STORE SPOTLIGHT
84 Delivering the Royal Treatment Englefield Oil’s new flagship Duchess store emphasizes the customer experience.
INSIDE THE CONSUMER MIND
102 Putting Convenience in Context C-store customers want a shopping experience that eases their anxiety, not adds to it.
102
18
INDUSTRY ROUNDUP
16 VERC Enterprises Exits Convenience Channel in Three-Way Sale 18 Summer Travel Season Triggers Hiring Sprees 23 Eye on Growth 23 Fast Facts
24 Retailer Tidbits
25 Supplier Tidbits
TECHNOLOGY
76 The Taste of Technology As with all other areas of the store, technology is playing a bigger role in foodservice. CATEGORY MANAGEMENT
FOODSERVICE
52 Knead-to-Know Pizza Trends Regional styles, unique flavors, premium proteins, and more make this an exciting segment.
FOODSERVICE
54 The Dispensed Drink Evolution Hot, cold and frozen beverage offerings at c-stores are adapting to meet the times.
TOBACCO
60 Keeping Up the Momentum Cigars were a big hit at the height of the pandemic, but what now?
CANDY
66 Nonchocolate Candy Makes a Rebound The pandemic unwrapped new shopping trends, consumer behaviors and product attributes.
76
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LAUREN QUAGLIA, Boston Beer Company
Bubbling Over
Riding the Hard Seltzer, ‘Beyond Beer’ Wave that Shows No Signs of Stopping
It’s no secret the ‘beyond
beer’ category has been on a tear, with an influx of new brands and innovations that continue to make it the most-watched and talked about space in beer.
Just this past year, the category has grown to represent 15.5% of total beer dollars in convenience, with much of that coming from its star player, hard seltzer, which hit $4.1 billion in sales — up sharply from just $400,000 in 2018.
Many stores have already managed to capitalize on this promising new category with smart but simple instore strategies that capture the attention of hard seltzer’s target audience. From stocking just the right leading brands to thoughtfully arranging the assortment on their shelves, how c-stores sell the category is having a major impact on how much they sell.
A BRIGHT OUTLOOK.
Beyond beer is an exciting space. And not only because the category has come up so quickly, but also because the outlook continues to be so bright.
Hard seltzer alone is projected to jump to $30 billion in retail by 2025, according to a Goldman Sachs Equity Research report, with much of that expected to come from leading brands White Claw and Truly.
And, all signs point to hard seltzer’s continued and significant growth.
Though often lumped in with flavored malt beverages, hard seltzer has managed to carve out its own identity and, just by itself, represents about 7.6% total beer share — enjoying a growth rate of 178% over the past year.
“Lead brands, and innovation from those lead brands, will continue to drive success within these segments,” says Lauren Quaglia, national channel manager of c-stores for Boston Beer Company, maker of Truly.
DRIVING FORCES BEHIND HARD SELTZER.
Part of the appeal of hard seltzer is that consumers see it as a healthier option — low calorie, low carb — which
taps a larger wellness trend that’s been gaining momentum steadily for years. It also follows a pattern of premiumization that’s spanning all alcohol categories.
Both wellness and premiumization are trends that accelerated during the pandemic.
Hard seltzer also tends to be more approachable, with singles and mix-and-match packs encouraging trial and with enough innovations and avor variety to not only bring consumers into the fold, but to keep them coming back.
Quaglia says Truly is focusing on expanding its drinker base and increasing penetration—and is outperforming competitors on both fronts.
“We’re outpacing the segment in household penetration, which is up 79% across all channels and 140% in c-stores,” she says. “And, looking at Nielsen Household Panel Data, we see that our innovation continues to bring new drinkers into the segment, with our L13 week growth of 182% outperforming the rest of the segment.” So, are c-store operators wholly on board then?
Most are, but some still lag behind. With limited shelf space, decisions come hard. Some operators are reluctant to scale back from domestic premiums and mass domestics and, for fear of potentially losing those shoppers, they hesitate before making changes to accommodate growth and innovations.
Others who have taken initiative to jump into the segment have, at times, slipped when it comes to the right space allocation or the correct avor assortment.
Or, rather than place their bets with leading brands, they’ve tried to appease every potential shopper and gone too broad.
HARD SELTZER CUTS INTO SPIRITS, NOT BEER.
One factor to consider is that, while some hard seltzer shoppers are also beer drinkers, they’re not taking away from beer sales — they’re incremental. Many are also coming from outside categories like wine and spirits.
In fact, c-stores who bet early on hard seltzer have seen the upside of getting these new shoppers.
Right now, 11% of dollars sold in the grocery business are for hard seltzer, while in c-stores it’s 7%. But in many markets, that gap is narrowing, with hard seltzer now over 10% of their beer category dollars.
In some markets, like Denver (14.7%), New York (14.3%), and San Diego (13.4%), c-stores have even reached parity with mass merchandisers and groceries in their hard seltzer sales, enjoying the same robust share.
Todd Bollig, Boston Beer Company’s director of category management and shopper insights, says shelf allocation has played a key role.
“These markets have experienced this kind of growth as a result of providing proper space to the two lead brands, Truly and White Claw,” he explains.
The Hard Seltzer SHOPPING TRIP
So, what exactly do these shoppers have in mind when they walk into a c-store? In short, it’s a brand.
NEW GENERATION OF SHOPPERS.
What those operators are nding is that by leveraging hard seltzer, they’re attracting a new and important shopper.
Recent research suggests that this younger generation is more diverse and more likely to choose ‘beyond beer’ products than their older counterparts, who still lean toward traditional beer.
Though the category is just ve years old, there were early concerns that
hard seltzer may have been a seasonal play, and that operators might see demand fluctuate. But the segment has proven resilient and extended its runway well beyond that summertime consumption.
We’re also seeing that it’s occasion-based, with c-store shoppers snapping up hard seltzer to relax or unwind at home, for a casual get-together, with a meal or for a BBQ or other outdoor gathering. › Brand leads the shopping trip. So, what exactly do these shoppers have in mind when they walk into a c-store?
In short, it’s a brand. Their trips are highly planned, with 87% knowing what they want before entering the store, and a full 71% having a specific brand in mind.
That speaks to the importance of leading with top brands (with the top two, White Claw and Truly, enjoying a whopping 75% share).
Those insights also speak to why it’s so important to connect with shoppers before they step foot in a store and to perhaps even influence them to spend more when they do come.
Not surprisingly, successful tactics tend to skew heavily on digital channels: C-store hard seltzer buyers are more likely than grocery hard seltzer buyers to use Snapchat and TikTok, play video games, and to learn about products and services or make new friends on social media. › Getting the mix right. So, what’s the right mix in-store to do just that? How do you strategically organize the store?
While it’s true that one size does not fit all, there are some common threads that can help you make considered choices to confidently reduce assortment in other segments and capture hard seltzer’s continued growth prospects: › Group ‘beyond beer’ segments together. They share common shopper attributes and purchase drivers (brand awareness and product quality tend to be top purchase motivators, whereas price is less important). › Merchandise for high visibility. Offer multiple points of interaction, and give particular emphasis to hard seltzer to attract that younger, more diverse shopper and drive incremental purchases. While overall ‘beyond beer’ trips tend to be planned, impulsivity is still a big factor: 41% of hard seltzer purchases are impulse driven. › Back leading brands. Brand is the top consideration in c-store shoppers’ planning and navigation. And while experimenting with some smaller brands may make sense for your market, you shouldn’t ignore the leading brands; too much assortment can confuse shoppers. › Manage space and assortment wisely. Dedicate enough shelf and cooler space for best-selling brands, and with the right packages and flavor options. Consider that just 19 packages represent a whopping 80% of hard seltzer dollars.
Then, arrange them in a way that enhances shoppability and encourages impulse buys: C-store shoppers navigate beer by brand first, and then size and type. Set flow from hard seltzer to flavored malt beverages (including hard cider and RTD), and then on to craft, imports, super premium, premium, and finally sub premium.
It’s true that shopping behavior and engagement in the beer category have changed, but ‘beyond beer’ offers a significant opening for convenience operators to keep pace.
At the end of the day, the prospects are bright and there are a host of ways to take full advantage of this ever-growing opportunity.
…A bet on hard seltzer is actually a new, incremental growth opportunity that adds strength to beer overall. …How c-stores sell the category is having a major impact on how much they sell.
