|Title:||United States annual number of convenience stores in units for 2001 to 2011|
Start of full article - but without data
Total convenience stores
Year Number of Stores
Source: National Association of Convenience Stores
Well, isn't this convenient?
Just as traditional supermarkets have gotten a handle on threats from supercenters, clubs and limited assortment stores, two more formats are making major incursions on their turf--convenience stores and dollar stores. Sure, both formats have been around for years, but in efforts to diversify and build sales in the recession-scarred economy both are stepping up their assortments of supermarket-style food.
"Dollar stores are becoming mini grocery chains," says Glenn Llopis, president of Glenn Llopis Group, a performance development and brand management company based in Irvine, Calif. "Right now money is tight and people are willing to channel shop because they know that certain levels of distribution and certain retailers are discounting at levels that mainstream grocery stores are not," he says.
As a result, dollar stores have been steadily increasing the amount of selling space devoted to grocer. Many sell branded products that have been in test markets, are discontinued or are nearing their expiration date. However, they are increasingly stocking custom-made and private label products.
In February, Matthews, N.C.-based Family Dollar hired Fort Worth, Texas-based Mar-keting Management, Inc. (MMI) to be its exclusive private label sales and marketing agency. "A compelling assortment of private brand merchandise across the store gives our value-conscious customer more choices and complements the increase in national brand products from food to housewares," says Don Hamblen, senior vice president of customer marketing at Family Dollar. "Enhancing our private brand offering is a key strategic initiative for Family Dollar aimed at driving improved margins and customer loyalty."
From cigarettes to Chardonnay
C-stores, meanwhile, are moving beyond cartons of milk and cigarettes to selling Chardonnay, rotisserie chickens and side orders of mac-and-cheese. According to industry experts, in some places c-stores are now targeting the dinner daypart, which they see as their last frontier.
"C-stores have breakfast and lunch figured out, but they still quite haven't figured out dinner," says Dr. Richard George, Ph.D., professor of food marketing, Gerald E. Peck fellow, Haul) School of Business, at Philadelphia-based St. Joseph's University. "Once they do, I think c-stores can be a real, real inhibitor to the prepared foods side of the supermarkets' business."
"Convenience retailers are continuing to enhance their foodscrvice programs," says David Bishop, managing partner at Balvor LLC, a Barrington, Ill.-based sales and marketing consulting firm. "This focus is motivated by higher margins versus packaged goods, competitive differentiation and growth opportunities that align with the consumer needs that convenience stores satisfy relative to immediate consumption," he says, adding that the ability to stock fresh foods has been largely fueled by improvements to the supply chain.
"Convenience stores are expanding their fresh foods in order to better meet the needs of consumers looking for quick and easy meal solutions on-the-go," Bishop says.
Numerous operators, including industry leader X-Eleven, are working to improve their fresh food marketing, says Beth Ann Kaminkow, president and COO of TracvLocke, a brand-to-retail marketing agency based in Dallas and Wilton, Conn. "It varies depending upon region and market, but it appears that the convenience channel is testing everything that you could possibly imagine to see on a menu for almost every single daypart," she says. "This will continue to make stores like X-Eleven a competitive threat to coffee shops, grocery stores and fast-food establishments. Shoppers have shown they are open to making these fresh food purchases at a convenience store."
The c-store industry took a hit during the recession, but is coming back strong, operating XXXXXX locations this year. That's X,XXX more than in 2010.
"We sell immediate consumption," says Jeff Lenard, vice president of communications for Alexandria, Va.-based National Association of Convenience Stores (NACS). "In an economic downturn, the more von have to think about a purchase the less likely you are to make one. We take away as many of those roadblocks as possible," he says. "We arc not far away. You don't have to look at your XXX (k) to make a purchase. The lines are short. Everything is easy. It's in a lot of stores' names. That helps in a recession."
With some observers predicting that gas prices will surpass $X a gallon this summer, Lenard expects c-stores to place an even greater emphasis on food. "The profit on gas is X-cents a gallon, so on a fill-up maybe you make a quarter. On a cup of coffee, you can make more," he says. In 2009, gas was more than two-thirds of the industry's total sales, but less than one-third of the profit. "Gas literally drives traffic, but you better have something else that drives profits."
At Swiss Farms, a Broomall, Pa.-based c-store chain of XX corporate and one franchise location, that "something else" is "drive-thru convenience."
"Our tagline is 'America's Drive-Thru Grocer,'" says Dennis Geraghty, director of marketing. Swiss Farms locations consist of a double drive-through where shoppers pull up and order products from their car. "On the surface, you might think we're a convenience store, but actually our product mix is aligned with the express line of the supermarket. That's really our target," he says. "Rather than having to go through the hassle of parking at the supermarket, dragging the kids in, waiting in line, getting your car dinged and everything else, you just drive in and drive out."
According to Geraghty, Swiss Farms analyzes syndicated express checkout lane data from wholesalers and other sources to fine-tune its product mix, which currently numbers around XXX SKUs. That's led to the inclusion of more prepared foods. "In our new stores we have rotisserie chickens set up and we have a relationship with a local gourmet restaurant where we pack age chilled gourmet meals for dinner under our label," he says.
It's a formula that's apparently paying off. "In spite of the flat retail economy, each year for the last several years we've seen compounded real growth on a same-store sales basis," Geraghty says. "Our shopping experience is like a minute and a half. What is it in a traditional supermarket? Fifteen minutes?" he asks. "It's never taken me less than that because you have to park and then find what you want. You're not dealing with XXX items, but XX,XXX."
On the other hand, Swiss Farms shoppers place their orders off of a menu and a weekly fiver with specials is distributed to customers. Plus, there is digital signage featuring daypart-specific specials. Next up at Swiss Farms is online ordering, expected to be instituted later this year. "Once we are up and running with shopping online it's going to be a tremendous boon to our business, not only with additional customers but also with the average number of items ordered," Geraghty says. "Currently most of our customers' purchases are planned. They may drive up for milk and then see boxes of Tastykakes in the window, but if you order online you have the full scope of our inventory organized by product category"
Swiss Farms operates primarily in suburban Philadelphia, opening its first franchise location in Somerdale, N.J. (Camden County) this year. "Last year we implemented a national franchising program," Geraghty says. "We will be growing concentrically, then regionally so we can control it."
Balloons and sandwiches
In New Jersey, say "Quick Chek" and a summer hot air balloon fest and mouthwatering sandwiches come to mind. The c-store chain has endeared itself to Garden State residents by being the title sponsor of the Quick Chek New Jersey Festival of Ballooning for more than XX years.
"The Balloon Festival has been recognized as one of North America's top XXX events to visit by the American Bus Association," says Jennifer Vespole, senior category manager for foodservice at Whitehouse Station, N.J.-based Quick Chek Corp. "It is also local to our support center, so it feels very much like part of our company. From an advertising and brand development perspective, the amount of impressions we get each year building up to the event is impressive. We are also able to build our brand equity at the event and interact with current and potential customers over the course of three days."
The company currently operates XXX stores in the Garden State, plus another nine in upstate New York. NACS' Lenard, who stopped by Quick Chek's Hillsborough store over Christmas, says he was wowed by the sandwiches as well as the automated checkout system being tested there.
"Quick Chek is very innovative," says Bill Bishop, chairman of Willard Bishop, LLC, a Barrington, IXX.-based consulting firm."They have a really nice foodservice program and their sandwich program is excellent. They have a good coffee program too and I've never seen a consistent service level at the gas pump as I've seen with those guys," he says. "Even though convenience stores may not be a direct source of competition today, it's coming."
Quick Chek continues to evolve, Vespole says. Initially it operated as a mini superette, with expanded grocery, bakery, deli and dairy selections. Today, a dozen stores have pharmacies and XX sell gas. "Today our deli business supports our fresh-made sub and sandwich program and, though we still bake fresh daily, the bakery also largely supports the sub and sandwich program," she says. "As people became less interested in preparing their own breakfast and lunch, we moved toward fulfilling that need by offering fresh ground, fresh brewed coffee, fresh made breakfast sandwiches and creating interesting sub, sandwich and salad recipes.
"We have not focused on refrigerated meals for the dinner day part yet," Vespole adds, "but our made-to-order menu has expanded over the last three years to include chicken tenders, pizza and burgers. We will continue to evolve our menu based on what people feel comfort able purchasing from us."
That includes single units of immediate consumption produce, such as apples, pears and bananas.
"Some c-stores are looking to have more produce and the thing you see most is bananas," says NACS' Lenard. "And probably nobody does that better than Kwik Trip of La Crosse, Wis. I think they are looking to move about XX million pounds of bananas this year. They have it down to a science. They have banana ripening rooms at headquarters and they are known for their bananas."