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F E B R U A R Y 2017
1
What’s in-store for 2017?
•• North American c-stores are aggressively competing against other foodservice
players from all segments—many of which are now fighting back.
•• New rivals are shaking up the market for c-stores’ traditional offerings.
•• Trends in fuel prices, tobacco regulations, and healthcare and labor costs
present additional challenges.
2
Customers crave both value and variety
•• Many—but not all—c-store customers are loyal to brands. Some may care
more about a c-store’s location, merchandise selection, and overall value than
its brand.
•• To win market share, c-stores should compete on value and merchandise
selection, coupled with foodservice excellence.
3
Grab-and-go: four steps for success
this year
•• C-stores should provide foodservice offerings that span dayparts.
•• They can also capitalize on digital technologies like mobile loyalty programs
and mobile payments.
•• They should look to build scale within certain geographies and DMAs. Some
should evaluate M&A opportunities, both domestically and abroad.
•• They can deploy savvy cost-management strategies to offset rising operating
expenses and safeguard profitability.
Those companies have noticed, and they’re responding The competitive landscape is growing more complex,
aggressively. Meanwhile, other entrants into the presenting both challenges and opportunities for some
foodservice space—such as mass merchants, c-store chains. C-stores are well positioned to operate
dollar stores, and even online retailers—have further effectively in this landscape. After all, many have prime
intensified the competition. Add to that the challenges real estate locations, and their offerings cover multiple
and sometimes opportunities stemming from higher dayparts as well as other major categories such as
operating costs, fuel-price trends, and technology—and fuel, which can add value even as a potential loss
c-stores find themselves operating in an environment leader. But to succeed in the future, they’ll have to build
that’s more challenging than ever. on those advantages and adapt to the trends shaping
their industry.
Findings from AlixPartners’ 2016 North American
convenience store consumer study—the first to In particular, they should excel at several winning
take an in-depth look at consumer behavior in this strategies—including enhancing their execution
industry1—point to the need for c-stores to master of foodservice programs, improving the customer
four imperatives to succeed in this space: enhancing experience, building and leveraging scale, and
the execution of foodservice programs, improving the developing comprehensive enterprise-improvement
customer experience, building scale, and launching programs that deliver year-over-year
comprehensive enterprise-improvement programs. productivity savings.
1
“The North American convenience store consumer study” reflects
responses from 1,000 United States–based consumers regarding
their choices and preferences when visiting and shopping at c-stores.
The survey was conducted from August 8 through
September 26, 2016.
2
“Convenience Store News Industry Report”, June 2016.
70 68.0%
60 58.8%
50
40
32.1%
29.8% 29.0%
30
20.8%
20
13.7%
10 8.4%
1.2%
0
Location Price/value Merchandise Promotions, Overall Fuel Availability Brand Other
products selection discounts, or value availability of branded loyalty
coupons products
ratings than the restaurants on speed of service as besting only late-night eating among all the dayparts.
well as price. That is, when consumers buy something to eat versus
cooking at home, it’s primarily dinner out, followed by
In addition, we see a mismatch between consumers’ lunch and then by breakfast. Our respondents don’t
perceptions of the things c-stores are best at with expect to change this behavioral pattern all that much,
regard to food offerings—and where consumers are other than perhaps lunching or dining out somewhat
spending most of their money on food. Specifically, less frequently than they did last year and purchasing
most of the consumers in our study said they stop snacks slightly more often.
at a convenience store to buy a snack when they’re
hungry (figure 2). Nevertheless, snacking still counts How can operators grow their foodservice sales—
among the least important dayparts for consumers, and positively influence consumers’ perceptions of
c-stores as great places to get breakfast, lunch, or
FIGURE 2: Consumers view snacking as the dinner? They’ll have to strengthen their foodservice
most common occasion for eating at offerings so they can better cater to those dayparts.
convenience stores To do so, operators should focus on food price,
T H I N K I N G O F T H E T O TA L N U M B E R O F quality, and variety. As our survey findings indicate,
O C C A S I O N S YO U E AT AT C - S T O R E S , those factors exert the biggest impacts on which
W H AT P E R C E N TAG E O F T H E T O TA L
I S F O R E AC H O F T H E F O L L O W I N G c-stores consumers choose when seeking to buy
(%)
DAY PA R T S I N T H E L A S T 12 M O N T H S ? food (figure 3). In fact, that finding was particularly
pronounced among millennials and
50
Generation X respondents.
45 43.6%
Source: AlixPartners
0 5 10 15 20 25 30 35 40 45 50
Source: AlixPartners
8
“RaceTrac Press Release” dated April 1, 2016.
9
“6 New C-Store Apps Hit Market,” CSP Daily News, April 7, 2016.
10
“Mobile Payments in the US Growing Fast, but Still Far From Mass Adoption,” eMarketer, November 7, 2016.
11
“Convenience Store News Industry Report”, June 2016.
12
AlixPartners 2016 global consumer survey.
C O N TA C T T H E A U T H O R S :
Eric Dzwonczyk, John Benson, and Michael Zarrilli
F O R M O R E I N F O R M AT I O N , C O N TA C T :
Eric Dzwonczyk
Managing Director
+1 (212) 845-4017
edzwonczyk@alixpartners.com
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respective professionals or clients. This article regarding What convenience stores should know—and do—in 2017 (“Article”) was prepared by
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