Beverages Bring 'Em In

Published in CSP Daily News

Drinks drive fuelers into store, but foodservice following close behind

ALEXANDRIA, Va. -- Beverage purchases drive gasoline customers inside the store more than any other item, but new preferences are emerging, with consumers saying that more foodservice, more healthy options and more local involvement could all increase their spending at convenience stores, according to findings released from the 2012 NACS Consumer Fuels Report.

While nearly half (48%) of gasoline purchasers said that they never go inside the store, for those who do, they said that beverages (coffee in the morning, cold drinks the rest of the day) are a big lure, with one in four consumers (25%) saying that they regularly purchase drinks.

A higher percentage said that they purchase drinks in the morning (33%), indicating that coffee is a solid traffic-driver for in-store sales. Also, younger consumers (ages 18 to 24) are much more likely to buy drinks: 43% of younger customers said that they buy drinks inside the store, compared to only 19% of those age 50 and older.

"Convenience and fuel retailers know that consumers are extremely price sensitive with respect to gasoline, and determining the link between gas and in-store purchases was a central question that NACS sought to answer in the 2012 NACS Consumer Fuels Report," said nacs vice president of government relations John Eichberger. "A retailer's gas price is clearly the primary attraction for consumers to both buy gas and shop inside the store. That is why the gross margin (the markup) on a gallon of gasoline is usually only 5% to 6%--far lower than the markup on any item inside the store--and possibly the lowest margin percentage in all of retail."

Retailers fight to get consumers to their gas pumps, knowing that they will travel to another location for a better price, translating into both a loss in sales on gas and in-store items. A retailer's fuel margins are razor-thin--in 2010, 67% of c-store revenues were from gasoline, but only 26% of profits were generated at the pump. NACS found that once a consumer purchases gasoline, retailers often have several options to get them inside the store.

While beverages are the biggest in-store traffic driver, foodservice is growing in popularity at c-stores. More than one in four consumers (28%) said that they would be "very likely" or "somewhat likely to buy food at a c-store. One in 11 consumers (9%) said that they had eaten food at a c-store within the past day, while 43% had purchased food from a store in the past month.

Traditional snacking items in c-stores remain the most popular food choices--over the past year, 29% of consumers purchased chips/salty snacks and 20% purchased candy bars, but healthy options are being sought by a growing group of consumers. Over the past year, one in 11 consumers (9%) had purchased yogurt, nuts or granola, 5% had purchased salad and 5% had purchased fresh fruit. Fruit is particularly popular in the West, with one in 10 consumers (10%) saying that they bought fresh fruit.

Healthier items do not yet dominate in-store sales, but the idea of having healthy options available is very important to consumers. Nearly two-thirds of consumers (63%) say that they would be more likely to shop at a store that offers healthy options. Community engagement is also important, with 61% of consumers saying that they would be more likely to shop at a store that supported the community.

Click here for more on the 2012 NACS Retail Fuels Report. NACS will release additional findings throughout the month of February, and the March NACS Magazine will feature additional insights.

Founded in 1961 as the National Association of Convenience Stores, NACS is the international association for convenience and fuel retailing. It has 2,200 retail and 1,600 supplier member companies that do business in nearly 50 countries.