The Effect of CPG on CPG

Published in CSP Daily News

IRI examines how gas prices affect consumer-packaged-goods buying behavior

Many factors will influence the actual impact of fluctuating gasoline prices on shopper behavior, including store location and banner, shopper mindset and simple needs and resources. In general, though, historical trends provide a general sense of purchase elasticity at the department level.

The categories most affected healthcare and general merchandise. These departments have traditionally been "secondary" areas for c-stores, so they tend to be first ones that consumers eliminate or re-direct to an alternate or even lower-priced channel. In contrast, beverages, which tend to be a key driver of trips for c-stores, do not see a sharp falloff in sales when gasoline prices climb.

Outdoor advertising, which includes pump toppers, window displays, stacks/displays outside the store (e.g., soda pallet), and ad or video displays on top of pumps, has proven effective at driving fuel buyers into the retail store. In fact, analysis demonstrates that when retailers use outdoor causal advertising, product growth is twice as high compared to when it is absent across a variety of key convenience categories.

Despite the power of this medium, outdoor advertising is, generally speaking, underdeveloped by c-store marketers, said IRI. Even in the warmer months, which are a peak time for outdoor advertising, less than 5% of c-stores' all commodity volume (ACV) is supported with outside displays.

In addition, marketers must understand that no two shoppers are alike. Each shopper follows a different path when making different purchases. C-store marketers must thoroughly understand their various shoppers, what activates them, which offers they find most appealing and how to use the right media to reach them.

"Convenience stores with gas pumps average 277 fillup trips per day," said Boraca. "And each trip represents an opportunity to sell goods inside the store. To boost the fuel-to-shopper conversion rate and drive revenue growth, convenience store marketers must empower their decision making with research. Through analytics, we know which shoppers and products are going to be most impacted when gas prices rise. We also know the message and the media that will influence the ideal audience for combating this challenge."

The IRI Point of View: "Gas Price Fluctuations Fuel a Convenience Channel Opportunity" is a free report available from IRI. Click here to download the report.