C-Store Perspective: Redefining Convenience

NPD research shows channel blurring becoming channel fade

Published in CSP Daily News

HOUSTON -- What is a "convenience" store?

What seems like a simple question actually does not have a simple answer. The NACS website describes six different formats for convenience stores, but generally summarizes one as having less than 5,000 square feet, off-street parking, expanded hours and at least 500 SKUs, including grocery items, snacks, beverages and tobacco. Such definitions are useful for trade organizations and product marketers who like to classify stores into channels: grocery, dollar, drug, mass and convenience. But what does this channel structure mean to the consumer?

A New Definition

Consumers don't tend to think in traditional channel terms like grocery, drug or dollar. Instead, consumers think in terms such as hungry, thirsty, in a hurry or running on empty. As more and more retailers seek to meet these consumer needs with convenient offerings that also have value appeal, it shouldn't be surprising that traditional channel lines are fading.

Among the questions our Convenience Store Monitor asks consumers is the name of the store or chain where they made their most recent convenience store purchase. Increasingly, the response is the name of a store or chain we'd more likely classify as a grocery, drug, mass or dollar retailer. This phenomenon has grown enough to necessitate classifying these purchases collectively as "non-conventional" convenience stores, so we don't skew an analysis of consumer behavior at "conventional" convenience stores. In fact, in the 12 months ending September 2012, these "non-conventional" stores captured 9.5% of all consumer convenience traffic.

There are several reasons why these changes are occurring. First, big-box retailers such as grocery and discount stores continue to gain share of the gasoline market and now account for almost 18% of all consumer gasoline purchases. This takes traffic directly out of the conventional convenience channel. In addition, drug, dollar and grocery retailers are intentionally developing convenience-oriented food and beverage offerings for on-the-go consumers. It's not uncommon to find a coffee bar, fountain beverages or grab-and-go foods at the neighborhood drug store. But perhaps the most important reason is that the American consumer is changing.

Understanding Components of Change

The key to finding opportunity in this changing retail landscape is understanding the consumer. For example, consider the Millennial generation. These younger consumers approach retail offerings with a different frame of reference. In their world, Walmart has always offered gasoline, convenience stores have always been a good place for lunch, and a dollar store may be a perfectly logical spot to find value in everyday items. The Convenience Store Monitor shows consumers under age 24 are more than twice as likely to report a "non-conventional" convenience store as the most recent place of purchase. 

To help retailers and manufacturers better understand this issue and other consumer dynamics behind changing channel trends, the NPD Group has developed a special report, Redefining Convenience: The Blurring Line Between Conventional and Non-Conventional C-Store Purchasing. More information is available by emailing NPD at  contactnpd@npd.com.