Here and Now

Whether consumers are Gen Now,' eating now or paying now, a sense of urgency is in the air.

By  Linda Abu-Shalback Zid, Senior Editor

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Todd Passmore gets it: As your customer base changes, so must you.

When Passmore, district manager for Brentwood, Tenn.-based Mapco Express, realized that Hispanics had rapidly grown to 10% of the population near the company’s stores, his plano- gram needed to evolve.

The company started small, launching pan dulce, Spanish for “sweet bread,” at 13 of its 383 stores. Because the products come from a nearby fresh bakery, Mapco is able to control quality and waste, as well as the product’s stability.

Those 13 stores now sell about 5,000 of the pastries a month. “I always start a program with an exit strategy in mind, but I ended up not needing it,” Passmore said at the CSP 2011 Consumer Insights & Engagement Forum. Mapco is now eyeing more immediate- consumption Hispanic products, such as candy, gum and mints, with plans to roll them out to 150 stores.

The Hispanic population has been growing in unexpected places, according to Eric Johnson, senior director of marketing, immediate consumption, consumer insights & strategy, for Northfield, Ill.-based Kraft Foods Inc. In Mapco’s home state of Tennessee, for example, the Hispanic population increased 134% from 2000 to 2010, with many other states in the Southeast also experiencing triple-digit growth in that time frame.

By 2050, Johnson says, Hispanics could account for as much as 30% of the U.S. population. They’re also becoming more active at the c-store level, increasing from 12% of c-store shoppers in 2008 to 16% in 2010.

Nine of 10 Hispanic c-store shoppers saod in a recent survey from Palo Alto, Calif.-based Knowledge Networks Inc. that they wanted more items from c-stores that are currently unavailable, with the top request, made up of 34% of respondents, being baked goods— including pan dulce. Carlos Garcia, senior vice president of Knowledge Networks, commended Mapco for its authenticity in making that extra effort.

“Their heart was in it,” he said. “It wasn’t just an intellectual decision; they were doing this because they wanted to do it.” (For more on marketing to Hispanics, see the “Hispanics Now” sidebar, above.)

Gen Now

Hispanics aren’t the only emerging consumer, according to Johnson. Kraft internally combines Generation X and Y consumers, accounting for 42% of the population, into a “Gen Now” group. And the group has “enormous spending power,” he said, with college students ages 18 to 34 alone accounting for $306 billion and growing.

Johnson also shared numbers from Mintel International Group that show c-store customers ages 18 to 24 spend $38 in weekly, ages 25 to 34 spend $40, and ages 35 to 44 spend $36.

To build those baskets and appeal to Gen Now, retailers must be aware of the group’s three greatest needs: alleviate boredom, entertain me and get energy. Johnson said 56% of Gen Now customers in a recent survey say they find themselves trying to boost their energy at least once a week. “The good news is all the products and things that we work on from an industry standpoint really fi t into this group well,” he said.

As for why they go to c-stores, most said they are already buying gasoline. On the flip side, reasons they don’t shop in c-stores “really came down to the experience,” Johnson said. “We’ve got to continue to raise the bar here—half the people we talked to wished the c-stores were cleaner.”

Some also said c-stores didn’t carry the products they liked. “Health is becoming a much bigger animal,” Johnson said. The group relates overall health to happiness; although they enjoy “better for you” packaged food, they defi ne “healthy foods” as fresher and less processed, he said. They also think of health as being all about moderation, allowing for small indulgences.

Other key categories for Gen Now c-store shoppers include sweet-snack foods, savory-snack foods, energy drinks and beverages. “These are the categories that are all around us; it’s about how we continue to evolve these and grow these in a way that’s going to be relevant for the new and upcoming consumer,” Johnson said.

Such an evolution would not come without challenges, he acknowledged: specifically, how to reconcile SKU and space rationalization while ensuring diverse offerings. “How do we maintain the appeal and variety that truly is for the Gen Now consumer,” he said, “and at the same time operate a business that’s profitable?”

Consume Now

It’s not only about who the consumer is, but also what that person wants to consume on the spot. C-stores claim 20% of immediate-consumption (IC) trips, about half of QSRs’ 43%. But c-stores beat the competition when it comes to packaged foods, being responsible for nearly half (47%) of IC in packaged food. Also unique to c-stores is all-day snacking. “That is the one mainstay that you are going to always own,” said Krista Lorio, consumer insights senior manager for Minneapolis-based General Mills.

C-stores particularly own consumers’ energy and craving needs, she said. C-stores are also at an advantage when it comes to loyalty for IC trips. While an average of 43% of IC shoppers visit the same location weekly, they are “much more loyal” at c-stores (66%).

As for why they go to c-stores for immediate consumption, hunger is a big driver, with 19% going for a satisfying meal and 14% addressing that it’s “time to eat.” Cravings also are a driver, with “drink up” accounting for 22%. External reasons include gas pit stops (14%) and being in food deserts (17%).

The “easy satisfying meal” trip is driven by variety and value. They typically know what they want to buy when they come into the store, but they are also more likely to buy on special. “So this is a way that you can get them to up their ring or to try something different to get into their routine,” Lorio said. With their satisfaction with c-stores being average, she said, “There’s a lot of room to be able to boost that up.” The “time to eat” group appreciates unique hunger and pairing solutions. Adding a dessert to a well-rounded meal can also add a differentiator from QSRs. The group is taste-driven, she said, so offering their satisfaction guaranteed can be powerful. “If you feel good about your product, standing up and saying, ‘This is fresh, I believe in it,’ really will go a long way,” she said.

“Drink up” shoppers tend to be young and mobile, and can therefore be targeted with technology. They also like to try new products, so retailers might consider rewarding their loyalty in the form of a new product after they buy 10 drinks vs. offering another drink. They also see thirst as a craving, so variety is important.

The “food desert” is really about urban areas with limited shopping alternatives, and those shoppers tend to be millennial and ethnic consumers—and open to experimentation and uniqueness. While most c-stores shoppers are in and out in 2 minutes, these shoppers tend be spend 6 minutes or more. They also tend to make use of dining areas. “If you are stopping there for something quick and on the run, you don’t really want to eat it in mass transit,” Lorio said. Success in urban food deserts includes having a good selection of food in stock, good prices and the right assortment, because these stores are used more like a grocery store than c-store.

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