Convenience is a major factor that influences many consumer purchases. So it's no surprise that convenience stores are popping up with more frequency across the nation. According to the National Association of Convenience Stores, Alexandria, Va., there are approximately 130,000 convenience stores in the United States. Gasoline sales are typically the reason for their existence, and account for the

Convenience is a major factor that influences many consumer purchases. So it's no surprise that convenience stores are popping up with more frequency across the nation. According to the National Association of Convenience Stores, Alexandria, Va., there are approximately 130,000 convenience stores in the United States. Gasoline sales are typically the reason for their existence, and account for the lion's share of business. In fact, NACS stated that total channel sales were $337 billion last year, with $220.8 billion of those sales generated at the pump. According to "Industry Outlook: Convenience Stores," a report published by global management consulting and market research firm Retail Forward, Columbus, Ohio, the 10.4% sales growth rate in the channel in 2003 was due solely to inflation resulting from elevated gasoline prices.

Yet, one food-related area that c-stores have always excelled in centers around products designed for immediate consumption -- items like a bag of chips and a single-serve soda that hungry consumers can quickly grab while on the go and eat immediately in the car. In 2003, the average sales per store of salty snacks in the channel were $27.5 million, according to category sales figures provided by NACS. Average sales per store of non-alcoholic packaged beverages were $114.8 million, and packaged ice cream/novelties generated average sales per store of $8.5 million last year.

Supermarket retailers, recognizing the importance of convenience to today's consumer, have begun to emulate c-stores to a degree, beefing up their front-end registers and other areas throughout the store with single-serve Center Store items. "You're seeing c-stores take things from other formats, and other channels taking from c-stores.

You see it in grocery stores, pet stores [and even] craft stores. They all look like convenience stores at the counter," said Jeff Lenard, director of public affairs at NACS. Many retailers have also begun opening their own on-premise c-stores in the continual effort to be a one-stop shop for consumers. Some of the more noteworthy moves in this direction came from Publix Super Markets, Lakeland, Fla., which opened its first Pix convenience store/gas station in 2001, as reported in SN, and has since added a few more units. Giant Eagle of Pittsburgh is also involved in the c-store realm, as is Raley's, West Sacramento, Calif., to name a few. The motivation for opening these on-premise c-stores varies by retailer, but sources told SN they are one way supermarkets are maximizing their real-estate holdings to generate new profits.

"Supermarket retailers take underutilized real estate, and use it to generate cash or profit for the site," said David Bishop, director at Bishop Consulting, Barrington, Ill. "Supermarkets have more acreage; the demand for all the current parking spaces may be going down. Bringing motor fuel onto the site is one of the key strategies for bringing traffic to the store. It helps position supermarkets as a way to pull people to their lot."

Many retailers -- H.E. Butt Grocery Co., San Antonio, and Farm Fresh Markets, Virginia Beach, Va., included -- even use their on-premise c-stores as a means of generating additional Center Store sales in their main grocery stores through promotions that link the two formats. In the case of Farm Fresh, the retailer offers a program called "Fuel Express" in which consumers can earn discounts on gasoline when they purchase specially marked Center Store items inside the supermarket. H-E-B calls its similarly named program "Fuel Rewards," and through it shoppers can earn up to $25 per transaction to be put toward an on-site fuel-up.

"People start to buy a different mix of products inside the store to get a discount at the pump," Bishop said. "[Retailers can] pull consumers onto the lot with a competitive gas price, and then convert that motor store consumer into an in-store consumer."

On the flip side, St. Louis-based Schnuck Markets has opted to treat its grocery and c-store properties as entirely separate entities.

"We have elected not to treat them as extensions of the grocery store," Lori Willis, spokeswoman, Schnucks, said of the five c-stores that Schnucks' Mid-South division inherited in the summer of 2002 when it acquired 12 Seessel supermarkets, some of which already included full-service gas stations.

"The supermarkets and the c-stores operate independently of each other; there are no promotional tie-ins." Each c-store stocks what Willis referred to as "traditional convenience and snack items." The units are of various size, and are located in close proximity to the retailer's supermarkets.

Regardless of strategy, retailers' collective migration into c-store territory has certainly left a mark on the format. As reported by Retail Forward, cross shopping in c-stores -- defined by purchases other than gasoline alone -- is declining, with the number of merchandise purchases made at c-stores dipping from 18% in 2001 to 12% in 2002. Likewise, the number of combined gasoline and merchandise purchases dropped from a record high of 42% in 2001 to 36% in 2002 (see chart). The report suggests high gas prices have hurt in-store sales as well.

Retailers operating their own c-store would be wise to conduct traffic studies, Bishop said, in order to determine when consumer traffic is heaviest. That way, they can tailor offerings and promotions accordingly. For example, frozen novelties could be brought outside on summer nights if they experience high shopper volume after dinner. Placing seasonal displays of items like U.S. flags at the pump during key patriotic holidays would also encourage impulse buys from consumers looking to save time.

"What's driving a lot of interest from the supermarket perspective is developing strategies that will help slow down trips to alternate channels," Bishop said. "One-stop shopping is evolving into a concept that's not just inside the store. [Retailers] are bringing more of these services together to allow the consumer to do more things in less time."


The surest way to emerge victorious in today's food retailing industry is to offer consumers something they can't get anywhere else. For many retailers, it's the lowest price. For others, that special something takes the form of store brands. For convenience store operator Stewart's Shops, based in Saratoga Springs, N.Y., it's both.

Close to 75% of the products sold at Stewart's are store brands, enabling the retailer to sell low and still maintain nice margins. On its Web site, the company boasts that "about 90% of our products are priced at or below supermarket prices." Stewart's bread, English muffins, hot dog and hamburger rolls sell at two for $1.89; Stewart's Shops two-liter soda is set at the everyday low price of 99 cents; and Stewart's chips, in various flavors, are value-priced daily between 99 cents and $1.99, depending on size.

"The big thing with private label is to have unique products that you can't get elsewhere. I think that's what Trader Joe's does so well. You don't have to go there. You want to go there," said Jeff Lenard, director of public affairs for the National Association of Convenience Stores, Alexandria, Va. "It raises the bar on expectations."

It also gives retailers a point of differentiation in a market that is saturated with players in all mediums. "We're all competing against Amazon for inventory depth and against Disney for the experiential dollar," Lenard said. "You never know what the future landscape holds."

Grocers who operate their own c-stores, like Publix and Giant Eagle, have the added bonus of being able to merchandise their store brands in both formats, something they should do often, said David Bishop, director, Bishop Consulting, Barrington, Ill.

"[They] could bring certain Center Store products out to the pump that may be considered fill-in items, like paper towels," he said.

What Shoppers Bought on Their Last Convenience Store Trip*

All Convenience Store Shoppers 1998; All Convenience Store Shoppers 1999; All Convenience Store Shoppers 2000; All Convenience Store Shoppers 2001; All Convenience Store Shoppers 2002; Weekly Gasoline Shoppers 2001; Weekly Gasoline Shoppers 2002; Weekly Merchandise Shoppers 2002; Weekly Shoppers (net) 2001; Weekly Shoppers (net) 2002

Gasoline only: 53%; 55%; 56%; 38%; 49%; 38%; 49%; 14%; 17%; 35%; 46%

Merchandise only: 13%; 12%; 13%; 18%; 12%; 10%; 7%; 26%; 22%; 15%; 10%

Gasoline and Merchandise: 29%; 27%; 25%; 42%; 36%; 52%; 45%; 61%; 62%; 50%; 44%

No purchase: 5%; 6%; 6%; 2%; 2%; 0%; 0%; 0%; 0%; 0%; 0%

Among shoppers who have frequented a convenience store at least once over the past 12 months

Source: U.S. Shopper Database, Retail Forward Inc.