C S P NACS® State of the Industry Summit Specia l I ssue 2014 45
When Speedway’s Glenn Plumby presented this year’s
industry numbers, he joked that the channel had
clearly entered “The Twilight Zone.” According to
Todd Hale, senior vice president of consumer and shopper insights
for The Nielsen Co., Schaumburg, Ill., we are not alone.
“You guys aren’t the only industry in ‘The Twilight Zone’ right
now,” Hale said as he began his “Understanding the Convenience
Shopper ‘Superconsumer’ ” general session. “Retailing in general is
having some tough times.”
Sci-fi spookiness aside, it’s been a tough road for retailers of
consumer packaged goods (CPG). While the unemployment rate is
improving and the housing and automobile markets seem to have
rebounded, robust growth continues to elude the c-store channel
and also competitors in the grocery, drug and value channels.
“Growth is tough today,” said Hale. “We’ve seen some great
examples of innovation in your industry and other retail indus-
tries that for whatever reason is not leading to the kind of growth
we’d expect.”
Nielsen’s 2009-2013 data on the convenience, grocery, drug, club
What a Shopper Wants
Analysts predict retail winners will focus on consumers, not competition
By Melissa Vonder Haar || [email protected]
It’s very easy to get caught in what the
competition is doing but I think you need to
think more about what your customer wants.”
– Todd Hale
“
C S P NACS® State of the Industry Summit Specia l I ssue 201446
stores and dollar/value channels paints a
confusing picture. Dollar sales grew slightly,
with 4% growth in 2011 and 3% growth in
2012 as the standouts—though Hale said
that was largely due to inflationary pres-
sure. Unit sales, however, have essentially
stayed flat.
“It’s not a simple story,” said Hale of
the lack of CPG growth. “There’s a lot of
positive and negative stuff going on that’s
impacting the ability of consumers to spend
these days.”
Some positives for consumers’ wallets
included increases to the minimum wage
and Social Security benefits (though last
year’s 1.5% increase probably won’t lead to
much growth). On the negative side, Hale
expressed concerns over a shrinking popu-
lation and wages that continue to drop.
“We had the slowest population growth
last year since 1937,” he said. “Is it any won-
der that our total stores are only growing by
1%? I don’t think so.”
Nielsen’s data did have some positive
numbers in certain categories: fresh meat
and fresh produce, thanks in part to a con-
sumer demand for perceived healthier or
fresh products. Alcohol beverages are also
doing well, with Hale describing the United
States as “drinking like there’s no tomor-
row.” However, these upswings were few
and far between, with the positive figures
unable to offset the negatives.
“If you look at unit volume, where
there’s growth, there’s less growth,” said
Hale. “Where there’s declines, there’s bigger
declines. Clearly, consumers are having to
make decisions as they don’t keep pace with
inflation and as their wages aren’t grow-
ing over time. They’re making decisions to
either shift spending to some other channel
or cutting out spending altogether.”
Unfortunately, these are issues are not
going away. Hale predicted that, as 2013
was, 2014 will be a tough year: “The finan-
cial headwinds we face are no different.
Stagnant and slowing population are going
to continue to limit spending power this
year and probably many more to come.”
Winning the ConsumerThat means the competition between
channels is likely to increase. But Hale
warned retailers against focusing too
much on their competition: In this eco-
nomic “Twilight Zone,” the focus needs to
be on the consumer—the right consumer.
“You’ll notice the dollar store, conve-
nience store and the automotive channels
are the three channels where we see a stron-
ger skew towards low-income shoppers,”
said Hale. “I would argue that part of the
issues you’re having in your industry is you
have shoppers who can’t afford to spend
these days. Their spending power is at risk.”
It’s no news that c-stores also tend to
skew heavily toward male shoppers. But
Hale sees this as an opportunity.
“We need new shoppers to drive growth
in this industry,” he said. “The reality is,
women still control the spending and trips
in every channel but yours. Think about
how to connect more with female shop-
pers.”
And though many c-store retailers have
been successful in rebranding themselves
to be more appealing to both women and
younger shoppers, Hale warned against
putting too much stock in the oft-talked-
about millennial demographic.
“I’ve got two millennial kids,” said Hale.
“They’ve left the nest—not to be confused
with leaving the wallet. Young people don’t
have a lot of money.”
To win over the right consumer, Hale
suggested that retailers:
▶ Win the Trip: “Either because of a
superior connection with their consumers,
innovation and/or operational excellence,”
he said. “Aldi does well because they con-
nect with shoppers who need to save but
also provide quality, innovative offerings to
that consumer.”
▶ Retail to the Extreme: “This is going
to drive innovation in terms of store expan-
sions, as well as new product introductions,”
said Hale, citing examples of HyVee stores
that had built sports bars in their grocery
locations to attract new consumers with
longer engagements in the store.
▶ Capitalize on Market Trends:
“C-stores have been doing this with their
foodservice offerings,” Hale said. “But you
need to tweak it and continue to innovate
around the latest trends such as ‘meal blur-
C S P NACS® State of the Industry Summit Specia l I ssue 201448
ring’ and perceived fresh/healthy options.”
▶ Own At-Home: “Because we’re
pressed for money, there’s going to be more
at-home time,” he said. “Are there oppor-
tunities to get more engaged in nonedible
categories that appeal to this down time?
“Ronald Lunge says, ‘Chase the cus-
tomer, not the competition,’ ” Hale con-
tinued. “Now more than ever, it’s not just
about chasing customers, but chasing the
right customer who really drives sales at
your stores.”
Finding the ‘Superconsumer’Chasing that sales-driving consumer—or
“superconsumer”—was exactly what Eddie
Yoon, a principal with The Cambridge
Group, Chicago, had in mind as he took
the stage from Hale for his “Introducing the
Superconsumer” part of the session.
“This idea of superconsumers is really a
concept we’ve been talking about ... that is
born out of a solution,” he said. “Not just an
idea, an opportunity or a threat, but looking
at how you grow your business in a simple
and speedy way.” The answer: attract the
right consumer who is passionate about the
channel and will thus spend a lot.
“It’s a combination of passion and
profits,” Yoon said. “A superconsumer not
only spends heavily but is heavily engaged
in the process. A deep understanding of
why people spend a lot of money and care
about spending that money is the key to
superconsumer success.”
It may seem silly to focus so much atten-
tion on a small sliver of the consumer base;
Cambridge and Nielsen estimate just 10%
of c-store shoppers could be considered
superconsumers. But this small percent-
age packs a big punch. Yoon estimated that
c-store superconsumers drive 40% of all
food and beverage sales, make twice as
many food and beverage shopping trips a
month and spend four times as much on
these trips than the average consumer.
“It’s a pretty significant index for how
economically valuable they are for some of
your higher-margined products,” he said.
“They come in more frequently throughout
the day, and they come in more frequently
throughout the week.”
Because c-store superconsumers tend
to also be superconsumers of other similar
small-format locations, understanding and
attracting this base could help operators get
a leg up on the competition.
“It becomes an extraordinary differen-
tial factor in how well you grow and how
fast you grow,” Yoon said.
Superconsumer success is also an indi-
cator of how a retailer is performing overall.
“It’s a very small share of consumers
who drive the lion’s share of the growth, and
because of the emotional resonance that
they have with the experience, will probably
continue to drive growth in the future,” he
said. “How you do with this one-tenth of
your shoppers is highly predictive of how
you’ll do in the marketplace at large. So the
ability to home in on these people becomes
a pretty critical business process.”
These superconsumers also tend to be
passionate about more than one category—
though it’s not always the categories you’d
expect. Yoon recently looked at milk super-
consumers, expecting dairy enthusiasts
would be superconsumers of other health-
conscious products. Instead, data showed
that milk superconsumers tended to be
passionate about indulgent products such
as doughnuts, cookies, cereal and candy.
This information could be a gold mine
of cross-merchandising opportunities for
retailers and suppliers alike. Yoon believes
it can be done in a relatively simple and
inexpensive way. “The goal should be to
take data you already have to learn what
makes these consumers tick,” he said. “Ask
your suppliers for help; they have lots of
information they’d like to share with you.”
Yoon also suggested retailers rank their
stores by category sales to identify which
category superconsumers are frequenting
their different locations.
“Once you’ve identified suppliers to
work with and the right locations for
those super consumers, work together
to build joint growth plans,” Yoon said.
“Everyone here is a superconsumer of
something, every category has a super-
consumer and every store has a super
consumer. Use them as inspiration to
drive your growth strategy.” n
It’s a combination of
passion and profits:
A superconsumer not only
spends heavily but
is heavily engaged
in the process.”
– Eddie Yoon
“