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Convenience Stores - US - May 2009

Sales growth in the convenience store industry has cooled off considerably since 2006 as the economic downturn and fluctuations in gasoline prices have impacted gasoline consumption and miles driven by consumers. Unable to count on gasoline sales for continued sales and traffic growth, innovative convenience stores are increasingly turning to foodservice not only as a means of increasing sales and profits, but also as a platform for differentiation and increased customer loyalty. The move to ever more sophisticated foodservice offerings is the latest example of the channel’s unique ability to respond and adapt to changing consumer dynamics.

This report provides an overview of the latest developments in the convenience store industry and guidance for marketers looking to thrive in a challenging, evolving marketplace, including:

  • Ideas and direction on how to make foodservice a strategic differentiator
  • An in-depth look at some of the most successful and innovative competitors
  • The behaviors and attitudes of various convenience store shopper segments, including insight into perception barriers that c-stores must overcome
  • A look at the convenience stores channel’s position in the broader retail landscape
  • An analysis of c-store sales trends by product category
  • An analysis of convenience store advertising

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Sales data
            • Consumer survey data
              • Abbreviations and terms
                • Abbreviations
                  • Terms
                  • Executive Summary

                    • Market at a glance
                      • In a fragmented channel, c-stores balance local knowledge with national scale
                        • C-stores face different competitors in leading product categories
                          • In-store sales linked to what happens at the gasoline pump
                            • Tobacco still leads in-store, but slips in share
                              • Foodservice plays an even more prominent strategic role
                                • Other categories remain small, but opportunities for new services exist
                                  • Growth in Hispanic population likely to benefit c-stores
                                    • 7-Eleven remains a dominant force in the industry
                                      • Big oil reducing number of stores
                                        • Shift to franchised/licensed stores continues
                                          • Well-established regional c-store players among the strongest brands
                                            • Ads focus on basic c-store values
                                              • Frequent shoppers are young and male
                                                • Perceptions of food are improving, but still room for improvement
                                                • Insights and Opportunities

                                                  • Convenience stores continue to evolve
                                                    • Foodservice becoming more important to sales and profits
                                                      • Still room for improvement
                                                        • Foodservice presents a range of strategic alternatives
                                                          • Reaching out to teens presents opportunity for growth
                                                          • Inspire Insights

                                                            • Corner Store
                                                              • What it’s about
                                                                • What we’ve seen
                                                                  • Implications
                                                                    • Figure 1: Interest in various new products/services at convenience stores, by race/Hispanic origin, January 2009
                                                                • Market Size and Forecast

                                                                  • Key points
                                                                    • After years of strong growth, market slows considerably
                                                                      • Figure 2: U.S. sales of convenience stores, at current prices, 2003-13
                                                                      • Figure 3: U.S. sales of convenience stores, at inflation-adjusted prices, 2003-13
                                                                  • Competitive Context

                                                                    • In a fragmented channel, c-stores balance local knowledge and national scale
                                                                      • C-stores face different competitors in leading product categories
                                                                      • Segment Performance

                                                                        • Key points
                                                                          • Figure 4: U.S. sales of convenience stores, by segment, 2006 and 2008
                                                                      • Segment Performance—Petroleum

                                                                        • Key points
                                                                          • Gasoline dominates sales, but may be losing power
                                                                              • Figure 5: U.S. sales and forecast of petroleum through convenience stores, at current prices, 2003-13
                                                                          • Segment Performance—In-Store Items

                                                                            • Key points
                                                                              • In-store sales linked to what happens at the gasoline pump
                                                                                • Figure 6: U.S. sales and forecast of in-store items at convenience stores, at current prices, 2003-13
                                                                              • Tobacco still leads but slips in share
                                                                                • Foodservice plays an even more prominent strategic role
                                                                                  • Other categories remain small, but opportunities for new services exist
                                                                                      • Figure 7: U.S. sales of in-store items in convenience stores, by sub-segment, 2006 and 2008
                                                                                  • Market Drivers

                                                                                    • Key points
                                                                                      • Convenience stores cater to a driving nation
                                                                                        • Figure 8: U.S. Vehicle miles by road system, 2004-08
                                                                                      • Rising gasoline prices key to c-store sales increases
                                                                                        • Figure 9: U.S. average price per gallon of gasoline, 2003-09
                                                                                      • Growth in Hispanic consumers likely to benefit c-stores
                                                                                        • Figure 10: Population, by race and Hispanic origin, 2003-13
                                                                                      • Aging population may present a challenge for c-stores
                                                                                        • Figure 11: U.S. population of adults aged 18 and over, by age group, 2003-13
                                                                                    • Leading Companies

                                                                                      • Key points
                                                                                        • 7-Eleven remains a dominant force in the industry
                                                                                          • Big oil reducing number of stores
                                                                                            • BP North America
                                                                                              • Exxon Mobil
                                                                                                • Shell
                                                                                                  • Chevron Texaco
                                                                                                    • The Pantry a dominant force in the Southeast
                                                                                                        • Figure 12: Number of U.S. stores and sales of leading convenience stores, by company, 2007 and 2008
                                                                                                      • Shift to franchised/licensed stores continues
                                                                                                        • Figure 13: Leading c-store operators, share of U.S. stores franchised or licensed, 2007 and 2008
                                                                                                    • Brand Qualities

                                                                                                      • Key point
                                                                                                        • Well-established regional c-store players among the strongest brands
                                                                                                            • Figure 14: Select regional convenience store chains, by number of stores, 2008 sales, and states of operation
                                                                                                          • Spotlight: Wawa typical of strong regional c-store operations
                                                                                                            • Customer service
                                                                                                              • Fresh food
                                                                                                                • Connection to the community
                                                                                                                • Innovation and Innovators

                                                                                                                  • Key points
                                                                                                                    • Convenience stores continue to evolve
                                                                                                                      • New Cumberland Farms prototype puts focus on fresh
                                                                                                                        • Supermarket chains step up in convenience market
                                                                                                                          • Sheetz breaks into in-store dining
                                                                                                                            • Rutter’s Farm Stores score a hit with stir fry
                                                                                                                            • Advertising and Promotion

                                                                                                                              • Key points
                                                                                                                                • Overview
                                                                                                                                  • 7-Eleven targets a variety of promotional tactics at young male customers
                                                                                                                                      • Figure 15: 7-Eleven TV ad, 2008
                                                                                                                                    • Chains stress basic c-store values of convenience and variety of foods
                                                                                                                                      • Figure 16: Circle K ‘Built for speed’ TV ad, 2008
                                                                                                                                      • Figure 17: am/pm ‘Too much good stuff” TV ad, 2009
                                                                                                                                      • Figure 18: Kwik Trip Magic Box TV ad, 2009
                                                                                                                                    • Quality coffee also receives emphasis
                                                                                                                                      • Figure 19: Speedway Coffee TV ad, 2009
                                                                                                                                  • Usage

                                                                                                                                    • Adults
                                                                                                                                      • Older adults least likely to shop convenience stores
                                                                                                                                        • Figure 20: Incidence of visiting convenience stores, by age, July 2007-September 2008
                                                                                                                                      • Younger shoppers make more trips
                                                                                                                                        • Figure 21: Number of visits to convenience stores in last 4 weeks, by age, July 2007-September 2008
                                                                                                                                      • Male shoppers visit more often
                                                                                                                                        • Figure 22: Number of visits to convenience stores in last 4 weeks, by gender, July 2007-September 2008
                                                                                                                                      • Average of $15 spent on last convenience store visit
                                                                                                                                        • Figure 23: Average amount spent on last convenience store visit, summary, January 2009
                                                                                                                                      • 7-Eleven is most frequently shopped convenience store
                                                                                                                                        • Figure 24: Convenience stores shopped, January 2009
                                                                                                                                      • Young respondents buy a wider array of products
                                                                                                                                        • Figure 25: Products bought at convenience stores, by age, January 2009
                                                                                                                                      • Coffee is the draw for older adults
                                                                                                                                        • Figure 26: Food and drink items bought at convenience stores, by age, January 2009
                                                                                                                                      • Shoppers want to see more natural and organic foods
                                                                                                                                        • Figure 27: Interest in products/services at convenience stores, by age, January 2009
                                                                                                                                      • Teens
                                                                                                                                        • Three out of four teens shop convenience stores
                                                                                                                                          • Figure 28: Incidence of visiting convenience stores, by gender and age, July 2007-September 2008
                                                                                                                                        • Teens make more visits to convenience stores
                                                                                                                                          • Figure 29: Teenagers: Number of visits to convenience stores in last 4 weeks, by gender and age, July 2007-September 2008
                                                                                                                                        • 7-Eleven is teens’ favorite too
                                                                                                                                          • Figure 30: Teenagers: convenience stores visited in last month, by store, July 2007-September 2008
                                                                                                                                      • Attitudes and Motivations

                                                                                                                                        • Women do their convenience store shopping when traveling
                                                                                                                                          • Figure 31: Attitudes and behaviors regarding convenience stores, by gender, January 2009
                                                                                                                                        • Older shoppers come for the coffee, but pass on the food
                                                                                                                                          • Figure 32: Attitudes and behaviors regarding convenience stores, by age, January 2009
                                                                                                                                        • Prices are the number one reason for not shopping convenience stores
                                                                                                                                          • Figure 33: Why convenience stores are not shopped, by gender, January 2009
                                                                                                                                      • Race and Hispanic Origin

                                                                                                                                        • Asian respondents much less likely to shop convenience stores
                                                                                                                                          • Figure 34: Incidence of visiting convenience stores, by race/ethnicity, July 2007-September 2008
                                                                                                                                        • Blacks and Hispanics are most frequent shoppers
                                                                                                                                          • Figure 35: Number of visits to convenience stores in last 4 weeks, by race/Hispanic origin, July 2007-September 2008
                                                                                                                                        • 7-Eleven the overall favorite, but subtle differences appear by race/Hispanic origin
                                                                                                                                          • Figure 36: Convenience stores shopped most frequently, by race/Hispanic origin, January 2009
                                                                                                                                        • Convenience stores meet a wide array of needs for Hispanic shoppers
                                                                                                                                          • Figure 37: Products bought at convenience stores, by race/Hispanic origin, January 2009
                                                                                                                                        • Stores may consider healthier fare, but should keep junk food favorites
                                                                                                                                          • Figure 38: Food and drink items bought at convenience stores, by race/Hispanic origin, January 2009
                                                                                                                                        • Coffee tops coffee shops with Hispanic and black shoppers
                                                                                                                                          • Figure 39: Attitudes and behaviors regarding convenience stores, by race/Hispanic origin, January 2009
                                                                                                                                        • Black and Hispanic shoppers interested in a wider array of products/services at convenience stores
                                                                                                                                          • Figure 40: Interest in products/services at convenience stores, by race/Hispanic origin, January 2009
                                                                                                                                      • Custom Consumer Groups

                                                                                                                                        • Race/Hispanic origin and age
                                                                                                                                          • Figure 41: Frequency of visiting convenience stores, by race/Hispanic origin and age, January 2009
                                                                                                                                          • Figure 42: Products bought at convenience stores, by race/Hispanic origin and age, January 2009
                                                                                                                                          • Figure 43: Interest in products/services at convenience stores, by race/Hispanic origin and age, January 2009
                                                                                                                                      • Cluster Analysis

                                                                                                                                        • Introduction
                                                                                                                                          • Big Spenders
                                                                                                                                            • Who they are
                                                                                                                                              • Soft-drink and Gasoline Guzzlers
                                                                                                                                                • Who they are
                                                                                                                                                  • Low-spending Road-trippers
                                                                                                                                                    • Who they are
                                                                                                                                                      • Cluster characteristics
                                                                                                                                                        • Figure 44: Convenience store shopper clusters, January 2009
                                                                                                                                                        • Figure 45: Frequency of visiting convenience stores, by convenience store shopper clusters, January 2009
                                                                                                                                                        • Figure 46: Average amount spent on last convenience store visit, by convenience store shopper clusters, January 2009
                                                                                                                                                        • Figure 47: Attitudes and behaviors regarding convenience stores, by convenience store shopper clusters, January 2009
                                                                                                                                                        • Figure 48: Products bought at convenience stores, by convenience store shopper clusters, January 2009
                                                                                                                                                        • Figure 49: Food and drink items bought at convenience stores, by convenience store shopper clusters, January 2009
                                                                                                                                                        • Figure 50: Interest in products/services in convenience stores, by convenience store shopper clusters, January 2009
                                                                                                                                                      • Cluster demographics
                                                                                                                                                        • Figure 51: Convenience store shopper clusters, by gender, January 2009
                                                                                                                                                        • Figure 52: Convenience store shopper clusters, by age, January 2009
                                                                                                                                                        • Figure 53: Convenience store shopper clusters, by household income, January 2009
                                                                                                                                                        • Figure 54: Convenience store shopper clusters, by race, January 2009
                                                                                                                                                        • Figure 55: Convenience store shopper clusters, by Hispanic origin, January 2009
                                                                                                                                                      • Cluster methodology
                                                                                                                                                      • Appendix: Trade Associations

                                                                                                                                                        Companies Covered

                                                                                                                                                        • Ahold USA
                                                                                                                                                        • Alimentation Couche-Tard Inc.
                                                                                                                                                        • Beer Institute (The)
                                                                                                                                                        • Best Buy stores (USA)
                                                                                                                                                        • BP p.l.c.
                                                                                                                                                        • Burger King Corporation
                                                                                                                                                        • Casey's General Stores Inc
                                                                                                                                                        • ChevronTexaco Corporation
                                                                                                                                                        • CITGO Petroleum Corporation
                                                                                                                                                        • Coca-Cola Company (The) (USA)
                                                                                                                                                        • Cumberland Farms, Inc
                                                                                                                                                        • CVS Caremark Corporation
                                                                                                                                                        • Denny's Corporation
                                                                                                                                                        • Dunkin' Brands
                                                                                                                                                        • Esso Petroleum Co Ltd (retail)
                                                                                                                                                        • Exxon Mobil Corporation
                                                                                                                                                        • Fresh & Easy
                                                                                                                                                        • Giant Eagle
                                                                                                                                                        • Giant-Carlisle
                                                                                                                                                        • Greenfield Online
                                                                                                                                                        • Kum & Go
                                                                                                                                                        • Major League Baseball
                                                                                                                                                        • McDonald's U.S.A.
                                                                                                                                                        • National Basketball Association
                                                                                                                                                        • National Broadcasting Company, Inc. (NBC)
                                                                                                                                                        • National Football League Inc.
                                                                                                                                                        • Pinnacle Foods Group Inc.
                                                                                                                                                        • Red Roof Inns
                                                                                                                                                        • Sheetz, Inc
                                                                                                                                                        • Shell Oil Products US
                                                                                                                                                        • Speedway SuperAmerica
                                                                                                                                                        • Starbucks Corporation
                                                                                                                                                        • Subway
                                                                                                                                                        • Sunoco, Inc.
                                                                                                                                                        • Target Corporation
                                                                                                                                                        • Tesco (US)
                                                                                                                                                        • The Pantry Inc
                                                                                                                                                        • U.S. Bureau of Labor Statistics
                                                                                                                                                        • U.S. Bureau of the Census
                                                                                                                                                        • U.S. Department of Transportation
                                                                                                                                                        • Umpqua Holdings Corporation
                                                                                                                                                        • Visa U.S.A. Inc.
                                                                                                                                                        • Walmart Stores (USA)
                                                                                                                                                        • Wawa, Inc
                                                                                                                                                        • White Hen Pantry Inc
                                                                                                                                                        • Wild Bean Café

                                                                                                                                                        Convenience Stores - US - May 2009

                                                                                                                                                        £3,277.28 (Excl.Tax)