Most convenience retailers carry some edible and perishable grocery staples, but they can find it difficult to compete in the category with dollar stores, e-commerce and supermarkets. “The expansion of online grocery delivery has been trying to cut into overall grocery sales, but the bright side for convenience retailers is that online delivery is taking much longer to be fully accepted by society,” said Jayme Gough, research analyst for NACS. “Where convenience sales are particularly protected from online grocery delivery is with perishables, which many consumers wouldn’t trust to be picked out and delivered to them by a stranger,” she said.

“People lead increasingly busy lives, leaving little time and energy to grocery shop and meal prep several nights a week,” said Robert Agnew, senior vice president of sales with Bob’s Red Mill. “Retailers can capitalize on consumer demand for healthy, ready-to-eat foods in grocery by carrying products that not only serve an array of wellness lifestyles, such as vegan, vegetarian and gluten-free, but are also delicious and easy to eat wherever, whenever.”

Consumable grocery in the c-store is broken out into two sections—edible and perishable—with edible accounting for 0.48% of in-store sales and perishable bringing in 0.12% in 2018. Sales in both edible and perishable categories declined in 2018, according to the NACS State of the Industry data for 2018. Sales in the edible category fell 4.1% in 2018 compared with 2017, while sales in the perishable category were down 7.1% from 2017.

On the Shelf

The edible and perishable categories look different store to store because retailers stock it based on their location and customer base. “Our customers expect that we will have milk, bread and frozen products,” said Sandra Arbogast, assistant manager at Valley Head Convenience Store in Valley Head, West Virginia. Although not many convenience stores carry frozen foods, frozen grab-and-go items have been popular at Valley Head.

The Hitchn Post General Store in Dobson, North Carolina, has a small section of edible groceries. “We carry a few items like condiments, canned goods and toilet paper for the locals, who don’t want to run into town for supplies, but it’s not a huge part of our merchandise mix,” said owner Kristi Proffit.

In rural markets, convenience stores like George’s Little Store in East Hickory, Pennsylvania, often have a more robust grocery section. “Stores like mine had to expand our grocery section because bigger supermarkets have been closing down,” said owner Marilyn George. “We offer a full line of foods, including specialty foods, and fresh fruit and vegetables, plus a full deli to accommodate our customers, who don’t want to drive 25 miles to the nearest supermarket.”

Convenience stores can help fill the gap for perishable and edible groceries in areas that are underserved by grocery stores. In urban areas, so-called food deserts leave residents hard-pressed to find easily accessible and affordable fresh fruit, vegetables and other healthy whole foods. Convenience stores can better serve these communities by expanding their fresh food offerings.

Meanwhile, Dollar stores are competing with convenience stores for the same budget shoppers, offering cereal, canned goods, condiments and packaged coffee, for example, and are making forays into fresh produce. Dollar General Corp., for instance, is adding more fresh foods and plans to open more than 900 new stores this year.

FRESH TO GO

In the convenience retail space, more stores in 2018 sold perishable groceries, increasing a point from 86.7% of stores in 2017 to 87.7% in 2018. “Perishable grocery includes fresh fruits and vegetables but also contains deli meats and cheeses, which carry large margins and can bring incremental sales to the category,” Gough said.

In grocery stores, the deli section has been a consistent source of annual sales growth as consumers increasingly demand convenient meal options, according to Nielsen’s “Total Score Bracket.” For the 52 weeks ended Feb. 23, 2019, the deli section generated $36.6 billion in sales for retailers, Nielsen reports.

“Perishable grocery products appeal to the grab-and-go convenience-store customer because they typically have three key things today’s consumers desire in an instant consumption snack or meal replacement: protein, freshness and understandable ingredients,” said Allie Phillips, head of drug and convenience store sales for Kraft Heinz.

Gough pointed out that younger consumers—Generation Z and millennials—want eating healthy to be easy, and they consider raw fruits and vegetables healthy to-go snacks. “A lot of retailers now have bananas, apples and oranges on the counter to encourage impulse buys of healthy grab-and-go eating,” she said.

Using signage to promote the source of fresh produce or deli offerings is one way convenience stores can drive more sales of perishable groceries. “Perishable grocery is an opportunity for retailers to both boost sales and to market to consumers who are looking for locally and responsibly sourced fresh foods,” Gough said.

A lot of retailers have bananas, apples and oranges on the counter to encourage grab-and-go eating.

Valley Head will soon tap into local farms to source fresh produce like tomatoes for the summer. “People like local sources for their fruits and vegetables, and we plan on highlighting that,” Arbogast said.

Some retailers, though, struggle with selling fresh produce. The Hitchn Post General Store stopped carrying perishables because “no one bought enough to make it worthwhile,” said Proffit. “We started out with a small amount of fresh fruit, hoping it would sell, but it didn’t.”

TRENDING HEALTHY

The desire for good-for-you and snack-size products—driven by younger consumers—has spilled over into the grocery section. “Younger consumers over-index on most of the long-term trends we see in food,” said Phillips. “Whether it’s the replacement of meals with grazing, high-flavor exploration or the desire for real ingredients, Gen Y consumers are typically in tune with and are helping to drive these trends.”

Agnew pointed out that “more and more consumers are swapping sit-down meals for regular snacking throughout the day. Nonperishable, packaged products like our grab-and-go oatmeal and muesli in single-serve cups fill a need for people who want foods that taste great, can be eaten on the fly and also support their overall health and wellness goals.”

Added Paul Boulay, director of category leadership and shopper insights–growth channels for Kraft Heinz, “Retailers can capitalize on the healthier eating trends of younger consumers by offering them the types of items they want to buy in portioned, portable formats. The trend toward more frequent snacking in lieu of a sit-down lunch creates c-store opportunities for items that offer more satiety while still maintaining portability.”

George’s Little Store provides a wider array of fresh produce than many convenience stores because of customer interest. “We’ve had to add more over the years because people are buying more,” George said. Sales of perishable grocery generally tick up in the summer because of an influx of tourists, who want quick, healthy grab-and-go options without the hassles of visiting a larger-format grocery or department store.

The trend toward more frequent snacking creates c-store opportunities for items that offer more satiety while maintaining portability.

MOVING FORWARD

Retailers who stay in-tune with their customer wants and needs and monitor the consumable grocery categories closest will win out in the end.

“We anticipate there will be steady growth of edible grocery in convenience stores, as long as retailers are continuously moving toward implementation of more health-forward products from trusted brands,” Agnew said.

“Moving forward, we will continue to see an evolution in the types of edible grocery products stocked in c-stores in response to overall food trends,” said Phillips. “Younger consumers like the speed offered by c-stores, but they wish they could buy more of their overall food needs in the format. As such, it’s likely we will see more space dedicated to food that will not be consumed right away, but still offers convenience for a meal solution.”

While George’s Little Store has benefited from the closures of larger grocery stores, George expressed concern that dollar stores opening in her area will siphon off her grocery business. “Right now, it’s hard to say if there will be a future for the grocery category at our store,” she said.

With only being open a few months, Valley Head is still figuring out how to stock its grocery section. “We’re still getting a feel for what the customer wants in terms of groceries,” Arbogast said. “But we expect groceries to be an important part of our in-store mix.”