Preparing for disasters is baked into the convenience industry’s DNA, but the coronavirus pandemic is a storm unlike any other. Strong growth in 2019 helps to soften the blow somewhat for what lies ahead, including critical operational changes and new consumer expectations of convenience.

In 2019, trips to c-stores were up 6.2% overall, according to IRI’s Larry Levin, executive vice president of consumer and shopper marketing for the Chicago-based market research firm. In his virtual presentation, The Convenience Consumer, Levin reported that U.S. consumers made more than 17.7 billion trips to retail last year, and trip growth was up 1.8% overall. C-stores accounted for 2.8% of those total trips in 2019. Online and dollar stores, two of c-stores’ largest competitors, saw trip growth of 3.3% and 6.5%, respectively.

“We’ve seen an incredible growth within the trips,” said Levin. “But as we look at revenue, trips are really sparking growth in the industry.” C-stores brought in $160.9 billion dollars in revenue, and dollar growth is up 3.3%. “And compared to the rest of CPG, which was up 2.2%, we’re punching basically 50% higher in terms of growth,” said Levin.

More than 19% of all sales in CPG came through c-stores last year, and according to Levin, the rest of the CPG market is underdelivering in their contribution to industry growth. In particular, the food channel is struggling to keep up the rates of its overall general market competition, which presents a strong growth opportunity for the c-store channel.

Convenience stores are the preferred, for many consumers, location for food and prepared food.

“I think the industry should be very proud of the fact that it drove 28% of the [CPG] growth in the industry year on year,” said Levin. “Comparatively, the food channel, which does 38% of our business, did 28% of our growth.”

Focusing on the consumer, Levin shared findings from IRI’s interviews of more than 600 recent c-store shoppers, with a first wave completed in 2018 and a second in 2019. Heavier convenience store shoppers grew from 15% surveyed in the first wave to 25% in the second wave. Lapsed shoppers, those who have not been in a c-store in the past three months, declined to 31% in the second wave from 38% in the first wave.

Millennials and Gen Z are a growing segment of the heavy shoppers. In 2019, 37% of heavy shoppers were millennial and Gen Z, and in the second wave, half of the heavy shoppers were millennial and Gen Z. “They are coming into the channel because the channel is responding to needs that they have,” said Levin.

Looking at light to medium shoppers, 29% have reduced the number of trips made. “The challenge for the industry is what are we going to do to rebuild that relationship with some of these light to medium buyers?” asked Levin. Attracting female consumers also is another challenge c-stores should address, according to Levin. Twenty-five percent of women who are less frequent visitors to c-stores are going to dollar stores instead, Levin said.

Pointing to the current consumer climate, Levin said that in 2019, 23% of consumers were cautious and worried about the economy, and 30% were optimistic. “We see nearly a flip where now just in the past three weeks, a third of the U.S. population has become cautious and worried, and one out of five are now optimistic,” said Levin. “We have a population that’s really scared about what the future holds.”

Levin encouraged the industry to continue to drive innovation and build on the healthy options momentum the industry has touted over the past few years. “Let’s hope as we come out of COVID-19 that we rebuild the power of the channel. Let’s have an empathic ear to our shoppers who are physically, mentally, and financially challenged by COVID-19 today, and unfortunately, maybe tomorrow.”

Foodservice in a New Era

The pandemic has turned the foodservice industry completely upside down, and restaurants to QSRs to convenience stores are altering the way they provide food to the consumer. According to Chris Wolf, senior vice president, strategic insights & planning at The Marlin Network, and Chef Thomas Talbert, vice president, culinary marketing at CSSI, consumers are turning to convenience stores to fulfill their needs for not only quick food items but also full meals and pantry staples.

According to Datassential, 32% of people would go to c-stores to avoid contact with the coronavirus, said Wolf in the session, Transforming Convenience Through Food Experiences.

“Convenience stores are the preferred, for many consumers, location for food and prepared food,” said Wolf. “So, what we saw as trends and possibilities for your industry are actually accelerating right now in the time of change.” Consumers are perceiving restaurants as closed, and if they are open, consumers fear food safety and additional contact with people. Grocery stores are unable to keep certain foods in stock, so people are turning to c-stores for a quick in and quick out.

Wolf said the c-store industry should take advantage of foodservice technologies that the restaurant industry has already mastered, such as home delivery, preorder mobile apps, online ordering and cashierless shopping.

In the midst of the coronavirus pandemic and in the aftermath, adapting certain foodservice tech will be especially beneficial for c-stores, specifically technologies that decrease human interaction. Panera Bread, for example, offers a preorder app that addresses just this. “What they now have […] is an app that allows you to [order], pull up, go in, get a bag and leave with your food without really interacting with anybody in the store, because at that moment, consumers are looking for as little friction in that exchange as possible,” said Wolf.

When customers are interacting with c-store employees, good customer service is one of the most important things, Wolf said. According to research firm Mintel, Chicago, 56% of consumers said good customer service is one of the most important aspects of using a convenience store, which followed convenient locations (67%) and good prices (60%).

Winning Customers Now and Later

Ahead of the pandemic, the top-performing convenience stores were clean, well-maintained and focused on fresh, healthy food and quality products, Jose Gomes, president, North America, dunnhumby, shared. Now, retailers can fully lean into their roles as essential businesses as they feed and support their communities amid the crisis.

In the session, The Voice of the Convenience Customer: Winning Their Preference, Gomes offered insights from the dunnhumby Retailer Preference Index (RPI) for Convenience Study and also outlined key markers to watch as the United States progresses through the pandemic.

The industry should be very proud of the fact that it drove 28% of the [CPG] growth in the industry year on year.

“We believe that there’s this real opportunity for retailers to lean into this sense of community, to be seen as the centers of food and support,” Gomes said. Think about “how you can leverage that in your messaging, and how you can win the trust and confidence of customers for the fact that you’ve stayed open, that you’ve supported them.”

For the RPI study, the London-based customer data science firm surveyed nearly 7,000 U.S. consumers in August 2019 and evaluated 27 retailers in the convenience channel to discover not only what the respondents think and feel about c-stores and how their preferences drive them to choose one retailer over another but also to understand how they perceive quality, convenience and price. The researchers then linked those customer perceptions to retailers’ market and sales performance.

The core pillars driving customer perceptions and choice within the convenience channel are what dunnhumby calls fresh and healthy (private label brands, fresh meats and produce, healthy food options and appetizing ready-to-eat meals) and convenient quality (easy in and out, fast and easy checkout, convenient locations, friendly and welcoming staff, beverage variety and right product variety, high quality products, safe and comfortable stores and clean and well-maintained stores). The supporting pillars are digital, price and discounts/rewards.

The study, released in October 2019, ranks retailers based on value perception and financial performance. “We see that clean and well-maintained stores really do have a connection with performance and with profitability of those stores,” Gomes said. “So, you’re more likely to go to these top-performing retailers because they have great ready to eat, because of their produce or because of anything that is fresh. And you’re less likely to go there purely because of tobacco, alcohol or gambling,” Gomes said.

Stores in the top-ranked first quartile of dunnhumby’s four-quartile value perception map are: 1) QuikTrip, 2) Wawa, 3) Sheetz, 4) Kwik Trip/Kwik Star, 5) RaceTrac, 6) Casey’s General Stores and 7) Maverik.

Retailers in the bottom half have more than four times as many stores as those in the top half (2,459 vs. 572), yet the top-half stores are growing their five-year sales at a compound annual growth rate (CAGR) that’s one and a half times faster than retailers in the bottom half (6.2% vs. 3.9%).

Underperforming retailers should prioritize getting the basics right, Gomes said. Then turn to developing ready-to-eat and fresh and healthy food offerings, followed by digital and reward programs. Foodservice is a key differentiator of growth, according to 2019 NACS State of the Industry data: Top quartile performing companies sold 7.7 times more foodservice than bottom quartile performers.

Gomes outlined three phases of how society is dealing with the pandemic—insecurity, transition and recovery—and said the United States is currently in the middle phase. “We expect consumer attitudes to move from this period of real uncertainty right now, to actually move quite quickly through to the higher levels of confidence as the worst is behind us and as people go back to normal lives,” Gomes said.

Gomes advises retailers to map out their strengths (beverages, foodservice, locations and hours to capture impulse and emergency trips outside of normal hours, for instance) and weaknesses (price perception, cleanliness and healthy food options, for example), along with opportunities (e-commerce growth, drive-thru, people reconnecting with their neighborhoods) and threats (consumers making fewer quick trips in favor of bigger stock-ups, price sensitivity and aggressive pricing by grocery stores).

And at this time, it’s crucial that retailers support their team members on the front lines of customer engagement by recognizing their work as essential employees and being transparent about things like stock availability, sanitization and product handling procedures so they can inform customers.

“We think it’s an unprecedented moment, but also a real opportunity to reconnect with customers and to build on the community experience,” Gomes said.