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 || mvonderhaar@cspnet.com

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

“