Threat from C-stores keeps growing
Convenience stores are making inroads with consumers and stealing quick-service visits, NPD finds
Nov 3, 2016
Convenience stores have been offering a more sophisticated and diverse selection of food for some time, posing a competitive threat to quick-service restaurants.
New data from global market research firm The NPD Group reveals that the threat continues to grow, as these food-forward chains change the face of the C-store consumer and increasingly take visits from quick-service restaurants.
“QSRs really have to pay attention to C-stores,” NPD analyst Bonnie Riggs said. “They’re are making inroads and stealing visits from QSR.”
According to NPD, C-stores’ share of quick-service visits rose to 10 percent in the year ended August 2016, from 9.3 percent in 2011.
Driving visits at C-stores is a more diverse and decidedly younger group of consumers, NPD found.
For example, both Gen Z (born between 1997 and 2015) and Millennials (born between 1981 and 1996) have increased visits to C-stores in the last five years. Millennials are now the heaviest users of C-stores, accounting for 32 percent of visits in the year ended August 2016, from 28 percent in 2011. Gen Z are the second-heaviest users, accounting for 23 percent of C-store visits, from just 7 percent in 2011.
Gen X has cut back on visits, but is still also a big user of convenience stores, accounting for 25 percent of visits, down from 30 percent in 2011.
“[C-stores] have broadened their appeal. Attracting all age groups, not totally dependent on blue-collar workers, on gasoline, smokes and Cokes,” Riggs said. “They offer fresh food, variety, convenience.”
Price is a key factor driving C-store visits, NPD found. In the year ended August 2015, a visit to a convenience store cost $2 less than a visit to a traditional quick-service outlet. Other motivations driving growth are quality and variety of products.
Brand loyalty, which includes convenience, menu deals and loyalty programs, has been motivating more visits to C-stores than to quick-service restaurants recently.
For instance, in the year ended August 2016, 15 percent of Gen Z visits and 19 percent of Millennial visits to C-stores were related to brand loyalty. During the same period, just 10 percent of Gen Z visits and 12 percent of Millennial visits to quick-service restaurants were related to brand loyalty.
“They really like going to these concepts,” Riggs said. “It’s something new, different.”
Building loyalty, stealing share
One tactic C-stores are using to grow more loyal customers and steal visits from quick-service restaurants is launching new or retooled loyalty programs. Executives from the C-store chains RaceTrac and Wawa share how they are successfully leveraging loyalty apps.
Third-generation led, family-owned RaceTrac, which operates more than 425 C-stores in Georgia, Florida, Louisiana and Texas, already had a lot of loyal customers, but it still decided to develop and launch its first rewards app.
“We have this personal relationship [with many guests],” said Madyson Burgess, senior brand manger of RaceTrac. “We knew that existed, and we wanted to reward that loyalty we already have and help to build a more personalized experience.”
Launched in April 2016, the RaceTrac app allows customers to use a single bar code to scan purchases and earn and redeem points. While many loyalty programs dictate which rewards customers receive, RaceTrac lets customers choose their own reward from a selection of 25 different categories. Among the rewards are everything from breakfast sandwiches, to roller hot dogs, to the Swirl World frozen treat bar, with frozen yogurt, ice cream, sorbet and a choice of more than 40 different toppings.
Users can also track cumulative points to earn monthly, weekly and daily rewards. To date, the chain reports that more than half a million users have signed up for the app, far exceeding original goals.
“Customers can really be rewarded with essentially whatever they want,” said Angie Chang, RaceTrac brand manager. “It was really a way for us to differentiate our program.”
Also looking to deepen customer loyalty is Wawa, Penn.-based Wawa. The 645-unit C-store chain launched a mobile app with its Wawa Rewards in January 2015. But the brand wanted a way to reward its loyal customers even more. On Oct. 10, it launched the Free for All rewards giveaway. The fall promotion will have the chain giving away millions of “freebies and surprises” to Wawa Rewards members through Dec. 12.
“Our Rewards program lets us connect with our customers while offering a more convenient way to pay for purchases and earn rewards,” Carol Jensen, chief marketing officer of Wawa, said in a statement. “And now, with our fall promotion, we are delighted to say ‘thank you’ to Wawa Rewards members in a big way with the largest giveaway in the history of our program.”
Among the rewards to be distributed in October are free Wawa favorites, such as a 16-ounce Handcrafted Latte, a Shortie Hoagie and a Sizzli breakfast sandwich. Every Friday in November, members can enjoy a free coffee, and in December they will get 12 days of free treats and special offers.