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Major Trends in Grocery and
Convenience Stores
Grocery Retail Trends
Mark Dunson
President, Emerson Retail Solutions
Operations: From Bricks to Clicks, It’s All in the Mix
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Rise of marketplaces Delivery raceStore reinvention
Mobile commerce Social commerce
Competition: Convergence of Concepts Creates New Challenges
• Grocery
• Brand is Fresh
RestaurantsConvenience stores
C-store
Food
is the
future
Restaurant
Efficient
food
factory
26 billion square feet under roof | Circling the globe three times
Grocery and retail
Grocery
Fresh is our brand
National regulation: U.S. lawmakers instructed the FDA to
forbid the sale of genetically
engineered salmon until the agency puts
in place labeling guidelines to disclose
whether a fish has been genetically
altered — a victory for advocates who
have long opposed such foods from
reaching Americans' dinner plates.
Global trade: The WTO ruled
that Canada and Mexico may
impose retaliatory tariffs of more
than $1 billion because COOL does
not comply with U.S. trade
commitments. COOL was repealed
by Congress. Now, senators are
pushing the Voluntary Country of
Origin Labeling Act of 2015 as a
solution.
Food safety: More than five
years after President Obama signed
the Food Safety Modernization Act
into law in January 2011, food
companies and retailers will finally
start having to comply with some of
its most significant rules. The FDA
published the final rules in fall 2015,
giving large companies one year to
come into compliance.
Regulation: More Regulation Requiring Sharper Focus on Many Fronts
Plus oversight in:
Energy savings
Refrigerant management
Sustainability
Workforce management
Wages
Health and welfare benefits
OSHA regulation
And more . . .
Profit: “Fresh” Remains at the Forefront, and Growing in Importance
Fresh food sales are increasing,
along with consumer buzz and interest
in eating and living well. In the U.S., 99% of
grocery shoppers buy fresh products, and
fresh perimeter aisles have become places
where grocers establish their identities.
Whether it’s sophisticated restaurant-style
foodservice offerings in deli or a wide variety
of fresh produce, retailers can use fresh to
win consumers within an increasingly
crowded retail market.
— AC Nielsen report“Supermarkets and the food retail industry have put renewed focused on
perishables departments . . . as consumers seek out food that is fresh,
healthy and minimally processed . . . products with attributes that
consumers are seeking, such as organic, natural, local and better-for-you.
Our customers are looking for more convenience but also want quality.”
-- Supermarket News, May 2016
Solutions: Technology, Regulation, Opportunity Create Fresh Approaches
What do these connected solutions enable?
End-to-end food quality
Shrink reduction
Regulation compliance
Shelf life strategies
More robust supply
Predictive equipment alerts
The Surging C-Store
Market: Transforming
How America Shops
John Lofstock
Editor-in-Chief, Convenience Store Decisions
Session Overview
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• Convenience store industry facts and figures
– Store count up
– In-store sales surge nearly 6% (thanks, CVS!)
– Fuel sales dollars dropped 27.7%, driven by the drop in oil prices
– While fuel prices were down, margins are strong
• Focus on foodservice
– Foodservice drove in-store traffic
• Employer of choice
– Salaries well above minimum wage; excellent training
– Advancement opportunities (ESOPs like Wawa, KT, Huck’s) give employees an ownership stake
State of the Industry
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• The industry is strong and growing. Store count up 1% to 154,195 in 2015 and 30,000 stores since 2001 (better stores, grumblings of market oversaturation)
• In-store dollar sales increased 5.8% in 2015 to $225.8 billion
• Pretax profit increased 1.6% to $10.6 billion
State of the Industry
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• Disparity between the haves and have-nots. Top quartile chains outsell other chains by wide margin. Food a major contributing factor.
• Tobacco is not dead. Sales in 2015 were up slightly to 35.9% of total in-store sales.
State of the Industry
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• Packaged beverages crucial (15.1% of in-store sales)
• Design matters. Facilities emphasize convenience for all demographics (IE, drive-throughs, upscale restrooms)
• Underappreciated early adopter to retail technology (foodservice touch-screens that upsell, self-checkout, loyalty programs, mobile apps)
• Brand equity is paramount. Less big oil. It’s QuikTrip, Wawa, Sheetz, RaceTrac, and customers are accepting.
Foodservice
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• Foodservice accounted for 20.8% of total in-store sales and 33.7% of gross profit dollars
• Cultivating a new generation of consumers who are growing up on c-store meals
• Study what time-pressed customers want and act quickly on trends and LTOs
• Hunted has become the hunter. QSRs mimicking c-store pricing.
Fueling Cars and Stomachs
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• No one thing has done more for the c-store industry than the demand for foodservice
• No longer a punchline. Sales at top quartile chains for foodservice much higher than bottom quartile.
• Coffee boom — Starbucks effect
• Impact of Whole Foods and Wegmans. C-stores don’t want to copy other c-stores; they want to be Wegmans
The Fuel Factor
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• The industry’s wild card continues to be location and consumer needs. If you have a car, you need a c-store. If you smoke, you need a c-store.
• Convert fuel customers to buy more stuff. Using technology to track customer movement to drive sales.
• Loyalty cards offer fuel discounts and reward repeat visits with free coffee, beverages, etc.
• Wages are increasing
• Employer of choice
• Training has consistently improved, allowing employees to take on new responsibilities
• Opportunities for advancement, familial industry
People Matter
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Tracking Customer Trends: What Do C-Store Consumers Want?
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• Wellness claims: products featuring a wellness claim are outpacing retail growth
• Menu transparency: nutritional information/product ingredients
• Click and collect: as e-commerce grows, watch for Whole Foods’ Instacart and Peapod to gain traction
• Mobile apps: mobile payments, QR codes and mobile coupons are all highly desirable with Millennials
Conclusion and Outlook
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• Industry will look to further the convenience proposition. Online ordering through mobile apps, drive-throughs, delivery, elegant in-store seating are now the rule, rather than the exception.
• Foodservice will continue to be king. Proprietary brand development and refinement are the new norm, with an emphasis on a quality dining experience at a good price.
• Loyalty programs will retain and attract customers. Fuel discounts and free coffee help sustain this popular trend.
• Employee migration to c-stores. Smaller teams where their input is valued and there is room for advancement is an appealing proposition.
Questions?
DISCLAIMER
Although all statements and information contained herein are believed to be accurate and reliable, they are presented without guarantee or warranty of any kind, expressed or
implied. Information provided herein does not relieve the user from the responsibility of carrying out its own tests and experiments, and the user assumes all risks and liability for
use of the information and results obtained. Statements or suggestions concerning the use of materials and processes are made without representation or warranty that any such
use is free of patent infringement and are not recommendations to infringe on any patents. The user should not assume that all toxicity data and safety measures are indicated
herein or that other measures may not be required.
Thank You!
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