It’s been a difficult few months for the US c-store sector. The devastation caused by Hurricane Katrina in September meant that even the industry’s biggest annual event, which every year attracts scores of retailers and suppliers from the UK, got off to a shaky start.
NACS 2005 was forced to shift dates and locations from New Orleans to Las Vegas in the wake of Katrina, but that didn’t keep the Brits away from what has become an annual expedition to see how things are done across the pond.
The ripple effect of Hurricane Katrina meant the US c-store industry has had a tough time in recent months, with the volatility in fuel prices putting increasing pressure on businesses. But NACS chairman
Bill Douglass kicked off this year’s event with a motivating opening speech. “We’re still standing,” he told thousands of NACS delegates. “And given what we’ve endured in the past few months, I’d bet my last dollar we’ll be standing for a good long while. Katrina magnified our issues and I believe has also left something positive in her wake - an awakening of how fragile our system can be when stressed.”
American and international visitors were treated to the usual mix of exhibition stands showcasing new products and educational sessions. The daily workshops were among the most popular features. Subjects such as loyalty marketing best practices, credit card fees, new techniques in surveillance and maximising category management efforts attracted large audiences.
Independent UK retailer Susie Hawkins was particularly impressed by the loyalty marketing workshop, which revealed the benefits of operating a system that uses key fobs to help retailers keep in touch with customers and their buying habits. “I’d love to do something like that in my stores because then you know who your customers are and you can target them more effectively,” she said.
BP UK director of retail Graham Sims and M&S Simply Foods general manager Jill Bruce were among the speakers at a session on adding world-class food to the convenience offer. Sims and Bruce talked about their unique partnership on BP Connect sites. Sims told delegates that an average BP Connect basket is $5, while a Connect M&S average basket is $9, proving that the partnership format is working.
“There’s a lot of cross-selling between the two offers,” said Sims. “It’s producing diverse baskets. This is something that’s the dream ticket in the UK.”
The sprawling exhibition halls showcased everything from new in-store services and products to technology and forecourt equipment. But some of the UK visitors were disappointed by the lack of true innovation. One retailer said: “I was surprised at how little innovation there was at the show. New products were mainly variations of those existing products.”
However, what was obvious was that food service in US convenience stores is an important part of the in-store mix. According to figures from NACS’s 2005 State of the Industry report, food made on site accounted for 11.9% of all in-store sales in 2004. Four out of five convenience stores offer food prepared on site, and total foodservice sales reached $15.7bn last year.
The British contingent had something to cheer about for the second year running as Henry Moran (pictured above) of Budgens Retail Management was named winner of the Global Scholarship Competition. Following in the footsteps of independent forecourt retailer Susie Hawkins, who won last year’s global contest, Henry fought off national competition winners from Australia and the USA with his presentation on community retailing.
Each of the contestants - three retailers and three suppliers - from around the world were posed the same question: what strategies or innovations can convenience operators employ to defend and grow their business? Henry’s presentation highlighted the importance of imbedding c-stores in the local community, and gave examples of stores that are fighting the might of the supermarkets
by taking this approach.
Henry was delighted to win the competition, which will take him back to NACS next year, and had been astounded by the feedback he’d received on his presentation. “People have been really surprised by the impact it can have,” he told C-Store. “The guy from Australia has even taken my presentation back to Australia with him.”
The UK’s supplier contestant - Lackhbir Kaur of Pepsico UK - was just pipped to the top prize in her category by Australian entrant Peter Simpson. Lackhbir impressed the judges with her presentation on opportunities for healthier snacking.
Facts and Figures:
There are more than 138,000 convenience stores in the US, and a strong 17.1% growth in revenue driven largely by higher gas prices in 2004 set record industry revenue of $394.7bn for last year.
The top 10 in-store categories accounted for more than 87% of all sales. Of the top 10, cigarettes, beer, other tobacco, salty snacks and edible grocery all gained in terms of percentage of overall sales.
Top 10 product categories in c-stores for 2004:
2. Packaged beverages
5. Other tobacco
7. Salty snacks
8. Fluid milk products
9. General merchandise
10. Edible grocery
Product news from the US:
Coca-Cola is expanding its family of cherry-flavoured soft drinks with a diet black cherry vanilla Coke and black cherry vanilla Coke in January 2006. Production of vanilla Coke and diet vanilla Coke is to be halted at the end of the year in the US, but may be available again in the future.
Continuing the cherry vanilla theme, Dr Pepper will also be launched in July next year in both standard and diet varieties.
Coca-Cola’s energy drinks portfolio is to be boosted by the launch of Advance by Powerade, Tab Energy, Vault and Vault Zero, Rockstar and Von Dutch, and a second Full Throttle flavour.
Jelly Belly confectionery brand showcased its new Sport Beans, which are formulated to fuel the body during exercise. The company hopes the brand will become available in the UK through its distributor Best Imports.
Pepsico was promoting its range of flavoured milk drinks called Quaker Milk Chillers. Made with 2% reduced-fat milk and fortified with calcium and essential vitamins, Milk Chillers come in three flavours - chocolate, strawberry and vanilla.