The Grocery Buyer

May 5, 2020 in Retail



The Grocery Buyer

Our casual conversations with c-store operators indicate some tremendous changes taking place in the industry.  They reported that fuel sales (and fuel customers) are down 50% or more yet higher margins than normal have been offsetting. The in-store sales driven by fuel customers must be down accordingly.  Yet most in-store sales seem to be down only 20% and in some stores in-store sales are actually up.  Certain products, such as self-serve hot foods and soft drinks, have been shut down by law in some locales, so this must be cutting off another group of customers.  And while most stores sold out of the expected items, such as disinfectants, hand sanitizer, wipes, toilet paper, etc., they also experienced a whole range of stock outages on unusual items.

Clearly c-stores are getting a lot of new customers who are balancing out the big reduction in traditional fuel customers.  We decided to use analytics to make sense of all these changes.  Our first conclusion was:

Conclusion #1: C-stores have a new customer type: the Grocery Buyer or GB

Literally overnight, c-stores everywhere have gained an important new group of customers due to the coronavirus pandemic. We refer to such a customer as a “Grocery Buyer” or GB because they are now visiting your store to purchase items that they used to buy at a grocery store. GBs are apparently choosing to shop at c-stores because they are less crowded, more convenient and appear to reduce the potential exposure to Covid19.

We used StoreKeep to analyze data we classified into four buckets:  urban, highway, residential, and rural. We then focused on several NACS subcategories of traditional grocery purchases. StoreKeep immediately began to provide useful insights:

  • From the 30,000 foot view, we saw a clear upward trend in the sale of “grocery items” from month to month. This trend was so apparent, we decided to dig deeper and determine exactly what’s driving it. 
  • When we took a closer look at the NACS categories of edible and non-edible grocery items, by revenue or volume, both approaches gave us the same result: increased sales of grocery items and paper products were making the biggest impact. We also determined that the following subcategories were also key contributors: Condiments, Pet Care, and Cereal. Click Here to see the full size version.

Quick Tip:

While self-serve roller dogs have been discontinued at some locations because of county regulations, customers are now purchasing their condiments at c-stores. It would be a good idea to have prepackaged hotdogs 
and buns available.

Quick Tip:

While self-serve roller dogs have been discontinued at some locations because of county regulations, customers are now purchasing their condiments at c-stores. It would be a good idea to have prepackaged hotdogs 
and buns available.

  • Focusing on paper products; it was clear that local residents are now shopping at c-stores for their necessities including; paper towels, toilet paper and kleenex. This spurs the question: what else could be stocked that would fall in the basket of these customers? Are there other related items like personal care or household cleaning products these customers would buy if they were available and prominently placed with these items? 
  • A more thorough market basket analysis of these trends would probably identify some additional new kinds of buyers and produce numerous opportunities to cross sell, improve margins and maintain loyalty among these customer types. Click Here to see the full size version.
  • When we moved our focus to the edible grocery category, we were surprised to see that the leading product was Ramen Noodles followed by a number of canned and packaged prepared foods and soups – things that used to sell like snails. This trend was most prevalent on weekdays at urban and suburban stores. Are there other related items like microwave meals these customers would buy if they were available and placed in proximity to these items?

Conclusion #2: Grocery Buyers can be converted to permanent customers

The pandemic is already starting to lift.  Fuel sales are drifting upward.  How long will you be able to retain the GB’s?

What can you do to make them permanent?

  • The fear of unnecessary exposure to the virus won’t be going away soon, so you want to make your c-store an oasis of safety compared to the traditional grocery store.
  • Make sure employees wear masks and do all the right cleaning (they will want to do it right for their own sake)
  • But you need to do this work in a visible way, to give the GBs assurance you are clean.  Have signs where staff indicate when they last cleaned the bathrooms or the door handles, etc.  Have a guy offer to spray the handles of the shopping basket.  Make the GB aware that you have the virus under control in your store.  Don’t just be clean, give the impression of being clean.
  • Have in stock what they want to add to the basket.  Don’t disappoint them.  Track down all your unusual outages and treat them as opportunities.  If the GB discovers, much to their surprise, that you have a lot of what they need, they will keep coming back because you are convenient.
  • GB’s won’t come back if you overprice their products. Many of these new high volume items used to sit on the shelves. Now you need to shave your margins or you will drive the GBs back to the big grocery stores.