Shopper Culture

Dear Customer; Please come inside - Thanks Mgmt.

On my way home from skiing this weekend I stopped in a small town called Dillon to fill up on gas and this sign at the pump caught my attention.The hunter orange sign was offering a 5 cent discount to anyone willing to pay for gas with cash. Now, I don't usually carry cash and the convenience store ATM fee would have cost far more than the dicsount I could have recieved, so I ignored the offer and payed at the pump with my credit card. But it got me thinking about why they were pushing such a significant discount. Is it because convenience stores are trying to cut down on the transaction fees credit card companies charge, up to 7.6% according to NACS. Or is this some sort of an invitation to draw pump payers into the store? According to a 2006 convenience store case study done by Envirosell, 46% of those who purchase gas don't even enter the store. With a tightening economy and rising gas prices many consumers may opt to just pay at the pump and leave. When you are paying more attention to your wallet things like energy drinks, chips, pop and gum all seem like "luxury" items. And in a business where the sale of gas accounts for such a small precentage of their profit, convenience stores need a draw to get people back into the store. Are c-stores hoping for an impulse purchase of things consumers are less inclined to buy if they aren't within reach? In the current state of the economy we plan on seeing more taticts like this executed by c-stores.

Fresh & Easy - Las Vegas

When you think of Las Vegas, you think of bright lights, glitz, glamor and a bit of excess.  That was definitely not the case when I walked into my first Fresh & Easy store.  But I have to say it was quite re"fresh"ing and definitely easy to navigate! So I guess the store lived up to its name. Picking up on a post from September 2007 about some of the factors that will make this a success in the US, we offer some observations from this particular visit:

- Key differentiation strategies appear to be (in no particular order):  sustainability, freshness/healthy food, ease of shopping & everyday low pricing (no loyalty cards or coupons).  You definitely saw all of these delivered on, even before you entered the store (i.e. front row parking for hybrid cars and even golf carts.  Yes, golf carts. We were in Vegas after all!)

- Limited space and lots of private label (50% of their inventory), which will make large consumer packaged goods manufacturers a bit nervous.  Will other grocers follow suit?

- There was no POP or promotions; packaging is the primary marketing tool for any brands allowed in.

They are definitely capitalizing on a trend that  Iconoculture have identified - that of "grocery-getters" with whom one-stop shopping is the elusive holy grail. Shoppers are starting to scrimp more than splurge (less eating out) and are time starved.  Tesco's answer: pre-made meals at a great value. 

Shoppers are also becoming choice fatigued and want their choices edited. Tesco once again answers by only carrying private label and just the category brand leaders. (One of the success factors of Tesco's small format stores in the UK).

And lastly, people are not cooking as much but are more sophisticated about eating.  Tesco once again provides a solution by offering fresh, organic healthy options that are quick and easy.

After visiting 4 of the 5 stores, it was very apparent that EVERY store followed the exact same format and delivered a consistent message, not typically what you see from other grocery retailers.  And I have to say that the best part of the store visit was when one of the employees gave the "ladies" each a bouquet of flowers (for free!).  After all, they have a strict freshness policy and I guess these flowers were past their 3 day shelf life.  Regardless, it made my day!

- Contributed by Tina Cline

Kroger's Shop24 Vending Experiment

Recently in Columbus, OH the Kroger company installed a giant hybrid convenience store / vending machine next to its gas pumps.

Local TV station NBC-4 reported on it, saying:

When operational, the machines will provide everything from drinks to pain relievers. In all, more than 150 products will be available at the so-called automated convenience stores.

The machines will accept credit cards, coins and cash.

"Product falls into a soft basket. Basket goes into a delivery bin, drops it in and it comes out the front," said Tom Riske, an installer.

The concept is from a company called Shop24 which is based in Belgium and has installed similar machines throughout Europe. 

For a while now there has been tension between the grocery and c-store channels, with each creeping toward the other.  In this move Kroger is dipping its toe in more automation territory.  First, along with other grocery chains, they have given shoppers the self-checkout option.  Now they are looking at a store-without-a-store.  It will be interesting to see how this catches on.  I couldn't find any pictures of the one in Columbus but here's a picture from a similar Shop24 unit attached to a Shell station in Portugal.
One of the interesting things about this concept is how people use it.  It appears to follow a purchase pattern similar to that of a standard convenience store.  On their website Shop24 outlines the highest selling Europesn items and typical dayparts for each, along with shopper needs.  It shows the breadth of occastions for this type of retail channel.  It all raises a small but significant question:  What is this channel called?  Un-manned C-Store or SuperVending?  I imagine it will live under the Vending banner.  And although it can't compare to the vending jungle that is at play in Japan, it's a pretty interesting development for us stateside.