2021 is turning out to be an opportunistic year in the c-store channel.
Consumers have been forming new habits as they slowly return to the workplace, giving retailers a once-in-a-lifetime chance to win loyal customers for years to come.
To take advantage, c-store retailers need to find ways to influence behavior. And using a data-driven loyalty program to send targeted promotions and discounts is one of the best ways to do that.
So we’ve rounded up a list of four products that are driving customer loyalty for c-stores right now. Let’s get started.
1. Energy drinks
Image source: Jorge Franganillo via Unsplash
Energy drinks remain the top-selling beverage category in c-store, posting $9.2 billion in sales in 2020. And with sales rising 6% and units up 5%, it’s one of the few categories to see growth in both areas.
As Laura-Lynn Freck, director of shopper insights at Red Bull North America explains, “We hear from consumers that they’re increasing their purchases and consumption of energy drinks in order to meet the new work and life demands.”
In addition to rising demand, energy drinks are one of those products uniquely ingrained into daily routines, with many consumers habitually stopping at the same store, at the same time, to grab the same pick-me-up — making energy drinks highly valuable from a loyalty perspective.
How can I use energy drinks to drive loyalty?
Use your data to learn about your customers.
On our podcast How Convenient, Melissa Jordan, VP of Client Success at Koupon, explains that energy drinks have a highly variable audience, with different consumer groups (like athletes, students, gamers, professionals, and partiers to name a few) using them for different reasons.
“Knowing how each consumer group interacts with their options in the store is key,” Jordan says. “The athlete may be interested in trying something new only if it means that they have healthier alternatives available.
“The gamer, while enjoying a consistent flavor, may be willing to try a new one if they're presented with one and the professional may have found what they like and they want to stick to it.
“Knowing your customers is going to allow you to fill your store with the selection that works for your customer base,” Jordan wraps up. “So use your data wisely.”
Use promotions to establish and maintain loyalty.
Jordan recommends promoting an enticing energy offer on your digital channels and tying it to a loyalty program sign up. “Energy drinks are a huge trip driver,” Jordan says. “The redemption rates on these products are absolutely crazy.”
Once you get people enrolled, then you can send carefully targeted offers, pairing energy drinks with other popular products. According to our data, the top non-restricted categories to pair with energy drinks are snacks, beverages, and candy.
And depending on the time of day that your consumers are visiting, you can send an offer to match the time slot. Across our panel, for example, energy consumers tend to purchase between 4:00 and 10:00 AM, a good time to pair an energy drink with a popular breakfast item for example.
2. Foodservice items — particularly breakfast
Image credit: NACS
Foodservice is crucial for the convenience industry, driving a higher gross margin than any other category. It’s also critical to customer loyalty, often influencing store choice. That’s why foodservice remains a top priority, as you can see above, despite being hit hard by the pandemic early on.
In the spring of last year, for example, the majority of c-stores pulled self-serve items like roller grill hot dogs and soup stations from the floor in the name of safety. And shoppers ditched their morning breakfast stop in droves as working from home became the norm.
But many c-store operators successfully pivoted to take-home meal solutions, posting double-digit growth in the ready-to-eat category from April through November 2020. 7-Eleven, for example, began offering many of its popular foodservice items like pizza, chicken tenders, and taquitos, in ready-to-bake form.
Now, as people return to work and habits change again, it’s time for another round of innovation in foodservice — this time around the coveted morning daypart.
As our CEO Brad Van Otterloo discusses on How Convenient, “Habits are formed over a long period of time and once you break them, they’re gone. So it’s not as if when people start going back to the office, they’re automatically going to be stopping where they did before to get their breakfast items.”
“Which means there’s a gigantic opportunity,” he continues. “A whole segment of these shoppers that are going back to work will be up for grabs. So convenience stores, we have a chance to win them — all.”
How can I use foodservice to drive loyalty?
Koupon’s CEO Van Otterloo recommends promoting the convenience of getting breakfast at your location along with affordability, two factors expected to be paramount as people emerge from the pandemic.
For example, you can offer promotional pricing for new shoppers tied to a loyalty sign up:
- Free breakfast burrito and coffee for a week when you join our loyalty program! Click here to sign up!
- Customer’s choice $1 breakfast combos all week when you join our loyalty program! Click here to sign up.
And then offer discounts for repeat purchases to establish habits and maintain loyalty:
- Every 5th coffee purchase is on the house! Buy 4, get the 5th FREE!
- Buy any two breakfast sandwiches Monday - Thursday, get a free donut on Friday!
When structuring your offers, you can use your data to determine which products are most popular in your area. For example, our data shows that burritos are most popular in the west, capturing 30% of units sold, with biscuits at just 5%. However, in the southeast, biscuits account for 25% of units sold and burritos account for less than 10%.
You can also use your data to target past loyal customers who might be changing routines in the coming months. Customers who visited on at least a weekly basis in 2019, primarily in the morning, actually grew trips in 2020. But instead of visiting in the morning, they shifted to the 12-6 pm daypart. So you can send targeted offers to this group, enticing them back in the morning.
3. Alcohol and tobacco
Image credit: Anheuser-Busch
Alcohol and tobacco led c-store sales by a landslide in 2020. And while these categories are typically strong performers, they’re especially crushing it right now. Here’s why:
First, with bars and restaurants closed, people increased alcohol consumption at home, turning to neighborhood c-stores to re-stock as needed. Cigarette consumption also increased, as those working from home were free to smoke anytime they wanted.
Second, innovation has exploded in both categories, further driving interest and consumption. Hard seltzer sales, for example, are up 146% in the convenience channel on a sales per store basis as new brands and flavors emerge seemingly every day. And the ready-to-drink category as a whole is up 73%.
As for tobacco, the overall category has long been a primary profit driver for convenience stores, but for years there was limited innovation. Then along came electronic nicotine delivery systems (ENDS) such as e-cigarettes and vaping devices. And most recently, the modern oral nicotine pouch.
Innovation is likely to continue in these categories, with Van Otterloo expecting changes in the next five years to be infinitely greater than the last 25.
How can I use alcohol and tobacco to drive loyalty?
Like energy drinks and morning routines, alcohol and tobacco purchases are typically habitual in nature. So you can easily use promotions to encourage repeat purchases and drive loyalty.
If you’re thinking you can’t promote alcohol and tobacco since they’re restricted products, we have just the solution — Verify With Koupon. It’s a platform that authenticates a shopper’s age so brands and retailers can safely deliver promotions for restricted products.
Verify With Koupon (VWK) is a one-time process that takes less than two minutes and seamlessly integrates into all digital channels. Plus, you can leverage loyalty data to further target customers based on a variety of attributes, including purchase history.
For example, you can send promotions for vaping products only to adults who have purchased cigarettes in the past. Or promotions for hard seltzer only to adult customers who have purchased alcohol in the past. It’s a win-win.
4. Better-for-you products
Image credit: Sheetz
According to NACS, 75% of consumers who purchase meals at gas stations at least once a month said they seek healthier options than they used to. And while foodservice is the category most likely to be disrupted by the better-for-you trend, it’s infiltrating everything from candy to beverages to beef jerky.
Many c-stores have taken note, adding more diverse food options and emphasizing quality over quantity. Some recent examples include:
- Rich’s Foodservice, based in Buffalo, N.Y., rolled out clean label, plant-based pizzas made with cauliflower crust.
- Sheetz became the first c-store in the U.S. to offer the Beyond Burger.
- 7-Eleven added several new varieties of sustainably sourced “farm-to-cup” coffees.
- Rutters began using cage-free eggs in their breakfast sandwiches.
- Wawa added Beyond Meat breakfast sausage to its menu, available in the grab-and-go breakfast Sizzli or added to breakfast bowls, bagel sandwiches, and breakfast burritos using touchscreen or mobile ordering.
How can I use better-for-you products to drive loyalty?
First, you should take a look at your product inventory. What items do you currently offer, whether in foodservice or on the shelf, that could be categorized as ‘better-for-you’? Are there products or menu items that you can easily add to bolster your selection?
Julia Taylor, c-store segment leader at Cargill Foodservice, says that consumers are especially interested in healthy breakfast alternatives. “Consumers state that their food choices for breakfast help set the tone for their day. A healthy and satisfying breakfast gets them off on the right foot.”
And when it comes to breakfast items, there’s a lot of room for creativity. Healthy options can include everything from plant-based breakfast sandwiches to more common items like yogurt, hard boil eggs, and granola bars.
With the latter, all you need is a little messaging. Jeff Lenard, vice president, strategic industry initiatives at NACS agrees, saying that simple messaging around packaged items — such as identifying granola bars as breakfast bars — can go a long way. He also notes that, “By increasing offerings of fresh, healthy and portable breakfast options, convenience stores can position themselves as industry leaders as U.S. food culture continues to shift.”
Once you’ve identified your better-for-you products, you need to build awareness. Customers need to know what you have to offer — especially as they form new habits and search for retailers with the selection of products they’re looking for.
You can run promotions on digital channels such as SMS, email, and social media featuring your lineup of healthy options, offering promotional pricing tied to loyalty sign ups and discounts to drive repeat purchases.
Running a c-store? See how Koupon helps c-stores grow
Consumer behavior is evolving, challenging retailers to grow and adapt. At Koupon, we provide the technology you need to reach shoppers, create data-informed strategies, and drive loyalty.
And no matter where you are in your digital transformation for your c-store, we have the solutions you need to grow. We can help you:
- Collaborate with CPG brands to drive loyalty: Attract incremental promotion dollars, funded entirely by leading CPG brands. You can launch these promotions across your own channels and grow sales.
- Drive shopper engagement: Reach new shoppers beyond your current loyal base and gain a greater share of wallet from existing customers. Digital promotions help increase basket size and drive store trips.
- Simplify promotion execution: Don’t stress over the details. Our team takes care of it all, from offer set up to post-campaign analysis, and everything in between.
- Make data-driven decisions: Evaluate consumer patterns across products, stores, and channels. We’ll help you use these insights to benchmark, adjust and launch strategic data-driven campaigns.
Our solutions grow with you. So whether you’re just getting started or fully accelerating, we can help. Get in touch to learn more!