How Convenient, Episode 16: Industry in Review, Convenience Retail and CPG Brands Post-Pandemic

March 2021 marks a full calendar year since the government shut down retailers across the nation due to COVID-19. These Shutdowns prompted a major transformation within the industry as well as significant changes in consumer behavior. Stores and consumer brands were quick to adapt. 
Koupon's CEO Brad Van Otterloo is back with Greg Crow for this week's episode of How Convenient to answer the million-dollar question: When can we expect the convenience industry to return to 2019 trip and sales levels?
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Greg Crow: In this episode, we highlight where small and medium size C-store chains are outperforming their larger cousins. Welcome to How Convenient, new podcast about the essential role convenience stores play in the busy lives of consumers. Our hope is to equip innovative C-store leaders as they seek to earn lasting shopper loyalty. In each weekly episode, we'll briefly share an update on C-store sales trends and what we're learning from billions of in-store purchase transactions. Today's episode was recorded on March 26, 2021. I'm Greg Crow with Koupon today we have Brad Van Otterloo, Koupon CEO.

So, Brad, I went back and looked and it's been two whole months since we co-hosted together. You and Allison did a great job talking about engaging consumers and loyalty programs, and I've enjoyed learning from others on a variety of topics from hard seltzers to energy drinks, to innovations and promotions. So, what have you been thinking about recently?

Brad Van Otterloo: First of all, Greg, I cannot believe it's been two months since we've been able to share the stage together, but I've been listening obviously to every episode and they are only getting better every single time. And I think we can officially call ourselves, or at least you can call yourself, a podcaster now so congratulations on that. This episode is actually perfectly timed as the dominating topic that I've been thinking about is what's next? Now that we are beginning to see the light at the end of the tunnel of this pandemic, things are going to, I believe, continue to be changing at an incredibly high rate. As has been said during the pandemic, what was is not what will be, and therefore it's going to be a very high rate of change at least through this year and most likely the next few, which is going to lead to some really exciting opportunities for everyone.

Greg Crow: A question for you, let's state this on a percentage basis. So, let's go back to January of 2020, that was a hundred percent. So, what's the level of kind of engagement getting out of the house that you're seeing amongst your community of friends today versus January of 2020?

Brad Van Otterloo: Well said. I will say that in the state of Texas, I think we are pushing at a very high rate of getting back out there and I would say we're probably in the 85 to 90% camp among my friends and family. How much you?

Greg Crow: I live a little bit outside of the city, we didn't lock down in the same way that so many folks did. It's just exciting to hear our friends more confident to get out. And I think that's good for all of us in terms of our emotional health, but it's good for our clients and their business. So as always, we'd love your feedback, we'll let you know how you can share that with us in a few minutes.

The flash this week, this is the week ending March the 14th. In store sales are up 2% versus year ago, alcohol up 11%, candy 2%, tobacco and beverages up 1%, snacks were flat and food -2%. In terms of overall in-store sales, that's really the best that we've seen for some time. Certainly in-store trips are down to -9%. Again, that's the best number that we've seen since the crisis started. Basket is up 14%.

Hot products this week include Modelo Especial 12 pack up 21% versus 2020. So, the Mexican style beers are still on fire Brad. 12 months in, as you said, and the sales and trips are continuing to improve in our panel. We are at the week ending March the 14th. And so, it was March the 13th of last year that the white house announced new policies around COVID and for many retailers, that was the week when everything really changed, although it depended a bit on where you were located. And so, for that reason, we're now getting to a place where we have easier comparisons as we think about year over year. And so, we're going to begin to transition some of our metrics to be more focused on week over week, because what's really important now is not that we are doing better than things were in a pandemic, but that we are improving on a week over week basis.

So, on that measure, sales per store grew 7% versus last week, which is incredible and trips for store grew 4%. And both of these represent the best that we've seen in terms of recovery over the last 12 months, so that's exciting.

So, Brad, I think that spring has sprung and I'm now seeing a new sense of hope that we talked about amongst my friends as you are. And so as of this recording, a significant number of older or at-risk adults are fully vaccinated. One in six is the number the CDC published recently. So, I'm going to put you on the spot as usual, how quickly do you expect to see us return to those 2019 levels that we're all looking for?

Brad Van Otterloo: Yeah, Greg, this is one of those million-dollar questions that you'd like to ask. And then, so right before we started this podcast, I looked up some stats and that's really hard to believe that we in just a few months, we've delivered over 133 million vaccination shots, 47 million have received all of the required shots, which means 14% of the US population is vaccinated. While it's clear that it's nearly impossible or impossible to get everything right the first time you're doing something at this scale, as this pandemic has done, I am very much in awe of how quickly we have gotten to this point. And we're at a place now where it's over 2.5 million doses every day that we're giving out so we're going to get to a place very quickly where this pandemic is under control and I'm a natural optimist, so I believe by this summer we're going to be able to be much more active much more comparable to 2019.

Now this leads to the quote that you hear, no matter what you're reading or what you're listening to, about the “new normal.” So, what day-to-day lives is going to look like starting in the summer and then through the rest of the year, and there is absolutely no way to tell what that's going to be. And as already mentioned a little bit, I do know that it is going to be a very exciting time of learning and seeing what new habits and trends form in the daily lives of Americans.

And I do believe that traffic patterns will return. Maybe not quite to the same levels, but the trend will be the same. And I know as we already talked about a little bit, when I'm getting on the road right now, I'm seeing it. Traffic is really building up and we are getting back to having traffic jams and things of that sort. And retailers and brands are going to have this incredible opportunity to reengage with consumers who have been very difficult to reach over the last year. And I do expect to see promotions and loyalty, being a very prominent feature for both the retailers and the brands as we continue through this year.

Greg Crow: It's interesting that you are the optimist, as you said, I tend to be more, let's say diplomatically measured, not cynical, but measured. And I'm super excited and also bullish. I do think we're going to see sustains trips numbers that will be at that 2019 watermark soon. I think you've got a lot more folks that are employed at this stage, you've got folks that are eager, they’ve been in cabin fever mode for the last year. They're eager to get out and go see the country, and I think that's going to be good for our retailers. And so, I'm excited about where things are going and then we've got stimulus funds coming as well. So, there's a lot of things that potentially are going to be [inaudible 07:32], push our retailers. So, we look forward to seeing how that plays out this year.

Brad in our last episode, you've listened to it, of course, but our last episode, we were joined by Jacob Jonas from NRS and we talked about how independent retailers have been winning during the last year in alcohol. And so, we talked about Modelo earlier as a hot product this week in our C-store panel and we segmented our retailer panel according to chain size. So, his discussion really got us thinking and we had some interesting findings. And so, we looked at chains that are large, medium and small over the last year to just identify some differences in how they experienced 2020. And so, we saw smaller chains were, on average, about three weeks behind the larger chains in experiencing a drop in trips. And some of that was due to just local conditions, obviously the larger retailers are exposed to a larger proportion of what's going on in the overall country. Large retailers on the other hand were the first to benefit from sales per store increases to beginning in late April and dipping then in the late summer months, while medium size retailers grew sales per store at a lower rate, but they sustained that increase throughout the year.

And for the year, the large chains had the largest average basket. So, it's crazy two years ago, we would have been talking about C-store baskets at $6.00 and today it is $10.88 for our large chains. Medium chains were at $8.89 and small chains actually were at $9.59. Again, larger than medium chains. And so, when you dig into this deeper from a category standpoint, there are obviously differences depending on where the chain is located and what their strategy is from a category and consumer branding perspective, but the larger chains performed better in tobacco than the other groups and smaller chains perform the best in alcohol on a per store basis, which is interesting that mirrors what Jacob told us. And both of those tend to drive higher dollar baskets.

And so that explains a little bit of what we talked about, but interestingly, medium-sized chains more effective than large or small chains in winning in food. And I know that food is really critical to all of our retailers in establishing some differentiation and also driving higher gross margin but obviously food tends to be smaller rings and a number of our clients were running heavy promotions in food this year.

Brad, we know that economy at scale brings advantages to the larger chains, but as we've seen over the last year, even the smaller chains have been rolling out innovative technology to engage consumers and enabling them to really reach of above their way class, so how can small retailers really create consumer engagement today?

Brad Van Otterloo: All retailers, both big and small have innovated at a very rapid pace. They had been forced to innovate at a very rapid pace over the past year. Obviously, the larger chains, as you mentioned, have the advantages of the scale, whether it's in merchandising, loyalty, operations, et cetera, but smaller chains who often have those owners that are really hands on and have that close relationship with the consumer, which is all around natural loyalty, they've also had an advantage. Having those individual relationships with our customers has helped them a ton during this year of uncertainty to be able to have, again, that loyalty and relationship with the consumer gets them coming in over and over, which is what those larger chains have to figure out how to build through technology. But now technology is increasingly going to be able to enable those smaller retailers to continue with that. They continue having that deeper connection, not only when they come into the store, but also when they're not in the store and having other options to consider. And it's going to be able to help with loyalty. It's going to be able to help with brand-funded offers and brand-funded value into the store, and naturally smaller chains are more dependent on the local conditions. And so, this explains to some of what we're seeing in terms of those differences that you mentioned around alcohol versus tobacco and things of that sorts. But I do believe that what they're going to see as we are in this year or years of change, and technology becomes more accessible to them, that they're going to be able to take quite a bit of advantage of.

Grew Crow: I think it's so helpful to remember, we get so excited about technology at Koupon and as consumers, but it is so important to draw back to retail roots, which is at the end of the day, in the old days when you or I were kids, retailers knew their customers and understood what customers’ needs and preferences were and they could recommend products. And so, technology, I think can help large chains really go a long way towards meeting that same need, but I think smaller retailers, you're right, they do have an advantage there for sure.

So, we recently looked at brands that we've talked about in previous episodes and where they are today. So, in episode one, we talked about Body Armor. It continues to grow sales for store share, and now is the number 11 brand in the overall beverage category and then Gatorade Bolt 24 is growing faster from a much smaller base and is currently approaching the top 25.I think they'll continue to grow as they're getting more brand awareness and distribution.

In episode three, we covered candy. We highlighted Osho and Chocolate, which jumped 28 points in candy rankings in 2020 and in episode four, we talked about snacks and trends there and how jerky is winning with consumers along with gummies. And in snacks, Old Trapper, which we highlighted is taken the 10th place just behind Jack links and Slim Jim. And the jerky category in episode nine, we covered hard seltzers and White Claw is now the number 10 brands, not in seltzer, but in alcohol, which is incredible considering it was effectively an unknown thing a few years back. Shirley is number 14 and alcohol, and also growing in a toward pace. Mike's Hard is another strong brand and recently took the 15th position in our panel.

In episode two, we talked about modern oral. So, Zen in 2020, it became a top 20 brands, not in tobacco, but across all in store categories. So quite an accomplishment in 2019, they ranked number 40. And in the meantime, On and Vivo continue to capture a growing share of a growing category. It'll be fun to watch years to come how that goes. So, Brad, we have had a little bit of success in highlighting some brands that are winning with consumers. What's the one trends, if you had to just choose one that you see manufacturers or retailers focused on as we close out our first year with COVID?

Brad Van Otterloo: Yeah, for sure. And before I do that Greg, you are very quickly building this podcast into being the emerging brand show of record, which is fantastic because we are highlighting these brands that are doing very well and we're really seeing some of these trends early by looking through the data that we're receiving from our partners, which is fantastic. Now I'll say the number one topic that I see or trend from retailers and brands is really how to either reconnect or deepen their connection with consumers as we go through this next major shift in behavior. So, all of these habits that we used to have are gone, we now have all of these new that we've created during this pandemic and those are going to be broken again, which is highlighting opportunity and risk for these, our brands and for our retailers. So just like during COVID, there are going to be big winners and unfortunately losers.

And you can tell, well, were able to tell in terms of the conversations we're having with both, which ones are really thinking through this. COVID may have hit us as a surprise, no one really could have foreseen that was happening, but some people are looking at this and it will not be a surprise that these habits are going to change and the ones that are really focusing on that are going to be in the best position.

Greg Crow: Absolutely. You can never go wrong with trying to understand better consumer expectations and how best to deliver on the brand promise. That's it for today, Brad. In our next episode, we will continue our one-year review with the dive into restricted brand trends and 21 plus promotions. Anything you want to say as we close?

Brad Van Otterloo: I just want to say it's a pleasure being with a true podcaster Greg Crow so it was fun. And then also I'm still shocked at how this past year has both gone slower than ever and it has also sped by it's really crazy to think about. But thank you very much podcaster Greg.

Greg Crow: All right. Very good. Thank you for listening to How Convenient we do want to hear from you. You can reach us at Don't forget to subscribe and review us and you can find more insights at