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Grocers, Other Alternate Channels Pinching C-stores at the Pump: Study

July 3, 2008

Alternative gasoline retailers, including supercenters, supermarkets, and warehouse clubs, are chipping away at the convenience store industry's gasoline shopper base, according to new data from Columbus, Ohio-based consultancy and market research firm TNS Retail Forward.

Recent TNS Retail Forward ShopperScape survey results indicate that one-third of shoppers are buying most of their gasoline at alternative outlets, up from 22 percent just three years ago.

"Fewer shoppers filling their tanks at convenience stores mean fewer shoppers filling their stomachs with higher-margin goods inside the store," noted Jennifer Halterman, senior consultant with TNS Retail Forward. "Sky-rocketing gasoline prices also leave little change in shoppers' pockets for in-store purchases."

Alternative gasoline retailers now capture an estimated 13 percent of U.S. gasoline sales, according to TNS Retail Forward, which projects that this figure will grow to 16 percent to 17 percent by 2012.

"Continued high gasoline prices are making alternative players' cents-off promotions very attractive," Halterman said. "As a result, we expect more shoppers to take advantage of the increasing number of fuel-reward programs. Aggressive fuel-reward programs combined with the convenience of one-stop shopping makes it no surprise that more shoppers are filling up at these alternative outlets."

Still, TNS Retail Forward shared advice for alternative gasoline retailers, as they continue to explore ways to offset hefty fuel discounts and a low-margin business. "Campaigns that tie fuel rewards to high-margin purchases such as private brands, non-grocery general merchandise items or in-store services will be critical going forward," Halterman said.

Likewise, convenience stores must reduce reliance on gasoline and focus efforts inside their stores, the firm suggested. "Convenience will remain key. However, adding destination appeal with unique product offerings, innovative marketing, and new service offers will help drive traffic, retain shoppers and increase profitability," Halterman said.


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