While American convenience stores have long been associated with the "cokes and smokes" tag, many are now innovating to thrive in a competitive market place.  On my recent trip to Washington and Atlanta, it was clear that new products and formats are being developed to meet new consumer needs.

Retailers Visited BP Connect Esso On The Run Millers Neighbourhood Market Quik Trip Race Trak Sheetz Wawa 7-Eleven

Innovating in core categories
 

While soft drinks, foodservice and tobacco are well established categories within US convenience stores, innovation continues to play a key role in their development.  Many stores are now developing their propositions within these categories with the introduction of new ranges and flavours of beverages, new products such as fruit smoothies and frozen yoghurt drinks, while the wide and diverse range of coffees on offer is increasingly being supplemented with speciality teas including chai and green varieties. While food-to-go has been an integral part of the US convenience store offer, with hot dogs and chicken wings being key staples, this category is also being affected by similar trends, with a particular focus on healthier ranges.  New ranges seen across the stores on my visits include made-to-order hot wraps, fresh soups and oatmeal breakfast drinks.
 

Growing fresh food offering for women and teens

On The Run convenience store

One of the key reasons why the offer is evolving is due to the changing profile of the average convenience store customer in the US, with more women and teenagers visiting stores more often. These key groups are much more interested in their health and well-being, leading operators to reduce their reliance on sugary drinks, high-fat foods and cigarettes.

Indeed this has been one of the key drivers behind the increased interest shoppers are showing in fresh foods. Traditionally fresh food has formed a limited part of the offer within US convenience stores. However in response to shopper demand, many operators have started to introduce UK-style chilled offers including sandwiches, salads and fruit portions, many of which are prepared in-store. Many US operators are now looking to the UK and Ireland for inspiration and to gain a better understanding of the key elements of delivering a successful chilled offer.

Top 10 Convenience Store Product Categories (by sales) Cigarettes Packaged Beverages (non-alcoholic) Beer Foodservice Other Tobacco Candy Salty Snacks General Merchandise Fluid Milk Products Packaged Sweet Snacks Source: NACS

Touch-screen ordering and pay at pump

Over half of US convenience stores how have scanning in place, 80% of forecourt stores feature ‘pay at pump’ technology and kiosk ordering points are becoming more commonplace. Given the range of foodservice options that are available and the degree to which meals can be tailored, touch-screen ordering systems have become an essential part of the offer, improving the speed of service, and also appealing to younger shoppers.

During this latest visit, various operators spoke about the role of new emerging technologies including flat panel television screens, TV at the pump and, over the longer term, combined mobile phone and GPS integrated marketing solutions that will guide shoppers to specific convenience stores based on their stated preferences.
 

US attracting global operators?

While it appears that the US convenience store sector is continuing to adapt its offer in line with consumer trends, it is clear that a number of significant challenges lie ahead. Industry consolidation is likely to continue, with the larger chains increasing the scope and reach of their networks, although given the weakness of the dollar, the US market is becoming increasingly attractive for global operators who are seeking to establish a presence in the US given the relative affordability of the assets.

Over 500 store images and layout plans are available from this trip on IGD's Retail Analysis

However, as the credit crunch continues to take effect and with fuel prices increasing, operators will need to demonstrate value for money, particularly if they are to maintain customer loyalty.  While a number of retailers use low fuel and tobacco prices as a key point of difference, as this becomes a  strategy for an increasing number of operators going forward, store formats and offers will be critical in building that essential level of differentiation.

More information:

Global convenience Retailing - Maximising The Opportunity IGD's report highlights trading opportunities of key international convenience retail markets, and includes case studies of key convenience retailers & looks at how the international convenience channel will evolve.

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Stewart Samuel is a Senior Business Analyst at IGD. He is responsible for UK research, publications, training and conferences and the publication and presentation of strategic analysis. In addition to being the lead author of 'UK Convenience Outlook', he is co-author of IGD's 'UK Grocery Retail Outlook'.