There was a time when the only “fresh” vegetable at the corner store was chopped onion to slather overdone hot dogs sweating on metal rollers. “Fruit” was an artificial flavour in a neon-coloured frozen drink, and “meat” was goo that came in a dispenser next to heat-lamp nachos.
While hotdogs and chips still have their place at convenience stores, shoppers can now find bananas next to the coffee pot and sushi in the sandwich case.
With two trends colliding–consumers’ need for convenience and their quest to eat healthier food–c-stores are making fresh, healthy fare a big part of their business strategies. The result? The corner store is being reinvented into a fresh-food store. As Bart Simpson might say “Ay, caramba!”
“Fresh food can actually become an incremental trip driver for c-stores. If you’re driving incremental footfall and incremental traffic, that’s a big win from a financial standpoint,” says Jason Dubroy, managing director of shopper marketing at DDB Canada, a Toronto ad agency.
He cites NPD’s 2009 Convenience Store Monitor that found fresh-prepared food buyers averaged 7.8 visits over a 30-day period versus 5.6 for all c-store shoppers.
Also, fresh-food buyers purchased 4.1 products versus 1.6 products by all c-store shoppers, and they spent $1.65 more per trip. “You can see why beyond the trend of fresh food, there’s a fundamental economic reason for c-stores to get into the mix,” Dubroy says.
Two industry giants, 7-11 and Alimentation Couche-Tard, which operates Mac’s and Couche-Tard stores in Canada and Circle K in the U.S., are focusing on healthier food. 7-11 now carries fresh fruit cups, cut vegetables, sushi and Greek yogurt, along with a line of sandwiches under 400 calories.
Alimentation Couche-Tard, meanwhile, has added freshly made sandwiches, yogurt, healthy juices and fresh fruit to all its stores in the U.S. and Canada.
Last year, the Laval, Que.-based chain hired away 7-11’s senior director of fresh foods, Joseph Chiovera, to bolster the category. Fresh food now accounts for about 18 per cent of Couche-Tard’s gross margins and it aims to raise that to 25 per cent.
Couche-Tard’s fresh strategy is already clicking. Same-store sales at Couche-Tard and Mac’s stores in Canada grew 5.4 per cent in its fourth quarter, reversing a 2.1 per cent decline in the same period last year.
The company attributed the growth to “targeted promotions and continuous improvement” of its fresh food offerings.
Regional player Chevron Canada has also beefed up its healthier options.
In B.C., 82 Bread Garden Express spots–a fresh-delivered concept within Chevron Town Pantry locations–oven fresh-delivered sandwiches, muffins, wraps and yogurt. Select locations now also sell fruit and sushi.
Chevron entered the fresh-delivered market 15 years ago, but “has really grown and adapted to changing consumer tastes,” says spokesperson Deirdre Reid. “We’ve evolved from a few selections to a much more expanded offering.”
The foray into fresh is not without challenges. After decades of living off pop, chips and cigarettes, c-stores have earned a poor reputation.
“People perceive that the convenience channel does not have a lot to offer in terms of healthy food,” says Kelly McGuire, VP of operations in Western Canada for Couche-Tard. “We’re hoping we can help convince consumers that [the sector] is trying to evolve and offer more healthy alternatives. I think it’s going to be a slow journey.”
Another hurdle is perishability. C-stores have less traffic than grocery stores, so fresh items aren’t exactly flying off shelves.
Mac’s ran into this issue when it launched a pilot program in February. Fifty-seven B.C. locations now offer three grab-and-go entrees identified with the Heart and Stroke Foundation’s Health Check logo.
The entrees, made by Richmond, B.C.-based Mava foods, are merchandised in the sandwich case, alongside fresh fruit and sandwiches.
The idea is to “attract new customers; more women and white-collar workers,” says McGuire. But results have been slow.
“One thing ‘healthy’ means is no preservatives or less preservatives, so the product does not have a long shelf life.” And because of less traffic, “the biggest challenge we’ve had is on the spoilage side. at has hampered some of the results.”
Since people head to c-stores for an immediate need–usually gas, thirst or hunger–the challenge is getting people to think about fresh options when they go into the store, says DDB’s Dubroy.
Merchandising becomes ultimately important. “People will buy fresh if you make it convenient for them and it has to be über-convenient,” he says.
At Mac’s, for example, bananas are displayed on a rack that hangs off the refrigerated case housing fresh sandwiches and fruit.
But they’re also on display in the coffee area, so “rather than grabbing a pastry filled with preservatives” customers might be incented to have a banana with their coffee instead, says McGuire.
The right merchandising equipment also plays a big part, says Jeff Lenard, VP of industry advocacy for the National Association of Convenience Stores, in Alexandria, Va.
“With a lot of the healthier options it’s a matter of perhaps looking at open-air coolers instead of the more traditional coolers that have doors,” he says. “That allows the product to be more readily seen. For a lot of people, opening a door isn’t convenient.”
Dubroy says pump signage, clings and direct mail couponing are also effective parts of the overall marketing mix. And while c-stores typically don’t rely on mass-market advertising, “some are turning to larger-scale TV, radio, print and social media” to change consumers’ perceptions.
The shift won’t happen overnight. But if the move to fresh keeps pace, shoppers will make c-stores a destination for a healthy take-out meal. “It’s going to be small victories that change perceptions over time,” says Lenard.