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A Convenient Truth

The convenience & petroleum channel is one of the fastest-growing channels in the nation. As more and more suppliers get squeezed in grocery, convenience is being seen as the new knight in shining armour. But what does it take to get on the white horse?

More than anything, an understanding of horses for courses, so to speak. With more than 4000 outlets in the total petroleum and convenience channel, it looks like one big, shiny, golden egg. But it’s important to understand that the convenience channel has segments, and different shoppers shop the different types of stores – differently.

Anyone who has read the 2007 Australasian Association of Convenience Stores report would note that there is now a shift in how the industry is talking about itself. Once upon a time, stores were split into ‘Tier 1, 2 or 3’ based on footprint and other factors. Now the industry is categorizing its stores more in terms of their function: Dual (petrol station plus large mini-mart), Petrol only (petrol station with small shop attached, stocking only the basics) and Convenience only (no petrol).

How each type is shopped varies. In general, observations from the school of the bleeding obvious apply: shoppers in Dual format may be there for auto or for non-auto reasons, petrol only shoppers are there for petrol (duh) and convenience store shoppers are there for quick-fix food, beverage and emergency household items. Not rocket science – but what it does mean is that often your category will not be appropriate for the whole P&C channel, it may only be appropriate for one segment. So 4000 stores may turn into 1400, for example, for your particular window of opportunity.

We have also found that there are variations in the age and gender of shoppers in each of the segments, along with variations in how shoppers move around each kind of store. For example, if your product is in the fridge in a petrol only store, you will have to work pretty hard to get people out of the petrol queue to even shop that part of the store. And doing that needs to be your POP focus, because the vast majority of shoppers there won’t even make it past the first four feet of the store. Understanding channel segment dynamics affect every decision you make about how to execute in store.

Often suppliers don’t necessarily make the adjustments that are required to enter the channel successfully, and try to repeat what they have done in grocery. This can have a disappointing outcome – the goose fails to lay the golden egg.

So what does it take to capitalize on the growth of the convenience channel?

Here is a checklist of thought-starters:

• Are your competitors there? If so, what with, and how are they executing?
• What are the shopper occasions for your category or product?
• Can they be found in the convenience channel?
• If so, do those occasions apply to the whole channel or to specific segments?
• How many stores / $ in the relevant segments, and what percentage penetration do you think you can realistically get – what is the size of the prize?
• Who is shopping the segments, and how (what are their key drivers and behaviour)? How can you appeal to this?
• What kind of category are you? Could you be an impulse purchase (like CDs and DVDs in petrol stations are)?
• What does your brand, pack, format look like? Is it appropriate for the channel, knowing that the majority of convenience shoppers are male and buying single serve formats?
• What would be the most effective Route to Market strategy? Sometimes suppliers rely wholly on distributors without having a strategy for key account management – chains like 7ELEVEN make their decisions at head office.

These are starter questions – there are many more that need to be answered in developing an effective entry strategy for the P&C channel.

It definitely IS possible to get on that white horse if your strategy is well informed and thought out – otherwise it’s more likely to be ‘the horse you rode in on’.

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