Given how challenging it is to get customers to venture past the gas pump and into c-stores, convenience retailers must ensure that once shoppers are in store, they’re purchasing as many items as possible. Yet, nearly 45% of c-store shoppers spend five minutes or less in stores, according to recent findings from GasBuddy. This is a problem—capitalizing on impulse purchases is one of the key tactics for how to increase basket size. And, the less time shoppers spend in a store, the less likely they are to succumb to the temptation of adding additional items on a whim, indicates a research by the University of Notre Dame.
To get customers to buy more, c-stores need to grab shoppers’ attention immediately using a combination of visual cues and relevant, hard-to-resist offers. C-store shoppers on average buy just 2.6 items per transaction and spend $6.52, according to a recent report by Koupon Media. Whether your stores fall above or below that, here are some tactics to increase average basket size in the world of convenience.
Promote Impulse Buys with Smart Layouts
One key to understanding how to increase basket size is store layout. To achieve an optimal planogram, you’ll need insight into how shoppers move through your store. You can make some general assumptions here, or you can employ tracking technology to really drill down.
The latest in-store tracking technology gathers data from next-generation cameras, mobile device sensors, point-of-sales data and more to provide a deeper understanding of shopper behavior. Some cameras can even give insights into which types of shoppers are doing what in your stores (for example, how men move through the space vs. women).
But, if you’re not ready to invest in in-store sensors that monitor traffic, you can operate knowing a few “due north” truths about c-store shopper behavior. For instance, we know that when shoppers initially venture in from the pump, it’s nearly always towards your store’s “destination zones,” read: the coolers and fresh food areas. But, despite their allure, these destination zones aren’t where your convenience store bread is buttered.
To that point, Ken Hagler, senior director of merchandising for Tri Star Energy’s Twice Daily c-stores, points to candy and salty snacks as the real driver for convenience store profitability. He explains that these treats are more than just impulse buys—they carry above-average margins. So, these are the products you’ll want to optimize as you contemplate how to increase basket size and maximize revenue.
Although candy and salty snacks don’t traditionally live in your destination zones, convenience retailers capitalize by strategically displaying them along the routes leading towards such as the coolers and fresh food areas. The other option is the place these products near the counter unit. That’s because, according to The Hershey Co., about 17% of a shopper’s total time in-store is spent at the checkout.
Whether you plan your store layout with the assistance of shopper analytics or not, understanding where shoppers linger and make their decisions can be a game-changer for store operators. Armed with such information, you can ensure neighboring zones complement one another, thus allowing you to capitalize on cross-selling opportunities. Also be mindful that familiar layouts mean customers can get in-and-out of stores quickly without taking much of a look around. For that reason, you’ll want to change things up periodically, prompting your regular shoppers to look at a wider range of merchandise in a new light.
According to Forbes, fuel accounts for only 38% of total profits at convenience stores. Where does bulk of revenue come from? Non-fuel, baseline and incremental purchases. In 2017, foodservice sales accounted for 22.5% of total in-store sales, yet contributed 33.9% to total gross profit. This datapoint alone demonstrates the value in guiding your customers towards higher-margin purchases when in-store. Having fresh foods isn’t enough—you’ve got to promote them effectively to get fuel shoppers through the door.
Traditionally, convenience retailers have relied on traditional, static signage to convey in-store specials. But today’s shopper, privy to a range of loyalty programs vying for his/her attention, demands more.
Fuel patrons, standing beside their car while filling up, are a uniquely captive audience. That said, you may have to distract them from their phones screens as the first step toward how to increase basket size. Convenience retailers are rising to the challenge by treating fuel customers to digital signage that can be customized by day, time, or even to reflect your inventory levels. To reach customers looking to get in-and-out quickly, bright, eye-catching signage is the way to go.
Convenience retailers know that BOGO and cross-promotions are the most effective tools for inspiring impulse buys. Digital signage allows you to take these promotions to the next level. A cup coffee and donut promotion cross-promotion will resonate at 8AM, not so by noon. A slice of pizza and can of coke special will get your late-night shoppers in-store and adding more items to their purchase. Use your digital signage to advertise your loyalty program and reap even more rewards.
Assortment Optimized for Health & Wellness
A recent study by North America NACs and Coca-Cola Retailing Research highlights the needs of today’s convenience shoppers. Their findings hint at how to increase basket size and optimize your assortment. The research identifies millennials and parents of young children as two key customer groups that patronize convenience stores. What do these two groups have in common? Both want an assortment of single-serve, portable foods and beverages that are easy to devour on the go. And, they want their consumables to be high-quality, fresh, and healthy.
Taken into consideration with Hagler’s statement on the importance of sweets and salty snacks, this finding has the power to take the average c-store basket size to new heights. Rather than just stocking M&Ms and Monster Energy, why not add Sahale Snacks and organic Kombucha to the mix? You might have better luck with kid-friendly Lara Bars than fruit snacks. Consumers’ conceptions of health and wellness is ever changing. Consider that CVS, Walgreen’s, and Rite Aid’s recent addition of CBD-infused topicals is already showing initial signs of paying off, and that “core convenience customers have a big interest in CBD,” according to CSP. Whether you’re considering products as unconventional as CBD the mix, you’ll want to be on the pulse of shopper sentiment when it comes to exploring new product opportunities. Any product that gives a millennial shopper or parent the feeling that they’re capitalizing on an opportunity to take care of themselves or their child is practically guaranteed to be a win.
The secret recipe for how to increase basket size in convenience includes buying products your customers are most likely to say yes to, crafting your planograms accordingly, and giving your promotions maximum visibility. The key to staying relevant is keeping an ear to the ground to understand your shoppers and then grabbing their attention in the right place at the right time.
Once you’ve carefully minded your assortment, your layout, and your promotions, pay equal attention to what’s happening to products once they hit your floor. Challenges to increasing basket size persist when store-level execution problems (such as out-of-stocks and products left in the stockroom) persist. In fact, in a recent survey, we asked 1,000 shoppers what they do when they can’t find the product their want at their local grocery store. Their answer? A whopping 50% of shoppers will head to a competitor’s store to get it.
It’s no wonder that leaders in convenience store operations estimate their stores lose between 1-3% of sales (on average) due to in-store operational issues. When convenience shoppers can’t get in-and-out of your stores as quickly as possible, they’re not likely to stick around scratching their heads. Learn how CB4 helps convenience, grocery, and specialty store managers ensure the products customers want most are in stock and ready-to-shop, with no in-store hardware required.