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Outdoor Ads Bring Consumers At The Pump Into The Store

October 9, 2013
by candyandsnacktoday

Chicago — As gas prices fluctuate, so does consumer spending at the c-stores that accompany most pumps, a recent study from Information Resources, Inc. (IRI) reveals, and not all demographic groups behave the same. Research shows that by using strategies including outdoor, mobile and in-store advertising, marketers can increase the 27 percent conversion rate from purchases at the pump to inside the store.

According to IRI, just a one percent increase in that rate would generate more than $700 million in national c-store sales, but an uptick in gas prices can sabotage that opportunity. For example, IRI says a 50 percent increase in gas prices would result in 44 percent of consumers reducing their grocery spending, 57 percent of consumers reducing trips to the store and 52 percent switching to stores that are closer to home.

Millennials, who are generally on strict budgets, are especially affected by gas price increases. Nearly 50 percent will make fewer, larger trips to reduce gas consumption and will focus heavily on price, while 40 percent will reduce the number of stores they visit, IRI reports. However, 11 percent of consumers actually shop c-stores more frequently during gas price increases because of their proximity, another practice especially prevalent among millennials, 20 percent of whom engage in this behavior.

The success of all categories in the c-store is not fully reliant on gas prices, however. IRI’s research shows general merchandise and health items take the biggest sales hit when prices are up, while food and tobacco are moderately affected.

IRI explains: “Departments most impacted by gas price increases have traditionally been 'secondary' areas for convenience stores, so they tend to be the first to get eliminated or redirected to an alternate or even lower-priced channel. In contrast, beverages, which tend to be a key driver of trips for convenience stores, tend not to see a sharp fall-off in sales when gas prices climb.”

Outdoor advertising, such as pump toppers, window displays or digital advertisements at the gas meter can alleviate some of that sales decline by up to six percent for chocolate candy and four percent for salty snacks, according to IRI data for the second quarter of 2013. The study shows meat snack sales increased two percent when consumers were presented with a pump topper or marquee, while non-chocolate candy sales saw a three percent uptick.

IRI reports: “Despite the power of this medium, outdoor advertising is, generally speaking, underleveraged by convenience store marketers. Even in the warmer months — peak time for outdoor advertising — less than five percent of convenience stores’ all commodity volume is supported with outside displays. And that support skews heavily to beverages.”

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