For every 100 gas customers pay at the pump. 21 purchase an item inside the store. 43 pay only for gas and leave. 36 pay inside the store.
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1 & Fueling Sales Inside VideoMining CSI Program 2012 For the fourth iteration of its annual C-Store Shopper Insights (CSI) program, VideoMining doubled the number of participating retail chains and nearly tripled the number of stores. Participants: 10 retail chains (ampm, Chevron, Circle K, Cumberland Farms, GetGo, Hess, Holiday Stationstores, Maverik, RaceTrac, Thorntons) Anatomy of a Gas Trip Nearly 70% of gas customers just pay for the fuel and leave, according to VideoMining research. Interestingly, pay-atthe-pump customers are twice as likely to purchase an item in the store vs. customers who pay for their fuel inside. Store count: 144 stores in 20 markets For every 100 gas customers... No. of trips: 10 million 64 pay at the pump. Store traffic per store per week: 10, purchase an item inside the store. Store traffic to buyer conversion: 60% 43 pay only for gas and leave. Average shopping time in store: 2:19 36 pay inside the store. Average time in forecourt: 4 minutes 26 seconds 10 purchase an item inside the store. Average in-store basket (dollars): $6.02 (including lottery) 26 pay only for gas and leave. Source: VideoMining Corp. Source: VideoMining Corp. 62 CSP J uly
2 Out By Samantha Oller An exclusive peek at latest VideoMining heat-map study reveals challenge of pump-to-store conversion, opportunity of layout More than 25 years ago, pay at the pump debuted in the United States, introducing a great convenience to motorists and a big conundrum to retailers. If you enable customers to pay for fuel at the pump, how do you persuade them to come inside the store to buy higher-margin items? If recent research from VideoMining Corp. is any indication, it s a challenge that fuel retailers have still not mastered. Sixty-nine percent of gas customers are just paying for gas and leaving, regardless of whether they are paying at the pump or prepaying [inside the store], says Priya Baboo, executive vice president of shopper insights & strategy for Video- Mining Corp., State College, Pa., which produces the annual C-Store Shopper Insights (CSI) Program, a research effort that documents the c-store shopping trip. This fourth iteration of the study, conducted in late summer 2012 and shared exclusively with CSP, included 10 chains representing 144 stores in 20 markets. Consider that for every 100 gasoline customers, 64 pay at the pump, and 43 of the 64 pay only for gas and leave, according to VideoMining. Let s put aside this latter group It is much harder to convince someone who is just thinking of pumping gas to walk into the store, because they may be in a hurry, Baboo says and focus solely on the opportunity presented by the others. The 36 fuel customers who walk into the store to pay are truly low-hanging fruit, she insists, because in the store you have a better opportunity of converting them. But unfortunately, we re not leveraging that opportunity. How poor is that leverage? Less than a third of these customers will ultimately make an in-store purchase. VideoMining evaluates this type of c-store shopper behavior through a combination of technologies. Ceiling-mounted cameras track customers movements through the c-store, while proprietary video-analysis software processes millions of hours of shopping trips. This data is cross-referenced with point-of-sale data to correlate store traffic with purchasing behavior and generate insights on everything from the basics (average time spent in store, average in-store basket) to the rates at which customers shopped particular categories and made a purchase. For the 2012 study, VideoMining turned its cameras out to the pump to assess how well convenience retailers were drawing fuel customers inside the store and triggering an additional purchase. For many of the participants which included ampm, Chevron, Circle K, Cumberland Farms, GetGo, Hess, Holiday Stationstores, Maverik, RaceTrac and Thorntons the results were sobering. We were a little surprised at the conversion from pump to store; we thought it would have been higher than it was, says Rich Green, segment manager for Maverik Inc., North Salt Lake, Utah, which has more than 240 sites in 10 states, and had one location participating in the 2012 VideoMining study. In Maverik s case, a low pump-tostore conversion rate may have partly been because the store was relatively new and in a market where the chain does not have a concentration of sites. Having said that, the conversion wasn t as high as we d like, he says. At the same time, all of the solutions people give you for improving conversion we re all over that. That s an enigma at this point. While VideoMining did not examine which factors drove conversion for this iteration of the study, Baboo says retailers who enjoy a higher rate are using different methods of communicating with fuel customers. I think these retailers made a point to emphasize what s new or better in their stores, says Baboo. Once people walk into the store, [the retailers are] doing a better job of emphasizing fresh food or saying the coffee is better. It may not be signage at the pump, but they also have signage at the forecourt. They are also doing other things like leveraging mobile technology, and maybe having even outdoor communications. Maverik uses pumptoppers that advertise food and beverage combos and popular items, as well as its loyalty program. We re looking at other areas of opportunity to help improve conversion, Green says. As we continue to develop the loyalty program, there will be more opportunity as well. Here are highlights from the 2012 CSI Program, including a look at pump-tostore conversion, the effect of store layout on impulse purchases, and how the type of foodservice program a retailer adopts can shape all the aspects of a customer s visit. CSP July
3 All of the destination categories are situated on one side of the store, drawing traffic away from the impulse categories. With destination categories tucked into a far corner of the store, and coffee situated near the door, store traffic stays near the counter area. The destination categories are placed across almost the entire back of the store, with traffic flowing relatively evenly through the aisles. 64 CSP July 2013
4 Impulse Category Exposure Store No. 3 (at left) indexes highest for all of the impulse categories thanks to its superior layout, which places destination categories at the back of the store and positions fixtures to draw and direct store traffic through the aisles. Category Aisle Store No. 1 Store No. 2 Store No. 3 Candy Cookies/Crackers Meat Snacks Salty Snacks * Aisle exposure: Aisle traffic/store traffic Aisle traffic area: Length of aisle x distance in front of aisles (for traffic to pass) Aisle exposure/area index = ([Aisle exposure]/aisle traffic area) Source: VideoMining Aisle Exposure/Area Index Store Layout & Impulse Categories As a key component of its research methodology, VideoMining constructs heatmap charts showing the direction and outcome of store traffic. Its video-analysis software, correlated with POS data, reveals not only where customers tend to walk and shop most frequently indicated in the charts on the facing page in red but also where they stop to pick up an item for purchase. Examining how traffic flows through different sites reveals how the placement of key destination and impulse categories influences the outcome of the average shopping trip. For example, in stores No. 1 and 2, foot traffic is concentrated in one particular area of the store: near the counter. For whatever reason, the right side of the store is not getting as much traffic as it should be, which is indicated in blue and also hosts many of the impulse categories, Baboo says. Also notice that Stores No. 1 and 2 have foodservice and fountain in the same areas of the store. The layout definitely has an impact on how traffic flows through the store, says Baboo. You don t want to have all the key categories on one side. If you do, you want to think how you will get traffic to flow through the store and where to place some of the key categories. For store No. 3, traffic is more spread out. When we talk about foodservice, coffee and fountain, this store had destination categories organized clearly against the back walls; it s kind of like pushing the traffic to different regions, says Baboo. They ve really thought through how to position complementary categories, how to have the traffic flow through the entire store. The effect of these layouts on impulse category purchases candy, salty snacks, cookies and crackers is clear. Compare the higher area index for these categories in store No. 3 (see chart, above ) vs. stores No. 1 and 2. The maps can also suggest opportunities to take better advantage of store layout. For example, at Maverik (not shown here), traffic heat maps revealed that customers were queuing around the store s horseshoe-shaped cash wrap. We don t channel customers through any kind of merchandising in the queuing area or design of the cash wrap; it s a straight-on approach, says Green. There s an opportunity to help customers queue better in that area, and it could be a combination of changes to the future design, and opening certain registers and closing others at certain times of day. CSP July
5 Adding Fuel to thefire The average fuel customer spends 4 minutes and 26 seconds on the fuel island, which seems a veritable eon compared to how little time less than 2 minutes is spent inside the store. Each presents a stage upon which to influence a purchase decision, but not many retailers are dominating that opportunity, says Baboo. It s relatively easy to convert people walking into the store because they re in the store and you have so many opportunities to drive conversion... [such as] signage for deals where you buy something inside the store and get a discount, she says, citing the example of retailers such as Sheetz who offer gas customers a discount toward an in-store purchase or a free item such as a cup of coffee. Even offering a $1 discount for same-day purchases... could be one way to drive loyalty, she continues. How do we leverage it, how do we use it to increase conversion? Fuel Customer Purchases Less than 20% of store traffic was made up of fuel customers, who also made less than 20% of in-store purchases, according to VideoMining. Store Traffic Composition Non-gas customers 81% Gas customers 19% Pump-to-Store Conversion Index* Salty snacks and CSDs ranked as the most purchased categories among fuel customers, thanks mainly to secondary placements. Once people walk into a store, salty snacks typically have multiple locations in a store, says Baboo. One category that indexes surprisingly high: CSDs. And surprisingly low: prepared food. When examining store purchases by non-fuel customers, CSDs are not one of the top purchased categories, according to Video-Mining. Rather, fountain ranks higher, largely because so many retailers are focusing on the category today with deals, everyday-low-price programs and more. Salty snacks Carbonated soft drinks Fountain drinks Cigarettes Candy Water Beer Hot dispensed beverages Energy drinks Food warmer Roller grill Sports drinks OTP In-Store Merchandise Buyers Non-gas customers 84% Gas customers 16% Behavior at the Pump More than one-half of customers look directly at the pump while fueling up, thus highlighting the technological opportunity of triggering an in-store visit. Look at the pump Look toward store Look at signage Other 15% 8% 44% 56% * Percentage of forecourt customers who purchased in-store item. Index was calculated relative to average category purchase incidence. Store Visit Timing Retailers have a real opportunity to trigger an additional purchase among nearly 40% of customers who enter the store while or after they are pumping. No visit 43% Before pumping 18% While pumping 13% After pumping 26% Source: VideoMining 66 CSP July 2013
6 Foodservice Findings Performance Index by Foodservice Type Limited Prepackaged Shopper Metrics QSR type foodservice food items Store traffic (per store per week) Store traffic to buyer conversion In-store buyers (per store per week) Store basket ($) (incl. lottery) Total time in-store Source: VideoMining To confirm findings from the previous year with its expanded sample, Video- Mining again examined the effect of a foodservice program on the overall store visit. The result? The more sophisticated a foodservice program, the better a store is able to draw traffic and the more buyers it tallies. Foodservice is playing a role in terms of bringing traffic into the store, says Baboo of VideoMining. If you have a good food program it doesn t have to be a QSR-type offering, but even roller grill as long as you make sure you are communicating it properly, maybe differentiating it from a price or variety standpoint, you will get the same amount of traffic. But if you just have prepackaged food items, the number of people who will walk in is much less. One area where stores with prepackaged food scored highest was in store basket size; however, this is because the baskets typically include higher-pricepoint items, such as cigarettes. The CSI Program also revealed how greatly conversion rates can vary by daypart, with purchases most prevalent in the morning and lunch time frames, but the lowest after 2 p.m. And that slump is not simply because c-stores do not have compelling foodservice offerings for the p.m. crowd; it could also be that stores are not consistently executing the program. For example, executives with Maverik noticed that a very high traffic time of day did not correlate with a foodservice sales spike. The warmer was probably not being filled to capacity at this particular time of day, says Green. We have very unique foodservice program; it s pretty robust, and one of the major traffic drivers for our company. We ve got to have food there. This particular store showed us there was some opportunity there as well for that day-part. To see video highlights from the fourth iteration of VideoMining s C-Store Shopper Insights Program, visit About the Study Over eight weeks in August and September 2012, VideoMining Corp. conducted its fourth C-Store Shopper Insights Program, a study that quantifies and analyzes c-store shopper behavior and tracks the in-store path to purchase. The 2012 study, conducted in collaboration with several CPG vendors, was expanded to include 10 of the c-store channel s largest chains, representing 144 stores in 20 markets, and encapsulated approximately 10 million shopping trips. Twelve stores were outfi tted with ceiling-mounted video sensors to track customers movement in the stores, while proprietary video-analysis software processed millions of hours of c-store shopping trips. The data was then crossreferenced with point-of-sale data to reveal insights about the average c-store shopping trip by day-part, category and location within the store. For the 2013 CSI Program, VideoMining will expand the retailer panel to include travel centers, home in on QSR-type foodservice offers and examine fuel in greater detail. For more information, or to participate in future research, contact Priya Baboo at pbaboo@videomining.com, or visit 68 CSP July 2013
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