200511cover
We can try to avoid making choices by doing nothing, but even that is a decision.
– Gary Collins
THE
BULLETIN
Volume 73 | Issue 6
November 2005

College Unions and Convenience Stores: What's next in the express lane

Timothy A. Reed

College unions have been home to convenience shopping for many years now. From the information counter that sells blue books, pencils, and gummy bears to the national chain on the next corner, “c-stores” play an important role in many union operations. Like any industry, there are segments and trends in the market and, as with all things in the union and auxiliary services field, no two institutions capitalize on these trends the same way. From self-operations to corporate contracts, the lure of convenience purchasing and the revenue they can generate are both appealing and ominous. To be successful, it's critical to stay abreast of current trends in the c-store world that impact our campuses.

Youth purchasing power

The convenience store industry estimates that those in the traditional age bracket of college students spend as much as $91 per week in convenience stores; “The 18- to 27-year-old customers are the most important as far as the highest spending group” (Mastroberta, 2005, p. 42). While the industry is including all convenience stores, clearly on-campus and near-campus stores are prime targets for student dollars. Many of the new-generation college students are arriving with ingrained patterns of shopping at convenience stores developed as teens or “tweens.” Sheetz Inc., a fast food and convenience store retailer, targets teens through local and neighborhood marketing programs. According to Sheetz, “We send a marketing specialist to knock on the doors of colleges and high schools to introduce [new lines]” (Mastroberta, 2005, p. 42). Students develop patterns of spending on impulse items as they pass through high school, creating established habits for their college spending.

With the expansion of the university all-in-one card (the student ID card at most universities), the availability of quick, electronic cash for purchases merges easily with on-campus c-stores. However, easy access to cash or credit does not necessarily translate into compulsive spending. A 360 Youth study of student buying patterns in showed that students are more cost conscious than may be apparent (Francella, 2004). Therefore, convenience at a reasonable price becomes important.

The more the merrier

The combination of traditional c-stores with other retail or dining service chain concepts is rapidly expanding markets and profits. In 2002, Southern Illinois University–Edwardsville expanded its c-store from “‘a closet’ of 700 sq. ft. to 12,000 square feet with twice as much variety” (Chater, 2002, p. 32). This was part of an overhaul of the central dining area, which encouraged students to eat at alternative dining venues and tap into the cyber caf8E craze.

The multiple concepts decrease needed workforce and have greater potential to increase both customer satisfaction and retail sales.

This pattern follows the industry-wide movement to combine c-stores with other retail operations. The 2003 C-Store Report showed that “all market segments except hospitals experienced double-digit C9 boosts to their c-store/convenience retailing sales” (Meet Growing Needs,” 2003, p. 27). The most prevalent combined operations were in higher education at 41.4 percent (“To Meet Growing Needs,” 2003). Clearly, when it comes to combining traditional c-store operations with additional retail concepts, more is definitely merrier.

Beverages lead the market

Grab a drink and but don’t sit down for this next trend—beverages. While beverages are still the most profitable category (“To Meet Growing Needs,” 2003), the hot new items range from repackaged standards like Pepsi and Sprite flavors to high-energy and low-carb drinks and tea. In the United States, wholesale sales of energy drinks were $1.15 billion for the 52 weeks ending April 2004, jumping 56 percent to $1.79 billion for the 52 weeks ending in April 2005 (Food Marketing Institute, ACNielsen, & Lempert, 2005). Energy drink brand names such as Red Bull, Full Throttle, and SoBe Adrenaline Rush are competing for the chic buzz at clubs and hot spots, and college students are using these energy drinks to replace the traditional caffeine jolt of cola drinks and coffee. The number and volume of sales in these products alone are beginning to have a serious impact on beverage sales, outpacing traditional carbonated beverages (FMI, ACNielsen, & Lempert, 2005). Coca-Cola even has branched out to create a sugar-free version of its Full Throttle energy drink.<

Energy drinks are only one segment of the healthy drinking phenomenon. Staff at the Common Convenience in Virginia Commonwealth University’s Student Commons did not anticipate sales of POM, pomegranate fruit drink when they opened their remodeled store. Store manager Butch Michalik from Aramark said the initial shipment sold out in less than half a day; “It flew off the shelves and we had to reorder immediately” (personal communication, May 2005). Since 2001, U.S. sales of pomegranate juice have increased 784 percent, with more customers preferring to purchase it chilled than room temperature (FMI, ACNielsen, & Lempert, 2005).

Tea anyone? Yes, that drink of the stately British has been Americanized and is moving to the top of the food chain. According to the National Association of Convenience Stores, tea has grown to 16 percent of total packaged beverages (RTD Tea Party, 2005). As part of the growing health conscientiousness, sales of some varieties of canned and bottled teas from herbal/medicinal teas to specialty flavored teas have increased as much as 46.5 percent in the United States (RTD Tea Party, 2005). The cases of teas and other noncarbonated drinks are truly beginning to crowd the traditional carbonated ranks.

Fair Trade Certified products, especially coffee, also are experiencing market growth, with an annual increase of 91 percent from 2002 to 2003 (FMI, ACNielsen, & Lempert, 2005). Products carrying the Fair Trade Certified label, presumably are higher quality because by guaranteeing farmers and workers received fair prices, no cost-cutting measures are used. Companies such as Dunkin’ Donuts and Caribou Coffee are among those that have gotten into the fair trade business (FMI, ACNielsen, & Lempert, 2005).

Bottled water, however, is still the No. 2 beverage. Americans consumed more than 23.8 gallons per person of bottled water in 2004 (“Bottled Water Strengthens Position,” 2005). While some soft drink sales have remained flat, bottled water and other healthy alternatives continue to grow. This movement away from traditional soft drinks toward healthy options segues nicely into the next trend—healthier fast food!

Fast and healthy

As more and more people shop less at traditional grocery stores, and college students seek wider options for meals than the traditional three squares in the dining hall, the convenience food industry has found motivation for new products. Healthier products like cereal and fruit bars grew at 14 percent and soy-based drinks and drinkable yogurts respectively had 31 and 19 percent increases over the last year (ACNielsen, 2005). However, refrigerated desserts and chocolate products grew only 7 and 8 percent respectively during the same period (ACNielsen, 2005). Frozen and refrigerated health-related products such as Healthy Choice dinners and Amy’s Kitchen products continue to increase in sales and market. These are becoming a staple among convenience stores particularly in areas with high residential populations like colleges and universities. Unions offering lounges and areas with microwaves will see likely see an increase in sales of these products as commuter students, faculty, and staff look for healthier options than standard quick-serve food. Not only are these frozen options being consumed locally, c-store industry reports show that consumers are purchasing frozen meals outside of supermarkets to take home for a quick dinner (Francella, 2004).

C-stores also are attempting to provide more fresh foods and specialty items for the health-conscious consumer. C-store giant 7-Eleven Inc. is expanding the quality, taste and “healthiness” of its products by introducing specialty fresh food concepts (“Fresh Food and C-Stores Not Mutually Exclusive,” 2004). Among these are sandwich spreads such as tomato basil, roasted pepper, tomato feta, and olive pesto as well as wraps. The old image of the c-store as the junk food haven is rapidly changing as its primary customers demand more quality in a better store.

Location and look

The final trend is being trendy. C-stores, like all other market-sensitive businesses, need to look and feel up-to-date for their customers. Sometime this means a “product refresh” but in the case of some institutions, new faces are needed for old places.

A few years ago, San Diego State University spread out its convenience stores in a system-wide approach to target marketing. The Aztec Market and Convenience Store has five locations across campus. Because of this approach, students get used to seeing Aztec Market as a brand like 7-Eleven, also opening the door for branding opportunities such as sandwiches and bottled water (Buzalka, 2004).

The Common Convenience store at Virginia Commonwealth University was an afterthought when the University Student Commons was expanded. When some unexpected space was available, Aramark tried a small store. The store was out of the way and not visible to the general public. Students who shopped there liked the products, but the location was not working. After reviewing the options of closing or moving, they completed a “spring break” turnaround and moved the c-store to the first level in a primary entrance location inside the Commons Caf8E. The improved product line and better visibility helped sales percentages since spring break 2005 increase in the triple digits.

The 2,500-square-foot c-store at the Southeast Missouri State University union offers household items such as toiletries, health and beauty products, laundry items, as well as food. While recently remodeled, future plans for the store include enhancing the interior for a higher end look (Southeast Missouri State University, 2004).

Even non-college retailers are getting into the college act. Circle K brand stores in Arizona are rolling out University of Arizona Wildcat-themed stores this year (Edwards, 2005). Plans include scoreboards, school colors and mascots, and televisions with current events on the campus.

C-stores, whether in the union, the bookstore, the residential complex, or across the street, are here to stay at college campuses. While naturally, specific product trends are subject to change, it would seem that union convenience stores can count on an increasing need to provide higher quality shopping environments and healthier foods. So, grab a made-to-order deli sandwich, pick up a frozen dinner for later, add in a high-energy drink to get through those late afternoon meetings, and pay for it all with the A1 Card. Now that’s convenience!

References

ACNielsen. (2005, January 26). Health and convenience continue to drive global food and beverage product growth, according to new ACNielsen study. Retrieved October 24, 2005, from http://www2.acnielsen.com/news/20050126.shtml.Bottled water strengthens position as No. 2 beverage, reports Beverage Marketing. (2005, April 25) Beverage Marketing Corporation. Retrieved October 24, 2005, from http://www.beveragemarketing.com.
Buzalka, M. (2004, January). Cashing in at San Diego State: How Aztec Market stores turn ’em fast, turn ’em often and keep ’em coming back. Convenience Store Decisions, 15(1), 44.
Chater, A. (2002, December). With renovation, c-store, Starbucks: Southern IL Univ. eyes 50% articipation boost. Food Service Director, 15(12), 32.
Edwards, L. (2005, April 21). Circle K redo is red, white, and blue. The Arizona Daily Star, pp. A1, A9.
Food Marketing Institute, ACNielsen, & Lempert. (2005, June 13). Facts, figures, and the future. Retrieved October 24, 2005, from http://www.factsfiguresfuture.com/archive/june_2005.htm.
Francella, B.G. (2004). The college try: Around-the-clock value and variety are the way to students’ heart and stomachs. Convenience Store News, 40(11), 63.
Fresh food and c-stores not mutually exclusive: 7-Eleven chefs debunk the ‘c-store food’ myth. (2004, April) Convenience Store Decisions, 16(4), 14.
Mastroberta, T. (2005, March 7). Smells like teen dollars: With pockets full of disposable cash, teens and tweens are a key target for convenience retailers. Convenience Store News, 40(3), 42.
RTD tea party: RID teas put a stranglehold on the c-store channel’s No.2 beverage position in 2004. (2005, July). Convenience Store Decisions, 16(8), 56.
Southeast Missouri State University. (2004, September 17). University Center renovations to boost ambience of facility. Retrieved October 24, 2005, from http://www.semo.edu/news/index_4594.html.
To meet growing needs: Convenience retailing sales climb. (2003, December). Food Service Director, 16(12), 27.