Discount stores

How will convenience and discount stores fare after the pandemic? » strategy

Last summer, strategy asked Jason Dubroy, SVP, Commerce and Experience, of Mosaic, how customer marketing has been shaped by the pandemic. Since then, supply chain issues and rising inflation have had a big impact on shopping habits, especially when it comes to discount shopping, which was already seen as a major opportunity. before the pandemic.

During his last taping, we spoke with Dubroy about the state of convenience and discount channels, what opportunities are on the table, and whether cost issues could impede sustainability efforts.

With renewed interest in budget shopping, do you foresee opportunities in the customer marketing space for discounters?

One area for the discount segment, and in particular the likes of Dollarama, is more to create or partner with a true retail media company.

Retail digital media spending in North America is booming right now, growing 50% over the past two years due to the pandemic, accounting for nearly 20% of total ad spend overall. (source: US digital ad spend 2021, eMarketer). Dollarama already has a great app, and seeing the continued and expected growth of this retailer in general, brands will continue to leverage it as a volume channel. With continued traffic and spending on retail media traditionally flowing out of retail channels, this is a great opportunity for Dollarama to increase profits and for brands to increase pre-store awareness. and in store.

In the US last year, Dollar Tree launched The DG Media Network and Dollar General launched the Chesapeake Media Group for its Family Dollar banner within weeks of each other, and both have successfully leveraged their proprietary data. , their media properties and accuracy. marketing to drive their trade marketing programs. At this point, not having an owned retail media network just leaves room on the table.

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Fresh foods are a sought after area for convenience stores. Do you foresee any other areas of growth for C-Channel?

Typical growth is generally driven by three key categories: foodservice, beverages (especially energy drinks) and confectionery. Beer and wine sales in convenience stores are still mandated at the provincial level and continue to be a controversial topic, so future growth outside will come from a combination of legislation and innovation. In the United States, 7-Eleven Evolution stores already offer full-service margarita bars, draft beer, and indoor/outdoor seating with handmade tacos. That’s awesome, can you imagine that in Canada?

Additionally, prepaid 5G phones will be another hot market to tap into as networks across the country activate. Fresh, local produce, including independent pizzerias and QSR sandwich shops, is on the rise. The other major growth area will be in payments, as chains will need to pivot like most other retailers to understand and accept digital currencies – and even provide on-site crypto ATMs. Lottery providers are also driven to deliver unique innovations to help boost loyalty and traffic.

If you’re an energy drink or candy brand, would you possibly redirect marketing dollars and put them in another part of the funnel instead of in-store?

Unless you’re a “ghost C-store” running just-in-time deliveries, the store is still where it is, and the stakes of playing the impulse game have never been higher. We see many convenience players investing in larger-scale campaigns, especially with Petro-Canada and Couche-Tard enabling high-end in-store display space, complemented by first-party CRM, assets digital and mobile and physical in-store purchase orders.

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Will foot traffic eventually return to the convenience in large enough numbers that things will eventually normalize over time?

Unless these stores install a crystal ball section next to the gum holder, it’s hard to answer. Right now, the “C” of C-Channel is completely redefined, based on how COVID has redefined our relationship with convenience. Some people are driving less due to high gas prices, which still impacts foot traffic in the short term, and so some stores are installing electric vehicle charging stations to encourage hybrid vehicle stops and times. longer stays in store. Some stores cater to pet owners, knowing that nearly 80% of them will travel with their pets and choose respite areas based on their ability to accommodate their furry friends, so they put everything from pet treats to dog wash stations. In the United States, some retailers are betting on micro-footprint and chashier-free checkouts, and Toronto’s Aisle-24 Marketplaces are rolling out 24-hour self-checkouts in high-density urban areas and shopping complexes. condos, which will save time and solve labor. shortage.

With inflation making cost a priority for many shoppers, does that mean we’re back to square one and putting sustainability on the back burner when it comes to packaging?

I think that will really propel him, to be honest. The supply chain crisis alone, coupled with pressure from public investors and activists after COP-26, the rise of ESG investing, and shifting public sentiment towards sustainability in general as a marker brand preferences have all helped drive sustainability initiatives forward. , and recent geopolitical events have shown us how fragile our global web is.

Many companies are now pushing sustainable initiatives forward and working closely with companies like Costco and Walmart that have sustainability initiatives and goals for their supplier partners. As companies set net goals for water or carbon, we see how packaging is now part of this transformation. A good example is Keurig Dr. Pepper, which plans to test its first fully recyclable and compostable paper bottle this year. The bottle, which will be tested with different beverages ranging from soft drinks to water to juices, will be 100% plastic-free and fully recyclable at the curb.