Market Watch

The Top Business Concern of Convenience Store Retailers is…

By Marianne Wilson, Chain Store Age, January 2, 2020

“The convenience store industry is feeling bullish about 2020 but remains mindful of potential issues that could impact its performance.
The majority of convenience retailers said their sales increased in 2019, according a survey by trade association NACS. Three in four retailers (74%) said that in-store sales increased last year. Strong industry sales in 2019 pushed retailer optimism to record-high levels. Eighty-nine percent of c-store retailers are optimistic about their economic prospects for the first quarter of 2020, four points higher than the year-ago period.
At the same time, retailers identified some the top concerns that could affect their businesses in 2020, with regulations/legislation (60%) and labor issues (58%) heading the list. Other top concerns were competition from other convenience stores (50%), competition from such other retail formats as drug and dollar stores (33%) and a potential decrease in driving/increase in gas prices (30%).
Here are other highlights from the NACS survey.
• A strong contributor to in-store sales growth was better-for-you items that include fruit, vegetables, nuts, health bars and yogurt. Two in three (67%) retailers surveyed said that their better-for-you products enjoyed increased sales in 2019.
• Retailers said that the morning daypart presents the biggest opportunity to grow their food sales: 45% said that breakfast in their biggest opportunity in 2020, compared to 26% who said lunch and 23% who said dinner.
• Sixty-two percent of retailers said that their fuel gallons sold increased, compared to 25% who said that their fuel sales decreased.”

Weighing Your Options: Go, Grow or Enhance?

By Danielle Romano, Convenience Store News, November 13, 2019

Sizeable deals made 2018 one of the most active years yet in convenience channel merger and acquisition (M&A) activity, with many of the largest chains in the industry getting even bigger. And that activity has not died down throughout this year either. With consolidation continuing at a rapid pace, the c-store industry’s single-store owners (SSOs) and small operators are feeling the pressure. It’s getting more difficult for them to compete against the multiple advantages that large chains have. Their options have essentially become to either go, grow, or remodel and enhance their offering to stay in the game.

TAKING THE EXIT The total number of convenience stores operating in the United States declined by 1.1 percent last year, falling from a record 154,958 stores to 153,237 as of Dec. 31, 2018. The drop was fueled by a 2,918-store decline in single-store operations. However, single stores still account for 62.3 percent (95,445) of all U.S. c-stores, according to the 2019 NACS/Nielsen Convenience Industry Store Count.

There are several driving forces contributing to SSOs and small operators shutting down their operations and/or selling. One factor is inexpensive borrowing costs due to low interest rates. Another factor is the quantum-level jump over the past six-plus years in margin dollars in fuels and inside the store, which has led to rising asset valuations. “Accordingly, the industry asset class continues to attract interest in growth and investment. The quest to find more assets continues as companies seek to accrete higher earnings and spread costs among increasingly larger store counts,” explained Ken Shriber, managing director and CEO of Petroleum Equity Group. “Market share growth by the biggest players in a low interest rate environment becomes of paramount importance. It positions them financially with economies of scale, and allows them to better weather the threat from new competitors (i.e., EG Group) and potential industry disrupters (i.e., Amazon Go).”

In the past, if a c-store retailer operated 25 stores, they were considered a sizable player. Nowadays, the industry keeps moving that carrot farther out, noted Terry Monroe, president of American Business Brokers. But not every retailer is cut out to own and operate 30, 40, 50-plus stores, and beyond. In such cases, he said there can be a silver lining for owners in selling their business to one of the industry’s most active acquirers. “I just sold a four-store chain of stores that were doing fantastic. They were acquired by a 50-store chain because it wanted the owners of the four stores to come to work for the company and make the stores great like the operator’s four stores,” Monroe explained. “It was a win-win deal for everyone.”

HOLDING YOUR GROUND For SSOs and small operators who are not interested in taking the exit, the good news is that they can secure a place in the industry’s future. But to do so, they must possess assets in exclusive markets and have the ability to maintain current levels of profitability. If they possess the financial and operational means and abilities, Shriber believes they should:
• Remodel existing sites on a larger footprint of up to 1.5 acres;
• Deliver a robust foodservice program; and
• Make several small acquisitions of three to five stores at a time over a two-year period.
“If not, they would be wise to consider exiting the business,” he advised.
Shriber cautions SSOs and small operators on the fence not to wait too long to decide their fate. He says a wait-and-see approach is not the right choice given the current market conditions. “We have seen firsthand many of these marketers suffer due to increased competition from larger stores/chains with modernized facilities and robust foodservice offerings. And then they wait too long to decide to exit, after their sales have substantially decreased,” he told Convenience Store News. “At that point, their ability to sell at even much lower asking prices/multiples of EBITDA becomes severely compromised.”

While the convenience store industry is built on the selling of two key commodities, convenience and service, SSOs and small operators who choose to stay and compete should identify their differentiators and then optimize them to stand apart from the competition, according to Monroe. That is, these retailers should ask themselves: What is my unique selling proposition? “What product or service do you offer that cannot be emulated by your competition?” posed Monroe. “When I sell a chain of stores to a consolidator, most of the time they change the product mix and try to make it like all of their other stores, thereby losing the local touch the original operator had and [they] end up losing business. As a SSO, you should know your market and what your market wants. If you don’t, then shame on you. The consolidators will win every time if you are not in touch with your market.”

DoorDash Gets in the Ghost Kitchen Business

By Danny Klien, QSR, October 2019

DoorDash launched a shared commissary kitchen with multiple restaurants under one roof, the company announced Monday. The ghost kitchen setup, called DoorDash Kitchens, is located in Redwood City, California.

DoorDash said the to-go-only concept will house a mix of locally founded spots and national brands, including Nation’s Giant Hamburgers, Rooster & Rice, Humphry Slocombe, and The Halal Guys. Coverage spreads across seven Bay Area markets—Atherton, Belmont, Menlo Park, Palo Alto, Redwood City, San Carlos, and Woodside. Pickup options extend to customers in 13 suburban markets, including Atherton, Belmont, Burlingame, Foster City, Los Altos, Menlo Park, Mountain View, Palo Alto, Redwood City, San Carlos, San Mateo, Sunnyvale, and Woodside.

Another unique feature at launch will be main pairings. For instance, Peninsula customers who order Rooster & Rice will be able to add Humphry Slocombe ice cream pints. “We are constantly working on innovations that help merchants find new, meaningful ways to reach customers and run their businesses more efficiently,” said Fuad Hannon, head of new business verticals at DoorDash, in a statement. “We launched DoorDash over six years ago in the Peninsula, and can’t wait to bring even more selection to the local community we know and admire.” DoorDash is offering no delivery fees to DoorDash Kitchens’ restaurants through the end of year.

The company added its ghost kitchen will give merchants access to new customers in neighboring communities without the same overhead cost involved in opening additional stores. DoorDash will cover the infrastructure, maintenance, marketing, and last-mile logistics. “Given our founders’ Bay Area roots, we are always interested in how technology can change the way food is delivered and shared,” said Min Park, chief financial officer of Rooster & Rice, in a statement. “We were impressed by the overall partnership and scale DoorDash could reach with this concept, and we found the notion of a delivery-only kitchen in Redwood City very appealing as it helps us test out demand in new markets, reaching new customers and areas quickly.”

DoorDash co-designed the spaces with restaurants, it said, and “hopes to empower a new set of entrepreneurs to thrive on the platform, further enabling customers to access their favorite restaurants and local delicacies at the touch of a button.” DoorDash Kitchens expect to build a team of 50 full or part-time employees in the area as well as create jobs for delivery drivers.

According to Edison Trends’ recent report, DoorDash held 35 percent of the third-party delivery market share of consumer spend in the first half of September. UberEats followed at 25 percent, with Grubhub at 23 percent.

Are Your C-stores Delivering the ‘Wow’ Factor?

By Renee M. Covino, Convenience Store News, August 29, 2019

Does your current store concept include a “wow factor?” If not, it should.

Customer expectations are continuously elevating thanks to the proliferation of great retail experiences — think Nike Town, Apple Store, Wegmans supermarkets and Eataly food markets, to name a few. “Since convenience is a common thread, design is becoming the catalyst for differentiation,” said Joseph Bona, president of Bona Design Lab, based in New York. “Design will get more sophisticated and will be an important line item in establishing budgets, as opposed to thinking whatever paint is the cheapest.”

Good design should neither be created in a vacuum nor based on individual personal tastes or current trends. Rather, according to Bona, “it should be focused on a firm understanding of what your brand stands for and the storytelling that you deliver through an enhanced store experience.” To discuss the ins and outs of merchandising with “wow,” Convenience Store News tapped Bona, who has extensive retail design experience across all sectors, from convenience and mass market to drug and luxury, as well as Jennifer Hatton, senior vice president of retail operations for Follett Corp., an expert in the world of campus retail stores. Here are their insights:

CSNEWS: WHY IS IN-STORE EXPERIENCE SO IMPORTANT THESE DAYS?
Hatton: The in-store experience is more important than ever in the c-store landscape because the consumer is more sophisticated than ever before. Options are endless, and the expectations are higher for companies to not only deliver an aesthetically appealing environment that is clean and bright, with fresh offerings and breadth of assortment, but also friendly and engaged associates that provide consistent and exceptional customer service.
Bona: In today’s highly competitive retail landscape, where all channels of trade are competing on convenience, consumers are faced with many options and choices in meeting their daily needs. Convenience is no longer a differentiator, but rather a table stake. Experience is how best-in-class retailers are winning customer loyalty and distancing themselves from the competition. An enhanced retail experience enables them to establish a unique position in the marketplace and separate themselves from the sea of sameness that is often found across many retail chains.

CSNEWS: WHAT ARE SOME OF THE SIMPLEST WAYS FOR C-STORES TO TAP INTO THIS?
Hatton: Start with the basics: Convenience customers are looking for efficient, high-quality service with in-stock and well-merchandised products. Food should be fresh, and planograms should be current at all times. The overall environment should be clean, from the front windows to the exit, and throughout the entire store, from floor to ceiling. It is important to reduce sign pollution in the windows and to be consistent with fixture height. Training for team members is also critically important to effectively meet the needs of the on-the-go customer who expects an experience that is fast and efficient.
Bona: Most importantly, it must start with each company and its unique individual stories and positioning. Experience is not only about what color to paint the walls, the type of lighting that is used in the environment or the style of graphics that deliver your messaging. Rather, it needs to begin with what makes your brand different from those of your competitors. It’s all about storytelling — delivering your message in your own way. All successful brands stand for something specific. Experience is how they curate that message throughout their built environment. So, the simplest approach (remember, simple and easy are not necessarily synonyms) is to begin with defining what you stand for. In this regard, I love to visit Maverik markets because their stores truly reflect the company’s culture. The adventurous store environment at Maverik is a testament to how both employees and customers embrace the great outdoors. The store experience is their “signature.”

CSNEWS: WHAT ARE THE MORE OUTRAGEOUS WAYS A C-STORE CAN OFFER AN EXPERIENCE?
Hatton: I believe it’s through innovation that uses technology, such as Coca-Cola’s Freestyle machines or Pepsi’s Spire beverage machines, and robots that are making salads. Another way is through new products, including new on-trend bakery items and fresh-baked cookies in-store, as well as fresh sandwiches, salads and sushi from local, respected restaurants. We are even piloting an edible fresh scoop cookie dough program with a company that was recently featured on “Shark Tank.”
Bona: Today’s shoppers are savvy, and authenticity is important to them. If you try to push “outrageous” gimmicks on them, they will call you out — and they have no shortage of social media channels with which to do that. None of this is to suggest, though, that you must be timid. I have always believed creating that engaging experience starts with the exterior. Curb appeal is what customers see every day, even when they don’t stop into the store. So, being a bit disruptive or a little outrageous can get customers’ attention and help you stand out from the crowd. However, you risk disappointing customers if the promise made on the outside is not carried through on the inside. Retailers must commit to delivering a 360-degree customer experience.

CSNEWS: WHAT ARE YOUR BEST PRACTICES FOR C-STORES TO CREATE A “WOW FACTOR?”
Hatton: Top practices that are sure to create a “wow” experience are the continued introduction of contemporary design elements, such as stones, woods and luxury vinyl tile. Also, LED energy-saving lighting and spotlights surgically placed to highlight product, along with sleek fixtures at the point-of-sale that elevate the brand. Offering organic, gluten-free products and premium coffees are just a few examples of products that can not only create a “wow” factor, but also add credibility and trust to your assortment.
Bona: First and foremost, create experiences that are authentic and built around giving meaning to your offer. If, for example, you have a robust food program, take cues from the restaurant industry, where higher-end establishments use open kitchens to show off how clean, precise and proud they are of how they prepare and deliver their food. Why not incorporate open kitchens in a c-store environment to help establish your food program as being first-class? In addition, lighting is always the most misunderstood and most underutilized tool to create “wow” moments throughout the retail environment. Too often, retailers look to use uniform light levels to light their spaces, but highlights and contrasts are what creates drama. They enable you to feature key products or offers and make the shopping experience more enjoyable.

Only one-third of shoppers have seen top tech features in stores

By Lisa Rowan, Retail Dive, July 16, 2019

Dive Brief:
• While three-fourths of customers are familiar with new retail technology features, only one-third are experiencing them in stores, according to a recent A.T Kearney report. The survey polled 1,000 people about emerging retail technology used in brick-and-mortar stores, focusing on augmented reality, mobile point of sale, cashierless checkout, interactive screens and 3D printing.
• Seventy-two percent of respondents said technology that reduced checkout time was most valuable to them, while 61% of respondents said technology that reduced the time spent navigating the store was most valuable.
• Shoppers seek convenience over novelty when it comes to technology, the report found, especially at the big-box level. Forty-one percent of respondents said technology associated with convenience had prompted them to shop at a big-box store.

Dive Insight:
A.T. Kearney’s report stresses the need for retail technology to focus on serving the customer rather than entertaining them. Only 13% of respondents said they went to a big-box store because of “technology associated with novelty,” while 14% said they visited a specialty store for the same reason. There are differences between big-box shoppers and specialty shoppers, though. Consumers look to specialty stores for customization and experience over the time-saving technology shoppers prefer at big-box stores.

The report encourages retailers seeking to bridge the gap between customer awareness and experience to ensure that technologies meet specific consumer needs, and to pair those investments with store personnel who can work in tandem with the technology enhancements. Retailers may wish to follow the example of Sam’s Club and Decathlon, to name recent examples, which have empowered their associates to serve customers throughout the store with the help of mobile checkout or apps.

Retail still has room to grow when it comes to merging technology with brick and mortar. Another recent survey from the National Retail Federation revealed that while 80% of shoppers think technology has improved their online shopping experience, only 66% said the same for in-store shopping. It’s the research and review process that seems to need the most attention, according to that report. That desire to be informed before purchasing offers opportunities for retailers to integrate technology features across sales platforms, from mobile to brick and mortar.

Retailers cash in on a ‘captive’ college campus market

By Wayne D’Orio, Retail Dive, May 23, 2019

Department stores, supermarkets and even apparel brands are adding locations on or near institutions, though experts debate whether the activity marks a trend.

Target, the trendy retail chain with a red bull’s-eye logo, has its sights set on a new kind of customer: college students. To reach them, the eighth-largest retailer in the U.S. by sales is shrinking its footprint with mini-stores that are about a third of the size of a typical 130,000-square-foot Target. Their pared-down and curated product selection packs a punch, however, with strong sales pushing the Minneapolis-based chain’s expansion, said company spokesperson Jacqueline DeBuse. In the last several years, Target has added such stores on or near some 100 campuses. It plans to open about 30 small-format stores annually over the next few years around colleges as well as in cities and other areas lacking space for a full-size location. Because Target stocks a wide variety of items and its supply chain allows the retailer to readily juggle products based on consumer interest, she said, its smaller stores are able to meet demand for items specific to its college customers, such as grab-and-go food, electronics and bedding that fits dorm room mattresses.

The retailer is not alone. While colleges have long looked to outside companies to help them run features like bookstores and fast-food restaurants on campus, a newer retail push includes department stores, supermarkets and even locations of popular apparel brands. “Good retailers are always looking for an outlet,” said Steve Niggeman, an executive vice president with Metro Commercial, which brokers real estate deals between colleges and retailers, including Target. While colleges vary in size and culture, their students, staff and even visiting parents can be “pretty captive” customers, he added.

Creating loyal shoppers

Late last year, the Florida-based grocery chain Publix opened its first on-campus location on land leased from the University of South Florida, even though it already had a store less than a mile and a half from the Tampa campus. The spot, about half the size of its typical supermarket, is located near the school’s new residential village, which can house around 2,000 students. It has been a success on several levels, said Ana Hernandez, assistant vice president of housing and residential education at the university. Students are looking for more amenities, she said, while the university is seeking ways to deepen students’ connections to the campus community. Before the deal was made, she added, the university’s student government passed a resolution in favor of adding the supermarket. And Publix agreed to hold at least two job fairs each year to offer students jobs and internships.

“There’s no question retailers are trying to build loyalty,” said Nick Egelanian, the president and founder of SiteWorks, a retail and development consultancy. While there’s a big movement among colleges and universities to build more student housing, retailers know being associated with a dorm is a positive experience for the brand, he added.

Still, Niggeman warns that not every school can support this type of retail. Indeed, USF has 50,000 students, including around 6,300 who live on campus. He estimates colleges with at least 20,000 students could support additional retail on campus. But as more students choose where to go to college based on the type of “experience” they can have, retail options can become a factor, he said. Given the popularity of athleisure wear, for example, he guessed chains such as Lululemon would be right at home on some campuses. In fact, Lululemon has opened “seasonal” temporary stores near several institutions, including one close to the University of Pennsylvania, in Philadelphia, last year.

Egelanian thinks of this growth as a new variation on an old theme. “There has always been retail [near] colleges,” he said, adding that some, such as Harvard University, Georgetown University and the University of California, Los Angeles, exist amid well-established neighborhoods chock full of retail stores. Citing Target’s growth, Egelanian argued that the new stores are more an outgrowth of retail chains moving into urban areas. But he stated that the retailer’s ability to adjust nimbly to meet demand gives it a leg up on other retailers, such as Walmart, in this kind of a market. For its part, Walmart pulled back on a similar initiative a few years ago.

One of colleges’ stalwart retailers, Barnes & Noble, has noticed changing retail trends on campuses. The chain now refreshes its merchandise three to four times a year, said Kenneth Wincko, vice president of marketing for Barnes & Noble College. Inside its campus stores, the bookseller is experimenting with specialty retail, such as curated selections of health and beauty products, or journals, athletic wear and other wellness-related items. Barnes & Noble tries to integrate into campus life in other ways as well, hosting up to 3,000 events per year and opening pop-up shops near sports stadiums during major events. It is also open to students’ feedback. For example, when Barnes & Noble added a coffee shop inside its University of Central Florida campus store, students asked to buy the plants — so the chain is now experimenting with selling plants, Wincko said. The chain currently has about 770 on-campus locations, and Wincko said there are plans to add dozens more each year.

To stay in touch with student needs, Barnes & Noble each year surveys 100,000 students using email addresses collected from campus stores, he said. Recent survey results showed that half of students responding don’t have all the materials they need on the first day of class. To address that, the company is working with faculty to identify needed items, from books to lab equipment, so the store can be properly stocked before the semester starts.

What’s next for campus retail

Today’s students may be comfortable shopping online (in some cases even during lectures), but Wincko and others say blending brick-and-mortar and e-commerce is key. Target plays up its ability for students, or their parents, to buy items online and pick them up at a nearby store within an hour, DeBuse said. The retailer is seeing double-digit sales growth in this area, she added, which is especially popular at the beginning of the academic year. Amazon’s pickup points on or near college campuses serve a similar purpose.

Yet the bonus for retailers looking to do business on campus, according to DeBuse, is the ability to create positive feelings about their brand just as many students are beginning to make their own purchasing decisions. Even Niggeman isn’t sure where this trend will end up. “We’re not going to be putting 1 million square feet” of retail on campus, he said. But colleges that are increasing enrollment should consider how retail factors into that growth. “As you expand enrollment, you need more support,” he said.

Three Steps to Drive Fuel-Only Customers Into the C-store

By Danielle Romano, Convenience Store News, April 19, 2019

It’s a classic tale of two customers. One is the fuel-only customer who pulls in, gases up and drives off without an incremental visit to the convenience store. The other is the fuel-up customer who also stops inside the store for their morning cup of coffee, mid-afternoon pick-me-up snack or on-the-go lunch. “A majority of your customers are fuel-only customers not stopping inside the store. We want to change that behavior,” said Kimberly Otocki, content marketing specialist at Paytronix Systems Inc. “On the flip side, there’s probably a smaller minority of your customers who are actually stopping at your fuel pumps and coming into your store, so we want to make sure and maximize that number because that’s where we’re able to change their behavior and get those incremental spends and visits.”

Speaking during the recent “How to Drive Pump-to-Store Visits With Data” webinar, hosted by Convenience Store News and sponsored by Paytronix, Otocki provided pointers on how to drive fuel-only customers inside the store, where higher-margin products are and where operators can collect more data on customers to market to them effectively. Discussing how c-store operators can collect data to change customer behavior, Otocki outlined three steps:

Step 1: Identify Customers
C-store operators need identifiable information to effectively reach customers. When looking at pump-only customers, retailers are uniquely positioned to reach them through at-the-pump advertising of in-store items. Citing The Coca-Cola Co.’s research on advertising at the pump, Otocki noted that 32 percent of customers noticed signage at the pump that influenced an in-store purchase during the same visit and 21 percent noticed signage at the pump that influenced an in-store purchase in the future.
Once retailers get fuel-only customers into the store, they must hook consumers and give them a good reason to give up their personal data. A few possibilities include:
• Welcome rewards as a thank-you to customers for providing valuable data and getting to be known as marketable customers.
• Text to join or mobile app that is easy and doesn’t require too much time.
• Ambassadors, such as cashiers and staff, who can speak to the value of the retailer’s offering to customers.

Step 2: Get Customers to Engage
Nearly three-quarters of customers (73 percent) say the best promotions give discounted fuel with in-store purchases. As opposed to continuously giving customers deep discounts that de-value sales, retailers can utilize tie-in promotions. The most effective are buy X amount, get X cents off per gallon, or visit 10 times for X cents off per gallon.

Another viable promotion is to offer fuel-only customers a free hot or cold beverage to drive them into the store. This tactic allows retailers to handle their margins and ensure they aren’t giving away a product too large. “We’ve seen fantastic results for this particular promotion. One of our clients saw a 55-percent increase in visits during that period from this targeted customer base. Beyond that, a spend lift of 184 percent,” Otocki pointed out. “That’s because these customers weren’t just coming in to get that free coffee or free dispensed beverage: they were coming in and tacking on a snack or sandwich, increasing their basket size.”

Step 3: Change Behavior
Getting customers inside the store for the first time isn’t the hardest part. Rather, it’s getting them to come back in time and time again. To do that, c-store operators should utilize data with segmentation. Convenience stores traditionally have three key segmentations:
• Bubba, who visits daily to buy Slim Jims, soda and chips;
• Susie the Soccer Mom, who visits two times a week for grab-and-go snacks for the kids that are healthier options, as well as salty snacks; and
• Professionals, who visit less frequently (every month) and prefer options like protein bars, shakes and healthy snacks such as nuts and popcorn.
Without segmentation, c-store retailers are at risk of running blanketed offers to all customers, which can be costly, Otocki cautioned. Instead, she suggests sending two different offers to two different segments. For example, retailers can send a free product or heavy discount to Segments 1 and 2 because it will motivate them for an incremental visit. With Segments 3 and 4, a BOGO promotion or a lesser discount might be more appropriate. Both moves will bring operators closer to motivating the right customers with the right promotions.

Continuous campaigns and machine-learning segmentation are other viable options that utilize data for maximum effectiveness. The first analyzes each guest’s unique visit cadence to trigger offers to the right person at the right time, while the latter discovers segments of similar guests based on what they do, which then can be translated into personalized, highly relevant offers.

GO BIG OR GO HOME
Otocki had these final key takeaways for convenience store operators:
1. Customers can change their behavior.
2. Get to know and identify all customers.
3. Data is key to changing behavior.
4. Think BIG.
Subscription services such as Burger King’s recently introduced BK Café Subscription are “perfect for c-stores,” according to Otocki. For $5 a month, customers can get a small coffee a day at the fast-casual restaurant at no additional cost. “It’s a great model to be able to utilize because Burger King isn’t just doing this in order to get $5 a month from their customers and give them a coffee every single day. They’re doing this because they know it’s the way to get those visits to come back time and time again,” she explained. “If you already paid for your coffee every morning with your subscription, you probably will stop there because you know it’s been paid for. On top of that, the hope is that if these customers are coming in, they’re likely to purchase more items.”

Beyond the Bookstore: A Look at the Rise of Campus Retail

By Steve Niggeman, Metro Commercial and NREI, March 28, 2019

The face of campus retail is changing. For decades, universities were known for their dearth of retail beyond a college bookstore. But now, retailers both large and small are seizing the opportunity to expand their operations beyond traditional shopping centers and onto university campuses where they can capture the attention of a niche audience: students. Students’ demand for college essentials in a convenient location while away at school has led retailers to create college-geared shopping experiences. Take a look at the factors driving the campus retail evolution and learn how universities can curate the right retail mix.

Factors fueling the rise of campus retail
While it’s not a new phenomenon, campus retail is evolving to better serve the needs of universities and their communities. Retailers are competing for prime real estate on college campuses where they can get in front of a captive audience comprised of thousands of students and faculty. This is a close-knit community that retailers need to support on an annual basis with an array of amenities, including entertainment and fitness options, school essentials, grab-and-go food, comfortable clothing, home decor, groceries, and more. Sure, students have the option to order online and they can ask their parents for care packages, but if universities want to stand out in this competitive market, offering a range of retail uses right on campus will help boost retention rates and attract prospective, convenience-driven students.

Fulfilling university campuses
National retail brands are also realizing that university campuses present an opportunity to further drive sales. On-campus retail provides brands with the opportunity to grow their fulfillment side of the business. Years ago, parents would send care packages directly to the student mailroom. However, college mailrooms aren’t always accommodating to student schedules and they can easily get backlogged. It’s now easier for parents to go online and order a custom package from a major nearby retailer with just a click of a button. The student can then walk across campus to the Target or a similar store to retrieve his or her package that same day. Talk about convenience!

Campus retailers appealing to younger generations
Tapping into the college market isn’t easy. The retailers that want to be on university campuses have a deep understanding of the younger generation and what attracts them. They sell merchandise that makes sense for not only the students, but the surrounding community and university by evaluating what’s already being offered in the local retail market and what’s missing. For example, a retailer located on an East Coast campus will likely look different than one on the West Coast. It is all about paying attention to your audience and curating the merchandise accordingly. Retailers also know that younger consumers are interested in personalized service and memorable experiences. Campus retailers that offer special incentives for university students, including after-hour shopping events and accepting university currency, can win the favor of young shoppers and turn them into life-long customers.

Final thoughts
Looking ahead, campus retail will continue to grow and evolve to meet the changing needs of students. Retailers that can add value to campuses will gain momentum and expand their footprint across universities, while less popular concepts will die out and be replaced. It’s important that campus retail adds to the overall college experience, gives universities a competitive edge, and supports the needs of students, faculty, and the surrounding community for years to come.