Consumers snub convenience store confectionery
convenience stores as consumers look to bigger stores for better
value, intensifying competition in the market, says a new report.
American retailers are becoming aware of a consumer shift away from shopping in convenience stores towards buying confectionery together with their other food in larger stores, according to a report by Deutsche Bank.
The change may have alarm bells ringing with confectioners as further doubts are placed over yet another of their reliable markets and sources of income.
The confectionery industry places great stock in consumers buying their confectionery along with beverages and snacks on impulse in convenience stores and petrol stations.
Retailers feel that people are now buying for value over convenience, yet value is a quality that is diminishing in this channel.
At the moment, retailers are merely speculating, but they are concerned that confectionery may follow the drop in volumes already being witnessed in alcohol and carbonated soft drinks.
Rising fuel prices also pose a serious problem to convenience sales, eating into consumers' disposable funds.
Deutsche Bank surveyed 14 of the largest US convenience stores and petrol retailers in order to assess how PepsiCo's shares would be affected in light of recent rises in fuel prices.
Prosperity at this level is essential for the PepsiCo, which is estimated to take 20 per cent of its domestic profits in convenience stores.
Respondents to the survey, which represent more than 14,000 stores, brought some good news for larger players in the confectionery industry.
Around 77 per cent of those surveyed felt that confectionery had shown the most growth over the past year and 40 per cent thought that Hershey was doing the best job in promoting its products in conveniences stores.
However, while larger confectionery companies appear to be holding up volume sales well, the convenience market overall is still shrinking - possibly creating problems for smaller firms.
