Podcast Summary: The CPG Guys – Convenience Channel Retail Media

Release Date: November 9, 2024

Introduction

In this episode of The CPG Guys, hosts Peter V.S. Bond and Sri Rajagopalan delve into the evolving landscape of retail media within the convenience store (C-store) channel. They are joined by esteemed guests Art Sebastian, CEO of NexChapter, and Jared Luskin and Neil Murphy from Bridge. The discussion centers around how convenience stores are becoming pivotal players in retail media, the challenges they face, and the emerging opportunities for brands and advertisers.

Guest Introductions and Company Overviews

Peter V.S. Bond begins by introducing the guests:

• Art Sebastian: CEO of NexChapter, with over 25 years in grocery and CPG retailing, formerly led digital transformation at Casey's.
• Jared Luskin: Head of Partnerships at Bridge, specializing in identity resolution and retail media networks.
• Neil Murphy: Chief Revenue Officer at Bridge, focusing on leveraging data for retail media engagement.

Evolution of Convenience Stores

Art Sebastian highlights the transformation of convenience stores from mere afterthoughts to essential retail points:

"There are over 150,000 convenience stores across the US with high density in many markets, leading to three to five purchases per week per shopper—significantly higher than traditional grocery shopping frequencies."
[07:56]

Key Points:

• Increased Foot Traffic: Convenience stores now serve approximately 160 million customers daily.
• Investment in Digital Capabilities: Enhanced loyalty programs, mobile apps, and sophisticated Martech and Ad Tech.
• Enhanced Food Service: Higher quality food offerings leveraging talent from the restaurant industry, making C-stores viable alternatives to fast-food restaurants.

Challenges in C-store Retail Media

Jared Luskin identifies the primary challenges facing retail media in the convenience channel:

"First-party data scale is limited due to low loyalty program penetration, and the investment required to launch retail media offerings impacts speed to market."
[10:39]

Challenges Discussed:

1. Data Scale and Loyalty Penetration: With only about 35% of consumers in loyalty programs, achieving sufficient data scale is difficult.
2. Investment and Speed to Market: Significant investment is needed to build or partner for retail media platforms, delaying market entry.
3. Measurement Capabilities: Proving incremental return on advertising spend remains a hurdle for brand advertisers.

Consumer Insights and Behavior

Art Sebastian provides a deep dive into the characteristics of convenience store shoppers:

"The convenience channel consumer is literally everyone across the US, including a spike in younger consumers who are twice as likely to build larger baskets and respond well to enhanced food services."
[13:40]

Key Consumer Behaviors:

• Diverse Demographics: From construction workers to teachers and businesspeople, including an increasing number of younger shoppers.
• High Purchase Frequency: Frequent visits (three to five times a week) compared to once-a-week grocery trips.
• Category Extensions: High engagement in categories like tobacco and lottery, often leading to additional impulsive purchases.

Leveraging Loyalty Programs and Data

Neil Murphy discusses the role of loyalty programs in enhancing retail media effectiveness:

"Loyalty programs drive higher pump-to-store conversion rates, with personalized promotions increasing conversions by up to 60%."
[16:50]

Insights:

• Higher Profit Margins: In-store sales have better margins than fuel sales, making loyalty-driven store visits more profitable.
• Data Utilization: Personalized marketing campaigns based on both loyalty and non-loyalty shopper data can significantly enhance targeting precision.
• Bridge's Ripple Platform: Aggregates data from over 70 million shoppers, aiming to surpass 100 million, enabling better audience targeting and measurement.

Opportunities for Brand Advertisers

Jared Luskin outlines the opportunities available for brands to engage convenience store shoppers:

"Ripple offers advertisers the ability to reach over 42,000 convenience store sites with detailed targeting based on purchasing behavior, demographics, and lifestyle indicators."
[19:32]

Opportunities Highlighted:

• High-Frequency Audience: Multiple touchpoints per week provide ample opportunities for brand engagement.
• Sophisticated Targeting: Ability to target based on specific purchasing patterns and consumer demographics.
• Measurable Impact: Precise measurement of campaign effectiveness facilitates better ROI tracking.

Future Trends and Innovations

Art Sebastian and Jared Luskin discuss the future trends shaping the convenience retail media ecosystem:

"Continued investment in customer-facing technologies like self-checkouts, digital signage, and customer data platforms will drive growth in retail media."
[21:44]

Emerging Trends:

• Technological Advancements: Increased use of self-checkout systems, digital menu boards, and edge computing to enhance customer experience.
• Enhanced Food Services: Investment in kitchen technologies and high-quality food offerings to compete with traditional restaurants.
• Data Integration: Adoption of customer data platforms to unify and leverage data for more effective marketing strategies.
• Ultra-Speedy Deliveries: Expansion of quick commerce offerings, enabling deliveries within 30 minutes to meet consumer demand for swift service.

Neil Murphy adds:

"Convenience stores are diving into ultra-speedy deliveries and embracing e-commerce trends to offer seamless cross-channel customer experiences."
[27:41]

Conclusion

The episode underscores the significant potential of the convenience store channel in retail media. With vast consumer reach, high purchase frequencies, and evolving technology integrations, C-stores present a fertile ground for brand advertisers. Despite challenges like data scale and loyalty program penetration, platforms like Bridge's Ripple are paving the way for more effective and measurable advertising strategies. The future points towards continued technological investments, enhanced food services, and innovative delivery models, all contributing to a dynamic and promising retail media landscape within the convenience channel.

Notable Quotes

• Jared Luskin:
  "Retail media in the convenience channel is a very new opportunity, but one with immense potential given the high-frequency shopper base."
  [10:39]

• Art Sebastian:
  "Convenience stores have this unique opportunity to serve rural America, acting as gas stations, mini grocery stores, and community meeting places."
  [15:55]

• Neil Murphy:
  "Convenience stores represented almost $860 billion in sales in 2023, with $325 billion from in-store purchases—a testament to their massive scale and growth."
  [27:41]

This comprehensive summary encapsulates the key discussions and insights from the podcast episode, providing valuable information for listeners and those interested in the intersection of convenience retail and media strategies.