US Convenience Changing face of small-box grocery retailing TREND REPORT US Convenience Changing face of small-box grocery retailing Sandy Skrovan May 2014 Research Director - US

Contents Shifting shopping behavior Evolving ‘convenience’ landscape Value retailers proliferate Neighborhood grocers emerge Mass gets small Learning from campus stores Drugstore as c-store Can traditional c-stores adapt? Key takeaways

1. Shifting shopping behavior

1. Shifting shopping behavior Eating and meal preparation habits reflect an increasing emphasis on convenience and on-the-go consumption. 53 minutes spent per day on meal preparation and clean-up, 2012. Source: US Bureau of Labor Statistics of snacks are eaten at home. Source: Hartman Group 80% 1in4 people eat some type of fast food every day. Source: DoSomething.org 83% US is a nation of snackers: 83% of consumers snack at least once a day. Source: NPD 1in5 consumers (66 million Americans) say their daily eating approach is ‘eating on the run’. Source: IRI 20% of all meals are eaten in the car. Source: DoSomething.org

small-format fresh food markets 1. Shifting shopping behavior Small-box stores are winning more fill-in grocery and quick-trip shopping occasions. Small-format food stores – i.e. hard discounters (e.g. Aldi), small-box convenience-oriented fresh stores (e.g. Sprouts, The Fresh Market) and dollar stores – are popular destinations for fill-in food shopping – according to Food Marketing Institute (FMI) data. USA: % of Format’s Shopping Trips that Are for Fill-in Food Shopping, 2013 (%) hard discounters 30% small-format fresh food markets 27% © FMI dollar stores 18% Source: Food Marketing Institute