Last summer, strategy asked Mosaic’s SVP, commerce and experience, Jason Dubroy, how shopper 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, something that was already seen as a major opportunity prior to the pandemic.

In his latest check-in, we spoke with Dubroy about the state of convenience and discount channels, the opportunities that are on the table and if cost concerns could hamper sustainability efforts.

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

One area for the discount segment, and especially the likes of Dollarama, is more on building or partnering in a proper retail media enterprise.

Digital retail media spending in North America is on fire right now, with 50% growth over the past two years due to the pandemic, representing almost 20% of total advertising spend in general (source: US Digital Ad Spending 2021, eMarketer). Dollarama already has a great app, and watching the continued and planned growth for that retailer in general, brands will continue to leverage it as a volume channel. With the continued traffic and the spend for retail media traditionally coming outside of trade channels, it’s a great opportunity for Dollarama to boost profit, and brands to boost pre-shop and instore awareness.

In the U.S. 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 been successful leveraging their first-party data, owned media properties, and precision marketing to drive their commerce marketing agendas. At this point, not having an owned retail media network is just leaving margin the table.

Fresh food has been an area convenience retailers have been pursuing. Are there other areas of growth you foresee for C-Channel?

Typical growth is usually driven across three key categories: foodservice, beverages (particularly energy beverages) and confectionery. Beer and wine sales in convenience is still provincially mandated and continues to be a controversial topic, so future growth outside will come from a combination of legislation and innovation. In the U.S., 7-Eleven Evolution stores already have full service margarita bars, beer on tap and indoor/outdoor seating with handmade tacos. That’s awesome, can you imagine that in Canada?

Also, pre-paid 5G phones will be another hot market to corner as networks cross country are turning on. Fresh made and locally sourced products including independent pizza and QSR sandwich shops are on the rise. The other major growth area will be in payments, as chains will need to pivot like most other retail to understand and accept digital currencies – and even provide crypto ATMs onsite. There is also a push from lottery providers to provide unique innovations to help drive loyalty and traffic.

If you’re an energy drink or candy brand, would you eventually redirect marketing dollars and put them against a different part of the funnel rather than in-store? 

Unless you are a “ghost C-store” running just in time deliveries, in-store is still where it’s at, and the stakes of playing the impulse game have never been higher. We are seeing many convenience players invest in larger scale campaigns, especially with Petro-Canada and Couche-Tard that allow for premium display space in-store, augmented with first party CRM, digital and mobile assets, and physical PO instore.

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

Unless these stores put in a crystal ball section next to the gum rack, that’s a tough one to answer. Right now the “C” of C-Channel is being completely redefined, based on how COVID redefined our relationship with convenience. Some people are driving less due to high gas prices, which is still impacting foot traffic in the short term, and so some stores are putting in EV charging stations to encourage hybrid vehicle stops and longer dwell times in-store. Some stores are catering to pet owners, knowing that almost 80% of them will travel with their pets and chose respite areas based on if they can accommodate their furry pals, so they are putting in everything from pet treats to dog wash stations. In the U.S., some retailers are betting on micro-footprinting and chashierless check-out, and Toronto’s Aisle-24 Markets is putting 24-hour self-serve checkouts in high density urban areas and condo complexes that will save time and solve for the labour shortage.

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

I think it will actually propel it, to be honest. The supply chain crisis alone, paired with public and activist investor pressure post-COP-26, the rise of ESG investing, and the shift in public sentiment towards sustainability in general as a brand preference marker have all had a hand in driving sustainability initiatives forward, and recent geopolitical events have showed us just how fragile our global web actually is.

Many companies are now pushing sustainable initiatives forward and are working in lockstep with companies like Costco and Walmart who have sustainability initiatives and targets for their supplier partners. As companies set goals for themselves to be net water or net carbon positive, we are seeing how packaging is now part of that transformation. A great example is Keurig Dr. Pepper, which is planning on testing its first fully recyclable and compostable paper bottle this year. The bottle, which will be tested with different drinks from pop to water to juices, will be 100% plastic-free and fully curbside recyclable.