The Pinch of Inflation

As consumers curb spending, retailers are developing a 2.0 plan for combating inflationary pressures as expectations rise for more economic turbulence.

The Pinch of Inflation

September 2022   minute read

By: Renee Pas

The pace of inflation seems unwilling to cease its meteoric rise. The U.S. Department of Labor reported the Consumer Price Index increased 9.1% for the 12 months ended in June, marking the largest 12-month increase since the end of November 1981. There has been continued upward momentum in nearly every index, including food away from home (up 7.7% vs. last year) and food at home (up 12.2% over the past 12 months).

Economists across the board have been sounding the recession alarm, and inflation has been a continued top story in the media. “Inflation is one of the most vexing issues facing economists and government policy makers and is a factor raising the risk of U.S. recession,” declared The Wall Street Journal. Fortune suggested “the economy is headed towards stagflation—a combination of slowing economic growth and high inflation—depending on which expert you speak with.”

While no one holds the crystal ball on a recession, the subject continues to make its way into daily conversations in every industry, and of course, convenience store executives share a concern about the pending headwinds.

“I can tell you that in the 30-plus years that I have been in business, the stars have never lined up like this before,” said Don Rhoads, president of The Convenience Group. “Labor issues, supply chain issues, inflation—all of it is hitting us at the same time. We are in for an interesting ride here, I think, for the next two years.”

The Convenience Group umbrella totals nine stores in Washington state, including Quick Shop Minit Mart, La Center Marketplace, Felida Store and Paradise Truck Stop, with a standard store footprint of about 3,000-4000 square feet. Merchandise skews more toward grocery than is traditionally found at c-stores, with stores taking more of a superette approach to convenience.

 Families are making choices today based on what’s left in their pocketbook, Rhoads said. Across his stores, customers are trading down, trip count is flat and basket size has declined—“not in double digits, but worth watching.” The optimistic side of him wants to factor in a wet spring in the Pacific Northwest as the cause of changing shopping patterns, but he knows inflation is also taking a toll.

When I think about where we sit today versus last year, almost all our price tags have changed."

“Normally we have a basket size around $13,” Rhoads said. “We’ve lost somewhere in the neighborhood of 7% of that in the last six months.” He notices that customers are buying down and likely doing more destination shopping because of higher gas prices. The goal now, he said, is to “balance our portfolio so that the three- to four-minute trip is still important.”

Rhoads continues to see a huge long-term opportunity in foodservice growth. The Convenience Group operates its own commissary, so it produces most of the food it sells at stores itself. The chain now also works with a third-party foodservice provider in an effort to circumvent the ongoing labor shortage. “That doesn’t mean we are reducing our commitment to foodservice,” Rhoads noted, adding that the shift is more about scale. He plans to supplement his commissary space to increase production of sandwiches and sides from the additional space. He’s even working on a wholesale partnership model, focusing on gourmet grab-and-go items for other retail establishments.

In addition to foodservice opportunities, premium beer and wine are key segments for The Convenience Group. The chain pays close attention to beverage pricing outside the c-store segment as part of its effort to keep stores relevant for customers, going so far as to post point-of-purchase information comparing pricing to nearby grocery stores. “Our core customer knows we are working very hard for them when it comes to the craft beer and wine category,” he said. “It comes down to the dollar ring for us in the category. It’s not always about margin; it’s about a value offering and remaining our community’s store of choice.”

Customers at Coen Markets, a 60-store chain that operates in the Pittsburgh region, have certainly shifted habits toward looking at prices, said Colin Dornish, senior director of operations for Coen Markets Inc. “The sticker shock for customers is happening everywhere—grocery stores, QSRs, c-stores—everyone in unison is raising prices.” Coen Markets stores routinely receive weekly, sometimes daily price changes now. “When I think about where we sit today versus last year, almost all our price tags have changed,” he said.

In the 30-plus years that I have been in business, the stars have never lined up like this before."

In the face of higher prices and consumer purchasing shifts, Coen Markets is focusing heavily on positioning toward value. In the foodservice arena, that translates to the retailer setting a price for a full meal instead of raising the price of just one singular entree. Another solution deployed at Coen Markets has been to trim out an item from the meal to maintain pricing. For instance, transitioning from always including dinner rolls with meal purchases to making them an optional add-on item is one approach. It’s a slight variation on a tactic employed by packaged goods manufacturers dubbed “shrinkflation”: Reduce package size/ounces yet maintain the price point.

Yet another strategy playing out at Coen Markets is expanding its proprietary product line with more value-centric items. For example, adding to its proprietary pepperoni rolls— its hero product—by way of a pretzel stick and bread stick rollout, which are “much more of a value line,” Dornish said.


Smaller basket sizes and more frequent visits mark the new normal when it comes to customer shopping patterns at many retail stores, including Parkland USA’s network of c-stores, said company president Doug Haugh. “Many customers are not filling up; they are filling in just enough to get by, and the average in-store basket has downshifted to economy brands or smaller size items,” he said.

There is a purchasing shift happening with consumers to be certain, said Jason Zelinski, client director, convenience and growth accounts, NielsenIQ. “Upticks are happening with smaller sizes across the board,” he said.

Add to that a mind-shift change with private label, Zelinski said. That shift started even before the pandemic, but with inflationary pressures today, consumers are even more receptive to private-label items, he explained. “There’s an enhanced trust with private-label brands today,” he said. “Grocery and mass merchandisers caught on to that during the last financial crisis, doubled down on private label, and it’s now paying dividends for those segments.”

Some retailers are even adding tiers to their private-label lines, with a base price, midrange and premium-level private-label options. Trader Joe’s is an example of a chain that is largely built exclusively around private label. “People have a brand loyalty to that chain, and because of that they are willing to try new products,” Zelinski said. “If you have great brand loyalty, it can extend to private label.”

Zelinski realizes smaller c-store retailers may find scale a barrier to entry for private label. If that’s a factor, he suggests considering adding generic, or white label, products to attract those buyers seeking lower price points. “Not every c-store has the negotiating power for private label, but there are a lot of generic options today, and consumers are more open to those than ever before,” he said.

Understanding shopper shifts also means realizing how behavior shifts back once consumers get money in their pockets again. “During a recession, private label strengthens, but that tide shifts back to national brands as the economy shifts,” Zelinski said. “We saw that even last year before gas prices started spiking, when the government was sending money to households. Private label took a dip. People started trading back up with the influx of money; now that trend has reversed.”

The average in-store basket has downshifted to economy brands or smaller size items."


Vendor price changes have come through across the board for both Coen Markets and The Convenience Group. Where vendors might have once been a bit timid in implementing price changes and often validated the changes by explaining the need for them, Dornish said today vendor price changes have become a normal pattern of life. “No one is remorseful or shy about pushing along price changes anymore,” he said.

In an effort to be more proactive with the imminent vendor price changes, Rhoads anticipates adjusting his purchasing patterns, particularly if he’s aware of a pending price increase on an item. That’s one way he feels he can prepare for what’s coming and take advantage of any buy-ins. He’s also tapping supplier relationships to know what to expect. When chocolate supply came into question last year, for example, he worked with the vendor to come up with a roadmap to be ahead of what was happening. “I have the ability to get on the phone and call in one of my suppliers, including my main wholesaler, and discuss what’s happening on their end and how it will affect me coming into the next quarter,” he said.

Rhoads’ strategy looking forward is to “control the controllables,” and find a way to balance inflationary pressures. “Inflation does not treat every category equally,” he said. Food-related inflation, particularly with proteins, has been a focal point for him and has taken the brunt of inflation. Foodservice was one of the first places retail prices increased at The Convenience Group stores, impacting sandwiches, sides and grab-and-go items.

Coen Markets has likewise been contending with food prices. “We are reacting quickly to pricing and supply chain issues; we’ve dialed into what we can change quickly and what will change diligently,” Dornish said.

On the nimble side of things, Dornish pointed to the transition to a QR-code-based menu as an example. Coen Markets had historically printed a menu for its food program, then as commodity changes happened with chicken, the retailer printed its menu three or four times in a short period of time because of protein price increases. The move to a QR code allows Coen Markets to have a more agile pricing strategy, he said.

The flip side is understanding when not to react too quickly, which in Coen Markets’ case became evident when the team started to re-evaluate packaging. Since customers tend to purchase food items for immediate consumption, the thinking was the retailer could switch out its take-home-style packaging in favor of something less expensive. It made sense, said Dornish, until the team started to work through the details on how long it would take to implement. “Transitioning quickly would have meant stores might have a backlog of packaging in their back rooms,” he said. “We want to avoid inconsistencies in our food presentation. It just means diligently thinking through an exit strategy when making some changes.”


The impact of inflation on consumer spending is apparent in nearly all households, with 95% of consumers reporting inflation has impacted their finances, according to New Realities & Routines, a study by Numerator. The most common adjustment has been stocking up on sale items (51%) and searching for coupons, promotions and sales (50%).

Those same money-saving approaches are expected to continue in coming months, according to the report.

The same message rings true in c-store specific data, where the number of shoppers noticing promotions showed an uptick of 10 points in the 2021 NACS Convenience Voices survey. The percentage of shoppers reporting they noticed a promotion on their visit was 30% in 2022 data, compared with 20% in 2021.

Shoppers are incredibly aware that promotions might help them stretch their dollars."

“People are noticing more promotions, and that is prompting them to make a purchase,” said Lori Buss Stillman, vice president, research, NACS. “Shoppers are incredibly aware that promotions might help them stretch their dollars.” Because accelerated food prices and inflation have both been heavily covered in the news, she believes consumers are even more aware of store prices today and will be discreet in their choices.

For instance, perhaps a family will watch a movie at home instead of going to the theater, Stillman suggested, but they may still stop at the c-store for the same fun candy they would have normally bought at the movies. Or, perhaps a shopper will try a brand they would not have purchased in the past because of a lower price. Inflation will continue to change the way consumers shop, she said. “We have to continue to offer the consumer reasons to come inside, consider how the trip missions are changing, and make sure our strategies can withstand the test of time.”

Renee Pas

Renee Pas

Renee Pas’ writing draws from both her c-store background and her more than 20 years writing about various retail channels. She can be reached at