For all the concerns about reduced consumer spending over the past 15 months, convenience stores experienced another strong year in 2012.
Core categories, such as foodservice, beer, snacks and beverages, all posted solid sales gains. Relative newcomers to the industry, including energy shots and electronic tobacco, continued to thrive and promise to exceed expectations again in 2013.
Even though convenience stores faced a harsh retail environment, the industry outperformed many other retail channels because of its inherent ability to provide speed of service to time-starved consumers who want to get in and out of the store quickly. These shoppers recognize this channel of trade for its convenient locations, extended hours of operation, one-stop shopping, grab-and-go foodservice, variety of merchandise and fast transactions.
Along with sales gains, the industry itself is growing. The U.S. convenience store count increased to a record 149,220 stores as of Dec. 31, 2012, a 0.7% increase 1,094 stores) from the year prior, according to the 2013 NACS/Nielsen Convenience Industry Store Count.
The growth of convenience stores selling motor fuels was nearly triple the overall growth in the industry, as fuel retailers added convenience operations and convenience retailers added fueling operations. Overall, 82.6% of convenience stores (123,289 stores) sell motor fuels, a 1.9% increase (2,339 stores) over last year.
Convenience stores account for 34.8% of all retail outlets in the U.S., according to Nielsen, which is significantly higher than the U.S. total of other retail channels, including drug stores (40,727 stores), supermarkets (33,192 stores) and dollar stores (24,075 stores).
“Our continued growth shows that our core offer of convenience resonates with customers, whether it’s a fill up, quick snack or drink or for fill-in groceries or take-out meals for time-starved consumers,” said NACS Chairman Dave Carpenter, president and CEO of Denver-based J.D. Carpenter Cos. Inc.
Overall, the industry’s 149,000-plus stores account for more than $680 billion in sales. According to NACS, the industry has a number of critical issues it must face as we head into 2013, including credit card fees, gasoline retailing misperceptions, debit card holds and more.
• Credit and Debit Card Fees: After a 21.6% increase in convenience store industry card fees in 2010, they jumped 23.3% in 2011 to a record $11 billion. Total credit and debit card fees surpassed overall c-store industry profits for the sixth consecutive year. Credit card fees are the second-largest expense at the store level. Only labor costs are more.
•Debit Holds for Fuels Purchases: As gas prices and the use of plastic at the pump have increased, consumers are increasingly concerned about the debit “holds” on their accounts.
• Foodservice at Convenience Stores: While convenience stores have offered fresh, prepared foods for years, it is only over the last decade that the trend has accelerated. The result is that c-stores have continued to evolve from gas stations that happen to sell food to food retailers that happen to sell gas. “Food-service is reshaping convenience retail,” said David Bishop, managing partner of Balvor LLC. “The cost of failing to execute consistently can be costly very quickly. However, the risk of not investing to enhance and expand one’s program can be even greater over the longer term.”
Facts and trends about the top in-store merchandise categories and services of the convenience and petroleum retailing industry include:
• Beer Sales: Nearly 80% of c-stores sell beer, accounting for more than 30% of all beer purchased in the U.S.
• Candy Sales: Candy is a high-impulse item in c-stores. In fact, many shoppers (49%) report that their candy purchases were unplanned, according to global research firm Envirosell
• Coffee Sales: More than three out of four adult Americans say that they drink coffee either daily or regularly, according to the National Coffee Association (NCA), and convenience stores are one of the preferred destinations for coffee drinkers.
Source: Convenience Store Decisions Posted on by John Lofstock