More than four in five convenience store retailers (82%) are optimistic about their business prospects in the first three months of 2015, according to the results of retailer sentiment survey released today by the National Association of Convenience Stores (NACS).
The drop in gas prices over the second half of 2014 was cited as a main reason for retailer optimism. Gas prices today are more than $1 per gallon lower than they were a year ago.
Convenience store retailers, which sell more than 80% of the gasoline purchased in the country, say that consumers are spending their savings where they are buying fuel. Overall, 62% say that customers are spending the extra savings from lower fuel prices inside the convenience store. Nearly three in four (73%) retailers say that they had higher merchandise sales in 2014.
“Lower fuel prices lead to higher volume inside the store and at the pump,” said Stuart Everngam, with The Gott Co. (Prince Frederick, Md.). “We are back to pre-recession sales numbers — and going up,” added Theron Soderlund, with Country Corner (Eastsound, Wa.).
Convenience retailers are especially optimistic about growing their in-store sales. Nearly seven in ten (69%) believe in opportunities to grow merchandise sales and 58% say that there are opportunities to grow food sales in 2015.
Overall, 88% of convenience retailers say that offering prepared foods is important to their business in 2015. “Foodservice fits the immediate consumption and time-starved needs of our consumers. It is an obvious fit, as long as it is a quality offer,” said Sonja Hubbard, with E-Z Mart (Texarkana, Texas).
“Consumers are looking for quick fresh and easy snacks or meals that can be consumed on the run,” added Julie Jackson with G&M Oil (Huntington Beach, Calif.).
“Prepared food is our industry’s future,” noted Tim Switzer, with Radiant Food Stores (Tampa, Fla.).
Produce also was cited as important to convenience retailers’ business in 2015, cited by 61% of retailers. “The trend is for fresh and better-for-you products,” said Giselle Eastlack, with Diaz Market (Metairie, La.).
Retailers also offered advice for how to grow produce sales. “Like foodservice, produce is a labor-intensive category when it is done correctly. Variety and fresh offerings are critical to the category’s success,” said Don Rhoads, with The Convenience Group (Vancouver, Wa.).
There also are challenges to offering produce, especially related to frequent distribution. “You must have nearly daily deliveries to maintain freshness,” added Ben Englefield, Duchess Shoppes (Heath, Ohio).
And, retailers need to be committed to the program’s long-term success produce if they expect to succeed. “If you are going to do it, then you better be married to it,” said Tony Huppert, with Team Oil Inc. (Spring Valley, Wis.).
While retailers are very optimistic about their specific business prospects, they are less optimistic about the overall economy. Only 62% of retailers say they are optimistic about the economy as a whole over the first quarter.
Convenience retailers noted several competitive advantages working in their favor for 2015. “We are in the unique position to service time-strapped consumers and retool ourselves much quicker than in other retail channels,” said Lonnie McQuirter, with the 36th & Lyndale BP (Minneapolis). “But we need to constantly be aware when opportunities present themselves to our industry,” he cautioned.
While retailers cite the value of convenience as a competitive advantage, they also noted that retail execution remains critical. “Stocking the right amount of the right product at the right price the right way is more critical than ever,” said Michael Maxfield, with Big John’s (Abingdon, Va.).
Ultimately, retail success in 2015 may depend upon gas prices. And while gas prices remain relatively low, retailers are also carefully looking to see if oil prices climb in 2015. “With the recent plunge, will they stay low and how will that help store sales and the economy in 2015?” asked Tom Robinson, with Rotten Robbie (Santa Clara, Calif.).
The quarterly NACS Retailer Sentiment Survey tracks retailer sentiment related to their business, the industry and the economy as a whole. A total of 88 member companies participated in the Q1 2015 survey.