NACS indicates that lower gas prices provided an economic boost to in-store sales in 2014.
By David Bennett, Senior Editor
Fueled by lower gas prices and more potent foodservice programs, the nation’s convenience store industry generated $697.5 billion in revenue last year, thanks to several strong product categories.
Despite lower fuel sales, c-stores experienced record in-store sales of $214.9 billion last year, according to newest industry figures unveiled at the State of the Industry Summit, an annual conference hosted by the National Association of Convenience Stores (NACS).
In tracking foodservice and merchandise sales, highlights included commissary sales, which rose 9.8% over 2013, an 8.5% spike in salty snacks, with potato chips, tortilla chips and popcorn leading the way. Packaged beverage sales rose 6.5%. Overall, packaged beverages earned the highest volume of gross profit dollars—going on the last five years.
Because of relief at the pump, Americans enjoyed more disposable income, often purchasing a snack, drink or cigarettes during their visit, said Kevin Smartt, CEO of Kwik Chek Food Stores Inc., a 39-store chain based in Bonham, Texas.
Foodservice accounted for 33.5% of gross profit dollars, a 4.4% increase over the previous. Smartt told attendees that the nature of the industry makes c-stores an attractive option for more customers, including Millennials, who are turning to c-stores for foodservice options—whether it’s healthy, grilled or something in between.
“We are an immediate consumption channel,” said Smartt, who explained that most food offerings purchased at c-stores are eaten within the hour.
Then again, so are many big, quick-service restaurants such as McDonalds and Taco Bell—all of which are looking to grab more convenience food customers through promotions and new initiatives.
Looking closer at in-store sales, most categories held their own, or better:
- Tobacco—cigarettes, cigars and other tobacco products, including e-cigarettes made up 35.9% of in-store sales;
- Foodservice (prepared and commissary food; hot, cold items) accounted for 19.4%;
- Packaged beverages, including soda, sports drinks, juices, water and teas generated 15.4%;
- Candy; sweet, salty and alternative snacks were 10.6%;
- Beer was 7.3%; and
- Other products racked up 11.4%
While tobacco products constituted 35.9% of in-store revenue dollars, they accounted for only 17.3% of gross margin dollars. However, while cigarette sales have dropped steadily the last few years, 2014 showed a small spike, pushing sales to just barely above flat.
“We’re happy that flat is the new up,” Smartt said.
The U.S. convenience store count increased to 152,794 stores as of Dec. 31, 2014, an almost 1% increase—1,512 stores—from the year prior, according NACS/Nielsen data. Convenience stores also account for 33.9% of all retail outlets in the U.S., according to Nielsen,