Convenience store sales were strong over the first quarter of 2015, despite harsh winter weather, and retailers are even more optimistic about second quarter sales, according to the results of retailer sentiment survey released today by the National Association of Convenience Stores (NACS).
Lower fuel prices, a sound convenience business model and foodservice are influencers, according to survey respondents.
Nearly nine in 10 retailers (86%) say that they are optimistic about their business in the second quarter, an increase from 82% who expressed optimism in the first quarter. Only 8% expressed pessimism about the second quarter.
Much of the optimism stems from a strong first quarter. More than two in three (69%) retailers say that merchandise sales in the first quarter of 2015 were more than the first quarter of 2014. And 45% say that gasoline sales increased in the first quarter compared to the same period in 2014.
“Lower fuel prices have a positive effect on sales,” said Mark Sidebottom with MWS Enterprises Inc. (East Amherst, N.Y.). More than one in three retailers (34%) say that consumers are spending the extra money from lower gas prices at their stores, and 29% say that consumers are driving more.
But retailers’ optimism also stems from a belief that the convenience retailing business model is sound.
“In a rapidly changing economic environment, no other industry responds to consumers’ needs better than we do,” said Charlie Rose with Charlie’s Chocolate and Cravings (St. Paul, Minn.). “The industry is healthy,” added Paul Rankin, with Country Fair (Erie, Pa.).
Convenience retailer optimism also extends from confidence in the industry’s growing foodservice offer. Nearly two in three (63%) say that they are optimistic about their ability to compete with quick-service restaurants, compared to 8% who expressed pessimism.
“We are very involved in food,” said Greg Darby with Little General Stores (Darby, W.Va.). “We will expand our fresh food offerings,” added Tom Price with Shaka’s (Idaho Falls, Idaho).
Warrior Fuel (Santa Ana, N.M.) “is adding healthy juices and smoothies,” said Silvia Gibson. “We purchased a new open-air cooler to merchandise our healthy alternative products,” said Jeff Armbruster with Ambruster Energy Stores (Grafton, Ohio).
Ultimately, the plan for success comes down to “great customer service and delicious food,” noted Gay Simpson with Dutchtown Tiger Mart (Geismar, La.).
While retailers are extremely optimistic about their own business prospects in the second quarter, they are slightly less optimistic about the convenience retailing industry (80%, down slightly from 83% in the first quarter) and the economy as a whole (70%, up from 63% in the first quarter).
Overall, retailers cited three factors that could grow sales in the second quarter: low gas prices (cited by 30%), better weather (29%) and a continued emphasis on fresh food (19%).
“If street fuel prices continue to decline, I think people are going to drive more and spend more of that discretionary income that’s become available. At least that’s what we hope!” said Dennis McCartney of Landhope Farms (Kennett Square, Pa.).
Retailers also say that sunnier skies and warmer weather should heat up sales. “Snow had a big impact in the Northeast. Sunshine will have a big impact in the spring,” said Larry Jackson with Good to Go Markets (Columbia, Md.). “If it is nice outside, we will be busy. If not, sales will be flat,” added Linda Kaplan with East Troy Point Shell (East Troy, Wis.).
Andy Jones with Sprint Food Stores (Augusta, Ga.) best summed up retailers’ reasons for optimism in the second quarter: “Better weather, lower fuels prices and better retail execution.”
The quarterly NACS Retailer Sentiment Survey tracks retailer sentiment related to their business, the industry and the economy as a whole. A total of 100 member companies, representing a cumulative 2,519 stores, participated in the Q2 2015 survey.