The first nine months of 2015 have brought growth to convenience store sales at the pump as well as inside the store. According to a report from the National Association of Convenience Stores (NACS), the growth in sales can be attributed, partly, to continued low gas prices. As the third quarter of 2015 concludes, NACS reports that retailers are optimistic about prospects over the fourth quarter.
Nearly eight in 10 convenience store retailers (79%) say that they are optimistic about their business for the fourth quarter of 2015, compared to only 8% who are pessimistic. While retailers are overwhelmingly optimistic about their business, overall optimism is down slightly from the second quarter (83%) and first quarter (86%).
Strong fuel sales and margins continue to drive retailer optimism. More than half of all retailers (59%) say that fuel sales so far in 2015 are stronger than the same period in 2014 and two in three (66%) say that fuels margins are stronger than in 2014. The convenience store industry sells an estimated 80% of the gasoline purchased in the country.
A majority of retailers (57%) are also optimistic about the overall economy, but their optimism about the economy is down slightly from 61% last quarter.
Employment numbers are one reason for retailer optimism. “More people are working,” said Marc Strauch with Cameron Park Petroleum (Folsom, Calif.).
Both low gas prices and an improving economy are helping to drive in-store food sales, said Tommy Hunt with E-Z Stop Food Marts (Maryville, Tenn.), leading the company to expand its coffee program.
Better-for-You Sales Are Up
Two in three retailers (67%) say that their food sales have increased in 2015 and nearly as many (63%) say that their “better-for-you” items are selling better this year.
“A lot of positive press around the business has drawn more eyes on our store and products,” said Lonnie McQuirter with Lovingsons Service Center (Minneapolis, Minn.). He said that stronger relationships with the vendors who understand better-for-you items — including merchandising strategies — also have increased sales. The growth of better-for-you items also reflects more media attention to healthy eating. “We’re following this trend,” says Kim Robello with Minit Stop (Kahului, Hawaii), which introduced a number of new food items in 2015.
Meanwhile, fresh, hot-off-the-griddle breakfast sandwiches and grab-and-go food are driving strong sales at Freshfields Convenience Store (Johns Island, S.C.). “Our foodservice sales are up 14% this year and our breakfast sandwiches have drawn an additional 85 customers daily,” said Anthony Shupert.
Across the country, retailers are seeing opportunities to grow foodservice sales. “We have put more effort into building our foodservice and getting more better-for-you items in stores,” said Jeff Chase with Fast Break (Klamath Falls, Ore.).
Marketing and Merchandising Also Driving Sales
In addition to stocking more fresh items, retailers are also aggressively marketing and merchandising them to create customer awareness and loyalty. Wi-Not Stop Convenience Stores (Manassas, Va.) offers deals on fruit to encourage purchases, said Carl Hitt. Walter-Dimmick Petroleum (Marshall, Mich.) is using open-air coolers to increase the visibility of sandwiches and grab-and-go items, says Mike LaBerteaux. Additional end-cap racks and coolers are driving sales of salads, yogurt and other healthier items at Y.A. Whitehills Chevron (Camp Verde, Ariz.), according to Keith Kaufman. And for freshly prepared foodservice, Andy’s Corner (Tunnel Hill, Ga.), digital menu signage has helped grow sales, said Ankit Patel.
While convenience stores sales are strongest in the warmer summer months, many retailers are well positioned to continue strong sales over the last three months of the year. Palo Mini Mart (Palo, Iowa) will be expanding its novelty items, according to Jesse Grieder. The fall and holiday seasons are also expected to be good for business at Square One Markets (Bethlehem, Penn.), said Lisa Dell’Alba. Meanwhile, other stores thrive in the winter months. “We are tourism based and snow brings the winter sports buffs,” said Penny Duprey with P.J. Hyde & Sons (Saranac Lake, N.Y.).
Retailer Optimism About the Industry Grows
Retailer optimism about the convenience retailing industry’s prospects increased, rising from 79% in the third quarter to 80% for the fourth quarter. A major reason for this optimism could be the upcoming NACS Show, the convenience and fueling industry’s biggest event. More than two in three (68%) retailers surveyed plan to attend the Oct. 11-14 conference and expo in Las Vegas where they will join 24,000 other attendees.
Greg Parker with Parker’s (Savannah, Ga.) cites the great education sessions and cool new products in the expo and Herb Hargraves with Jacobs Entertainment (Lafayette, La.) will focus on finding better healthy options that are quick for consumers on the 410,000-square-foot expo. John Shehadey with Shop-N-Go Inc. (Fresno, Calif.) said he is attending for overall industry knowledge. “Same as the last 25 years attending,” he added.