CSD explores industry innovations, sales trends and outlooks for 38 key c-store categories.
A CSD Staff Report
Restrained economic times and stiff competition across the supply chain make it critical for convenience store operators to have a solid understanding of their customers, particularly high-frequency, high-value shoppers.
Armed with clear insights, operators can manage the necessary steps to retain loyal customers and attract new ones.
Though store owners continued to face 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 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 expedited transactions.
The one crucial difference in 2015 versus years past was the sharp reduction in fuel prices. This had repercussions throughout the convenience store industry. While overall fuel prices cratered, customers made use of more disposable income in their pockets, in such critical categories as foodservice, beverages and snacking.
Since the average retail fuel transaction is down sharply, retailers have also been benefiting from reduced credit card fees. Many retailers reported this was a little bit of a double-edged sword, however. Though transaction fees were down, fuel margins remained relatively flat in some key markets when compared to a spectacular 2014.
Also, the National Association of Convenience Stores (NACS) in February found that, despite fuel prices having fallen to their lowest point in seven years, optimism about the economy fell to its lowest level in almost a year.
According to the NACS survey, consumer optimism fell three percentage points to 44%, the lowest percentage of Americans who were confident about the economy since March 2015.
Millennials are the only group in which a majority feel positive about the economy; 52% of those ages 18-34 report being optimistic compared to just two in five (39%) of those age 50 or higher. Four in five Millennials (79%) also said that gas prices affect their economic sentiment, compared to only three in five (62%) of those age 50 or older.
FODSERVICE TAKES OVER
Foodservice remains the biggest area of opportunity for convenience stores. As revenues from gasoline and tobacco products fall, foodservice sales are increasingly becoming convenience stores’ most profitable category.
Convenience store foodservice is a $13 billion industry and the second largest retail host foodservice category behind supermarkets.The c-store segment comprises about 30% of retail foodservice and almost 3% of the total foodservice industry.
In the coming years, it is imperative that convenience store chains look to better position themselves for continued growth in foodservice. This is important because not only are quick-service restaurants targeting c-store customers, but other c-store competitors are upping their game with fresh foods and healthier ingredients.
Stay tuned to Convenience Store Decisions‘ March issue, where we delve into 38 in-store categories to identify emerging trends and garner retailer analysis to forecast what operators can expect for 2016 and beyond.