Cigarettes accounted for the largest portion of merchandise sales at 31%, followed by foodservice at 22.6%.
U.S. c-stores saw record in-store sales in 2018, according to data released at the NACS State of the Industry Summit on April 3.
The NACS State of the Industry Summit, April 2-4 at the O’Hare Hyatt Regency in Chicago, hosts more than 600 retail and supplier company representative.
This marks the 16th straight year for record in-store c-store sales, according to NACS.
Complete data and analysis will be released in June in the NACS State of the Industry Report of 2018 Data.
Merchandise sales include:
- Cigarettes: 31% of in-store sales
- Foodservice (prepared and commissary food; hot, cold and dispensed beverages): 22.6%
- Packaged beverages (carbonated soft drinks, energy drinks, water, sports drinks, juices and teas): 15.3%
- Center of the store (salty, candy, packaged sweet snacks and alternative snacks): 10.4%
- Other tobacco products: 6.7%
- Beer: 6.3% (12.4% for stores selling beer)
- Other: 7.7%
Additional data from the report includes:
- Total sales increased 8.9% to $654.3B, led by a 13.2% increase in fuel sales
- In-store sales increased 2.2% to a record $242.2 billion
- Wages increased 4.4%; the average wage for a store associate increased to $10.74 per hour
Higher gas prices, up 13.7% from $2.37 per gallon in 2017 to $2.69 per gallon in 2018, contributed to the increase in overall industry sales.
Fuel margins, which have increased over the last five years, were also higher in 2018, up 7.5% to 23.35 cents per gallon, while gallons sold decreased by 0.4%.
“Fuel sales were strong in 2018, but consumers were making fewer stops to refuel, which suggests that greater fuel efficiency in vehicles is translating to less trips per week to the convenience store,” said Andy Jones, NACS vice chairman of research and president/CEO of Sprint Food Stores Inc. in Augusta, Georgia. “Utilizing NACS research can help retailers track trips per transaction and develop new marketing strategies to bring customers from the pump inside the store.”
Foodservice sales accounted for 22.6% of in-store sales, a category that continues to be a key focus area for the convenience store channel.
165 million U.S. customers frequent their favorite c-store location every day, and 83% of the items bought at a convenience store are consumed within the first hour of purchase.
The growth in foodservice also has led to an increase in store size.
The average convenience store is 3,230 square feet. But as newer stores feature touchscreen food-ordering kiosks, add space for in-store seating and waiting areas and incorporate an open-kitchen design, the size of new stores has increased — to 4,991 in rural locations and 4,603 square feet in urban locations.
New business investments are also leading to higher direct store operating expenses (DSOE).
This includes wages, payroll taxes, health-care insurance, card fees, utilities, repairs/maintenance and supplies, as well as several other categories including franchise fees and property taxes.
For the third consecutive year, DSOE has outpaced inside gross profit dollars, which continues to create challenges for convenience retailers.
“The cost of growth, whether it’s higher acquisition multiples, new store construction or retrofitting older sites, has never been higher in our industry,” said Jones. For example, the average cost to build a new store has increased over the last five years from $5.6 million to $7 million. “These are business trends that convenience retailers should be prepared to address as they continue evolving and growing their businesses.”
Beyond sales, c-stores are an important part of the economy. The industry employed 2.36 million people in 2018.
Despite a tight labor market, store associate turnover decreased from 121% in 2017 to 118% in 2018.
However, retailers are also paying employees more. Wages were up 4.4%, and the average wage for a store associate increased to $10.74 per hour.