Economists and politicians argue about the effects of inflation, but no one doubts that its impact on retail businesses — like convenience stores — is very real.
Inflation means an at times dramatic rise in the prices of goods and services due to excessive growth in the money supply. When there are more dollars in circulation prices rise: since dollars are worth less, they buy less than before. The “inflation rate” is the annualized percentage of change in a general price index. The Consumer Price Index quantifies the average shift of the price of a fixed market basket of goods and services over a period of time.
At retail, inflation can and does cause a variety of headaches. For one thing, it can lead to cash flow disruption. Other related concerns include too much inventory, increased storage costs, depressed revenues and slimmer margins.
According to Morningconsult.com, 85% of adults in the U.S. said that rising inflation has impacted how they shop, leading to a sharper eye for discounts and couponing and a scaling back of purchases overall. This is just what retailers already reeling from inflationary pressures and competitive discounts don’t need.
How is inflation impacting convenience stores?
“Inflation takes money out of consumers’ pockets that they ordinarily might spend on additional items in stores,” explained Lori Stillman, vice president of research and education for the National Association of Convenience Stores (NACS). “Inflation also takes money out of retailers’ pockets because swipe fees, which are based on prices, also increase. In this environment, it’s essential for retailers to focus on conveying value in their offer to customers by bundling items and developing promotional offers that resonate and inspire shopper action.”
Stillman added, “Working with suppliers to develop programs that appeal to cost-conscious customers, exploring lower opening price-points and store brands can also be effective strategies in inflationary times. Stores rely on building relationships with customers that make their stores part of an everyday routine, and you want to do everything you can to keep them coming to your location, despite inflation.”