CStore Decisions reliably covers trends, data and first-hand accounts of the different facets of convenience retailing from flavor favorites to regulations to electric vehicles (EV) to growth and beyond. Now, we are taking a look at how these different areas play out by region.
Defining regions as West, South, Midwest and Northeast per the U.S. Census Bureau, CStore Decisions surveyed c-store retailers to discern the prevalent trends in these four regions.
Topics covered in the survey include trending products, the fuel and EV landscape, top challenges and opportunities, competition and more. Respondents indicated at the end if they were amenable to be contacted for a follow-up. The collection of data and conversations have informed the following convenience store regional snapshots.
While some trends are seen across the board, such as energy drinks, protein and low-calorie options for certain chains, as well as the recent Dubai chocolate boom and challenges with local competition, others are region specific.
Northeast
Consisting of the six New England and three mid-Atlantic states, the Northeast is largely characterized as dense, urban and highly developed. The c-store landscape in this area reflects this, with survey respondents describing the region as “growing quickly” and “saturated.”
“You need a good-sized site if you want a 5,000- or 6,000-square-foot store. It’s very difficult to find — or it’s becoming more difficult to find — those locations, so you may have to buy a small chain or another convenience store that’s on a big plot, but it’s a small store, and then you have to do a raze and rebuild,” said Barry Ahern, chief retail and people officer, Kayrouz Petroleum.
Kayrouz Petroleum operates 10 locations in Massachusetts, Connecticut and New Hampshire under the Racing Mart and Cape Cod Farms brands, although it’s beginning a rebranding process to kp Market.
Larger-format stores are increasing in numbers as more chains develop foodservice programs and a more modernized space.
Ahern notices the Northeast building these larger sites — “not the old-school, smaller sites” — as well as expanding on diesel options for trucking.
With such a crowded market, the competition is high in the Northeast. Survey respondents indicated competition comes in the form of national c-store brands, quick-service restaurants (QSR), drug stores, big-box retailers, supermarkets and specialty stores.
“When you build a site, you want it on a busy corner or right off the highway. And the challenge there is that these QSRs are buying up some of those properties, as well. From a food perspective, that creates some competition,” said Ahern.
Another respondent noted the competitiveness of the region, sharing that they must perform at a very high level to retain and grow market share.
Along with competition, hiring and retention and fuel market pressures were listed as some of the top challenges for c-stores in the region.
However, Northeastern chains are looking at foodservice as an opportunity for differentiation, with survey respondents listing it as a priority going forward, along with loyalty, upgrades and employee retention.
One respondent commented that expanded food offerings have provided the greatest opportunity across each of its regions.
Still, foodservice can prove challenging in the Northeast, Ahern noted, saying “we’re getting there slowly, over time. It just seems that in the Northeast in a lot of areas, the customer base isn’t as accepting to the food quickly enough,” although some of the larger chains are evolving foodservice in the area.
In the Northeast, respondents revealed customers are still heavily reliant on gasoline, and while most agreed that there is enough demand to justify investment in EV chargers, most also agreed that EV charging infrastructure is not expanding rapidly.
Ahern noted, however, “one of the things we are seeing up here in the Northeast is when we look to build another site, some of the municipalities are saying for approval, that they are requiring us to put EV chargers on site in order to approve the building of the site, which I think is good and bad in some sense.”
On the flavor trends front, indulgent desserts are popular, including the popular Dubai chocolate.
West
Across the country, the West is vast and open, with big cities spread out amongst a rural landscape. It’s a 13-state region, encompassing the Mountain and Pacific states.
With such disparity amongst rural and urban areas, characterization varies.
In California, for instance, the c-store market is competitive, with “too many regulations impacting the business,” according to Pervez Pir, president of retail for Loop Neighborhood Market, which has over 130 sites in the state.
Whereas in eastern Montana, stores are “few and far between. We are looking to add a second location about 30 miles from our current one because there is not another one for another 70 miles past that,” said Diane Meeks, c-store director of single-store operator Farmers Union Oil Co-op of Circle and Terry.
“The c-store market here in eastern Montana is fuel focused and basic. We’re one of only two stations in Circle and the only one with pumps for semis. Customers rely on us for consistency, loyalty rewards and friendly service that bigger towns might take for granted,” she continued.
Notably, fuel reliance and EV demand fluctuate depending on where in the West a store is located. While some agree there is demand for EV charging, others strongly disagree. Still, others who are more widely spread in the West neither agree nor disagree with the ideas of gasoline reliance or expanding EV infrastructure.
In terms of growth, one respondent noticed the influx of c-stores to the West that offer different amenities. Additionally, new laws and wages are influencing many areas with new processes.
Particularly in California, the high minimum wage means sales must keep up with increases. “When it comes to new development, getting approvals, permits and getting sites up is taking longer than ever before. Cost for material is also a lot more expensive,” added Pir.
Wages and upgrade costs in general are predicted to have the biggest effect on operations in the West, one respondent said.
Pir also noted the difficulty of California’s tobacco regulations, which the Northeast’s Massachusetts is seeing, too.
Food, however, is expected to be a big opportunity in the West, although difficulty scaling foodservice was listed as a challenge amongst all respondents located in the region. Chicken was revealed to be one of the biggest preferences, as well as spicy flavors.
“Anything with spice, unique flavors are trending. I think customers are looking for innovation in food and want to try something new frequently versus just having the same items,” said Pir.
Opportunity also lies in recruiting for foodservice talent and building trust in food programs.
South
The South, with its own distinctive culture and strong identity, encompasses three areas — East South Central, South Atlantic and West South Central — a large 16-state region generally known for “Southern” food and hospitality.
Here, competition is widespread.
In the Southeast in particular, one respondent is seeing increased competition from food-forward chains, due in part to lower overall investment in the region and fewer barriers to entry for new-to-industry (NTI) stores, as well as rising labor costs and shifting tobacco/nicotine trends.
“These changes will push operators to streamline labor models, sharpen food and beverage execution, and prepare for regulatory and environmental pressures. In addition, this region is becoming a barbell market with mega travel centers and food-centric c-stores aggressively expanding, while traditional operators face pressure to modernize. Competition is intensifying around foodservice quality, wages and real estate, with evolving categories like nicotine pouches, energy drinks and ready-to-drink alcohol driving inside sales,” one respondent elaborated.
Other respondents also clocked the popularity of energy drinks and packaged beverages. Pickles, too, are a big seller.
In terms of foodservice, biscuits are popular in many Southern areas, as well as pizza, chicken and barbecue.
The South is also typically known for low fuel margins. Respondents strongly agreed that customers in this region are still heavily reliant on gasoline and agreed with the notion that there isn’t enough customer demand to justify investing in EV charging. Responses varied, however, on the level of EV charging infrastructure expansion the South is seeing.
As for regulations, Brian Young, VP of Young Oil, which operates 13 Grub Mart stores in Alabama, noted the broad spectrum of regulatory actions regarding building permits.
“As far as building a building, you can build whatever you want to in some areas, but then again, you get into some areas (such as) Auburn, Ala. — it’s just super restrictive,” he said. “… There are even some towns in Alabama that have a moratorium against convenience stores right now. You can’t do it.”
Regulations and compliance join technology integration and fuel market pressures, among others, as challenges c-stores in the South are facing.
Still, technology is a priority for the future, as well as foodservice and growth.
Midwest
A region surrounding the Great Lakes, the Midwest is comprised of the East North Central states and West North Central states. The middle of the country, also known as America’s Heartland, has a history of manufacturing and agriculture, with large cities interspersed among the extensive farmlands.
The c-store landscape is mixed, respondents noted, with community-friendly, local stores still appealing to customers while advances and larger chains are becoming more of a presence.
“Our central region is diverse; while there are still many single-site owners, there has been a shift, and we’re seeing more major-brand NTIs,” one respondent said.
The last few years have seen larger chains such as Sheetz and Wawa expanding in the region, and QSR competition has become more apparent, noted Haley Guthrie, assistant category manager, Beck Suppliers, which operates 31 FriendShip Stores in Ohio.
Lately, hiring and retention seems to have become the greatest challenge facing this region.
Many respondents in the Midwest indicated staffing to be an issue, one expected to influence operations over the next few years. Artificial intelligence and the younger generation’s penchant for speediness and on-the-go purchases are also expected to affect stores.
Already, staffing has had the biggest impact on one retailer, with the respondent noting that a competing national retailer had entered the market and cut into the chain’s fuel sales, but this past summer, the competitor closed its kitchen due to lack of staff. The challenge, it appears, exists both for independents as well as larger operators.
The chain offering the most “conveniences” will win, the respondent continued, but only as long as they can staff their stores.
Other challenges lie in changing customer preferences and local competition, which is putting “pressure on deliverables,” as one respondent noted. Competition includes “Dollar” stores, which c-stores are watching in nearly every region.
Still, there is opportunity here to create differentiating experiences for customers, offer personalization and stay involved with the community.
“… Convenience stores here are more than a place to go to grab food, fuel, etc. They are your local’s everyday stop, where they can see familiar faces. Customers are not just another ‘number;’ they are considered family. Even when I go to stores, I see many of my regular customers I used to see all the time, and it is great to catch up,” said Guthrie.
In terms of fuel, there is strong agreement that most Midwestern customers still rely greatly on gasoline. And, most respondents believe EV charging infrastructure is not expanding rapidly in the region and there isn’t enough demand to invest in charging stations. There is a general agreement that fuel volume remains stable.
When customers venture beyond the forecourt, some of the most popular in-store trends include hot honey, Dubai chocolate, popcorn and spicy flavors, among others.
The Midwest is “less boujee,” Guthrie noted, but customers in the region are willing to spend if they see a product that has gone viral — the Dubai chocolate, for instance. Often, those customers include the blue-collar lunch rush.
Understanding these regional identities can help convenience retailers capitalize on the growing trends and cater to their customer preferences.
