The National Association of Convenience Stores (NACS) has reported that total in-store sales reached a record $277.9 billion in 2021. *
As we noted in January:
Ironically the pandemic has turned out to be a boost for the c-store business. Because restaurants and stores were closed or operating at significantly reduced capacity, it brought in many people who were new to convenience stores. The new customers were looking for a somewhat different mix of products and retailers responded by offering more fresh and healthy eating options.
Foodservice
The numbers testify to this growing trend. C-stores sold more restaurant-quality food, as well as more hot, cold, and frozen dispensed beverages. The food service part of the business saw sales grow 24.1% in 2021.* Foodservice represented 22.5% of in-store sales up from just under 17% a decade earlier. Profit from food service now accounts for 35.5% of in-store gross profits.
A vibrant foodservice offering also provided the greatest prediction of in-store profits. The most profitable 10% of stores had foodservice gross profits seven times the stores in the bottom 10%.
Fuel
Almost 80% of the fuel sold in the U.S. is purchased at convenience stores. As pandemic restrictions loosened and people started going back to work and traveling again. The number of gallons of fuel sold rose 4.4% in 2021 but still remained below the pre-pandemic level. In spite of that, gas prices rose significantly so fuel sales grew 46.2%.
“The sales and performance metrics show that our industry is resilient. Our rapid adjustments to product assortment and the embrace of last-mile solutions allowed our industry to hold its own over the past few years, but to grow, especially market basket, is simply remarkable. While there are numerous headwinds facing retail in 2022, I am very optimistic about our channel’s future,” said Charlie McIlvaine, chairman and CEO of Coen Markets Inc., Canonsburg, Pa., and a member of the NACS board of directors.*
Supply Chain Headwinds
Like other businesses, c-stores have had issues with a broken supply chain. As some large grocery chains struggled to keep shelves full, shoppers looked to convenience stores to fill in some of the gaps. But convenience store operators say they have faced the same kinds of challenges in keeping inventory on hand. This can be a particular problem in small rural towns where the convenience store may be the only place close by to purchase occasional groceries.
One c-store chain in Texas reports that they are averaging 12% to 13% of items out of stock where normally it would be between 1% and 2%.** Normally they would try to restock with other substitute brands from other suppliers, but everybody is trying to do the same thing. This has driven costs up and created frustration for owners and shoppers alike.
Labor
Another challenge for the industry has been a labor shortage. The c-store industry typically has a relatively high turnover, but recently it’s been an unusually big challenge. Turnover in 2021 was 150% – a 10-year high.
Across the country, the industry provides 2.38 million jobs. Average wages in the industry increased approximately 12%.
Rising to the Challenge
Early on in the pandemic, no one could predict how things would turn out for convenience stores. In spite of the epic challenges, c-stores adapted and innovated and thrived where other businesses failed. In spite of the fact that there are still challenges ahead, it appears the industry has become more nimble and will likely continue to thrive for the foreseeable future.
** https://www.cnn.com/2022/02/06/business/convenience-stores-supply-chain-struggle/index.html
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