Convenience Stores: Transforming with Their Communities
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Convenience Stores:
Transforming with Their Communities
A Special Report from Media Group Online, Inc.
It may be a metaphorical stretch, but convenience
stores are like the general store and travel
waystation of the 19th century: they are
essential to their communities, but as with so many
retail sectors during the pandemic, the transformation
Despite changes in business conditions, consumer
behavior and technological advancements wrought
by the pandemic, convenience stores are surviving
and have many opportunities to expand their offerings
and increase their value to their communities.
already begun must accelerate so convenience
stores remain vital. This month’s Special Report from Media Group Online
explores the path, the evolution of convenience stores
Some convenience stores have been critical during during the past 12 months and their work to create a
the pandemic, such as the Arivaca Mercantile in better future.
Arivaca, AZ, as the nearest gas station and grocery
store are more than 35 miles distance.
pg. 2
Convenience Stores:
Transforming with Their Communities www.mediagrouponlineinc.com
Finding Ways California remained the state with the most C-stores
to Remain Essential
(12,074) and the only one to add stores (84) during 2020.
C-store counts decreased the most in the next three
most-populous states: New York (393), Florida (192) and
The convenience-stores industry started 2020 in a good Texas (161).
place. Although total 2019 sales decreased 1.9% to $648.8
billion, primarily because of lower fuel prices, pretax Despite multiple challenges, a September 2020 survey
profits increased a very healthy 7.8% to $10.58 billion. from CSP Daily News found 52% of C-store operators said
The all-important inside-store category increased 2.6% they expected their 2020 sales to increase from 2019: 16%
and foodservice had its best performance since 2016, “much more” and 36%, “somewhat more.” 39% expected
increasing 5.2%. a decrease, or 30% “somewhat less” and 9% “much less.”
Considering the many retail-store closings, the 1.6% C-store operators, much like grocery stores (and to remain
decrease of total C-stores to 150,274 at the end of 2020 competitive with them), adjusted their product offerings to
indicates the strength of the industry. Unsurprisingly, serve their communities.
single-store operations had the largest decline, or 3.1%,
but are still 61.4% of all C-stores.
How C-Store Operators Adjusted Their
Product Offerings, December 2020
Adjustment Percent
Focused more on cleaning/toiletry items 39%
Focused more on beer and wine 39%
Focused more on grocery items 34%
The Association for Convenience & Fuel Retailing (NACS),
January 2021
C-Store Operators’ Primary Pandemic
Challenges, September 2020
Challenge Percent
COVID-19 safety concerns 64%
Able to hire and retain necessary workforce 51%
Employee turnover 34%
Increase traffic/store visits 27%
Credit-card fees 23%
Wage inflation 21%
Regulatory pressures 18%
Fuel-margin volatility 12%
Increased competition from other retailers 11%
Increased competition from other C-stores 10%
As with many retailers and other B2C businesses,
Gas prices 10%
COVID-19 safety was the #1 challenge cited by C-store
operators responding to the September 2020 Convenience Increased competition from e-commerce 8%
Store News survey. CSP Daily News, November 2020
pg. 3
Convenience Stores:
Transforming with Their Communities www.mediagrouponlineinc.com
Convenience Still Drives Consumers
A September 2020 Gallup survey found 33% of adults said they were
always working from home, 25% sometimes and 42% never. Almost two-
thirds of those working at home would prefer to continue, even if their
employers opened their businesses for all employees and the pandemic
ended. Not good news for the convenience-store industry.
Although many consumers still had reasons to visit C-stores, 64.4% had
decreased their spending during the early-pandemic period. The general
trend hadn’t changed much by November when 52% of consumers said
they were shopping less than before the pandemic.
Reasons Consumers Were Shopping
Less at C-Stores, November 2020
Reason Percent
Trying to consolidate or make fewer total shopping trips 40%
Not buying gasoline/fuel as often 38%
Not traveling as much for leisure 34%
Not eating outside the home as often 33%
Don’t feel safe shopping at convenience stores 29%
Choosing to shop at online stores/sites 24%
Convenience Store News, November 2020
Despite more remote working and less commuting, Convenience
Store News’ 2020 New Realities of the Aisle Survey of more than 1,500
C-store shoppers found “general convenience” received the highest
performance rating of the stores they shopped most often.
Performance Ratings for C-Store
Shopped Most Often, 2020
Excellent/
Factor Good Fair/Poor
Very Good
General convenience 80% 17% 3%
Speed of shopping trip 76% 18% 7%
Store organization 72% 23% 5%
Store cleanliness 71% 22% 8%
Employee friendliness 71% 21% 8%
Employee helpfulness 68% 22% 10%
Although the pandemic has resulted in fewer
Variety of products 66% 24% 10% C-store shoppers, they remain very loyal,
Loyalty/Rewards program 66% 21% 13% according to summer 2020 Convenience
Store News research: 74% of all and 78% of
Quality of prepared food 63% 27% 10%
daily C-store shoppers visit the same store.
Fun to shop 58% 28% 14% 18% of Millennials and 17% of Gen Xers visit
Price of products 56% 25% 19% a C-store twice daily, compared to 8% of Gen
Zers and 6% of Baby Boomers.
Convenience Store News, 2020
pg. 4
Convenience Stores:
Transforming with Their Communities www.mediagrouponlineinc.com
Pandemic Pushed
and Pulled In-Store Sales
During the first half of 2020, C-stores experienced mixed
sales results for in-store categories, compared to 2019
total in-store sales. On the plus side, beer sales were
unsurprisingly robust, increasing 12.0% after having only
increased 0.1% during the first half of 2019. Although
cigarette sales only increased 0.2%, it was a major
turnaround from the 4.9% decrease for the first half of 2019.
As with grocery stockpiling, many consumers visited
C-stores for edible and non-edible groceries in search of
an alternative source of necessities they couldn’t find at
other stores.
Edible and Non-Edible Grocery C-Store Sales, 1H 2020 vs. 1H 2019
Edible 1H 2020 1H 2019 Non-Edible 1H 2020 1H 2019
Breakfast cereal -7.5% -0.3% Dish care +15.3% -7.4%
Condiments +13.1% -2.6% Household care +3.1% -9.7%
Other +11.1% -3.0% Laundry care +1.3% -1.0%
Packaged coffee/tea +3.6% +3.8% Other +11.9% -8.4%
Total +7.3% +0.3% Paper/Plastic/Foil +8.4% -4.6%
Pet care -3.8% +2.6%
Total +3.3% -4.0%
Convenience Store News, July 2020
Among the inside-store categories which performed worse Another inside-store category the pandemic influenced was
during the first half of 2020, salty snacks had the biggest general merchandise. Although 1H 2020 sales decreased
decline, or -7.6%, compared to a 4.1% increase during 4.4%, it was a significant improvement from the 11.5%
1H 2019. Packaged beverages decreased 2.2% while the decrease during 1H 2019. The two subcategories with the
category gained 1.0% during 1H 2019. biggest increases were batteries +12.7% (-8.5% 1H 2019)
and video/audio tapes +4.0% (-45.0% 1H 2019).
Bottled water -10.9%, enhanced water -9.3% and ready-
to-drink iced teas -8.0% declined the most, reflective of Consumers were clearly purchasing hardware/housewares
fewer commuters and total visitors and more purchases at at other stores, most likely hardware, home improvement
mainstream grocery stores and online. and mass merchandisers, as sales decreased 23.3% at
C-stores, extending a trend from the first half of 2019 when
Another big loser was other tobacco products, which they decreased 20.4%.
increased 16.1% during the first half of 2019, but only 1.9%
for 1H 2020. The e-cigarette sub-category led the decline
at -8.6% after a 76.5% gain during 1H 2019. Industry
analysts cite California’s ban of flavored tobacco and vape
products as a major factor, a trend other states may follow.
pg. 5
Convenience Stores:
Transforming with Their Communities www.mediagrouponlineinc.com
Foodservice Suffers as During the first half of 2020, 53% of all C-store operators
responding to Convenience Store News’ Foodservice
Consumers Shun Self-Service
Study said their foodservice sales had decreased, 47%
among small operators and 63% among large operators.
Approximately one-third said their sales had increased: all
Foodservice has been a primary focus of the convenience- 36%, small 36% and large 34%.
store industry for several years, as other foodservice
options are becoming more competitive and the variety Unsurprisingly, 69% of survey respondents said their biggest
and quality of the food at C-stores required major upgrades obstacle to increased foodservice sales was “COVID-19
and improvements. restrictions on self-service food and beverages.”
During 2019, foodservice sales totaled $39.8 billion, a
5.2% increase, twice the 2.6% increase for all C-store
sales. Frozen, dispensed beverages increased the most,
or 11.8%, but was only $1.37 billion of the $39.8 billion
total. Prepared foods (onsite or offsite) was the largest sub-
sector by sales, or $27.72 billion.
Matching or even approaching 2019 foodservice sales
has been challenging during 2020. A late-2020 survey
from Intouch Insight found 9% more respondents than its
spring survey said, “they are extremely unlikely to use self-
serve condiments or coffee bars, purchase self-dispensed
beverages or purchase food from a bakery case or roller
grill,” as reported by CSP in a December 2020 article.
Biggest Obstacles to Increase Foodservice Sales, 2020
Small Large
Obstacle All
Operators Operators
COVID-19 restrictions on self-service food and beverages 69% 65% 76%
Changes of store traffic and trips due to COVID-19 62% 57% 71%
Less foot traffic in stores 49% 53% 42%
Difficulty hiring and retaining employees 35% 39% 27%
Supply chain 28% 29% 27%
Negative consumer perceptions of C-store foodservice 23% 21% 27%
Lack of alternative shopping options (mobile ordering, etc.) 17% 10% 29%
Operational inefficiencies at store level 15% 13% 20%
Increasing competition for foodservice business 13% 10% 17%
Finding the right products/programs 12% 10% 15%
Convenience Store News, August 2020
Despite the many obstacles to increasing foodservice sales, 44% of all surveyed C-store
operators expected to increase their sales for all of 2020 and the same percentage
expected increased foodservice profits. While less than 30% (28%) expected foodservice
sales to decrease, 33% expected decreased profits at yearend.
pg. 6
Convenience Stores:
Transforming with Their Communities www.mediagrouponlineinc.com
Less Commuting and Travel,
Fewer Fuel Sales
With more people working from home, fewer activities
outside the home and less travel, average fuel transactions
during summer 2020 were 6% less than summer 2019,
which was better than many analysts expected. More
Americans were choosing personal instead of public
transportation and more were vacationing in an RV.
The pandemic also affected when people bought gasoline,
with a 12% decrease of purchases during the morning Upgrading fuel pumps to comply with the EMV chip card
commute from 4am–7am. People were more likely to visit a by April 2021 is a major challenge for many C-stores. The
convenience store for gasoline from 9am–12pm, increasing 14% responding to CSP’s 2020 Outlook Survey who said
12%; however, purchases from 6pm–12am decreased 27%. they weren’t planning to upgrade could have to pay an
average of $17,315 per site.
Reduced driving is clearly evident in the monthly data from
the Federal Highway Administration. Although monthly The expected and significant increase in electric-vehicle
travel improved from the early-pandemic period, it is likely (EVs) sales is starting to impact C-store operators’ views
to decrease again with the COVID-19 surge during the on future fuel demand, as 24% told CSP EVs would have a
winter months. positive or negative effect, third behind changing consumer
behavior/preferences 37% and fuel prices 25%.
YOY Changes of Monthly Travel on All Surprisingly, almost half of C-store operators participating
Roads and Streets in the US and by in the survey said they were not planning any changes
to their fuel offerings during 2021, despite the long-term,
Region, December 2020 anticipated changes in personal transportation.
May August October
Area
2020 2020 2020
United States -25.5% -12.3% -8.8%
C-Store Operators’ Planned Changes
Northeast -33.4% -14.3% -11.5%
to Their Fuel Offerings During 2021,
South Atlantic -26.1% -12.5% -8.5% September 2020
North Central -26.3% -11.1% -10.4% Change Percent
South Gulf -19.8% -11.1% -7.4% Not planning any changes 43%
West -24.3% -13.1% -7.1% Upgrade pumps to EMV specifications 30%
Federal Highway Administration, December 2020 Add new marketing technology at the pump 21%
Add EV-charging stations 21%
Add ethanol-free gasoline 16%
Change fuel brands 9%
Add biodiesel 7%
Revamp or expand fuel islands 4%
Add diesel 3%
Add E15 1%
Add E85 1%
CSP, November 2020
pg. 7
Convenience Stores:
Transforming with Their Communities www.mediagrouponlineinc.com
Adopting New
Technologies to Ensure Future Growth
Upgrading technologies at C-stores was already a challenge prior to the
pandemic, but is even more so with the significant changes in shopper
behaviors. According to Convenience Store News’ 2020 Technology Study,
C-stores are making more of an effort, as 31.5% increased their tech budgets by
10% or more during 2019 and 73.7% said they would spend more during 2020.
The pandemic has likely caused difficulties for C-stores to achieve those
additional tech expenditures, but the pandemic also forced many of them to
initiate those changes.
Impact of the Pandemic on Tech Despite renewed efforts to adopt new technologies, the
Development at C-Stores, 2020 Convenience Store News survey found only a bit more
Impact Percent than one-third (34.8%) had a delivery service and, worse
yet, 43.5% said they don’t offer a delivery service and
Increase implementation of new don’t plan to add it. As the survey was conducted during
contactless technology, delivery and 33.3% early 2020, it is likely more C-stores have added a delivery
curbside pickup options service during the pandemic.
Generated interest to explore contactless
technology, delivery and curbside pickup 26.7% A more recent survey (May–August 2020) from NACS
options for the future found C-stores remain slow to add/improve their last-mile
Increase expansion and/or enhancement fulfillment services, as 46% of those in North America said
of existing contactless technology, 20.0% they have, compared to 80% in Europe and Australia.
delivery and curbside pickup options The survey also revealed the pandemic prompted 68% of
North American C-store operators to offer these services.
None of the above 20.0%
Convenience Store News, February 2020
Technologies C-Store Operators Are Offering to Accept
Last-Mile Fulfillment Orders, May–August 2020
Plan to
Currently
Technology Offer Next
Offering
12 Months
Mobile order (app or call) for in-store pickup 65% 44%
Mobile order for delivery to alternate location 46% 26%
Mobile order for curbside pickup 36% 38%
Website order 26% 34%
Third-party locker at store or other retailer
23% 16%
(Amazon, UPS)
Mobile orders for drive-thru pickup 15% 8%
Order at the pump for in-store pickup 11% 34%
Order at the pump for delivery to vehicle 8% 20%
NACS, October 2020
pg. 8
Convenience Stores:
Transforming with Their Communities www.mediagrouponlineinc.com
Working Towards
a Better Future
Although the pandemic and consumers’ responses to it
have adversely affected many C-stores, the industry will
remain critical, especially since 80% of all fuels are sold
there. As more people are vaccinated and the pandemic
diminishes, C-stores will be well-positioned to regain foot
traffic and revenues.
Nonetheless, some operators noted anecdotally they might
not return to profitability until 2022 or even 2023. Even
with some return to normalcy, consumers will expect a
continuation of many pandemic health and safety protocols.
To remain competitive, more C-stores will have to consider
the addition of drive-thru services, especially those with
made-to-order food offerings, since fast-food restaurants
were very successful with drive-thru during the pandemic.
According to NACS data, many C-store operators will
emphasize foodservice during 2021.
C-Stores’ Plans to Offer More Meal Despite the many challenges C-store operators have faced
Solutions During 2021, January 2021 during the pandemic and how they will have to change
Meal Solutions Percent their business model during 2021 and beyond, 16% said
they expected a great improvement in 2021 business
Will emphasize prepared foodservice 58% conditions, according to CSP’s 2020 Outlook Survey. A
Will focus more on fresh, prepared meals 51% majority (64%) expected some improvement, 16% said
Will focus more on ready-to-heat meals 30% business conditions will remain the same and only 4% said
they would somewhat decline.
NACS, January 2021
All of these changes, adjustments and introduction of new
technologies will require more advertising and promotions
for C-stores during the next few years, so they should be
near the top of your prospects’ list.
Sources Convenience Store News Website, 1/21; CSP Daily
News Website, 1/21; The Association for Convenience & Fuel
Retailing (NACS) Website, 1/21; Gallup Website, 1/21; Federal
Highway Administration Website, 1/21.
Prepared: January 2021
© 2021 Media Group Online, Inc. All rights reserved.
You can also read
