Convenience store retailers expect the robust sales of 2015 to continue into the first quarter of 2016, according to the results of a survey released by the National Association of Convenience Stores (NACS).
Retailers said that overall sales in 2015 were strong, with more than three in four (78 percent) reporting an increase in foodservice sales and nearly two in three (64 percent) reporting an increase in fuel gallons sold.
Nearly eight in 10 convenience store retailers (78 percent) said that they are optimistic about their business for the first quarter of 2016, compared to only 6 percent who are pessimistic.
“People seem to have a bit more money available—maybe due to lower gas prices—and are buying more inside the stores,” said Richard Parry of Aloha Petroleum, Honolulu, Hawaii.
Added Stephen Lair of Harrison, Arkansas-based Petromark Inc., which operates White Oak Station stores, “Customers are willing to spend more inside the store after spending less money at the pump.”
“The price of fuel seems to have helped with inside sales,” said Herb Hargraves of Jacobs Entertainment, Lafayette, Louisiana, adding that customers are more willing to purchase additional items inside the stores, including higher-ticket items such as sportsman coolers and even $399 hoverboards for the holiday season.
A proprietary food rollout has helped grow sales at Anderson, Indiana-based Ricker’s convenience stores.
“We’ve seen sales growth inside our stores after adding foodservice—and it has had a halo effect on other in-store items,” said Jay Ricker.
Stores also grew sales by offering a variety of better-for-you items. Nearly two in three retailers (65 percent) said that sales of better-for-you items increased.
“We had a significant increase in selling healthy foods,” said Jeff Armbruster of Armbruster Energy Stores, Grafton, Ohio. At Marshall, Michigan-based Walter-Dimmick Petroleum, better-for-you beverages, especially water, had strong sales, according to Michael LeBerteaux.
Grab-and-go food items helped drive sales in 2015, noted Gregory Cobb of Freedom Oil LLC, Warsaw, Indiana.
Trends for 2016
Retailers also are bullish on the convenience store industry’s business prospects. More than three in four retailers (78 percent) said they are optimistic about the convenience store industry, an increase from 73 percent last year.
Retailers expect to see continued demand for healthy items in stores.
James Lynch of Burley, Idaho-based Triple S Oil expects better-for-you foods sales to grow, especially in the first quarter following New Year’s resolutions.
Breakfast also is a positive growth opportunity for convenience stores in 2016, according to Dee Dhaliwal of Dhaliwal & Associates, Pleasanton, California.
While retailers are optimistic about 2016, they also have a number of concerns, especially related to labor.
More than two in five retailers (41 percent) said that labor issues are a threat to their business in 2016. With tight labor markets and pushes to increase the minimum wage in many areas, meeting the demand for more prepared food programs, which require more employees on the payroll, will be challenging.
“With our low unemployment rate, the labor pool has become a puddle,” said Kim Robello of Minit Stop in Kahului, Hawaii.
“Employment is near full capacity in the Minneapolis market and is causing serious issues related to a stable workforce,” added Steve Williams of Bobby & Steve’s Auto World, Minneapolis, Minnesota.
Distribution issues also are a concern for retailers like Lisa Dell’Alba of Square One Markets, Bethlehem, Pennsylvania, who seek to grow their foodservice offer.
While competition is always a concern for retailers—47 percent of retailers said that competition from other convenience retailers was the biggest threat to their business, while 33 percent cited competition from other channels—the biggest threat in 2016 is over regulation and legislation, cited by 61 percent.
What factors will most influence sales? Four broad factors emerged from the survey: gas prices (cited by 33 percent), the economy (15 percent), the weather (14 percent) and the embrace of better-for-you items (10 percent).
“If gas prices stay low, inside sales will be strong,” said John Long of Dyno’s Convenience Stores, Spencer, Iowa.
Even with a variety of external factors, it will likely be internal strategies that drive success in 2016.
“Those who have successfully found their visions for the future will continue to make large strides and rally their teams behind them. Our success will depend on our ability to adapt to new trends and deliver a truly different experience than other competing retailers,” said Lonnie McQuirter of Lovingsons Service Center, Minneapolis, Minnesota.
The quarterly NACS Retailer Sentiment Survey tracks retailer sentiment related to their business, the industry and the economy as a whole. A total of 100 member companies, representing a cumulative 1,248 stores, participated in the survey.
