Healthy food and beverage sales growth led to positive overall sales at convenience stores in 2017, and retailers expect the momentum to continue in 2018, according to a survey of retailers recently released by the National Association of Convenience Stores (NACS).
A total of 103 member companies participated in the December 2017 survey.
More than two in three convenience retailers (69 percent) said that foodservice sales increased last year, and 61 percent said that sales of better-for-you items (i.e., fruits/vegetables, yogurt, nuts, health bars) experienced sales gains. By comparison, only 7 percent said that foodservice sales were down, and only 3 percent said that sales of better-for-you items decreased.
“Customers are demanding higher quality foods and snacks,” according to Mickey Jamal at Chestnut Petroleum stores in New Paltz, New York.
According to the survey, sales of healthy food and drinks were strong in 2017 at the Arroyo Grande Valero in Atascadero, California; protein bars and fruit and protein smoothies propelled sales at A-Square Enterprises Inc. in Conyers, Georgia; and water—whether plain, flavored or coconut water—grew sales at Select Fuel & Convenience in Red Bud, Illinois.
Retailers also predicted emerging trends for 2018. They believe kombucha drinks will continue to grow, as will new programs for home delivery, according to Lisa Dell’Alba at Square One Markets in Bethlehem, Pennsylvania.
Kent Frieling at Stop’n Save in Grand Junction, Colorado, says, “New payment methods also will be a top trend.”
And Kent Couch at Stop & Go Mini Mart in Bend, Oregon, says, “Healthier meal replacements won’t just be a big trend in 2018—they will also be on his menu, complimenting a robust growler fill program.”
Retailers also said that the lunch daypart has the most potential to grow sales at their stores, with 67 percent identifying lunchtime traffic as their biggest opportunity. Other times of the day also hold promise, including the opportunity to grow sales of mid-day snacks, noted Stephen Lair with Petromark Inc. in Harrison, Arkansas.
“People love food inside a convenience store. It’s a one-stop shop for them,” said Parvez Himani at Priya Impex Inc. in Alpharetta, Georgia.
Beyond products, retailers say that strong consumer optimism over economic prospects also helped grow sales in 2017.
“There seems to be a direct correlation between our customers’ view of the economy and their use of disposable income in our marketplace,” said Dennis McCartney of Landhope Farms in Kennett Square, Pennsylvania.
Strong consumer optimism also translated into strong retailer optimism. More than three in four (77 percent) retailers are optimistic about their business prospects for the first three months of 2018, with the same percentage of retailers optimistic about the overall U.S. economy for the first quarter.
On the fuel side, NACS reports that c-stores sell an estimated 80 percent of the fuel purchased in the U.S., and 2017 sales were strong at the pump. Most retailers (52 percent) said that fuel sales increased in 2017 compared to 20 percent that reported a decline in gallons sold.
Some concerns for 2018
Competition for the convenience store customer is the top concern of retailers heading into 2018, with nearly half (46 percent) saying that they expect to continue competing with other channels and other convenience and fuel retailers (45 percent).
Labor is another major concern, cited by 45 percent of retailers, in terms of finding and recruiting top talent in the market. To address the issue, retailers say they are recruiting employees from “non-traditional” labor pools like retirees, disabled workers and military veterans.
“For the right kind of person, it is a fun job. Interacting with customers is enjoyable as our business attracts a lot of repeat customers whom they see every day,” said John Clark with Alpine Mart in Stowe, Vermont.
Regulation and legislation that could potentially harm their operations also is a concern, cited by 42 percent of retailers, especially those doing business in California.