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Convenience Stores Hit Record In-Store Sales In 2016

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Last updated on April 10th, 2017 at 03:11 pm

U.S. convenience stores experienced record in-store sales of $233.0 billion in 2016—as well as their third straight year of $10 billion-plus in pretax profits—according to newly released “NACS State of the Industry” data, which provides benchmarks and key performance category insights for the convenience and fuel retailing industry.

Convenience stores, which sell more than 80 percent of the fuel purchased in the country, reported a 9.2 percent decline in fuel sales. This was driven by another year of low gas prices, which averaged $2.17 for the year, compared with $2.44 in 2015. Fuel sales volume was up 2.6 percent, riding the wave of continued economic recovery. Meanwhile, fuel margins in 2016 dropped to 23.1 cents, compared with 23.4 cents in 2015, but due to increased sales volume overall, fuel gross profit increased 1.6 percent per store per month.

Top in-store categories

The top 10 in-store categories ranked by sales dollars represent about 80 percent of all in-store sales. In 2016, eight of the 10 top in-store categories saw positive sales, including cigarettes, and nine had positive gross profit dollar growth. Factors such as low fuel prices, job growth and more discretionary income in consumers’ wallets drove spending inside the store.

Here’s how in-store sales performed in 2016:

  • Tobacco (cigarettes and OTP): 36 percent of in-store sales
  • Foodservice (prepared and commissary food; hot, cold and dispensed beverages): 21.7 percent
  • Packaged beverages (carbonated soft drinks, energy drinks, sports drinks, water, juices and teas): 15 percent
  • Center of the store (salty, candy, packaged sweet snacks and alternative snacks): 9.8 percent
  • Beer: 6.7 percent (12.2 percent for stores selling beer)
  • Other: 10.8 percent

While tobacco products, including cigarettes, were 36 percent of in-store sales dollars, they accounted for only 18.2 percent of gross profit dollars. Other tobacco products (OTP) is a bright spot, achieving double-digit growth in both sales and gross profit dollars. Since 2001, U.S. smoking rates have continued to decline, driven by individuals between the ages of 18 and 29. Product innovation and consumers moving from combustible tobacco products to other forms of tobacco are driving the OTP category.

Foodservice, a broad category that includes prepared and commissary foods, hot dispensed beverages (coffee) and cold (fountain) and frozen (slushee) dispensed drinks, continues to be a key focus for growth in the convenience store channel. Foodservice contributed 21.7 percent of in-store sales in 2016 and accounted for 35.2 percent of gross profit dollars, with prepared food and cold dispensed beverages driving the category’s growth. In 2016, convenience stores experienced growth in every foodservice subcategory except for commissary and frozen dispensed beverages.

Packaged beverages (non-alcoholic) accounted for 18.5 percent of gross profit dollars. Within the category, enhanced water (12.3 percent increase in sales), sports drinks (4.5 percent) and bottled water (3.9 percent) led sales growth from the cooler in 2016, signaling a move by consumers toward healthier and/or functional beverage options.

Snacking categories, including salty, candy and alternative snacks, all had strong growth as some consumers, especially Millennials, moved toward snacking and away from traditional meals. For the second consecutive year, alternative snacks, a category driven by protein- and energy-rich items, reached the top 10 in-store merchandise categories, also signaling a desire by consumers for immediate and healthier snacking options.

Operating expenses again outpace gross profits

Despite record in-store sales, direct store operating expenses (DSOE), encompassing wages, payroll taxes, health insurance, card fees, utilities, repairs/maintenance and supplies, as well as several other categories including franchise fees and property taxes, outpaced inside gross profit dollars for the second consecutive year. This trend is creating challenges for convenience retailers as they look to grow their businesses.

Beyond sales, convenience stores are an important part of the economy, NACS reports. The convenience and fuel retailing industry employed 2.5 million people in 2016. Wages were up 8.1 percent, and the average wage for a store associate is $9.99 per hour. Turnover for store associates was 133 percent, up from 95 percent in 2015, according to the recently released “NACS Compensation Report of 2016 Data.” The rise is primarily due to tighter labor markets resulting from being in the seventh year of economic recovery.

There is a notable dichotomy between the top-quartile performers and bottom-quartile performers within the convenience store industry, with nearly a 10-fold difference in store operating profit between the two quartiles. In terms of foodservice, the top quartile is excelling at hot dispensed beverages, with 6.6 times the coffee sales compared to the bottom quartile and more than three times the prepared food sales.

The industry’s 2016 metrics are based on the NACS State of the Industry survey powered by its wholly owned subsidiary CSX LLC, an online database of financial and operating data for the convenience retailing industry. Complete data and analysis will be released in June in the “NACS State of the Industry Report of 2016 Data.”

About the author

Alissa Marchat

Alissa was Staff Writer at The Shelby Report.


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  • That’s impressive that c-stores hit in-store sales of $233.0 billion in 2016. I wonder what caused the shift in consumer behavior? With the influx of dollars, it must be really important to have the most efficient c-store systems in place to maximize profit.

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