NACS SOI Summit Reveals Industry Performance, Opportunities

A strong 2012 brought $700.3 billion in sales, but opportunities exist to grow foodservice, and drive customer spending on trips in 2013employees4.

The NACS State of the Industry (SOI) Summit took place in Chicago on April 10-11, giving retailers an overview of the economy, industry statistics, and the challenges that are just ahead.

Glenn Plumby, vice president, Speedway LLC, addressed the audience, indicating that while 2012 got off to a strong start and closed with $700.3 billion in sales, it experienced a more difficult second half, which has carried over into the first quarter of 2013. Still there are a number of “Shining Moments” in 2013: $700 billion industry; 2013 fuel volumes are up; pool margins are up; foodservice is growing faster than at QSRs; credit card expenses are slowing down; DSOE is growing less than inflation.

Plumby advised retailers to rationalize assets to aid growth; to continue to grow foodservice at a rapid pace; to grow profitability by knowing what your shopper wants; and to weigh acquisition/consolidation amidst the continuous need to grow.

The Numbers
Kevin Smartt, CEO of Kwik Chek Food Stores Inc., revealed the metrics for 28 in-store categories. Total dollar sales were $133,286 per store/per month up 2.2% year-over-year, while total GP$ were $41,856 per store/per month, up 5.6% year-over-year.

Highlights:

•  All but six categories (publications, wine, cigarettes, dairy, edible and nonedible groceries) saw year-over-year sales increases.

• Packaged Beverages have almost caught up to tobacco for in-store GP$ contribution. (Tobacco 21.0%, Pack Beverages 18.8%).

• OTP is growing. Out of OTP sales 94% of unit sales came out of c-stores, and 91% of dollar sales were from c-stores. C-stores saw $6.8 billion in OTP sales. Tobacco sales contribution in c-stores:  cigarettes 36.3%, OTP 4.4%.

• Thanks to the We Card program, minor access to tobacco has fallen to 5.6%.

• There have been 48 total state level tobacco tax increases in the past six years.

• Packaged Beverages 20% sales increase over 36 months, and saw a 19% growth in margin.

• Drug stores have seen a 10% increase in beer selling stores, and now Dollar Stores are getting into category, which means increased competition for c-stores. C-store beer sales in 2012 were $15.9 billion, and accounted for 58% of cross channel beer dollar sales and 69% of beer unit sales. Premium, particularly premium light beers, are dominating the c-store channel.

• Foodservice accounted for 15.8% of c-store sales in 2012. Prepared food brought in $16,308 per store/per month in 2012.

• Cigarettes, prepared food and hot dispensed are clearly dominated by the top quartile.

Understanding The C-Store Shopper
Todd Hale, senior vice president of consumer and shopper insights, Nielsen, spoke on the blurring of lines between channels and how grocery, drug, dollar store, etc. are creating increased competition for convenience stores.

•Supermarket sales are up, and 67% of supermarket growth is coming from niche markets like Trader Joes. Supermarkets are freezing prices in response to the economy; and one-third of customers are buying gas linked to grocery reward programs.

• There is a huge amount channel crossover, which is still increasing. Target is offering a small urban format; Burger King is debuting an upscale spring menu; Hy-Vee is offing a sit down restaurant; Kroger is sampling wine—something c-stores could cash in on.

Shopper Insights
Leroy Kelsey, senior vice president of industry analytics for NACS and Rajeev Sharma, founder and CEO of VideoMining walked attendees through key shopper insights.

• C-stores need to pay attention to all meal occasions, not just breakfast and lunch. More customers are snacking today as the way we eat changes. The lowest sales leakage is in the breakfast category, while the snacks occasion has highest missed opportunity with 32.3% leakage.

• One study showed that out of 100 c-store shoppers, 61 are buying a beverage, of that 61, 16 are also buying a snack, of that 16, only eight are buying prepared food/commissary. This equals 24,696 foodservice occasions missed per store.

• Customers are spending an average of four minutes and 26 seconds in the forecourt.  Of 100 customers buying gas, 64 pay at the pump while 36 pay inside. Of the 64 paying at the pump, 21 are purchasing an item. Some 13% visit the store while pumping gas, and 26% after getting their gas.

• Instead of thinking in terms of just daypart, it can be helpful to consider the “missions” customers are on when they come to your store. In terms of shopper missions, c-stores are highest in treats 29.9% (fountain/carbonated soft drinks) and snacks 15.3%, which are some of the lowest ticket missions. Convenience stores need to drive the meals mission, which is a higher ticket occasion. But right now, fountain and coffee are top “meal” drives at c-store. Working to make meal occasions around food the top drives can grow your store’s profitability. There are “spend opportunity” gaps in 92% of trips.

• Among other channels, however, c-stores lead in “touches” or trips into the store, which equals an opportunity to turn all those trips into a sale.

 

 

 

 

 

 

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