CHICAGO - Convenience store in-store sales grew 4.4 percent in 2010, reaching a record $190.4 billion, according to figures released today by NACS. Combined with $385.3 billion in motor fuels sales, total convenience store sales in 2010 were $575.6 billion, or one out of every 25 dollars of the overall $14.624 trillion U.S. gross domestic product.

The industry??s 2010 numbers were announced in Chicago today at the annual NACS State of the Industry Summit, a two-day conference that reviews and analyzes the industry??s key economic indicators.

The 4.4 percent growth rate of convenience store in-store sales surpassed the growth rates of other competing channels, including warehouse stores/clubs (4.0%), restaurants (3.4%), drug stores (2.4%) and grocery stores (2.3%), based on U.S. Department of Commerce numbers.

Part of the sales growth can be attributed to an increase in stores. The number of U.S. convenience stores grew 1.2 percent over the past year and stands at a record 146,341 stores, according to the NACS/Nielsen TDLinx 2011 Convenience Industry Store Count, released in January 2011.

While motor fuels revenues are closely tied to price volatility, the 17.2 percent growth in motor fuels sales outpaced the overall 14.4 percent increase in prices in 2010, meaning that convenience stores, which sell an estimated 80 percent of the country??s motor fuels, also picked up some volume in 2010. Overall, 66.9 percent of total convenience store sales dollars were from motor fuels. Even with an increase in motor fuels gross margins to 15.8 cents per gallon, motor fuels margins remain slim and motor fuels still only account for 26.4 percent of pretax profits at convenience stores.

As a result of these strong sales, convenience store pretax profits reached $6.5 billion in 2010, a remarkable turnaround from just 20 years ago, when the industry reported a loss of $220 million in 1990. As a percentage of total sales, pretax profits in 2010 were 1.1 percent.

"Our strong performance in 2010 shows that our convenience offer - especially one-stop shopping and speed of service for refreshments, food and fuel - continues to resonate with customers," said NACS Vice Chairman of Research Fran Duskiewicz, senior executive vice president of Canastota, New York-based Nice N Easy Grocery Shoppes.

Despite the strong sales and profit numbers, concerns remain for the industry, especially with credit and debit card fees jumping a staggering 21.6 percent to hit a record $9.0 billion. Total credit and debit card fees surpassed overall convenience store industry profits for the fifth straight year. As a percentage of overall sales, credit and debit card fees increased from 1.45 percent to 1.56 percent of total industry sales dollars, factoring in all forms of payment, including cash and check. Just looking at motor fuels sales, credit and debit card fees added 4.7 cents to every gallon of gasoline sold at convenience stores in 2010.

In-store sales have shown significant growth at convenience stores over the past decade, growing 82.9 percent since 2000. This year??s in-store sales alone topped total sales - combined in-store and motor fuels sales - for every year through 1998.

Nearly three-quarters of in-store sales are from the top five categories:

1. Cigarettes (35.8 percent of in-store sales)
2. Packaged beverages (14.2 percent)
3. Foodservice (12.9 percent)
4. Beer (8.3 percent)
5. Other tobacco products (4.0 percent)

More than two-thirds of in-store gross margin dollars are from the top five categories:

1. Foodservice (21.9 percent of in-store gross margin dollars)
2. Cigarettes (18.4 percent)
3. Packaged beverages (17.7 percent)
4. Beer (5.4 percent)
5. Candy (4.8 percent)

The industry??s bifurcation continues as well. The industry has previously seen bifurcation with respect to store ownership, with the percentage of one-store operations growing from 50.0 percent to 62.7 percent of all convenience stores over the past decade. Now that bifurcation extends to profits. Top quartile performers had profitability of more than 10 times that of the bottom quartile - with monthly profits per store of $23,891 compared to $2,033. Top quartile companies had sales that were at least double the industry average in most categories and four times higher for hot dispensed beverages (almost exclusively coffee) and three times higher for cold dispensed beverages.

The industry??s 2010 metrics are based on the NACS State of the Industry survey powered by its wholly owned subsidiary CSX, the industry??s largest purpose-designed business development tool, and based on data from 228 firms representing more than 26,000 stores. Complete data tables and analysis will be released in June in the NACS State of the Industry Report of 2010 Data, NACS?? 41^st annual report of industry data.