High Gas Prices Impact Bottom Line of C-Stores

Some gasoline station operators are hurting because the cost of gas is translating to customers not spending as much inside their stores.

April 13, 2012

DETROIT - Gasoline stations and convenience stores that sell fuel are being squeezed from all sides these days. High gasoline prices are eroding profit margins at the pump. Rising fuel costs are keeping customers from venturing inside the store. Credit- and debit-card swipe fees are eating away their bottom line.

With around 75% of the profit coming from in-store sales, according to the Associated Food and Petroleum Dealers (AFPD), retailers such as Ted Jabbori are in a tight spot, the Detroit Free Press reports.

"Seventy percent (of people) think when (gas prices) go up, gas station owners make more money, when it's exactly the opposite," said Jabbori, owner of two Sunoco stations. "When our customers are suffering, we're suffering. That's the bottom line."

However, Paul Lane, marketing professor at Grand Valley State University, said it won€™t be long before customers revert to their old spending habits. "They reconfigure, and they're back having their Butterfinger and their snacks," he said. It only takes a short time before "people find a way to make it work. What we have to do every time there's a shock is we have to reorganize in a way."

Lane sees gasoline stations have a return of in-store sales soon "because our society is a convenience-driven society€¦They want to have things when they want to have them ... People aren't going to quit going to the convenience store."

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