MT. WAVERLEY – For the third consecutive year, Australia’s convenience channel outpaced the growth of the grocery channel in 2014, recording sales growth of 4.5% compared to the 2.6% recorded by the country’s major grocers, according to the Australasian Association of Convenience Stores (AACS) annual State of the Industry Report.

“This is another outstanding result from our industry against the background of challenging retail conditions. The emphasis that retailers and suppliers are placing on innovation and store execution to meet shifting consumer needs and shopping behaviours is clearly paying dividends and gives us all reason to be confident in the future of this vital sector of the small business economy,” said AACS CEO Jeff Rogut.

The growth in non-food outperformed growth in the food category for the second year, with tobacco as a major factor, as excise tax increases helped add $232 million in additional sales value to the category. According to Rogut, fluctuation in these categories reinforces the importance for convenience stores to maintain their focus on anticipating customer needs and adapting their offer.

“As the need to continually innovate becomes ever clearer, the industry must focus on customer service and optimize the performance of key categories to cement a strong and sustainable future over the long term,” said Rogut.

The AACS report reaffirmed the importance of tobacco to the industry, accounting for 37.34% of a typical convenience store’s sales. The category grew 8.9% over the course of the year, adding $232 million in value to the category, perhaps the most striking figure to dispel the claims by the health lobby that plain packaging has worked. The actual sales data suggests that, if anything, the regulation has had the opposite effect.

Fuel volumes were also up 3.6% over the course of 2014 in independent stores, as customers responded to lower fuel prices and the benefits of the cap on discount vouchers offered by the major supermarkets flowed back to independent retailers. AACS noted a trend toward customers not filling up as frequently, but merchandise transactions were slightly up again as well as the average transaction value.

AACS did express concern about an increase in fuel theft (drive-offs)el, which increased by 6.8% in 2014. “We continue to work toward securing decisive action on another issue of crucial significance to small businesses – petrol theft,” Rogut asserted. On average fuel theft costs each convenience store in the country AU$220.58 per week, equating to approximately AU$66 million nationally and dramatically affects the bottom line for franchisees and store operators.

Overall, Rogut said the channel’s highly credible performance in 2014 generates confidence in the future of the industry as increasingly time-starved consumers recognize and respond to the value proposition that convenience stores offer. “Convenience stores have proven their capacity to evolve and innovate their offer to better meet their customers’ needs. While this is ongoing process, the industry is awash with talented professionals operating in stable, long term businesses with strong brands, systems and proven managers unwilling to rest on their laurels,” he said.