ALEXANDRIA, Va. – Growth in healthy food and beverages sales led to positive overall sales at convenience stores in 2017, and retailers expect the momentum to continue in 2018, according to a survey of retailers released today by the National Association of Convenience Stores (NACS).
More than two in three convenience retailers (69%) said that foodservice sales increased last year, and 61% said that sales of better-for-you items (i.e., fruits/vegetables, yogurt, nuts, health bars) experienced sales gains. By comparison, only 7% said that foodservice sales were down and only 3% said that sales of better-for-you items decreased.
“Customers are demanding higher quality foods and snacks” at Chestnut Petroleum stores (New Paltz, NY), according to Mickey Jamal. Sales of healthy food and drinks were strong in 2017 at Arroyo Grande Valero (Atascadero, CA). Protein bars and fruit and protein smoothies propelled sales at A-Square Enterprises Inc. (Conyers, GA), and water—whether plain, flavored or coconut water—grew sales at Select Fuel & Convenience (Red Bud, IL).
Convenience stores sell an estimated 80% of the fuel purchased in the United States and retailers also said sales were strong at the pump: Most retailers (52%) said that fuel sales increased in 2017, compared to 20% who reported a decline in gallons sold.
Trends for 2018
Retailers also predicted emerging trends for 2018. Kombucha drinks will continue to grow, as will new programs for home delivery, according to Lisa Dell’Alba at Square One Markets (Bethlehem, PA). New payment methods also will be a top trend, said Kent Frieling at Stop ’n Save (Grand Junction, CO). And healthier meal replacements won’t just be a big trend in 2018—they will also be on his menu, complimenting a robust growler fill program, said Kent Couch at Stop & Go Mini Mart (Bend, OR).
Also, retailers said that the lunch daypart has the most potential to grow sales at their stores, with 67% identifying lunchtime traffic as their biggest opportunity. But other dayparts also hold promise, including the opportunity to grow sales of mid-day snacks, noted Stephen Lair with Petromark Inc. (Harrison, AR).
“People love food inside a convenience store. It’s a one-stop shop for them,” said Parvez Himani at Priya Impex Inc. (Alpharetta, GA).
Strong Optimism for 2018
Beyond products, retailers say that strong consumer optimism over economic prospects, identified in the monthly NACS Consumer Surveys, also helped grow sales in 2017.
“There seems to be a direct correlation between our customers’ view of the economy and their use of disposable income in our marketplace,” said Dennis McCartney of Landhope Farms (Kennett Square, PA).
Strong consumer optimism also translated into strong retailer optimism. More than three in four (77%) retailers are optimistic about their business prospects for the first three months of 2018, with the same percentage of retailers optimistic about the overall U.S. economy for the first quarter.
Some Concerns Loom in 2018
Competition for the convenience store customer is the top concern of retailers heading into 2018, with nearly half (46%) saying that they expect to continue competing with other channels and other convenience and fuel retailers (45%).
Labor is another major concern, cited by 45% of retailers, such as finding and recruiting top talent in the market. To address the issue, retailers say that are recruiting employees from non-traditional labor pools including retirees, disabled workers and military veterans.
“For the right kind of person, it is a fun job. Interacting with customers is enjoyable as our business attracts a lot of repeat customers whom they see every day,” said John Clark with Alpine Mart (Stowe, VT).
Regulation and legislation that could potentially harm their operations is also a concern, cited by 42% of retailers, especially those doing business in California.
The quarterly NACS Retailer Sentiment Survey tracks retailer sentiment related to their businesses, the industry and the economy. A total of 103 member companies participated in the December 2017 survey.