By Sara Counihan
ALEXANDRIA, Va.—The first half of 2022 was turbulent for convenience and fuel retailers. Heading into the second half of the year, the NACS research team has gathered data on the first half of 2022, and there are many obstacles for c-store retailers to overcome, but there are some bright spots as well.
“When we got into $5 gas in May and June, folks stopped going into the stores. So we’re seeing declines of 2% or 3% versus 2021 and closer to 7% versus 2019, which we’ve been using as a benchmark,” said Chris Rapanick, director of business development, NACS, on this week’s NACS Convenience Matters podcast episode.
However, Rapanick said that baskets have been holding steady, so there is an increase in total for inside sales. Additionally, fuel margins are good this year, improving over 2021.
“I believe that we’ll carry through the year as profitable again and probably have some improvement in profitability for the year, assuming that things stay basically as they are now,” said Rapanick. “So, not so great news, but some things that aren’t so bad as well.”
Direct store operating expenses (DSOE) have been “out of control,” according to Rapanick. In 2022, DSOE is up in the double digits over 2021 and 2020. Also, credit card swipe fees were up 25.6% in 2021 ($13.5 billion) versus 2020 ($10.7 billion).
“Honestly, it’s hard to see a future for 2022 and probably early next year that doesn’t have some version of $4-plus gas. So you would like to think that card fees may decline some, but I would venture to say that’s probably not the case,” said Rapanick.
Rapanick is hopefully that the decline in gas prices will push customers inside the store.
“I think people tend to say, ‘wow, you know, gas prices are dropping—maybe this is all over.’ And maybe they will go back inside because transactions at the pump are up 24% right now. … There are people at the stores; they’re just not going inside right now. So, hopefully a positive result will happen from this,” he said.
Inside sales and merchandise sales in general are still positive, but Rapanick said some of that is inflation driven.
“If we can get the shopper inside, they’re back to buying cold dispensed beverages and coffee when they want it. The challenge for everyone is finding someone to staff the store so they can serve the customer when they come in and then getting folks to come back inside the store,” he said.
Another bright spot is that foodservice is almost, if not back to pre-pandemic levels.
“Foodservice in general, sales are way up. Margins aren’t great, but gross profit dollars in general are good. It is outpacing what the CPI is as far as inflation goes. It’s up double digits, and folks are somewhere between 8% and 10% on the CPI,” said Rapanick.
Tune in to this week’s NACS Convenience Matters podcast episode No. 347 “2022 C-Store Industry Outlook” to hear Rapanick’s take on fuel volumes, how food is the future of the industry and his outlook on the remainder of 2022.
Sara Counihan is contributing editor of NACS Magazine and NACS Daily. She can be reached at email@example.com.