Convenience Store Sales, Profits Edged Higher in 2017

The industry numbers are being announced during this week’s NACS State of the Industry Summit.
April 12, 2018

CHICAGO – U.S. convenience stores experienced a 15th straight year of record in-store sales and a 4th straight year of $10 billion-plus in pretax profits, according to newly released State of the Industry data from NACS. The industry’s numbers were announced during the NACS State of the Industry Summit, which takes place April 10-12 at the O’Hare Hyatt Regency in Chicago. More than 600 leading retail and supplier company representatives are at the industry’s top conference for benchmarking and analysis of retail trends.

Industry Snapshot 2017 % Change
Inside sales $237.0B 1.7%
Fuel sales  $364.1B 14.9%
Total sales  $601.1B 9.3%
Pretax profit $10.4B 1.6%
U.S. store count 154,958 FLAT

(Sources: NACS State of the Industry Report® of 2017 Data; 2018 NACS/Nielsen Convenience Industry Store Count)

Sales, Profits Increase Led by Fuels
Fuel gross margins in 2017 increased to 22.0 cents per gallon. Paired with increased sales volume overall, fuel gross profits increased 11.7% per store. The last time the convenience store industry reported negative profits was 1991.

In-Store Growth Powered by Foodservice
While tobacco products, including cigarettes, cumulatively were 34.1% of in-store sales dollars, they accounted for only 17.1% of gross profit dollars. Cigarette sales accounted for 28.6% of in-store sales dollars, a sharp decline from 36.9% in 2011. Meanwhile, the category other tobacco products (OTP) had an 11.2% increase in sales dollars and an 9.2% increase in gross profit dollars. The last time the U.S. convenience store industry reported a decrease in in-store sales was 2002, when sales dropped 2.4%.

Packaged beverages (non-alcohol) accounted for 15.8% of revenue dollars and 20.1% of gross profit dollars. Within the category, the trend of consumers seeking more healthier and/or functional beverage options at convenience stores has continued.

This was the second consecutive year that alternative snacks, a category driven by protein- and energy-rich items, reached the top 10 in-store merchandise categories, signaling a growing desire by consumers for immediate/healthier snacking options.

Top In-Store Categories
Here are overall merchandise sales groups as a percentage of overall merchandise sales:

  • Tobacco (cigarettes and OTP): 34.1% of in-store sales
  • Foodservice (prepared and commissary food; hot, cold and dispensed beverages): 22.5%
  • Packaged beverages (carbonated soft drinks, energy drinks, sports drinks, water, juices and teas): 15.8%
  • Center of the store (salty, candy, packaged sweet snacks and alternative snacks): 9.9%
  • Beer: 8.5% (12.4% for stores selling beer)
  • Other: 9.2%

Operating Expenses
Despite record in-store sales, direct store operating expenses (DSOE)—encompassing wages, payroll taxes, health-care insurance, card fees, utilities, repairs/maintenance and supplies, as well as several other categories including franchise fees and property taxes—outpaced inside gross profit dollars for the second consecutive year. This trend continues to create challenges for convenience retailers as they look to grow their businesses.

Beyond sales, convenience stores are an important part of the economy. The convenience and fuel retailing industry employed 2.48 million people in 2017, wages were up 8.3% and the average wage for a store associate increased to $10.19 per hour. Turnover for store associates was 115%, down from 133% in 2016 but a huge increase from the 73% that was reported in 2010 when unemployment was much higher because of the Great Recession. The rise is primarily due to tighter labor markets resulting from being in the seventh year of economic recovery. Turnover for store managers was only 18%, down from 27% the year prior.

The industry’s 2017 metrics are based on the NACS State of the Industry survey powered by its wholly owned subsidiary CSX LLC, the industry’s largest online database of financial and operating data. Complete data and analysis will be released in June in the NACS State of the Industry Report® of 2017 Data. Metrics related to turnover were from the recently released NACS Compensation Report® of 2017 Data.

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