C-stores Are Taking Over the Fuel Market

Millennials are as interested in good food as they are in inexpensive costs.

August 22, 2017

NEW YORK CITY – Major oil companies are being pushed out of the U.S. retail gasoline business, where filling up your stomach is as important as filling your gas tank, according to Bloomberg. Once upon a time, American road trippers would look for Exxon’s Tony Tiger or the Texaco star, but they are now in search of the Buc-ee’s beaver or Wawa’s Canadian goose.

Now the two models are coming together, combining the strength of fuel brand recognition with new consumer preferences for a broader buying experience, and boosting profits in the volatile, competitive business of selling fuel to U.S. drivers.

“Irrespective of the operating model, the key to our growth plans is the brand,” István Kapitány, executive vice president of retail for Royal Dutch Shell Plc, told the news source.

In the U.S., Shell has partnered with Alimentation Couche-Tard’s Circle K, allowing it to expand the market for its Shell-branded gasoline by pairing its loyalty rewards program with the second-largest convenience-store operator in North America. Exxon Mobil has similar arrangements with Circle K and 7-Eleven.

According to NACS data, the five largest oil companies owned 0.4% of U.S gasoline stations in 2014, down from 1.9% in 2008. The majority of filling stations bearing the logos of iconic companies such as Exxon, Chevron and BP actually are owned by individual entrepreneurs or c-store chains that have long-term supply contracts with one of the major oil companies.

As a result, convenience stores such as 7-Eleven and Sheetz pumped more than 80% of U.S. gasoline purchased in 2015, up from 59% in 1997, according to NACS data. Stores like Kroger, Walmart and Costco sold much of the rest.

“There’s a shift in people buying gas based on the quality of the sandwich as opposed to getting a sandwich based on the price of gas,” said Jeff Lenard, vice president of strategic industry initiatives for NACS.

The percentage of people who say gasoline price determines where they refuel has fallen by 6 points since 2015, to 51%, according to NACS research. Millennials split equally at 45% on the gas price versus food quality question, Lenard said.

“You can’t just have good gas prices,” Billy Milam, president of RaceTrac Petroleum Inc., a Georgia-based convenience store, told Bloomberg. “Back 20 years, we’d rarely talk about what we’d sell in stores, but it’s really taken root over the past 10 to 12 years and we had to reshape our business to make that possible.”

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