ALEXANDRIA, Va. – Convenience store retailers cited positive revenue growth over the first six months of 2018, with expanded healthy snack and drink options expected to fuel strong summer sales growth, according to a survey of U.S. convenience store owners by NACS, the trade association that represents the convenience retailing industry.
Convenience stores sell nearly 80% of the fuel purchased in the United States and conduct an estimated 165 million transaction a day, making the industry a good indicator for trends related to travel and consumer spending.
More than three in four (79%) convenience retailers said in-store sales increased over the first six months of 2018 compared to the same time last year, and more than half (56%) said their fuel sales increased compared to last year. Only 7% of retailers said that in-store sales declined and only 19% said fuels sales declined.
Retailers say a continued focus on fresh and healthy items in stores helped boost sales, and they plan to continue dedicating more sales space to these items. Retailers cited the addition or expansion of the following items in their stores:
- Health bars (45% of retailers added or significantly expanded over the first half of 2018)
- Fresh fruit/vegetables (41%)
- Packaged salads (37%)
- Nuts/trail mix (35%)
Healthy snacks are expected to continue driving in-store sales at Muskogee Creek Nation Travel Plazas (Tulsa, OK). The alternative snacks category, driven by protein- and energy-rich items, is one of the faster growing categories in the convenience retailing industry, per the NACS State of the Industry Report of 2017 Data.
Prepared foods also are expected to attract customers at J.R.’s Country Stores (Pueblo, CO), continuing a trend from last year. In-store growth for U.S. convenience stores in 2017 was powered by foodservice (22.5% of in-store sales and 33.9% of gross profit dollars), a broad category that includes prepared food—69% of total foodservice sales—as well as commissary foods and hot, cold and frozen dispensed beverages.
Retailers also cited their core offer of delivering value and choice for consumers, whether for healthy or indulgent food and beverage options. “Fresh salads and smoothies, along with burgers and fries, seem to be the big winners so far in 2018—the full spectrum of pleasure food vs. healthy options,” said Dennis McCartney at Landhope Farms (Kennett Square, PA).
Especially during the warm summer months, convenience stores are a destination for packaged beverages, a category that generates more gross profit dollars inside the store than another other merchandise category. As demand continues for healthier options, many retailers are devoting more cooler space to lower-calorie and lower-sugar beverages options, especially waters.
During the first six months of 2018, a majority of retailers say they’ve added flavored/enhanced waters (54%) and regular bottled water (52%). Water also figures prominently in sales growth, with 46% of retailers expecting more still bottled water sales to increase and 42% expecting sparkling bottled water sales to increase. Lower-calorie teas and coffees also were cited by 42% of retailers, including Ute Mountain Travel Center (Towaoc, CO). Healthy beverages are expected to grow sales at Charlie’s Convenience (St. Paul, MN) and organic energy drinks are growing sales at Minit Stop (Kahului, HI).
In addition to in-store offers, retailers say that sales growth will be fueled by generally low gas prices, warm summer weather and strong consumer confidence. With these factors in place, retailer confidence has soared, with a record 86% of convenience retailers indicating they are optimistic about their business prospects over the third quarter, up three points from last quarter and tied for the highest measured since NACS debuted the retailer sentiment survey in 2015. Convenience retailers also are optimistic on a broader economic level. Approximately three in four retailers are optimistic about the economy (74%) and the convenience store industry (77%).
The quarterly NACS Retailer Sentiment Survey tracks retailer sentiment related to their businesses, the industry and the economy. A total of 74-member companies, representing a cumulative 2,106 stores, participated in the July 2018 survey.