ALEXANDRIA, Va.—Despite pandemic-related challenges throughout the year, two in three convenience retailers (66%) report that their in-store sales were higher in 2021 than in 2020. Only one in six retailers (16%) say that in-store sales decreased in 2021, according to a NACS “Pulse” survey of its retailer members.
In 2020, in-store sales reached a record $255.6 billion, according to the NACS State of the Industry Report of 2020 Data. Complete 2021 industry data will be announced during the NACS State of the Industry Summit, which will take place April 12-14 in Chicago.
Industry suppliers were equally positive about sales: 63% of NACS supplier members say that sales to convenience retailers were higher in 2021 relative to 2020; only 9% say their sales were lower.
Suppliers also are very optimistic about 2022: Three in four (75%) believe their sales in the c-store channel will increase in 2022 and 71% say they will invest more in the channel this year; only 3% will invest less. This marks the second strong year of suppliers investing in the c-store channel: A year ago, 63% of supplier members said they would boost their investment in the channel.
Innovation, partnerships push sales higher
Convenience retailers are optimistic about prospects in 2022 and most (51%) expect strong sales in the first quarter. Part of the optimism could be related to new or expanded offerings: 41% say they will offer frictionless/cashier-less checkout and 30% say they will offer app-based ordering/payment in 2022.
Suppliers credit continuing partnerships within the channel for growing sales. Nearly two in three (62%) say they formed new relationships with retailers, which likely helped expand opportunities: 35% of suppliers say they increased SKUs in the channel and 31% say they entered new categories where they did not have a presence.
Convenience stores contribute more than $1 billion annually to charities and retailers say that the local connection is important. Retailers say the top community groups for the industry to focus on are local schools (cited by 53%) and first responders (50%).
Labor, supply chain still present challenges
Not surprisingly, the top two issues facing both retailers and suppliers are labor challenges and supply-chain reliability.
Overall, 56% of suppliers are facing labor challenges, and the top three affecting their business are:
- Lack of production/front-line employees (cited by 62% of suppliers)
- Offering competitive wages (51%)
- Driver shortage (31%)
Most suppliers (69%) say that they are facing supply-chain challenges because of the truck driver shortage and inflationary pressures (each cited by 36% of suppliers). Suppliers also say it’s going to take time until the supply chain is back to normal: 36% of suppliers say that won’t happen until the second half of 2022 and 35% say it won’t happen until the first half of 2023.
Retailers say that they expect both challenges to linger well into or beyond 2022: 40% say supply-chain disruptions will no longer be a significant challenge in in the second half of 2022, while 7% say they will never return to pre-pandemic normalcy. They are even less optimistic about the labor challenges: 24% say the labor shortage will no longer be a significant challenge in first half 2023. The top answer? Nearly one in three retailers (32%) say the labor challenge “always will be a problem.”
Retailers cited solutions to overcome labor challenges such as offering higher pay, flexible scheduling, referral bonuses and spending more time on the hiring process.
“Spend more time in the interview and on-boarding process. The costs are higher up-front, but it can help in reducing the percentage of hires who only show up for their first week and quit shortly afterward,” said Lonnie McQuirter, director of operations at 36 Lyn Refuel Station in Minneapolis, Minnesota.
“Put in the time to train and build relationships,” added Jeff Chase, director of c-store operations at Klamath Falls, Oregon-based Ed Staub & Sons Petroleum (dba Fast Break Stores).
Looking ahead in 2022
Industry suppliers say several trends that emerged in 2021 will continue, including the growth of healthy options in stores, the expansion of delivery options and greater usage of mobile apps for ordering.
Most of all, retailers say that a continued focus on serving convenience and in some cases, redefining it, will pay out big dividends in 2022.
“COVID forced us to change our business model. We partnered with a health food supplier that has allowed us to migrate our store from a ‘snack and junk food’ stop to a premium food store. Now we have larger basket sizes, both in items and value, and larger gross profits,” said Adam De Caul, managing director of Caulco (dba Cauls), which operates in St. George’s, Grenada.
“It's during the difficult times that you see the vendors that step up. Where there is a will, there is a way, and it always results in satisfying our customers 100% of the time, no matter what circumstances challenge the final product,” added Dennis McCartney, director of operations with Kennett Square, Pennsylvania-based Landhope Corporation (dba Landhope Farms).
But most of all, convenience retailing is about people.
“We have great customers who have supported us through these difficult times and wonderful team members who were there for them,” said Jacque Hager, vice president of retail operations for Dubuque, Iowa-based Molo Oil Company (dba Big 10 Mart).
The NACS Member Pulse Surveys were conducted in December by NACS Research. A total of 67 retailer member companies and 87 supplier member companies participated in the surveys. NACS Research conducts quarterly custom research with retailer members to identify key priorities and opportunities across the convenience and fuel retail landscape. Explore more NACS Research insights and data.