Convenience Store Sales Topped $700 Billion in 2012
In-store sales reach record $199.3 billion; motor fuels sales hit record $501 billion
CHICAGO -- The convenience store industry had record sales of $700.3 billion in 2012, with in-store sales increasing 2.2% to reach a record $199.3 billion and motor fuels sales increasing 2.9% to a record $501 billion, according to figures released Wednesday by NACS.
The industry's 2012 numbers were announced at the NACS State of the Industry Summit, a two-day conference that reviews and analyzes the industry's key economic indicators.
The industry's overall sales reflected real growth per store, with sales outpacing the 0.7% increase in c-stores in 2012, according to the NACS/Nielsen Convenience Industry Store Count released in January 2012. The U.S. c-store count increased to a record 149,220 stores as of Dec. 31, 2012.
In-store sales growth was driven by double-digit sales gains in several subcategories: alternative snacks, which include meat snacks and health, energy and protein bars (12.2%), liquor, a relatively small subcategory (11.6%), cold dispensed beverages (11.3%) and sweet snacks (10.3%).
Beyond sales, c-stores are an important part of the economy. They employed 1.84 million people and generated $171 billion in federal, state and local taxes in 2012. Overall, c-stores sales represent 4.5%--or one out of every 22 dollars--of the entire $15.68 trillion U.S. gross domestic product.
"These numbers demonstrate that Americans turn to us for their daily needs," said NACS chairman Dave Carpenter, president and CEO of J.D. Carpenter Cos. Inc. "We are a vital part of consumers' daily lives and the U.S. economy. We also continue to innovate and deliver on our promise of providing fast, one-stop shopping to consumers, whether they are on the road or in their communities."
C-store pretax profits reached a record $7.2 billion in 2012, but taken as a percent of total sales, profits only moved from 1.027% to 1.028% of total sales.
Motor fuels continued to drive sales dollars, but in-store sales drove profit dollars. Overall, 71.5% of total sales were motor fuels, but motor fuels only accounted for 35% of profit dollars. Motor fuels gross margins decreased from 18.2 cents to 17.8 cents per gallon before expenses, and also dipped on a percentage basis, falling from 5.23% to 4.94%, the lowest that they have been on a percentage basis in decades.
While sales and profits were strong, there are concerns for the convenience retailing industry. Total credit and debit card fees hit a record $11.2 billion and surpassed overall convenience store industry profits for the seventh straight year. Overall, card fees increased 1.5%, a much slower pace than the double-digit increases that were routine the past decade. Passage and implementation of new debit card swipe fees limits played a significant role in reducing escalating card fees; however, card fees still were significant. Just looking at motor fuels sales, credit and debit card fees added 5.1 cents to every gallon of gasoline sold at c-stores in 2012. Beyond card fees, several other expenses lines saw increase, led by health insurance costs, which rose 6.3%.
The industry's bifurcation also continues, with a considerable difference between top quartile and bottom quartile performers. Top-quartile performers had hot dispensed profits that were 4.4 times greater than those of the bottom quartile, prepared food profits 2.4 times greater than the bottom quartile, cold dispensed profits 2.3 times greater than the bottom quartile and packaged beverage sales that were 2.3 times greater than the bottom quartile.
Of greater concern to all retailers, there was a major difference in sales and profits by quarter. First-quarter sales and profits were considerably better than those of any other quarter, while fourth-quarter sales and profits lagged behind the other quarters. Weather likely was a major factor in the sales and profits variations. The first quarter of 2012 was unusually warm and dry, which is conductive to growing on-the-go sales, while the fourth quarter had much poorer weather and significant storms in densely populated areas, most notably Hurricane Sandy.
Here's how in-store sales were broken down in 2012:
- Tobacco (cigarettes and OTP): 40.7% of in-store sales.
- Foodservice (prepared and commissary food; hot, cold and dispensed beverages): 15.8%.
- Packaged beverages (soda, alternative beverages, sports drinks, juices, water, teas, etc.): 14.7%.
- Center of the store (candy; sweet, salty and alternative snacks): 10.4%.
- Beer: 7.6%.
- Other: 10.8%.
Meanwhile, foodservice was the category that drove profits, accounting for 27.1% of gross profit dollars. While tobacco products constituted 40.7% of in-store revenue dollars, they accounted for only 21.0% of gross margin dollars. Packaged beverages were third, accounting for 18.8% of gross profit dollars.
The industry's 2012 metrics are based on the NACS State of the Industry survey powered by its wholly owned subsidiary CSX, 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 2012 Data.
Founded in 1961 as the National Association of Convenience Stores, NACS is the international association for convenience and petroleum retailing. The U.S. convenience store industry, with more than 149,000 stores across the country, posted $700 billion in total sales in 2012, of which $501 billion were motor fuels sales. NACS has 2,100 retail and 1,600 supplier member companies, which do business in nearly 50 countries.
CSP is the exclusive media partner of the NACS State of the Industry Summit.