Why Convenience Store Retailers Are Smiling

The answer lies in how low gas prices are affecting consumers, says NACS survey

consumers (CSP Daily News / Convenience Stores / Gas Stations)

ALEXANDRIA, Va. -- Low gasoline prices have not only warmed up consumer sentiment, they also are making fuel retailers feel pretty special, according to the latest quarterly retailer sentiment survey from the National Association of Convenience Stores (NACS).

More than 80% of convenience store retailers said they were optimistic about business prospects for first-quarter 2015, according to the latest survey.

The top reason? The decline in gasoline prices during the second half of 2014, falling to more than $1.00 per gallon below year-ago prices.

According to 62% of convenience store retailers, consumers were spending their savings from lower gas prices in the store. And 73% said they enjoyed higher merchandise sales in 2014 compared to the year prior.

"Lower fuel prices lead to higher volume inside the store and at the pump," said Stuart Everngam, retail operations manager at The Gott Co., Prince Frederick, Md., and a participant in the survey. Another retailer, Theron Soderlund, president of Country Corner, Eastsound, Wash., was equally pleased with the upward trend. "We are back to pre-recession sales numbers--and going up," said Soderlund.

Although retailers were overwhelmingly optimistic about their business growth prospects, a lower percentage--62%--were feeling rosy about the overall economy during the first quarter.

Meanwhile, 69% of convenience store retailers surveyed see opportunity to grow merchandise sales and 58% see a chance to expand foodservice sales in 2015. On this latter point, 88% of retailers said that prepared foods was an important offer for 2015.

"Foodservice fits the immediate consumption and time-starved needs of our consumers," said Sonja Hubbard, CEO of E-Z Mart, Texarkana, Texas. "It is an obvious fit, as long as it is a quality offer."

"Consumers are looking for quick, fresh and easy snacks or meals that can be consumed on the run," said Julie Jackson, general manager and senior vice president at G&M Oil, Huntington Beach, Calif. And Tim Switzer, COO and executive vice president at Radiant Food Stores, Tampa, Fla, described prepared food as "our industry's future."

Produce also has a lot of interest from convenience store retailers, who acknowledge its appeal and challenge; 61% of retailers cited produce as an important offer for 2015. "The trend is for fresh and better-for-you products," said Giselle Eastlack, general manager of Diaz Market, Metairie, La.

"Like foodservice, produce is a labor-intensive category when it is done correctly," said Don Rhoads, president of The Convenience Group, Vancouver, Wash. "Variety and fresh offerings are critical to the category's success."

"You must have nearly daily deliveries to maintain freshness," said Ben Englefield, co-president of Englefield Oil Co., owner of the Duchess Shoppes c-store chain based in Heath, Ohio.

Also like foodservice, retailers need to be committed for the long-term to succeed. "If you are going to do it, then you better be married to it," said Tony Huppert, CEO of Team Oil Inc., Spring Valley, Wis.

Despite the potential of foodservice and produce, retailers realize how much their business prospects are tied to continued low gasoline prices. "With the recent plunge, will they stay low, and how will that help store sales and the economy in 2015?" said Tom Robinson, CEO at Robinson Oil corp. owner of the Rotten Robbie c-store chain based in Santa Clara, Calif.

A total of 88 NACS' member companies participated in this latest Retailer Sentiment Survey, which NACS conducts on a quarterly basis to gauge retailer attitudes on their business, the c-store industry and the economy.