CHICAGO -- The insights from NACS' State of the Industry (SOI) Summit come in more than just data points. From industry performance and competitive analyses to consumer habits and presidential goals, here are nine highlights that stood out to us ...
1. Cracks in the foundation
RaceTrac President Billy Milam's "Key Points on 2016" were as concise a summary of the year's SOI financial metrics as we can imagine:
- Another flurry of M&A
- Low fuel prices = more gallons
- More gallons = more inside sales
- Cost and availability of labor a growing concern
- A third consecutive record year of profit, but, "There may be some cracks in the foundation," he said.
2. Neck-and-neck
The c-store industry is second to just e-commerce when it comes to projected compound annual growth rate (CAGR) from 2016 to 2021, according to Nielsen. But don’t be too boastful: The dollar channel is right behind it.
3. You know who else likes data ...
The Amazon Go convenience store that allows consumers to pay automatically via their smartphone and an Amazon Prime account has one giant advantage beyond speeding the visit for customers. "It's the data and analytics that they're going to get from this store," said industry watcher and consultant Todd Hale, formerly with Nielsen. "With data and analytics, they’re going to understand who their customer is, how they shop and what they’re putting into their basket."
4. About those fees
Just as the industry gets a handle on controlling credit- and debit-card swipe fees, which were down for a second year in a row, a major challenge is looming. The Durbin Amendment, which limits the fees, will come before Congress for possible repeal this fall, according to Milam. "We've got to continue to fight for this," he said. "It pushed $800 million back into our customers' pockets. You need to continue to reach out to your representatives. I know they're getting tired of hearing about it, but it's the only way."
5. Getting swamped
With President Donald Trump’s victory, Republicans' economic confidence soared, as did that of mostly Republican-leaning small-business owners, said economist David Nelson, professor of economics at Western Washington University and founder and CEO of Finance & Resource Management Consultants Inc., Bellingham, Wash. Seventy days into Trump’s administration, Nelson asked, will he be able to "drain the swamp," or "is Washington, D.C., a protected wetland?"
6. The truth about jobs
Bringing jobs back to the United States isn’t as easy as the president says it is, according to Nelson. He estimates that 88% of job loss in U.S. manufacturing between 2000 and 2010 was a result of technological change, not jobs simply moving to other countries.
7. Shopping around
While master limited partnerships (MLPs) may have driven c-store merger and acquisition activity in previous years, two other entities—private equity and foreign operators—were most active in 2016, said Milam.
8. The space between
The disparity between top- and bottom-quartile retailers in capital productivity has never been higher, according to NACS State of the Industry figures. Top-quartile operators’ breakeven cents per gallon (CPG), for example, is more than 19 cents per gallon lower than bottom-quartile retailers, giving them a “20-cent advantage just for turning their lights on in the morning,” said Milam.
9. Off the streets
The increasingly virtual economy has long-term implications for fuel demand, especially among the rising millennial demographic. “If they’re at home clicking, they’re not driving in their cars, going shopping,” said Kevin Smartt, CEO of Kwik Chek Food Stores Inc., Austin, Texas.
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