With sales apart from gasoline up 0.6% despite the economic recession, endemic contraband tobacco and excessive credit-card transaction fees, Canadian c-store owners have demonstrated a remarkable capacity for adaptation, but at the price of major downsizing, reported the Canadian NewsWire, citing [image-nocss] data presented in the 2010 Annual Report on that nation's c-store industry prepared by HEC Montreal and PricewaterhouseCoopers on behalf of the Canadian Convenience Stores Association (CCSA).
They presented the findings before 350 Canadian retailers, distributors and manufacturers meeting in Laval, Quebec.
The report said that 10% of c-stores2,300closed their doors last year, two-thirds of them in Quebec and Ontario, the provinces most affected by contraband tobacco. Over the course of the year, six c-stores disappeared every day.
"Whether it's endemic contraband tobacco or excessive credit-card fees, we see poor government intervention. Either they are not enforcing their own laws or worse, they are ignoring situations that make no sense," said CCSA senior vice president Michel Gadbois, "If we want to retain the local family business model, an essential community service and key contributor to community life, governments must do moreand betterto safeguard the business environment for convenience stores."
Illegal tobacco sales continued to cost stores more than $2.5 billion (Canadian) in annual sales and $260 million in profits, said the Canadian Press, citing the same data in a separate report. The industry is heavily dependent on cigarette sales. Two out of every three cigarettes sold legally in Canada are purchased in c-stores.
Credit-card fees accounted for $200 million in costs, some $50 million of that as a result of a recent increase in processing fees by major card companies.
The industry's profitability was also hurt by an average 5% increase in the minimum wage.
Overall, the net profitability of c-stores was barely holding at about 1%, about half the level in 2008.
The steady erosion of profits forced companies to control costs and generate traffic through the introduction of fresh food.
The future is expected to remain challenging as the maturing industry faces slowing sales growth, the study said. That has forced consolidation as many independent retailers have joined large chains or buying groups.
Alimentation Couche-Tard, Canada's largest c-store chain, continued its U.S. expansion. Suncor acquired Petro-Canada, and Quickie Convenience Stores purchased the 7-Eleven network in the Ottawa area.
The recession also had its toll as consumers used less gasoline, which generated less traffic in stores. The industry also faced heightened competition with other food retailers.
Hurt by falling gasoline prices, c-store sales fell by 3.6% in 2009 after rising by 12.2% in 2008. Supermarket sales increased by 4.4% and 4.2% in each of the last two years. Canadians purchased $31.9 billion worth of goods and gasoline from c-stores last year. More than 10.4 million visits are made daily to the country's 23,228 neighborhood stores.
The NACS State of the Industry Summit will be held in Chicago, April 13-15, 2010. Watch CSP Daily News for a first look at the numbers unveiled at the summit.
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