SOI: C-Stores Resilient in Face of Disruption

By 
Angel Abcede, Senior Editor/Tobacco, CSP

CHICAGO -- Amid a larger decline in brick-and-mortar retail, convenience and dollar stores showed the most resilience among retail channels, growing in unit count in 2017 while all other channels declined, according to data presented during the annual NACS State of the Industry (SOI) Summit.

Here’s a look at how cross-channel growth played out during the year …

Brick-and-mortar

The number of c-stores in the United States grew 0.27% to 154,958 in 2017 compared to 2016, topped only by the dollar-store channel, which grew 5.2% to 30,332 units, according to Andy Jones, president and CEO of Sprint Food Stores, Augusta, Ga. Citing figures from New York-based Nielsen, Jones told attendees on April 11 that liquor stores, drugstores, supermarkets, mass merchants and wholesale clubs all had store-count declines in 2017.

E-commerce

One of the main reasons for the overall brick-and-mortar decline was the growing effect of e-commerce, Jones said, citing sales-percentage increases in the double digits in online buying every year since 2009. Despite online accounting for only 9% of retail sales, according to a study from New York-based Deloitte, Jones said e-commerce is “having a profound effect on not only our stores but on every brick-and-mortar [location].”

Income inequality

Jones described a growing retail “bifurcation,” with successful brick-and-mortar locations catering to either low-income households with “value” formats or higher-income shoppers with “premium” formats. While both are valid, he said, the convenience and dollar channels tend to fight for value shoppers. Citing Nielsen, Jones said 40% of convenience-store and gas-station shoppers live in households that make less than $29,000 a year, while 43% of dollar-store customers are in that same income bracket. In comparison, people in the lower income segment make up 23% of the online shopper base, he said.

“All of us are chasing the same customer, and that space is getting really crowded,” Jones said, specifically citing Seattle-based online retailer Amazon’s reach into “our space” by selling gift cards, health and beauty care items and automotive products.

“The big are getting bigger, and the best are getting better," added Kevin Smartt, CEO of Kwik Chek Food Stores, Austin, Texas. "After four years of record profit, our competition is all taking notice, and they are not staying still. So we can’t either.”