CHICAGO -- In early April, NACS reported industry record sales and profits for 2005 at the NACS State of the Industry Summit in Partnership with CSP. But what about this yearhow's 2006 shaping up for the convenience channel?
On Thursday, CStoreXchange (CSX) will present its How's Business CyberConference and will be joined by retailer Andrew Bowman of Stop-N-Go of Madison, Wis., who will share how his company is employing monthly benchmarking to strategically improve performance.[Dick Meyer will present the exclusive report into first-quarter 2006 [image-nocss] performance vs. first-quarter 2005. To register forThursday's CSPNetwork CyberConference, click here].
As for first-quarter 2006, CSX partner Dick Meyer said his group's database of same-firm data shows declining profits. Our CSX data reflects lower profits per store than in first-quarter 2005. The difference is not dramatic, but there are some industry dynamics that I personally am concerned about, and I look forward to visiting with other retailers to see if they share my perspective.
Meyer said that while it's easy to look at CSX numbers and interpret why profits are lower and why per-store sales and gross profit dollar increases are softer than they were a year earlier he added, I'd much prefer that our industry focus on larger dynamics that I believe may be in play so we can address them proactively, and possibly hedge off what might be too large of a downswing if we don't recognize these trends early.
Asked what he considers the primary concerns behind a somewhat lackluster first quarter, Meyer said, The last two years our CSX same firms' trends showed very favorable per-store increases in gallons, inside sales and margins. And while the first quarter of 2006 shows a reasonable growth for in-store sales and margins: (a) it's not as high; and (b) fuel gallons growth and margin dollars are flat.
This, Meyer said, raises the following important questions:
As of the end of 2005 were most of the major fuel remodelings (including expansion of Pay at the Pump) completed? Thus, on a net' basis will per-store gallons for CSX's population and NACS' 2007 SOI reflect flat growth per store going forward in 2006? Is the big growth the industry sustained in per-store foodservice dollars about to soften because as of 2005 most retailers have fully implemented their new fountain and coffee programs and substantially enhanced their overall foodservice operation? Will CSX's first-quarter 2006 same-firm results for fuel margin be indicative of overall industry results? CSX's first-quarter data could be construed as saying that retailers essentially raised street prices just enough to cover the higher credit card fees associated with higher pump prices, and the result is no extra funds to absorb higher labor and utility costs.CSP has tracked Dick Meyer's prognostications long enough to appreciate he may be on to something. He said I'm thrilled that whereas in the past I had to dig deeper at lots of dynamics to try and envision our industry's direction, now I can look at CSX's same-firms' data on an interim basis and typically they will crystallize the major trends that are in play. So, maybe we can change them if they are not to our liking.
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