Government gridlock, consumer frugality temper retailers’ 2014 expectations in latest Outlook Survey.
Steve Keane, formerly with Temple, Texas-based CEFCO and now a franchisee of two 7-Eleven stores in the Dallas-Ft. Worth area, considers business conditions “good” and has seen a modest increase in same-store sales, thanks to a slowly improving construction industry and the benefits of operating in a high-income county with an average household income of $100,000.
“One of my bigger challenges is: How do we serve that specific consumer, and have them think of us as a place for a great beverage or food item?” he says. “How do we tap into the buying power of affluent consumers?”
Allen Marsh, CEO of Sapp Bros Inc., Omaha, Neb., which owns and operates 16 truckstops from Utah to Pennsylvania and distributes fuel, was among the less than 7% of Outlook Survey participants to describe business conditions as “excellent.” But he has good reason. For one, recent troubles at Pilot/Flying J have directed business his way. For another, Sapp Bros. has very low turnover compared to the industry average, and committed employees. But perhaps even a greater reason is the retailer’s own operational discipline.
Marsh cites one of Walmart founder Sam Walton’s “10 Rules for Building a Business”: “You can make a lot of different mistakes and still recover if you run an efficient operation. Or you can be brilliant and still go out of business if you’re too inefficient.”
For Sapp Bros., that has meant replacing managers who are not performing well, maximizing the hauling capacity of its transportation division, and keeping each travel center’s management team up to date on how it is performing by key metrics, including overtime hours, cost per gallon to staff, and cost per gallon per dollar store sales.
Read on for more c-store retailers’ assessment of the year that was, and their hopes for the year ahead, in the results of the 2013 CSP Outlook Survey.
More than 53% of participants in the 2013 Outlook Survey described current business conditions as “good” or “excellent,” compared to more than 62% in 2012. About 51% expect “some” or “great improvement” in the coming year, little change from the 2012 survey.
While the percentages cannot be directly compared—participation in the survey varies from year to year—it does suggest a certain mood of disappointed resignation. And based on comments by participants, one of the biggest factors is the government—whether it be manufactured crises such as the debt-ceiling squabble and government shutdown, the FDA’s still-pending regulatory decisions on tobacco, or the effect of the Affordable Care Act (ACA).
While Holmes Oil does not have a huge base of government workers among its employees, its stores near the state capital do, and the company is concerned about another crisis such as the one that hit this past fall. “If we have another debt ceiling [crisis], the uncertainty is troubling; we don’t know what will happen in January,” says Zikias. “Will there be a grand budget deal to ensure long-term viability?”