Government gridlock, consumer frugality temper retailers’ 2014 expectations in latest Outlook Survey.
Expanding foodservice, however, is not as easy. “As our legacy stores are in the 2,400-square-foot range, we cannot expand into freshly prepared foods,” he says, but the chain is looking into dashboard dining options, and increasing its fresh food deliveries.
More than three-quarters of Outlook Survey participants said their stores offer fresh and healthful foods, with sandwiches, wraps and fresh fruit the top-stocked items. More than 81% see demand for such items growing. For Sapp Bros., whole fruit is a big seller. The truckstop chain places bins of oranges, bananas and apples near its cash registers. “A lot of that is impulse,” says Marsh. The company is building a bigger area for fresh-fruit fixtures at a couple of its sites. “Those do well, and it’s good for the consumer too.”
At Holmes Oil’s Cruizers stores, healthful alternative snacks, such as bars from KIND, Clif and PowerBar, are gaining space. “In the past it may have been more general-merchandise items, and now [we] have more of a focus on immediate consumption, food, beverages and snacks,” says Zikias. “We are also looking to get new items in quicker.”
According to the Outlook Survey, more than 42% of retailers had fuel margins that were “about the same” as those in 2012. Slightly fewer—38%—saw fuel volumes hold steady. Nearly 34% experienced a drop in margin and less than 16% saw an increase compared to 2012.
At Sapp Bros., gas and diesel volumes have been basically flat compared to 2012. But the travel-center chain still sees opportunity for growth—in alternative fuels. This fall, the retailer is hosting the installation of a compressed natural gas (CNG) fueling site at its Lincoln, Neb., travel center, run by United Farmers Cooperative’s J & J Compression division. The site will operate under the Stirk CNG brand. A second CNG site at Sapp Bros.’ Council Bluffs, Iowa, travel center is planned for next spring.
“We think our diesel volume is going to go down, and we’re not going to pick it all up with CNG,” Marsh says. However, margins are much higher for CNG than diesel, and it could cement customer loyalty. “If we can get these local guys to come into the store, buy knickknacks and pop, we’re going to have the advantage over the competition,” he says.
While more than 81% of Outlook Survey retailers plan to keep their fuel offer the same, a few are planning changes, with upgrading fueling equipment the most popular move. Less than 16% plan to debrand—and that includes Sapp Bros. The chain, which has sold several brands of fuel, is raising its own flag, Sapp Bros., to be rolled out initially at five sites.
“Sapp Bros. has enough brand recognition that we think volumes will hold and margins will be better,” says Marsh.