With regard to inside-sales numbers, retailers can see satisfaction turn to dissatisfaction with the simple switch of a channel—not necessarily a TV channel, but one involving a cross-channel competitor. Seemingly notable gains likewise are drab when compared to other categories and years.
In looking at the NACS State of the Industry (SOI) Summit numbers from participating c-stores, Glenn Plumby, vice president of operations for Speedway LLC, Enon, Ohio, cast a grim shadow on a solid industry performance.
But the stakes are high. Slumping cigarette sales and the competitive nature of foodservice are adding a sense of urgency to c-store retailing. Comparing growth in foodservice to declines in tobacco and gains in drug and QSR, Plumby said the industry should be concerned.
Inside sales for the industry were up slightly at 2.4% in 2013 vs. 2.2% in 2012. But put against a same-firm drop from 2012 foodservice gains (from 8.7% to 2.4% as well for same firms in 2013) and a greater drop in cigarette sales (-3.5% in 2013 vs. a 0.9% slip in 2012), the picture wasn’t as rosy. Regarding cigarettes, he said price increases did not offset volume lost.
“As an industry, we have to do better than that,” Plumby said. “This is something we’ve got to continue to work on as a whole. We’ve got to offset [rising] cost issues and the hurt in other sales categories.”
The story Plumby tells with same-firm data is essentially the same:
▶ In-store sales is up 2.5% (vs. total industry at 2.4%).
▶ Merchandise less cigarettes is up 2.4%.
▶ In-store plus fuel sales down 0.1%.
Calling total sales from a same-firm perspective “flat,” Plumby said the number for the year previous was up 3%. “As an industry, the sales engine really did not kick in in 2013 as well as it did 2012.”
Profitability inside the store was up in general at 4.5%, but that was not so much helped by foodservice profitability at 2.5% and certainly not by cigarettes, which presented a 5.7% decline in profitability for same firms reporting to NACS.
In a different cut of data from firms with five years of consecutive reporting data (vs. just two), the correlation between foodservice gross profit dollars and cigarettes are more evident. In 2010, cigarette gross profit dollars in this reporting group rose 8.1%, while foodservice gross profit dollars rose only 3.8%. While foodservice did not grow as much last year as it did in 2012, it was still at 9.2% growth vs. cigarettes in 2013, which sowed a drop in gross profit dollars of 4.1%.
Getting back to same firms, Plumby said total gross profit for inside and forecourt sales were up 4.4% in 2013. Again, the number would be considered strong with inflation at about 1.5%, but Plumby compared it to the industry’s growing expenses. Total direct store operating expenses for same firms in 2013 was 5.1%.
Plumby also brought in numbers from other channels. Comparing c-store sales with drug, dollar and big-box categories, convenience lags behind. Plumby reported inside sales less food for c-stores last year at 1.3%—a number comparable to other channels. For dollar stores, sales are up 3.6%, outdoing c-stores by 3x. For drug stores, a weighted average was 3.5%, again a 3x advantage.
From a convenience-food standpoint, sales are up 2.4%. “That’s slightly the same as Wendy’s and McDonald’s,” Plumby said. “The only difference is when you look at the base: McDonald’s is 10x ours and Wendy’s base is 5x. With us looking at being up 2.4% equal to our competitor in that channel is discouraging … Last year, it used to be 8.7%. That’s the type of return we need to enjoy to offset [our costs].”
Store Count Changes Among Cross-Channel Competitors
Convenience-store growth in terms of number of units was a modest 1.4% in 2013, but compared to dollar stores at 6.1%, it was considerably less aggressive.
| Store Count Comparisons | ||||
| Trade Channel | 2012 | 2013 | Unit Change | % Change |
| Convenience stores | 149,220 | 151,282 | 2,062 | 1.4% |
| -Single stores | 93,819 | 95,056 | 1,237 | 1.3% |
| Category killer | 84,526 | 83,959 | -567 | -0.7% |
| Supermarket/supercenter/superette | 50,078 | 50,645 | 567 | 1.1% |
| Liquor store | 45,665 | 46,266 | 601 | 1.3% |
| Drug | 40,727 | 41,378 | 651 | 1.6% |
| Dollar | 23,421 | 24,853 | 1,432 | 6.1% |
| Kiosk/other | 23,052 | 22,847 | -205 | -0.9% |
| Cigarette outlet | 10,374 | 10,956 | 582 | 5.6% |
| Mass merchandiser | 7,243 | 7,177 | -66 | -0.9% |
| Wholesale club | 1,261 | 1,286 | 25 | 2.0% |
| Total retail | 435,567 | 440,649 | 5,082 | 1.2% |
Source: Nielsen
Comparing Cross-Channel Competitors
In an effort to make “apples to apples” comparisons of merchandise and foodservice against cross-channel competitors, NACS broke convenience food apart from merchandise to see how c-stores stacked up.
| Store Sales Comparisons | |||
| Chain | Prior Fiscal Year | Current Fiscal Year | Difference |
| Convenience merchandise | $110,448 | $111,866 | 1.3% |
| Dollar Tree | $126,992 | $131,922 | 3.9% |
| Dollar General | $124,174 | $127,087 | 2.3% |
| Family Dollar | $104,486 | $109,392 | 4.7% |
| CVS | $1,208,040 | $1,366,687 | 13.1% |
| Walgreens | $711,916 | $701,245 | -1.5% |
| Rite Aid | $466,413 | $457,716 | -1.9% |
| Convenience food | $24,158 | $24,726 | 2.4% |
| McDonald’s (company) | $238,026 | $243,235 | 2.2% |
| Wendy’s | $120,566 | $124,346 | 3.1% |
*Note: Per store per month over the last two fiscal years.
Source: NACS
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