Preliminary Data from NACS State of the Industry Summit 2014
Total industry sales and a breakdown of the top retail product categories
Do you want to be MacGyver, the ’80s special-ops agent and troubleshooter who can save the world with a paperclip? Or are you going to be MacGruber, the easily distracted “Saturday Night Live” parody who cannot defuse a bomb to save his own life?
That was the question Kevin Smartt, CEO of Kwik Chek Food Stores Inc., Bonham, Texas, posed to attendees at the 2014 NACS State of the Industry (SOI) Summit. One case in point: the c-store industry’s response to McDonald’s McCafé hot-beverage program, which went on to become a key driver of growth for the fast-food chain and a real competitive threat to c-stores.
“Folks, we got caught flat-footed in ’07 when McDonald’s rolled out McCafé,” Smartt said. “We don’t want to MacGruber this again.”
In 2013, hot-beverage sales fell 4% on a per-store, per-month basis, according to preliminary numbers from the NACS State of the Industry Report of 2013 data, with gross profits off 2.6%. While the specific factors leading to this decrease are unknown—such as if weather was a factor—retailers need to double down on foodservice. Total category sales rose only 2.4% in 2013, compared to an 8.7% increase in 2012.
“As an industry, we have to do better than that,” warned Glenn Plumby, vice president of operations for Speedway LLC, Enon, Ohio, during his presentation of industry numbers. He pointed to the fact that quick-service chains McDonald’s and Wendy’s each saw a similar or greater same-store growth rate over the past two years, but they grew off a much greater sales base.
Meanwhile, myriad issues are picking away at the industry’s growth potential, from a sluggish economy to greater regulatory threats and changing consumer demographics.
There are bright spots, such as strong sales growth in the “alternative” and “other” subcategories of snacks and packaged beverages. Figures from The Nielsen Co. show that c-store unit sales of “other packaged beverages”—a subcategory that includes bottled coffee and protein drinks—rose 26.3% in 2013. Dollar sales of alternative beverages, led by energy drinks, are now 72% that of the category’s biggest seller, carbonated soft drinks, according to preliminary NACS SOI figures.
And alternative snacks, which include meat snacks and bars, saw a 30.5% jump in monthly sales per store, according to NACS.
In tobacco, smoking alternatives—e.g., e-cigarettes and other tobacco products—were the greatest areas of growth. Nielsen figures show smokeless tobacco up 6.8% and e-cigarettes up nearly 129%, with units growing 149.5%. Kwik Chek saw a leap of more than 180% in unit sales for the subcategory but, as he explained, it took a little MacGyver-type action.
“We made it a mission to own this subcategory,” he said. “We took the challenge head on, moved fast, added multiple brands and at varying price points.” The retailer even self-distributed some brands to the point that it is now one of the market leaders in its area. This is an approach that would serve all retailers well, no matter the category.
“What would MacGyver do?” Smartt asked. “MacGyver was known for facing challenges head on, using the resources he had available and overcoming obstacles at the end with positive results.”
Data Begins on Page 2 ...