Retailers are generally optimistic about business conditions as 2022 nears, with their biggest challenges revolving around securing and retaining labor, wage inflation and operating through the COVID-19 pandemic.
About 58% of respondents to CSP’s 2021 Outlook Survey anticipate business conditions to improve somewhat or greatly in 2022, a dip from the 80% surveyed last year who expected an improvement going into this year.
That may be more about how dire business conditions were a year ago than a measure of current conditions. For reference, in 2019, 49% of survey respondents said they expected business conditions to improve the next year.
In a related question that garnered more positive feedback compared with last year, 62% expect 2021 total sales, including fuel and in-store, to be “somewhat” or “much” higher than in 2020. In last year’s survey, that number, comparing 2020 sales to 2019’s, was 52%.
Only 13% expect 2021 sales to be “somewhat” or “much” lower; last year that number was 39%. About 88% of retailers surveyed say current business conditions are good (69%) or excellent (18.5%), a jump of about 10 percentage points from respondents last year, indicating a more positive outlook.
“We’ve seen really strong growth in recent months,” says Blackie Wills, president and COO of La Plata, Md.-based The Wills Group, which runs 55 Dash In stores. “Our c-store sales have been up through the summer months, double-digit percentage points.”
Despite a typical dip in September, Wills says he’s “pretty bullish” on industry sales for the foreseeable future, with his only concerns COVID-related.
Chad Ellis, a retail division manager at Horizon Resources Co-Op in Williston, N.D., also says 2022 looks bright.
“Our pumps are backed up, which is awesome,” he says. But the health of the supply chain is critical for a successful year. Food- and hardware-related items have been of particular concern, but Ellis has been able to obtain similar items to make do. Such products include propane tanks and diesel exhaust fluid, which became a problem when the original vendor’s price rose too high.
Wills concurs on supply-chain constraints, adding he has issues not just with the products they sell but with “construction materials, technology components, you name it. We can’t find card readers for our fuel pumps. We’re having trouble getting the PIN pads for in-store transactions.”
Scarcity also extends to underground storage tanks, bar joints for buildings, construction materials and technology components.
“The supply chain’s just been incredibly difficult to manage,” he says. “In the 14 years I’ve been in this business, I’ve never seen a supply chain this strained.”
Ellis, a retail division manager for five stores, three in North Dakota and two in Montana, says his stores are lucky because of a one-two punch of having a good number of customers with immediate needs, particularly regarding hardware, and a solid number of customers who aren’t particularly tech-savvy and thus less likely to pursue an online option.
“When people want something, they don’t want to order it and wait,” he says. “They need it ASAP. Our store can be ideal for that consumer.”
One category where Ellis is lacking is “good, quality help.” He has found it difficult to get people out of the mentality of getting paid to sit at home and collect stimulus checks, he says.
Survey data supports Ellis’ frustration. When asked for the three biggest challenges they face today, respondents’ top answer was the ability to hire and retain the necessary workforce. The second was employee turnover/labor. Tied for third are COVID safety concerns and wage inflation.
Another issue affecting business conditions was brought on by technology and delivery services, says Roy Strasburger, president and CEO of StrasGlobal, a c-store management services company in Temple, Texas.
“In the old days, the definition of convenience was location, location, location, but location does not matter if somebody is ordering something from their sofa,” Strasburger says. “So, we are competing against people across town, who we’ve never competed against. And they’re competing against us.”
This new avenue of competition means, “we need to figure out what our offer is, how to make it, how to be seen, how to be visible, how to provide the customer with what they want and how to do it economically,” he adds, noting fees from standard third-party delivery services eat up almost all a c-store’s profits.
Another new challenge is figuring out how to better leverage one’s loyalty program, which up until very recently meant solely offering promotions and discounts, and luring customers with offers, Strasburger says.
“What 2020 showed us was a loyalty program is (also) about being able to communicate to your customer and get your story out: Tell them we were open, we had toilet paper, were wearing masks and sanitizing.” Related to this is communicating better with the c-store team “and creating a more robust feedback loop,” he says.
Looking toward 2022, retailers selected curbside pickup (55%) as the top amenity they plan to offer. Drive-thru service (42%) came in second, mobile ordering (39%) third, frictionless transactions (23%) fourth, and delivery (22%) fifth. That’s a significant shift from last year’s survey, where the top five were frictionless transactions (34%), mobile ordering (27%), curbside pickup (20%), drive-thru (13%) and delivery (7%).