OAK BROOK, Ill. -- Convenience store retailers are bracing for a more challenging environment in the second half of 2005 for their in-store sales. This is according to a survey of 14 of the largest convenience/gasoline retailers in the country conducted by Deutsche Bank, New York. The respondents, primarily category managers, represent more than 14,000 retail stores.
All retailers noted minimal to no impact of higher gas prices on inside sales, yet, the report issued September 13 said. Retailers are bracing for a more challenging environment in the back [image-nocss] half. As summer comes to a close, some respondents sensed a shift may be in the offing.
The report focuses mainly on beverages, candy and snacks to provide Deutsche Bank an idea of how PepsiCo stock might fare in the coming months. Both Frito-Lay and Pepsi products play a critical role for c-store retailers, a channel we estimate accounts for close to 20% of [PepsiCo's] domestic system profitability, the report noted.
The survey shows retailers are wary of recent consumer shifts from shopping in c-stores to shop in grocery stores for one-stop shopping. Shift of purchase patternsowes to consumers who are feeling pinched at the pump buying for value over convenience, the report stated. Beer was noted as the first category to be affected by this trend, with other food/beverage categories to follow. Clearly, higher CSD (carbonated soft drink) prices would exacerbate this trend.
Deutsche asked retailers how they would position themselves should supplier prices rise and consumer demand wane, owing to high gas prices. Responses were mixed, according to the report. All feared increased channel risk from higher gas prices and in the store price increase. Some chains sought to preserve margins in the face of higher pricing with the hope that volume loss would be temporary. Others looked to value ideas such as buy-2-get-1 deals.
Other results of the survey:
73% of respondents said confection had exhibited the most growth over the past year. 18% chose salty snacks. 9% said snack bars. 40% of respondents ranked Hershey as doing the best job in the candy/snacks category. 25% chose Frito-Lay. 10% each chose Kraft or Kellogg. Respondents expect wholesale CSD pricing to increase 30-80 cents per case from Coke, followed by Pepsi. A 10-cent increase in single-serve prices is expected to flow through to consumers, pushing 20-oz. bottle prices to $1.29 on average.Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.