ALEXANDRIA, Va. -- Thus far, this year has been kind to convenience-store retailers, with 79% of retailers saying in-store sales increased in the first six months of 2018 compared to the same time last year, according to a NACS survey of U.S. c-store owners.
Furthermore, more than half (56%) of the retailers surveyed said their fuel sales increased compared to last year. Only 7% of retailers said in-store sales declined, and 19% said fuels sales declined.
NACS said it expects the momentum to continue through the summer, fueled by expanded healthy snack and drink options.
Retailers said a continued focus on fresh and healthy items helped boost sales, and they plan to continue dedicating more space to these items. Retailers cited the addition or expansion of the following items in their stores:
- Health bars (45% of retailers added or significantly expanded in the first half of 2018)
- Fresh fruit/vegetables (41%)
- Packaged salads (37%)
- Nuts/trail mix (35%)
The alternative snacks category, driven by protein- and energy-rich items, is one of the faster-growing categories in the convenience retailing industry, according to the NACS State of the Industry Report of 2017 Data.
NACS said c-store retailers such as J.R.’s Country Stores, Pueblo, Colo., expect to see prepared foods attract more customers, continuing a trend from last year. In-store growth for U.S. convenience stores in 2017 was powered by foodservice (22.5% of in-store sales and 33.9% of gross-profit dollars), a broad category that includes prepared food—69% of total foodservice sales—as well as commissary foods and hot, cold and frozen dispensed beverages.
“Fresh salads and smoothies, along with burgers and fries, seem to be the big winners so far in 2018—the full spectrum of pleasure food vs. healthy options,” said Dennis McCartney of Landhope Farms, Kennett Square, Pa., another c-store retailer that NACS surveyed.
Especially during the summer months, c-stores are a destination for packaged beverages, a category that generates more gross-profit dollars inside the store than another other merchandise category, NACS said. As demand continues for healthier options, many retailers are devoting more cooler space to lower-calorie and lower-sugar beverages, especially waters.
During the first six months of 2018, a majority of retailers say they’ve added flavored/enhanced waters (54%) and regular bottled water (52%), the NACS survey said. Water also figures prominently in sales growth, with 46% of retailers expecting sales of still bottled water to increase and 42% expecting sales of sparkling bottled water to increase. Lower-calorie teas and coffees also were cited by 42% of retailers. Healthy beverages are expected to grow sales at Charlie’s Convenience in St. Paul, Minn., and organic energy drinks are growing sales at Minit Stop in Kahului, Hawaii.
In addition to in-store offers, retailers said sales growth will be fueled by generally low gas prices, warm summer weather and strong consumer confidence. Retailer confidence has soared, with a record 86% of convenience retailers indicating they are optimistic about their business prospects over the third quarter, up three points from last quarter and tied for the highest measured since NACS debuted the retailer sentiment survey in 2015. Convenience retailers also are optimistic on a broader economic level: About three in four retailers are optimistic about the economy (74%) and the c-store industry (77%).
The quarterly NACS Retailer Sentiment Survey tracks retailer sentiment related to their businesses, the industry and the economy. A total of 74 member companies, representing a cumulative 2,106 stores, participated in the July 2018 survey. Alexandria, Va.-based NACS has 2,100 retailer and 1,750 supplier members from more than 50 countries.
The U.S. c-store industry, with more than 154,000 stores nationwide selling fuel, food and merchandise, serves 165 million customers daily—half of the U.S. population—and has sales that are 10.8% of total U.S. retail and foodservice sales.