CHICAGO -- Cigarettes supplied 28.6% share of inside sales, retaining its perennial position as the largest in-store category for c-stores. However, this share has slipped from nearly 37% in 2011, according to NACS figures. Monthly sales rose 2.4% in 2017, with gross-profit dollars off 0.7%. The category’s gross margin, meanwhile, slipped 0.5% to just under 15%.
“Folks, we cannot ignore this, and we certainly want to protect it, because [cigarettes] helped get us here today and it’s a traffic driver,” said Alan Beach, senior vice president of merchandising for Irving, Texas-based 7-Eleven Inc., presenting at the 2018 NACS State of the Industry Summit. “But with 15% margins, this is not going to get us to the promised land.”
Other tobacco products (OTP) provide “a huge opportunity” for c-stores, thanks to strong growth in unit sales in 2017—up 8.5%, according to Nielsen. Smokeless supplied more than 57% share of dollar sales, but the greatest growth happened in cigars and e-cigarettes. For the latter, vaping products provided the engine behind a 51.1% jump in dollar sales and nearly 22% increase in unit sales, according to Nielsen.
“In OTP we have a huge opportunity, but [one] not well understood by our stores and our associates,” said Beach. “It’s critical we have strong product-assortment management and execution in this area to continue our growth.”
Subcategory Sales Breakdown
Convenience-store cigarette unit sales fell 3.5% in 2017, with losses in every segment except for subgeneric and private label, according to Nielsen.
Source: The Nielsen Co. | ** Percent change from a year ago