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2018 SOI: Regional Insights

The Western U.S. saw some of the highest sales gains in 2017, as well as the biggest costs

CHICAGO -- In a reflection of its prospecting past, the West was once again the region of opportunity last year, netting strong sales gains in 2017. Other parts of the country—especially the Midwest—saw flat and even negative sales growth in crucial categories such as foodservice and cigarettes.

“The Western region led the way in gallons and inside sales growth,” said Andy Jones, president and CEO of Sprint Food Stores, Augusta, Ga., during the 2018 NACS State of the Industry (SOI) Summit.

“The small amounts in red,” he continued, pointing to declines in the Northeast, Southeast and Midwest, “you need to look into those if that happened in your regions.”

Regional Category Sales

Sales of OTP and candy increased for all regions in 2017.


Sources: NACS preliminary data. Final data to appear in the NACS State of the Industry Report of 2017 Data; CSX

And yet the West was not immune to negative forces: The region, which includes statistics-skewing California, saw notably greater gains in direct-store operating expenses (DSOE) than other parts of the country.

The Western region saw a 3.6% increase in fuel gallons sold in 2017, according to CSX data. It was followed by the South Central region with 3.4% growth. South Central, meanwhile, led the way in fuel sales growth at 17.4%, followed by the Southeast at 16.2%. The Northeast saw the largest increase in average selling price: It rose 13.8%, followed by the South Central at 13.5%.

Regional gross-profit dollar change casts a different light on how the regions fared. The West experienced a decline of 0.4% in pool margin and a 2.6% decline in fuel margin less credit-card fees. On the other end of the spectrum, the Southeast saw 15.8% growth in pool margin and 18.8% growth in margin less credit-card fees. Overall, the West’s fuel gross-profit dollars were nearly flat at 0.8%. The South Central region saw the greatest growth in fuel gross-profit dollars, with 15.6% growth.

Back to sales, the Western region also saw the greatest gains for inside sales, with a 5.4% increase. It experienced 12.5% growth in foodservice sales—nearly double the gains of the next closest region, South Central, at 7.1%. The Southeast also had strong foodservice sales growth at 6.8%. The Midwest was the only region to go into the red on foodservice sales, with a 1.3% decline.

“The Western region led the way in gallons and inside sales growth.”

Cigarette sales saw a spectrum of results across the country. The Northeast, Southeast and Midwest regions all dipped into the red with 2.9%, 1.9% and 0.2% declines, respectively. The Central and Western regions, meanwhile, saw gains of 2.9% and 2.8%, respectively. The South Central region experienced 0.7% growth.

Cigarette gross-profit dollars reflect a year of regulatory change. While the Western region saw cigarette sales growth of 2.8%, gross-profit dollars declined 1.5%.

The Central region likewise went from black to red, with sales growth of 2.9% and gross-profit dollar decline of 1.7%. The Southeast was the one region to see cigarette sales decline (down 1.9%), while gross-profit dollars increased to 7.0%.

A look at DSOE reveals even more pain for the Western region. It saw increases in all DSOE metrics, including a 9.3% increase in wages and benefits and a 6.3% increase in supplies. Overall, the Western region was nearly 2 percentage points higher than the next closet region in terms of total DSOE and facility expenses; it saw a 7.5% increase, compared to a 1.8% increase for the Southeast region, which saw the least change.

Jones used the industry’s DSOE numbers to drive home a critical theme at this year’s SOI. “Doesn’t it seem odd that credit-card fees increase more for us than wages and benefits?” he said, pointing to the 8.1% increase in wages and benefits for all regions combined, vs. the 12% growth in card fees. “This issue must be addressed, and this would be a great slide to show your congressman.”

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