Company News

2018 SOI: In-Store Sales

Preliminary data from NACS State of the Industry Summit

CHICAGO -- Woe is Bubba: The low-income c-store consumer has not benefited from the recent years of economic growth nearly as much as his higher-income cohorts have.

“The guys on the low end of the scale are hurting,” said Alan Beach, senior vice president of merchandising for Irving, Texas-based 7-Eleven, presenting at the 2018 NACS State of the Industry Summit. “Their expenses have shot up, whether it’s rent, healthcare, gasoline, whatever. After that’s done, they have basically no incremental discretionary income. This is our consumer.”

For convenience retailers, the weakened financial state of their core customer is forcing them to re-examine their model. Do they stick to the familiar, or stretch toward a new reality?

Total Industry Sales

Inside c-store sales grew 1.7% in 2017 to hit $237.0 billion, a modest increase compared to a nearly 15% jump in fuel sales, inflated by higher gasoline prices.


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

“Change creates both danger and opportunity,” Beach said. “How we leverage that opportunity is about the choices we make.”

From his perspective, it’s about choosing to diversify the offer so that less of a retailer’s economic fortunes rely on a single demographic.

“We need to become a better destination for more customers in more income ranges,” Beach said.

This is key, he believes, to avoiding “the mediocre middle,” the realm filled with retailers who overleveraged their balance sheet and relied on an outdated business model (e.g., Toys R Us). According to an analysis by Deloitte, retailers of this type that tried to fill the middle road—“balanced” retailers—saw a 2% year-over-year decline in revenue, and a drop in net store openings from 2015 to 2017.

Instead, c-store retailers should straddle where the growth is: value and premium. Deloitte’s analysis found that value, or “price-based,” operators enjoyed a 7% increase in revenue, and premium, or “premier,” retailers saw an 8% jump. Both also increased their net store openings from 2015 to 2017.

To get on better footing, c-store retailers must become “a better choice for the consumer” and deliver on the overall shopping experience, Beach said. This includes offering the right product assortment, hitting the right notes on variety and providing exclusive offers. It means targeting products to market segments that index highest in a specific neighborhood. And the offer must meet consumers’ price-value requirements, with functionality, ease of use and consumption, and the right quantity for the dollar amount.

“Change creates both danger and opportunity. How we leverage that opportunity is about the choices we make.”

In this world, c-store retailers can’t just rest on great customer service, Beach warned, especially in a tight labor market. “It’s going to be very hard to differentiate just on service alone if we’re all sharing the same labor pool with QSRs,” he said.

What c-store retailers must do, he said, is deliver on all three of “the F’s”: fast, friendly and frictionless, which refers to the ease of shopping and payment.

“We must be good at two of these and great at one,” he said.

Click here to see complete in-store data.

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