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Convenience-Store Sales, Performance Reach Pre-Pandemic Levels

In-store sales hit record high, even as labor headwinds persist, says NACS
convenience store
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CHICAGO — As customers continued to rely on their local convenience store to fulfill their shopping needs, the resiliency of the U.S. convenience retailing industry was amplified in 2021, and total in-store sales increased to a record $277.9 billion in 2021, according to the latest NACS State of the Industry (SOI) data released during the 2022 NACS State of the Industry Summit in Chicago.

The in-store increase in sales came despite a 1.5% decline in the number of c-stores, which totaled 148,026 stores at the start of 2022.

Factoring in fuels sales of $427.8 billion, total c-store sales reached $705.7 billion in 2021, meaning that overall sales were 3.1% of the total U.S. gross domestic product (GDP) of $23 trillion in 2021.

The average in-store basket size increased 6.3% in 2021 to $7.59 and has grown 22.4% over the past two years, making up for a 6.9% decrease in in-store transactions since 2019.

Fuel Sales Head Back Toward 2019 Levels

C-stores sell approximately 80% of the motor fuels purchased in the United States and saw a return to the pumps as more consumers and commuters took to the roads again in 2021, although below pre-pandemic levels in 2019. Total fuel gallons sold increased 4.4% in 2021, still 7.2% below the level they were in 2019. Overall, 79% of all U.S. c-stores (116,641 stores total) sell fuel.

Total c-store fuel sales increased 46.2% in 2021, reflecting both higher demand and higher gas prices, which averaged $3.02 per gallon in 2021, considerably higher than the average of $2.17 per gallon in 2020.

“The sales and performance metrics show that our industry is resilient. Our rapid adjustments to product assortment and the embrace of last-mile solutions allowed our industry to hold its own over the past few years, but to grow, especially market basket, is simply remarkable. While there are numerous headwinds facing retail in 2022, I am very optimistic about our channel’s future,” said Charlie McIlvaine, chairman and CEO of Coen Markets Inc., Canonsburg, Pa., and a member of the NACS board of directors.

Foodservice Comeback

Foodservice sales reflected the trend of c-stores selling more restaurant-quality food. Foodservice, which includes prepared food, commissary, hot dispensed beverages, cold dispensed beverages and frozen dispensed beverages, saw sales grow 24.1% in 2021 and are 10.6% higher than 2019 levels.

Overall, foodservice accounted for 22.5% of in-store sales in 2021—significantly higher than the 16.8% reported a decade ago. Foodservice now accounts for 35.5% of in-store gross profits, compared to 29.2% in 2011.

After declining 8.5% in 2020, sales of prepared food—the largest foodservice segment at 66.7% of foodservice sales dollars—surged 25.9% in 2021 and were 15.2% higher than in 2019. Meanwhile, hot dispensed beverages (coffee, tea, hot chocolate) have not recovered to pre-pandemic levels but continue to represent the second-largest segment of foodservice sales at (13.2%), followed by cold dispensed beverages (7.8%), commissary (6.6%) and frozen dispensed beverages (5.8%).

A robust foodservice offer was the greatest predictor of in-store profit, said NACS; stores in the top decile for in-store store operating profit have foodservice gross profits that were seven times those in the bottom decile.

Labor Headwind

The c-store industry provided 2.38 million jobs across the United States in 2021. Average wages increased 10.5% for full-time and 12.3% for part-time employees to $13.14 per hour and $12.45 per hour, respectively.

Overall, the industry paid or collected $159 billion in taxes, or 23% of all sales dollars at c-stores in 2021. On a per-store basis, taxes collected averaged $1.1 million.

While sales and other financial metrics related to performance were positive, there are concerns related to labor and expenses, said NACS. Total turnover for retail overall has increased, and it also increased in the convenience channel; turnover in 2021 was 150%—the highest it has been since 2012, according to the NACS State of the Industry Compensation Report of 2021 data. The full-time employee turnover rate was 119%, and the part-time employee turnover rate was 182%.

Direct-store operating expenses increased 14.3% in 2021 versus 2020, and the largest contributor to DSOE was wages and benefits ($71.7 billion), which was up 10.7% compared to 2020 ($64.8 billion) and up 17.1% compared to 2019 ($60.9 billion). Card fees, meanwhile, were up 25.6% in 2021 ($13.5 billion) versus 2020 ($10.7 billion).

Founded in 1961 as the National Association of Convenience Stores, NACS advances the role of c-stores as positive economic, social and philanthropic contributors to the communities they serve. Alexandria, Va.-based NACS has 1,900 retailer and 1,800 supplier members from more than 50 countries.

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