ASHEVILLE, N.C. — Few attendees at CSP’s 2019 Outlook Leadership conference raised their hands when Donna Hood Crecca, principal with Technomic, asked if their businesses were built for growth in the coming years. “What about our industry? Do you feel confident in the convenience channel?” Again, few people raised their hands. Everyone was waiting for what would come next.
That uncertainty and interest in the future was reflected in the Era of Disruption study, which Chicago-based Technomic and CSP worked together to produce. Technomic surveyed a sample of 200 convenience-store executives and conducted one-on-one interviews with 21 executives to build the study, which measures the industry’s confidence in the years ahead.
Read on for insights into the study and Crecca’s presentation of the data …
Meeting the change
“When we dig deeper into the research, a sense of unease does emerge,” Crecca said. She pointed to 80% of respondents who said the definition of convenience has changed in the past five years. Meanwhile, 82% are evolving their stores to align with the changing definition. Nearly half—40%—indicated low confidence in the convenience channel’s relevance to today’s and tomorrow’s consumer.
Crecca said that while these statistics might sound alarming, they speak to the optimism of the industry. “There’s widespread acknowledgement of change,” said Crecca. On the other hand, one-fifth of respondents don’t acknowledge that the definition of convenience is changing.
A tale of two c-stores
Crecca spoke about a potential disconnect between the industry’s acknowledgement of change and its actions. “Are we accelerating the pace of change for our store refreshes?” she asked. The answer is yes and no.
Of today’s existing U.S. c-store network, 49% of those stores were built in the past four years and 76% of the store network is less than 10 years old, Crecca said. Three in 10 said they have remodeled over the past five years.
However, more than half of respondents—52%—said they have never remodeled a store. “Think about the cellphone you had in 2009,” Crecca said. She said she had a BlackBerry in 2009. “I don’t use it anymore, obviously. Likewise, a store built in 2009 may not feel relevant. It may not meet the needs of today’s consumer, let alone tomorrow's.”
M&A and NTI
Crecca said mergers and acquisitions (M&A) will continue to take place in convenience. “But it’s going to be different going forward—weaker, if you will,” she said.
Nearly 3 in 10 brands anticipate growing store count through M&A. Of these, 14% will be through local deals and 13% multistate deals, according to Crecca.
Specifically, Crecca pointed to Enmarket’s acquisition of Clyde’s two years ago, in which Savannah, Ga.-based Enmarket bought 36 locations from Clyde’s, based in Glennville, Ga. “We think that’s going to be more of the norm going forward,” said Crecca.
She said new-to-industry (NTI) stores would make up 71% of future growth, evident store construction from chains such as Rutter’s, High’s and Dash In. “They can be seamlessly integrated into the existing system,” potentially making NTI a more enticing growth strategy for c-stores, Crecca said.
Us and QSRs
The U.S. population has grown 13% since 2004, said Crecca, while c-store unit counts have grown 17%. She said this level of growth is healthy compared to the restaurant industry, which has grown 2.5 times faster than the population and is likely oversaturated.
Crecca said that while the industry is pointing to foodservice as the cash cow, running c-store foodservice is very different than running restaurant foodservice. For instance, sales per square foot does not apply to other foodservice sectors. She shared data that said 82% of respondents view foodservice as a strategic priority and growth driver, and that c-stores are outpacing the growth rate for quick-service restaurants.
Look for more from the Era of Disruption study in the October issue of CSP Magazine.