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SOI 2019: Another Record Year for Convenience Stores

Fuel traffic struggles as operating costs outpace gross profits
nacs state of the industry summit
Photograph by CSP Staff

ROSEMONT, Ill. — U.S. convenience stores experienced a 16th straight year of record in-store sales in 2018, according to newly released NACS State of the Industry data, the convenience and fuel retailing industry’s premier benchmarks and key performance category insights.

U.S. convenience-stores sales overall surged 8.9% to $654.3 billion, led by a 13.2% increase in fuel sales, which account for 69.6% of total sales. In-store sales increased 2.2% to a record $242.2 billion. Overall, convenience-stores sales are 3.1% of the U.S. gross domestic product of $20.5 trillion.

Higher gas prices, up 13.7% from $2.37 per gallon in 2017 to $2.69 per gallon in 2018, contributed to the increase in overall industry sales. Fuel margins, which have increased over the past five years, were also higher in 2018, up 7.5% to 23.35 cents per gallon, while gallons sold decreased by 0.4%.

“Fuel sales were strong in 2018, but consumers were making fewer stops to refuel, which suggests that greater fuel efficiency in vehicles is translating to less trips per week to the convenience store,” said Andy Jones, NACS vice chairman of research and president/CEO of Sprint Food Stores Inc., Augusta, Ga. “Utilizing NACS research can help retailers track trips per transaction and develop new marketing strategies to bring customers from the pump inside the store.”

Top-Line Numbers

Snapshot20172018% Change
Store count154,958153,237(1.11%)
-Inside sales (billions)$237.0$242.22.2%
-Fuel sales (billions)$364.1$412.113.2%
Total sales (billions)$601.1$654.38.9%
Pretax profit (billions)$10.4$11.05.8%
Credit-card fees (billions)$10.1$11.19.9%
Employees (millions)2.382.36(0.84%)
Fuel margin (cents per gallon)21.7323.357.5%
-Net of credit-card fees (cpg)16.9018.026.6%

Sources: NACS State of the Industry data; 2019 NACS/Nielsen Convenience Industry Store Count

Cost of Growth

New business investments are leading to higher direct-store operating expenses (DSOE), which include wages, payroll taxes, health-care insurance, card fees—higher than overall industry pretax profit ($11.1 billion vs. $11.0 billion) for the first time since 2014—utilities, repairs/maintenance and supplies, as well as several other categories, including franchise fees and property taxes. For the third consecutive year, DSOE has outpaced inside gross-profit dollars, a trend that continues to create challenges for convenience retailers.

“The cost of growth, whether it’s higher acquisition multiples, new store construction or retrofitting older sites, has never been higher in our industry,” Jones said. For example, the average cost to build a new store has increased over the past five years from $5.6 million to $7 million. “These are business trends that convenience retailers should be prepared to address as they continue evolving and growing their businesses.”

Employment and Wages

Beyond sales, convenience stores are an important part of the economy. The industry employed 2.36 million people in 2018, a slight decrease from 2.38 million in 2017. Part of this decline can be attributed to the slight decrease in the U.S. convenience-store industry store count reported in February.

Despite a tight labor market, store associate turnover decreased from 121% in 2017 to 118% in 2018. However, retailers are also paying employees more: Wages were up 4.4%, and the average wage for a store associate increased to $10.74 per hour.

Watch CSP Daily News for additional State of the Industry Data later today.

Convenience retail industry data was announced at the NACS State of the Industry Summit, taking place April 2-4 at the Hyatt Regency O’Hare in Rosemont, Ill. More than 600 leading retail and supplier company representatives are at the industry’s top conference for benchmarking and analysis of retail trends.

Alexandria, Va.-based NACS advances the role of convenience stores as positive economic, social and philanthropic contributors to the communities they serve. The U.S. convenience store industry, with more than 153,000 stores selling fuel, food and merchandise, serves more than 165 million customers daily—half of the U.S. population—and has sales that are 11% of total U.S. retail and foodservice sales.

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