General Merchandise/HBC

3 Hurdles for C-Stores Around Price

Basket sizes highest on record, but there are losses in key areas, VideoMining says
2022 C-store tracker points to 3 key hurdles
Image courtesy of VideoMining LLC

Price hikes on almost all in-store convenience-store products helped keep year-over-year revenues steady in 2022, according to a report by VideoMining LLC.

The just released report shows the average basket size for a c-store buyer was $10.49 in December 2022, the highest on record for the channel, according to VideoMining's C-Store Shopper Insights. The report, however, also revealed three hurdles faced by the industry in 2022, hurdles that can hamper revenue growth in 2023 because “price hikes cannot be a sustainable strategy,” State College, Pennsylvania-based VideoMining said.

The trend-analysis tracker of key behavioral metrics against prior year and against pre-pandemic data shows three challenges:

  • Loss in fuel trips, down 2.5% vs. 2021, down 20% vs. 2019
  • Loss in pump-to-store conversion rates, down 3% vs. 2021, down 8% vs. 2019
  • Loss in in-store traffic, down 2% vs. 2021, down 5% vs. 2019

Two factors can explain the decline in the total number of fuel trips in 2022, VideoMining said, with the year-over-year loss relating to high gas prices.

“Though the gas prices eased by the end of year, the high prices for most of the year hurt the demand for gas,” VideoMining said. A closer analysis shows a direct correlation between average weekly gas prices, the number of gas trips and the number of gallons purchased per trip. Hopefully as the gas prices continue to decline, the number of fuel trips will bounce back.”

The larger decline from pre-pandemic levels (2022 vs. 2019) is related to the substantial decline in commuting to work, VideoMining said. “Accelerating adoption of electric vehicles also played a small factor in 2022. These are part of long-term trends to watch as they do impact the lot traffic.”

It is harder to explain the second challenge, the loss in pump-to-store conversions, said VideoMining.

“In 2022, only 23% of gas customers bought any other product in-store,” the company said. “This was a slight decline from the 26% pump-to-store conversion rate for 2021 and can be related to inflation including the high gas prices. But why is it so far below the pump-to-store conversion rate of 31% pre-pandemic in 2019?”

Looking closer, most of these declines were due to those who paid at the pump. In 2022, 71% of all gas customers paid at the pump, compared to 69% in 2019—not a significant change.

“However, in 2022 only 20% of those who paid at the pump bought anything in-store, compared to 31% in 2019,” VideoMining said. “Any measures to attract these shoppers into the store can make a significant positive impact on the c-store performance.”

Finally, regarding the loss in in-store traffic, VideoMining pointed out that 75% of total in-store visits were from direct store (non-fuel) trips.

“These trips seem to have been impacted by both short-term (inflation, economy) and long-term (workforce changes) trends in 2022,” the company said. “The 15% decline of 2022 vs. 2019 should be of particular concern, as it could indicate long-term changes to the channel beyond the temporary disruptions from the pandemic.”

Declines in the store traffic varied significantly by store location, VideoMining said, indicating how adjustments to c-store portfolios affect sales.

VideoMining data also revealed 2022 bright spots that might offer insight on future growth strategy.

In-store sales were supported by key trip missions to the store, with the top five—refreshments, snacking, caffeine boost, nicotine and meal building—all doing well in 2022.

“Caffeine boost and meal building trips grew year over year,” VIdeoMining said. “Among the dayparts, breakfast performed the best and saw year-over-year growth.

Energy drinks, coffee/hot beverages and prepackaged foods were the biggest winners in 2022, the company said, with smaller categories like wine and pet foods also doing well.

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