If C-store Food Sales Are Up, Why Is Industry Optimism Down?

By Scott Hill

health-c-store-food

“Summertime and the livin’ is easy,” Ella Fitzgerald famously sang. This year, retailers have expressed optimism about summer sales and with good reason.

According to a recent retailer sentiment survey released by NACS, the Association for Convenience & Fuel Retailing, more than four out of five retailers say in-store sales were higher in the first half of 2015 compared to the first half of last year. Fifty-five percent of retailers also reported stronger fuel sales so far in 2015 than the year-ago period. Lower fuel sales always bode well in an industry that has better margins on in-store items than at the pump.

The past several years have seen the convenience store industry become a convenience restaurant industry. With cigarette usage hitting new lows, the continuity of beverage promotions and the expansion of food offerings has been a great way to get customers in the door.

More than three in four convenience store retailers (77%) say they are selling fresh fruit and vegetables, with almost six in 10 selling packaged salads and nearly half also selling cut fruit and vegetables. This trend has been ongoing for the past six months. Half of all c-store retailers surveyed said they have expanded their fresh fruit sales, 30 percent have increased their cut fruit and vegetable offerings, and 21% are offering more salads.

It’s not just about fruits and vegetables. C-stores are selling other better-for-you items, including nuts and trail mix, healthy bars, yogurt, string cheese and hard boiled eggs. Retailers surveyed indicated they are most expanding selections of health bars and yogurt.

Of course, this rosy report on summertime food concessions has a flipside and important lesson.

C-Stores Can’t be Complacent in Strategy

Summer is the time for c-stores to make the most out of increased foot traffic from good weather and vacation plans. So while the living is easy for customers, c-store retailers can’t afford to be lackadaisical about their promotions.

While the NACS survey revealed that retailers are very optimistic about their own business prospects, they are slightly less optimistic about the convenience retailing industry (79% down slightly from 80% in the second quarter), and the economy as a whole (61% down from 70% in the second quarter).

At least one retailer expressed concern about an “influx of new competitors in the market.” It’s not just other convenience stores that pose a threat, but also dollar stores, wholesale clubs like Costco and Sam’s Club, and big-box retailers and grocery stores opening smaller format stores with fresh foods.

It’s important that convenience stores remember that their fuel sales continue to give them a competitive market advantage. This is why forecourt promotions and cleanliness of facilities are important for the fresh food upsell.

Summertime is prime time for building the kind of brand that consumers come to trust, whether they are five minutes from home or five hours away.

Subscribe to Zenput's Blog