CHICAGO — Foodservice, salty snacks and packaged beverages helped propel the U.S. convenience store industry to a record sales year in 2014, according to figures released Wednesday at the NACS State of the Industry Summit.
Buoyed in part by low fuel prices, the industry posted record in-store sales of $214.9 billion last year — higher than the overall industry sales of 1998. This figure represented an increase of 4.6 percent over 2013, which was itself a record year.
Last year’s in-store sales growth was driven in particular by commissary (e.g., packaged sandwiches, deli salads), up 9.8 percent; salty snacks, up 8.5 percent; and packaged beverages, up 6.5 percent. These categories saw the biggest percentage growth year over year.
Overall industry sales for 2014 (fuel and in-store combined) reached $697.5 billion.
“These numbers demonstrate that Americans turn to us for their daily needs,” said NACS Chairman Steve Loehr, vice president of operations support at La Crosse, Wis.-based Kwik Trip Inc. “We are a vital part of consumers' daily lives and the U.S. economy. We also continue to innovate and deliver on our promise of providing fast, one-stop shopping to consumers, whether they are on the road or in their communities.”
More gallons of fuel were sold in 2014 than 2013, however total industry fuel sales decreased by 1.8 percent due to gasoline prices that were 4 percent lower in 2014 than the previous year.
Still, the link between fuels and convenience retailing continues to grow as 83.5 percent of convenience stores (127,588 in total) sold motor fuels in 2014, a 0.7-percent increase (930 stores) over 2013. The growth of c-stores selling motor fuels is double the overall growth in the industry, as fuel retailers add convenience operations and convenience retailers add fueling operations.
Motor fuels continued to drive sales dollars, but in-store sales drove profit dollars. Overall, 69.2 percent of total sales were motor fuels, but motor fuels only accounted for 39.5 percent of profit dollars.
The in-store sales breakdown was as follows:
- Tobacco (cigarettes and other tobacco products): 35.9 percent of in-store sales
- Foodservice (prepared and commissary food; dispensed beverages): 19.4 percent
- Packaged beverages (soda, alternative beverages, sports drinks, juices, water, teas, etc.): 15.4 percent
- Center of the store (candy; sweet, salty and alternative snacks): 10.6 percent
- Beer: 7.3 percent
- Other: 11.4 percent
In terms of in-store profits, foodservice led the pack, accounting for 33.5 percent of gross profit dollars, a 4.4 percentage point increase over 2013. Packaged beverages, meanwhile, accounted for 18.5 percent of gross margin dollars, while tobacco accounted for 17.3 percent.
Convenience store pretax profits increased to $10.2 billion in 2014, due primarily to higher profit margins as wholesale fuel costs decreased. The industry saw an 18.8-percent increase in fuel margins at an average of 22.2 cents per gallon for 2014, compared to 18.7 cents per gallon in 2013. In a same-firm comparison, the number also rose from 5.4 percent to 6.8 percent, a significant increase over 2013.
The industry’s bifurcation also continues, with a considerable difference between top-quartile and bottom-quartile performers — although the gap was less pronounced in some categories.
The metrics presented at the State of the Industry Summit are based on the NACS State of the Industry survey powered by its wholly owned subsidiary CSX, an online database of financial and operating data. NACS, the Association for Convenience & Fuel Retailing, has 2,100 retail and 1,600 supplier member companies, which do business in nearly 50 countries.
The NACS State of the Industry Summit, a two-day conference that reviews and analyzes the industry’s key economic indicators, continues Thursday.