Are You Out of Date?
There is no doubt that the COVID-19 pandemic forced the convenience store industry to change its way of doing business and greatly accelerated the adoption of new innovations.
Today, the most successful convenience store operators in the United States have evolved into multichannel companies that give their guests multiple ways to transact with the brand, including but not limited to a proprietary mobile app tied to a robust loyalty program, fuel pumps that offer in-store ordering, drive-thru service, and home delivery options.
Industry-leading retailers are also building new, bigger stores that make fresh food the first thing customers see when they walk through the door, and they're investing significant time, money and resources in enabling customers to order the way they want and obtain their purchases the way they want. In some cases, this means fully contactless experiences.
As the c-store business gets more complex and competitive, the industry's single-store and small chain operators are at a crossroads, as our July issue cover heralds. While single stores still account for more than 60 percent of the industry, many of these operators are falling behind.
According to the fourth-annual Convenience Store News State of the Small Operator Study, fewer respondents this year reported an increase in total dollar sales vs. the year prior. About six in 10 small operators said their overall sales per store increased in 2022, compared to nearly eight in 10 in 2021. Year over year, a higher percentage reported a decrease in sales: 19.7 percent in this year's study vs. just 7.4 percent in last year's study.
Taking motor fuels out of the mix and looking only at in-store merchandise sales, six in 10 small operators said their in-store sales rose last year, down from 76.9 percent who said the same the year before. The average net increase in in-store revenue was 5.5 percent, which underperformed compared to the industry average. In-store sales at all U.S. convenience stores in 2022 hit a new high, reaching $275.3 billion, which equated to a 6.6 percent increase year over year.
The ongoing advancement of the c-store business is putting the industry's small operators in a precarious position. The time has come for them to conduct a comprehensive review of their business, look at the competition in their market (other c-stores and restaurants), and ask: Am I out of date? If the answer is yes, then the only option really is to modernize.
I think industry consultant John Matthews, president and CEO of Gray Cat Enterprises Inc., summed it up best when he was asked about his 10-year outlook for the c-store industry's small operators and he responded: "Adapt, invest, improve or become obsolete."
