C-store Retailers Foresee a Rosy 2017

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C-store Retailers Foresee a Rosy 2017

By Melissa Kress, Convenience Store News - 01/05/2017

NATIONAL REPORT — The mantra of real estate has long been: Location, location, location. When it comes to 2017, the mantra of convenience store retailers appears to be: Increase, increase, increase.

The third-annual Convenience Store News Retailer Forecast Study finds that 88.6 percent of c-store retailers expect their average sales per store to increase in 2017 vs. 2016. Only 11.4 percent believe sales will stay the same. And in the good news column, no respondents anticipate a decrease. In last year’s study, 82.1 percent of retailers expected their sales to rise.

Several factors, however, will have to come into play in order to turn this rosy forecast into reality. C-store retailers (63.6 percent of them) point to motor fuel prices as having the biggest impact on sales and profitability in the coming months — not surprising since the industry sells about 80 percent of all the gasoline purchased in the United States.

"Fuel always has the biggest impact," one retailer noted.

Added another, "Fuel prices drive the number of customers."

A majority of the c-store retailers surveyed this year also cited labor costs as having the next biggest impact on their expected bottom line in 2017 (at 57.6 percent). With the new federal overtime rule winding its way through the courts, and the Affordable Care Act under the microscope, only time will tell what the exact impact of these costs will be.

Rounding out the top three factors that c-store retailers say will most impact their sales and profitability in the year ahead is competition (cited by about one in four respondents). Interestingly, in last year’s study, competition ranked fifth on the list of factors.

"I think with the ever-evolving trends in the c-store business, such as the Amazon revolution of brick-and-mortar stores, companies need to consistently stay ahead of competition," one retailer remarked. "I believe this will either make a company grow or make them disappear."

Competition, though, doesn’t only mean cross-channel. Some c-store retailers are wary of increased local and state legislation and the effect this will have on border stores. For example, one retailer anticipates that his beer sales will be affected once surrounding states implement new laws. Adult tobacco consumers heading out of state is likewise a concern, as new excise-tax increases took hold in a handful of states effective Jan 1.

For the full results of our 2017 Forecast Study, including projections by product category, look in the January issue of Convenience Store News, hitting desks soon.