Convenience Stores' Business Shot Up as Oil Prices Plunged

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Convenience Stores' Business Shot Up as Oil Prices Plunged

NEW YORK -- Forty-eight percent of convenience retailers responding to a special Economic Pulse Survey from Convenience Store News earlier this month said their business in the fourth quarter of 2008 (October, November and December) was better than it was in the same period of 2007.

In addition, 50 percent of respondents to the survey said their business in the first quarter of 2009 (January, February and March) was better than the year-ago period.

The reported results for both the fourth quarter of 2008 and first quarter of 2009 are dramatically different from retailers’ responses to a Pulse Survey conducted in December that asked about third quarter results. In that survey, 61 percent of respondents reported business levels were below the previous year and only 29 percent said business was better.

The lackluster third-quarter results followed a historic run-up in fuel prices that was accompanied by consumers purse-tightening. Retailers also dealt with higher credit card transaction fees as consumers increased their use of credit cards to purchase high-price gasoline.

However, according to published reports, c-stores were able to recoup gross margins as fuel prices plummeted in the fourth quarter. While most U.S. industries were hammered by the full force of the recession in the first quarter of 2009, c-stores proved somewhat recession-proof. About a third of respondents said economic conditions adversely impacted sales results and another third said they experienced lower basket rings and lower traffic counts inside the store during the first quarter of 2009.

And c-store retailers remain optimistic about the second quarter as well. Approximately 57 percent project business for this April, May and June to be better than the year-ago period. Only 23 percent said business will be below last year’s levels during the second quarter.

By far, the most used tactic for bolstering sales in the next quarter is special pricing (discounts and coupons) on core product categories, with nearly three-quarters (73 percent) of respondents planning to do that.

Seventy-percent of retailers would like to see suppliers provide more specials (such as buy-one, get-one free promotions) in order to improve sales of their products in the stores. About 63 percent said suppliers should offer more in-store merchandising and marketing ideas for their product and/or category.

In contrast, a similar survey of supermarket retailers conducted by CSNews’ sister media brand, Progressive Grocer, found grocery retailers’ business becoming more difficult as the recession worsened. In the fourth quarter of 2008, 60 percent of grocers said their business was better than the year before, but by the first quarter of 2009, that figure had dropped to 44 percent.