NATIONAL REPORT — With the unemployment rate dropping, real wages rising slightly and oil prices plummeting to their lowest levels in years, business conditions in 2015 are expected to improve for both the national economy and convenience store retailers.
“There are a lot of positives going forward,” said Maureen Maguire, president and founder of ThinkResearch and chief analyst for the annual Convenience Store News Industry Forecast Study, now in its 13th year. “The price of gas is dropping significantly and that amounts to an enormous tax break for the American consumer.”
Various sources suggest American motorists are saving $630 million a day on gasoline compared to what they paid at June 2014 prices, and that the annual savings would put $230 billion of disposable income into consumers’ pockets if prices were to stay this low for an entire year.
However, the drop in oil prices also carries a potential negative impact: the fear that producers will no longer have an incentive to produce as much oil, running the risk of stalling what has been the great energy boom in the United States.
Maguire also cautioned that although the drop in the unemployment rate to 5.8 percent in November 2014 is a significant decline from the previous year, the nation hasn’t seen the kind of robust job growth that usually accompanies a drop in the unemployment rate.
“Unlike past recessions where the aftermath rebound is usually stronger, this recovery feels like a long, slow uphill march,” she said.
The bottom line, according to Maguire: “I expect 2015 to be better than 2014 — a little bit better.”
As in past years, the exclusive CSNews Industry Forecast Study provides dollar and unit volume projections in key c-store product categories based on data from various sources, including Nielsen for category sales history; TDLinx for store counts; and government sources for motor fuel volume and pricing data. The data is then run through a sophisticated projection model and presented in summary form. Maguire, CSNews’ consulting economist, oversees the Forecast Study process.
Along with the individual forecasts for the product categories of most importance to c-store retailers, the CSNews Industry Forecast Study also provides an overall U.S. economic outlook.
Among some of the product category projections:
- Motor Fuels — The average retail price per gallon is forecast to be $2.80 in 2015, a massive 21-percent decline compared to the projected $3.56 average retail price per gallon in 2014. Convenience store fuel sales in terms of billions of gallons are expected to remain flat.
- Tobacco — The cigarettes segment, which makes up the lion's share of the category, is expected to fare better this year. Cigarette unit volume per store is projected to dip just 1.1 percent in 2015. This is compared to an estimated 3.6-percent decrease in 2014.
- Packaged Beverages — Continuing the category’s better-than-expected performance in 2014, unit volume per store for packaged beverages is forecast to increase 6.7 percent in 2015, while dollar sales per store are expected to increase 7.8 percent.
- Candy — More so than with any other category, what retailers are predicting in terms of a net sales change for next year — an increase of 3.2 percent — closely mirrors what the CSNews Industry Forecast Study projects — a 3.3-percent increase per store.
For full results of the 13th annual Industry Forecast Study, look in the January issue of Convenience Store News.