<i>CSNews</i> Top 100 Report Reveals Still-Fragmented Industry

NATIONAL REPORT -- One of the persistent themes we hear in the market from various sources is that the convenience store industry is quickly consolidating as large chains such as 7-Eleven Inc. and Alimentation Couche-Tard Inc. acquire one smaller retailer after another across the country.

Judging by the headlines we read and report on every day, it does seem like the retail industry is shrinking into fewer, but larger chains. Since January, we've seen GPM Investments LLC, owner of Fas Mart and Shore Stop convenience stores, purchase the VPS Convenience Store Group's 300-store Southeast division; Couche-Tard acquire 29 stores in three states from Dickerson Petroleum; and 7-Eleven acquire 143 Speedy Stop and Tigermarket sites in Texas from C.L. Thomas Inc.

Meanwhile, speculation continues to swirl around potential deals for Hess Corp.'s nearly 1,700-store retail division and Energy Transfer Partners' approximate 5,000 Sunoco sites. In addition, 7-Eleven's parent company, Seven & I Holdings Co., has publicly stated that it plans to more than double the chain's current 7,760 store count in the United States through acquisitions.

And it remains to be seen how the spate of master limited partnerships will spur growth at such companies as Lehigh Gas Partners LP, Susser Petroleum Partners LP, Alon USA Energy Inc., Western Refining Co., Marathon Petroleum Corp. and Northern Tier Energy LP.

Beyond acquisitions, many of the industry's biggest chains continue to grow organically. RaceTrac Petroleum Corp., Sheetz Inc., Thorntons Inc. and Wawa Inc. are among the big players to open newly built units over the past couple of months.

Despite these headlines, though, the numbers don't back up the premise that the industry is consolidating. According to the annual Convenience Store News Top 100 Convenience Stores report, the top 100 retailers by store count have accounted for about 40 percent of the total number of U.S. convenience stores for the past four years. The top 10 chains have remained consistently at just under 25 percent of the industry total since 2010.

The CSNews Top 100 is the most authoritative accounting of the leading retail chains in the industry. The list is compiled first from Nielsen's TDLinx database of convenience stores -- the same database used by NACS to document the size of the convenience industry. This year, the numbers were further confirmed by CSNews' editorial staff and Director of Market Research Debra Chanil using publicly available information, as well as direct contact with many of the companies.

A look at this year's numbers reiterates that the Top 100 is not growing more and more dominant among the total c-store universe, and the top 10 chains in fact represent a smaller percentage of the Top 100 this year compared to previous years. This year's top 10 chains, from 7-Eleven to The Pantry Inc., operate a total of 35,292 stores and account for a 58.9-percent share of the Top 100.

Last year, the top 10 accounted for a 60-percent share of the Top 100 and in 2011, the top 10 made up a 62.1-percent share of the Top 100. Although several big retailers like 7-Eleven, Couche-Tard and Casey's General Stores Inc. continue to grow through acquisitions, most of the Big Oil companies have been steadily selling off units, offsetting those gains.

As in previous years, Dallas-based 7-Eleven remains No. 1 on this year's Top 100 ranking, adding more than 900 net stores to its U.S. lineup in 2012. The chain's total store count in the United States now stands at 7,760 locations, a net gain of 419 units vs. last year's Top 100 report. Along with organic growth across multiple metropolitan areas, 7-Eleven has been on an acquisition spree.

After 7-Eleven, Shell Oil Products US ranks No. 2 with 4,950 locations. Shell was the only Big Oil company in the top 10 to show a gain in store count this year, with the addition of 16 stores.

BP North America ranks third with 4,504 sites, although the company lost 187 stores year over year. BP last year announced the withdrawal of the ampm brand from the East Coast. The company plans to own the brand and franchise it to Tesoro Corp. for use in the Southwest. This followed a related announcement of the sale of BP's Carson, Calif., refinery and the ARCO brand to Tesoro, which closed in June.

The remainder of this year's top 10 includes:

• 4. Chevron Corp.: 3,985 stores; down 72 stores from 4,057 a year ago.
• 5. Alimentation Couche-Tard Inc.: 3,701 stores; up 116 stores from 3,585 a year ago.
• 6. ExxonMobil Corp.: 3,421 stores; down 25 stores from 3,446 a year ago.
• 7. Energy Transfer Partners LP: 2,000 stores; up 13 stores from 1,987 a year ago.
• 8. Casey's General Stores Inc.: 1,735 stores; up 42 stores from 1,693 a year ago.
• 9. CITGO Petroleum Corp.: 1,668 stores; down 54 stores from 1,722 a year ago.
• 10. The Pantry Inc.: 1,568 stores; down 47 stores from 1,615 a year ago.

For the full Top 100 Convenience Stores report, look in the July issue of Convenience Store News.