Getting Better, But Not Nearly Normal

Recent data suggests that business is improving at the nation’s convenience retail establishments after the nearly three-month economic shutdown triggered by the COVID-19 pandemic. As many states around the nation begin to reopen for business, convenience store traffic appears on the road to recovery — though business is still quite a ways off from pre-pandemic levels.

For the week ended May 30, inside sales at U.S. c-stores were up 3 percent over the prior week, according to Nielsen, while unit improvement exceeded dollar growth.

“A positive read on traffic recovery,” commented Jeffries Equity analysts Christopher Mandeville and Blake Anderson. “Better trends were realized nearly across the board, with alcohol remaining a source of strength and, importantly, prepared food showing market improvement (down 13 percent in dollars and 24 percent in volume vs. a 21 percent decline in dollars and 30 percent volume loss compared to the previous period).”

In conversations we’ve had with retailers on the Convenience Store News Editorial Advisory Board, prepared foods were hit very hard by the pandemic as many c-stores eliminated self-serve food and beverages. Most reported their foodservice sales were off between 12 percent and 15 percent during the height of the shutdowns, so it’s heartening to see improvement.

An interesting exchange during Casey’s General Stores’ recent earnings call shed light on whether customers would be reluctant to go back to self-serve food and beverages. Casey’s CEO Darren Rebelez responded that quite the contrary, customers prefer self-serve, were disappointed when it was taken away, and are now happy as the retailer is restoring it. 

It’s anyone’s guess how fundamentally the c-store business will change due to the COVID-19 crisis. I suspect that — like in the case of self-serve food — some things might not change much. But it would be foolish not to expect some very profound impacts from the pandemic.

Expect a greater bifurcation of the industry into the haves and have-nots. Retailers that entered the pandemic with superior brand and value propositions, as well as a strong balance sheet, are in enviable positions to grow and get stronger. In many ways, the pandemic accelerated trends already in play and quickened the adoption of new store-level technology. Things like contactless payment, mobile ordering, curbside or pumpside pickup, and home delivery are all likely to see broader application throughout the convenience channel.

Retailers, rightfully, have been in crisis mode. It’s impossible to know what the future will bring, but the smart retailers have already pivoted toward figuring that out.