A year ago, I wrote that the pandemic would likely cause a greater bifurcation of the convenience store industry into the haves and the have-nots. I wrote that when we were still in the middle of lockdowns and social distancing restrictions. C-stores were in crisis mode, scrambling to keep their employees and customers safe while searching for new ways to serve an apprehensive populace.
Today, most retailers are seeing their sales and profits bounce back after the pandemic. This Memorial Day weekend, more than 37 million Americans traveled more than 50 miles over the three-day holiday, a 60 percent jump from last year, according to AAA. While larger chains and many smaller operators are experiencing traffic gains at both the pump and inside the store, it appears a significant number of the industry’s small operators are still struggling, according to the Convenience Store News 2021 State of the Small Operator Study.
Nearly one in five small operators (defined as those with one to 20 stores) said they expect their sales and profits this year will be slightly less than last year’s mostly anemic results, and another 22 percent are expecting similar results as in 2020. More concerning, almost 7 percent of single-store and small operators said they expect to either decrease their store counts this year or completely sell their stores and exit the business.
In a recent blog post, Rajeev Sharma, founder and CEO of VideoMining, pointed out that the increased car trips translate to more visits to the gas pump. What’s more, the pump-to-store conversion rate, which cratered by as much as 30 percent last year for those who pay at the pump, is already showing encouraging trends. According to Sharma, the pump-to-store conversion rate was up by 12.5 percent for pay-at-the-pump customers in the first quarter of this year.
Overall, in-store traffic is still down 14 percent compared to the seasonally adjusted pre-pandemic levels. But there are more signs that consumers’ fear of the pandemic is diminishing. According to VideoMining, shoppers spent 13.6 percent more time in the store, bought more items (2.6 vs. 2.4), and spent more dollars ($9.33 vs. $7.69) in the first quarter of 2021 compared to 2020.
With business picking up, my message to small operators is don’t despair. The c-store business is still one of the most lucrative and satisfying retail channels around. I know the past 18 months have been stressful, but don’t give up just when conditions are improving.