NACS: Strong Fuel Sales Drove Overall U.S. C-store Business to $654.3B in 2018

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CHICAGO — Convenience stores in the U.S. experienced its 16th consecutive year of record in-store sales for 2018, according to the newly released NACS State of the Industry data shared at the NACS State of the Industry Summit, which took place April 2-4 at Chicago’s O'Hare Hyatt Regency.

Overall, c-store sales surged 8.9 percent to $654.3 billion, led by a 13.2-percent increase in fuel sales, which accounted for 69.9 percent of total sales. In-store sales increased 2.2 percent to a record $242.2 billion.

Convenience stores sales are 3.1 percent of the U.S. gross domestic product of $20.5 trillion overall.

Higher gas prices, up 13.7 percent from $2.37 per gallon in 2017 to $2.69 per gallon in 2018, contributed to the increase in overall industry sales. Fuel margins, which have increased over the last five years, were also higher in 2018 (up 7.5 percent to 23.35 cents per gallon, while gallons sold decreased by 0.4 percent).

"Fuel sales were strong in 2018 but consumers were making fewer stops to refuel, which suggests that greater fuel efficiency in vehicles is translating to less trips per week to the convenience store," said Andy Jones, NACS vice chairman of research and president/CEO of Sprint Food Stores Inc. "Utilizing NACS research can help retailers track trips per transaction and develop new marketing strategies to bring customers from the pump inside the store." 

Category Performance

Approximately 165 million customers choose c-stores each day and 83 percent of the items purchased are consumed within the first hour of purchase.

As part of in-store sales, categories accounted for merchandise sales:

  • Cigarettes: 31 percent
  • Foodservice: 22.6 percent
  • Packaged beverages: 15.3 percent
  • Center of store: 10.4 percent
  • Other tobacco products: 6.7 percent
  • Beer: 6.3 percent (12.4 percent for c-stores selling beers)
  • Other: 7.7 percent

In-store Growth Driven by Foodservice

A key focus area for c-stores, foodservice sales accounted for 22.6 percent of in-store sales in 2018. The category — which includes prepared hot and cold food, as well as hot and cold dispensed beverages — peaked 69 percent of both category sales and profits.

The growth in foodservice also has led to an increase in store size. The average c-store is 3,230 square feet, but, as newer stores feature on the overall foodservice experience like touchscreen ordering kiosks, in-store seating, and incorporating an open-kitchen design, the size of new stores has increased to 4,991 in rural locations and 4,603 square feet in urban areas, NACS reported.

Cost of Growth

New business investments are leading to higher direct store operating expenses, like wages, payroll taxes, health-care insurance, card fees, utilities, property taxes and more, are higher than overall industry pre-tax profit for the first time since 2014 ($11.1 billion vs. $11 billion, respectively).

"The cost of growth, whether it's higher acquisition multiples, new store construction or retrofitting older sites, has never been higher in our industry," said Jones, noting for example, the average cost to build a new store has increased over the last five years from $5.6 million to $7 million. "These are business trends that convenience retailers should be prepared to address as they continue evolving and growing their businesses."

Employment & Wages

The convenience store industry employed 2.36 million people in 2018, a slight decrease from 2.38 million in 2017. Despite a tight labor market, store associate turnover decreased from 121 percent in 2017 to 118 percent in 2018. However, retailers are also paying employees more: wages were up 4.4 percent and the average wage for a store associate increased to $10.74 per hour.

The industry's 2018 metrics are based on the NACS State of the Industry survey powered by its wholly owned subsidiary CSX LLC.

Alexandria-based NACS, the Association for Convenience & Fuel Retailing, has 1,900 retailer and 1,800 supplier members from more than 50 countries.