Pricing Pressures, Hurricane Season Concern C-Store Operators

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Pricing Pressures, Hurricane Season Concern C-Store Operators

By Debra Chanil

Despite an overall decline in the July VNU Retail Index, c-store operators were more likely to give a positive evaluation for both current and future conditions than their supermarket, mass and drug channel counterparts. When asked their assessment of current business conditions, 42 percent of c-store respondents indicated that current conditions were positive, compared to 33 percent of supermarket operators and 25 percent of mass/drug/specialty retailers. Looking ahead at the next six months, 48 percent of c-stores reported a positive outlook, compared to 40 percent from supermarkets and 28 percent from mass/drug/specialty retailers.

Total respondents cited economic conditions as the single biggest challenge to earnings growth, replacing the competitive environment for the first time in eight months. However, among c-stores retailers, pricing pressure topped the list, mentioned by just over one-third of respondents from that channel -- clearly a reaction to gas pricing.

Retailers are determined to be better prepared for the upcoming hurricane season. Approximately one-half of the c-store respondents operate stores that could potentially be affected by hurricanes. When asked about actions they wished they had taken to prepare last year, 24 percent wished they had more generators available. "We needed more back-up equipment in high volume locations," said one retailer. Sufficient gasoline supply was cited by another 13 percent. "We should have filled our tanks prior to the hurricanes," noted another convenience operator. One retailer wished it had "saved some spare cash to ride the gas price wave."

Nine percent of respondents seemed satisfied with measures taken last year. "We took all actions necessary," said one c-store executive. Another reported, "Last year we stayed in direct contact with the locations in the storm's path and stayed tuned to the weather channel for updates. This ensured that good, sound decisions were made."

When asked what they will do differently for the 2006 season, it is clear these retailers learned from last year's events, as generators topped the wish list, followed by ensuring an adequate fuel supply. Updating and, in some cases, creating, hurricane action plans --and communicating them from headquarters to store level -- were also mentioned.