Single-Store Owners Greet 2016 With Less Optimism
NATIONAL REPORT — My, what a difference a year makes. Last year, as the convenience store industry’s single-store owners welcomed the start of 2015, they did so with a great deal of optimism. Not one of the independent retailers surveyed by Convenience Store News for the Single Store Owner believed their total store sales (in-store and motor fuels combined) would decrease in 2015 vs. 2014, and more than eight in 10 expected their store’s sales to increase year over year.
Fast-forward to this year and the industry’s single-store operators are greeting the start of 2016 with a decidedly different outlook — one tinged with a fair amount of worry and doubt.
Only two-thirds of the single-store owners polled this time around expect their total store sales to increase in 2016 vs. 2015. While still the majority, this year’s figure represents a nearly 17-percentage-point drop in the number of optimistic owners.
Instead, a quarter of single-store operators expect their store’s sales to stay the same this year (up about 8 percentage points). And, unlike last year, there is a group of single-store owners this year who anticipate their store’s sales will decline (8.3 percent of those surveyed).
The industry’s chain operators (two or more stores) are far more optimistic about the opportunity 2016 holds. Nearly 90 percent of chain retailers surveyed expect to see increased sales. Only 3.7 percent of chain retailers anticipate a decline, and 7.4 percent expect status quo.
Naturally, the question is: What’s got single-store retailers so down about the new year? It seems the answer is increasing costs negatively affecting the profitability of their business.
“Costs keep increasing and we have no choice but to follow — insurance rates, EMV issues inside and outside the store, higher wages to get qualified people,” one single-store owner remarked.
“Compliance with government regulations is a huge cost to business,” said another. “The credit card cartel has foisted their cost of doing business onto small merchants and they have also abdicated their responsibility and cost for security to merchants as well.”
“Year over year, you have to find a way to increase sales and profit just to cover these increases and/or compression in dollars,” still another single-store operator lamented.
The good news, however, is that according to the results of the 14th annual CSNews Industry Forecast Study, single-store retailers have reason to be a bit more bullish than they are.
Not one of the in-store product categories included in our study is predicted to see a drop in per-store dollar sales or unit volume this year. On the dollar side, packaged beverages leads the pack with a 6.5-percent dollar sales increase forecasted. On the units side, other tobacco products is tops with a 5.7-percent unit volume increase projected.
As in past years, our exclusive study provides dollar and unit volume projections in key c-store product categories based on data from various sources, including Nielsen for category sales history; TDLinx for store counts; and government sources for motor fuel volume and pricing data. The data is then run through a sophisticated projection model and presented in summary form. Consulting economist Maureen Maguire, founder and CEO of New York-based ThinkResearch, oversees the process.
For more findings from the 2016 Industry Forecast Study, look in the January issue of Convenience Store News for the Single Store Owner.