Stronger Merchandise Sales Fuel In-store Sales Gain

Thanks to stronger merchandise sales and solid foodservice sales gains in 2009, in-store sales grew at a higher rate than 2008. In-store sales for 2009 reached $173 billion — a 4.2-percent increase, or $7 billion, and the highest percentage growth since 2006.

As the economy began its path to recovery in 2009, lower gas prices that year compared to the historically high 2008 prices at the pump gave consumers some relief, allowing for a boost in cash that could be spent inside convenience stores.

Inside the store, merchandise sales saw a 4.1-percent jump, far outpacing the 1.9-percent increase seen in 2008. And this $5.9 billion increase in total industry merchandise sales represents the majority of growth seen in inside sales at convenience stores last year.

Foodservice sales continue to increase, as does the category's share of in-store sales, thanks to consumers' continued trading down to food retailers that offer a value proposition. Retailers have reported that value can come in the form of bundling deals as well as discounting, yet the convenience store channel has had to compete with ever-enticing $1 and $5 deals from the quick-service restaurant (QSR) channel, including Subway's $5 footlong and Quiznos smaller-sized Torpedo sandwiches at $4. McDonald's and Burger King, meanwhile, upped the ante on their coffee programs, and experimented with $1 burgers and other value-priced items.

Yet foodservice's growth rate in c-stores appears to be decelerating when compared to recent years. Foodservice sales in the convenience store industry totaled $22.5 billion, a 5.3-percent increase over 2008. While representing a respectable $1.1 billion jump in foodservice sales, this percentage increase was the smallest in four years. Foodservice sales grew 6.8 percent in 2008, and an impressive 11.0 percent in 2007.

And for the fifth consecutive year, 2009 inside sales per store exceeded the $1 million mark. The average convenience store sold $1.22 million in 2009 — an additional $52,268 in sales for the year. This boost represents a strong 4.5 percent increase over 2008, when sales per store grew 3.3 percent to $1.17 million.

Some of this per-store growth can be attributed to a decline in industry store count, with surviving convenience stores stronger and more successful than those that fell out of the industry. The convenience store industry is now made up of 144,541 locations, a 0.2-percent decrease over 2008.

bottom line:

In-store sales reached $173 billion in 2009, a 4.2-percent increase over 2008.

Foodservice sales grew at a slower rate than in previous years, at 5.0 percent.

Average store sales exceeded the $1 million mark for the fifth straight year.
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