TNS Retail Forward Report Finds C-store Gas Margin Shrinking

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TNS Retail Forward Report Finds C-store Gas Margin Shrinking

COLUMBUS -- A new report from TNS Retail Forward delivers grim news for c-store operators, as alternative gasoline retailers including supercenters, supermarkets and warehouse clubs are attracting industry's gasoline shopper base.

The firm's Forward ShopperScape survey found one-third of shoppers are buying most of their gasoline at alternative outlets, up from 22 percent just three years ago.

"Fewer shoppers filling their tanks at convenience stores mean fewer shoppers filling their stomachs with higher-margin goods inside the store," Jennifer Halterman, senior consultant with TNS Retail Forward, said in a released statement.

To date, alternative gasoline retailers now capture an estimated 13 percent of U.S. gasoline sales, a figure TNS Retail Forward projects will grow to approximately 17 percent by 2012.

"Continued high gasoline prices are making alternative players' cents-off promotions very attractive. As a result, we expect more shoppers to take advantage of the increasing number of fuel-reward programs," Halterman said in a released statement. "Aggressive fuel-reward programs combined with the convenience of one-stop shopping makes it no surprise that more shoppers are filling up at these alternative outlets," she adds.

In order to compete in a tightening market, C-stores and alternative gas suppliers will need to maximize inside sales, which is the only way to offset low-margin gas sales.

"Campaigns that tie fuel rewards to high-margin purchases such as private brands, non-grocery general merchandise items or in-store services will be critical going forward," Halterman said. "Convenience will remain key; however, adding destination appeal with unique product offerings, innovative marketing and new service offers will help drive traffic, retain shoppers and increase profitability."

Halterman explained they will continually have to re-evalaute how they are doing business as competition mounts. "C-stores must prepare for a future retail landscape that will be filled with an increasing number of small-store concepts that home in on convenience," she noted. "C-stores must deliver a differentiated offer not only delivers convenience but adds destination appeal. Ultimately, convenience stores that reduce their reliance on gasoline by focusing efforts inside the store will be best positioned for the future."