Without Inside Sales, Convenience Stores Would Be a Less-Profitable Business Although the convenience store industry’s 2016 gross profits exceeded $10 billion for the third consecutive year, they were 3.8% less than 2015’s. They wouldn’t have increased that much without inside sales’ record of $233.0 billion, or a 3.2% increase. According to a June 2017 press release from The National Association of Convenience Stores (NACS), 67% of store operators said in-store sales during the first half of 2017 exceeded the first half of 2016, with only 15% indicating a decrease in inside sales. Then, an October 2017 NACS press release revealed a slight softening of inside sales, as 60% of operators said inside sales had increased during the first 9 months of 2017, compared to the same 2016 period. Inside sales decreased for 20%.

The High and Low of Inside Sales The top 5 convenience store sandwich chains, as measured by units and market share, during 2017 were Exxon Mobile, 13.61%; 7-Eleven, 9.74%; Chevron, 7.9%; Circle K, 6.75%; and Citgo, 6.69%. The top 5 states with convenience stores accounting for the largest share of the state’s total foodservice business were North Dakota, 63.15%; South Dakota, 62.88%; New Mexico, 62.49%; Iowa, 60.70%; and Nevada, 60.14%. Among the top 25% of all c-stores, cigarettes generated the largest average sales per store per month, at $69,006. Beer sales were relatively the same at the top and bottom 25% of c-stores, at $15,717 and $13,320, respectively.

The Tobacco Category For 2016, sales dollars for cigarettes per store per month were more than twice the next inside sales category, making it #1: cigarettes, $50,740, and packaged beverages, $24,784. Cigarettes’ sales increase from 2015 was just 0.9%, however. Other tobacco products (OTP) – smokeless, cigars, e-cigarettes, papers and loose tobacco – were fourth in merchandise sales, or an average of $8,316 per store per month, a 10.5% increase from 2015. All tobacco products accounted for 36.0% of total inside sales and 18.2% of gross profits, first and third, respectively. Cigarettes, however, had the lowest gross-margin percentage, at 15.18%, while OTP’s was 29.17%.

The Foodservice Category Foodservice was second in all merchandise categories’ share of total inside sales, at 21.7%, but generated gross-profit dollars at almost twice the next category: foodservice, 35.2%, and packaged beverages, 18.5%. Prepared food was the top sub-category in sales, at $33,158, and gross profits, at $18,695, per store per month; however, it was third in gross-margin percentage, or 56.38%, trailing frozen-dispensed beverages and hot-dispensed beverages. Prepared food had the largest dollar sales per store per month among the top 25% (quartile) of c-stores, at $35,411, compared to $11,053 for the bottom 25%, a 3.2x difference. Hot- dispensed beverages, however, had the largest difference, or 6.6x.

The Beverage Categories Of the two beverage sub-categories, packaged beverages was second in merchandise sales per store per month during 2016, at $24,784, while beer was third, at $15,021. Top-quartile c-stores had 2.4 times the sales in packaged beverages than the bottom quartile per store per month, at $33,398 and $13,370, respectively. In the packaged beverages sub-category, bottled water generated the largest gross margin, or 57.5%, while in the beer sub-category, flavored malt was first, at 26.5%.

The Snacks Categories In the overall snacks category, salty snacks were fifth in merchandise sales per store per month, at $7,084; candy was sixth, $5,436; and alternative snacks, 10th, $2,315. In the salty snack category, crackers generated the largest gross margin, at 49.0%. Among candy sub-categories, it was non-chocolate bars, at 52.0%, and, in the alternative-snacks category, health/energy/protein bars, at 49.1%. The top-selling products (average per store per month) in each snacks category were potato chips in Salty Snacks, $1773; bagged or repackaged peg candy in Candy, $1,872; and meat snacks in Alternative Snacks, at $1,360.

Advertising Strategies Recommend early-morning news for C-store chains with a sufficient ad budget, promoting healthy breakfast selections. For smaller stores, recommend ads on your station’s Website news pages, promoting similar breakfast specials. Offer smaller, local c-store operators the opportunity to participate in station-sponsored community events, acting as a hydration stop for a 5K run, with free water to the participants, and/or providing catering of quick-and-easy, healthy food options. With the wealth of information in the three Convenience Stores 2018 Profilers, present yourself to c-store operators in the lower quartile as a consultant who can help them improve their performance, reviewing cleanliness, especially bathrooms, food quality, etc.

New Media Strategies Promote “Healthy Afternoon Snack Packs” on Instagram and Snapchat to attract Millennials and Gen Zers. Feature bundles of healthy snacks at discounted prices with a mobile coupon and share content that emphasizes how healthy eating boosts young people’s brain power. Promote lunch alternatives to fast food during the morning hours on Facebook, touting freshness, quality and selection and much quicker service than the typical fast-food restaurants. Offer a digital coupon for a qualifying purchase. Use the contents of the table on page 4 of the Profiler, “Reasons Consumers Don’t Plan to Purchase These C-Store Categories,” as themes for a series of videos to post on social media to explain what your store has done/is doing to reverse these perceptions.