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Convenience Stores Feeling The Heat

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If, when walking or driving around town, you’ve thought to yourself that it seems like there are a lot of new convenience stores that have sprouted up over the last few years, you’d be right. Since December 2001, more than 20,000 new locations have opened, bringing the total to almost 145,000 such stores in the U.S. But facing high gas prices last year as well as competition from groceries and mass merchandisers and the effects of the economy, c-stores have actually been pulling back. Since the end of 2007, more than 1,400 c-stores have closed.

Chain stores, such as 7-Eleven and BP, account for more than 52 percent of c-stores, while independently owned stores make up the balance. That said, only 14 percent of c-stores are from chains with more than 500 stores; the rest of the chain stores are part of local or regional companies such as WaWa, Get Go and Nice N Easy.

So what makes one store more successful than another? Execution. “According to Nielsen research, consumers want convenience, obviously, but they also want a clean, organized store and the ability to check-out quickly,” said Tom Pirovano, Director of Industry Insights at Nielsen.

C-stores dominate a number of high-volume categories such as tobacco (85% share of all channels), ice (57%) and beer (56%) and they outsell food, drug and mass merchandisers (including Walmart) combined in these categories. C-store sales of tobacco and beverages generate more than $90 billion annually.

A Convenience Store News/Nielsen survey found that customers want their stores to offer gas, snacks and prepared food, a category that has shown growth as the quality of those food service items has improved.  Doughnuts and muffins are the top prepared food category, followed by sandwiches and hot dogs.

“Stores that offer prepared food that looks fresh and smells good and cross merchandise those with other items are likely to hit a homerun,” continued Pirovano.

Despite their seeming ubiquity, the challenges facing the c-store channel are numerous: rising credit card fees, competition from small format groceries, a desire for healthier foods and competition from club and mass retailers selling gas are just a few of the issues c-store owners face.

“The key to success is innovation. C-store retailers need to constantly fine-tune their offerings in the face of increased competition from other channels while never taking their eyes off the basics of cleanliness and efficiency,” said Pirovano.


Nielsen Business Media