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Record U.S. Convenience Store Food, Merchandise Sales in 2018

- Total sales surged 8.9% to $654.3B, led by a 13.2% increase in fuel sales

- In-store sales increased 2.2% to a record $242.2 billion

- Foodservice sales accounted for 22.6% of in-store sales

- Wages increased 4.4%; the average wage for a store associate increased to $10.74 per hour


News provided by

National Association of Convenience Stores

Apr 03, 2019, 14:31 ET

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CHICAGO, April 3, 2019 /PRNewswire/ -- U.S. convenience stores experienced a 16th straight year of record in-store sales in 2018, according to newly released NACS State of the Industry data, the convenience and fuel retailing industry's premier benchmarks and key performance category insights. 

U.S. convenience stores sales overall surged 8.9% to $654.3 billion, led by a 13.2% increase in fuel sales, which account for 69.6% of total sales. In-store sales increased 2.2% to a record $242.2 billion. Overall, convenience stores sales are 3.1% of the U.S. gross domestic product of $20.5 trillion.

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U.S. convenience stores experienced record sales in 2018, according to newly released NACS State of the Industry data, the convenience and fuel retailing industry’s premier benchmarks and key performance category insights.
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U.S. convenience stores experienced record sales in 2018, according to newly released NACS State of the Industry data, the convenience and fuel retailing industry’s premier benchmarks and key performance category insights.

Higher gas prices, up 13.7% from $2.37 per gallon in 2017 to $2.69 per gallon in 2018, contributed to the increase in overall industry sales. Fuel margins, which have increased over the last five years, were also higher in 2018, up 7.5% to 23.35 cents per gallon, while gallons sold decreased by 0.4%.

"Fuel sales were strong in 2018 but consumers were making fewer stops to refuel, which suggests that greater fuel efficiency in vehicles is translating to less trips per week to the convenience store," said Andy Jones, NACS vice chairman of research and president/CEO of Sprint Food Stores Inc. in Augusta, Georgia. "Utilizing NACS research can help retailers track trips per transaction and develop new marketing strategies to bring customers from the pump inside the store."

Snapshot

2017

2018

% Change

Store Count

154,958

153,237

(1.11)%

     Inside Sales (Billions)

$237.0

$242.2

2.2%

     Fuel Sales (Billions)

$364.1

$412.1

13.2%

Total Sales (Billions)

$601.1

$654.3

8.9%

Pretax Profit (Billions)

$10.4

$11.0

5.8%

Credit Card Fees (Billions)

$10.1

$11.1

9.9%

Employees (Millions)

2.38

2.36

(0.84)%

Fuel Margin (cents per gallon)

21.73

23.35

7.5%

    Net of Credit Card Fees (cpg)

16.90

18.02

6.6%

(Sources: NACS State of the Industry data; 2019 NACS/Nielsen Convenience Industry Store Count)

Foodservice Powers In-Store Growth and Strategies
Foodservice sales accounted for 22.6% of in-store sales, a category that continues to be a key focus area for the convenience store channel. Foodservice is a broad category that mostly encompasses prepared food (69% of both category sales and profits) as well as commissary foods and hot, cold and frozen dispensed beverages.

The growth in foodservice also has led to an increase in store size. Overall, the average convenience store is 3,230 square feet. But as newer stores feature touchscreen food-ordering kiosks, add space for in-store seating and waiting areas and incorporate an open-kitchen design, the size of new stores has increased to 4,991 in rural locations, and 4,603 square feet in urban locations.

Cost of Growth
New business investments are also leading to higher direct store operating expenses (DSOE), which include wages, payroll taxes, health-care insurance, card fees—higher than overall industry pre-tax profit for the first time since 2014 ($11.1 billion vs. $11.0 billion)—utilities, repairs/maintenance and supplies, as well as several other categories including franchise fees and property taxes. For the third consecutive year, DSOE has outpaced inside gross profit dollars, a trend that continues to create challenges for convenience retailers.

"The cost of growth, whether it's higher acquisition multiples, new store construction or retrofitting older sites, has never been higher in our industry," said Jones. For example, the average cost to build a new store has increased over the last five years from $5.6 million to $7 million. "These are business trends that convenience retailers should be prepared to address as they continue evolving and growing their businesses."

Employment and Wages
Beyond sales, convenience stores are an important part of the economy. The industry employed 2.36 million people in 2018, a slight decrease from 2.38 million in 2017. Part of this decline can be attributed to the slight decrease in the U.S. convenience store industry store count reported in March 2019 (convenience.org/storecount).

Despite a tight labor market, store associate turnover decreased from 121% in 2017 to 118% in 2018; however, retailers are also paying employees more: Wages were up 4.4% and the average wage for a store associate increased to $10.74 per hour.

Category Performance
Convenience stores are the destination of choice for the 165 million U.S. customers who frequent their favorite location each day, and 83% of the items bought at a convenience store are consumed within the first hour of purchase.

Here are overall merchandise sales groups as a percentage of overall merchandise sales:

  • Cigarettes: 31% of in-store sales
  • Foodservice (prepared and commissary food; hot, cold and dispensed beverages): 22.6%
  • Packaged beverages (carbonated soft drinks, energy drinks, water, sports drinks, juices and teas): 15.3%
  • Center of the store (salty, candy, packaged sweet snacks and alternative snacks): 10.4%
  • Other tobacco products: 6.7%
  • Beer: 6.3% (12.4% for stores selling beer)
  • Other: 7.7%

Convenience retail industry data was announced at the NACS State of the Industry Summit, taking place April 2-4 at the O'Hare Hyatt Regency in Chicago. More than 600 leading retail and supplier company representatives are at the industry's top conference for benchmarking and analysis of retail trends.

The industry's 2018 metrics are based on the NACS State of the Industry survey powered by its wholly owned subsidiary CSX LLC, the industry's largest online database of financial and operating data. Complete data and analysis will be released in June in the NACS State of the Industry Report® of 2018 Data. Metrics related to turnover were from the recently released NACS State of the Industry Compensation Report® of 2018 Data.

Download the infographic, "Strong Sales for Convenience Stores." (PDF)

NACS (convenience.org) advances the role of convenience stores as positive economic, social and philanthropic contributors to the communities they serve. The U.S. convenience store industry, with more than 153,000 stores selling fuel, food and merchandise, serves more than 165 million customers daily—half of the U.S. population—and has sales that are 11% of total U.S. retail and foodservice sales. NACS has 1,900 retailer and 1,800 supplier members from more than 50 countries.

SOURCE National Association of Convenience Stores

Related Links

https://www.convenience.org

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