US Convenience Stores Enjoy Profit Boom In 2017
US convenience stores have experienced the 15th year in a row of record in-store sales, and the fourth successive year of more than $10 billion in pretax profits, according to figures shared at the NACS State of the Industry Summit in Chicago on Wednesday.
The National Association of Convenience Stores is an industry representative body, which ‘advances the role of convenience stores as positive economic, social and philanthropic contributors to the communities they serve.’ More than 600 retail and supplier company representatives attended the event.
According to its research, overall, convenience store sales rose 9.3% to $601.1 billion, with fuel sales leading the way (+14.9%). Convenience store sales make up 3.2% of the US GDP total ($18.57 trillion).
However, the record in-store sales have been offset by direct store operating expenses (i.e. wages, payroll taxes, insurance, etc.) for the second consecutive year.
Higher gas prices in 2017 (which experienced a 12.8% increase in price and a 1.9% increase in volume) helped boost sales. With increased fuel gross margins (+$0.22/gallon), gross profits increased 11.7% per store.
The report revealed that convenience stores sell an estimated 80% of purchased fuels in the United States.
Foodservice was the main driver of in-store growth, increasing sales by a milestone $237 billion. The category, which includes prepared and fresh foods, as well as hot, cold and frozen beverages, will continue to be a ‘key focus for growth’ in the channel, the report said.
In total, foodservice sales were $53.3 billion, comprising 22.5% of sales and 33.9% of gross profit sales.
One of the segments that saw a decline was tobacco products, including cigarettes. It dropped to 28.6% of in-store sales, nearly a 10% fall from 36.9% in 2011. However, the other tobacco products category (OTP) was a ‘bright spot’, increasing sales by 11.2%.
Other top in-store segments included packaged beverages (15.8% of overall sales); centre of the store, or confectionery (9.9%); and beer (8.5%).
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Karen Henderson. Click subscribe to sign up to ESM: European Supermarket Magazine.