The Surging C-Store Market: Transforming How America Shops. John Lofstock Vice President, Editor-in-Chief The Convenience Store Decisions Group

Transcription

1 The Surging C-Store Market: Transforming How America Shops John Lofstock Vice President, Editor-in-Chief The Convenience Store Decisions Group

2 Session Overview Convenience store industry facts and figures Store count up In-store sales jumped 3.3% (thanks, CVS!) Fuel sales dollars dropped 9.2%, driven by the drop in oil prices While fuel prices were down, margins are strong Focus on foodservice Foodservice drove in-store traffic Employer of choice Salaries well above minimum wage; excellent training Advancement opportunities (ESOPs like Wawa, KT, Huck s) give employees an ownership stake 2

3 State of the Industry The industry is strong and growing. Store count up 1% to 154,535 in 2016 and 31,000 stores since 2001 (better stores, grumblings of market oversaturation) In-store dollar sales increased 3.2% in 2016 to $233 billion Pretax profit decreased 3.8% to $10.2 billion 3

4 State of the Industry Disparity between the haves and have-nots. Top quartile chains outsell other chains by wide margin. Food a major contributing factor. Tobacco is not dead. Sales in 2016 were up slightly to 36.1% of total in-store sales. 4

5 State of the Industry Packaged beverages crucial (15.1% of in-store sales) Design matters. Facilities emphasize convenience for all demographics (IE, drive-throughs, upscale restrooms) Underappreciated early adopter to retail technology (foodservice touch-screens that upsell, self-checkout, loyalty programs, mobile apps) Brand equity is paramount. Less Big Oil. It s QuikTrip, Wawa, Sheetz, RaceTrac, and customers are accepting. 5

6 Foodservice Foodservice accounted for 21.7% of total in-store sales and 35.2% of gross profit dollars Cultivating a new generation of consumers who are growing up on c-store meals Study what time-pressed customers want and act quickly on trends and LTOs Hunted has become the hunter. QSRs mimicking c-store pricing. 6

7 Fueling Cars and Stomachs No one thing has done more for the c-store industry than the demand for foodservice No longer a punchline. Sales at top quartile chains for foodservice much higher than bottom quartile. Coffee boom Starbucks effect Impact of Whole Foods and Wegmans. C-stores don t want to copy other c-stores; they want to be Wegmans 7

8 The Fuel Factor The industry s wild card continues to be location and consumer needs. If you have a car, you need a c-store. If you smoke, you need a c-store. Convert fuel customers to buy more stuff. Using technology to track customer movement to drive sales. Loyalty cards offer fuel discounts and reward repeat visits with free coffee, beverages, etc. 8

9 People Matter Wages are increasing Employer of choice Training has consistently improved, allowing employees to take on new responsibilities Opportunities for advancement, familial industry 9

10 Tracking Customer Trends: What Do C-Store Consumers Want? Wellness claims: products featuring a wellness claim are outpacing retail growth Menu transparency: nutritional information/product ingredients Click and collect: as e-commerce grows, watch for Whole Foods Instacart and Peapod to gain traction. Amazon s acquisition of Whole foods could be a game changer. Mobile apps: mobile payments, QR codes and mobile coupons are all highly desirable with Millennials 10

11 Conclusion and Outlook Industry will look to further the convenience proposition. Online ordering through mobile apps, drive-throughs, delivery, elegant in-store seating are now the rule, rather than the exception. Foodservice will continue to be king. Proprietary brand development and refinement are the new norm, with an emphasis on a quality dining experience at a good price. Loyalty programs will retain and attract customers. Fuel discounts and free coffee help sustain this popular trend. Employee migration to c-stores. Smaller teams where their input is valued and there is room for advancement is an appealing proposition. 11

12 Thank You! Questions? 12