14 minute read

AT A CROSSROADS

THE CONVENIENCE STORE INDUSTRY’S SMALL OPERATORS MUST ADAPT OR THEY WILL BECOME OBSOLETE

BY LINDA LISANTI & DANIELLE ROMANO

SPONSORED BY

TOTAL U.S. CONVENIENCE store sales reached a record high of $814 billion last year, an increase of nearly 23 percent year over year, as Americans returned to normal living and the nation’s convenience stores benefitted from the bounceback of traditional commuting routines and shopping behaviors. However, not all c-store operators shared in the riches equally.

Among the industry’s single-store and small chain operators, fewer reported an increase in total dollar sales for 2022 vs. the year prior, according to the fourth-annual Convenience Store News State of the Small Operator Study, which looks at how the convenience channel’s small operators are performing vs. their larger chain counterparts. About six in 10 small operators saw their overall sales per store increase last year, compared to nearly eight in 10 in 2021.

Year over year, a higher percentage reported a decrease in sales: 19.7 percent in this year’s study vs. just 7.4 percent in last year’s study. Still, this is much improved from the nearly two-thirds of operators who reported a decline in 2020 during the worst of the COVID-19 pandemic.

On average, single-store and small chain operators reported their average sales per store last year increased by 19.8 percent, slightly below the 21.7 percent increase they netted in 2021. Smaller operators underperformed their larger brethren by about 3 percentage points, as average per-store sales among the whole U.S. c-store industry increased by 22.7 percent last year.

For the second year in a row, motor fuel sales industrywide posted an annual increase upwards of 30 percent. Largely driven by higher gas prices, the industry’s 2022 fuel revenue rose by 32.9 percent to reach $538.7 billion. Fuel volume grew slightly, with gallons up 1.6 percent for the year.

A little more than six in 10 single-store and small operators reported their motor fuel sales dollars increased last year. The average net increase in fuel revenue was 31.4 percent, down from a 37.4 percent jump the prior year. The industrywide increase for 2022 was 32.9 percent, comparatively.

About the same percentage of single-store and small operators — six in 10 — reported their in-store merchandise sales rose last year, down from 76.9 percent who said the same the year before. The average net increase in in-store revenue was 5.5 percent, up just slightly from the year prior when in-store sales among single-store and small operators rose 5.2 percent.

Again, however, smaller operators underperformed compared to the industry average. For the second consecutive year, in-store sales at all U.S. convenience stores in 2022 hit a new high, reaching $275.3 billion, which equated to a 6.6 percent increase year over year.

Across the industry, the strength of in-store sales last year was propelled by the power of the foodservice category. More and more c-store retailers are enhancing their in-store offers to entice customers to visit the store even when they don’t need to fill up their gas tank. Highquality foodservice programs that boast fresh, appealing prepared foods and customizable dispensed beverages are an integral part of this burgeoning effort that is happening industrywide.

Total foodservice sales in the c-store industry were up a whopping 19.5 percent in 2022.

More than three-quarters of the small operators surveyed this year said their prepared food dollar sales increased last year, with a net average gain of 21.1 percent. Not one operator said their prepared food sales decreased for the year, while the rest said sales stayed the same.

Average Total Dollar Sales per Store 2022 vs. 2021

Average Motor Fuel Dollar Sales per Store 2022 vs. 2021

The same trend was not evident, though, across the hot, cold and frozen dispensed beverage categories, perhaps indicating that the industry’s smaller operators are not keeping up with the improvements and advancements being made at the larger c-store chains these days.

While more than 70 percent of small operators reported an increase in hot dispensed beverage sales in 2021, only about 43 percent reported an increase for 2022. Similarly, while 63 percent saw an increase in cold dispensed beverage sales in 2021, this percentage dropped to 56.5 percent last year. And in frozen dispensed beverages, more than 80 percent of small operators reported increased sales in 2021, but this percentage fell to 65.4 percent for 2022.

The most successful convenience store operators have not only committed to foodservice, but they’ve moved it to the forefront of their business. Industry-leading retailers are building new, bigger stores that make fresh food the first thing customers see when they walk through the door. They’re also investing significant time, money and resources in enabling customers to order food and beverages the way they want and obtain them the way they want — think online ordering, mobile ordering, curbside pickup, in-store pickup, delivery, seating and more.

Surviving vs. Thriving

Whether operating a single store or a small chain, surviving against the larger convenience store chains is always top of mind for the industry’s small operators, and it can be challenging at times. This is especially true as of late, with the catalyst being the onset of the COVID-19 pandemic, which forced convenience store retailers to adapt by adopting and accelerating new services such as mobile ordering, delivery and contactless experiences.

Fast forward to today and these competitive pressures are combined with a post-pandemic world that includes an unpredictable economic climate, an erratic fuel market, supply chain woes and an inconsistent labor pool, creating a perfect storm for small operators to weather.

Average In-Store Merchandise Sales per Store 2022 vs. 2021

Average Number of Weekly Transactions per Store

Average Dollar Amount per Transaction

IF AN OPERATOR IS LOOKING TO SWITCH FUEL PARTNERS OR IS CONSIDERING GOING FROM UNBRANDED FUELS TO BRANDED FUELS, WHAT ARE SOME OF THE MOST IMPORTANT THINGS TO CONSIDER?

IF AN OPERATOR IS LOOKING TO SWITCH FUEL PARTNERS OR IS CONSIDERING GOING FROM UNBRANDED FUELS TO BRANDED FUELS, WHAT ARE SOME OF THE MOST IMPORTANT THINGS TO CONSIDER?

IF

The power of a brand plays a large role in your consumer’s willingness to consider you. Trust, perceived higher-quality fuel and the drive for higher-margin premium fuel sales are all key considerations for operators. Brands can bring with them established programs such as loyalty, private-label credit cards and other gallon-driving partnerships, such as grocery loyalty or other exclusive relationships. Marketing support from the brand, inclusive of national partnerships and sponsorships, is also a differentiator for a station owner’s customers. Value-added programs such as Sunoco’s industry-leading dispenser equipment discount program provide significant savings to station owners and imaging programs also offer business benefits: Sunoco’s centennial program drives more than 10% gallon growth when a site rebrands.

The power of a brand plays a large role in your consumer’s willingness to consider you. Trust, perceived higher-quality fuel and the drive for higher-margin premium fuel sales are all key considerations for operators. Brands can bring with them established programs such as loyalty, private-label credit cards and other gallon-driving partnerships, such as grocery loyalty or other exclusive relationships. Marketing support from the brand, inclusive of national partnerships and sponsorships, is also a differentiator for a station owner’s customers. Value-added programs such as Sunoco’s industry-leading dispenser equipment discount program provide significant savings to station owners and imaging programs also offer business benefits: Sunoco’s centennial program drives more than 10% gallon growth when a site rebrands.

The power of a brand plays a large role in your consumer’s willingness to consider you. Trust, perceived higher-quality fuel and the drive for higher-margin premium fuel sales are all key considerations for operators. Brands can bring with them established programs such as loyalty, private-label credit cards and other gallon-driving partnerships, such as grocery loyalty or other exclusive relationships. Marketing support from the brand, inclusive of national partnerships and sponsorships, is also a differentiator for a station owner’s customers. Value-added programs such as Sunoco’s industry-leading dispenser equipment discount program provide significant savings to station owners and imaging programs also offer business benefits: Sunoco’s centennial program drives more than 10% gallon growth when a site rebrands.

FLEXIBILITY IS A KEY PART OF THE VALUE PROPOSITION ANY PARTNER PROVIDES, BUT WHAT DOES THAT MEAN IN PRACTICE?

FLEXIBILITY IS A KEY PART OF THE VALUE PROPOSITION ANY PARTNER PROVIDES, BUT WHAT DOES THAT MEAN IN PRACTICE?

Flexibility means finding ways to meet your customers where they’re at today and to give them what they need to continue to be successful in the future. Sunoco recognizes every business unique and has its own criteria for success. Our flexible financing options are unique in our industry: We’re able to provide capital up front if that is what a customer needs and update term options and pricing when those situations arise. Having a flexible approach means more than offering a range of financing options; it speaks to a brand’s commitment to its partners in communication and customer support, too. One of Sunoco’s biggest differentiators is accessibility. Sunoco’s customers can pick up the phone and call anyone within their account team organization, including our leadership. Flexibility isn’t just about the deal, but about how you manage the relationship moving forward and meeting station owners where their needs are.

Sunoco Go Rewards app helps station owners generate demand by offering discounts on fuel. As a company, we invest in consumer research to fuel innovative solutions and programs. The Sunoco mystery shop program helps operators gauge how their stations appeal to consumers and details what can be done to create the safest, most approachable station possible. And the brand provides ongoing quarterly point-of-purchase (POP) promotions to continue to promote the brand and a station owner’s business.

Sunoco Go Rewards app helps station owners generate demand by offering discounts on fuel. As a company, we invest in consumer research to fuel innovative solutions and programs. The Sunoco mystery shop program helps operators gauge how their stations appeal to consumers and details what can be done to create the safest, most approachable station possible. And the brand provides ongoing quarterly point-of-purchase (POP) promotions to continue to promote the brand and a station owner’s business.

Sunoco Go Rewards station owners generate by offering discounts company, we invest research to fuel innovative and programs. The shop program helps gauge how their stations consumers and details done to create the safest, proachable station brand provides ongoing point-of-purchase tions to continue to promote the brand and a station business.

Fred McConnell, Director of Brand and Fuels Marketing at Sunoco LP www.sunocolp.com

WHAT IS SUNOCO’S VALUE PROPOSITION WITHIN THE REALM OF FUELS?

WHAT IS SUNOCO’S VALUE PROPOSITION WITHIN THE REALM OF FUELS?

WHAT IS SUNOCO’S VALUE PROPOSITION THE REALM OF FUELS?

FLEXIBILITY IS A KEY PART OF THE VALUE PROPOSITION ANY PARTNER PROVIDES, BUT WHAT DOES THAT MEAN IN PRACTICE?

Flexibility means finding ways to meet your customers where they’re at today and to give them what they need to continue to be successful in the future. Sunoco recognizes every business is unique and has its own criteria for success. Our flexible financing options are unique in our industry: We’re able to provide capital up front if that is what a customer needs and update term options and pricing when those situations arise.

Having a flexible approach means more than offering a range of financing options; it speaks to a brand’s commitment to its partners in communication and customer support, too. One of Sunoco’s biggest differentiators is accessibility. Sunoco’s customers can pick up the phone and call anyone within their account team organization, including our leadership.

Flexibility means finding ways to meet your customers where they’re at today and to give them what they need to continue to be successful in the future. Sunoco recognizes every business is unique and has its own criteria for success. Our flexible financing options are unique in our industry: We’re able to provide capital up front if that is what a customer needs and update term options and pricing when those situations arise. Having a flexible approach means more than offering a range of financing options; it speaks to a brand’s commitment to its partners in communication and customer support, too.

Sunoco’s value proposition is first and foremost about the fuel quality itself. High-quality fuel is a top consideration driver for consumers—behind only price and convenience. Sunoco Ultratech is a top-tier certified fuel proven to make your engine run cleaner and last longer.This is evidenced by Sunoco’s 20 years as the exclusive fuel provider of NASCAR, where we’ve done 20 million miles across three different fuel blends, and we’ve never had a defect. It’s a testament to the quality of our fuel and the excellence of our operations team. We fuel every race, every driver, flawlessly every time. Sunoco puts the same focus and care into the fuel at its stations as it does for the fuel that powers the fastest racing machines around the world. And as the largest fuel distributor in the country, Sunoco’s reliability as a fuel supplier is something our operators appreciate.

Sunoco’s value proposition is first and foremost about the fuel quality itself. High-quality fuel is a top consideration driver for consumers—behind only price and convenience. Sunoco Ultratech is a top-tier certified fuel proven to make your engine run cleaner and last longer.This is evidenced by Sunoco’s 20 years as the exclusive fuel provider of NASCAR, where we’ve done 20 million miles across three different fuel blends, and we’ve never had a defect. It’s a testament to the quality of our fuel and the excellence of our operations team. We fuel every race, every driver, flawlessly every time. Sunoco puts the same focus and care into the fuel at its stations as it does for the fuel that powers the fastest racing machines around the world. And as the largest fuel distributor in the country, Sunoco’s reliability as a fuel supplier is something our operators appreciate.

Sunoco’s value proposition is first and foremost quality itself. High-quality fuel is a top consideration for consumers—behind only price and convenience. Ultratech is a top-tier certified fuel proven to make run cleaner and last longer.This is evidenced by years as the exclusive fuel provider of NASCAR, done 20 million miles across three different fuel we’ve never had a defect. It’s a testament to the fuel and the excellence of our operations team. race, every driver, flawlessly every time. Sunoco focus and care into the fuel at its stations as it that powers the fastest racing machines around as the largest fuel distributor in the country, Sunoco’s ty as a fuel supplier is something our operators

One of Sunoco’s biggest differentiators is accessibility. Sunoco’s customers can pick up the phone and call anyone within their account team organization, including our leadership.

SUNOCO REVAMPED ITS FUEL BRAND IMAGE. WHAT WAS THE MOTIVATION FOR THAT, AND WHAT ARE THE RESULTS?

SUNOCO REVAMPED ITS FUEL BRAND IMAGE. WHAT WAS THE MOTIVATION FOR THAT, AND WHAT ARE THE RESULTS?

SUNOCO REVAMPED ITS FUEL BRAND WHAT WAS THE MOTIVATION FOR THAT, WHAT ARE THE RESULTS?

Flexibility isn’t just about the deal, but about how you manage the relationship moving forward and meeting station owners where their needs are.

Flexibility isn’t just about the deal, but about how you manage the relationship moving forward and meeting station owners where their needs are.

AFTER A PARTNERSHIP AGREEMENT IS SIGNED, WHAT ARE SOME ONGOING WAYS A PARTNER CAN HELP AN OPERATOR?

AFTER A PARTNERSHIP AGREEMENT IS SIGNED, WHAT ARE SOME ONGOING WAYS A PARTNER CAN HELP AN OPERATOR?

AFTER A PARTNERSHIP AGREEMENT IS SIGNED, WHAT ARE SOME ONGOING WAYS A PARTNER CAN HELP AN OPERATOR?

One of the first things our new station customers read in their onboarding kits is: “Your success drives ours,” because Sunoco is successful when our stations are successful. This involves supporting operators with programs and partnerships driving business to their station(s), including generating demand through digital avenues (e.g.: location-based Google ads), regional/national advertising and more. Our

One of the first things our new station customers read in their onboarding kits is: “Your success drives ours,” because Sunoco is successful when our stations are successful.

One of the first things our new station customers read in their onboarding kits is: “Your success drives ours,” because Sunoco is successful when our stations are successful.

This involves supporting operators with programs and partnerships driving business to their station(s), including generating demand through digital avenues (e.g.: location-based Google ads), regional/national advertising and more. Our

This involves supporting operators with programs and partnerships driving business to their station(s), including generating demand through digital avenues (e.g.: location-based Google ads), regional/national advertising and more. Our

In our consumer research, consumers’ perception of station safety showed to be a significant determining factor when they selected where to refuel. When updating our fuel brand image, we focused on making safety a priority by adding additional lighting, as well as making LED mandatory at every station. The result is a modern, clean and simpler design for the next generation of Sunoco consumers. We leveraged our heritage to bring back the iconic Sunoco diamond to the canopy and our dispenser valences. We place an emphasis on our product quality with Sunoco Ultratech as well as being the official fuel of NASCAR. We introduced a new POP element dedicated to communicating the benefits and quality of Sunoco Ultratech fuel. These culminate in a big impact for our operators: We see more than 10% gallon growth at the stations that receive the new image.

In our consumer research, consumers’ perception of station safety showed to be a significant determining factor when they selected where to refuel. When updating our fuel brand image, we focused on making safety a priority by adding additional lighting, as well as making LED mandatory at every station. The result is a modern, clean and simpler design for the next generation of Sunoco consumers. We leveraged our heritage to bring back the iconic Sunoco diamond to the canopy and our dispenser valences. We place an emphasis on our product quality with Sunoco Ultratech as well as being the official fuel of NASCAR. We introduced a new POP element dedicated to communicating the benefits and quality of Sunoco Ultratech fuel. These culminate in a big impact for our operators: We see more than 10% gallon growth at the stations that receive the new image.

In our consumer research, consumers’ perception safety showed to be a significant determining factor selected where to refuel. When updating our fuel we focused on making safety a priority by adding lighting, as well as making LED mandatory at every result is a modern, clean and simpler design for ation of Sunoco consumers. We leveraged our back the iconic Sunoco diamond to the canopy er valences. We place an emphasis on our product Sunoco Ultratech as well as being the official fuel We introduced a new POP element dedicated to the benefits and quality of Sunoco Ultratech fuel. nate in a big impact for our operators: We see more gallon growth at the stations that receive the new

Category Dollar Sales per Store 2022 vs. 2021

This kind of business environment has industry experts split on how they would rate the current health of the small operator. Roy Strasburger, CEO of StrasGlobal, a Temple, Texas-based provider of consulting, operations and management services serving the small-format retail industry, gives single-store and small operators a rating of 7 — an assessment he considers “good.” Strasburger explained that his rating is driven by today’s high fuel margins and convenience retailing being favored by consumers during difficult economic times.

John Matthews, president and CEO of Raleigh, N.C.based Gray Cat Enterprises Inc., which provides retail consulting for multiunit operations, told CSNews that he cannot assign a rating to the current health of the small operator community because of the multitude of factors that come into play, including market conditions, competitive pressures, store location and a retailer’s offering.

“Some small operators are hitting the ball out of the park, while others are going to be out of business within five years unless they adapt. So, a rating would take both of these into account and just muddy the rating,” Matthews stated.

The major obstacle threatening small operators right now is the convenience channel’s accelerated overall change in the marketplace post-pandemic, according to Matthews. “Think about all the changes that have been brought to the forefront in the last three to five years,” he said.

These changes, according to Matthews, include:

• Product expansion — The need to get into “meaningful” foodservice and create a differentiated offering;

• Technology enhancements — From mobile apps, self-checkout and frictionless engagement to overall operational streamlining to minimize labor;

This article is from: