Industry Posts Strong Sales Gains

Despite the challenging economy, convenience store retailers enjoyed a solid year of growth in key categories like foodservice, frozen beverages and smokeless tobacco.

By John Lofstock, Editor.

While sales across all retail remained sluggish for much of 2010, the year ended on a relatively good note for c-store operators. Sales and gross margin contributions from foodservice helped the industry to overcome the challenging retail environment, while candy, beverages, salty snacks and fuel all provided a nice boost.

One key to consumers’ recessionary spending has been that fuel prices have remained relatively tame, though at presstime were surging due to unrest in Libya and Egypt. But for most of 2010 fuel avoided the wild price swings we had seen in previous years, which helped boost in-store spending at convenience stores.

The magic number for prices at the pumps tends to be $3.50. That’s where customers begin to alter purchasing decisions. The Oil Price Information Service (OPIS) anticipates prices will range from $3.50 to $3.75 per gallon heading into the summer driving season. Turmoil in several North African and Middle Eastern nations could further impact global oil supply making gasoline susceptible to even higher price fluctuations. Not surprisingly, fuel discounts top the list of concerns retailers have about competitive threat in 2011—whether it’s other stores offering discounts or partnerships with grocery chains, said David Bishop, managing partner of Balvor LLC. “This is understandable given the critical role fuel plays in driving site traffic and sensitivity that consumers have relative to fuel pricing.”

According to the Balvor survey of 113 chains, retailers are most likely to focus on five key areas in 2011: coffee, new categories, multi-vendor displays, the roller grill and coffee equipment.

CSD’s 2011 Category Management Outlook offers a category-by-category breakdown of sales in these key areas and projects what the industry can expect from dozens of in-store categories in 2011 and beyond.

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