Data shows economic climate in c-store industry is heating up and should continue for 2015.
By David Bennett, Senior Editor
Convenience store industry revenue in 2014 topped $697 billion, bolstered in part by lower gas prices and demonstrating that c-store merchandising programs are resonating with customers.
That was a major theme as the State of the Industry (SOI) Summit, an annual conference hosted by the National Association of Convenience Stores (NACS), wrapped up April 16. Indeed attendees heard that a strong U.S. economy will continue to support growth in the c-store industry.
Providing even more good news for convenience retailers that sell fuel, Tom Kloza, global head of energy analysis at pricing and news provider OPIS, said that lower gas prices that spurred record in-store sale should continue for the foreseeable future.
U.S. refiners are poised to make gasoline at a record pace this year, due in part to an ocean of excess crude that is keeping margins healthy and is driving U.S. gasoline and diesel prices down. Refiners have increased output to meet consumer demand, adding more than 100,000 barrels a day of capacity since last summer.
“Refiners are very, very worried about placing all of the gasoline that they are going to make in the next decade,” Kloza said.
Last year, refiners processed barrels of crude in record numbers, the highest levels in OPIS data going back four decades, thanks to heightened oil production in the U.S. That trend should carry forward through at least 2015, keeping prices at the pump relatively tame.
Other forecasts from Kloza included:
- North America will have slightly cheaper crude than the rest of the world;
- Futures’ markets is exponentially bigger than it was from 1978-2002; and
- There will be pressure to roll back tougher fuel economy standard for vehicles.
POSITIVE OUTLOOK
Aside from strong economic indicators that loom in 2015, featured speaker Sanjay Khosla, senior fellow at Northwestern University’s Kellogg School of Management and author of “Fewer Bigger Bolder: From Mindless Expansion to Focused Growth,” explained that success in the marketplace is often achieved through concentrated growth rather than unfocused ambition.
The former president of developing markets for Kraft Foods, Khosla was instrumental in growing some of Kraft’s most iconic brands in international markets, including Tang and Oreo.
After years of lessons learned, Khosla presented a quick list of tips so audience members might channel their own innovative models.
Khosla’s five simple takeaways for attendees included:
- Keeping focus;
- Being bold;
- Unleashing the potential of your employees;
- Effective execution, to include: thinking big, starting small, and scaling fast; and
- Maintaining metrics: Measuring and communicating progress.