retail

Convenience Store Sales Gained In 2008

storeIt hasn't been an easy few years for the humble convenience store. Buffeted by soaring-then-sinking fuel prices and the recession, which has consumers trying hard to save money, business has been tough.

But the National Association of Convenience Stores says industry sales jumped 8.1% to $624.1 billion in 2008, with both motor fuels sales (up 10.1% to $450.2 billion) and in-store sales (up 3.2% to $173.9 billion) registering substantial gains. And industry profits rose 54% to reach $5.2 billion, "reversing a two-year decline where profits dropped 42% over," the trade group says in its release.

The group says the gains are commendable, not just because they buck other retail trends, but because they occur in a year where there was actually a decline in the number of convenience stores. Store count dropped about 1% in the year, as "many stores closed because of the punishing economic conditions and record-low motor fuels margins the industry faced during the first three quarters of 2008," it says.

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The trade group, which says its pumps about 80% of the gas used by consumers, reports that credit-card fees continue to be the sore spot in the industry, and climbed another 10.5% last year to $8.4 billion, which it says is about three times higher than it was five years ago. Another ongoing issue is that declining profit margins in cigarettes, which account for about a third of the industry's dollar sales, also continued.

Food-service sales continue to grow, and now account for about 25% of in-store profits. After cigarettes, with 32.7% of sales, packaged beverages are the next-biggest product category, accounting for 14.1% of sales, followed by food service (13.9%), beer (10.2%) and other tobacco products (3.9%.)

Despite the stabilizing performance of 2008, the convenience-store sector is a shrinking one. A recent report from Nielsen says that in the last 12 years, the channel's share of market has plunged 12%. In 2008, only 40% of all U.S. households shopped at such stores, compared to 52% in 1997. By comparison, 99% of households used a grocery store in 2008, 95% shopped in mass merchandisers with supercenters, and 81% shopped in a drug store.

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