On-the-Go Shoppers Fuel Convenience Store Growth

Not long ago, industry execs fretted that consumer frugality would put a damper on convenience-store growth, but a new report from IRI shows the channel is thriving. Compared to grocery and drug stores, it says convenience stores were the only channel to grow in both dollar and unit sales in 2012.

Led by such giants as 7-Eleven, Shell, and BP, IRI says there are now some 149,000 convenience stores, with roughly two-thirds owned by independents. Increasingly, these stores are stepping away from their cookie-cutter roots, adding kiosks, healthier food options, fresh foods and payment innovations.

Tobacco sales, the channel’s biggest revenue stream, continue to be an issue. And while they account for $52 billion in sales and drive 150 store trips per day, volume sales have declined as more people have kicked the habit. (IRI says the U.S. smoking rate is down 50% since 1965.) Smokeless tobacco sales in c-stores gained 2.7% in 2012, and sales of electronic smokes are also strong.

Gas prices are also a factor, writes Kelley Vacca, IRI’s principal of client insights, in the report. “Even though these prices have been stable during the last year, they are still high and impacting shoppers’ wallets, particularly those of young shoppers. Among Millennial shoppers, 24% have stepped up convenience channel shopping frequency to save money on gas,” the report says.

Energy drinks are also hot, with double-digit growth in both unit and dollar sales.

The sharpest declines came in sales of bottled water.

Last month, Convenience Store News ranked the largest chains, with 7-Eleven in first place at 7,341 c-stores, an increase of 9.1% from the prior year, followed by Shell/Motiva Enterprises, with 4,934 stores; BP, with 4,691 stores; Chevron, 4,057 stores; Couche-Tard (owner of Circle K) 3,585 stores, and ExxonMobil, with 3,445 stores.

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