Despite pandemic-related challenges, NACS has released findings from 2021, revealing that two in three convenience retailers (66 percent) report that their in-store sales were higher than in 2020.
Only one in six retailers (16 percent) say that in-store sales decreased in 2021, according to a NACS “Pulse” survey of its retailer members.
In 2020, in-store sales reached a record $255.6 billion, according to the NACS State of the Industry Report of 2020 Data.
Complete 2021 industry data will be announced during the NACS State of the Industry Summit, which will take place April 12-14 in Chicago.
Industry suppliers were equally positive about sales: 63 percent of NACS supplier members say that sales to convenience retailers were higher in 2021 relative to 2020; only 9 percent say their sales were lower.
Suppliers also are very optimistic about 2022: 75 percent, or three in four suppliers, believe their sales in the c-store channel will increase in 2022, and 71 percent say they will invest more in the channel this year. NACS reports that only 3 percent will invest less.
This marks the second strong year of suppliers investing in the c-store channel: a year ago, 63 percent of supplier members said they would boost their investment in the channel.
Innovation, partnerships push sales higher
Convenience retailers are optimistic about prospects in 2022, and 51 percent expect strong sales in the first quarter. Part of the optimism could be related to new or expanded offerings: 41 percent say they will offer frictionless/cashierless checkout, and 30 percent say they will offer app-based ordering/payment this year.
Suppliers credit continuing partnerships within the channel for growing sales. Sixty-two percent say they formed new relationships with retailers, which helped expand opportunities. Thirty-five percent of suppliers say they increased SKUs in the channel, and 31 percent say they entered new categories where they did not have a presence.
Convenience stores contribute more than $1 billion annually to charities, and retailers say that the local connection is important. Retailers say the top community groups for the industry to focus on are local schools at 53 percent and first responders at 50 percent.
Labor, supply chain still present challenges
Not surprisingly, the top two issues facing both retailers and suppliers are labor challenges and supply-chain reliability.
Overall, 56 percent of suppliers are facing labor challenges and the top three affecting their business are:
- 62 percent cited lack of production/front-line employees;
- 51 percent cited offering competitive wages; and
- 31 percent cited driver shortages.
Sixty-nine percent of suppliers say they are facing supply-chain challenges because of the truck driver shortage and inflationary pressures. Suppliers also say it’s going to take time until the supply chain is back to normal.
Thirty-six percent of suppliers say that won’t happen until the second half of 2022, and 35 percent say it won’t happen until the first half of 2023.
Retailers say they expect both challenges to linger well into or beyond 2022: 40 percent say supply-chain disruptions will no longer be a significant challenge in the second half of 2022, while 7 percent say they will never return to pre-pandemic normalcy.
They are even less optimistic about the labor challenges: 24 percent say the labor shortage will no longer be a significant challenge in the first half of 2023. The top answer was that almost 32 percent say the labor challenge “always will be a problem.”
Retailers cited solutions to overcome labor challenges, such as offering higher pay, flexible scheduling, referral bonuses and spending more time on the hiring process.
“Spend more time in the interview and on-boarding process. The costs are higher up-front, but it can help in reducing the percentage of hires who only show up for their first week and quit shortly afterward,” said Lonnie McQuirter, director of operations in Minneapolis, Minnesota.
“Put in the time to train and build relationships,” said Jeff Chase, director of c-store operations at Klamath Falls, Oregon-based Ed Staub & Sons Petroleum (dba Fast Break Stores).
Looking ahead in 2022
Industry suppliers say several trends that emerged in 2021 will continue, including the growth of healthy options in stores, the expansion of delivery options and greater usage of mobile apps for ordering.
Most of all, retailers say that a continued focus on serving convenience and in some cases, redefining it, will pay out big dividends in 2022.
“COVID forced us to change our business model. We partnered with a health food supplier that has allowed us to migrate our store from a ‘snack and junk food’ stop to a premium food store. Now we have larger basket sizes, both in items and value, and larger gross profits,” said Adam De Caul, managing director of Caulco (dba Cauls), which operates in St. George’s, Grenada.
“It’s during the difficult times that you see the vendors that step up. Where there is a will, there is a way, and it always results in satisfying our customers 100 percent of the time, no matter what circumstances challenge the final product,” said Dennis McCartney, director of operations with Kennett Square, Pennsylvania-based Landhope Corp. (dba Landhope Farms).
But most of all, convenience retailing is about people.
“We have great customers who have supported us through these difficult times and wonderful team members who were there for them,” said Jacque Hager, VP of retail operations for Dubuque, Iowa-based Molo Oil Company (dba Big 10 Mart).
NACS is a global trade association dedicated to advancing convenience and fuel retailing. NACS advances the role of convenience stores as positive economic, social and philanthropic contributors to the communities they serve.
The U.S. convenience store industry, with more than 150,000 stores nationwide selling fuel, food and merchandise, serves 165 million customers daily and had sales of $548 billion in 2020.
For more information, visit convenience.org.
The NACS Member Pulse Surveys were conducted in December by NACS Research. A total of 67 retailer member companies and 87 supplier member companies participated in the surveys.
NACS Research conducts quarterly custom research with retailer members to identify key priorities and opportunities across the convenience and fuel retail landscape.
To explore more NACS Research insights and data, visit convenience.org/Research.
