Convenience store channel: Road rules
On MTV’s Road Rules, a group of strangers is stripped of its money and loaded into an RV to embark on a mysterious journey. The team receives messages about where to go and what to do while in transit. While very little is certain about this trip, there is at least one rule of the road that the team can count on: No matter where they go it a c-store will be within reach.
These roadside retailers continue to multiply - even amidst challenges such as rising gas prices and credit card fees. The National Association of Convenience Stores (NACS) reported that net store count grew 1 percent to 146,294 stores as of Dec. 30, 2007, but this actually accounts for a 31 percent change in the channel. While more than 7,700 stores closed, still more - 8,300 - opened.
NACS also reported that sales growth grew 15 percent last year and 2007 saw c-stores pulling in approximately $569 billion. Aside from gasoline, foodservice was the fourth biggest sales driver (after cigarettes, packaged non-alcoholic beverages and beer).C-store food sales are expected to rise to $166.1 billion by 2011, according to the International Dairy Deli Bakery Association (IDDBA). IDDBA also noted that c-stores make up 16.2 percent of all food retailers.
C-store foodservice sales rose 5.1 percent and operators indicated that they plan to expand their foodservice operations in 2008. In the Convenience Store/Petroleum News (CSP) annual Outlook Survey, 41.7 percent of retailer respondents said they planned to expand their foodservice offerings in the coming year - making it the most popular option for expansion on the survey.
Both big names, such as 7-Eleven, as well as independent operators have been vocal about their plans in this arena. In March, 7-Eleven, Dallas, said it would introduce a variety of “fresh” items in its retail stores nationwide.
“We have developed the infrastructure to deliver fresh foods and baked goods to our stores every single day, and we’ve challenged our local suppliers to supplement our national menu by creating items that match local preferences,” said Dennis Phelps, 7-Eleven vice president of fresh foods, according to an article by Elliot Zwiebach in Supermarket News.
New 7-Eleven “fresh” offerings will include gourmet sandwiches and wraps, focaccia sandwiches, chicken fajitas, baked goods and three-cheese bites. The convenience giant (approximately 6,000 locations in the U.S. and Canada) isn’t alone in rethinking its foodservice strategy. Wawa, based in Wawa, Pa., added made to order ciabatta melt sandwiches and launched a dinner deal featuring to-go bowls of soup, chicken fingers, salads, hoagies and other items.
“C-stores were able to target both indulgent and health [tastes],” said Sally Lyons Wyatt, senior vice president of Information Resources Inc. (IRI) at the CSP Snack & Candy Category Review Meeting in San Antonio in April. Wyatt also added that consumers are looking for healthier snack options from c-stores.
IRI data indicated that healthier snack sales in c-stores grew 6.6 percent between 2006 and 2007, with ice cream and sherbet dollar sales alone rising 10 percent and volume sales gaining 8 percent.
Still consumers haven’t forgotten old c-store stand-bys such as roller grill offerings. Indulgent snacks may not be growing as fast (at 1.3 percent between 2006 and 2007) but IRI data still indicate that they account for the majority of snack sales at 66 percent, CSP reports. In fact, Ruiz Foods’ El Monterey Firecracker Chicken Tornados were voted one of CSP’s Retailer Choice Best New Product Winners in November 2007.