Top 10 C-Store Categories: Which Are on Track for Growth?

As foodservice flags in 2013, other categories rise to challenge

Published in CSP Daily News

By
Samantha Oller, Senior Editor/Special Projects Coordinator

Glenn Plumby National Association of Convenience Stores NACS State of the Industry SOI

Glenn Plumby (Photo: NACS)

ROSEMONT, Ill. -- While 2013 saw no big shakeups in terms of which categories ranked as the biggest sales and gross-profit generators in convenience stores, it did witness some worrisome softening in one of the channel's biggest growth opportunities--foodservice.

Ranking first in gross-profit dollar contribution and second in share of sales, foodservice saw decent sales and gross-profit dollar growth in prepared food and commissary, but softness in dispensed beverages, according to preliminary NACS State of the Industry (SOI) survey figures.

NACS is not yet certain why hot, cold and frozen performance was off in 2013, but weather could be a culprit.

On a same-firm basis, foodservice sales rose only 2.4% in 2013 to reach $24,726 per store per month, after a nearly 9% jump in 2012.

"As an industry, we have to do better than that," said Glenn Plumby, vice president of operations at Speedway LLC, Enon, Ohio, during a presentation of the industry numbers. This becomes especially true in light of the growth at quick-service restaurant (QSR) chains such as McDonald's and Wendy's, which both grew sales around the same pace as c-store foodservice over the past two years, but off of a much bigger base.

Same-firm foodservice gross-profit dollars rose 2.5%. Despite the recent sales sluggishness, foodservice had outperformed cigarettes in growth of gross-profit dollars in three of the past four years.

Broken down by region, the Central United States--10 states ranging from Montana, Wyoming and Colorado in the west to Minnesota, Iowa and Missouri in the east--grew foodservice sales and gross-profit dollars the most, while the Northeast suffered the biggest drop on a same-firm basis.

Other categories:

  • Tobacco. At 37% of sales and 18.7% of gross-profit dollars, tobacco continues to play a dominant role inside the c-store, but cigarettes have long given up the charge as other tobacco products (OTP) and e-cigarettes outperform. More than 80% of c-store cigarette sales in 2013 were premium brands, according to figures from The Nielsen Co., although branded discount and subgeneric grew sales and units.
  • Other Tobacco Products. In OTP, smokeless enjoyed a 2.4% bump in unit sales, but e-cigarettes rose nearly 150%, according to Nielsen. In his presentation of the category figures, Kevin Smartt, CEO of Kwik Chek Food Stores Inc., Bonham, Texas, noted that his chain actually saw more than 180% growth in e-cigarettes in 2013. "It didn't just happen--we made it a mission to own this subcategory," said Smartt, explaining that the company added multiple brands at varying price points, even self-distributing some, to become of the market leaders in its area.
  • Packaged Beverages. Contributing 15.5% of in-store sales and 19.6% of gross-profit dollars, packaged beverages was a strong performer for convenience in 2013. On a same-store basis, it supplied less than one-half of the sales as cigarettes but 34% more gross-profit dollars. Sales rose 3.6% with gross profit up 5.4%, according to preliminary NACS figures, with the strongest growth in the West and Southeast.
  • Beer. Beer grew gross-profit dollars by 0.4% and sales by 0.7%, according to NACS and Nielsen figures. Microbrews, flavored malt beverages, superpremium and imports delivered the greatest growth. Elsewhere in the cooler space, other packaged beverages--bottled ready-to-drink coffee, protein drinks, etc.--as well as alternative beverages, or energy drinks--were subcategory growth leaders, Nielsen figures show.
  • Center Store. Salty snacks, candy, sweet and alternative snacks combined supplied 9.9% of center-store sales and 12.4% of margin in 2013, according to NACS figures. Alternative snacks in particular--a subcategory that includes meat snacks, protein bars and granola bars, among other items--enjoyed a 30.5% jump in monthly sales, with gross-profit dollars up 30.6%. In candy, standup pouches and bite-size pieces drove a 9.5% increase in unit sales for bag and peg confections, according to Nielsen. Seasonal novelties grew units by 2.6% with chocolate bars up 0.6%.

When examining category performance based on how a retailer ranks in overall store operating profit, the top quartile of chains proved most competitive on cigarettes, beer and hot dispensed beverages. In that latter subcategory, the top quartile of retailers generated more than seven times the gross-profit dollars as bottom-quartile chains, according to NACS figures, and more than four times the sales.

Category2013 Dollar Sales Per Store/Per Month% Sales Change From 2012
Cigarettes$44,751-3.5%
Packaged Beverages$21,1143.6%
Beer$14,9730.7%
Other Tobacco Products$6,4796.6%
Salty Snacks$5,9757.0%
Candy$4,4871.2%
Packaged Sweet Snacks$3,04410.0%
Milk$2,252-4.1%
General Merchandise$1,9788.4%
Packaged Ice Cream/Novelties$1,657-4.2%
Samantha Oller By Samantha Oller, Senior Editor/Special Projects Coordinator
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