As the U.S. economy is slowly recovering, convenience stores are growing rapidly, serving more and more people on the go.
The convenience store’ industry has expanded over the last five years. During the 2013, the sector rose by 1.4 percent: more than 2,000 stores were opened compared to the previous year, according to the Nielsen and the National Association for Convenience Store (NACSA). It was the biggest increase since the pre-recession. In addition, employment increased 19 percent, according to a survey conducted on members by NACSA over last year.
Convenience stores started in the 1920s, but they really took off during the 1950s and the 1960s, especially in the suburbs. Customers are really cautious when it comes to shopping, whether is food, beverages, or even snacks. And convenient stores, after all, are very cheap.
The reason why there is such growth is that convenience stores are largely recession resistant. Their performance did not decline during the recession. “While they don’t want to see an economic downturn, they are better able to handle an economic downturn than other retail channels,” said Jeff Lenard, vice president of NACSA. “That is because right now 84 percent of what is purchased at a convenient store is consumed within an hour.”
But the reality is that Americans are super busy. Jessica T. VanScoy, 33, lives in Brooklyn and is a teacher of economics and government. She goes to convenience stores at least three times a week. “It is purely for convenience, because (a convenience store) is across the street from my house or work,” she said. “In New York, we don’t like to travel longer than two blocks to get what we need, people don’t have time.”
Consumers have also diversified their shopping repertory, over the years. A lot of consumers, in fact, used to purchased what they needed at grocery stores or supermarkets. But, as Heste Joen, analyst at IBISWorld Research company, underlined, with the introduction of a greater variety of stores formats, such as dollar stores and convenience stores, consumers now have the option of visiting different store formats for specific needs, such as weekly staples at grocery stores or nonperishables in bulk at wholesale clubs.
In addition, consumers are looking for a greater convenience. “While location convenience contributes to the growth of convenience stores, product selection has also contributed to the growth of this industry,” he said. Convenience stores are also smaller in size compared to grocery stores. And they often stock a limited selection of brands which are in high demand, he explained.
But more than anything else, convenient stores sell time. And the expression “grab-and-go a snack” couldn’t be more appropriate. Located conveniently on one’s way, whitout doubt, they solve people’s time problems. They make consumers’s life easier.
“Grab-and-go snacking represents a sizable opportunity and manufacturers and retailers can capture a larger share of this buy and consume behavior by understanding the consumer dynamics that drive these purchases,” said Darren Seifer, a NPD food and beverage industry analyst.
Source: National Association of Convenence Stores
Alimentation Couche-tard is one of the biggest independent company-operated stores in the U.S., and the leader in the Canadian convenience stores’ industry. 2013 was the fifth straight year of record earnings. Revenue from merchandise and service in the U.S. increased by 5.2 percent.
Casey’s General Stores chain is another example of rapid growth. Its total revenues rose almost 4 percent in 2013, particularly because of its 24-hour operation. “Our same-store fuel sales are exceeding industry-wide trends and gross profit from inside the store was up over eleven percent for both quarter and year,” said Robert J. Myers, chairman and CEO.
Convenience store account for 34 percent of all retail outlets in the U.S. “Our industry numbers demonstrates that convenience and fuel retailing continues to grow, despite economic and retail environment challenges,” said Brad Call, NACSA’s chairman.
Moreover, convenience stores can be an important contributor for the job market, even if they offer low wage jobs. The convenience store’ industry employed 2.2 million people in the United States. In addition, in 2013, the industry generated almost $175 billion in state, federal, and local taxes.
“There are always people that are going to need those jobs. So they are definitely important” said Kim Fraser, economist at BBVA Compass.
“A lot of that has to do with an increase in how you sell more food,” said Lenard. “Particularly food that is prepared on site is more labor intensive.” But convenience stores are usually looking for more part-time workers instead of hiring someone to work an eight-hour-shift.
In addition, employees are exposed to a variety of skills opportunities, such as accounting or customer service. “You may be a cashier, or stockroom worker, or (work) in the kitchen, or even something like a produce manager,” he said. “These are skills that are useful anywhere,” he said.
Convenience store’ industry is a strong channel, because convenience is becoming very important to people. “Everyone else wants to sell convenience,” said Lenard. Moreover, the number of those store selling gas is also rising. According to the U.S. Convenience Store Count report, 83.7 percent of convenient stores sell motor fuel.
But more than anything else, convenience stores sell time. It is about speed service, solving people’s time problems. The average time to walk in a store and leave with a purchase is 3 minutes, 33 seconds. “No one comes close to that,” said Lenard.
Despite that, convenience store’ industry will have more competition in the future. “Online sales and e commerce have much larger share to retail sales and that is something that will probably overtake significant growth,” said Fraser.