Dive Brief:

• Convenience stores saw fewer transactions in Q2 2022 compared to Q2 2021, yet due to inflation, the industry’s average weekly in-store revenue increased 0.6% between the two periods, according to a report from c-store technology company Skupos.
• Although fuel trips only slightly dipped, gallons purchased fell 12%, highlighting consumers’ avoidance in filling up as gas prices soared during the quarter.
• Merchandise prices rose between 5% and 20%, yet the average price of baskets only grew 3.3%. With the number of items per basket dropping 2.2%, this signals consumers are buying different or cheaper brands, the report said.

Dive Insight:

High gas prices, combined with persistent inflation and supply chain issues, have driven a surge in private-label product sales across sectors as consumers seek more affordable retail items.

Circle K’s private-label brands — notably the snack and candy items — jumped 21% during this most recent quarter as consumers transitioned from premium to budget brands amid inflation, Brian Hannasch, president and CEO of Circle K, said during the company’s fiscal Q1 2023 earnings call on August 31. Products in Circle K’s private-label snack and candy collection include kettle chips, peanuts, sour gummy worms, and more.

“Premium sales have struggled, but that’s typical with price hikes,” Hannasch said. “Consumers are clearly looking for value and we’re pleased to provide that.

In the last several years, 7-Eleven has also invested significantly in its own brands, which now encompass more than 1,500 products. Its 7-Select label includes its packaged food and beverages, while 24/7 Life, which was announced in 2019, provides general merchandise such as electronic accessories and over-the-counter medications. By December 2020, the retailer reached a milestone, with President and CEO Joe DePinto tweeting that the company had hit $1 billion in annual sales for its private label. 

Today we hit an exciting milestone… $1 Billion in Private Brand annual sales! We’ll continue to innovate our assortment to provide customers with high quality products that also provide an incredible value. Congrats, team @7eleven! #7Eleven #PrivateBrands

— Joe DePinto (@JoeDePinto) December 21, 2020

These private brands are playing a bigger role as gas prices tighten wallets. Regular gasoline peaked at $4.99 per gallon at the beginning of June and finished the month at $4.79. In comparison, the average price of regular gasoline in June 2021 was $3.04, according to Skupos’ report. The cost, while not curbing fuel visits as much, is impacting how many gallons drivers are choosing to buy. 

“All of that to say, inflation has left consumers hesitant to spend,” the report said.

Meanwhile, the package beverage category shrunk 0.6% for the year ending June 30, highlighted by drops in sports drinks (-4.4%), juice (-3.6%) and energy drinks (-3%). The only packaged beverages to see more than a half percentage increase from Q2 2021 were ready-to-drink coffee (8%) and iced tea (5.5%). Since January 2021, the category as a whole saw price increases of 8.2%. 

Tobacco sales year over year are also down 6.2%, per Skupos, aligning with predictions from Goldman Sachs’ Nicotine Nuggets survey of 75,000 c-store units that the category may feel a pinch as consumers have to make trade-off purchases

On a positive note, sweet and salty snacks grew by 1.9% and 2.5%, respectively, and signal that new snacking forms are taking charge. For instance plant-based jerky reached about four times more weekly distribution during the 52 weeks, according to Skupos' report. 

Major c-store brands such as 7-Eleven, Circle K and Casey’s General Stores already sell plant-based jerky. But as consumers increasingly seek plant-based products — 40% of U.S. consumers already do, according to a study from Acosta — the industry at large has an opportunity to capitalize on this snacking trend and grow the category further.