Dive Brief:
- Small c-store operators’ revenues are staying on track despite seeing fewer visitors overall last quarter, according to Skupos’ first-quarter Independent Convenience Retail Trend report, which covers over 15,000 small-chain and independent c-stores.
- Overall, weekly in-store revenue was up by 2.6% year over year, even though average weekly foot traffic was down by the same percentage, the report said.
- Average basket prices at the end of the quarter grew by about 5%, from around $10.50 at the end of March 2022 to around $11 at the end of March 2023.
Dive Insight:
The report notes that inflation is a major revenue driver, saying that “although fewer people are visiting convenience stores, revenue has not taken a hit due to the higher prices of goods.”
Larger retailers are seeing this happen as well. Arko Corp. CFO Don Bassell said in the company’s first-quarter earnings call that its stores are also seeing fewer trips with larger baskets.
“There is inflation-driven [results] in there, and obviously, every time prices go up, we try and pass it on,” Bassell said.
Although year-over-year inflation rates have been declining in recent months, prices remain well above historic levels. Many consumers have cut back on discretionary purchases and shifted their spending to discount retailers.
Despite the boost it’s providing to revenue, inflation’s negative impact on unit sales and traffic are a worrying sign for c-store operators, since there’s no guarantee trips and spending will bounce back as prices moderate.
Most major in-store categories saw a unit-sales decline during the quarter, ranging from less than a 1% for packaged beverages and salty snacks to more than 8% for tobacco, according to the Skupos report. The one exception was alcohol, with beer up 1% and wine and liquor up 1.8%.
The report also outlined some of the innovative new products that sold particularly well in the first quarter. Starry, PepsiCo’s rebrand of Sierra Mist, led the pack with distribution to about 50% of stores for its full calorie version and 30% for the zero-calorie version. Other notable newcomers in early 2023 were Gatorade Fast Twitch energy drinks and Monster Java Cafe Latte.
