The Business Accelerator Team (BATeam) recently conducted a study among top convenience store retailers to gather their input on performance for 2019 and gain their perspectives on key indicators for 2020. This presents a top-line recap of the collective responses among the 20 retailers who responded to the survey. The group included retailers from chains of 15 to 650-units and was geographically diverse, representing the entire United States. All surveys were completed by C-suite company executives.
2019 – A Good Year for Growth
All respondents cited overall revenue growth for 2019. Seventy-one percent (71%) of respondents cited growth in single digits and 29% in double digits. Fuel sales was the only segment with negative growth, cited by 23% of the respondents.
Growth and Optimism – Good News for 2020
Directionally, the group anticipates the same type of revenue growth as 2019 in 2020. Also, with expected continued low interest rates and favorable tax structures for write-offs of c-store assets, 65% of respondents plan increases in capital spending next year – with none citing decreases.
Ninety percent (90%) are optimistic about 2020 with some qualifiers relative to a shift in the economy.
Foodservice Tops Sentiment for Driving Growth
Foodservice ranks high among areas for investment and it is also the #1 mentioned category for driving overall revenue growth. Foodservice is one of the fastest-growing profit centers for the convenience industry.
Carroll Motor Fuels/High’s CEO John Phelps shared a comment that is reflective of retailer sentiment regarding this #1 category driver. Responding to our question about ‘What specific categories do you see driving growth in 2020?’ he said, “Foodservice and all related store lifts that result from selling more food.” The importance of this category is why industry retailers continue to work to hunt for the magic recipe of foodservice execution – balancing labor, quality and repeatable delivery to the consumer.
Other significant multiple mentions for growth included: Tobacco/OPT/Vaping, Alcohol, Energy Drinks, and Beverages.
Investment Priorities
Build/Rebuild/Acquire/Upgrade: over half of the respondents cited this as the #1 unaided-response area of investment to grow their customer base in 2020. Furthermore, when asked specifically about reinvestment in existing store rebuilds and new locations, 90% responded in the affirmative.
Foodservice came in #2 followed by technology.
Specific comments from respondents pointed to the necessity to invest in technology. Raymond Huff, president of HJB Convenience, summed things up quite well with his comment, “We will continue to invest in technology that makes it easy buy from us.” Retailers know they must keep up with technology advances and address changing consumer behavior. This was also identified earlier in the year by Gray Taylor, executive director of industry technology association Connexxus, when he said at the NACS SOI Summit 2019, “In the next five years technology will continue to empower the fickle consumer.”
Government & Labor Issues Greatest Threats
Government Legislation/Regulation topped stated potential negative factors for business in 2020 with 75% noting this concern. When asked about a longer-term view (beyond 2020) this remains the #1 threat.
Labor related issues, including labor shortage, minimum wage increases and other expanded benefits, came in #2.
Implications/Opportunities
“The economy has been in expansion mode for over ten years and consumer spending remains strong,” according to David Nelson, Professor of Economics at Western Washington University and BATeam member. Nelson notes that “there is weakness in the manufacturing sector and uncertainty over trade policy has slowed some investments; furthermore, the index of leading economic indicators has declined for the last three months suggesting a slowdown in the economy”. The convenience store industry has traditionally been the last to feel effect from any slowdown or recession and the first to recover. We believe if the economy remains at current output with no significant recessionary impacts and retailers continue with their current plans, 2020 should once again prove to be a productive year for both retailers and vendors alike in the convenience store channel. Particularly, products and services related to the “physical” structure (building and exterior and interior upgrades), anything foodservice related and technology stand out as key opportunities for which retailers and fuel marketers will look to the vendor community for solutions and support.
About Business Accelerator Team
Revenue generation consulting is a finely crafted niche for the Business Accelerator Team (BATeam). Starting in 2015, this team of industry experts combined their 350 years of collective experience to improve profitability for a range of clients. The BATeam serves suppliers, retailers and media in retailing and foodservice by operating as an outside-in catalyst assisting with insight, strategy, marketing and key industry connections. Individualized consulting plans provide business-development expertise across the petroleum, convenience store, grocery retail, media, digital and CPG. To learn more visit www.thebateam.com or Click Here to complete a contact form.
