Expenses Grow as Transactions Shrink
Convenience store retailers were able to control expenses in 2009 about as well as they did the year prior, as direct-store operating expenses fell 0.8 percent, or $3,072 in 2009, to under $400,000 per store. These expenses also took up 83.52 percent of profits.
Out of all the direct-store operating expenses, labor was the highest, at $241,591 per store, which was also down 0.8 percent when compared to 2008. Labor takes up 50.55 percent of the average store’s profits. The expense that grew the most for stores in 2009 was health insurance, up 10.4 percent to $16,398 per store. Interestingly, credit card fees was the expense that fell the most in 2009, dropping 10.5 percent to $49,619 per store. While this cost dropped, it still ate up a little more than one-tenth of the average store’s gross profits in 2009.
The economy’s effect on consumers’ shopping habits is evident when looking at transaction data in 2009. In-store transactions per week fell 1.5 percent to 3,180 per store — its lowest level in three years. While transactions were lower, consumers spent more in stores, averaging $7.39 per transaction, a 6.1-percent increase.
At the pump, motor fuel transactions fell to their lowest in three years, down 9.6 percent to 2,550 per week for the average store. The decline in transactions is twofold — the tough economy and high unemployment left fewer commuters on the roads, and as motor fuel prices hit lower levels than 2008, drivers began filling tanks with fuel rather than the partial fills seen in 2008’s year of record gas prices. Evidence of this is the average gallons per transaction, which were up 8.0 percent and sat at 9.5 gallons — its highest level in the past three years. And while consumers were purchasing more gallons per transaction, the price they paid reflected the lower motor fuel prices seen in 2009 when compared to 2008. The average motor fuels transaction fell 21.9 percent to $22.20.
And not surprisingly, with the increase in the price of cigarettes in 2009, in-store shrink rose for this section, and was up more than all other in-store areas. Cigarette shrink totaled $4,866 per store in 2009, a 15.4-percent jump over 2008, representing $651 per store. Foodservice shrink also grew by $347 dollars per store, a 6.0-percent increase to total $6,118 for the average convenience store. All other merchandise categories saw shrink fall 2.7 percent per store, and overall, per-store shrink increased 5.5 percent to $16,260.
While the total industry store count declined in 2009, culling out the poor performers and leaving the most successful operators, the average convenience store as a result is getting bigger. Total property size was up slightly to 27,455 square feet, with stores averaging 3,090 square feet — a 1.1-percent increase. Sales areas also expanded by the same percentage, and now average 2,305 square feet, while non-sales areas grew 1.3 percent, to 785 square feet.
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