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NEW YORK -- Alon USA president and CEO and CSNews industry forecast council member Jeff Morris took part in the CSNews Forecast Webinar on Dec. 14 to talk trends, numbers and other topics relevant to the c-store industry for 2005.
Morris expressed his belief that the slowest growth portion in retail today is the grocery channel, while the c-store industry is quite strong. Many c-store operators are seeing inside store sales growth of 4 to 5 percent on a same-store basis -- market share that Morris believes is being taken from the grocery channel.
Morris also pointed out that in the c-store industry, size doesn't matter. The number of single-store operators in the business is increasing at a rapid pace, with approximately 50 percent of stores singly-operated.
"One simply needs to perfect the basics in order to succeed," said Morris, "which are cleanliness, service and knowing the customer."
Morris also emphasized the importance of the foodservice category, which he feels is an area where there is great opportunity for growth and improvement. "If you exclude gasoline, more than half the chains have a margin of less than 30 percent," he said. "Seventy to 80 percent of our revenue comes from items that we're actually selling below cost, which means that we rely on profits from only 20 to 30 percent of our sales."
Morris claimed that the biggest differentiator in sales is foodservice, which is daunting to some because of its reliance on staffing. Pointing to QuikTrip's coffee and beverage program as an example, he claimed that chains don't need a comprehensive foodservice program, just a specialty service -- whether it be hot sandwiches, pizza or something else.
"I doubt that people on their way to work everyday are going to go to a supermarket for a hot cup of coffee. They stop at a convenience store," said Morris. "And with foodservice offering some of the highest margins of any category, we need that 20 to 30 percent of our sales to offset the margins for everything else in the store."
Morris spoke of his own stores, whose in-store sales would increase thousands of dollars per month if his coffee sales, which are below the industry average, were to double.
"I believe that the successful chains will focus more and more on the foodservice category," Morris concluded.