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DALLAS -– THE Tech EVENT took a break today from its abundance of hands-on technical education sessions and instead turned the attention to the state of the overall convenience store industry to close out the third day of the trade show.
With so many factors affecting the c-store shopper, Zaneta Purvis, analytics manager for NACS, the Association for Convenience & Fuel Retailing, dubbed it "death by 1,000 cuts" during her presentation at the Hilton Anatole hotel in Dallas.
Perhaps the biggest factor affecting in-store sales is the economy. "Wages have not kept up with inflation. And people are accepting lower salaries and therefore have less to spend at c-stores," Purvis said, noting that the unemployment rate directly affects in-store merchandise sales.
"Why do we care about the unemployment rate so much?" she asked. "Because once it improves, tobacco and in-store merchandise sales increase. For every 1 percent of improvement we see in the unemployment rate, cigarette sales improve by 1.4 percent and all other merchandise sales increase by 2.4 percent."
Unfortunately, even though the U.S. unemployment rate dipped to 7.5 percent as of the latest report released on May 3, job growth remains stubbornly slow and c-store operators cannot count on the jobless rate to improve, Purvis cautioned attendees of THE Tech EVENT.
In regards to the industry’s strengths, convenience store operators have done a solid job appealing to male shoppers. Fifty-nine percent of c-store shoppers were men last year, according to Purvis, who cited NACS State of the Industry data. Product categories such as foodservice, packaged beverages, alternative snacks and sweet snacks are favorites of male consumers and provide the best margins, she added.
The opportunity to grow in-store sales lies with female consumers, who are attracted to healthy food and beverages, the NACS executive relayed. Getting women into c-stores can be accomplished by providing better-for-you options, but Purvis acknowledged that offering healthy items is a Catch-22.
"Many retailers have argued [that] the top-selling products in their stores are non-healthy items," she said. "So, appealing to health-conscious female consumers could be a difficult balance for some c-store operators."
Looking ahead, the industry faces some troubling trends. According to NACS research, for every 100 customers who frequent a convenience store to purchase gas, 64 pay at the pump and drive off, while only 36 come inside the store.
"More than 60 percent shop for their in-store merchandise elsewhere," Purvis said.
Tobacco products, considered to be low-margin items by many c-store retailers, accounted for 40.7 percent of in-store sales in 2012. "That’s going to be a very difficult category for c-store retailers to replace [regarding profit margins],” she noted. “Foodservice is one way retailers are attempting to counteract that problem."
Today marked the final day of THE Tech EVENT’s Supplier Exchange, a show floor for exhibitors to show off their latest products and solutions.
THE Tech EVENT, a combination of the former NACStech conference and PCATS Winter Meeting, continues through May 10. Tomorrow, the show will offer a variety of educational sessions -- including a keynote session on the future of fuels -- as well as a host of PCATS committee meetings.