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02/08/2021

Nearly Two-Thirds of Suppliers Will Boost Investment in Convenience Channel in 2021

inside a convenience store

ALEXANDRIA, Va. — The supplier community is riding a wave of optimism into 2021, according to the latest NACS Supplier Member Pulse Survey.

The survey found that suppliers who sell through convenience stores saw their sales in the channel grow in 2020, with nearly twice as many reporting an increase than a decrease (50 percent vs. 28 percent). 

The results mirror what NACS retailer members reported in a similar survey in January, with 59 percent of retailers reporting a sales increase, compared to 30 percent who saw sales decline (in-store sales only), as Convenience Store News previously reported. 

More significantly, NACS pointed out, supplier members said they are increasing their emphasis on the convenience channel in 2021. Specifically, 63 percent said they will boost their investment in the channel — including 18 percent who will significantly increase their investment — compared to 10 percent who said they will decrease their convenience retail investment.

In addition, they said that product innovation will be their top investment in the channel, ahead of growing their sales forces and advertising, among others.

"Our industry continues to find success in very challenging times because our supplier partners truly are partners, and our close working relationships — and alignment on strategies and attitudes — are important and we together redefine how we provide convenience to customers every single day," said NACS Chairman Kevin Smartt, CEO and president of Kwik Chek Food Stores in Bonham, Texas.

As for primary drivers for growing 2020 sales, survey respondents cited:

  • New relationships with retailers (57 percent);
  • Increasing the number of SKUs in the channel (32 percent) and;
  • Increasing the quantity of existing SKUs in the channel (24 percent).

Suppliers also said that they will continue these efforts in 2021. Nearly two-thirds will seek to form new relationships with retailers, one-third will add more SKUs in the channel and one quarter will increase the amount of existing SKUs.

"The challenges and change that we and our convenience retailer partners have experienced over the past year have been seismic. What hasn't changed is our collective commitment to each other and the consumers we both serve," said Rick Brindle, chairman of the NACS Supplier Board and vice president of industry development for Mondelez International.

Suppliers also noted issues for the convenience retail industry to address, led by keeping up with shopper preferences (55 percent), introducing new products (49 percent), meeting demand for pickup or delivery (38 percent).

Foodservice offering (45 percent) and food safety (33 percent) were also top priorities expressed by suppliers.

As for the 2021 outlook, suppliers are more optimistic than pessimistic about the their sales in the convenience retailing channel for the first quarter (41 percent vs. 36 percent), and the their optimism grows significantly for the ensuing three quarters, peaking at 83 percent of suppliers expressing optimism about fourth-quarter sales, compared to only 5 percent who are pessimistic.

The NACS Supplier Member Pulse Survey was fielded Jan. 27-Feb. 5 by NACS Research and complements six-plus years of Retailer Pulse Surveys. A total of 109 companies participated.

The survey's findings are somewhat in line with the 2021 Convenience Store News Forecast Study. Although only 54 percent of convenience channel suppliers said they have a positive view on the U.S. economy for the year ahead, suppliers are more bullish about the convenience channel than any of the other retail channels they serve. Specifically, 71 percent rate business conditions in the convenience channel positively, placing it ahead of grocery (62 percent), mass merchandisers (47 percent), dollar stores (46 percent), and drugstores (43 percent).