Add convenience stores to the growing list of businesses slammed by skyrocketing gasoline prices.
Fifty-nine percent of convenience retailers say customer traffic has decreased in stores over the past three months, according to the Q3 2022 NACS Pulse Survey. And while c-stores sell an estimated 80 percent of fuel purchased in the U.S., operators rely on in-store sales, not fuel sales, to drive profits.
In addition to less foot traffic, nearly half of all retailers (49 percent) said customers coming inside the store are buying less than three months ago, when gas prices were $1.50 less per gallon. (Convenience Store News, June 28)
Retailers also expressed concerns that elevated gas prices could depress sales over the traditionally busy summer-driving season. Fifty-three percent expect sales to be lower this summer than last summer, with only 25 percent anticipating increased sales.
With that, retailers will be keeping an eye on gas prices this summer, though pricing is likely to remain elevated.
After peaking at a record of $5.02 per gallon last month, the national average price of regular unleaded slipped to “just” $4.86 on June 30. Kiplinger’s projects the national average to hover in the high-$4 range this summer, and possibly spike well above $5 if any disruptions hit refineries or the pipelines that move gas to market. (Kiplinger’s, June 27)
Prices could moderate with renewed action on a federal tax holiday.
Last month, President Biden called for a three-month suspension of the 18.4 cents-a-gallon federal tax on gasoline and a 24.4 cents-per-gallon tax on diesel fuel. However, the proposal was met with skepticism from senior Democrats in the House who questioned whether the policy would lead to savings at the pump, rather than excess profits for gas companies.
New Food Initiatives
Some c-stores have been able offset the impact of rising gas prices with new food offerings.
According to The Bluedot Convenience Experience report, Americans appear to be putting c-stores on par with fast food restaurants, signaling the strategic investments c-store brands made into foodservice and innovation are starting to pay off. With that, 6 in 10 consumers consider purchasing a meal from a convenience store when stopping for fast food.
Mobile ordering, drive-thru, and curbside pickup could also boost business. The report said 62% would visit a c-store more often if these services were available.
Grab-and-go offerings are also on the rise at c-stores.
Kwik Trip, for example offers Kitchen Cravings Take Home Meals, which are prepared daily and include cooking instructions for selections like chicken casserole and beef stroganoff as well as several varieties of pasta.