Convenience Stores & Truck Stops
Description
Companies in this industry operate retail locations that primarily sell fuel, groceries, cigarettes, and alcoholic beverages. Major US companies include 7-Eleven (the North American subsidiary of Seven-Eleven Japan), Casey's, Circle K (a division of Canada-based Couche-Tard), and Wawa.
Economic growth, urbanization, and an increasing affinity for smaller store formats is driving growth in the global convenience store (c-store) sector. Worldwide c-store sales are expected to approach $1.4 trillion by 2033, according to a report from Research and Markets. Latin America has the most countries that recorded remarkable growth, according to the National Association of Convenience Stores (NACS).
The US c-store and truck stop industry includes about 130,000 establishments with combined annual revenue of about $400 billion. The industry includes establishments that are gas station/c-store combinations, as well as c-stores that don't sell fuel. Gas stations that don't include c-stores are covered in a separate industry profile.
COMPETITIVE LANDSCAPE
Consumer and commercial driving trends drive demand. The profitability of individual stores depends on competitive pricing, effective merchandising, and the ability to secure high-traffic locations. Large companies have advantages in purchasing and finance. Small companies can compete effectively by acquiring superior locations or offering specialized merchandise or services. The industry is fragmented: the top 50 US companies account for about 40% of industry sales. Single-store operators predominate, accounting for more than 60% of all convenience stores, according to the National Association of Convenience Stores (NACS).
Because c-stores sell gas, food, and other types of merchandise, companies compete with a wide range of retailers, including gas stations, grocery stores, mass merchandisers, drug stores, warehouse clubs, fast-food restaurants, and even dollar stores. Dollar stores are adding staples such as milk and eggs, while fast-food chains offering value menus are siphoning off hungry drivers. US convenience stores serve 160 million customers daily, according to NACS.
Online competition is a growing threat to convenience stores as consumers change the way they shop. Amazon offers quick delivery for basic items, which otherwise might have been purchased at a convenience store. The online giant's cashier-less Amazon Go format is spurring the c-store industry to improve digital tools, such as online ordering.
PRODUCTS, OPERATIONS & TECHNOLOGY
Unleaded regular gasoline accounts for about 50% of US sales; other sources of revenue include tobacco products and smoking accessories (about 10%). Other products also include unleaded premium gasoline and diesel fuel.
About 122,000 convenience stores sell fuel in the US, accounting for an estimated 80% of all the fuel purchased in the country, according to the National Association of Convenience Stores (NACS). More than half of the c-stores that sell fuel are single-store operators. The industry includes national chains, franchises, and independent retailers. The majority of c-stores are small and independently owned. Some independent retailers have dealer relationships with large oil companies.
Companies may sell branded or unbranded gas; the most common type of fuel sold is regular unleaded gas. Fuel suppliers include oil companies, refineries, or distributors (also known as "jobbers"). Companies may have supply agreements, which typically require minimum annual purchases and may offer volume-based allowances. The purchase price may be a Dealer Tank Wagon (DTW) price set by the supplier or a fixed markup over the "rack," or market, price. While motor fuels are the majority of c-store sales, gas generates low margins; thus, getting the lowest possible wholesale cost is critical to profitability. Most modern gas pumps have digital displays and allow customers to pay at the pump using a variety of methods, including credit and debit cards. The average US household purchases 135 gallons of gas annually, according to the Energy Information Administration (EIA). Most of US households utilize a credit or debit card to pay for fuels and groceries, according to TD Bank. Fuels is stored in underground storage tanks (UST), which are subject to inspection by environmental regulators.
Store size can range from about 800 square feet (for a kiosk) to 5,000. While location types can vary, most companies target high-traffic sites. C-stores off major interstates and highways tend to attract travelers and truckers. Stores at high-traffic intersections and in densely populated areas may depend on local customers. The shopping radius for many c-stores is two to six miles. Many stores operate 24/7. Store layouts can vary and may include fountain drink stations, hot beverage centers, or food preparation areas.
Typical nonfuel merchandise includes high volume goods (beverages and cigarettes); impulse items (snacks and candy); and staples (milk). Prepared foods include sandwiches, pizzas, and/or hot dogs, and some chains offer nationally branded products from restaurant franchises. Many items are immediately consumable; some are perishable and require refrigeration. Depending on merchandise offerings, companies may buy nonfuel goods from a variety of sources, including manufacturers, grocery wholesalers, or distributors. Large chains may have long-term contracts with suppliers; some offer private-label brands. Nonfuel merchandise carries higher margins than fuel and typically generates the majority of store profits.
Economic growth, urbanization, and an increasing affinity for smaller store formats is driving growth in the global convenience store (c-store) sector. Worldwide c-store sales are expected to approach $1.4 trillion by 2033, according to a report from Research and Markets. Latin America has the most countries that recorded remarkable growth, according to the National Association of Convenience Stores (NACS).
The US c-store and truck stop industry includes about 130,000 establishments with combined annual revenue of about $400 billion. The industry includes establishments that are gas station/c-store combinations, as well as c-stores that don't sell fuel. Gas stations that don't include c-stores are covered in a separate industry profile.
COMPETITIVE LANDSCAPE
Consumer and commercial driving trends drive demand. The profitability of individual stores depends on competitive pricing, effective merchandising, and the ability to secure high-traffic locations. Large companies have advantages in purchasing and finance. Small companies can compete effectively by acquiring superior locations or offering specialized merchandise or services. The industry is fragmented: the top 50 US companies account for about 40% of industry sales. Single-store operators predominate, accounting for more than 60% of all convenience stores, according to the National Association of Convenience Stores (NACS).
Because c-stores sell gas, food, and other types of merchandise, companies compete with a wide range of retailers, including gas stations, grocery stores, mass merchandisers, drug stores, warehouse clubs, fast-food restaurants, and even dollar stores. Dollar stores are adding staples such as milk and eggs, while fast-food chains offering value menus are siphoning off hungry drivers. US convenience stores serve 160 million customers daily, according to NACS.
Online competition is a growing threat to convenience stores as consumers change the way they shop. Amazon offers quick delivery for basic items, which otherwise might have been purchased at a convenience store. The online giant's cashier-less Amazon Go format is spurring the c-store industry to improve digital tools, such as online ordering.
PRODUCTS, OPERATIONS & TECHNOLOGY
Unleaded regular gasoline accounts for about 50% of US sales; other sources of revenue include tobacco products and smoking accessories (about 10%). Other products also include unleaded premium gasoline and diesel fuel.
About 122,000 convenience stores sell fuel in the US, accounting for an estimated 80% of all the fuel purchased in the country, according to the National Association of Convenience Stores (NACS). More than half of the c-stores that sell fuel are single-store operators. The industry includes national chains, franchises, and independent retailers. The majority of c-stores are small and independently owned. Some independent retailers have dealer relationships with large oil companies.
Companies may sell branded or unbranded gas; the most common type of fuel sold is regular unleaded gas. Fuel suppliers include oil companies, refineries, or distributors (also known as "jobbers"). Companies may have supply agreements, which typically require minimum annual purchases and may offer volume-based allowances. The purchase price may be a Dealer Tank Wagon (DTW) price set by the supplier or a fixed markup over the "rack," or market, price. While motor fuels are the majority of c-store sales, gas generates low margins; thus, getting the lowest possible wholesale cost is critical to profitability. Most modern gas pumps have digital displays and allow customers to pay at the pump using a variety of methods, including credit and debit cards. The average US household purchases 135 gallons of gas annually, according to the Energy Information Administration (EIA). Most of US households utilize a credit or debit card to pay for fuels and groceries, according to TD Bank. Fuels is stored in underground storage tanks (UST), which are subject to inspection by environmental regulators.
Store size can range from about 800 square feet (for a kiosk) to 5,000. While location types can vary, most companies target high-traffic sites. C-stores off major interstates and highways tend to attract travelers and truckers. Stores at high-traffic intersections and in densely populated areas may depend on local customers. The shopping radius for many c-stores is two to six miles. Many stores operate 24/7. Store layouts can vary and may include fountain drink stations, hot beverage centers, or food preparation areas.
Typical nonfuel merchandise includes high volume goods (beverages and cigarettes); impulse items (snacks and candy); and staples (milk). Prepared foods include sandwiches, pizzas, and/or hot dogs, and some chains offer nationally branded products from restaurant franchises. Many items are immediately consumable; some are perishable and require refrigeration. Depending on merchandise offerings, companies may buy nonfuel goods from a variety of sources, including manufacturers, grocery wholesalers, or distributors. Large chains may have long-term contracts with suppliers; some offer private-label brands. Nonfuel merchandise carries higher margins than fuel and typically generates the majority of store profits.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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