Growth Story: Convenience Stores Ring Up Gains

Ready-to-eat meals, fresh produce are growing features

Author: Andria Cheng

May 19, 2017

Convenience-store sales have been rising for several years and the product mix is changing.

Sales at US convenience stores, excluding gas sales, have been on the rise since at least 2012, reaching a record $140.4 billion last year, according to Nielsen, which tracks actual sales at these outlets. The 2016 total represents a 1.8% gain from $137.9 billion in 2015.

Meanwhile, Nielsen said, the number of convenience stores has risen to more than 154,500. That growth is a contrast to many other retail formats, such as traditional mall type department stores and apparel retailers, which are shutting down stores at rapid clip.

In fact, convenience stores are the only brick-and-mortar channel that Nielsen projects will win an increase in retail spend share by 2021. Nielsen expects share of consumer packaged goods-related retail spending at supercenters, supermarkets, warehouse clubs, drugstores and dollar chains to all see their share of the market either decline or stay flat.

Convenience Stores by the Numbers
Store counts for select convenience chains, drawn from the Retail & Ecommerce database

1) Casey's General Stores - 1,941 stores

2) CST Brands - 1493 stores

3) Murphy USA - 1,401 stores

4) TravelCenters of America - 541 stores

5) Delek US Holdings - 348

Just as other types of retailers are giving their stores a makeover in response to evolving consumer preferences, convenience stores are changing up their product mix. The old standbys—cigarettes, packaged beverages, candy, beer, salty snacks and other tobacco products—drove 85% of sales at convenience stores last year. But within those categories, shifts are occurring: e-cigarettes, enhanced water, super premium and craft beer are on the rise.

Meanwhile, ready-to-eat meals registered “mid-to-high double digit sales growth” at convenience stores in 2016, Nielsen said. Strong demand was also seen in categories such as sparkling wine and tools and housewares.

“The range of experiences you can get in convenience stores is growing,” said Jordan Rost, Nielsen’s VP of consumer insights, in an interview. “The format is a nationwide phenomenon we are seeing.”

In fact, the line dividing convenience stores and other retailers is blurring, he said, as other merchants eye smaller format stores and test or expand ready-to-eat offerings as well as other products that satisfy consumers’ immediate, on-the-go needs.

The new competition isn't the only pressure point for future gains.  The growth of online shopping is another looming challenge, given the rise of curbside and in-store pick up options.

And convenience stores still largely rely on Americans driving, the Nielsen study said, which could be a problem now that young people are less likely to drive. The percentage of 18-year-olds getting driver’s licenses has dropped to 69% from 87% more than 30 years ago, Nielsen said. 

Separately, Nielsen Homescan data showed the total number of U.S. retail trips taken dropped to 15.8 billion last year, from 17.6 billion in 2012.