Sales Way Up, Profits Way Down for C-Stores
The good news, according to the National Association of Convenience Stores (NACS), is convenience store sales increased 15 percent last year. The bad news is profits tumbled 23.5 percent at the same time.
According to the trade association, convenience store sales numbers were helped by higher prices at the pump along with an increase in the channel’s share of total fuel sales. The flip side of that coin was lower margins associated with those sales along with high credit card fees tied to much of the gas sold in 2006.
Motor fuels sales, according to NACS, account for 71.3 percent of total convenience store industry sales while contributing only 33.7 percent of its profits.
Credit card fees soared 22 percent in 2006 to the point that those charges now exceed total industry profits. Credit card fees rose to $6.6 billion last year while total industry profits were $4.8 billion.
On the positive side, in-store sales were up 8.3 percent with the foodservice portion of the business up five percent for the year. Foodservice now represents 12.1 percent of total in-store sales within the convenience channel.
Discussion Question: What do you make of the convenience store sales and profit numbers released by NACS? Are efforts to increase fuel sales in the channel a wise strategy?