Convenience Industry Forecast
A generally upbeat forecast for the convenience sector was presented during a morning educational session by Maureen Maguire, president, ThinkResearch, in cooperation with Convenience Store News.
Maguire predicted retail sales will increase 7.6% this year and 4.5% next year, and that unemployment will drop to 8.4% in 2012 from today’s level of just over 9%. The Consumer Price Index, she said, should reach 2.5% in 2011 and 2.4% in 2012.
“While I do believe consumers are going to pull back because of the economy, and they have, I do not believe this is a ‘new normal’ or a paradigm shift. I believe they will go out and spend their money once confidence returns,” she said.
While the number of convenience stores in the U.S. declined by 0.2% last year, Maguire said there is reason to believe they may increase slightly in 2011, perhaps as much as 0.5%.
Noting that the price of gas affects distribution, Maguire said the average price per gallon for 2011 is expected by the U.S. Department of Energy to hover at about $3.10 per gallon. She disagreed with other forecasters who warn of prices reaching or exceeding $4 per gallon. It is the $4 level, she added, that causes consumers to alter their traveling and driving habits – and which could adversely affect c-store sales.
Among some of the strongest performing categories, Maguire said, will be alternative drinks and energy shots, with double digit growth expected.
Candy, gum and mint sales are expected to improve slightly, with chocolate leading the way with an anticipated 4% increase. Salty snacks will see a modest volume increase at convenience of just under 1%, but dollar sales increases could increase nearly 3%, she said.
Maguire predicted cigarette taxes would generally remain flat, given the anti-tax sentiment evident in the November elections. She predicted slight per store cigarette volume declines for this year of about 0.4%.
With respect to other tobacco products (OTP), Maguire said, “convenience stores rule,” with $6.1 billion in sales vs. $500 million for supermarkets. She forecasted a volume increase 20.4% and a sales increase of 12.4% per store.
“A lot of growth depends upon new product introductions,” she said. “The new product seems to be a real engine of growth. OTP was strong in 2010 and will be stronger in 2011.”
Cigars also continue to be strong performers, Maguire added, with volume and sales up 6.7% and 13.7% respectively in 2010, and corresponding increases of 3.1% and 9.5% expected in 2011.
Total in-store sales, including foodservice and merchandise, continue to grow in the convenience store sector, Maguire said, with a sales increase of 11% reported in 2009. Given the trends, she expects the 2010 number to be about 13% or 14%.
“It will prove to be a very strong year, as people are finally able to make that transition, realizing there are very good food choices in the convenience store and that they are getting healthier -- and they like the price point and the convenience.
