The pandemic of 2020 will test the convenience store industry’s reputation of being one of the most recession-proof retail channels in America.
According to the 45th annual Convenience Store News Industry Report, total industry sales in 2019 fell by 1.9 percent to $648.8 billion, mostly due to lower fuel prices that caused a 4.3 percent drop in motor fuel revenue last year. However, it was a very good year for inside-the-store sales, which grew by 2.6 percent, beating the previous year’s growth rate by more than 1 percentage point.
Total merchandise sales were up 2.1 percent, while foodservice sales (prepared food and dispensed beverages) were up 5.2 percent. Both figures represent the best increases since 2016. Sales per store of merchandise and foodservice combined were up 3.2 percent to a record high of $1,554,276.
On the bottom line, total industry pretax profits leapt by 7.8 percent to a record $10.58 billion last year, driven by higher fuel margins and a nearly $4 billion increase in in-store gross profits.
That kind of stellar performance will be near-impossible to duplicate in 2020 as the industry deals with the near-total U.S. economic shutdown caused by the coronavirus pandemic. After an initial boom of sales driven by panic-buying of basic essentials like toilet paper, bottled water, milk, bread and center-store grocery items, business dropped precipitously as nationwide shelter-in-place regulations destroyed demand for fuel and led to dismal foot traffic numbers.
Prepared food and fresh baked goods were particularly affected as many chains eliminated self-serve foodservice and drinks. Other c-stores have found they were not as prepared as restaurants to pivot quickly to takeout or delivery. On the bright side, alcoholic beverages (beer, wine and liquor) and tobacco (both cigarettes and other tobacco products) sales have remained strong.