Convenience Stores Focusing on Inside Sales

NACS Online
May 8, 2013

The convenience and fuel retailing industry is transforming itself to meet changing consumer demands, says NACS President and CEO Henry Armour at an Industry Update Luncheon in West Virginia.

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CHARLESTON, W.Va. – “Half the population of the United States comes to a convenience store every day,” said Henry Armour, president and CEO of NACS, during a recent Industry Update Luncheon in West Virginia. Armour talked with the State Journal to discuss the industry and its future.

The convenience store industry registered record sales and transaction numbers even during the recession, as it changes to accommodate a diverse clientele. One difference is a renewed focus on foodservice and fountain drinks, which is growing as a percentage of in-store sales from prepared food and beverages. Food now grabs around a quarter of all in-store sales.

Overall, the future is bright for this channel. “It probably is one of the most entrepreneurial retail channels,” said Armour. “Because it is not the convenience store of the past. It’s the convenient retailing center of the future.”

One of the biggest challenges facing the industry today is credit and debit interchange fees or swipe fees. “It is absolutely — we think it is criminal — it is outrageous,” said Armour. In 2012, the convenience store industry shelled out $11.2 billion in swipe fees.

“The credit card companies are making more than the operating companies,” he said. “It is the second-largest expense in operating a convenience store, behind wages.”

Another challenge is the “demand destruction” as consumers start to purchase more vehicles that are more fuel-efficient. Also troubling convenience stores is the Obamacare, which will push retailers to hiring more part-time rather than full-time employees. “Many companies that had subsidized family premiums, they’re doing away with subsidized family premiums. They’re doing away with any subsidization of family coverage so they can afford the employee coverage,” said Armour.