AACS RELEASES MID YEAR STATE OF INDUSTRY REPORT

The Australian Association of Convenience Stores (AACS) released its 2026 Mid-Year State of Industry Report in Sydney and Melbourne last week, attracting record attendance with more than 375 industry leaders attending across the two events. CMA’s Brett Barclay presented the latest market insights and performance trends.

At a headline level, total convenience in-store sales finished the half down 0.6 per cent in value, while units declined 0.1 per cent. While still negative, this represents a significant improvement on the same period last year when sales value was down 2.3 per cent.

Excluding tobacco, the channel delivered positive growth, with retail sales increasing 2.2 per cent and unit sales edging up 0.2 per cent. However, beneath these top-line results lies the industry’s most pressing challenge: declining unit sales across most of the store.

Thirteen of the fifteen major categories recorded unit sales declines during the half. While many categories achieved value growth through pricing and inflation, consumers are purchasing fewer items. The gap between value and volume highlights that sales growth is not yet translating into stronger customer demand or increased basket sizes.

Foodservice and Packaged Beverages remain the channel’s standout performers and continue to drive overall growth. Foodservice sales increased 5.8 per cent, supported by strong unit growth, while Packaged Beverages grew 3.6 per cent, with energy drinks contributing the majority of category growth. Together, these categories now account for more than half of total retail sales and an even greater share of volume. The results reinforce that foodvenience is no longer an emerging trend but the primary growth engine of the convenience channel.

The Tobacco category also showed signs of stabilisation. After five years of significant value and volume declines, the rate of decline has more than halved compared with the first half of 2025. The second quarter returned to positive value growth, driven largely by a strong performance in Queensland. These results demonstrate the impact that enforcement of illegal tobacco can have on restoring legitimate sales, although tobacco remains substantially below historical levels.

Despite the positive signs in selected categories, the broader volume story remains concerning. Snacking categories, including chips, confectionery and ice cream, continue to experience unit sales declines. This indicates that while shoppers remain engaged with the channel, they are purchasing less frequently or buying fewer items on each visit.

Rebuilding customer traffic and driving volume growth therefore remains the industry’s biggest opportunity. Sustainable growth cannot rely solely on price increases. Long-term success will depend on increasing transactions, strengthening shopper frequency and winning more customer missions.

Importantly, shoppers have not abandoned the convenience channel. Household penetration remains stable, but visit frequency has softened as quick service restaurants and delivery platforms compete aggressively for similar consumption occasions.

Industry sentiment, however, is improving. The latest State of Play survey of retailers and suppliers found net positive outlook increased from 42 per cent to 58 per cent. No respondents reported a very negative outlook, and more businesses are performing in line with or ahead of sales forecasts than at any stage over the past twelve months. Confidence in achieving year-end targets remains steady.

The channel has navigated a challenging trading environment shaped by both local and international pressures. While food and beverage categories continue to perform strongly, tobacco enforcement is beginning to deliver results and industry confidence is improving, the overriding challenge remains clear: reversing widespread unit sales declines. Generating more customer visits and increasing purchasing volumes will be critical to unlocking the next phase of sustainable growth for the convenience industry.

The Mid Year State of Industry Report will be presented in Brisbane for the first time this Wednesday.

View article source here.