For the most part, the first half of 2024 unfolded in line with expectations for the c-store industry. Retailers continued to boost their foodservice offerings and technology capabilities, M&A shifted more to small and mid-sized operators, and the evolution of loyalty programs became a sole focus for operators.
But there are still several uncertainties as the second half of the year kicks off. With inflation still plaguing the economy, retailers are still struggling with hiring, supply chains, operating costs and consumer confidence. Whether or not retailers can address these challenges will define how successful their year will be.
Here are five things we’re waiting to see unfold through the end of the year in the c-store industry.
What new format will emerge next?
Over the past couple years, the convenience store industry has seen a number of retailers explore larger formats. For example, numerous chains have added travel centers to their networks, including Wawa, which announced plans in May for its first travel center.
Buc-ee’s, which already boasted massive stores, set a new record of 74,707 square feet last year at a site in Tennessee, only to shift that title back to Texas in June. And Rutter’s broke ground in May on a new 13,500-square-foot format.
But not all new prototypes are larger. As drive-thru-only c-stores gain steam, Wawa tested a prefabricated model for its drive-thru that allowed it to be built in pieces off-site, then assembled in a matter of days.
Large or small, the ever-changing landscape and the need to stand out and meet consumer needs will keep companies testing new formats.
When will customer confidence return?
Inflation has prompted consumers to be much more stingy about opening their wallets, trading down to cheaper options and reducing basket sizes to offset rising costs. Consumer confidence also continues to be weaker than it was pre-pandemic. The Consumer Confidence Index from The Confidence Board was down slightly in June
Could consumer confidence rise in the latter half of the year?
The state of the labor market could be an indication. Consumer confidence has remained mostly above 100 for the past two years, but “if material weaknesses in the labor market appear, Confidence could weaken as the year progresses,” said Dana M. Peterson, chief economist at The Conference Board, in the Index.
In the meantime, convenience stores are focused on offering more value to cash-strapped or fiscally concerned customers. EG America rolled out a $5 meal deal and new gas discounts through WEX Edge, GPM Investments launched $5 pizzas and QuickChek added a 2-for-$5 breakfast sandwich deal.
Will EV charging gain traction?
Just a few years ago, it seemed like c-store retailers would be rushing to install electric vehicle charging stations amid the threat of gasoline becoming obsolete. While large retailers like Pilot and BP have begun adding significant EV infrastructure, most of the industry — especially smaller and mid-size operators — remain in the early stages or haven’t even gotten started.
“It’s really early on and we want to just see how this plays out,” Cheryl Szczesniak, executive vice president of human resources for the Spinx Company, which has a handful of EV charging stations across its roughly 80 c-stores in the Carolinas, said during a Convenience Technology Vision Group roundtable last October.
Implementation costs are among the challenges c-store retailers face with charging stations. Although some can get started via funding from the National Electric Vehicle Infrastructure (NEVI) program, only 23 states have begun awarding contracts and installing stations. This means many retailers are left waiting and observing.
Still, the lag in EV charging among c-store retailers may be an opportunity in itself.
“I think now is the time to really be investigating this again, because if convenience stores aren’t looking at it, many other retail locations, they’re all lining up,” John Gartner, then senior director of transparency and insights for the Center for Sustainable Energy, said during the CTVG forum.
Will c-store retailers boost their hiring and retention rates?
Some of the c-store industry’s biggest players embark on massive hiring sprees at least once a year. Just this summer, EG America announced plans to hire 7,500 full- and part-time employees, while Pilot Company said it’s looking to bring on over 10,000 team members across the U.S.
Yet c-stores continually struggle with hiring and retention. According to a February 2024 report from NACS and the Coca-Cola Retailing Research Council, only 17% of people would be interested in taking a job at a c-store or have previously worked at one. Additionally, employee turnover in the industry has been over 100% since 2016.
The report notes safety concerns, low pay and a lack of career paths as the top reasons people avoid working in convenience. Low pay and negative work environments were the top reasons people left their c-store jobs.
Companies like Love’s Travel Stops & Country Stores and Weigel’s have recently introduced new employee programs to improve their workers’ experiences. It remains to be seen whether initiatives like these will spread across the industry and boost its hiring and retention rates, but one thing is certain: there’s plenty of room to improve.
How close can gasoline sales get to pre-pandemic volumes?
COVID-19 crushed gasoline demand, according to data from the Energy Information Association. Businesses closed, many workers went remote and gatherings were reduced.
Gasoline consumption has recovered from those lows, but remains below pre-pandemic levels.
There are multiple headwinds as retailers try to recover. First, a small but growing portion of cars on the road are electric vehicles. The number of EV and hybrid sales in the U.S. both surpassed 1 million in 2023, according to Edmunds sales data. Hybrids use less gasoline, while EVs avoid the pump entirely.
Then there’s the growing fuel economy of gas-powered vehicles. The Environmental Protection Agency found that fuel efficiency rose by about 35% from 2004 to 2022, and U.S. regulations passed in 2022 were focused on increasing fuel efficiency by 8% a year for model years 2024-2025 and 10% for model year 2026.
Finally, certain driving groups have not come back after COVID-19, including some remote workers who are not required to return to the office.
Can it improve from here? AAA forecast record travel for July 4, but gasoline demand remains stalled. Will this summer spark an uptick, or will demand stay down? The convenience store industry will be watching the numbers closely.