Inflation and a challenging macroeconomic environment for consumers continue to impact convenience retail, with a third of c-store shoppers saying they’ve cut back on food, drink and nicotine purchases in the channel, according to a new report from NielsenIQ.
This challenge looms over most retail industries, but convenience stores may be feeling the impacts a little harder because of their prices relative to other retail outlets.
“The convenience channel is more expensive to buy these sorts of products in, and that's likely driving down some of that unit consumption,” said Chris Costagli, vice president of food thought leadership at NielsenIQ, in a webinar about the report.
On average, c-store chocolate and confection prices were 67% higher than all retailers for the 52 weeks ended March 21, according to the report. While the gap was narrower for some categories — cookies were only 34% more expensive in convenience stores — other categories like chips, crackers and popcorn were roughly double the price. As a result, 50% of respondents to a NielsenIQ survey said they’re shopping at c-stores less often.
This impact is being felt across the store. Dollar sales were down around half a percent year over year in March, while unit sales were down 2.6% according to the report. Additionally, c-stores experienced unit sale losses in all major categories, including alcohol, nicotine, snacks and candy. Of all the categories NielsenIQ listed, only candy, gum and mints saw dollar sales growth.
Inflation is driving some of these sales challenges, but it’s not the only problem.
Two anchor categories — nicotine and alcohol — are seeing usage hit long-term lows in the U.S., according to data from Gallup and the American Lung Association. While this negatively impacts sales in those categories, it also has a knock-on effect on the impulse buys that shoppers grab while in the store.
“If we focus specifically in on convenience store trips for tobacco … $230 million worth of salty snacks are also purchased on those same trips,” said Costagli in the webinar.
Soaring gas prices are also putting pressure on snack sales. Average retail gas prices were up about 30% year over year in April, according to the U.S. Energy Information Administration.
“We know that with transportation getting more expensive, shoppers are cutting back on the products that they don't deem to be essential,” Costagli said. “Forty four percent are cutting back on snacks. They're cutting back on those premium, those indulgent options.”
