Financial services giant Wells Fargo has said that US-based convenience stores should look to wean themselves away from a dependency on fuel retailing if they are to maintain a positive growth arc in the future.
Wells Fargo was commenting following the National Association of Convenience Stores (NACS) State of the Industry (SOI) Summit in Chicago, which welcomed around 600 of the US’s leading convenience store retailers.
It reported that while 2018 was a ‘banner year’ in terms of in-store sales, the ‘tone of the conference was rather subdued’, due to a number of factors.
Potential Impact
The ‘Amazon effect’, dollar stores, small-format hybrids, and the range of automated retailing are among the factors affecting the C-store sector in the US, however, Wells Fargo believes that fuel-efficient vehicles and electric vehicles present a potential stumbling block for the sector going forward.
‘As cars/trucks become more fuel efficient, there is less need to fill up the tank, leading one presenter to urge the industry to “wean itself off fuel dependency,” especially in light of potentially very strict national fuel standard amendments proposed by the U.S. Dept of Transportation,’ Wells Fargo analyst Bonnie Herzog wrote in a briefing note.
‘Real Imperative’
While the macro-trends facing the convenience store industry in the US are consolidation and scale, Herzog noted, the ‘real imperative is for c-stores to evolve from a commodity-driven business to one that is more nimble, service-driven and less transactional.
‘Indeed, a prominent concern for c-store operators is declining fuel consumption despite growth in miles traveled.’
Overall, she added that while convenience stores’ participation in the fuel supply chain is an ‘advantage’, ‘we came away from the event marginally more concerned about the growing threats facing the industry given the rapidly evolving competitive landscape.’
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
