Year-over-year revenues from in-store products for c-stores held steady in 2022, thanks to price hikes on almost all in-store products. The average basket size for a c-store buyer was $10.49 in December 2022, the highest on record for the channel (Source: VideoMining C-Store Shopper Insights, CSI Tracker).

However, the CSI Tracker also revealed three big hurdles faced by the industry in 2022, which can hamper revenue growth in 2023 since price hikes cannot be a sustainable strategy. The trend analysis of key behavioral metrics against prior year and against pre-pandemic data, highlights the three challenges:

(a) Loss in fuel trips (-2.5% vs 2021, -20% vs 2019)

(b) Loss in pump-to-store conversion rates (-3% vs 2021, -8% vs 2019)

(c) Loss in in-store traffic (-2% vs 2021, -15% vs 2019)

(a) Loss in Fuel Trips

Two factors can explain the decline in the total number of fuel trips in 2022. The year-over-year loss relates directly to high gas prices. Though the gas prices eased by the end of year, the high prices for most of the year hurt the demand for gas. A closer analysis shows a direct correlation between average weekly gas prices, the number of gas trips and the number of gallons purchased per trip. Hopefully as the gas prices continue to decline, the number of fuel trips will bounce back.

The bigger decline from pre-pandemic levels (2022 vs 2019), is related to the significant drop in commuting to work, with continued work-from-home (WFH) and hybrid workforce. Accelerating adoption of electric vehicles also played a small factor in 2022. These are part of long-term trends to watch as they do impact the lot traffic (see also 3 Disruptors of C-store Shopper Behaviors)

(b) Loss in Pump-to-store Conversions

While the declines in fuel trips can be explained by external factors, it is harder to explain the loss in “pump to store” conversions. In 2022 only 23% of gas customers bought any other product in-store! This was a slight decline from the 26% pump-to-store conversion rate for 2021 and can be related to inflation including the high gas prices. But why is it so far below the pump-to-store conversion rate of 31% pre-pandemic in 2019?

Looking closer, most of the declines in the pump to store conversions were from those who paid at the pump. In 2022, 71% of all gas customers paid at the pump, compared to 69% in 2019, so the payment behavior has not changed significantly. However, in 2022 only 20% of those who paid at the pump bought anything in-store, compared to 31% in 2019! That was a HUGE missed opportunity for the c-store channel, with almost 80% of those who paid at the pump driving way without visiting in-store in 2022. Any measures to attract these shoppers into the store can make a significant positive impact on the c-store performance.

(c) Loss in In-store Traffic

The erosion of fuel trips and pump-to-store conversions obviously impacted in-store traffic in 2022. However, 75% of total in-store visits were from direct store (non-fuel) trips. These trips seem to have been impacted by both short-term (inflation, economy) and long-term (workforce changes) trends in 2022.

The 15% decline of 2022 vs 2019 should be of particular concern, as it could indicate long-term changes to the channel beyond the temporary disruptions from the pandemic.

The declines in the store traffic varied significantly by store location. This points to continued adjustments to store portfolios by c-store chains, as we are already seeing with many store closures and increased M&A activities.

Jumping Over the Hurdles

The CSI Tracker data also revealed the bright spots for the channel in 2022 that may provide clues for future growth strategy. In-store sales were solidly supported by key trip missions to the store. The top 5 trip mission – Refreshments, Snacking, Caffeine Boost, Nicotine, Meal Building trips all did well in 2022. Caffeine Boost and Meal Building trips grew year-over-year. Among the day-parts, Breakfast performed the best and saw year-over-year growth.

The dynamics of the trip missions had a direct impact on the performance of different product categories. Energy Drinks, Coffee/Hot Beverages and Pre-packaged Foods were the biggest winners in 2022. Other smaller categories in the channel such as Wine and Pet Foods also had major gains.

Obviously not all retailers and stores performed the same. Some of the contributing factors were outside the control of the operators, but others were handled much better by the “winners”. These high performers attracted more non-fuel visitors on multiple trips every week, converting more customers from the pump and drove more impulse purchases with effective merchandising strategies.

With the uncertainty in economy and continued shifts in consumer/workplace patterns, it will be interesting to see how the convenience store channel evolves in 2023.