What will the future hold for c-stores?

Jul 21, 2014

Through a special arrangement, presented here for discussion is a summary of an article from Convenience Store Decisions magazine.

Twenty-five years ago, the upscale, large format c-stores offering fresh prepared foods and grab-and-go lunches weren’t even a twinkle in the eye of most c-store owners and operators.

Marking its silver anniversary, Convenience Store Decisions recently celebrated the major transformation the c-store industry has undergone in all facets of operation over those years. That includes polishing its unsophisticated and in many cases inhospitable image to where the channel is competing with Walgreens, McDonald’s, Panera Bread and other prominent retail chains.

But retail experts agree that changes are sure to be even more rapid and extreme going forward, as technology, especially, matures at a fast pace.

Chet Cadieux, president and CEO of Tulsa-based QuikTrip, strongly believes the industry needs to prepare itself for a marketplace will demand 30 percent fewer gallons of gas per day than it does today. He adds, "Those are a lot of margin dollars to replace. The customer isn’t going to go away, so we are all going to have to figure out what we are going to sell to them to replace those motor fuel margin dollars."

Even more mobile technology dependency is expected through expanding communications, applications and payments.

"Cash may not even be used as we’ll make digital payments for products and services with our electronic devices, whether that means phones, watches, glasses or maybe an improbable-to-lose chip in your finger," said Sonja Hubbard, CEO at Arkansas’ E-Z Mart Stores. "Specific products will come and go in popularity, but I would anticipate the staples remain relatively constant, just as they have for some time."

Also widely predicted is a further blurring of channels — possibly even drug stores selling fuel and c-stores featuring pharmacies.

"A c-store could become a large drug store with a dollar store section that sells food," said Fran Duskiewicz, SVP of Nice N Easy Grocery Shoppes, in upstate New York. "Shopper research is indicating people want a number of things right where they stop, and as long as everyone is listening to what the shopper is saying, we’re all going to wind up doing the same thing."

Said Bill Weigel, chairman and CEO of Weigel’s in Powell, TN, "In 25 years, I would say, we will be serving dinner."

Which channel — club, dollar, drug store, grocery, mass discount, QSR — represents biggest threat to c-store market share? How do c-stores need to further evolve to address market challenges in the years ahead?

Join the Discussion!

15 Comments on "What will the future hold for c-stores?"

Notify of

Sort by:   newest | oldest | most voted
Tom Redd
Grocery is the killer. As the food stores downsize their stores and upsize their fuel distribution sites, the C-store becomes more and more threatened. Why? C-stores have an old image to kill. On average, dirty places, way over-priced, main reason to stop is gas, pop, coffee or Powerball tickets. Oh, and also to use their restrooms. In the years ahead the c-store operations need to decide; do we own the small grocery space and cut off the downsizing big groceries, or do we condense our stores and serve the market that wants the basics: restroom, pop, coffee, gas, snack? We have some c-stores that are already on the side that says, “get bigger.” Others are just doing nothing. The plan c-stores come up with needs to be market-specific and a mix of the mini stores and the big stores. Grocery stores can’t do this this type of market tuning—they will one-size it all. Also, c-stores need to re-brand their industry. Convenience stores are the old thing and people have an image of c-stores in their brains. Shift to “neighborhood store” or “fast store” or something, but kill the c-store and the association’s (NACS) use of the term. New image time.… Read more »
Richard J. George, Ph.D.

With the evolution to more food service by c-stores, two channels become even bigger potential competitors; drug stores and dollar stores. I perceive drug stores, as they add more grocery and meals-to-go, as becoming the c-store of choice for women. Women feel more comfortable in a Walgreens and CVS than they do in a conventional c-store. They offer an array of products targeted to women, and now food of all types will drive visits and more crossover purchases.

The other emerging competitor is the dollar store. It is being reconfigured with over 60 percent consumable products as a “c-store without c-store prices.” The grocery and emergency CPG products offered by the non food service-oriented c-stores are at risk for losses to dollar stores.

The challenge, as noted, is the dinner part. The c-store that figures this out will see separation from other c-stores and competing channels.

Cathy Hotka

I don’t think any of these channels will threaten c-stores in a meaningful way.

I worked in the oil industry for 10 years, and even 15 years ago there were active discussions about how to leverage all the real estate that c-stores and gas stations have. They were looking at anything and everything, including lockers, ethnic food, dry-cleaning drop off and commercials beamed to gas pumps. C-stores have done a great job of responding to a changing customer base; I have every faith that they’ll continue to adapt.

Mohamed Amer
Technology and social/lifestyle changes are what makes for trends in business—the trend is your friend. In the case of c-stores, there are some segment-specific pressures such as technology-driven reduction of motor fuel margin dollars as mentioned by Mr. Cadieux and those impacting all retailers such as payment technology, mobile and social. So in looking at c-store market share in fuel, the biggest threat is not a channel but the slow shift from fossil fuel. Can they make any money in adding electric car battery chargers? In looking at their non-fuel market share, the threat will continue to be from fast food and grocery stores that are themselves fighting their own share erosion. The future is impossible to predict with any precision, but leveraging their strengths is the key to growth—chasing new margin dollars in c-store green field areas is high risk. Delving into new categories such as prescription drugs is nonsensical, but adding more OTC medications makes more sense; offering sit-down dinners is cost-prohibitive, but adding an espresso bar might add destination traffic. Is it too far-fetched to consider a drive through c-store? Probably so; IF the current assortment remains the same, but an option in a different business model.… Read more »
Mel Kleiman

It would be wonderful if you could say that one type of competitor is the major threat. Then you would only have to fight a battle on one front. This is not the case in the c-store industry. Each of the channels above is a different threat in a different way.

It is interesting that you did not mention the fast food segment, since this is possibly the fastest growing part of the c-store industry model.

When it comes to addressing threats, the c-store industry will need to do three major things.

  1. Be clean, bright and appealing.
  2. Hire, train and retain a higher level of employee.
  3. Remember that they are no longer c-stores; they need to think like they are convenience retailers and fast food operators.
Steve Montgomery

There are five destination drivers for c-stores; fuel, tobacco, packaged beverages, beer and food service. What many people don’t realize is that typically two thirds of the profits of a c-store location with gas are generated by sales from inside the store.

When looking at those five drivers my vote for the largest threat is the dollar stores. They already had packaged beverages, and recently some dollar store chains have added tobacco and beer.

The future of c-stores is based on continuing to provide time-starved customers the ability to fulfill multiple needs in one convenient, easy-to-shop location. While this will continue to evolve, the strongest trend is to provide food service. In many c-stores this has evolved from selling nitrogen-flushed long-life sandwiches to fresh made-to-order sandwiches, tacos, etc.

Mark Heckman

Certainly one opportunity for c-stores is to continue to develop their breadth and quality of food service. While most of these stores are doing a great job in becoming an alternative to drive-through fast food, there is more “head room” in the c-store industry for better fixtures, better food preparation and better variety to support all three major meal occasions.

Ed Rosenbaum

As they currently are perceived, real or imagined, I say the c-stores themselves are their own greatest threat. The current image of overpriced items, under-trained employees and somewhat dirty and dark environments puts the c-store in a position of having to perform a major transformation of themselves. Remember the old expression “physician, heal thyself.” Same thing here.

David Lubert
David Lubert
3 years 4 months ago

C-Stores will survive and thrive as long as they stay true to their concept—convenience! I see no threat from these other channels, quite frankly. C-Store operators will simply need to continue to refine and define convenience!

vic gallese
3 years 4 months ago

Necessity IS the mother of all invention. This could set the trend for the C-Store format to truly focus and commit to a new direction.

Why not the best of the Dollar General categories (private label, of course) at a grocery-competitive price, along with midweek grocery replacements: milk, bread, bananas/fruits, cold cuts/cheese, etc? What is not to like about that alternative?

Mike B
Mike B
3 years 4 months ago
The convenience store industry will do as well as it wants to. Convenience stores mean different things to different regions. In California, for instance, where the industry is dominated by oil company dealers with single stores, 7-Elevens, and AM/PM sites, store conditions are typically poor. May are dirty with a very inconsistent mix and pricing between locations, even of the franchised brands noted. Many stores have an odd odor, and very limited selections of fresh foods. You just don’t see people buying much more than alcohol and tobacco in California convenience stores. The stores have the bad reputation they deserve. Chevron Extra Mile looked very promising until they started to franchise; since then, site quality and product selection is just as inconsistent as 7-Eleven or AM/PM. In many other regions where you have stronger operators building larger stores that are new, clean and have many more fresh food offerings, I think the industry has already evolved and has a reputation as a place to go pick up ready-to-eat foods at a low cost. Brands like Quik Trip, Sheetz and Wawa have written the book on how to do this and do it successfully. Smaller regional operators like Maverik are trying… Read more »
gordon arnold

It is true that convenience stores are generally unkempt and mostly over priced, but they are convenient. Getting into the fuel business may have been a merchandising burden not planned for. Many commuters, the lifeblood of c-stores, chase pennies in search for the lowest price gasoline. The store visit will make up for the low gas prices but perhaps not for long.

There is talk around the market that some of the retail giants may give it a go. With huge distribution and seasoned food and beverage experience the pressure from these discounters will be tremendous. There is just too much market opportunity for the big guys and gals that are starving for more market share to keep the machine on to simply ignore any longer. One thing is for sure, the 21st century is a time for change in markets and especially retail. Not at all for the faint of heart.

Bill Hanifin

The channel threats that pose the greatest challenge to convenience retail are those that can make available food, drinks, snacks (as well as tobacco, beer, and lottery tickets) in a manner that serves busy people on the go. Sounds to me like a grocery store first, maybe a drug store second.

But there is more to the challenge than product and price. Creating an atmosphere that invites a visit and permits a comfortable, even if brief, stay is something that convenience retailers have within their control. If they play the cards well in this area, they can defend intrusion from competitors while continuing to justify price differential.

Mobile apps and loyalty clubs will augment these marketing efforts. Maybe, these tools will represent a bridge enabling convenience retailers to journey from their present condition to an even brighter future.

Kai Clarke

All of these retail models represent a threat to c-stores, as each has the potential to change their footprint to become more like a c-store, albeit with their specialty emphasis, at the core of their retail focus.

Leo Suarez
Leo Suarez
3 years 3 months ago

The one advantage convenience stories have over any other type of channel out there, is their ability to build genuine relationships with their customers. Retail giants may have the manpower to beat convenience stores on price and inventory, but convenience stores are small enough for their business owners to actually get to know who’s coming through their store doors. Independent retailers that run convenience stores have the manageable real estate and consistent traffic to build deeper, more profitable relationships and help increase revenue. Their smaller size also allows them to react to customer needs by installing new store solutions with ease, low risk and fast time to value. By creating a truly customer-centric store experience, convenience stores will be able to compete with other competing channels.


Take Our Instant Poll

Which do you see as the biggest threat to c-store market share in the years ahead?

View Results

Loading ... Loading ...