High Marks by Suppliers and Wholesalers for Retail Convenience Stores

On a broad scale, 2015 was an interesting year for the United States and, with the presidential election, 2016 promised to be every bit as exciting. The same can be said about the conve­nience store industry. Based on the results of an outlook survey conducted in early November 2015 by the National Associa­tion for Business Economics, the average forecast for growth in 2016 was 2.6 percent, down slightly from 2.7 percent in its previous survey conducted in September 2015.

The panel of 49 business economists expected the jobs market to continue strengthening in 2016, with unemployment dropping to 4.7 percent by the end of 2016, down from 5 per­cent in December 2015. The experts lowered their earlier fore­casts on a variety of measures of economic health, including housing starts and industrial production. Looking further down the road, two-thirds of the business economists surveyed expect potential economic growth of between 2 percent and 2.5 percent over the next 5 years.

When it comes to convenience and fuel retailing, at least one side of the equation entered 2016 with an upbeat attitude. As part of the Industry Forecast Study, Convenience Store News conducted its first Supplier Forecast Study to complement the Retailer Forecast Study. The majority of convenience-store sup­pliers and wholesalers that participated had a favorable outlook when it came to the 2016 economic picture.

Notably, 41.7 percent had a “very positive” view of the overall conditions of the U.S. economy, 28.6 percent had a “pos­itive” view, and 10.4 percent had a “slightly positive” view. On the other hand, at the beginning of that year, only a combined 12.8 percent viewed the U.S. economy of 2016 negatively.

When asked about their particular product categories, the supply side of convenience retailing did hedge bets a little. Although overwhelmingly positive, those indicating they were very positive about their particular product category dipped to 35.5 percent, followed by 28.7 percent who were positive and 16.4 percent who were slightly positive. No respondents from either the supplier or wholesaler communities said they were very negative on their product category, and only 6.5 percent said they were slightly negative.

Stacking up the convenience channel against the other retail channels they serve, c-store suppliers and wholesalers gave convenience high marks for performance. A whopping 86.7 percent of respondents placed convenience in the positive column when asked to rate conditions in the retail channels where they work. This rating placed convenience squarely in front of all competing channels, with drugstores coming in sec­ond at a 65.4-percent positive rating. See Table 1.

The Supplier Forecast Study also asked participants to weigh in on what the key factors for retailers’ success in 2016 would be. New product development, an uptick in consumer spending, and growth in store count were the top factors cited. The study also asked c-store suppliers and wholesalers to list their top concerns for 2016. Although some mentioned fad brands and private-label brands, the issues weighing most widely on their minds were government regulation, political events, consumer confidence, gas prices, and rising costs. Here were their top reasons for optimism: innovation and new products, new or remodeled store locations, a strong business pipeline, growth across small-format channels, and category upticks.

Source: Barry Berman, Joel R Evans, Patrali Chatterjee (2017), Retail Management: A Strategic Approach, Pearson; 13th edition.

1 thoughts on “High Marks by Suppliers and Wholesalers for Retail Convenience Stores

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