What's behind the grocery slowdown in c-stores?

Dive Brief:

Sales of edible groceries at America’s convenience stores are expected to flatten this year after seeing notable growth in 2016, according to a forecast report from Convenience Store News.
The report predicts that dollar stores and dollar sales per store will grow 0.1% and 0.6%, respectively, while unit volume per store could fall 0.8%.
More than half of retailers surveyed said they foresee flat sales this year, while a third predicted their sales would grow. Just 9% of respondents said they feel sales will drop.

Dive Insight:

Convenience stores have expanded their assortment of grocery products in recent years and, along with dollar stores, have become quick-trip destinations for consumers. In addition to the snacks and candy that c-stores are known for, they’ve also become places where consumers can find bagged coffee and tea, cereal, condiments, frozen meals and other items.

These staples encourage regular shopping and have made c-stores popular destinations for fill-in trips. Indeed, while supermarkets have been the traditional go-to for groceries, more and more consumers are replacing their large shopping trip with numerous small ones that fit with c-stores’ limited size and assortment.

The Convenience Store News study shows flattening sales ahead for edible grocery in c-stores, but this appears to be an inevitable slowdown for a category that’s been growing ahead of expectations. C-stores generated excitement as they bolstered their grocery selections, and now it appears the dust is settling.

What’s important for store operators is that they hold on to the shoppers they’ve gained. Many c-stores offer loyalty programs that tie in with fuel and other perks, and there may be opportunities to expand further here. Smart merchandising can also go a long way, as can pricing promotions that change frequently and take advantage of high-demand products.

Getting back to growth will require c-stores to capitalize on their advantages, namely quick-service offerings. Many stores offer fresh grab-and-go sandwiches and salads, while others have moved into quick-service restaurants. Some are now offering hot bars and other prepared foods. According to a recent report from Datassential, foodservice is currently the top profit driver for convenience stores.