NACS State of the Industry Update: A Look Back, A Look Ahead

Let’s face it, the c-store industry puts up with more crap than any other retail channel. If we’re not getting hit with steep increases in credit card fees or new mandates, then we’re on the short end of governmental regulations that directly impact our businesses (i.e. FDA control of tobacco). The rest of the world thinks we are making a killing off of selling motor fuels, when in reality our customers are driving to hell and back just to save 40¢ on a fill up.

Industry Snapshot

There are currently an estimated 145,000 stores operating in our industry – that’s 50,000 more than all of the warehouse clubs, supercenters, dollar stores, mass merchandise stores, supermarkets, and drug stores com-bined! Over 90,000 of our stores are run by single store operators.

Independent Operator Profile (From the NACS Dealer Study, 2006-2008):

  • Consolidation and divestiture have created opportunities for New Americans to operate convenience stores
  • Influx of immigrants to the industry (India, Pakistan, Korea, Egypt, Jordan, Lebanon, Iran, Eastern Europe)
  • Many are college educated, have previous business ownership experience, or both
  • Most had little to no understanding of fuel marketing when entering the business (…other than US-born “mom & pops” who grew up in the business)

With 160 million transactions per day, our 2008 sales totaled $624.1 billion – over 4% of the US GDP. An estimated 98% of Americans shop at c-stores at least once a month, and we sell 80% of the motor fuel sold in the US. Our industry employs over 1,700,000 workers on the retail side alone.

According to Nielson, our customers fall primarily into one of several categories…

  • Lower income households
  • Single households
  • Households without children
  • African American households
  • Struggling urban, modest working towns & rural living
  • Blue collar & currently not in the workforce
  • All age households and male only households

Over the last 5 years in our industry, credit card fees have increased over 160%, from $3.2 billion in 2003 to $8.4 billion in 2008.

The US has the highest interchange rates in the entire world, and as our industry was still coping with the affects of the unthinkably high gas prices we saw last year, our interchange rates increased to over 2%, totaling nearly twice as much as the next highest country on the list (India at 1.10%).

In 2003, our industry’s pre-tax profit exceeded credit card fees by 25%; but by 2008, credit card fees towered over pre-tax profit by over 62%!Customer Trends

Consumer Trends

Two of the most crucial segments of the c-store target market are “Generations X, Y, and Beyond,” and the “Baby Boomers”. These segments can vary significantly in terms of buying patterns and brand loyalty, and it is important to understand the motives driving their behaviors.

  • Generation X, Y, and Beyond
    • Birth year: 1977-2002
    • Age: 4-29 years
    • Cultural influences: MTV, dot-com bust, September 11, Iraqi War
    • Brand loyalty measured in: Days
    • Teens tend to buy small amounts of gas frequently – 10, 15, even 20 times a month
    • Over 60% of teens say they stop at convenience stores to “use the restroom”
    • Clean restrooms strongly influence where teens buy gas
    • Teens who purchase food prepared in the store or branded fast food are likely to want to use the restroom
    • Teens revealed through a survey that being denied access to restrooms was a significant issue for them
    • Convenience teens have grown up with what many of us consider to be advanced technology
    • Teens expect a threshold level of technology that accommodates their “access anytime, anywhere” devices and routines
  • Baby Boomers:
    • Birth year: 1946-1964
    • Age: 42-60 years
    • Cultural influences: The 1960s, Vietnam War, Kennedy Assassination, Woodstock
    • Brand loyalty measured in: Yearso Brand loyalty measured in: DaysFirst “me” generation – driven by wealth and success
    • By the end of this year, this segment will reportedly spend $3 trillion a year
    • While mostly “brand fixed,” they are still just as likely to switch brands as younger buyers
    • 33% of consumers older than 50 believe it is “risky” to buy an unfamiliar brand (36% of consumers age 16-34, and 30% of consumers age 35-49 agree)

Industry Shifts

In the last three years, over 200 convenience and petroleum retailers were acquired, totaling more than 6,000 stores. It seems larger operators are getting larger, while small to mid-sized operators are choosing to sell due to increased competition and regulations, little to no business succession opportunities, and enticing bids from larger companies. Companies like 7-Eleven and am|pm are moving to total franchise models, and major oil companies are divesting company owned and operated sites to chains and jobbers. For dozens of companies, fuel replacement costs and credit card fees have simply driven them out of business altogether. While there are new opportunities for entrepreneurs to enter the marketplace, there are still great issues for wholesalers and technology providers.


Although it has been a rough year, we are bound to see some bottom line improvements. As consumers become more time-starved, they will look to us for convenient solutions for their ever growing demands. It is up to us as an industry to increase visibility and stay relevant within the consumers’ minds.

About NACS
• Founded in 1961
• More than 2,000 retail member companies
• More than 2,000 supplier member companies


By: Michael Davis, Vice President, Member Services, NACS