C-Stores: What Happened in 2020 and What’s Next for 2021
Over the course of 2020, many factors impacted consumer buying behavior. Independent convenience retailers and brands proved resilient, making real-time adjustments in order to provide customers with what they needed, when they needed it.
We’ve outlined key trends from 2020 below, and how we believe brands and retailers can use this information to guide 2021 decisions. Key takeaways are as follows:
- Keep Baskets Full: The average market basket size per transaction increased 12% (from 2.5 units to 2.8 units) over the course of 2020. Brands will need to take advantage of promotion and cross-promotion opportunities early in the year in order to get into those larger baskets, and retailers need to offer enticing discounts in order to keep basket sizes high.
- Incentivize Take-Home Purchases: Throughout 2020, we saw purchases of future-consumption items, such as 6-packs and family size products, increase. Continue to push these items in the first half of the year, whether that’s through a promotional program or a marketing campaign, but be ready to reassess in the back half of 2021 when future consumption will likely return to more historical levels. The most important thing is to make sure that these high-demand products are in stock.
Average monthly in-store revenue for Skupos stores in 2020 has consistently outperformed 2019 by an average of 8%, proving convenience retail’s resilience throughout this tough year. The largest increases in in-store sales occurred during the summer months of June, July, and August, with YOY growth ranging from 10 to 13%. Although average sales have dipped slightly with the COVID resurgence at the end of 2020, December average in-store sales still ended up 7.5% higher than 2019.
With the country in the midst of it’s strictest period of pandemic-related stay-at-home orders, April showed the steepest decline in gasoline prices for 2020, dropping between 14-19% from March. While gasoline prices have not yet recovered to pre-covid levels, in June they started ticking up again, rising 8-13% from May. Since May, they have remained relatively steady, with slight increases in November and December.
Americans were ready to get out of the house once summer arrived. A 20-25% plunge in gallon purchases between March and April was followed by a 30% increase in gallon purchases between April and May. Since then, gas volumes remained steady throughout the summer and into the winter months. Although day-to-day life looked much different in 2020, gas volumes remained fairly steady once more restrictive stay-at-home orders were lifted.
Consumer market baskets increased considerably in size throughout 2020, ending the year 12% higher than the first week of 2020. In January, consumers purchased an average of 2.5 units per transaction, compared to 2.8 units per transaction by the end of December. This trend began with a huge spike in March, with consumers “stocking up” and basket sizes increasing almost 10% as the pandemic hit. Since then, baskets have leveled off between 2.75 and 2.8 items, which is still a 6–8% increase over the pre-pandemic period of January through mid-March. To put that in context, it means that for every 5 consumers walking in the door today, each retail store is selling an extra item, compared to January/February.
Historically, 83% of sales in convenience retail were items consumed within an hour of purchase, however between January and June, take-home purchases of packaged beverages, including 6+ packs and 2+ liter bottles, increased 84% (7.8 vs 4.2 units per day per store). Future consumption transactions settled through Q3 at about 7 transactions per store per day, and now into Q4 have fallen down to about 6 such transactions per store per day, which is still almost 50% more than the pre-pandemic period.
Keep in mind that there are about 150,000 c-stores in the US, so when this metric goes from 5 to 6 over the course of a year, that amounts to about a 20% increase, or an additional 150,000 transactions per day which include an item for future consumption.
In 2020, c-stores proved resilient through the adversity brought on by the pandemic. From restrictions on customer self-serve beverage and food, to store occupancy limits, to enforcing social distancing, independent retailers rose to the occasion and outperformed. We are confident that retailers will use this momentum for more growth in 2021!