U.S. gas prices just hit a 2-month low in July, dipping under $4.50 a gallon, but that may not be enough to revive curtailed summer travel plans that has put a dent in convivence store (C-Stores) sales.
“High gas prices are taking their toll on sales at convenience stores, with 59 percent of retailers saying their customer traffic has decreased in stores over the past three months,” according to the results of a survey released in late June by the NACS, a c-store and fuel retailer advocate.
Pump Prices Have Fallen 13 Percent Since All-Time High in June
The American Automobile Association (AAA) reported that regular unleaded hit an all-time high on June 14, 2022, at a national average of $5.02 a gallon. Since then, gas prices have been falling, down some 13 percent to $4.38 as of July 23, 2022.
“Patrick De Hann, the head of petroleum analysis at GasBuddy, said on Twitter this week that he expects gas prices will continue falling over the coming months, eventually reaching a national average of $3.99 per gallon by August,” reported Fortune.
While the price relief at the pump is welcome news for consumers, some summer travel plans have already been scuttled due to inflation with the U.S. Travel Association reported at the end of June that 41 percent of American travelers now say, “rising gas prices will greatly impact their decision to travel in the next six months.”
The price of regular unleaded is still more than $1 a gallon above last year’s $3.16 price for unleaded but is falling in part due to a lack of demand.
“Global economic headwinds are pushing oil prices lower and less expensive oil leads to lower pump prices,” said Andrew Gross, AAA spokesperson. “And here at home, people are fueling up less, despite this being the height of the traditional summer driving season. These two key factors are behind the recent drop in pump prices.”
C-Stores Rely on In-Store Sales to Drive Profits
C-Stores may sell an estimated 80 percent of fuel purchased in the United States, according to the NACS, but they rely on in-store sales, not fuel sales, to drive profits.
“But high gas prices are hurting customer traffic in stores and “basket” size: Nearly half of all retailers (49 percent) also say that those customers coming inside the store are buying less compared to three months ago when gas prices were $1.50 a gallon lower,” says the NACS.
The lower in-store traffic this summer, makes C-store marketing efforts, such as eye-catching price signs and LED message centers, more important than ever.
“While sales and traffic have slowed as gas prices climbed, retailers continue to seek out innovative ways to provide value at the pump and inside the store to help their customers extend their paychecks and weather this period of inflated costs,” said Jeff Lenard, NACS vice president of strategic industry initiatives.
Summer Bummer: 53 Percent C-Stores Expect Lower Sales
NACS says that retailers have expressed concerns that elevated gas prices could also depress sales over the traditionally busy summer-drive season with 53 percent saying they expect sales to be lower this summer than last summer, with only 25 percent anticipating increased sales.
Signage to lure drivers to pull in and take advantage of specials will be key with NACS saying the drive to offer more value to consumers over the hot summer months may be best summed up by Kwik Trip: “Offering hotter specials!”
NACS says some C-Stores are looking to pump up the sales by:
- High’s (Baltimore, Maryland) is offering greater fuel discounts tied to store purchases.
- Landhope Farms (Kennett Square, Pennsylvania) is offering discounts for both fuel and in-store items via app purchases.
- Mickey Mart (Milan, Ohio) is offering more promotions and deals on items in stores.
- Armbruster Energy Store (Grafton, Ohio) is expanding electronic coupon offers.
“Loyal customers want to be rewarded, and that’s our aim during this time of immense inflation,” Dennis McCartney of Landhope Farms told the NACS.
Bouncing Back Business Travel May Boost C-Stores
While C-stores may be seeing fewer loaded minivans with families this summer, they may get a boost with business travel continuing to bounce back.
The U.S. Travel Association monthly travel data report found that:
- 48 million Americans, according to AAA, planned to travel over the Fourth of July holiday weekend—an increase of 4 percent from 2021, but still 2 percent below 2019 pre-pandemic levels.
- Travel spending hit a new pandemic high of $101 billion in May, just slightly above April’s $100 billion.
- As of June, 89 percent of companies now allow non-essential domestic business travel, same as April.
- In-person meetings are the top business travel expense companies are planning for the remainder of the year – spending for conferences as a share of overall business travel spend is expected to be up four percentage points from 2019.
American Express reported on July 22, 2022 that second quarter travel spending by the category most likely to target C-Stores while on the road (small and midsize corporate segment) topped pre-pandemic 2019 levels for the same quarter.
Small and midsize enterprise T&E spending in the second quarter was 108 percent of 2019 levels, according to Amex.
That spending on Amex corporate cards by the large and global corporate segment was 60 percent of what it was in the second quarter of 2019, but that is up from 38 percent in the first quarter of 2022.
American Express CFO Jeff Campbell called that uptick "a sign of a more meaningful business travel recovery."
