While retailers in general are suffering, it’s the traditional corner store that is fighting a losing battle, according to BIS Foodservice’s Route Trade Market 2012 report series.
The report shows there has been a persistent downward trend in store numbers for many years with a sharp drop in the past two years.
In 2010, there were an estimated 4,131 outlets – which ranked first among route trade channels. However, in 2012 the number dropped to just 2,725, a decline of 1,406 stores.
The channel’s ranking slid with it, dropping from first to fifth in the past two years, while the average turnover per store also shrank from $985,000 to $750,000. Independent convenience stores now make up just 12 per cent of the total market. In 2007, that number was 20 per cent.
“We continue to see the decline in the number of independent convenience stores – the demise of the corner store is a fact,” says Sissel Rosengren, head of BIS Foodservice. “We fully expect this decline to continue due mainly to the rise in number of supermarkets and convenience stores attached to service stations.”
Meanwhile, service stations continue to build with convenience store within the station. This has increased from an estimated 3,162 outlets in 2010 to 3,450 estimated outlets in 2012 – an increase of almost 10 per cent since 2010.
As expected, this is almost the exact opposite of its little sister, the service station without a convenience store, which declined from an estimated 3,471 stores in 2010 to 3,168 outlets in 2012, suggesting that most service stations are simply moving towards more food and beverage offerings.
“The service station without a convenience store still considers itself a provider of petrol, as opposed to a supermarket with a bowser,” says Sissel.
“Food and beverage offerings are simply not seen as core to their business. Many food and beverage orders at these outlets often only take place when a visiting sales rep comes in.”
While the number of independent service stations that depend on petrol and a limited food offering is clearly on the decline, the major grocery organisations continue to increase their presence in the sector.
In fact, Woolworths/Caltex has gone from 611 stores in the route trade market to 848, nearly accounting for the increase in service stations with a convenience store itself.
However, the market for service stations with a convenience store, despite the significant increase in the total number of stores, is not immune to the generally poor economic sentiment among its customers.
“Since 2010 we’ve seen an increased movement in successful promotional strategies from multi-buys to ‘buy one get one free’ in service stations with a convenience store,” says Rosengren. “This is another indicator of tougher economic times, and this is the case in many other route trade channels.”