April 15, 2022
Gas doesn’t just fuel cars; it also powers Marlboros, Red Bull, and Doritos. In fact, an estimated 80% of the fuel purchased in the United States comes from stations with convenience stores, which bring in about $475 billion of revenue each year, according to IBISWorld data.
And more specifically, reports CNN, one-quarter of that take comes from the 44% of gas guzzlers who come into the store each time they hit the pumps to purchase groceries, snacks, beer and cigarettes.
So as Russia’s invasion of Ukraine and record-high inflation rates cause crude oil prices to shoot up, executives at PepsiCo, General Mills, and Conagra (the company behind Slim Jim beef jerky) are biting their nails.
The national gas average price in the United States was about $4.10 per gallon on Wednesday, April 13, according to data compiled by AAA. While that’s a little bit under the record high, it’s still high enough to make 60% of Americans reconsider their driving habits and make some lifestyle changes, according to a survey by the automotive service company.
Less driving and fewer trips to the pump typically serve a double hit to convenience store retailers: a loss of foot traffic and money left for discretionary purchases.
“Our [convenience store] retailer contacts have recently highlighted some signs of strain on consumer spending as gas prices remain stubbornly high, with one retailer noting a slowdown in March in-store purchases across categories,” wrote Bonnie Herzog, managing director at Goldman Sachs, in a research note Wednesday.
Rising gas prices also appear to be weighing on packaged snack food sales. “This is evidenced by the slowing volume trend seen across most major snack food categories and outright volume declines for single-serve chocolate and jerky meat,” she wrote.
“Anytime you sell immediate consumption and people’s pocketbooks are pinched you could lose sales,” said Jeff Lenard, vice president of Strategic Industry Initiatives at the National Association of Convenience Stores.
Gas prices are top of Americans’ minds, said Jason Zelinski, director of Convenience Channel Accounts at NielsenIQ. But they haven’t greatly impacted other sales yet. He noticed a shift toward increased visits to gas stations—people are topping off their tanks more frequently instead of paying for a full tank.
Consumer Edge, a data insights company, looked at the top three fuel retail brands in the United States (Costco, Sam’s Club, and Kroger) and noticed a spike in fuel sales as a percentage of total sales through the month of March.
“Although average fuel prices per gallon have gone up, some consumers can no longer afford to fill their tanks each trip and are making the same-priced transactions for fewer gallons, but filling up more often,” they wrote.
And while there are certainly fears of an upcoming recession, unemployment remains at record lows. Americans are still driving to work. Walmart, Costco and convenience stores are tying product promotions or discounts to the purchase of gas in order to encourage store visits.
Research contact: @CNN