The rise of gas stations as an important part of the convenience store retail business. But this is changing
Gas stations line the roads and highways across the United States. Fueling the country’s cars and trucks. They arguably comprise one of the most important retail businesses in the country. There are 152,000 convenience stores in the US.
That’s 30% of all stores in the country. Put another way one out of every three stores in the US is a convenience store.
It’s a 654 billion dollar industry, but those who follow it say most Americans know very little about it and it’s actually rather misunderstood. While convenience store retailing has so far been spared the sometimes catastrophic disruptions that have hit other segments of retail the fuel and convenience business is going through some profound changes of its own.
For much of their history gas stations have been and still are today small locally owned businesses. For their owners, they often represent a path toward the American dream.
One of the things a lot of folks don’t actually realize is that almost two-thirds of the industry is still single store owner operated meaning that your local gas station may be owned by somebody who lives at the end of your street.
But in recent years, the industry has increasingly gone corporate. The smallest companies with anywhere from one to 200 stores are being bought up by bigger chains or are otherwise going out of business and it is getting harder for the little guy to survive.
The first commercial fuel pump in the United States was sold to an Indiana grocery store in 1885, the kerosene pump was invented by a man named Silvanus Freelove Bowser, who patented his design two years later. The first dedicated gas station opened in Pittsburgh Pennsylvania within two decades. But it wasn’t until the 1970s when modern fuel retailing as we know it, today, began to emerge.
There are more than 100,000 distinct companies in the convenience and fuel retailing industry across the US. More than in any other sector of retail. 62.1% of the market is made up of single-store owners, that is, as it sounds like owners who own just one store. It is somewhat difficult to see this. Since many if not most fuel stations often bear some kind of corporate logo.
Typically from a petroleum company such as Texaco, despite the corporate logo though, these are still independently-owned businesses. Owners of these stores often have some kind of franchise deal with the fuel provider to share costs, but the stores are not owned by the oil and gas companies.
The other 37.9% of the convenience and gas station market is controlled by larger chains which include familiar corporate brands such as 711 and Circle K. But most of the changes in convenience and fuel retail are regional. Wawa sheets race track and Casey’s General Store are all brands well known in different regions of the country.
About 15% of the total market is controlled by chains that are 500 stores or more and most of those are regional chains with a few national brands thrown in. But that share of the market is growing in 2019, the largest chains added 312 stores over the previous year and the second-largest tier of companies in terms of store count added 134 stores.
Every Other tier lost stores with the biggest losses among independently owned stores. Part of the reason for this change is what the stores are selling and how they look is changing dramatically as well. As these businesses move away from the coax, smokes and gasoline model and more into products like freshly prepared food some independent and smaller owners are having a hard time keeping up.
Convenience stores now also have to worry about competition from retailers in adjacent segments of retail, especially those who might be getting pelted with their own competition. Convenience stores are so named because they offer convenience and they are built around getting customers in and out of the store.
They also offer customers free advice on fuel savings, and how to get the best fuel-cards in the market. Convenience store customers such as small business owners like to stop by to get gas at their local convenience store because they get advice on where to buy the best fuel-cards for their growing, and expensive fleets.
Some convenience store owners don’t shy away from giving good advice. Such as recommending online platforms for better fuel-cards if there aren’t any in the store. iCompario is a good source to check out for fuel-card and fleet solution comparison.
The typical visit to a convenience store lasts about three minutes and 30 seconds. But the rise of e-commerce store apps and other technological innovations have left consumers accustomed to a whole new level of convenience that challenges the relevance of the traditional convenience store.
So the question is how does a store survive in this changing landscape? Some are doing it by trying to outwork the problem by, for example, hiring family to keep the store running, and keeping their labor costs low.
Some are doing it by embracing the grocery chain mentality by incorporating other products in the store, with the aim of drawing customers in for the fuel, but keeping them in for other shopping needs.