The Changing Landscape of Gas and Convenience in Canada
In the past several years, gas stations and convenience stores across Canada have seen a rise in growth.
In 2018, for example, food sales from convenience and specialty stores were up 6% and 10% respectively while retail food sales were down.
However, the 2019 outlook wasn’t quite as positive. Gas sales declined 3.6% for the year, rising only in 2019 Q4 by 0.04%. Convenience stores also experienced a decline in 2019 of 6.4%. Specialty food stores gained 0.5%.
Since 2019, the gas and convenience industry has seen another huge shift (like all the retail industry) with the onset of COVID-19. The pandemic spurred numerous changes across the industry, including:
- A decline in gas sales as fewer people travelled and more worked from home.
- A spike in cigarette sales.
- Shifts in consumer behaviour; for example, Couch-Tarde reported that consumers were stocking up on large orders of beer and alcohol with restaurants closed.
While the landscape was changing pre-pandemic, it has continued to do so as COVID-19 subsides. This has caused some challenges for the gas and convenience sectors, but it has also created opportunities.
Changes to Gas and Convenience Retail
To truly understand the opportunities on the horizon, first we must look at what has changed for gas and convenience — specifically, sales of gasoline and sales of tobacco.
Cigarette plain packaging took effect in February 2020 across Canada. This is significant because traditionally, tobacco sales have made up a large percentage of convenience store sales. For example, in 2017, Health Canada reported that 27,110,716,886 units of cigarettes were sold across the country.
With the Government of Canada aiming to reduce smoking rates across the country to 5% by 2035, tobacco sales could take an even bigger hit in the future (even despite the rise in sales during COVID-19).
To make up the difference, many industry professionals were looking at vaping or e-cigarettes. Yet, those were fraught with problems too — particularly the emergence of vaping-related illness.
And then there are gasoline sales to consider. As mentioned, in 2019, gasoline sales declined. In fact, Retail Insider called them the “biggest drag on overall Canadian retail numbers.” Why the drop?
Many professionals are citing reasons such as slowing consumer consumption (even before COVID-19) and high fuel prices at the time. Some provinces — such as B.C. — have also seen an uptick in electronic cars.
With COVID-19 as well, fewer people have been driving and some companies are even moving to permanent work-from-home setups.
On the flip side, more people may be travelling within Canada — turning to road-trips versus international trips. CBC News also reported that car sales could rise as people steer away from crowded public transit.
Either way, the long-term consequences are still unknown.
If the long-time staples of gas and convenience stores can no longer be relied upon for driving sales, then what can?
Beacons of Hope for Gas and Convenience
There are several promising trends on the horizon for the future of gas and convenience that could make up the difference in sales.
- Healthier options. Canadian Convenience Store News reported in its January/February 2020 issue that consumers are thirsting for better-for-you beverages, such as protein drinks. After COVID-19, some grocers have also reported an uptick in health-conscious shoppers.
- Grab and go, ready-made meals.
- Fresh, convenient produce.
- And more.
To on-the-go options, Canadian Grocer recently reported on the trend, writing that many operators are upping their game in terms of the quality of food they’re offering and equipment they’re adopting.
One example of this trend is Toronto’s PopBox Micro Market, which offers wraps, gourmet chocolates, and kombucha.
As for more general trends, the Canadian Convenience Store News National Shopper Study recently found that:
- Most shoppers typically visit stores in the evening, between 4 p.m. to 10 p.m. to later.
- 41% of shoppers make special trips to the convenience store, outside of needing to purchase gas.
- 53% purchase lottery tickets.
There are other ways that convenience stores are putting the “convenience” into the title, including:
- Vending machines – these are not just for food. Some pharmacy-based vending machines have popped up, too.
- Fast checkouts – some stores like Amazon Go are making this even faster.
- Mobile ordering — Starbucks U.S. stores generate 13% of their transactions from mobile ordering.
- Focus on experience — in Canada, Circle K was expanding food and beverage service, starting with burritos and baristas.
While some convenience store staples will continue to drive sales, it’s time to tap into the changing landscape.
At Storesupport Canada, we help retailers and merchandisers drive brands at retail and beyond. Make sure products are kept in stock and on the shelf, signage is displayed, prices are accurate, and much more.
Learn more about our ADAPT-able solutions by calling 1-877-421-5081 or visiting www.storesupport.ca.« Back to Blog