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The Washington Post reports that “once primarily the province of Big Gulps and beef jerky, convenience and drug stores are siphoning away sales from traditional supermarkets as the weak economy and high gas prices force consumers to save more by driving less. They are stopping by not only for the quickie quart of milk, but also for pantry items normally bought at the supermarket -- and even for dinner. Some are using the stores to stretch their paychecks, buying what they need when they need it instead of stocking up.”

In the DC area, for example, grocery sales at 7-Eleven stores during July were 2-3 percent higher than a year ago, while frozen food sales were up seven percent and ready-to-eat meals were up nine percent. The Post says that other areas of the country are seeing similar trends, as well as other stores and formats in the DC region.

There have been other published reports saying that 7-Eleven in the US plans to increase the number of units in which foods are cooked in-store from 100 at present to about 800, which would represent a rollout of what has been a successful pilot program in Virginia. And company even foresees the day when all of its more than six thousand units in the US could offer in-store cooked foods.

KC's View:
This isn’t just a matter of people saving money on gasoline. C-store retailers such as &-Eleven, Sheetz and Wawa have done an excellent job over the past few years of repositioning themselves in many markets. They’ve been gradually shifting away from a dependence on gasoline and cigarette sales to a focus on fresh and prepared foods – the margins are better and it strikes management as a healthier long-term strategy.

And so, as gas prices have gone through the roof and people have been seeking alternatives to the trip across town to the big box store, c-stores have been better able to offer options that make sense. And, it seems as if most of the have been able to do so without disenfranchising their core customer bases.

I’ve always thought that the convenience store industry and its trade association, NACS, are worth watching…they seem to have a very strong sense of the market, some of their retailers are exceptionally smart and focused, and there doesn’t seem to be a lot of complacency there. As I said, attention should be paid.