- Seven & I Holdings, the Japanese parent company of the 7-Eleven chain of convenience stores, has agreed to purchase more than 1,000 gas stations from competitor Sunoco in a deal worth $3.3 billion, according to the New York Times.
- The deal is thought to be the largest ever for Seven & I, and reflects the company’s ambition to expand its holdings abroad as its domestic retail operations, including department stores and supermarkets, struggle.
- In June, Seven & I bought 79 gas stations from CST Brands in California and Wyoming.
Last year, Americans spent $550 billion at convenience stores, according to newly released figures from the National Association of Convenience Stores. That represents a sales drop of 4.3% compared to 2015, which might seem worrying to a company like Seven & I Holdings that’s making deep investments in the channel.
In fact, all it reflects are falling gas prices, which dropped from an average of $2.44 to $2.15. Sales of food, tobacco, beer and soda, on the other hand, rose 3.2%. The real growth driver, though, and the likely reason for Seven & I’s Sunoco purchase, is foodservice, which accounted for the second highest share of inside-store sales (22%) behind tobacco (36%).
In terms of growth, there’s no contest: Prepared foods accounted for 35% of convenience stores’ gross profits, nearly twice as much as tobacco.
Over the past several years, convenience stores have been redefining the term “gas station food” with an increasingly sophisticated selection of salads, sandwiches, hot entrees and ethnic cuisine. Across the country, it’s not uncommon to find vegetarian, gluten-free, clean-label and other healthy on-trend items at places typically known for slushed ices and microwaveable burritos.
With consumers making more grab-and-go and fill-in trips, convenience stores’ small size makes them desirable destinations. Companies like Sheetz, Wawa and QuikTrip are capitalizing on this by rolling out fuel-free stores in high-traffic locations. Others, like Rutters Farm Stores in Pennsylvania, offer an ever-expanding array of snacks, packaged food and made-to-order items.
C-stores like 7-Eleven say they’re competing with quick-service restaurants. But they’re also competing against supermarkets, which are also seeking to capture consumers’ quick trips. Retailers are already slimming down their store sizes and investing in their own c-store formats. As the competition heats up, it’ll be interesting to see how the two sides adjust to meet the needs of on-the-go shoppers.