Operators increasingly rely on convenience store sales because in-store products are more profitable than gasoline.
Los Angeles, CA (PRWEB) November 12, 2013
The Gas Stations with Convenience Stores industry has performed fairly well in recent years. The increasing world price of crude oil, the industry's primary input, has been the main driver of industry revenue growth. Despite a drastic dip in 2009, revenue recovered thereafter as strong global demand for oil boosted the retail price of fuel. According to IBISWorld Industry Analyst Hester Jeon, “While gasoline constitutes the lion's share of sales, store owners are increasingly relying on convenience store sales because in-store products are more profitable than gasoline.” Consequently, Gas Stations with Convenience Stores industry revenue is expected to rise at an average annual rate of 1.8% to $463.6 billion over the five years to 2013, including an anticipated growth rate of 0.5% in 2013.
Unemployment swelled in 2009, causing consumers to cut back on spending and traveling. In turn, demand for gasoline and store items fell, leading to a drop in revenue. Since the majority of the industry's business is generated from consumers rather than commercial businesses, consumer spending plays a major role in determining the industry's financial performance. While this slowdown in spending did not offset the increases in gas prices, it lowered industry profit as operators engaged in price-based competition to entice consumers to their stations.
As profit margins diminished, major oil companies divested their gas stations to concentrate on a few, well-performing locations. Companies such as ExxonMobil sold their operations to smaller chains and independent business owners to focus on more profitable upstream business segments such as exploring, refining and distributing. “The industry has consequently become more fragmented as the number of enterprises increased at a faster rate than establishments,” says Jeon.
Demand for retail fuel is expected to grow in the upcoming years as the economy continues to recover and more Americans return to work. Along with growing volume sales, prices at gasoline pumps are expected to climb as global demand continues to strengthen. A rise in per capita disposable income will enable consumers to purchase more gasoline despite higher prices. In addition, some consumers will trade up to higher grades of gasoline, further aiding revenue growth. However, the growth of fuel-efficient vehicle purchases in the United States is anticipated to marginally offset higher sales volumes. Over the five years to 2018, revenue is forecast to increase.
For more information, visit IBISWorld’s Metal Pipe & Tube Manufacturing in the US industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
Operators in the Gas Stations with Convenience Stores industry sell automotive fuels such as gasoline and diesel from stations that are collocated with convenience stores or food marts. They may also provide automotive repair services. This industry is distinct from the Convenience Stores industry and the Gas Stations industry (IBISWorld reports 44512 and 44719, respectively). Major oil producers that franchise out most of their convenience operations are not included unless they own and operate a significant number of sites.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.