Increasing competition will continue to challenge the Convenience Stores industry.
New York, NY (PRWEB) October 05, 2014
The Convenience Stores industry has struggled to overcome lagging demand in the wake of the economic recession. While per capita disposable income improved and the national unemployment rate continued to drop, consumers remained wary of spending money at convenience stores, which typically carry higher mark ups than competing grocery or mass merchandise stores. “Many retailers had difficulty selling some of their most popular merchandise, including snack foods and soft drinks,” according to IBISWorld Industry Analyst Will McKitterick. Slow growth over the period led to an overall decline in industry sales. IBISWorld estimates industry revenue fell at an average annual rate of 0.3% during the five-year period, including a decline of 0.4% to $8.2 billion in 2014.
The Convenience Stores industry is primarily made up of a large number of small, independently owned operations. These owners have been hit particularly hard by the lingering effects of the recession, as well as heightened external competition from grocery stores, mass merchandisers and other retail stores. Furthermore, regulation has hampered operators' ability to turn a profit. Salty snacks, soft drinks, tobacco, alcohol and gaming, convenience store staples, are among the most highly taxed and heavily regulated products in the Canadian economy. “Convenience stores, especially smaller operators, have struggled to pass progressively higher regulatory costs on to their customers without losing business to competitors outside the industry,” says McKitterick. As a result, profitability has been a major issue for many retailers over the past five years.
Increasing competition will continue to challenge the Convenience Stores industry through 2019. Large players in the Warehouse Clubs and Supercentres industry will dabble in convenience store operations of their own. The growing internal threat from these new entrants into the industry will plague existing operators, particularly the small, single-location firms that make up the bulk of the industry. Further, acquisition activity that began during the past five years will continue through 2019. The industry is highly saturated, with convenience stores on most urban and suburban street corners, so larger players have long adopted a strategy of growth through acquisition.
For more information, visit IBISWorld’s Convenience Stores in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry consists of retail businesses that primarily sell basic food, beverage and tobacco merchandise in convenient locations during extended hours of operation. This report excludes gas stations, gas stations with convenience stores, grocery stores and small kiosks. See IBISWorld report 44711CA for information on gas stations with convenience stores and IBISWorld report 44719 for information on standalone gas stations.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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