C-store retailers report strong sales in 2021 amid labor, supply chain challenges

Convenience stores retailers saw their sales rise in 2021 even as they dealt with two big challenges.

Two in three convenience retailers (66%) report that their in-store sales were higher in 2021 than in 2020, according to a report by NACS.  Only one in six retailers (16%) say that in-store sales decreased in 2021, according to a NACS “Pulse” survey of its retailer members.

Convenience retailers are optimistic about prospects in 2022 and most (51%) expect strong sales in the first quarter. Part of the optimism could be related to new or expanded offerings: 41% say they will offer frictionless/cashier-less checkout and 30% say they will offer app-based ordering/payment in 2022.

Challenges
Not surprisingly, the top two issues facing retailers as well as suppliers are labor challenges and supply-chain reliability. Retailers say that they expect both challenges to linger well into or beyond 2022. Forty percent say supply-chain disruptions will no longer be a significant challenge in the second half of 2022, while 7% say they will never return to pre-pandemic normalcy.

Retailers are even less optimistic about the labor challenges. Nearly one in three (32%) say the labor challenge “always will be a problem.” Twenty-four percent say the labor shortage will no longer be a significant challenge in the first half 2023. Retailers cited solutions to overcome labor challenges such as offering higher pay, flexible scheduling, referral bonuses and spending more time on the hiring process.

Supplier Challenges
Overall, 56% of suppliers are facing labor challenges, and the top three affecting their business are: lack of production/front-line employees (cited by 62% of suppliers); offering competitive wages (51%) and driver shortage (31%) 

Most suppliers (69%) say that they are facing supply-chain challenges because of the truck driver shortage and inflationary pressures (each cited by 36% of suppliers). Suppliers also say it’s going to take time until the supply chain is back to normal: 36% of suppliers say that won’t happen until the second half of 2022 and 35% say it won’t happen until the first half of 2023.

The NACS Member Pulse Surveys were conducted in December by NACS Research. A total of 67 retailer member companies and 87 supplier member companies participated in the surveys. NACS Research conducts quarterly custom research with retailer members to identify key priorities and opportunities across the convenience and fuel retail landscape.