Walmart Express format entering a crowded field

Expectations are high that Walmart will accelerate expansion of its small format Express stores when 2014 capital expansion plans are announced this fall. If that’s the case, the company will be entering a crowded landscape.

Already, Dollar General, Family Dollar and Dollar Tree stores operate upwards of 20,000 units with considerable overlap. Now, new data out this week shows the number of units operated by traditional convenience store retailers, especially the well-capitalized operators of larger format C-stores, continues to grow.

Sales in the convenience store industry advanced 2.7% during 2012, which was below a prior year gain of 18.5%, and the number of units increased to 149,220 from 148,126, according to NACS, the Association for Convenience and Fuel Retailing. Total industry sales increased 2.7% to slightly more than $700 billion in 2012. The increase was comprised of a 2.2% increase that saw in store sales reach $199.3 billion and motor fuel sales increase 2.9% to $501 billion.

The in-store sales growth was driven by double-digit sales gains in several subcategories, including: alternative snacks, which include meat snacks and health, energy and protein bars (12.2%), liquor, a relatively small subcategory (11.6%), cold dispensed beverages (11.3%) and sweet snacks (10.3%).

According to NACS, the industry’s pace of growth was hindered by a sluggish economic picture as unemployment remained high, disposable income per capita was weak and real GDP growth was insufficient to generate strong employment growth.

"The convenience store industry depends on strong commuter traffic to generate store visits, both on the way to work and the way home. Until the labor force gets back to work, the industry will likely endure lower fuel sales and poorer inside sales than would be expected under higher levels of performance in the overall economy," according to NACS.

Even so, growth is growth and the C-store industry is riding a multiple year upward trend that has seen sales more than double to $700 billion from $290.6 billion in 2002. Could be why Walmart finds stores that are smaller and more convenient to shop and attractive space.