Convenience Stores Downturn: Strategies to Bridge Revenue Gaps
Convenience stores are facing a downturn in key categories – and there’s a need to pivot in order to bridge the revenue gaps. Convenience stores, or c-stores, have long relied on staple categories like tobacco, food, and beverages to drive revenue. However, as inflation continues to strain consumer spending habits and shrink profit margins, these key categories are experiencing a noticeable downturn in 2024.
Although this downturn admittedly poses a challenge for c-store owners and operators, the future brims with possibilities. Rest assured that there are strategic ways to combat these pressures and position your store for success and growth in 2025 and beyond.
The Downward Turn Rundown
While the start of 2024 showed an increase in convenience store dollar sales, the truth behind the increase isn’t quite as uplifting. According to Convenience Store News’ 2024 Midyear Report Card, the higher dollar sales were likely the result of inflation hiking up all product prices. Thus, the data tells a different story for c-stores — the true story.
As the 2024 Midyear Report Card shows, most of the key c-store categories experienced a drop in both dollar sales and unit volume sales during the first six months of 2024. In particular, the cigarette category, candy category, and beer and malt beverages experienced the largest decreases in dollar sales, while the cigarette, candy, and general merchandise categories experienced the largest decrease in unit volume sales.
The Impact on C-Stores
There’s no denying that inflation shapes our economic landscape. As costs for goods rise, shoppers become more sensitive to prices and, in turn, more hesitant about completing purchases. But what does this mean for c-stores?
The result of inflation presents a two-pronged challenge for c-store owners and operators: Maintaining foot traffic and preserving margins while also dealing with higher operational costs.
Nevertheless, despite these economic headwinds, opportunities for innovation and diversification remain. So, what solutions can your c-store implement and leverage for financial success?
C-Store Solutions for 2025: Investing in Skill Games and Food Services
The key to c-store success in the coming years is rooted in where you focus your revenue efforts. By shifting focus toward alternative revenue streams, c-store owners can put themselves in the position to not only keep their doors open but also to create a more resilient and sustainable business model.
The only question is, what alternative revenue streams stand to benefit c-stores the most?
Food Services: A Fresh (Never Frozen) Solution
One promising solution for c-stores involves the expansion of food services. The increasing demand for convenient meal options creates a significant revenue opportunity. And as more and more consumers prioritize healthy eating options, offering fresh, made-to-order food is a strategic way to retain customers.
In addition, not only does offering food services allow c-stores to differentiate themselves, but it also comes with the potential for higher margins compared to more traditional pre-packaged goods. For instance, a well-designed food service program can turn a convenience store into a daily destination for breakfast, lunch, and dinner options.
We suggest c-store owners consider investing in in-store kitchens or partnering with third-party eateries. This is a great way to drive recurring traffic and attract a wider range of customers, including those who may not traditionally visit c-stores.
Skill Games: A Low-Cost, High-Return Solution
In light of key c-store category profits declining, skill games represent another compellingly lucrative opportunity to bridge the gap between declining traditional sales and new profit avenues.
Not only does the widespread appeal of skill games help increase foot traffic, but they also encourage more frequent store visits with a longer dwell time. Thus, in turn, these machines help drive sales in other categories, such as snacks and beverages.
Moreover, skill games require a minimal upfront investment for c-store owners and operators. The only start-up cost in most states is an annual per-game licensing fee. For instance, in Georgia, this fee is just a mere $125 per machine. And unlike other store additions, skill game machines require relatively little square footage, making them an ideal option for c-stores with limited space.
Given the low cost of entry and the significant potential for revenue generation, we strongly encourage c-store owners to consider implementing skill games at their location.
Next Steps
The key to skill game success in your c-store is partnering with a reputable Master License Holder (MLH). Working with a credible MLH like INAMAX is critical, as it will ensure you’re set up for long-term support and success. In contrast, partnering with a less credible MLH poses the risk of illegal interactions that risk your business license, and they often provide minimal ongoing support.
INAMAX stands out by offering a range of services specifically designed to help c-store operators maximize the potential of skill games. Beyond just installing the machines, INAMAX ensures that convenience store employees understand the technical aspects of skill games and how to engage customers with them.
And with gaming representing a valuable revenue stream, INAMAX knows that any machine downtime could impact profits. That’s why INAMAX’s 24/7 technician response service makes a point to protect operators from long service delays and the associated revenue loss from machine malfunctions. INAMAX proudly boasts a 6 hour SLA time – that means from the time you call in an issue, your machine will be up and running again in 6 hours or less!
Thus, from space planning to ongoing marketing support, INAMAX provides invaluable guidance in creating a gaming area that enhances the overall store experience and draws both new and existing customers. With dedicate account management and data analytics teams, your machines will not only always be working, but they’ll be swapped out and upgraded as needed to keep players engaged.
Turning the Downward Turn On Its Head
While the downturn in key c-store categories is undeniable, that doesn’t mean the future is bleak. On the contrary — there are actionable solutions that can help owners and operators like you navigate these challenges and achieve success. By investing in food services and leveraging the revenue-generating potential of skill-based gaming, c-stores can offset losses, diversify income streams, and ensure continued success in the years to come.