The Australian Association of Convenience Stores (AACS) showcased its State of Industry Half Yearly Report 2022 in a webinar last Thursday.
The key headline revealed an overall performance decline of 0.9 per cent for the YTD 2022, although this decline was on the back of two consecutive years of healthy growth. Additionally, the second quarter showed stronger performance with a decline of 0.3 per cent.
Excluding tobacco from the overall performance, which is currently facing significant challenges due to an explosion in illegal nicotine vaping products and illicit tobacco, the total is up around 2.5 per cent YTD 2022.
Labour shortages and inflation are the major challenges facing the industry, with the difficulties in finding staff leading to around 10 per cent of the network having to reduce their opening hours, and a shortage of drivers is exacerbating current supply chain issues by making it difficult to get stock out to stores. Higher fuel prices being experienced over the first half has also applied additional pressure on discretionary spend in store.
Regional and independent stores continue to perform strongly, however as the metropolitan areas cycle over a very soft second half in 2021, AACS expects a stronger performance in the metropolitan areas.
Despite the challenges, many categories experienced growth, such as Packaged Beverages growing 5.9 per cent along with strong growth from the functional and energy segments.
Foodservice experienced growth of 6.5 per cent YTD 2022, backing up a strong performance of 19.4 per cent growth during the previous year. Within the Foodservice, Take Home Food saw a 12.8 per cent rise and now accounts for a quarter of the total category.
The Snacking category had growth of 3.4 per cent, continuing from a sustained period of growth cycling 14.3 per cent YTD 2021, with popcorn being the surprise player in the category, growing by double digits.
Hot Dispensed Beverages saw a decline of 2.7 per cent, which has been impacted by reduced discretionary spend on the back of higher fuel prices as well as CBD and surrounding areas still experiencing lower than expected sales due to work from home hangover.
NSW experienced its third straight year of decline, down 3.9 per cent, with the weather playing a significant impact. Victoria maintained a strong first half on the back of eight per cent growth in 2021, with a strong back half performance expected, as also cycling over lockdowns.
Looking ahead, AACS expects Tobacco to continue to be a drain on performance however the declines are expected to stabilise in the second half, while food and beverage categories will continue to drive growth.
Staff shortages will remain an issue for the foreseeable future, with the fatigue of current employees having to work longer shifts becoming a real issue.
Overall, a strong second half is expected despite the removal of fuel excise relief in September although margin pressures across the board for all business operating costs are a major concern.
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