Convenience and communities at risk: A true test of resiliency

As we gear up for CICC’s National Summit in Montreal, our members are eagerly awaiting the release of our annual State of the Industry Report that recaps the financial health of Canada’s c-store industry in 2022.

Without revealing too much, this year’s numbers highlight one of the most unique economic situations the convenience channel has weathered in that last two decades, even in the wake of COVID-19.

Slowly adapting to the industry’s new normal post pandemic, the Canadian convenience channel faced a 40-year high jump in inflation—6.8%—boosting prices both at the pump and in store, while it endured a massive drop in its biggest category, tobacco. The result is what some retailers dubbed a “9-1-1 scenario” as the industry once again had to pivot and adapt to ever-changing market conditions.

The five-year trend of fewer stores, lower sales and a reduction in employees continued in 2022. Unfortunately, for the second year in a row, three stores closed their doors for good every day. Most of these closures were independents in rural areas of the country, often where the local c-store is the sole provider of essential goods.

And these closures not only impact the residents and the communities they serve, but it has a ripple effect throughout our daily routines, not to mention the national economy. Convenience stores are community hubs regardless of geography, but they are a lifeline to rural and remote communities. While residents in some areas are now inconvenienced to purchase day-to-day items, others will in some cases have to do without, or drive a longer distance. But it’s not just the residents of those communities who will be impacted. It’s the paramedic and police services who won’t be able to fuel their vehicles or purchase a late-night coffee. The disappearance of convenience gas outlets also causes new challenges for the tourism industry as some areas of the country will essentially be cut off due to lack of available fuel.

Every year, the headwinds the industry faces increase. Last year was no exception. According to CICC/IPSOS consumer data, the top issues on the mind of Canadians were inflation and recession. In fact, that data highlighted many obstacles for the c-store industry as consumers said they were cutting back on non-essentials, opting for lower-priced products and driving less. In other words, the premium of convenience that retailers have enjoyed for years, evaporated in a few short months, forcing c-store retailers to be more cost-competitive than ever before.

Add into the mix a 9.2% reduction in the industry’s biggest in-store category—cigarettes—driven by a flourishing contraband tobacco market, and it truly created a challenging economic climate.

Yet despite facing these unforeseen challenges, Canada’s c-stores once again demonstrated their Canuck-style hockey resiliency of battling adversity.

Despite a reduction in stores and employees, unit sales remained relatively constant in comparison—an increase of 0.7% not including tobacco. In overall dollars, sales volumes were down by $678 million or 1.25%.

But factoring in the taxes the convenience channel collects for governments paints a different picture. Overall, taxes collected jumped by $2.6 billion—11%—to $25.2 billion. The increase was fuelled by the federal government’s carbon tax, and taxes now account for 47% of total sales.

In other words, convenience retailers are figuring out that doing more with less is not just a euphemism, but a necessary business mantra for the future. Maximizing square footage, changing up product mix to meet customer demand, tapping into innovative technology to take the convenience store to the customer and focusing on customer loyalty are tools that retailers are employing in their quest for sustainability. 

Innovation and agility are critical success factors in the Canadian market. Know your customer, serve your customer. Pivot and adapt. Repeat.

While no one can predict what the future has in store for Canada’s convenience industry, the past few challenging years have made retailers stronger than ever. The one constant moving forward is what sets Canadian c-stores apart from the rest of the world—being part of the communities they serve, digging in the proverbial corners to overcome both the adversity and challenges they face.

Convenience and community are synonymous in Canada. In fact, you can use the health of the industry as a barometer to gauge the health of communities. When convenience does well, so do communities. When the industry struggles, it threatens the vibrancy of the communities it serves.

CICC will continue to be the voice of Canada’s convenience industry, fighting to create long-lasting winning business conditions as we navigate this era of both challenge and change.