Fueling growth Convenience stores expand with fresh, fancy offerings

Kangaroo Express on Dorchester Road

Until recently, convenience stores were hardly more than a place that offered a soda, bag of chips or cigarettes while you waited for the gas tank to fill up.

But a new breed of gas station stores popping up around the country, particularly in South Carolina, may be changing the face of convenience retailing.

Expanded convenience stores, as they are called by those in the retail industry, are growing faster than any other type of store with gas station counterparts. Compared to traditional "c-stores," these outlets are about 800 to 1,400 square feet larger, they often have more sophisticated architectural designs and they have a greater focus on fresh foods and local products.

For example, the new Sunoco APlus store at Ladson and Miles Jamison roads that opened in North Charleston in January is the company's first prototype for the fleet of expanded stores it plans to open in the Charleston area. It features an outdoor patio, a juice and coffee bar staffed by a barista, a deli sandwich counter and local craft beers on tap, where customers can fill growlers.

"Our store in North Charleston - the best store I think we've ever had - that has deli-quality items that you could find in a restaurant," said Jeff Shields, a Sunoco spokesman. "We were pioneers in that field, offering something that people would not necessarily associate with a convenience store. People seem to really enjoy that choice."

Roofing technicians Wade Carrigan and Michael Vinson recently stopped at that Sunoco APlus store for the first time on their way to a job in the area.

"This is a pretty cool place, it's like a gas station and a restaurant," Carrigan said. "It's somewhere close to where we work that we can stop in and grab something to eat."

Jeff Lenard, vice president of strategic industry initiatives with the National Association of Convenience Stores, said there are a few reasons why the expanded c-store is the new prototype for growth in the convenience industry.

For one thing, sales of tobacco and fuel, which make up a combined 80 percent of the average convenience store's sales, are declining.

Vehicles are becoming more fuel efficient, and more smokers are making efforts to shake the habit, Lenard said.

"With so much of the sales dollars facing challenges, convenience stores are looking more toward foods," he said.

While fuel and tobacco are big players in sales, the profits retailers make on both products is relatively slim. Lenard said the real value of fuel and cigarettes to most convenience retailers these days is that they get people in the doors.

"If they're already stopped to buy gas, they're more likely to go in and buy a snack or a drink," he said.

Last year, food sales accounted for about 30 percent of convenience stores' profits, nearly as much as fuel, while tobacco sales accounted for about 19 percent of profits.

"Convenience stores are evolving from gas stations that happen to sell food to food stores that happen to sell gas," Lenard said. "That's the ultimate evolution because there's more profit there and there is more likely demand."

The Palmetto State is home to about 4.7 million residents, according to the most recent census data. There are nearly 3,500 convenience stores in the state, according to the National Association of Convenience Stores, which means there is one store for nearly every 1,350 residents.

But c-stores continue to expand in both size and number across South Carolina.

Sunoco plans to invest $30 million to build at least six more expanded stores in the Charleston area over the next 18 months, Shields said.

"We want to grow, and we want to put our best foot forward in markets like Charleston," he said.

Kangaroo Express, the c-store chain owned by The Pantry based in Cary, N.C., has about 20 locations in the Charleston area. With 1,585 stores in 13 states, Kangaroo Express is the fifth largest convenience store chain in the United States, said Dennis Kirk, regional division vice president.

In the past two years, The Pantry has opened several expanded c-stores in the Palmetto State, which Kirk said is one of the company's main markets.

The strong tourism industry and the surge in commercial and residential development may explain why convenience retailers are expanding their footprint in South Carolina, he said.

"I think the tourism aspect is picking up, so when tourism picks up there's a lot more traffic coming through, and that gives us the advantage of having that footprint," Kirk said.

He added that construction workers represent a major portion of their client base, so convenience retailers are often drawn to rapidly developing areas.

"Those crews that are working and getting the contracts, those are the customers that come into the convenience stores on a regular basis. So the more housing picks up, the more you see the c-store industry grow," Kirk said.

With 151,000 stores and counting in the United States, the convenience store business is already the largest single sector of the retail industry. But c-stores continue to expand across the country, perhaps because they can afford to.

Convenience store sales, excluding fuel, reached a record $204 billion last year, according to the National Association of Convenience Stores.

Business is so good, even Walmart is tapping into the trend. The retail giant last month opened its first small-format store with a gas station, Walmart To Go, in its hometown of Bentonville, Ark. Walmart is expected to bring another small-format store, the Walmart Neighborhood Market, to Myrtle Beach this summer.

Lenard said the growth may reflect just how valuable it is for consumers to save time.

"However people define time, we deliver it. Sometimes it's one-stop shopping, or it's easy in and out," he said. "The value of convenience has never been higher."

Reach Abigail Darlington at 937-5906 and follow her on Twitter @A_Big_Gail