Impulse shoppers drive convenience store recovery

ATLANTA — Impulse buyers are heading back to convenience stores for sodas and Hershey bars.

PepsiCo and Coca-Cola said the volume declines at convenience stores slowed last quarter for the first time in at least a year. Hershey's first-quarter chocolate, mint and gum sales in those stores grew about 6 percent.

"We're definitely seeing improving trends," said Dennis Phelps, senior director of beverages for 7-Eleven Inc., the world's largest convenience retailer. "Maybe customers feel a little better about letting go of some money."

Consumers bought less candy and soda last year at 7-Eleven and other on-the-go stores that typically generate higher profit margins for manufacturers. Dollar sales excluding cigarettes at convenience stores rose 0.5 percent in March after a 1.3 percent decline during the previous 52 weeks, according to Consumer Edge Research.

"We saw a pick-up in consumer discretionary spending, which resulted in improved sales for impulse purchases in convenience stores," said Bill Pecoriello, chief executive officer of Consumer Edge, based in Stamford, Conn. The research firm analyzes store scanner data from Information Resources Inc. to determine sales.

"Encouraging" volume trends for beverages at convenience stores continued into the second quarter, Eric Foss, head of PepsiCo's bottling unit, said in a conference call last week. Coca-Cola also saw slight improvement at convenience stores, said Dana Bolden, a spokesman for the Atlanta-based company.

Snacks, too, showed signs of recovery in the first quarter, said John Compton, CEO of Americas Foods for PepsiCo, which is the world's biggest snack maker and is based in Purchase, N.Y.

"I would characterize it as improving," he said during the call. "It has a ways to go as the unemployment numbers need to improve and the overall economy needs to improve."

The recession, record high gas prices and increased federal cigarette taxes imposed in March 2009 reduced convenience-store visits, 7-Eleven's Phelps said. In 2009, soft-drink volume industrywide at convenience stores fell 0.6 percent to 1.74 billion liters, according to Chicago-based researcher Euromonitor International.

That trend might be reversing. Customer counts at 7-Eleven fell less in the first quarter and might grow in the current quarter, now that the tobacco-tax increase is a year old and gas prices are stable, Phelps said. There are 38,000 7-Eleven stores worldwide. Dallas-based 7-Eleven, a unit of Seven & i Holdings Co., operates or franchises 6,000 in the United States.

Non-alcoholic beverage sales at 7-Eleven stemmed declines in the first quarter, compared with the fourth quarter of last year, Phelps said. He declined to provide dollar sales figures.

"There's no question about it, we're seeing better sales," said Mike Thornbrugh, a spokesman for Quiktrip Corp., which operates 548 convenience stores and is based in Tulsa, Okla. "It's not as much as we'd like, but they're still spending."