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									RNCOS                       U.S. Convenience Stores: A Market Analysis
Online Business Research

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RNCOS                                     U.S. Convenience Stores: A Market Analysis
Online Business Research

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RNCOS                                           U.S. Convenience Stores: A Market Analysis
Online Business Research

About the Report
RNCOS’ “U.S. Convenience Stores: A Market Analysis” provides extensive research and
rational analysis on the proliferating market of convenience stores in United States. This
report helps clients to analyze the opportunities and factors critical to the success of the
convenience stores market in US.

This report reviews the stores and industry practices across the globe in general and in US in
particular. It provides an insight into how convenience business is shaping up to address the
gamut of issues raised by this new standard-bearer of world retail.

In recent years, with convenience stores operators initiated on strategic moves to improve
operations, enhance performance and differentiate from the competitor to position
themselves—the changing nature of convenience retailing and the margin pressures brought
on by encroaching competitive formats is driving c-store industry consolidation.

Key Issues and Facts Analyzed

       What is the market size of the US retail store industry?
       How is the convenience stores growth state-wise?
       What are the factors driving growth in this sector?
       What are the technologies that can help convenience store markets to improve their
       How these technologies are increasing operational efficiency in this industry?
       Who are the major players of US Convenience Industry, their presence and strategies
             being used by them to improve profitability?

Key Findings

       C-store unit growth continues to outpace US’ population growth as average person per
             store has declined by 0.72% in the year 2005 in comparison to 2004.
       California provides a big opportunity market for the C-stores to grow. California is, by
             far, the largest US state with a population of 36.13 Million in 2005 and accounts for
             the second highest number of C-stores in US.

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RNCOS                                             U.S. Convenience Stores: A Market Analysis
Online Business Research

       Convenience stores sell three-quarters of all the gasoline purchased in the United
             States through Convenience stores.
       As the gasoline prices are increasing day-by-day, two states, New Jersey (30.1%), and
             Oregon (51.7 %), had shown the lowest fuel sales in the year 2005.
       Gasoline theft is a major problem for retailers in US. It is estimated that on an
             average, one in every 1,100 fill-ups gasoline was theft in 2005.
       Credit card fees in 2005 constituted more than 90% of a store's profits; totaling to US$
             38,383 per store, and it is expected to grow in the coming years.

Key Players

This section covers the key facts about major players currently operating in the C-store
industry, such as 7-Eleven Inc., Kroger, Koninklijke Ahold N.V, Shell Oil Products US,
Exxonmobil Corporation, Alimentation Couche-Tard Inc. and Sunoco, Inc.

Research Methodology Used

Information Sources
Information has been sourced from books, newspapers, trade journals, and white papers,
industry portals, government agencies, trade associations, monitoring industry news and
developments, and through access to access to more than 3000 paid databases.

Analysis Methods
Ratio Analysis, Historical Trend Analysis, Linear Regression Analysis using software tools,
Judgmental Forecasting and Cause and Effect Analysis are the methods used to analyze the
facts and figures given in this report.

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RNCOS                                             U.S. Convenience Stores: A Market Analysis
Online Business Research

      Table of Contents
                                                                5.2.4 Online Presence
      1.       Analyst View
                                                                5.2.5 Out of Stock
      2.       Research Overview
                                                                5.2.6 Competition
      3.       Industry Overview
                                                                5.3    Challenges
      3.1      Worldwide Development of C-Store
                                                                5.3.1 High Credit Card Fees
      3.2      Worldwide Retail Sales
                                                                5.3.2 Same Customer Visit has to Pay
      3.3      Retail Sales by Geographical Regions
                                                                Twice Fees
      3.4      Worldwide Top Retailers
                                                                5.3.3 Shrinking Margins
      4.       US C-Stores Industry Market
                                                                5.3.4 Labor Challenges
      4.1      Total Number of US C-Stores
                                                                5.3.5 Violence and Robbery
      4.1.1 US - Top Ten States by Maximum
                                                                5.3.6 Increased Competition
      Number of C-Stores
                                                                5.3.7 Virtual Robbery
      4.2      C-Stores - Regional and State-Level
                                                                5.3.8 Gasoline Theft
                                                                5.4    Future Outlook
      4.2.1 Southern Region
                                                                6.     Key Players
      4.2.2 Northeast Region
                                                                6.1    7-Eleven Inc.
      4.2.3 Midwest Region
                                                                6.2    Kroger
      4.2.4 Western States
                                                                6.3    Koninklijke Ahold N.V
      4.3      C-Store Sales in US
                                                                6.4    Shell Oil Products US
      4.4      C-Stores selling Motor Fuels
                                                                6.5    ExxonMobil Corporation
      4.5      In-Store Sales
                                                                6.6    Alimentation Couche-Tard Inc.
      4.6      Total Single Store and Chain Stores
                                                                6.7    Sunoco, Inc.
      in Operation
      4.7      C-Stores Closed in US
      4.8      Growth and Sales Analysis of US C-
      Stores Companies
      4.9      Employment Opportunities in US C-
      5.       Industry Analysis
      5.1      Driving Forces
      5.1.1 Strong GDP Growth
      5.1.2 Investment on the Part of Fuel
      5.1.3 Increase in Disposable Income
      5.1.4 Demand for Convenience Shopping
      5.1.5 Convenient Location of C-Stores
      5.1.6 Socio-demographic Shifts
      5.1.7 Single Person Households
      5.1.8 Increased Immigration
      5.1.9 Increased Travel Time
      5.1.10 Eating Patterns
      5.1.11 Busy Lives
      5.2      Opportunities
      5.2.1 IT in C-Stores
      5.2.2 Biometric Products for C-Stores
      5.2.3 Local C-Stores

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RNCOS                                                 U.S. Convenience Stores: A Market Analysis
Online Business Research

List of Figures & Tables

      List of Figures:                                              List of Tables:

      Figure 3-1: Worldwide - Retail Sales (in Trillion US$),       Table 3-1: Structure of Convenience Storefront
      2001-2006E                                                    by Size and Operation
      Figure 3-2: Worldwide - Retail Sales by Geographical          Table 3-2: Worldwide - Top 10 Retailers by Net
      Regions (in Trillion US$), 2006                               Sales (in Billion US$), 2005
      Figure 4-1: US - Growth in Various Retail Formats             Table 4-1: US - Historical Growth of C-Stores
      (%), 2005-06                                                  (1973, 1983, 1993 & 2003)
      Figure 4-2: US - Total Number of C-Stores (2003-04,           Table 4-2: US - Total Number of C-Stores in
      2004-05 & 2005-06)                                            Southern States (2004 & 2005)
      Figure 4-3: US - Number of C-Stores Share by Top 10           Table 4-3: US - C-Stores Saturation Figure for
      States (%), 2005-06                                           Southern States (Average Person per Store),
      Figure 4-4: US - C-Stores Saturation Figures (Average         2004 & 2005
      Person per Store), 2004 & 2005                                Table 4-4: US - Total Number of C-Stores in
      Figure 4-5: US - C-Store Industry Sales (in Billion           Northeast States (2004 & 2005)
      US$), 1998-2002 & 2003-04 to 2005-06                          Table 4-5: US - C-Stores Saturation Figure for
      Figure 4-6: US - Share of Motor Fuel and In-Store             Northeast States (Average Person per Store),
      Sales in C-Store Sales (%), 2005-06                           2004 & 2005
      Figure 4-7: US - Motor Fuel Sales (in Billion US$),           Table 4-6: US - Total Number of C-Stores in
      2004-05 & 2005-06                                             Midwest States (2004 & 2005)
      Figure 4-8: US - Motor Fuel Sales by Product (%),             Table 4-7: US - C-Stores Saturation Figure for
      2005-06                                                       Midwest States (Average Person per Store), 2004
      Figure 4-9: US - States with Highest and Lowest               & 2005
      Percentage of Motor Fuel Sales                                Table 4-8: US - Total Number of C-Stores in
      Figure 4-10: US - In-Store Sales Growth (in Billion           Western States (2004 & 2005)
      US$), 2003-04 to 2005-06                                      Table 4-9: US - C-Stores Saturation Figure for
      Figure 4-11: US - In-Store Sales by Products (%),             Western States (Average Person per Store), 2004
      2004-05                                                       & 2005
      Figure 4-12: West Coast - Market Segmentation of              Table 4-10: US - Number of Single Stores and
      Single Stores (%), 2005                                       Chain Stores (2004-05 & 2005-06)
      Figure 5-1: US - Personal Disposable Income (in US$           Table 4-11: US - Number of C-Stores Closed,
      per Head), 2001-2006E                                         2004
      Figure 6-1: Kroger - Stock Performance                        Table 4-12: US - Number of C-Stores Closed,
      Figure 6-2: Koninklijke Ahold N.V - Stock                     2005
      Performance                                                   Table 4-13: US - Top 50 C-Store Companies,
      Figure 6-3: Exxonmobil Corporation - Stock                    2005
      Performance                                                   Table 4-14: US - Average Wage Rates (in US$ per
      Figure 6-4: Alimentation Couche-Tard Inc. - Stock             Hour), 2004-05
      Performance                                                   Table 5-1: US - GDP Growth (%), 2001-2006E
      Figure 6-5: Sunoco, Inc. - Stock Performance                  Table 5-2: US - Population Break-up (%), 2001-
                                                                    Table 6-1: 7-Eleven Inc. - Financial Overview (in
                                                                    Million US$), 2000-2004
                                                                    Table 6-2: Kroger - Financial Overview (in
                                                                    Million US$), 2006
                                                                    Table 6-3: Koninklijke Ahold N.V - Financial
                                                                    Overview (in Million Euro), Q3 2005 to Q3 2006
                                                                    Table 6-4: ExxonMobil Corporation - Financial
                                                                    Overview (2003-2005)
                                                                    Table 6-5: Alimentation Couche-Tard Inc. -
                                                                    Financial Overview (in Million US$), 2005 &2006
                                                                    Table 6-6: Sunoco, Inc. - Financial Overview

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RNCOS                                                       U.S. Convenience Stores: A Market Analysis
Online Business Research

4.1                 Total Number of US C-Stores

The number of convenience stores in the United States stands at 140,655 in the year 2005-06.
The new figure is a 1.77 % increase over the 138,205 stores in the year-end 2004.

                            Figure 4-2: US - Total Number of C-Stores (2003-04, 2004-05 & 2005-06)

                   140000                                            138205
      in Numbers



                                      2003-04                        2004-05                 2005-06

Source: NACS, 2006

Historical Growth of C-stores
C-Stores growth in US saw a boom during the period 1973 to 1983. The CAGR during the
period was around 12.11% and the number of C-stores increased by 51,900. But the CAGR
slowed down during the period 1983 to 1993 (2.84%) and 1993 to 2003 (2.66%), although the
overall number of C-store increased and touched the new height of 131,000 by 2003.

                            Table 4-1: US - Historical Growth of C-Stores (1973, 1983, 1993 & 2003)

                    Year                   No. of Stores                             CAGR
     1973                                                   24,300                                          -
     1983                                                   76,200                                     12.11%
     1993                                                  100,800                                      2.84%
     2003                                                  131,000                                      2.66%

Source: NACS

Total C-store industry sales increased from US$ 186 Billion to US$ 394.7 Billion from 1998 to

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RNCOS                                                 U.S. Convenience Stores: A Market Analysis
Online Business Research

4.2.3           Midwest Region

The Midwest’s population growth since 2004 has only been 0.38%, but C-store development
did not show any significant growth from 2004 to 2005. Ohio, Kansas, Michigan, Illinois and
Missouri lead the way.

Out of twelve states, six states showed negative growth as the number of c-store have
declined in the year 2005 in comparison to 2004 in these states.

                       Table 4-6: US - Total Number of C-Stores in Midwest States (2004 & 2005)

                           State                    2004             2005                  % Growth
   Minnesota                                               3,974            3,820                       -3.88
   Nebraska                                                1,638            1,600                       -2.32
   Iowa                                                    2,788            2,732                       -2.01
   Michigan                                                5,176            5,089                       -1.68
   South Dakota                                            1,100            1,085                       -1.36
   North Dakota                                             835              830                        -0.60
   Indiana                                                 3,300            3,300                        0.00
   Wisconsin                                               4,253            4,253                        0.00
   Illinois                                                4,900            5,100                        4.08
   Ohio                                                    4,923            5,125                        4.10
   Kansas                                                  2,200            2,500                       13.64
   Missouri                                                3,825            4,410                       15.29

Source: NACS, 2005
Note: Store

Four states have shown the declined saturation figure in the year 2005 where the average
person per stores has decreased.

  Table 4-7: US - C-Stores Saturation Figure for Midwest States (Average Person per Store), 2004 &

                  States           Saturation Figure (2004)    Saturation Figure (2005)       % Change
   Missouri                                            1678                         1451              -13.51%
   Kansas                                              1243                         1098              -11.70%
   Ohio                                                2328                         2237               -3.90%
   Illinois                                            2595                         2503               -3.55%
   Wisconsin                                           1295                         1302               0.49%

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RNCOS                       U.S. Convenience Stores: A Market Analysis
Online Business Research

   Indiana                   1890                 1901          0.55%
   North Dakota               760                  767          0.97%
   Michigan                  1954                 1989          1.79%
   South Dakota               701                  715          2.05%
   Iowa                      1060                 1086          2.46%
   Nebraska                  1067                 1099          3.05%
   Minnesota                 1284                 1344          4.68%

Source: NACS, 2005
Note: Store

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RNCOS                                         U.S. Convenience Stores: A Market Analysis
Online Business Research

5. Industry Analysis

5.1 Driving Forces

5.1.2           Investment on the Part of Fuel Retailers

Retail margins have fallen significantly in the past two decades, as rising oil prices and
taxation levels led to increased price-sensitivity among motorists and more aggressive price
competition between retailers, spurring a complete transformation of the forecourt. Where
once their sole business was the retail of fuel and car-related products, it has now become
imperative for service stations to sell other goods and services in order to survive.

Increasing non-fuel sales has become a strategic priority and oil companies have been
investing especially heavily in the forecourt shop in recent years, extending these to cover a
greater proportion of the network, whilst expanding existing shops and increasing the range
of products to attract 'on-the-go' consumers and top-up shoppers as well as motorists.

5.1.4              Demand for Convenience Shopping

Strong consumer demand for convenience shopping has made the convenience store (C-store)
sector as one of the most dynamic sectors in the whole retail market. C-stores have
established an important niche for themselves in the grocery supply chain, essentially serving
top-up shopping requirements to supplement the supermarket shop.

5.2          Opportunities

5.2.3             Local C-Stores

There is an opportunity for local C-stores to develop their potential as community stores and
‘lifestyle assistants’, as they are better placed to know the particular needs of a town or
village more intimately than the larger supermarkets. They could create solutions for the
increasingly time-pressured element in the community, by offering anything that will give the
consumer extra time, e.g. home deliveries of high-quality frozen food, whether it is lunch for
the home worker, or the evening meal for a busy family.

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RNCOS                                       U.S. Convenience Stores: A Market Analysis
Online Business Research

5.2.4              Online Presence

Finding space has always been an issue for an average C-store. Offering any product beyond
the traditional boundaries is generally rendered impossible, simply as a result of size
constraints. However, the development of the computerized kiosk is seen by some as one way
to revolutionize the world of convenience retailing, making it possible to buy cars, book
holidays or select sports gear from these outlets.

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RNCOS                                        U.S. Convenience Stores: A Market Analysis
Online Business Research

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RNCOS                                    U.S. Convenience Stores: A Market Analysis
Online Business Research

Our Partial List of Clients
          ABN Amro Bank            ETRI                      Novratis Consumer
          Accenture                FMC Technologies            Health Switzerland
          AES Corporation          GE Global Research          AG
          Agrana                   Gene            Codes     Oak        Petroleum
          Allianz          Risk      Corporation                 Technologies
            Transfer,                ICICI                     Pfizer Animal Health
            PharmChem                ICRA Ltd                  PSE International
            Solutions                IIC (P) Ltd               RBB Economics
          Apollo     Marketing     IIM Ahemdabad             Reliance Capital
            Partners, Inc.           IITA                      Reliance Industries
          Bain & Company           ION       Automative        Limited
          BenQ Mobile                Systems                   Ritzio
          Bosch        Security    ITT Industries              Entertainment
            Systems                  Japan     Bank    For     Schuff International
          British     American       International             Scotiabank
            Tobacco                    Cooperation.              SiGe Semiconductor
          Cernium                  Japan         Electric    Sony Corporation
          Chart    Energy    &       Power Information         Sony Ericsson
            Chemicals, Inc.            Center Inc.               SUEK
          CheckPhone, Inc.         KCC          Research     Suite-Soft
          Chevron                    Institute                   Technologies, Inc.
            International   Pte.     KIPA     (Korea     IT    Sun Life Financial
            Ltd.                       Industry Promotion        Vocera
          CNSGT/Foxconn Inc.         Agency)                     Communications
          Core Media AG            Minerals                  Walt Disney Internet
          CSC                        Technologies Inc            Group
          Direct     Insurance     Nomura       Research     Zebra Technologies
            Financial                  Institute, Ltd.
            Investments LTD          Norkom
          Dow         Chemical       Technologies

                                       Page 13 of 14
RNCOS                                      U.S. Convenience Stores: A Market Analysis
Online Business Research


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