The Australian convenience sector has recorded a strong growth rate of 4 per cent for the first half of 2014, according to a State of the Industry report from industry body the Australasian Association of Convenience Stores (AACS).

This result follows the 3.7 per cent increase recorded for the full year in 2013. THe AACS said the report demonstrated the “resilience” of the convenience sector and the value proposition that stores continue to offer their customers.

AACS CEO Jeff Rogut said the strong momentum was a testament to the retailers and suppliers at the forefront of the industry.

“The half year result demonstrates the industry is tracking well for another year of sustained growth,” Mr Rogut said. “The commitment to innovation on both the supply and retail side of the industry is clearly paying dividends in what remains a challenging environment for retailers generally,” he said.

“Generally speaking, strong performing product categories in 2013 have continued to show growth, while the challenge to extract value from underperforming categories remains,” Mr Rogut said.

Similarly to 2013, in the first half of 2014 Non Food grew at a faster rate, increasing by 4.6 per cent in the first half. Food dropped slightly on the 2013 result at 3.2 per cent growth in the first half of 2014 compared to 3.5 per cent last year.

After a strong result in 2013 the Ice Cream category maintained its momentum into the first half of 2014, once again having the strongest growth for the first half at 10.6 per cent.

Other leading categories for the half included Medicinal, which grew 8.6 per cent; Take Home Beverages, which grew 5.5 per cent; and Food on the Go, which increased 4.5 per cent.

Tobacco sales growth

Continuing the trend driven by further Government excise increases, the massive growth in the tobacco sub-value category of 61.7 per cent and roll your own tobacco of 29.1 per cent saw Tobacco category sales for the half increase 7.3 per cent. This result must be viewed in the context of the huge growth in the illicit tobacco market.

“Another round of Government excise increases on tobacco and the growth in the illicit tobacco market driven by plain packaging continues to impact small businesses, pushing legal tobacco customers to cheaper product alternatives, with price firmly established as the key driver in tobacco sales,” Mr Rogut said.

Mainstream Cigarettes remains the largest category, however the growth rate was just 0.9 per cent, while the Premium category, which remains the second largest, declined 7.4 per cent.

Petrol theft growth ‘concerning’

The alarming incidence of petrol theft crimes remains perhaps the most concerning area for the convenience industry, with petrol theft now costing on average $191 per store per week, equating to almost $60 million annually. This is an increase of 30 per cent.

“Petrol theft crimes are occurring in unprecedented numbers,” Mr Rogut said. “Aside from the potentially dire safety consequences, the financial implications for convenience store owners have become critical,” he said.

“The AACS will remain outspoken on the issue as theft is a cost that can’t be absorbed by retailers and will necessarily be passed on to motorists,” Mr Rogut said. “Petrol theft is increasing, and while police fail to acknowledge the issue, it will continue to get worse,” he said.

Nevertheless, on a whole, to see the convenience industry continue to achieve growth against a backdrop of high fuel prices and budget uncertainty is especially pleasing,” Mr Rogut said. “After strong performance in 2013 in a challenging environment of subdued consumer confidence and a market which is prioritising value, it was encouraging to see the convenience channel has again achieved growth above CPI,” he said.

Supermarkets seeking share of convenience growth

Australian Food News reported earlier in October 2014 that supermarket giants Coles and Woolworths looked set to enter the convenience market, with media reports that the supermarket groups were making a ‘land grab’ for inner city corner store real estate.

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