Convenience Store News

JAN 2017

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42 Convenience Store News | JANUARY 2017 | WWW.CSNEWS.COM Business Forecast Healthy Economy, Healthy Consumer The U.S. is operating near full employment and consumer confidence is high C onvenience store retailers are feeling pretty good about the overall conditions for the U.S. economy in 2017, and the industry's suppliers are feeling even better. More than 60 percent of the c-store retailers surveyed for this year's Forecast Study and 73 percent of the c-store suppliers surveyed said they view economic conditions for 2017 as positive. Our consulting economist Maureen Maguire agrees with their assessment. The consumer is "healthy," leading to high consumer confidence, which translates into healthy consumer spending, she explained. The economy is operating near full employment, inflation is low, and interest rates are relatively low. At the same time, the stock market continues to push new highs, which translates into positive wealth effects and circles back to a healthy consumer. The 15th annual Convenience Store News Forecast Study provides dollar and unit volume projections in key c-store product categories based on data from various sources, including Nielsen for category sales history; TDLinx for store counts; and government sources for motor fuel volume and pricing data. The data is then run through a sophisticated projection model and presented here in summary form. Maguire, founder and CEO of New York-based ThinkResearch, oversees the Forecast Study process (see page 52 for full methodology). Here are the category projections for 2017: MOTOR FUELS Low gas prices will continue to be the chief storyline in "The Tale of Motor Fuels" in 2017, but the ending of this year's chapter should be even happier than pre- vious ones. The last time the average U.S. retail price per gal- lon (all grades) tipped the $3 mark was in 2014. Since then, the average price has remained in the $2 range, and that is forecasted to again be the case in 2017, with the average price for the year projected at $2.49 per gallon. Although this is 10 percent higher than 2016's esti- mated per-gallon price of $2.27, this year's Forecast Study results show 2017 consumption of motor fuels will be up slightly — both on a national level and a convenience store-specific level. Consumption was relatively flat in 2016. Nationally across all outlets, the forecast calls for a total of 189.2 billion gallons of gasoline to be sold in 2017, up from 187.5 billion in 2016 (estimated) and 187.5 billion in 2015 (actual). At the c-store level, the forecast calls for 153.5 billion gallons to be sold in 2017 — 81 percent of the national total — up from 151.9 billion in 2016 and 152.1 billion in 2015. Because of the increased consumption, combined with Retailer Forecast: Motor Fuels 63.3% 23.3% 13.3% Source: Convenience Store News Market Research, 2017 Net change: 3.2% 2017 sales per store will: Industry Forecast: Motor Fuels 2015 2016 2017 ACTUAL ESTIMATED FORECAST Average retail price per gallon 1 $2.57 $2.27* $2.49* Gasoline (all grades) $2.51 $2.25* $2.41* Diesel $2.71 $2.31* $2.70* National billions of gallons 187.3 187.5* 189.2* C-store billions of gallons 151.9 152.1 153.5 National sales of gasoline ($ billions) $481.4 $424.9 $471.3 C-store sales of gasoline ($ billions) $390.4 $344.6 $382.2 1 Weighted average price of all grades and diesel fuel *Prediction from EIA/Department of Energy, Short-Term Outlook, December 2016 Source: EIA/Department of Energy; Convenience Store News Market Research, 2017 Volume will increase Volume will decrease Volume will stay the same

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