Product procurement throughout the supply chain was a major challenge for convenience stores and their supplier partners last quarter and is expected to continue throughout 2021, according to leading convenience store and supplier companies.
Two in five convenience retailers (39%) say there were “significant” levels of disruption across the supply chain during the second quarter of 2021, and 86% report that at least 10% of their orders were disrupted, according to two NACS surveys of U.S.-based convenience retailers and their supplier partners.
Beverages were particularly a challenge in Q2, with 72% of retailers reporting supply disruptions of packaged beverages and 67% reporting supply challenges with beer. Also, two in five industry suppliers (38%) said they faced “significant” levels of disruption for materials necessary to create their products.
Compounding inventory challenges in Q2, three in four retailers (76%) say it was difficult to fill available positions. Only 2% of retailers surveyed said they did not face hiring challenges.
Supply chain disruptions also extended to equipment: 79% of retailers say they experienced delays with store equipment/hardware deliveries this year and 41% say they postponed store equipment orders or new store construction/remodel projects because of supply chain delays.
Confidence among convenience retailers and suppliers that improvements are coming is low: Only 25% of retailers and 27% of suppliers are confident that supply disruptions will improve in the second half of the year.
Despite the challenges, in-store sales have rebounded to pre-pandemic levels at convenience stores, according NACS CSX sales data ending April 2021. Fuel sales also have largely recovered. Finished gasoline supplied, which is tracked by the U.S. Energy Information Administration and is a proxy for supply, is only 1.8% lower the last two weeks of June 2021 than the same period in 2019.
Disruptions throughout the supply channel also have led to a greater level of collaboration between convenience retailers and their suppliers: 66% of supplier companies say that their overall relationship with convenience retailers is better than a year ago and 44% say their level of partnership and collaboration with the convenience retailing channel is better than other channels.
“Our industry’s resilience has been on display throughout the pandemic and is even more apparent now as the economy continues to bounce back. The value of convenience has never been higher, and the innovation within our channel to continually reinvent convenience to benefit our 165 million daily customers astonishes me. I look forward to a strong rest of 2021 and beyond,” said NACS Chairman Kevin Smartt, who operates 48 Texas Born and Kwik Chek stores across Texas and Oklahoma.
The NACS Retailer and Supplier Member Pulse Surveys were conducted in June 2021 by NACS Research. Overall, 56 retailer members, representing a cumulative 1,497 stores, and 83 supplier member companies participated in the survey. NACS Research conducts quarterly custom research with retailer members to identify key priorities and opportunities across the convenience and fuel retailing landscape.