Grocery chain Giant Eagle hasn’t built a lot of new supermarkets in recent years, even sliding a few hardware stores into some of its existing locations to give customers more reasons to stop in.
But convenience stores seem to be a different story. The O’Hara grocer sees potential in continuing to grow its GetGo stores chain selling gas, sandwiches and smoothies — an assessment that drove its recent acquisition in Indiana.
GetGo snapped up Ricker’s, a chain of convenience stores in September for an undisclosed amount.
“We were about 10 in market share in Indiana. This catapults us to number two and allows us to scale quickly,” said Polly Flinn, executive vice president and general manager for GetGo.
Giant Eagle isn’t alone in seeing opportunity in the convenience store space. Recent years have seen the number of convenience stores climb steadily as they’ve shed their image of junk food and scorched coffee for fresher, healthier choices.
There were a record 154,958 stores at the end of 2017, according to the National Association of Convenience Stores/Nielsen Convenience Industry Store Count.
That year, overall sales climbed 9.3 percent to $601.1 billion, led by a 14.9 percent increase in fuel sales — largely due to higher gas prices in 2017, according to NACS, the Alexandria, Va.-based trade group.
Location and scale is key in the convenience store business — being within easy reach of consumers and their cars. And having plenty of locations for regular customers to use their loyalty cards.
In December, Coen Markets Inc. — a Canonsburg-based company that owns stores in Pennsylvania, West Virginia and Ohio — acquired CoGo’s, which operates 38 locations in and around Pittsburgh.
Altoona-based Sheetz is in the midst of an expansion with plans to build 25 to 30 stores a year. The company, which pulls in more than $5.6 billion in revenue, operates more than 560 store locations with at least 18,500 employees in Pennsylvania, West Virginia, Virginia, Maryland, Ohio and North Carolina.
For industry operators like Giant Eagle, convenience store growth is an opportunity as the grocery space faces increasing competition.
Bloomberg Intelligence points out that the landscape for supermarkets is crowded “as discount stores, dollar stores and warehouse clubs have improved their food selection to drive customer traffic in stores. Growth in hard-discount grocery chains is also rising.”
“Supermarket operators have to be nimble to defend share, especially as online sales grow,” Bloomberg Intelligence stated.
Giant Eagle has responded by adding home delivery and curbside pickup for customers who don’t want to bother to shop, but grocers of all sorts are challenged by online rivals and even delivery services that pick up food from neighborhood restaurants.
Meanwhile, GetGo has had seven stores in the Indianapolis-area since 2015. The Ricker’s deal gives the company another 63 stores and 80 wholesale locations, Ms. Flinn said. Ricker’s, founded in 1979, has more than 750 employees. The stores are expected to operate under the GetGo name by the end of the summer.
“We thought this chain had a really good set of capabilities,” she said. “We were looking for great people and thought this was a really great opportunity for us to acquire.”
The GetGo chain is also investing in its operations closer to home.
Earlier this month, GetGo also opened the doors at a new location in Monroeville and is working on a new store in New Stanton that is expected to open this spring, which will bring the store total to 256.
Ms. Flinn notes that while convenience stores aren’t completely “internet proof,” it’s a sector that’s growing successfully because it fills a need.
“For 80 percent of consumers, this is a need they’re trying to address within an hour. And they’re buying inside that they’re going to consume within an hour — I’m thirsty; I’m hungry. It’s an impulse destination.”
Stephanie Ritenbaugh: sritenbaugh@post-gazette.com; 412-263-4910; Twitter: @StephanieRit
First Published: January 30, 2019, 12:00 p.m.
Updated: January 30, 2019, 12:01 p.m.