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Circle K Parent Expands As Threats To C-Stores Grow

Global convenience store giant Couche-Tard is growing its physical footprint in the U.S., even as short- and long-term factors cast a shadow on its future.

The Story

Couche-Tard, a company that operates over 14,000 stores across 26 countries and territories including convenience store brands Circle K, INGO brand and its flagship Couche-Tard, announced Tuesday (Aug. 24) that it has acquired 35 locations from the Porter’s convenience store brand, which are primarily located in Oregon and Washington.

“These locations have strong fuel and convenience assets with a track record of growth and a network of experienced employees,” Brian Hannasch, president and CEO of Alimentation Couche-Tard, said in a statement. “With this transaction, we look forward to growing in the pacific northwest and making our customers’ lives a little easier every day in that region.”

The Lead-Up

2020 was difficult for convenience stores, but they have been bouncing back in recent months. In the quarter ended April 25, 2021, the most recent quarter on record, the company’s revenue jumped 26 percent, helped by the incipient vaccine rollout.

“During the last weeks of the quarter, restrictions began to be lifted in parts of our network, particularly in the U.S. and we are cautiously optimistic that as vaccination ramps up across the world, we will continue to see traffic improve,” Hannasch told analysts on a call at the time.

The Near Future

This might not be the best time for a brick-and-mortar c-store chain to be going all-in on growth. There are a couple of major factors threatening the traditional convenience store in the near- and long-term future. Regarding the former, the delta variant poses a significant threat to mobility, the lifeblood of convenience stores.

Cases are up 11-fold since the end of June, and many consumers are beginning to hew toward socially distant behaviors. PYMNTS data show that, when contagion concerns rise, consumers move their retail shopping habits online, and that consumers’ willingness to engage in commerce away-from-home depends strongly on how safe they feel.

Read more: PYMNTS’ COVID-19 Brief Series

The Long View

Convenience stores work when they are, as the name suggests, the most convenient option. Unfortunately for the incumbents, an option is emerging that is even more convenient for consumers than going to the store on the corner — staying where they are, and having their purchase brought to them. PYMNTS research finds that consumers increasingly expect the option to get what they need wherever they are, whenever it is, but the traditional convenience store is deeply tied to the store’s physical location.

DoorDash announced its DashMart online convenience store in August of 2020, placing itself in competition with the convenience stores already on the platform. Since then, the delivery giant has only been making DashMart easier to access, recently announcing its DoubleDash feature, which allows customers to add DashMart goods to their restaurant orders.

Learn more: DoorDash Launches Digital Convenience Stores

Restaurant Roundup: DoubleDashed, Double Vaxxed And Double Shacked

Convenience stores focusing on brick-and-mortar risk falling behind. A Mobiquity study of convenience store customers found that more than half want the ability to use digital tools that fit their lifestyle, and that it is important to more than three-quarters of consumers that the store from which they are shopping has an easy-to-use mobile app.

With the rise of the delta variant and the shift to digital, acquiring more physical locations may not be the key to c-stores’ success in months and years ahead.

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