Throughout 2022, we focused on inflation and how it impacted visitation trends across the retail sector. We examined the impact of rising gas prices last March, which turned out to be something of an inflection point where consumers who were already feeling the pinch of higher food prices at grocery stores and restaurants started to adjust purchasing/visitation behavior. Even after gas prices started to subside from their June 2022 peaks (below), lower-to-middle-income consumers were being more selective with purchases.
Recently, we’ve received questions about gas station visits, and what they might reveal about the current state of the consumer. To dive deeper, we plotted weekly visits for gas station chains (representing 32 chains and almost 45,000 locations) the past six years (below). Two trends stand out to us. One, the industry has consolidated the past several years, with chains taking share from independents and smaller chains. Two, like most retail categories, the past three years have been abnormal for gas station visits. 2020 brought the steep decline in visits that most retail categories saw, followed by a bounce-back year in 2021 as consumers capitalized on pent up demand for travel (and boosted by government stimulus efforts). 2022 has been unusual as well, with visits trending ahead of 2021 for the first half of the year, but falling behind in the back half amid inflation and other macro headwinds.
Gas station visitation trends broadly mirror what we saw across the retail landscape in 2022, with year-over-year declines in visits as the year progressed. However, if we segment the gas station category even further, we see that it also mirrors the consumer shift to value. Below, we’ve segmented year-over-year visitation growth for “traditional” gas stations, gas stations that are affiliated with a grocery chain, and gas stations that are affiliated with a warehouse club. We’ve covered how gas (and draw of low pricing) helped Costco visitation trends in the past, but it also benefited Sam’s Club and BJ’s as well. On the other hand, grocery gas station visits (which are typically affiliated to larger national and regional chains like Kroger, Safeway, H-E-B, and Meijer) saw similar visit trends as their grocery counterparts, with visitation trends declining on a year-over-year basis as consumers sought out value in other channels.
Some grocery-affiliated gas stations did outperform traditional grocery stores to start the year, including Safeway, H-E-B, and Fred Meyer (below). However, with more consumers visiting value-oriented grocery chains as the year progressed, we saw that almost all grocery-affiliated gas station chains were underperforming the broader gas station category by the end of the year.
The key takeaway? Gas stations can drive incremental visits to the warehouse clubs and grocery stores they are affiliated with, but they can also be disrupted by food inflation and other factors. Many grocery-affiliated gas chains have rolled out loyalty programs to increase visit frequency and improve customer loyalty, and there is evidence that these efforts were successful when food inflation was less of a purchase consideration for consumers. However, with warehouse clubs, dollar stores, and value grocery seeing the strongest year-over-year visitation trends among consumer staples retailers to start 2023, it appears that the draw of lower food prices is nullifying some of the impact that gas stations have had in the past for their affiliated grocery stores.