Here's What Happened Inside Convenience Stores When Gas Hit $4
Continuing our coverage of consumer behavior shifts at petrol stations and convenience stores, the U.S. national average for 87-octane gasoline has remained above the politically sensitive $4-a-gallon level for three weeks. Goldman analysts have released a new note indicating that a majority of convenience stores are seeing drivers buying less fuel and trading down in-store.
Bonnie Herzog, managing director and senior consumer analyst at Goldman, penned a note titled Q1 "Beverage Bytes," which covers a survey of 32,000 retail locations, or about 21% of convenience stores nationwide.
"Despite the improved outlook, it appears that some consumers are already changing their behavior as gas prices remain elevated (at ~$4/gallon). Our retailers are seeing consumers purchasing less fuel, downtrading within the store, and declining basket sizes," Herzog wrote in the note.
More than half of respondents (53%) said they are already seeing changed consumer behavior with gas prices around $4 a gallon, while another 37% expect behavior to shift if prices remain elevated. Only 11% said they have not noticed any change.
The most common pattern shifts in these convenience stores were consumers buying less fuel, trading down at the pump, trading down in-store, and buying fewer in-store items. A smaller share also said customers are simply driving less because of higher gas prices.
Last week, Herzog's team published a survey of 44,000 retail locations across the U.S. (about 28% of all tobacco outlets) that showed $4-a-gallon fuel had already sparked trading down among nicotine users: "Downtrading was strong in Q1, as roughly 80% of respondents indicated that deep-discount cigarettes gained share."
To sum up, the fuel price shock highlights just how sensitive consumers remain in an ongoing K-shaped economy, with working-poor households bearing the brunt of the financial pain.
Professional subscribers can read the "Beverage Bytes" note on our new Marketdesk.ai portal.