CSN - Feb 2017 by ensembleiq

Getting your tobacco categories to the next level begins with setting goals for the future. Let’s work together to develop a plan to enhance your store’s performance. Contact your AGDC Sales Representative today to make success a reality.

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VIEWPOINT By Don Longo, Editorial Director

Keeping the Beverage Sales Flowing C-stores must stay abreast of rapidly changing consumer tastes

everages are the lifeblood of a convenience store, but there may be signs that plaque is building up in some of the arteries. When it comes to the top 10 in-store categories for the convenience channel, packaged beverages and alcoholic beverages take the third and fourth spots, respectively. These two categories alone capture roughly 22 percent of all in-store sales, according to the Convenience Store News Industry Report. Add in hot, cold and frozen dispensed beverages and that percentage rises to more than 27 percent of in-store sales. And the importance of beverages to a c-store is only getting stronger. Packaged beverages, including carbonated soft drinks, energy drinks, juice, sports drinks, bottled water, ready-to-drink iced tea and enhanced water, grew by about 3.5 percent last year, based on preliminary data we’ve collected. That’s up from a 2.4-percent gain in the year-ago period. For comments, please contact Don Longo, Editorial Director, Meanwhile, beer sales rose by 3.1 at (201) 855-7606 or percent, a full percentage point betdlongo@ensembleiq.com. ter than the year-ago period. Although these statistics demonstrate the importance of beverages to the convenience channel and all its players — retailers, distributors and manufacturers — it is also true that consumer tastes continue to change rapidly. New research from The NPD Group

shows that U.S. consumers are drinking fewer purchased beverages. This is worrisome news for convenience stores, as this trend affects more than a quarter of their in-store sales. Apparently, according to NPD, Americans are drinking more tap water at home, and brewing their own gourmet coffee in their kitchens due to the wide variety of coffee appliances now available. Consumption of both regular and diet soft drinks has also been on the decline, although they still represent the largest revenue-generating subcategory within packaged beverages. The hot growth categories in beverages the past few years have been bottled water, enhanced water and energy drinks. In the beer category, imports, super-premium brands and microbrews/craft beers are the hot subcategories. On the dispensed side, the introduction of barista-served coffee at more and more c-stores is a sign of the growth of specialty coffee drinks. One look at a c-store’s cold vault today and you’ll see that there are more varieties of beverages available than ever before in order to appeal to the broad range of consumer needs and wants. The same goes for the coffee bar, beer cave, and the fountain drink wall. In order to keep their beverage sales flowing, c-store retailers must constantly be alert to changes in consumer tastes and trends. In this issue, we highlight some of the latest evolutions in the beverage business and provide case-study examples of c-store operators who are doing it right (see page 24).

EDITORIAL EXCELLENCE AWARDS (2013-2017) 2016 American Society of Business Press Editors, National Azbee Awards Gold, Best How-To Article, March 2015 Bronze, Best Original Research, June 2015 2016 American Society of Business Press Editors, Midwest Regional Azbee Awards Gold, Best How-To Article, March 2015 Silver, Best Original Research, June 2015 2015 American Society of Business Press Editors, National Azbee Awards Silver, Best Profile (long form), February 2014 2015 American Society of Business Press Editors, Midwest Regional Azbee Awards Gold, Best Special Supplement, November 2014 Silver, Best Profile (long form), February 2014 2013 American Society of Business Press Editors, Midwest Regional Azbee Awards Bronze, Best Editorial/Commentary, July 2012 2016 Trade Association Business Publications Intl. Tabbie Awards Silver, Front Cover Illustration, June 2015

EDITORIAL ADVISORY BOARD

2013 Jesse H. Neal National Business Journalism Award Best Single Issue, October 2012 2013 Jesse H. Neal National Business Journalism Award Finalist, Best Profile, August 2012

2016 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2015 Business to Business, Retail, Single/Series of Articles, August 2015 2015 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Single Article, February 2014 2014 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2013 Business to Business, Retail, Single Article, February 2013 2013 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2012

4 Convenience Store News | FEBRUARY 2017 | WWW.CSNEWS.COM

Brett Atherton Bolla Management Jon Bratta Core-Mark International Inc. Rick Crawford Green Valley Grocery Edward Davidson ER Davidson & Associates (7-Eleven Inc., retired) Jim Hachtel Eby-Brown Co. Ray Johnson Speedee Mart Kirk Leff McLane Co. Inc. Jack Lewis GPM Midwest

Danielle Mattiussi Maverik Inc. Kyle McKeen Alon Brands Inc. Richard Mione GPM Southeast Jonathan Polonsky Plaid Pantries Inc. Greg Scriver Kwik Trip Inc. Roy Strasburger Convenience Management Services Inc. Jon Urbanik CST Brands Inc.

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CONTENTS FEBRUARY 2017

VOLUME 53/NUMBER 2

24 | COVER STORY Defending Your Beverage Business

Great Scott! Convenience store retailers must protect the No.1 reason customers visit their store.

SPECIAL SECTION 43 | Guide to Consumer Insights

570 Lake Cook Road, Ste. 310, Deerfield, IL. 60015 (224) 632-8200 Fax: (224) 632-8266 www.csnews.com Direct Mailing Address for Convenience Store News: 111 Town Square Place, Suite 400, Jersey City, N.J. 07310

BRAND MANAGEMENT Group Brand Director (330) 840-9557

Ron Lowy rlowy@ensembleiq.com

EDITORIAL Editorial Director (201) 855-7606 Editor-in-Chief (201) 855-7608 Senior Editor (201) 855-7618 Associate Editor (201) 855-7619 Associate Managing Editor (201) 855-7604 Assistant Editor (201) 855-7614 Contributing Editor (303) 741-3377 Contributing Editor (201) 280-2614

Don Longo dlongo@ensembleiq.com Linda Lisanti llisanti@ensembleiq.com Melissa Kress mkress@ensembleiq.com Angela Hanson ahanson@ensembleiq.com Danielle Romano dromano@ensembleiq.com Chelsea Regan cregan@ensembleiq.com Renée M. Covino reneek@aol.com Tammy Mastroberte tmastroberte@gmail.com

ADVERTISING SALES & BUSINESS

CATEGORY MANAGEMENT

DEPARTMENTS

Business Development Manager Michael Hatherill (201) 855-7610 mhatherill@ensembleiq.com Southeast Regional Sales Manager Erika Cann (330) 357-9207 ecann@ensembleiq.com Northeast Regional Sales Manager Rachel McGaffigan (508) 385-2524 rmcgaffigan@ensembleiq.com Western Regional Sales Manager Dian Melius (949) 387-1451 dmelius@ensembleiq.com Account Executive & Classified Advertising Terry Kanganis (201) 855-7615 tkanganis@ensembleiq.com Classified Production Manager Mary Beth Medley (856) 809-0050 marybeth@marybethmedley.com

VIEWPOINT

CUSTOM MEDIA

4 | Keeping the Beverage Sales Flowing C-stores must stay abreast of rapidly changing consumer tastes.

Vice President/Custom Media Division Pierce Hollingsworth (224) 632-8229 phollingsworth@ensembleiq.com General Manager, Custom Media Kathy Colwell (224) 632-8244 kcolwell@ensembleiq.com

8 | CSNews Online

MARKETING

FOODSERVICE

34 | Think Local, Act Local Wawa’s significance in Philadelphia illustrates the importance of market-level information.

10 | Industry Roundup

16 | New Products

Strategic Marketing Director (224) 632-8214 Director of Market Research (201) 855-7605

Bruce Hendrickson bhendrickson@ensembleiq.com Debra Chanil dchanil@ensembleiq.com

AUDIENCE DEVELOPMENT

SMALL OPERATOR

19 | Hip, But Not Just for Hipsters A minimalist design offering streamlined SKUs is the cornerstone of Mini Mini’s strategy. EXPERT’S VIEW

38 | The Potential Trump Effect How some of the major policy proposals could impact c-store industry M&A. 71 | How Stubborn Stereotypes Hold Women Back Women leaders are seen as competent or well-liked — rarely both. 86 | Getting to the Core Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by EnsembleIQ, 570 Lake Cook Rd. Deerfield, IL 60015. Copyright © 2017 by EnsembleIQ. All rights reserved. Subscriptions: One year, $93; two years, $152. One year, Canada, $110; two years, Canada, $175. One year, foreign, $150. Payable in advance with a bank draft drawn on a U.S. bank in U.S. funds. Single copies, $10, except foreign, where postage will be added. Printed in U.S.A. Periodicals postage paid at Deerfield, IL, and at additional mailing offices. POSTMASTER: Send address changes to Convenience Store News, P.O. Box 1842, Lowell, MA 01853. 6 Convenience Store News | FEBRUARY 2017 | WWW.CSNEWS.COM

Director of Audience Development Gail Reboletti (224) 632-8214 greboletti@ensembleiq.com Audience Development Manager Shelly Patton (646) 217-1045 spatton@ensembleiq.com List Rental The Information Refinery (800) 529-9020 Brian Clotworthy Subscriber Services/Single-Copy Purchases (978) 671-0449 EnsembleIQ@e-circ.net

ART/PRODUCTION Director of Production (973) 358-4875 Advertising/Production Manager (314) 403-4753 Art Director (224) 632-8245

Kathryn Homenick khomenick@ensembleiq.com Roz Gilman rgilman@ensembleiq.com Michael Escobedo mescobedo@ensembleiq.com

CORPORATE OFFICERS Executive Chairman Alan Glass President & CEO Peter Hoyt Chief Operating Officer Rich Rivera Chief Financial Officer Chris Stark Chief Business Development Officer & President, EnsembleIQ Canada Korry Stagnito Chief Customer Officer/President of Strategic Platforms Ned Bardic Chief Digital Officer Joel Hughes Chief Human Resources Officer Greg Flores

CONVENIENCE STORE NEWS AFFILIATIONS

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TOP 5 Daily News Headlines The most viewed articles online. 1 | Get to Know the Future Consumption Beverage Shopper Compared to the average convenience retail shopper, the future consumption beverage shopper in the convenience channel is more likely to be a younger male, Hispanic and married; be from a larger household; be the primary grocery shopper for the household; and prepare for the trip with a shopping app. 2 | Break Time Entering New Markets With New Store Concept The Break Time chain took the wraps off a new look and offering with the opening of its 74th convenience store. The c-store in Lee’s Summit, Mo., features the chain’s customer-focused layout, an enhanced food concept, and refreshed branding. 3 | 22nd Century Group Makes Progress on Modified Risk 22nd Century Group Inc. is seeing some progress on its modified risk tobacco product applications (MRTPAs) currently under review by the Food and Drug Administration. The company reported that it has received “helpful and positive feedback” on its combined MRTPAs and premarket tobacco product applications for its “Brand A” Very Low Nicotine cigarettes. 4 | RaceTrac Doubling Down on Florida Expansion The Atlanta-based retailer closed out 2016 by adding 24 new convenience stores in Florida. The locations brought its portfolio in the Sunshine State to 207. That accounts for nearly half of RaceTrac’s 435-plus store count, which also includes locations in Georgia, Louisiana and Texas. 5 | Pilot Flying J, Kroger Help Launch Groundbreaking Retail Program Convenience retailers are joining with the National Retail Federation (NRF) and other merchants for a new training initiative designed to help people pursue opportunities in retail. The NRF Foundation brought together dozens of retailers and nonprofits to launch RISE Up (Retail Industry Skills & Education), which is designed by the industry to assist people — regardless of education, background, economic means or age — to acquire the skills they need to secure jobs in retail and advance into promising careers.

VIDEO: Rick Bayless on Connecting Through Food

A highlight of Convenience Store News’ inaugural Convenience Foodservice Exchange event was a “fireside chat” between popular Chicago-based celebrity chef and award-winning restaurateur Rick Bayless and Supermarket Guru Phil Lempert. During an hour-long conversation, Lempert questioned Bayless on a variety of topics, including the latest food trends in the United States, the impact of millennials, the importance of authenticity and freshness, and employee training programs. We’ve edited the interview into six digestible video clips, available exclusively on CSNews.com. For more exclusive stories, visit the Special Features section of www.csnews.com.

PRODUCT HIGHLIGHT The most viewed New Product online.

Butterball Chorizo-Seasoned Ground Turkey

To cater to healthy eaters with a palate for bolder flavors, Butterball is now offering ChorizoSeasoned Ground Turkey. Turkey chorizo, which has about half the calories, fat and sodium of beef or pork chorizo, makes an easy substitute for ground turkey in a number of popular dishes, according to the brand. Foodservice operators name chili, meatballs, meatloaf, tacos, lettuce wraps, shepherd’s pie, empanadas, nachos, Bolognese sauce and pizza among the top uses for ground turkey. According to Butterball, each of these dishes can easily be spiced up with its new ChorizoSeasoned Ground Turkey. Butterball LLC Garner, N.C. (800) 288-8372 www.butterball.com

OUT & ABOUT

NRF’s Big Show Hits the Big Apple

Retailers from across the globe gathered in New York City Jan. 15-17 for Retail’s BIG Show 2017, the annual innovation and technology conference of the National Retail Federation. As in past years, the show included a heavy focus on technology, with exhibitors showcasing a myriad of innovative solutions to help retailers more efficiently connect with consumers. “Smart Retail Solutions,” “Streamlined Currency Management,” “eCommerce Made Easy,” “Unified Commerce,” and “The Connected Consumer” were among the many buzzwords and expressions on display at the 240,000-square-foot expo. 8 Convenience Store News | FEBRUARY 2017 | WWW.CSNEWS.COM

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INDUSTRYROUNDUP FAST FACT

Frequent convenience store shoppers (those who visit daily or weekly) are most often found in the 45- to 54-year-old age range; the $75,000-$99,999 income range; and in the Northeast region of the United States. They are also most likely to be men. Source: Convenience Store News 2017 Realities of the Aisle Study (page 43)

QUOTABLES

“People need to label everything so that it fits in a box, but the truth is, we don’t fit in a box. When we opened Mini Mini, nobody knew what to do with it.” — Mini Mini co-owner Matt Brown (page 19)

Delek to Gain Integrated Retail Network With Alon USA Deal Former MAPCO parent will explore new megastores in the Permian Basin region

elek US Holdings Inc. and Alon USA Energy Inc. have reached a deal for Delek US to acquire all of the outstanding shares of Alon common stock it does not already own. The allstock transaction carries an equity value of $464 million. According to the two companies, the enterprise value of the deal for Delek to take ownership of the remaining 53 percent of Alon shares of common stock is approximately $657 million. That includes the proportionate assumption of $152 million of net debt related to the transaction, and $59 million of market value for the non-controlling interest in Alon USA Partners LP. This deal gives Delek a new foothold in the convenience channel. It previously owned the MAPCO chain of convenience stores. The Brentwood, Tenn.-based company sold that retail network last year to Compañía de Petróleos de Chile COPEC S.A. (COPEC). Dallas-based Alon is North America’s largest 7-Eleven licensee, with 307 convenience stores. In July, Alon formed a special committee to review a number of strategic alternatives, including a potential business combination with Delek; the analysis of capital investments; shareholder distributions; or a sale or merger and spinoff or separation of a selected business. Delek’s purchase of Alon, which is

10 Convenience Store News | FEBRUARY 2017 | WWW.CSNEWS.COM

expected to deliver between $85 million and $105 million in synergies in 2018, will give Delek “an integrated retail system in the Permian Basin we can continue to invest in,” said Uzi Yemin, chairman, president and CEO of Delek US. As Delek Executive Vice President Fred Green further explained, this transaction will create a larger geographic footprint on a combined basis. “The retail system of approximately 307 stores in the Southwest is supported by the Big Spring refinery and offers a platform for future growth,” Green said during a company conference call held Jan. 3. Delek will apply “its previous experience in improving and growing a retail platform to create value from this system,” according to Green. Alon’s retail portfolio differs from Delek’s previous experience with MAPCO because it is more integrated, said Yemin. Plus, the portfolio’s location — namely, the Permian Basin — offers the potential Delek needs “to evaluate in a different light.” MAPCO and Alon c-stores also differ in format, the chief executive noted. Alon did not build “what we call megastores, so we would like to explore the opportunity to build some megastores in the area before we start jumping in to sell the stores,” said Yemin. The transaction is expected to close in the first half of this year.

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INDUSTRYROUNDUP

Love’s Charts Course to Set a New Growth Record in 2017 New travel stops and additional services are on the retailer’s agenda

ith a record year of growth in the books for 2016, Love’s Travel Stops & Country Stores Inc. plans to kick things up a notch in 2017 by opening 50 new stores during the year. The Oklahoma City-based retailer welcomed customers to 47 new locations in 2016 — the most ever in one year in the company’s history. These additions gave Love’s a total store count of 410 U.S. locations to start the new year. This year, along with opening 50 new stores, Love’s plans to expand its customer laundry facilities and add more than 3,400 truck-parking spaces, while also expanding truck parking at existing sites. Plus, Love’s Truck Tire Care segment will continue to add more locations and services. “We’re always listening to our customers to see what needs we can meet,” said Frank Love, co-CEO of Love’s. “Since 2008, Love’s Truck Tire Care has been taking care of our customers’ tire needs and we’ve consistently heard more tire and maintenance offerings would benefit drivers. We’ve added light mechanical services, and we introduced oil change capabilities in 2016. Providing our customers with these services helps keep them on the road.”

In all, Love’s will open new stores across 25 states in 2017, including its second travel stop in Maryland, which is scheduled to open in Hagerstown in the spring. There are currently more than 260 Love’s Truck Tire Care locations. Light mechanical and oil change offerings will be added to new and existing travel stops. By the end of 2017, more than 300 Love’s Truck Tire Care sites will offer oil change and maintenance capabilities.

12 Convenience Store News | FEBRUARY 2017 | WWW.CSNEWS.COM

According to the company, Love’s will also expand its reach this spring when it opens a travel stop in Hardin, Mont. This site will mark the company’s first location in its 41st state. In all, Love’s will open new stores across 25 states in 2017, including its second travel stop in Maryland, which is scheduled to open in Hagerstown in the spring. Between new store openings, more support staff at the corporate office, and expansion in other areas of the Love’s Family of Companies, the retailer will add approximately 3,000 new jobs in 2017, expanding its total employee count to an estimated 20,000. All new Love’s travel stops offer amenities such as showers, truck parking, diesel exhaust fluid (DEF), and other driver services; and all locations feature one or more quick-service restaurants. Last year, Love’s added three new food brands at select locations and now operates six IHOP Express restaurants, two Dunkin’ Donuts locations, and one Taco John’s restaurant.

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INDUSTRYROUNDUP

retailer tidbits The Best Record for the Fuels of Today and Tomorrow!

n Campbell Oil Co. sold its residential heating oil and

commercial fuels business Lykins Energy Solutions. It will now focus on its c-store banner, BellStores Inc. n First Coast Energy LLP, owner and operator of Daily’s

convenience stores, sold 13 gas stations and c-stores to Northeast Petro Holdings LLC. The $14.4-million deal included seven Shell stations and one Sunoco-branded site in Duval County, Fla. n CrossAmerica Partners LP completed a sale-leaseback

transaction with unnamed institutional investors for net proceeds of approximately $25 million. Under the pact, CrossAmerica will lease 17 properties in the Chicago market for an initial period of 15 years with an additional 15 years of renewal options. n Chevron Products Co., a division of

Chevron U.S.A. Inc., launched the ExtraMile Extras rewards program on Jan. 4 at more than 700 ExtraMile locations. Each time participating customers make a purchase, they earn one Shield. Five Shields equal a free “Extra” item, such as a coffee, snack or fountain drink.

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program to allow customers to receive immediate rewards, including fuel discounts. This replaces the convenience store retailer’s former tier-based reward structure.

supplier tidbits n PDI acquired the enterprise resource planning

(ERP) assets of The Pinnacle Corp. Pinnacle will retain its remaining assets and customers for its point-of-sale, payments, loyalty, and its new Affinity mobile solutions. n J&J Snack Foods Corp. acquired Hill & Valley Inc., a

premium bakery in Rock Island, Ill. Doug Davidson, Hill & Valley’s president, will be staying on with J&J. n Anheuser-Busch InBev will dedicate its Super Bowl pres-

ence this year to its Busch brand. The TV spot signals the company’s investment and belief in the value beer brand’s role in driving growth.

RAI & BAT Shake Hands on Merger Agreement The $49B tobacco industry deal is expected to close in the third quarter By Melissa Kress

hree months after a proposal was first put on the table, Reynolds American Inc. (RAI) and British American Tobacco (BAT) reached a $49-billion deal to join forces. Winston Salem, N.C.-based RAI is the parent company of R.J. Reynolds Tobacco Co., the second-largest U.S. tobacco company, as well as Santa Fe Natural Tobacco Co. Inc., American Snuff Co. LLC, Niconovum USA Inc., Niconovum AB, and R.J. Reynolds Vapor Co. London-based British American Tobacco is a global tobacco group with brands sold in more than 200 markets. BAT has market-leading positions in at least 55 markets around the world. RAI agreed to be acquired by BAT in a cash and share transaction valued at $59.64 cents per share. This is a 26.4-percent premium to the RAI stock price on Oct. 20, the day prior to the public announcement of BAT’s initial proposal. The agreement represents a total enterprise value for all of RAI at more than $95 billion — a 7-percent premium to the original Oct. 20 proposal, resulting from BAT’s incremental understanding of RAI’s unique opportunities for growth in the attractive and profitable U.S. tobacco market, explained Susan Cameron, executive chair of the RAI board of trustees. “What we are announcing today is compelling, strategic and serves to create further value. The acquisition of Reynolds American that we agreed to not only represents a significant premium for our shareholders, but also includes the potential for continued future growth through ownership in the combined company,” she stated. Once completed, the acquisition will position RAI as BAT’s largest operating subsidiary. The merger will increase share, generate significant cost efficiencies, enhance geographic diversification, and significantly strengthen research and development capabilities — all of which will result in enhanced growth opportunities for the combined companies, according to Cameron.

WWW.CSNEWS.COM | FEBRUARY 2017 | Convenience Store News 15

NEWPRODUCTS FIJI Water Slim & Sleek Redesign FIJI Water enters 2017 with a fresh, new look that features a slim and sleek redesign of its bottles. FIJI Water’s 330mL, 500mL and 700mL SKUs will now fit effortlessly everywhere, including in the car, in fitness equipment cup holders, and more, according to the brand. The redesign rollout commenced in January and is slated to be completed by the end of the first quarter. While the updated bottles will make FIJI Water a more convenient on-the-go beverage, the company noted they will retain the brand’s iconic square shape and distinctive taste. FIJI Water Los Angeles (310) 312-2850 fijiwater.com

Nutriblade Wheatgrass Shot The Nutriblade Wheatgrass Shot is billed as the first and only ready-to-drink premium wheatgrass drink in America. According to its makers, the shot provides energy; contains vital minerals and vitamins; helps fight disease; eliminates toxins, heavy metals and cancer-causing agents from the body; and oxygenates the blood. The Nutriblade Wheatgrass Shot, packaged in a 2.5-ounce bottle, has a suggested price of $2.99. Nutriblade Cornelius, N.C. (419) 666-1109 info@nutriblade.com nutriblade.com

Better-for-You Protein Energy Bars & Cookies Combining consumers’ desires for fresh-baked goods and healthier products, Rich’s Foodservice launched Better-for-You Protein Energy Bars and Cookies into convenience stores nationwide in January. The line is compatible with ACT ovens and allows operators to purchase the dough and bake the products in-store, “producing a mouthwatering aroma that will entice shoppers,” the company stated. The energy bars come in three varieties: blueberry cinnamon cashew, chocolate chunk cherry almond, and dark chocolate peanut butter. Each bar is 200 calories or less, has zero trans fat, is low in cholesterol and a good source of protein and fiber, according to Rich’s. The cookies come in two varieties: oatmeal dark chocolate chunk raisin cranberry, and quinoa flax seed chocolate chunk pecan. Each cookie is 100 calories or less, with zero trans fat and low cholesterol. Rich Products Corp. Buffalo, N.Y. (800) 356-7094 richsfoodservice.com

Swisher Sweets Mango Swisher International adds Swisher Sweets Mango to its classic cigarillo line. The new addition delivers a tangy, smooth and sweet taste, according to the company. With the popularity of mango flavor on the rise, Swisher Sweets Mango is now available in a resealable two-count pouch that can be shipped to stores nationwide. The cigarillos are offered in “2 for 99 cents,” “Save on 2” and “2 for $1.49” options. Swisher International Inc. Jacksonville, Fla. (800) 874-9720 swisher.com

New Seasonal Beers From Samuel Adams Boston Beer Co.’s Samuel Adams brand dropped two new seasonal beers: Hopscape and Fresh as Helles. Hopscape, which boasts citrus and piney hop flavors with a lingering bitter finish, is brewed with four varieties of West Coast hops: Chinook, Citra, Centennial and Zeus. Fresh as Helles, a beer with a honey malt aroma and orange blossom notes, gets its flavor from Mandarina hops and orange blossom petals, according to the brewer. Hopscape hit shelves nationwide starting in January and February, while Fresh as Helles can be purchased in March and April. Both new seasonal beers are available in six-packs for a suggested retail price of $7.99 to $9.99, 12-packs (bottles or cans) for a suggested retail price of $14.99 to $17.99, and 16-ounce single-serve cans for a suggested retail price of $1.99 to $2.49. Boston Beer Co. Boston (617) 368-5000 bostonbeer.com 16 Convenience Store News | FEBRUARY 2017 | WWW.CSNEWS.COM

NEWPRODUCTS Petrosoft Loss Prevention Analytics

Yuso Rice Ball Snacks

Petrosoft’s Loss Prevention Analytics is a solution that enhances both point-of-sale and loss prevention technology. The solution discourages theft with verifiable proof; identifies employee training issues; and verifies transactions, risk events and employee claims. Retailers can access information through a combination of different sources, such as transactional data and video data. The solution analyzes the combined information against set rules, and produces documentation and reports for prevention, early detection, investigation and prosecution. Loss Prevention Analytics includes a cloud-based interface, enabling retailers to access reports and click through to view associated video footage from any internet-connected device anywhere.

Yuso, a new Japanese-inspired snack, is designed to deliver sushi to those on the move. Drawing from Japanese onigiri, Yuso is a triangle-shaped rice ball filled with bold flavors and wrapped in Japanese nori, a pure, dried, crunchy seaweed. Four varieties are offered: Spicy Smoked Steelhead, Thai Peanut Smoked Mackerel, Smoked Salmon, and Sesame Chickpea. The three fish-based flavors provide more than a day’s worth of omega-3 fatty acids from smoked fish and five seeds, including flax, sesame and chia, according to the maker. And at 200 calories or less per snack, each Yuso has a balance of carbs, fiber, and protein ranging between 5.5 grams and 7.3 grams, the company noted. All Yuso snacks are non-GMO and free of gluten, preservatives and antibiotics.

Petrosoft LLC Pittsburgh, Pa. (888) 306-0640 info@petrosoftinc.com petrosoftinc.com

Yuso Amesbury, Mass. (978) 834-6494 sarah@yusogood.com yusogood.com

Milk Truck Cheese Cherky Doublemint Perfectly Sweet Doublemint Perfectly Sweet is a new choice for consumers looking for gum sweetened with only real sugar, with the trusted flavor expected from Wrigley’s Doublemint brand. The new format contains no artificial sweeteners. Doublemint Perfectly Sweet comes in a 12-stick envelope pack for a suggested retail price of 68 cents. It is available now nationwide. Wm. Wrigley Jr. Co. Chicago (800) 974-4539 wrigley.com

Cherky, from Milk Truck Cheese, aims to create a whole new category of cheese and meat snacks by combining bacon and cheese in one convenient, on-the-go snack. Cherky comes in two varieties: Aged Cheddar Cheese, Bacon & Jalapeno, and Smokey Bacon & Cheddar. High in protein, Cherky is non-GMO, gluten-free and low in carbohydrates. The product does not require refrigeration and has a one-year shelf life. Milk Truck Cheese Gilman, Wis. (201) 218-8399 henry@milktruckcheese.com milktruckcheese.com

PanFree Predeposited Loaf Cake Batters Bake’n Joy extends its line of PanFree Predeposited Loaf Cake Batters (18-ounce) with the new Banana Chocolate Chip variety. The Banana Chocolate Chip Loaf is sweetened with banana puree, loaded with chocolate chips, and finished off with a touch of molasses. Bake’n Joy’s PanFree Predeposited Loaf Cake Batters are part of its FreshBakes freezer-to-oven line of predeposited muffin, loaf and cake batters. The batters are premeasured and predeposited into paper-lined aluminum pans and flash-frozen for the freshest taste and performance. The pans are then placed in plastic carrier trays, six per layer for easy handling, and packed 18 to a case for convenient storage. Bake’n Joy Foods Inc. North Andover, Mass. (800) 666-4937 productinfo@bakenjoy.com bakenjoy.com

18 Convenience Store News | FEBRUARY 2017 | WWW.CSNEWS.COM

SMALLOPERATOR

Hip, But Not Just for Hipsters A minimalist design offering streamlined SKUs is the cornerstone of Mini Mini’s strategy By Renée M. Covino

ocal media has dubbed Mini Mini as “Portland’s First Hipster-Themed Convenience Store,” but one of its founders refutes this label, explaining that Mini Mini is a “modern convenience concept” that is somewhat misunderstood, but in it for the long haul. “People need to label everything so that it fits in a box, but the truth is, we don’t fit in a box. When we opened Mini Mini, nobody knew what to do with it,” co-owner Matt Brown, 35, told Convenience Store News, speaking about the public reaction to the minimalist-designed single store that opened this past September Mini Mini is the brainchild of four co-founders/investors, who plan to expand into a chain. in Portland’s Buckman neighborhood. “People walk in and say, ‘I think this is a c-store, but I’ve never seen anything like it.’ Then, the fact that us one label. We just roll with it. As long as people are my business partners and I are young, it’s easy to clastalking about [Mini Mini], that’s a good thing.” sify [the store] as a ‘hipster mart.’” Indeed, the buzz swirls. Local news outlets have Mini Mini was designed by Brown and its three other both praised and poked fun at the new convenience founders/investors to be hip, but also to have a much store, pointing out there are no canned goods or frobroader appeal than just to Portland’s hipster crowd. zen pizzas sold, for instance. From families with little kids, to daytime profes“So, the joke is, we are a glorified snack shop,” sionals, to nighttime city folks, “we want everyone to Brown relayed. In reality, the store’s assortment is built feel welcome,” Brown said. “It’s interesting they gave around the notion that everything revolves around grab-and-go but with a streamlined choice, rather than a cluttered and chaotic heap of emergency shopping SKUs. There is a calm here that isn’t typically found in the confines of a c-store, and it’s attracting attention. CLASSIC VS. RAD

Mini Mini strives for less “visual noise.”

The Mini Mini concept is the creation of Brown and one of his partners, Jonathan Felix-Lund, who both started toying with the idea four years ago. While on a business road trip, they recognized a need for “a refined version of a convenience store” that was easy to access and played to different diets. They envisioned a mix of the indulgent and the healthy, with meat options as well as vegan and gluten-free options, but

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SMALLOPERATOR without the aisles, shopping carts and parking-lot hassles of the large grocery stores where customers could typically find such an assortment. They started referring to their idea as “the c-store, refreshed.” When that vision came to fruition and Mini Mini debuted a few months ago, customers discovered they could quickly choose from a dichotomy of options — the “classic” vs. the “rad,” as Brown has relayed the approach to his staff. For instance, a “classic” option in the candy category is a Snickers bar, while a “rad” option is Justin’s Dark Chocolate Peanut Butter Cups. Mini Mini has carried this “classic vs. rad” merchandising throughout the store, offering items customers know they love alongside options to try something different. “We want to have options, but we also have to make sure our product bounce doesn’t get too wacky, leaning toward one dietary option or being too healthy,” acknowledged Brown. “We have Hostess doughnuts and Red Bull because when you’re leaving a bar late at night, that’s what you want from a c-store.” Mini Mini has also introduced its customers to softer lighting, clean displays, custom shelving, and other “significant design elements” not typical of a c-store, Brown noted. The store utilizes colors of red, white and blue “that feel familiar, The store contains roughly 750 SKUs. but are not [the] traditional American tones,” he added. This was the work of Aaron Draplin, another one of Mini Mini’s founders and the mastermind behind its minimalist, less-is-more ambiance, which extends into signage and SKUs. Basically, there is a lack of signage, clutter and the proliferation of products found elsewhere in the convenience channel. Brown puts the store’s total SKU count at roughly 750. “We don’t have every beer company in the world, and we have Coke, but we don’t have Pepsi,” he said. EXTRAORDINARILY CLEAN

Aside from keeping a “clean” product assortment, the

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Mini Mini’s owners believe in a spotless environment for food sales.

store is also, literally, kept clean — “extraordinarily clean,” Brown maintains. “You’re going to buy food here, so everything is spotless and very ordered,” he said. “All of these things together create an environment of less visual noise, so there’s less urgency.” And this is where Mini Mini’s “calm convenience” comes in to play. However, the in-store music is intended to be upbeat in a way that makes customers feel they can take on the day. “We know we’ve done it right when we see people bobbing their head in the store while they shop. It all plays into a comfort level,” Brown explained. Regarding pricing, Mini Mini aims to stick to flat pricing as much as it can — $2 instead of $1.99. The founders also designed it so that nothing in the store costs more than $25. Currently, there’s a bottle of wine priced at $25, but most trios of snack foods — a sandwich, snack and drink — are purposely priced so that the combined cost is $10 or less. This was done so that customers could compare the prices to a grocery store where “you’re looking at $15 to do that same thing,” according to Brown. Grab-and-go food is mostly priced in the $5 range. This includes its popular guacamole packs, small containers of the spread plus chips — similar to the hummus and pretzel packs that came on the scene a few years ago. Bags of chips can range from $1.50 to $5. STILL GOT THEIR DAY JOBS

While minimum wages are raising across the country, Mini Mini from day one has believed in employee investment and the return you get from it. “A lot of people don’t ask much of their convenience store staff, but we pay ours better than most shops do to secure a solid group of folks who are getting it

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SMALLOPERATOR

Mini Mini serves Portland’s Buckman neighborhood, one of the city’s most popular residential districts.

right,” said Brown. They conducted a lot of interviews to find people who could help set up systems and count inventory. For Mini Mini, this wasn’t really an option, but rather a requirement, given that Brown and Felix-Lund, the operating partners of Mini Mini, actually have “day jobs.” Brown is the director of sales for Portland’s Schoolhouse Electric & Supply Co., a lighting and lifestyle company that manufactures lights, furniture and shelving units. And yes, it is the source of the lights and custom shelving at Mini Mini. Felix-Lund is the director of operations for Coava coffee, an award-winning coffee found in Mini Mini that “immediately grabs the ears of folks who want the next level of coffee, which is super important in Portland,” Brown said. The fact that “we were able to pool these different areas of our lives together was really exciting.” Brown, though, admits that while the pooling of resources was a business benefit, their having other career commitments is a definite drawback. The two operating partners trade their before and after work time to be at the shop, keeping rigorous schedules to get it all done. “If we could be there more often, we would, especially during the day hours when deliveries come in,” said Brown. “But we spend a lot of time setting up [our] staff for whatever is going to happen on a particular day — that is paramount.” EXPANSION PLANNING

Given how busy both operating partners are, can expansion be in Mini Mini’s future? “Oh yeah, we’re already scouting out the next location,” Brown revealed. “We want to put in as many Mini Minis as we can, and pool our resources to do so.”

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The four founders/investors, which include two pizza company entrepreneurs who took their local Sizzle Pie concept to Seattle and Brooklyn, have a goal of running five Mini Mini stores in Portland within the next three years. Setting up Mini Mini locations beyond its home base is a strong possibility, too, as there have already been requests by building owners in New York City and Seattle looking for shops like Mini Mini. “The whole goal is to lock things in place here. Then, anything is game,” Brown said. “We have to make our processes sound before we make that big of a jump.” He’s referring to the fact that so many of Mini Mini’s products are sourced by local vendors, something it would have to do in each city it enters. So, a prerequisite of expanding outside Portland would be to make sure its systems for managing vendors were “locked tight and in place,” as he puts it. Then, bringing on people with a similar energy in other cities would be the next key in expanding. Wherever they go, the plan is to take their neighborhood appeal with them — relying on being nimble and listening to the locals before building something special. Before Mini Mini opened, Buckman neighborhood residents found Brown and Felix-Lund painting over graffiti that was tagged on the building the night before, sweeping the sidewalks in front of the store, and just communing with passersby. “We showed them how small business works. We didn’t come from money and we didn’t have money to hire anyone to do these tasks; we were out there doing it ourselves,” Brown said. “By the time we opened, people told us how glad they were that we made it, and that was partly because we asked them beforehand what they wanted in a store like this. We listened.” CSN

24 Convenience Store News | FEBRUARY 2017 | WWW.CSNEWS.COM

Cover Story

By Angela Hanson & Melissa Kress

everages are big business for convenience store operators. Combined, packaged beverages, beer and dispensed beverages (hot, cold and frozen) brought in $383,490 in in-store sales for the average convenience store last year, and $58.1 billion in in-store sales for the total convenience store industry, according to the latest Convenience Store News Industry Report. As a percent of in-store sales, beverages combined account for 27.3 percent of share. Those are pretty convincing numbers for the importance — and strength — of beverages in the convenience channel. Yet times are changing for all segments of beverages, and it is imperative that convenience store operators not take their beverage business for granted. Even though there are more varieties of beverages available today than in the past in order to appeal to consumers’ wide range of needs and wants, new research from The NPD Group shows that in the United States, there are actually 72 fewer in- or away-from-home purchased beverage occasions per person annually today than there were 10 years ago. One of the chief reasons why is that consumers are migrating to tap water for spending and sustainability concerns. Regulatory measures are also having an effect on beverage sales. In 2016, major cities such as San Francisco, Philadelphia and Chicago passed or implemented additional taxes on sweetened beverages, a trend that is continuing as interest grows in healthy eating and drinking and the prevention of obesity. In the beer cave, the incredible growth of craft beer is beginning to slow, and retailers face generational differences in preferred types of beer and malt beverages. The bad news is that c-stores are not immune from these widespread changes. The good news, though, is that the beverage business is not at a crisis point, and convenience stores, perhaps more than any other retail channel, are well-positioned to defend against category declines. C-store customers are predisposed to buying beverages. In fact, purchasing beverages is the foremost reason shoppers visit a convenience store — 98 percent of consumers recently surveyed by CSNews cited purchasing beverages as the driver that brought them to the store. To be a beverage sales superhero, c-store operators must continually adjust their beverage offerings to give customers what they want — and what they don’t yet know they want. Creative flavors, better-for-you beverages, and putting the power in consumers’ hands through customization are among the top ways c-store retailers can triumph in the end.

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Cover Story

DEFENDING PACKAGED BEVERAGES

Give Innovation a Chance The Break Time chain doesn’t let space constraints stop it from trying new things

sk any convenience store retailer what the top obstacle they face in the cold vault is and the answer will not surprise you: limited space. It’s the same stumbling block found around every c-store category, according to Jennifer Bach, director of marketing for Break Time. However, that does not mean you shouldn’t try new things in the packaged beverages space. The Break Time convenience store chain is owned and operated by MFA Oil based in Columbia, Mo. There are currently 74 Break Time locations operating in Missouri and Arkansas. “Space is typically at a premium inside a c-store for any product. This is especially true in the cooler doors,” Bach explained. “Space is typically contracted with your bigger beverage players, which makes it very difficult for the smaller players to intro new products.” That being said, “consideration should always be given to new products, especially those lines that are trending upward,” the marketing chief advised. When it comes time to make decisions on what new products to add to the cooler, Break Time tries to capitalize on those lines that are growing — and ideally finds the needed space in those parts of the packaged beverages segment that are on the decline. Overall, packaged beverages accounts for approximately 41 percent of Break Time’s beverage sales. Broken out even further, carbonated soft drinks (CSDs) makes up the lion’s share of its beverage sales (40 percent), followed by energy drinks (21 percent), bottled water (13 percent), tea (9 percent), sports drinks (7 percent), juice (4 percent), and coffee (4 percent). “CSDs have seen a decline in recent years as energy drinks have spiked. Water and tea have shown steady growth,” Bach said, adding that cold packaged coffee is a trend to watch. Any convenience store retailer looking for a stan-

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dard playbook for managing packaged beverages and its varied segments will be looking for a long time, according to Bach, as it is not one-size-fits-all when it comes to the category. “Many factors go into managing this [business] — markets, demographics, regional preferences, cooler size.” Similar to other in-store categories, beverage sales at Break Time “ebb and flow,” with the warmer months lending themselves to higher beverage sales, she noted. Break Time utilizes promotions on its packaged beverages, but does not limit deals to certain seasons, holidays or events — think Super Bowl or Fourth of July. Instead, the chain runs different types of promotions on different products all the time. “Our favorites are the 2-for-1 offers that increase sales volume both on the offer and single-unit sales,” said Bach. Bundling packaged beverages with other categories is always effective, too. “We recently bundled our private-label bottled water with a fresh fruit purchase,” she said. “We are trying some new things with our mobile app and loyalty program as well.”

Cover Story

DEFENDING DISPENSED BEVERAGES

Build on the Fundamentals

Wawa has taken a crawl-walk-run approach to expanding its dispensed beverage program

awa Inc. is widely known for its stellar foodservice program, and a significant part of that program’s success is the Pennsylvania-based chain’s investment in dispensed beverages. Thirsty customers have a wide variety of dispensed beverage options to choose from when they step into a Wawa store. The retailer has a Coca-Cola Freestyle fountain machine in every store — sometimes even two — as well as a four-barrel ICEE machine; a threehead iced coffee dispenser (two in its Florida stores); and a six-bank powdered cappuccino machine. All of this is anchored by “one of the best fresh-brewed coffee stations in the industry,” offering up to eight varieties and constantly changing with innovative inand-out blends, according to Jerome Hunsinger, fresh beverage category manager for Wawa.

The large number of flavors and condiments available allows Wawa customers to have the drink they want, exactly how they want it. This focus on offering customization is continued with Wawa’s Handcrafted Specialty Beverages platform. Concentrated around three main pieces of equipment — a milkshake machine, a blender for smoothies and an espresso machine, plus plenty of ice — “we go all the way from frozen cappuccinos to smoothies to the customized caramel macchiatos, chai tea lattes, and more,” Hunsinger told CSNews. Increasingly, consumers are shifting away from premade beverages in favor of handcrafted and freshly

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made products. Even when customers place an order using Wawa’s automated ordering screens instead of preparing a beverage themselves, “they still feel like they’re in control,” he said. “…Freshness and customization continue to rule the game here.” Wawa is seeing healthy growth rates within its Handcrafted Specialty Beverages platform, and the program is gaining more momentum each year as the trend toward customization and fresh preparation has expanded beyond the coffee segment, Hunsinger reports. For the most part, Wawa stores generally offer the same dispensed beverage lineup, although some regional variations exist. The chain launched a Cuban Coffee Blend in its Florida market, only to find out that it sells just as well and even a little better in its Mid-Atlantic market. “What resonates well in the world of beverages is transferrable, whether we’re in southern Florida or we’re in northern New Jersey,” explained Hunsinger. While the continued success of Wawa’s dispensed beverage program makes it worth emulating, the category manager cautions other c-store retailers against looking too far into the future. Instead, they must focus on establishing a solid foundation, like Wawa has done. “I think sometimes people jump too quickly to what I would call elevated or enhanced needs before they have established themselves as credible in the basic needs,” said Hunsinger. “Basic needs” are basic customization, freshness, convenience, cleanliness, affordability, and fast and friendly service. “Enhanced needs” include zeroing in on what’s currently trendy and focusing on things such as building an environmentally friendly, socially conscious story for the brand. Hunsinger is a proponent of the crawl-walk-run approach, whereby retailers get the basics down pat first before progressing to more premium offerings, expanded customization, seasonal offerings, and other enhanced features.

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DEFENDING ALCOHOLIC BEVERAGES

Carefully Craft Your Selection

Variety is great, but Twice Daily is mindful of not tipping the cart too far

n certain areas of Nashville — the hometown of Tri Star Energy’s Twice Daily chain of convenience stores — craft and import beers are booming as consumers in the city are receptive to trying new items. The further you move out from Nashville and into more rural areas, though, customers prefer to stay tried-and-true to their regular premium and budget beer brands.

“Variety is great and desired, and you can have a good selection of what consumers want, but you also want to be careful not to tip the cart too far,” advised Terry Messmer, sales manager for Twice Daily. “The majority of sales are still coming from the core (premium and budget/popular) — you need to take care of those brands first and foremost.” When it comes to stocking new and emerging offerings, Twice Daily looks in its own backyard. “In the past two to three years, it has been local, local, local,” Messmer said. In addition to Nashville breweries, “local” could include breweries throughout Tennessee. “This blurs the lines a little to what is actually local [vs.] a regional brand. We define local as within 25 miles of store locations, and anything outside that range is

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regional,” he explained. Twice Daily looks for synergy within 10 miles of a store when choosing which “local” craft brands to add to that store’s beer cooler. “If the brewery is within 10 miles of a store, then we’ll put it in the store. We segment local crafts like that,” Messmer said. “Then, there are a few craft beers that are well-known in the whole area so we have them in all the stores.” Craft, however, is not the biggest beer trend that Messmer is seeing — imports are. Corona used to be the one import brand that retailers carried and made sure they had one package size available. But as import sales continue to grow, he said c-stores need to take a look at their days of supply, and their package selections. Other Mexican beers, like Modelo and Tecate, are also growing and need to be considered as viable packages, he explained. Twice Daily is evaluating the viability of high-alcohol beers now, too, as recent changes to Tennessee laws have made it possible for convenience stores to carry high-alcohol beers, further crowding the beer cooler. According to Messmer, adding high-alcohol items into its beer set “will open the floodgates to another 50 to 100 SKU possibilities.” So, what is the right mix? “We need to be very careful not to expand too far and lose sight of premium and budget/popular, which still represent over 60 percent of beer sales,” he said. “We want to make sure that we have the top high-alcohol packages available and, if space permits, add new brands to the mix.” C-store retailers have to look at insights from data and distributors to determine what the top sellers are. Additionally, they need to know which brands have a marketing plan and are looking to grow sales in the market, not just be content with space on the shelf, he concluded.

Cover Story

Know Your Opponent Suppliers weigh in on how c-stores can counteract cross-channel competition

upermarkets, supercenters, and liquor/package stores are going after the same beer consumers that convenience stores are. So, how can c-store retailers guard against losing that ring? For some food for thought, Convenience Store News checked in with leading suppliers in the beer space. Sharing their insights are Josh Halpern, vice president of small format at Anheuser-Busch InBev, and Nuno Teles, chief marketing officer at Heineken USA. CSNews: Are there specific things a retailer needs to understand about c-store consumer purchasing behavior that’s different than other retail channels? Halpern: The core c-store shopper is significantly different than that of competitive channels. The shopper is younger, lower income, more diverse, on-the-go, and more sensitive to price. There are two predomi-

nant shopper missions the c-store channel owns. We excel at the “For Me, For Now” mission, which is the guy who grabs a couple of singles when he gets off Josh Halpern Nuno Teles work, and the “Social Beer Run” mission, which is when you go to pick up beer to bring to your friend’s house. Teles: It’s important to remember that 60 percent of consumers come into a store with a planned purchase; only 21 percent change their mind in the aisle. C-store customers are rarely ones to meander. In the beer cave or cold box, they are in and out within two to three minutes. CSNews: Where does your company foresee the

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Cover Story

DEFENDING ALCOHOLIC BEVERAGES

greatest growth in consumption coming from? Halpern: Grocery and c-store are growing in the industry at basically the same rate, with chains outperforming independent stores. Over the last few years, the average millennial has gone to restaurants almost 50 times less per year. They are recognizing that grocery and c-store foodservice are just as viable as any quick-service restaurant or fast-casual chain. They are more likely to enjoy a few drinks at home since, especially in a Tinder/Bumble world, it’s easier to go out later. If the c-store industry focuses on this occasion and the value that consumers put on “convenience,” it can quickly grow faster, especially in inner cities. Teles: We don’t necessarily view this in terms of which specific channel(s) will drive growth; we view it as where we should be putting the focus of our sales and marketing efforts. While we know consumer trial and long-term loyalty are won on-premise, our goal is not necessarily to drive them to a specific channel, but to create the desire and reason for a beer-drinking occasion. CSNews: What do you see as the most important trend in the category at this time? Halpern: There are two really. The first is that

channels are blurring, and we can build traffic by having the right mission/occasion promotions and packs. The second is a beer trend, and it is mix shift. Millennials are seeking flavor proliferation, higher ABV, and status-symbol badge brands. Teles: Health and wellbeing and innovation onpremise are salient trends that will continue to present unique brand-building opportunities for those who respond effectively. Americans drink a lot of beer; we know that. There’s probably never been a better time to be a beer drinker. While the proliferation and explosive growth of craft will slow (How many craft brewers can one country sustain?), imports will continue to drive the category, and consumer choice will be important. Like wine, millennials will propel imports and premiumization in 2017, with caveats: they are fickle and promiscuous beer consumers. CSN

BONUS CONTENT

Check out CSNews.com for an interview with McLane Co. Inc. executives about how retailers can work with their distribution partners to continually evolve their beverage offer.

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FOODSERVICE Category Trends + Insights from

TRENDSIGHTS

Think Local, Act Local Wawa’s significance in Philadelphia illustrates the importance of market-level information

By Bonnie Riggs Restaurant Industry Analyst, The NPD Group www.npd.com

onvenience store foodservice operations and restaurants face different competitors locally. To illustrate, the food-forward Wawa convenience stores have a low 1.5-percent national share; however, within the Philadelphia market, Wawa’s importance is large — far exceeding that of McDonald’s. This makes Wawa a formidable competitor in Philadelphia, and quick-service restaurants (QSRs) and other convenience store operators

Market Share of Prepared Food/Beverage Visits (% Visit Share) In Philadelphia, Wawa’s share is twice that of McDonald’s.

Wawa

McDonald’s

14.9% 8.7%

7.1%

1.5% Total U.S. QSR/C-Store/Grocery

Philadelphia QSR/C-Store/Grocery

Source: The NPD Group; QSR Plus Retail Market Monitor

Market Penetration (% Penetration) More than half of the DMA visits Wawa during the average month

Total U.S.

McDonald’s

Wawa

80.1%

78.9% 51.1%

47.6%

54.2%

10.9% Total U.S. QSR/C-Store/Grocery

Philadelphia QSR/C-Store/Grocery

Source: The NPD Group; QSR Plus Retail Market Monitor

34 Convenience Store News | FEBRUARY 2017 | WWW.CSNEWS.COM

need to recognize this to grow share in that market. More than half of Philadelphians visited Wawa in an average four-week period, which is more than McDonald’s reaches in the same time period. Furthermore, McDonald’s attracts fewer customers in Philadelphia than its national average because Wawa is so strong. McDonald’s, other QSRs and other c-store operators are challenged to compete against Wawa if they are to build their share in this market. HIGH REPEAT BUSINESS

Not only does Wawa reach so many Philadelphians, but it also has high repeat. The typical customer reached by Wawa visits the chain a bit more than once a week (4.5 times over a four-week period). There is a sizeable segment of Wawa customers who visit much more frequently. Close to one-fifth of consumers in Philadelphia visit Wawa 10 times in a four-week period — more than twice a week. Wawa’s strong standing is supported by a large group of highly loyal customers. QSRs and c-store operators will benefit from a greater understanding of the preferences of Wawa customers. Knowing the competition’s areas of strength identifies how to defend against important competitors, pointing to defensive actions operators can consider as a means to entice Wawa customers back to

FOODSERVICE Category Trends + Insights from

Wawa’s Heavy/Medium/Light Users Just under a third of Wawa’s buyers account for more than two-thirds of visits where prepared food and beverages are purchased. PHILADELPHIA

Wawa 1-time buyers

Wawa 2-4 times buyers

Wawa 5+ times buyers

5.1%

23.9%

27.4% 44.5%

their stores. One out of every four breakfast visits and nearly as many p.m. snack visits are satisfied by Wawa. Wawa has to compete more heavily at lunch and particularly at dinner than it does for breakfast and snacks. Still, with the exception of the dinner occasion, Wawa satisfies an impressively high share of its customers’ meal needs.

% Buyers

LOCAL MARKET INFORMATION

Opportunities emerge from understanding where customers buy types of foods. Wawa’s hoagies, burritos, other sandwiches, and coffee are strong draws for visits. The competition is able to satisfy Wawa customers’ interests in chicken, Italian and Mexican foods. These would be food areas Wawa should develop, which could improve purchasing at dinner time, according to NPD’s QSR Market Monitor. NPD’s QSR Market Monitor measures competitive strength, tells operators how their customers feel about the chain, diagnoses the current situation, and offers direction.

36 Convenience Store News | FEBRUARY 2017 | WWW.CSNEWS.COM

% Visits

Source: The NPD Group; QSR Plus Retail Market Monitor

Visit Distribution by Channel

Wawa buyers are more loyal to c-stores than the averege channel buyer. PHILADELPHIA

Average Channel Buyer

KEY COMPETITORS DIFFER BY OCCASION TYPE

Dunkin’ Donuts is a major competitor of Wawa for the breakfast and snack occasions, while McDonald’s interacts with Wawa customers especially at lunch, and ShopRite is a preferred place for purchasing dinner meals by Wawa customers. Wawa is competing against grocery stores like ShopRite on one-stop shopping, the feature that makes a grocery store a good choice for picking up dinner on the way home. This demonstrates that Wawa needs to evaluate the meal situation to compete effectively. Wawa competes with all other channels, with traditional QSRs receiving the bulk of their prepared meal purchases. However, the strong loyalty to Wawa is reflected in its buyers’ considerably higher share of all meal needs given to the c-store channel vs. what is typical of all c-store customers.

67.5%

31.5%

Wawa Buyer

60.3% 50.3% 29.6% 7.2% 8.3% Traditional QSRs

12.9% 11.5%

Fast Casual

Grocery

19.6% C-Store

Source: The NPD Group; QSR Plus Retail Market Monitor

Strengths, weaknesses, and areas of vulnerability of a brand cannot be fully understood with only a national view. For convenience store foodservice operators, it’s the restaurants down the road and local preferences that affect their daily business. As the most local of all businesses, foodservice operators need market-level information to inform their marketing and advertising decisions. CSN

Little Debbie products are the sales leader*. Let us break this down for you â&#x20AC;&#x201C; 55 Little Debbie products are purchased every second of every day. Plus, when your customers stop by for a beverage, theyâ&#x20AC;&#x2122;ll appreciate that you have Little Debbie snacks to go along with their drink. To learn more, call (800) 315-6208 or visit LittleDebbieCStore.com. Little Debbie products are sold DSD by wholesale distributors. *Nielsen ScanTrack, Convenience Stores channel of trade, 52 weeks ending July 30, 2016.

EXPERT’SVIEW

The Potential Trump Effect How some of the major policy proposals could impact c-store industry M&A

resident Donald Trump is getting ready to enact sweeping changes to the federal tax laws in the United States and the regulatory code that were implemented during the past eight years under President Barack Obama. The new president’s tax and regulatory plans closely mirror the blueprint for reforming most of the federal tax code, and revising or eliminating numerous federal regulations proposed by By John C. Flippen Jr. & John Sartory, Republicans in the House Petroleum Capital and Real Estate LLC of Representatives during the 2016 election cycle. The House blueprint for the economic revival of the U.S. economy is referred to as “A Better Way.” It is widely believed that House Speaker Paul Ryan will lead the new administration’s legislative initiatives in Congress, and any final legislation will include most of the key tax and regulatory concepts included in “A Better Way.” While the business community is almost universally cheering on these anticipated policy proposals, it is too early to fully understand how President Trump’s plans will actually impact each sector of the U. S. economy and, more specifically, the rapid consolidation that has been occurring in the convenience

38 Convenience Store News | FEBRUARY 2017 | WWW.CSNEWS.COM

and gas (C&G) industry over the past several years. Listed below is a brief summary of some of the major policy proposals the unified Republican government hopes to pass in the first year of the new president’s term and how these stimulative initiatives may impact the overall U.S. economy and the C&G industry in particular. REFORM OF THE U.S. TAX CODE

The overall goal of the tax plan outlined in “A Better Way” is to greatly simplify the U.S. tax code and vastly reduce federal tax rates for individuals and corporations. President Trump also campaigned on a platform to lower the federal tax rate for corporations to 15 percent, including pass-through entities. These dual goals of lower rates for individuals and corporations were widely discussed and covered during the recent presidential campaign. The business community has also been stressing for some time that the federal tax code needed to be reformed, as the country’s outdated tax system was actually stifling economic growth. However, what has not received as much attention are many of the proposed details in the Republican House of Representatives plan that will impact merger and acquisition (M&A) activity in the U.S. For example, the House plan would eliminate the current deduction for debt payments for all businesses. Leverage has long played a major role in most acquisitions in the U.S., in part because interest payments are currently tax deductible. “A Better Way” would also eliminate depreciation and

EXPERT’SVIEW instead, a buyer of real estate assets would be able to treat the entire cost of acquiring property, excluding land, as a business expense that could be used to reduce taxable income. It is certainly too early to tell how these interrelated revisions to the tax code will impact every industry or company. In addition, companies that recently completed major acquisitions are concerned about how the elimination of depreciation and interest payments would be phased in under any new law. The large C&G consolidators that have completed numerous acquisitions during the recent merger mania in the industry may all of a sudden lose their previously anticipated tax deductions that will certainly increase future taxable income and offset some of the positive benefit of the lower tax rates. How all these tax changes will impact each company and sector of the economy is far from certain. NEW INTEREST RATE ENVIRONMENT

In December 2016, the Federal Reserve showed increased optimism in the U.S. economy’s outlook and raised the federal-funds rate by 25 basis points — only the second rate increase the Federal Open Market Committee (FOMC) has approved in a decade. Many members of the Fed’s board of governors have commented for years that the Fed monetary policy alone could not revive the historical rate of economic growth in the U.S. economy and that major fiscal and regulatory reforms at the federal level were needed to achieve this goal. Until these types of reforms were implemented, most economic experts have assumed that the Fed would move very slowly and cautiously toward removing what has been an unprecedented level of monetary stimulus from the economy since the Great Recession that started in 2007. Numerous economists are now predicting that the Fed may have to raise interest rates faster and higher than currently forecasted if the U.S. Congress quickly

40 Convenience Store News | FEBRUARY 2017 | WWW.CSNEWS.COM

passes many of the tax and regulatory reforms that are being advocated by President Trump and House Speaker Ryan, and the outlook for faster economic growth quickly materializes. Fed Chairwoman Janet Yellen, in her December press conference announcing the federal-funds rate increase, was unwilling to attribute any of the Fed’s more bullish forecasts to Trump’s election as President of the United States. She indicated a desire to adopt a more wait-and-see approach to its actual impact on the economy and ultimately, Fed policy. However, the post-election increases in the U.S. stock markets and longer term market interest rates certainly tell a different story. For example, the yield on the 10-year Treasury Note climbed by 84 basis points in the last quarter of 2016, the largest quarterly gain since 1994. Many Fed watchers are wondering out loud if the Fed is still acting too cautiously and running the risk of letting the economy overheat and inflation take off. Keep in mind, the Fed is currently forecasting the federal-funds rate will rise by only 75 basis points in 2017. This forecast is only 25 basis points higher than the Fed’s pre-election assumption. Many companies in the C&G industry that completed numerous acquisitions during this period of historically low interest rates may now face the unanticipated risk that the cash flow needed to service their current debt payments has been vastly underestimated. This new reality could be especially painful for some of the larger master limited partnerships (MLPs) that are already under market pressure to lower their overall level of existing debt. NEW REGULATORY ENVIRONMENT

President Trump’s picks of Oklahoma Attorney General Scott Pruitt to lead the Environmental Protection Agency (EPA) and businessman Andy Puzder, chief executive of CKE Restaurants Holdings Inc., the parent company of the Carl’s Jr. and Hardee’s burger chains, to be Labor Secretary were positively received by most members of the business community. Puzder has been a vocal advocate for cutting back or eliminating many of the new labor regulations passed during the Obama Administration. He has also argued against raising the federal minimum wage higher than $9 an hour, far less than the $15 an hour most Democratic members of Congress are currently proposing. Since minimum wages will increase in 20 states in 2017, impacting approximately 4.4 million workers across the country, the business community could

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EXPERT’SVIEW certainly use a forceful advocate in the executive branch of government to publicly speak about the negative economic implications of higher minimum wage laws. The progressive forces in the U.S. are currently winning the minimum wage debate all over the country. For example, the voters in the very red state of Arizona passed a $1.95 increase in November. The increase, which went into effect on Jan. 1, brought the state’s minimum wage to $10 an hour, one of the largest onetime increases ever enacted in any state. One of the first tests of new Labor Secretary Puzder’s influence in the Trump Administration will concern the revised federal overtime rule the Obama Department of Labor approved in 2016 that nearly doubled the salary threshold from its current $23,360 to $47,476, under which virtually all workers will be eligible for time-and-a half pay starting in 2017. The overtime rule has a real economic impact on the C&G industry in particular. Its implementation was temporarily blocked nationwide in November 2016 by an injunction ordered by a U.S. District Judge in Texas. President Obama’s Department of Labor filed an appellate brief with the U. S. Court of Appeals for the Fifth Circuit to overturn the injunction. An oral argument on the case was scheduled for shortly after Trump took office on Jan. 20. Puzder has written extensively about the negative impact of the new overtime rule, and the business community is expecting that the Trump Administration will decide to drop the current appeal and let the injunction stand until a total review of the new labor regulations the Obama Administration has proposed or passed has been completed. If Puzder’s views prevail, this will be very bullish for the C&G industry and should help to restrain the growing cost of skilled labor. However, is the new president who ran on a populist platform going to stop millions of American workers impacted by this new rule from receiving a much anticipated wage increase? One thing President Trump has proved since he announced his candidacy is his unpredictability.

42 Convenience Store News | FEBRUARY 2017 | WWW.CSNEWS.COM

The new head of the EPA, Pruitt, comes from an oil and gas state and has been clear about his opposition to the increased use of ethanol and other biofuels in the U.S. fuel supply. He has called the current Renewable Fuel Standard (RFS) totally unworkable. Carl Icahn, the newly appointed special advisor to President Trump on regulatory reform, is the controlling stockholder in the merchant refiner CVR Refining and also a vocal advocate for reforming the RFS. According to Icahn, the RINs market that was created as part of the Renewable Fuel Standard is full of rampant fraud and abuse and the market distortions it causes are driving the entire independent refining industry in the U.S. into bankruptcy. However, Trump expressed his full and 100-percent support for the current ethanol mandates while campaigning in Iowa and other corn-producing states. How President Trump decides to settle this obvious conflict within the administration could have a major impact on the motor fuels market in the U.S. and the competitive advantage the current RFS system has offered many of the largest marketers in the country. If President Trump decides to actually reform the RFS in a way that leads to a collapse in current market value for RINs credits, the pricing and wholesale margin advantage many of the leading M&A players in the C&G industry have enjoyed over the past several years could start to disappear. Finally, it will be especially interesting and important to see how the new president’s stated goals of reversing most of the Obama Administration’s regulatory agenda that has impacted the entire petroleum industry and further expanding energy production in the U.S. will impact the worldwide market price for crude oil. IN CLOSING

A single article cannot cover all the policy initiatives that the Trump Administration is expected to focus on in the coming years that will impact our industry and its ongoing consolidation. Most importantly, given President Trump’s unconventional approach to campaigning, interacting with other public officials and communicating with the American people, we may all be in for a wild ride. CSN John C. Flippen Jr. and John Sartory are managing directors of Petroleum Capital and Real Estate LLC (www.PetroCapRE.com). The firm provides buyside acquisition, refinancing, capital restructuring, and select sell-side advisory services in the convenience and gas industry. PetroCapRE has assisted clients in completing transactions valued at more than $2 billion. They can be reached at jflippen@PetroCapRE.com and jsartory@PetroCapRE.com. Editor’s note: The opinions expressed in this column are the authors’ and do not necessarily reflect the views of Convenience Store News.

Editor’s Note

You Asked, We Deliver

CSNews’ readers told us that consumer insights is the most important content for their jobs

t Convenience Store News and our parent company EnsembleIQ, it is always our goal to be the premier provider of actionable marketplace intelligence for our readers, to help them do their jobs better and in turn, contribute to greater success for their organizations. This past fall, we surveyed our readers to make sure we are on the pulse in regards to the information that’s most important to you, and the way you want it delivered. Consumer insights/trends repeatedly appeared at the top of the list as the most important content for helping our readers be more effective at work. I wasn’t surprised to see consumer insights so highly ranked since after all, the consumer is (or should be) at the heart of nearly every decision made in convenience retailing. I also wasn’t surprised because consumers are challenging — it seems like every day, we’re writing a new story on consumers’ changing needs and wants. One day, they’re most interested in health and wellness. The next day, they want to indulge. The week after that, they’re most concerned about sustainability. Man, are we humans a complicated bunch! For the past eight years now, CSNews has been taking our readers inside the minds of convenience store shoppers with our annual Realities of the Aisle consumer study. This year, we’ve gone a step further to present you with our “Guide to Consumer Insights.” This special section contains what CSNews’ editors believe are the most interesting and actionable findings from the research. Interviews were conducted with 1,505 consumers who shop at a convenience store at least once a month, and our survey essentially asked these respondents the who, what, when, where, why and how of their shopping habits. To add even more value for our readers, this Guide to Consumer Insights places an emphasis on analyzing the behavior of frequent c-store shoppers (those who visit daily or weekly) vs. infrequent c-store shoppers (those who visit less than once a week). We often hear in the marketplace about The 80/20 Rule — that 80 percent of your sales come from 20 percent of your customers and therefore, you should expend 80 per-

cent of your effort on getting that 20 percent to visit more and spend more. We’re arming you with LINDA LISANTI Editor-in-Chief insights to do just that. Some of the key differences our llisanti@ensembleiq.com (201) 855-7608 research revealed are that frequent c-store shoppers tend to be male, have children, and are most prevalent in the 45- to 54-year-old age range; the $75,000-$99,999 and $35,000-or-less income ranges; and in the Northeast region of the country. Along with making c-store visits part of their regular routine, they are loyal to particular c-stores. When asked what more convenience stores could do to encourage them to shop more, the responses of frequent c-store shoppers included: • Adding a drive-thru window; • Providing delivery; • Technology that would let them bypass the checkout; • Special discounts and coupons exclusive to frequent shoppers; • Offering cash back; and • A greater selection of products, particularly more “fresh” and “healthy” items. Read on for more of our findings. And throughout this year, we’ll be bringing you many other highlights from our Realities of the Aisle research. You asked, we deliver.

METHODOLOGY

The eighth-annual Convenience Store News Realities of the Aisle consumer study was implemented by Carbonview Research, a custom primary market research and analysis firm owned by CSNews’ parent company EnsembleIQ. The study was coordinated by Research Director Debra Chanil. Electronic interviews were conducted with 1,505 consumers who shop at a convenience store at least once a month. The sample of respondents was obtained from a national panel, representing the total population based on gender, age, region, income and presence of children in the household. The survey asked these respondents how often they shopped, their reasons for shopping, purchases preferences, frequencies, and amount spent for a variety of convenience product categories.

WWW.CSNEWS.COM | FEBRUARY 2017 | Guide to Consumer Insights 45

Contents

45 | You Asked, We Deliver

CSNewsâ&#x20AC;&#x2122; readers told us that consumer insights is the most important content for their jobs.

48 | Who Is the High-

Frequency C-store Shopper?

Our exclusive consumer research sheds light on those who shop daily and weekly.

54 | Motor Fuels 56 | Tobacco 58 | Foodservice

46 Guide to Consumer Insights | FEBRUARY 2017 | WWW.CSNEWS.COM

Effect

How do c-store shoppers enrolled in loyalty programs purchase differently?

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Who Is the

High-Frequency C-store Shopper? Our exclusive consumer research sheds light on those who shop daily and weekly BY ANGELA HANSON

or some retailers, one sale is as good as another, and every dollar is worth the same amount. This is objectively true, but industry insiders and savvy convenience store retailers have long known that regular customers hold more value than the contents of their wallet. Strategies that prioritize increasing the basket size of existing customers are

Do you typically shop at the same convenience store each time? Yes

36.0% 64.0%

Base: 969 frequent c-store shoppers Source: Convenience Store News Market Research, 2017

48 Guide to Consumer Insights | FEBRUARY 2017 | WWW.CSNEWS.COM

more lucrative than those that try to attract new customers, and regular shoppers are more profitable than the occasional visitors. This year, Convenience Store News’ exclusive Realities of the Aisle annual consumer study highlights the differences between frequent c-store shoppers — those who shop at a convenience store on a daily or weekly basis — and shoppers who visit c-stores less than once a week. Of the 1,505 consumers surveyed for the eighthannual CSNews Realities of the Aisle study, 64.4 percent qualified for the “frequent shopper” label, shopping at a c-store on a daily or weekly basis. Men are more likely to fall into this group at 67.8 percent, vs. 59.6 percent of women. Men are also more likely to be daily c-store shoppers. A total of 14.6 percent of men are daily shoppers, again more than the 11 percent of females who shop at c-stores at this pace. It also follows, then, that women are more likely to be infrequent shoppers. In fact, 40.4 percent of females shop at c-stores at a rate of once a month, compared to 32.2 percent of men. Looking at other characteristics, frequent c-store shoppers are most often found in the 45- to 54-year-old age range (68 percent); the $75,000-$99,999 and $35,000-orless income ranges (66 percent and 65.9 percent, respectively); and in the Northeast (68.8 percent). Among shoppers with children, 66 percent are in

For what reason(s) do you typically shop at a convenience store?

a c-store daily or weekly, compared to 63.2 percent of those without kids. On a daily basis, the difference between these two groups becomes more significant: 15.7 percent among those with kids, vs. 11.2 percent for those without. Along with making c-store visits part of their regular routine, frequent shoppers are more loyal to particular c-stores. Sixty-four percent of daily/weekly shoppers typically visit the same c-store each time, compared to 61 percent of monthly shoppers. Daily shoppers are the most loyal segment, as seven in 10 say they typically return to the same store every time. Regular shopping trips seem to be standard for frequent shoppers even outside the convenience channel. When asked how often they visit other types of stores, 83.1 percent of frequent c-store shoppers said they visit grocery stores on a daily or weekly basis, and 71.6 percent visit supercenters (such as Walmart or Target) on a daily or weekly basis. Only 12.6 percent of frequent c-store shoppers visit grocery stores once a month, and 25.5 percent visit supercenters once a month. THE WHAT & WHEN

Purchasing beverages (packaged or dispensed) and purchasing gasoline are the most common reasons to shop at a c-store. The vast majority of all consumers CSNews surveyed â&#x20AC;&#x201D; and 100 percent of daily c-store shoppers â&#x20AC;&#x201D; listed these as top reasons. Interestingly, both frequent and infrequent c-store shoppers said they typically visit to buy gasoline at comparable levels (81.2 percent vs. 78.5 percent, respectively). Frequent c-store shoppers, though, stand out when it comes to the purchase of food and drinks. Of the most commonly listed reasons to shop at a c-store, frequent shoppers listed snacks more often than infrequent shoppers did, at 70.1 percent compared to 58.4 percent. This pattern was also seen with bottled/canned soda (56.2 percent vs. 44.4 percent); fountain/frozen beverages (50.5 percent vs. 36.9 percent); hot beverages (48.9 percent vs. 36.2 percent); candy/gum (45.1 percent vs. 34 percent); and prepared food/fast food for immediate consumption (43.7 percent vs. 23.7 percent). Regardless of what they buy, frequent c-store shoppers are likely to combine the shopping trip with another reason for being out and about. Daily shoppers are most likely to visit a c-store while traveling to or from work or school (80.7 percent), making these trips part of their regular routine, as well as while running other errands (73.6 percent). Weekly c-store shop-

(Base) To buy beverages (net) To buy gasoline To buy snacks To buy packaged beverages To buy fountain/frozen beverages To buy hot beverages To buy candy/gum To buy prepared food/fast food for immediate consumption To buy lottery tickets To use the restroom To buy food for consumption later or at home To buy cigarettes To buy a newspaper/magazine To use the ATM To look around/browse To buy other tobacco products (smokeless, cigars, etc.) To buy fill-in grocery items To buy health and beauty care products Other

TOTAL

FREQUENT

INFREQUENT

(1,505) 98.3% 80.3% 65.9% 52.0% 45.6% 44.4% 41.1%

(969) 99.1% 81.2% 70.1% 56.2% 50.5% 48.9% 45.1%

(536) 97.0% 78.5% 58.4% 44.4% 36.9% 36.2% 34.0%

36.5% 38.8% 32.3%

43.7% 42.8% 33.5%

23.7% 31.5% 30.0%

21.7% 18.7% 17.7% 17.1% 11.6%

26.4% 23.2% 20.3% 20.1% 12.8%

13.1% 10.6% 12.9% 11.6% 9.3%

8.3% 6.4%

10.9% 7.4%

3.5% 4.7%

3.3% 0.8%

4.1% 0.6%

1.9% 1.1%

Base: Respondents who shopped at a c-store in the past month Multiple responses accepted Source: Convenience Store News Market Research, 2017

For now or later, frequent shoppers are about twice as likely to shop for food as infrequent shoppers.

At what time(s) of day do you typically shop at convenience stores? (Base) 6 a.m. - 8:59 a.m. 9 a.m. - 10:59 a.m. 11 a.m. - 1:59 p.m. 2 p.m. - 3:59 p.m. 4 p.m. - 6:59 p.m. 7 p.m. - 10 p.m. Later than 10 p.m. Donâ&#x20AC;&#x2122;t know

TOTAL

FREQUENT

INFREQUENT

(1,505) 41.5% 27.0% 34.9% 35.7% 57.7% 37.7% 12.4% 1.9%

(969) 46.6% 28.0% 37.6% 36.7% 61.1% 42.0% 15.6% 1.0%

(536) 32.3% 25.4% 30.0% 34.0% 51.7% 30.0% 6.5% 3.5%

Base: Respondents who shopped at a c-store in the past month Multiple responses accepted Source: Convenience Store News Market Research, 2017

pers are most likely to plan their trips and combine them with running other errands (73.8 percent). Making a special trip to the c-store from home is not out of the question, however: 57.9 percent of daily shoppers and 42 percent of weekly shoppers report that they typically do so, compared to only

WWW.CSNEWS.COM | FEBRUARY 2017 | Guide to Consumer Insights 49

How often do you buy in-store merchandise when you stop for gas at a convenience store? Every time Almost every time

Some of the time Rarely

Never

Frequent

Infrequent

0.8%

1.3%

1.1%

11.8% 6.1%

15.7%

27.5%

33.2% 48.1%

54.4%

Base: 841 frequent and 458 infrequent shoppers who purchased gasoline/motor fuels at a c-store in the past month Source: Convenience Store News Market Research, 2017

How often do you shop at each of the following types of stores? DAILY/WEEKLY

ONCE A MONTH

82.5% 68.5% 42.7% 39.9% 36.7%

13.2% 27.0% 36.1% 45.1% 39.5%

Grocery stores Supercenters (Walmart, Target, etc.) Online (Amazon, Peapod, etc.) Drugstores Dollar stores

24.4 percent of infrequent shoppers. Frequent c-store shoppers as a group are less likely to visit a c-store while traveling for business (25.7 percent). The routine nature of frequent shoppers’ visits to c-stores is also evident in the most common times of day when they make their trips. The most common time period is 4 p.m. to 6:59 p.m., when 61.1 percent of frequent shoppers typically visit a c-store, indicating they are probably buying food or drink for their evening meal. The next most popular timeframes for this group are between 6 a.m. and 8:59 a.m. (46.6 percent) and 7 p.m. to 10 p.m. (42 percent). For infrequent shoppers, 4 p.m. to 6:59 p.m. is also the favored time period, cited by 51.7 percent of these shoppers, but still less so than among frequent shoppers. During c-store shopping trips that involve stopping to buy gas, infrequent shoppers are more likely to say they also purchase in-store merchandise “some of the time” at 54.4 percent, compared to 48.1 percent of frequent shoppers. Meanwhile, more than twice as many frequent shoppers say they buy in-store merchandise “almost every time” at 33.2 percent, compared to 15.7 percent of infrequent shoppers.

ONCE EVERY SIX MONTHS RARELY/NEVER

2.5% 3.3% 11.2% 11.3% 15.0%

1.8% 1.2% 10.0% 3.7% 8.8%

Base: 969 frequent c-store shoppers Source: Convenience Store News Market Research, 2017

MAKING A HABIT

Perhaps because of their increased willingness to shop at c-stores regularly, more than half of frequent c-store shoppers also report that some outside element influences their decision to visit a c-store. Frequent c-store shoppers as a group are more likely than infrequent shoppers to list any individual element as an influencer. They are most likely to cite a loyalty

On what occasion(s) do you typically shop at a convenience store? Frequent

Infrequent

73.6%

68.4%

61.0% 48.7% 25.7%

While traveling to/ from work or school

53.4%

45.2%

66.8%

24.4% 16.0%

While traveling for business

Base: 969 frequent c-store shoppers; 536 infrequent c-store shoppers Multiple responses accepted Source: Convenience Store News Market Research, 2017

50 Guide to Consumer Insights | FEBRUARY 2017 | WWW.CSNEWS.COM

While traveling for pleasure

Special trips to the convenience store from home

While running other errands

program, at 23.3 percent compared to 17 percent of infrequent shoppers. Daily shoppers in particular are likely to cite a loyalty program, as 62.9 percent did so compared to 49.9 percent of weekly shoppers. Frequent c-store shoppers are also more likely to say they are enrolled in their favorite c-storeâ&#x20AC;&#x2122;s loyalty program (39.5 percent) than infrequent shoppers (31.2 percent). Retailers that want to increase their number of familiar faces should consider adding a loyalty program, as 35.4 percent of frequent shoppers say they would enroll if one existed at their favorite store. And adding a loyalty program can be an all-around win, as infrequent shoppers are likely to join as well: 31.2 percent say their usual c-store offers a loyalty program and they are enrolled, while 37.3 percent say their store does not have one, but theyâ&#x20AC;&#x2122;d enroll if it did. Another (not surprising) reason for c-store operators to court their highest frequency shoppers is that this group spends more money at their stores per visit. When asked how much they spent during their last instore visit to a c-store (excluding fuel purchases), frequent shoppers averaged $16.22, compared to $14.12 for infrequent shoppers. This figure for daily shoppers was even higher, averaging $19.45 on their last visit. Both frequent and infrequent shoppers are most likely to have paid for their last in-store purchase with cash (40.3 percent and 39.8 percent, respectively), followed by debit cards and credit cards. Frequent shoppers were slightly more likely to have used a debit card, while infrequent shoppers were slightly more likely to have used a credit card.

Did any promotional elements influence your decision to buy in-store products on a recent c-store trip to purchase gasoline? (Base) Frequent buyer/loyalty programs Banners/window signs Promotional signage Gasoline nozzle display ads Coupons dispensed from pump Pumptopper ads Car wash promotions Mobile app promotions/deals Video displays on pump Audio music feed with messages

TOTAL

FREQUENT

INFREQUENT

(1,299) 17.0% 12.5% 11.9% 7.5% 6.6% 5.8% 5.7% 5.5% 4.3% 2.3%

(841) 19.0% 13.7% 13.6% 8.7% 8.0% 6.8% 5.9% 6.1% 4.8% 3.0%

(458) 13.3% 10.5% 8.7% 5.2% 4.1% 3.9% 5.2% 4.6% 3.5% 1.1%

Base: Purchased gasoline/motor fuels at a c-store in the past month Source: Convenience Store News Market Research, 2017

This figure jumps to 20% among daily c-store shoppers.

52 Guide to Consumer Insights | FEBRUARY 2017 | WWW.CSNEWS.COM

How much did you spend on your last in-store visit to a convenience store?* Total $15.59

INF R $1 EQUEN 4.1 T

T UEN FREQ 27

$16.

DAILY SHOPPER

$19.45 WEEKLY SHOPPER

$15.40 *Not including gasoline/motor fuel Source: Convenience Store News Market Research, 2017

Have any of the following elements influenced your decision to visit a convenience store? (Base) Influenced (net) Loyalty program Word of mouth Coupon Gas price app Mobile app offer from convenience store Billboard Radio or TV advertisement Email Print circular Promotion or message on social media Text message Not influenced

TOTAL

FREQUENT

INFREQUENT

(1,505) 50.2% 21.1% 12.2% 12.1% 12.0%

(969) 52.5% 23.3% 13.3% 13.2% 11.9%

(536) 46.1% 17.0% 10.3% 10.1% 12.1%

5.3% 5.7% 4.1% 4.0% 3.3%

6.1% 5.8% 4.3% 4.3% 3.6%

3.9% 5.6% 3.5% 3.4% 2.8%

2.9% 3.1% 49.8%

3.4% 3.0% 47.5%

1.9% 3.2% 53.9%

Base: Respondents who shopped at a c-store in the past month Source: Convenience Store News Market Research, 2017

This figure jumps to 62.9% among daily c-store shoppers.

Motor Fuels

hen it comes to purchasing motor fuels, heavy convenience store users shop for fuel at about the same frequency as light convenience store users. Eight out of 10 consumers (81.2 percent) who shop at a c-store at least once a week cite gasoline as the reason they shop at c-stores. In comparison, this metric stands at about 79 percent for those who shop less often than once a week. Differences between these two groups, however, can be seen in their rate of purchase. Frequent c-store shoppers (at least once a week) purchase fuel an average of 5.2 times per month, compared to 3.7 times a month among infrequent c-store shoppers. Still, the fact remains that fuel is a top purchase among c-store shoppers overall, cited by 88.5 percent of the total consumers surveyed by CSNews. On a

FREQUENT VS. INFREQUENT SHOPPERS (Per Month)

FREQUENT C-STORE SHOPPER

% who purchase motor fuels # of times Avg. $ spent

88.7% 5.23 $103.87

Did you purchase motor fuels at a convenience store in the past month?

INFREQUENT C-STORE SHOPPER

87.3% 3.66 $83.86

Frequent defined as daily or weekly shopper. Source: Convenience Store News Market Research, 2017

regional basis, the Midwest and South regions have the highest percentage of fuel purchasing, at above 90 percent for each, compared to closer to 80 percent in the Northeast and West regions. For about a third of consumers, getting fuel is a weekly occurrence. Thirty percent of consumers surveyed said they purchase fuel four times a month at a c-store. Another 27 percent said they buy fuel five times or more per month. All consumers, on average (mean), spent about $97 per month on fuel during the four-week period that this survey covered. While the vast majority of consumers buy fuel at convenience stores, a solid two-thirds say they also purchase fuel at other locations â&#x20AC;&#x201D; the most popular outlets being gas-only sites (39 percent), followed by wholesale clubs (16.4 percent), supercenters (16.1 percent), and supermarkets (15 percent). A third of con-

(Base) Yes No

TOTAL

BY REGION: NORTHEAST

MIDWEST

SOUTH

WEST

(1,505) 88.5% 11.5

(307) 81.1% 18.9

(352) 93.5% 6.5

(559) 92.1% 7.9

(287) 83.3% 16.7

Base: Respondents who shopped at a c-store in the past month Source: Convenience Store News Market Research, 2017

Where else do you purchase motor fuels in an average month? (Base) Purchase at other locations (net) Gas-only location Wholesale club Supercenter (Walmart, Target, etc.) Supermarket Truck stop plaza Other Only purchase at a convenience store Base: Purchased motor fuels at a c-store in the past month Multiple responses accepted Source: Convenience Store News Market Research, 2017

54 Guide to Consumer Insights | FEBRUARY 2017 | WWW.CSNEWS.COM

TOTAL

BY REGION: NORTHEAST

MIDWEST

SOUTH

WEST

(1,299) 67.5% 39.0% 16.4% 16.1% 15.5% 4.8% 1.1% 32.5%

(240) 70.0% 50.8% 17.1% 7.9% 7.9% 3.3% 1.3% 30.0%

(323) 62.8% 36.2% 11.1% 14.6% 16.4% 6.2% 1.2% 37.2%

(504) 65.1% 31.7% 15.3% 23.8% 16.5% 4.2% 0.8% 34.9%

(232) 76.7% 46.1% 25.4% 9.9% 19.8% 5.6% 1.3% 23.3%

sumers (32.5 percent), however, say they shop solely at convenience stores to fuel up their vehicles. It’s no surprise that price is the foremost reason behind a consumer’s choice of where to purchase fuel. More than nine out of 10 (91.7 percent) said price is an extremely or very important consideration for where they get their fuel. About 40 percent said the brand of the fuel is extremely or very important to them. A higher percentage of women than men (95 percent vs. 90 percent, respectively) cite price as being extremely or very important in their purchasing decision. The most price-sensitive shoppers are found in the South where 93 percent of consumers cite price as extremely or very important. And, by age, younger consumers (18-24) are the most price sensitive.

Approximately how much did you spend in the past month on motor fuels at a convenience store? TOTAL

(Base) Mean Median

(1,299) $96.81 $81.94

CHILDREN IN HOUSEHOLD: YES NO

(567) $111.94 $91.50

(732) $85.11 $77.50

Base: Purchased motor fuels at a c-store in the past month Source: Convenience Store News Market Research, 2017

How many times in the past month did you purchase motor fuels at a convenience store? TOTAL

(Base) Mean Median

(1,299) 4.68 4.24

BY GENDER: MALE FEMALE

(760) 4.78 4.27

(539) 4.54 4.19

Base: Purchased motor fuels at a c-store in the past month Source: Convenience Store News Market Research, 2017

— Don Longo

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WWW.CSNEWS.COM | FEBRUARY 2017 | Guide to Consumer Insights 55

Tobacco

he legal minimum age to buy cigarettes is increasing in municipalities across the country, and state lawmakers continue to rely on higher tobacco excise taxes to fund health care initiatives and budget shortfalls. Still, despite being a product that always comes under fire, cigarettes remains a significant category for convenience stores. This year’s CSNews Realities of the Aisle research shows that when you look at the FREQUENT VS. INFREQUENT SHOPPERS average dollars spent per month (Per Month) by category, cigFREQUENT INFREQUENT C-STORE SHOPPER C-STORE SHOPPER arettes comes in % who purchase second at $79.43 cigarettes 28.4% 13.4% spent per month # of times 9.25 4.79 — trailing only Avg. $ spent $86.50 $52.20 behind gasoline Frequent defined as daily or weekly shopper. at $96.81. This Source: Convenience Store News Market Research, 2017 is particularly notable considering that although c-stores have the reputation of “Cokes-and-smokes” outlets, only about one quarter of total respondents (23.1 percent) in CSNews’ study of convenience store shoppers said they purchased cigarettes at a convenience store in the past month.

How many times in the past month did you purchase cigarettes at a convenience store? TOTAL

(Base) 1 time 2 times 3 times 4 times 5-9 times 10-14 times 15 or more times Mean Median

The number of c-store cigarette purchasers was split evenly among men and women, however the figures were highest among lower-income buyers (28.8 percent), 45- to 54-year-olds (27.2 percent), and consumers in the South (25.2 percent). Cigarettes outpace other tobacco products in the convenience channel. For example, only 6.6 percent of consumers purchased cigars or snus at a convenience store in the past month, and an even lower 3.2 percent purchased electronic cigarettes. Picking up a pack at a c-store five to nine times a month seems to be the most popular frequency. However, 19 percent of c-store cigarette buyers are making such purchases 15 or more times a month. This figure reaches 28.4 percent among consumers in the Northeast. For those who do shop for cigarettes outside the convenience channel, they are buying at tobacco stores (28.4 percent), supermarkets (23.5 percent) and supercenters (19.9 percent). To appeal to cigarette buyers, it’s vital to have a convenient location, as 56.3 percent of smokers point to this as their top influencer. Location is followed by consumers who stick with one brand (43.4 percent), and those looking for a good price/value (37.6 percent). — Melissa Kress

Which factor(s) influenced your last cigarette purchase at a convenience store?

BY GENDER: MALE FEMALE

(327) 10.1% 14.4 11.9 10.1 22.3 12.2 19.0

(191) 12.0% 14.7 7.9 9.9 23.6 12.0 19.9

(136) 7.4% 14.0 17.6 10.3 20.6 12.5 17.6

8.32 5.43

8.27 5.55

8.40 5.13

Base: Purchased cigarettes at a c-store in the past month Source: Convenience Store News Market Research, 2017

56 Guide to Consumer Insights | FEBRUARY 2017 | WWW.CSNEWS.COM

TOTAL

(Base) It was a convenient location I always buy the same brand It was a good price/value It was a special promotion for brand Other stores don’t carry cigarettes Other

CHILDREN IN HOUSEHOLD YES NO

(327)

(155)

(172)

56.3%

53.5%

58.7%

43.4%

46.5%

40.7%

37.6%

31.0%

43.6%

15.6%

15.5%

15.7%

2.1% 2.4%

1.3% 1.9%

2.9% 2.9%

Base: Purchased cigarettes at a c-store in the past month Multiple responses accepted Source: Convenience Store News Market Research, 2017

Foodservice

onvenience foodservice remains hot with consumers. Two-thirds (66.2 percent) of the shoppers surveyed by CSNews said they bought prepared food at a convenience store in the past month, and more than eight in 10 reported making multiple prepared food purchases per month. For the second year in a row, approximately a quarter (26.6 percent) of those FREQUENT VS. INFREQUENT SHOPPERS who purchased prepared food (Per Month) did so twice in FREQUENT INFREQUENT C-STORE SHOPPER

C-STORE SHOPPER

76.1% 4.80 $36.50

48.3% 2.56 $23.52

% who purchase hot dispensed beverages 69.2% # of times 7.27 Avg. $ spent $17.41

52.2% 3.37 $12.23

% who purchase cold/frozen dispensed beverages 70.6% # of times 6.22 Avg. $ spent $14.03

56.9% 2.93 $6.74

% who purchase prepared foods # of times Avg. $ spent

one month, and nearly 70 percent (69.6 percent) did so three times or more. The average number of visits in one month was 4.24. C-store shoppers are looking for a good deal, but they still expect to receive a product worth their money. Price/value moved up a slot to become the attribute of prepared food that is most important to study participants, cited by 69.1 percent. However, taste (at 66.2 percent) and food quality (at 62.5 percent) are also key attributes. More women than men most value taste (70.2 percent vs. 63.6 percent, respectively), freshness (63.7 percent vs. 56.4 percent), and sanitation (43.5 percent

How many times in the past month did you purchase foodservice items at a convenience store?

Frequent defined as daily or weekly shopper. Source: Convenience Store News Market Research, 2017

Mean

Median

6.13 4.24

4.14

3.60

PREPARED FOOD

HOT DISPENSED BEVERAGES

5.20 3.51

COLD/FROZEN DISPENSED BEVERAGES

Base: Respondents who purchased at a c-store in the past month: 957 for prepared food; 918 for hot dispensed; 883 for cold/frozen dispensed Source: Convenience Store News Market Research, 2017

Which types of prepared food did you purchase at a convenience store in the past month? (Base) Hot dog Deli/sandwich Pizza Breakfast sandwich Fresh baked goods (doughnuts, cookies, etc.) Hamburger Mexican (tacos, burrito, etc.) Other breakfast foods (biscuits, bagels, etc.) Chicken Hot entrĂŠe French fries Ice cream/frozen yogurt (soft-serve) Base: Purchased prepared food at a c-store in the past month Multiple responses accepted Source: Convenience Store News Market Research, 2017

58 Guide to Consumer Insights | FEBRUARY 2017 | WWW.CSNEWS.COM

TOTAL

BY REGION: NORTHEAST

MIDWEST

SOUTH

WEST

(957) 41.3% 40.8% 32.4% 27.6% 20.9% 16.1% 15.6% 15.5% 14.4% 11.1% 11.0% 9.0%

(214) 33.2% 49.1% 22.4% 31.8% 19.6% 18.2% 12.1% 17.3% 10.7% 13.1% 15.4% 9.8%

(235) 36.6% 36.2% 46.0% 29.4% 24.3% 16.2% 9.8% 15.3% 14.0% 8.9% 8.1% 6.4%

(330) 41.8% 40.0% 28.8% 24.5% 18.2% 14.5% 16.1% 16.1% 16.1% 11.8% 11.5% 7.9%

(178) 56.2% 38.2% 33.1% 25.8% 23.0% 16.3% 26.4% 12.4% 16.3% 10.1% 8.4% 13.5%

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(Base) 6 a.m. - 8:59 a.m. 9 a.m. - 10:59 a.m. 11 a.m. - 1:59 p.m. 2 p.m. - 3:59 p.m. 4 p.m. - 6:59 p.m. 7 p.m. - 10 p.m. Later than 10 p.m. Don’t know

TOTAL

BY AGE: 18-24

25-34

35-44

(957) 15.2% 7.4 24.2 14.7 23.7 11.7 2.6 0.4

(102) 1.0% 4.9 18.6 24.5 29.4 14.7 6.9 0.0

(217) 15.2% 7.4 23.5 12.9 27.2 10.1 3.7 0.0

(224) 20.1% 7.6 22.8 9.8 22.3 13.8 2.7 0.9

45-54

(186) 17.7% 8.6 24.2 11.3 23.7 13.4 1.1 0.0

55+

(228) 14.5% 7.5 28.9 19.7 19.3 8.3 0.9 0.9

Base: Purchased prepared food at a c-store in the past month Source: Convenience Store News Market Research, 2017

who said they ate their last prevs. 35.6 percent). pared c-store food purchase inside Grab-and-go/prepackaged the car jumped from 45.3 percent food is the most popular type of last year to 51.2 percent this year, prepared food, preferred by 42.6 while the percentage who said they percent of consumers, followed by took it home to eat fell from 33.3 made-to-order food at 38.8 perpercent to 27.2 percent. cent. Survey participants spent an average of $33.22 a month on prepared food, with respon71 percent of purchasers dents who have children in were extremely/very the household and those in the $75,000-$99,999 income satisfied with their last bracket each topping $40. purchase of prepared food Lunchtime remains the at a c-store. busiest time for prepared food visits to a convenience store, Along with prepared food, buywith 24.2 percent of customers making a purchase from 11 a.m. to ing dispensed beverages is part of consumers’ routines. Nearly 1:59 p.m., followed by 23.7 pertwo-thirds (65.7 percent) of those cent doing so during the 4 p.m. to surveyed said they purchased cold 6:59 p.m. window. or frozen dispensed beverages at a The most popular types of c-store in the last month, with 24.8 prepared food — hot dogs, deli/ percent saying they did so twice, sandwiches, pizza and breakfast 18.8 percent saying they did so sandwiches — are also the easiest once, and 18.5 percent saying they to eat on the go, reflecting customdid so 5-9 times. Hot dispensed ers’ interest in a convenient meal. beverages were nearly as popular, Fountain drinks, bottled or canned with 63.2 percent of consumers soda, and bottled water are the saying they purchased them – 21.2 items most frequently purchased said they did so twice in that time, alongside prepared food, revealing an opportunity for retailers to capi- while 19.2 percent said they did so 5-9 times. talize by offering bundled deals. The percentage of consumers — Angela Hanson

60 Guide to Consumer Insights | FEBRUARY 2017 | WWW.CSNEWS.COM

[

]

Packaged Beverages

ust how important are beverages overall to convenience store retailers? According to this year’s Realities of the Aisle study findings, when netted all together, purchasing beverages — including packaged beverages and dispensed offerings — is the top reason consumers shop at a c-store. At 98 percent, the figure even surpasses fuel. Delving deeper into packaged beverages, a majority of the overall consumers surveyed by CSNews (75.5 percent) said they bought a non-alcoholic drink from the cold vault in the past month. The highest occurrence was among millennial consumers, aged 25 to 34, at 83.1 percent. The number drops as you reach consumers aged 55 and older, at 62.5 percent. Among all respondents who purchased a packaged beverage item at a convenience store in the past month — including carbonated soft drinks, bottled water, energy drinks and juice — slightly more than a third

FREQUENT VS. INFREQUENT SHOPPERS (Per Month)

FREQUENT C-STORE SHOPPER

% who purchase packaged beverages # of times Avg. $ spent

82.7% 4.80 $12.82

INFREQUENT C-STORE SHOPPER

62.5% 2.26 $10.72

Frequent defined as daily or weekly shopper. Source: Convenience Store News Market Research, 2017

spent less than $5. A combined 76 percent spent up to $14.99. A quarter of shoppers added a packaged beverage to their basket twice in the past month, the most frequent rate of purchase, followed by 20.7 percent purchasing once during the month. And while the beverage business is a foremost driver to get consumers in the door of convenience stores, a relatively low 3.8 percent of c-store shoppers buy their packaged beverages exclusively at a convenience store in the average month. Beverage purchasers in the Northeast are a little more loyal to c-stores, at 6 percent. When shopping for packaged beverages outside the convenience channel, consumers choose supermarkets (69.5 percent) and supercenters like Walmart (66.4 percent). Supermarkets increasingly become the packaged-beverage outlet of choice as income rises. — Melissa Kress

Did you purchase packaged beverages from a convenience store in the past month?* (Base) Yes No

TOTAL

BY AGE: 18-24

25-34

35-44

45-54

55+

(1,505) 75.5% 24.5

(191) 81.7% 18.3

(290) 83.1% 16.9

(331) 82.2% 17.8

(272) 75.0% 25.0

(421) 62.5% 37.5

*Includes soda, energy drinks, bottled water, juice drinks, etc. Base: Respondents who shopped at a c-store in the past month Source: Convenience Store News Market Research, 2017

In an average month, where else do you purchase packaged beverages? (Base) Purchase at other channels (net) Drugstore Supermarket Supercenter (Walmart, Target, etc.) Wholesale club Dollar store Online grocer (Amazon Fresh, Peapod, etc.) Other Only purchase at a convenience store

TOTAL

BY INCOME: LESS THAN $35,000

$35,000 TO $49,999

$50,000 TO $74,999

$75,000 TO $99,999

$100,000+

(993) 96.2% 18.7% 69.5% 66.4% 21.0% 24.3% 3.5% 0.8% 3.8%

(186) 95.7% 14.5% 61.8% 71.5% 12.9% 36.6% 2.2% 1.6% 4.3%

(183) 97.3% 19.7% 65.6% 68.3% 12.0% 29.5% 3.3% 2.2% 2.7%

(236) 95.8% 20.3% 71.6% 62.7% 23.7% 20.3% 4.2% 0.0% 4.2%

(178) 97.2% 16.9% 73.6% 71.3% 25.3% 20.8% 4.5% 0.0% 2.8%

(210) 95.2% 21.4% 73.8% 60.0% 29.5% 16.2% 3.3% 0.5% 4.8%

Base: Purchased packaged beverages at a c-store in the past month Source: Convenience Store News Market Research, 2017

62 Guide to Consumer Insights | FEBRUARY 2017 | WWW.CSNEWS.COM

Beer

FREQUENT VS. INFREQUENT SHOPPERS (Per Month)

FREQUENT C-STORE SHOPPER

% who purchase beer 30.9% # of times 5.28 Avg. $ spent $38.41

eer consumers are proof that there is power in small numbers. Roughly one in five shoppers (24.7 percent) purchased a beer/malt beverage from a convenience store in the past month — slightly higher among men (29.1 percent) and millennials aged 25 to 34 (31 percent). While those percentages may seem low compared to other mainstay convenience-channel categories, beer packs a punch

INFREQUENT C-STORE SHOPPER

13.6% 2.15 $35.78

when it comes to basket ring. Frequent defined as daily or weekly shopper. In the past Source: Convenience Store News Market Research, 2017 month, purchasers spent an average of $37.89 on the category’s offerings in c-stores, according to CSNews’ 2017 Realities of the Aisle research. This is especially impressive when considering that of the c-store shoppers who picked up something from the beer cave/cooler in the past month, roughly half indicated they did so just Approximately how much did you spend in the once or twice during the period. past month on beer at a convenience store? While the highest percentage BY AGE: spent between was $10 and $14.99 TOTAL 18-24 25-34 35-44 45-54 55+ (17.9 percent), a notable amount (Base) (329) (27)* (83) (79) (64) (76) (11.9 percent) was spent between Less than $5 3.0% 3.7% 2.4% 2.5% 3.1% 3.9% $50 and $99.99. Higher beer spend$5 - $9.99 9.1 7.4 8.4 6.3 7.8 14.5 ing is most prevalent among shop$10 - $14.99 17.9 7.4 16.9 24.1 15.6 18.4 pers aged 25-34 (14.4 percent), $15 - $19.99 10.3 22.2 7.2 10.1 9.4 10.5 55-plus (13.1 percent), and 35-44 $20 - $24.99 13.7 11.1 14.5 15.2 12.5 13.2 (12.8 percent). $25 - $29.99 8.5 7.4 9.6 7.6 9.4 7.9 Convenience store retailers must $30 - $34.99 7.6 7.4 7.2 7.6 9.4 6.6 be vigilant, however, as they could watch those dollars slip through their $35 - $49.99 10.0 18.5 10.8 10.1 11.0 5.2 fingers as consumers turn to other $50 - $99.99 11.9 3.7 14.4 12.8 9.5 13.1 retail channels for their beer buys. $100 or more 7.9 11.1 8.4 3.8 12.5 6.6 Shoppers gravitate toward supermarkets (62.3 percent), supercenters (53.5 Mean $37.89 $36.92 $40.13 $28.52 $38.54 $35.89 percent), and liquor/package stores Median $21.83 $21.88 $21.70 $20.50 $20.90 $25.20 (40.1 percent) when not buying beer *Caution: Small base at a convenience store. Base: Purchased beer or malt beverages at a c-store in the past month Source: Convenience Store News Market Research, 2017

— Melissa Kress

In an average month, where else do you purchase beer? (Base) Purchase at other channels (net) Supermarket Supercenter (Walmart, Target, etc.) Liquor/package store Wholesale club Drugstore Dollar store Online grocer (Amazon Fresh, Peapod, etc.) Other Only purchase at a convenience store

TOTAL

BY REGION: NORTHEAST

MIDWEST

SOUTH

WEST

(329) 93.6% 62.3% 53.5% 40.1% 19.1% 11.6% 5.2% 2.4% 0.3% 6.4%

(46)* 91.3% 63.0% 45.7% 37.0% 32.6% 15.2% 6.5% 6.5% 0.0% 8.7%

(81) 91.4% 61.7% 53.1% 44.4% 9.9% 14.8% 3.7% 2.5% 1.2% 8.6%

(130) 94.6% 57.7% 56.9% 38.5% 13.1% 9.2% 6.2% 2.3% 0.0% 5.4%

(72) 95.8% 70.8% 52.8% 40.3% 31.9% 9.7% 4.2% 0.0% 0.0% 4.2%

*Caution: Small base Base: Purchased beer or malt beverages at a c-store in the past month Source: Convenience Store News Market Research, 2017

WWW.CSNEWS.COM | FEBRUARY 2017 | Guide to Consumer Insights 63

Snacks

hen it comes to the reasons consumers shop at a convenience store, purchasing a snack ranks in the top three, trailing only behind purchasing beverages and buying fuel. Nearly 66 percent of the consumers surveyed for this year’s CSNews Realities of the Aisle study say they shop at a c-store to buy snacks, FREQUENT VS. INFREQUENT SHOPPERS compared to (Per Month) 98 percent who FREQUENT INFREQUENT frequent c-stores C-STORE SHOPPER C-STORE SHOPPER to buy beverages % who purchase (both packaged snacks (net) 70.1% 58.4% and dispensed), Packaged salty snacks 51.9% 35.1% and 80 percent Packaged sweet snacks 42.8% 22.0% who do so to Meat snacks 25.9% 13.2% fuel up. Energy/nutrition bars 14.4% 7.3% For shoppers Frequent defined as daily or weekly shopper. in the 18-24 age Source: Convenience Store News Market Research, 2017 range, however, buying a snack is even more of a convenience store trip driver — 73 percent of these shoppers cite it as their reason for going. When asked about their c-store purchases in the

past month, nearly 63 percent of all the shoppers CSNews surveyed indicated they made a purchase in at least one of the four snack segments tracked in the study: salty snacks, sweet snacks, meat snacks, and energy/nutrition bars. And among frequent c-store shoppers (daily and weekly visitors), a whopping 70.1 percent made a snack purchase, significantly higher than infrequent c-store shoppers (at 58.4 percent). Of the snack segments tracked, packaged salty snacks are the most popular snack purchase, with 45.9 percent of total respondents crunching away. Salty snacks are purchased by more than 50 percent of shoppers aged 35-54, and a majority of shoppers with children in the household. Packaged sweet snacks are more popular among women than men (40.6 percent vs. 31.7 percent purchasing, respectively). Additionally, shoppers aged 35-44 are more likely to make this purchase (at 42.9 percent) than consumers in any other bracket. Retailers will find male shoppers in the meat snacks aisle, where they are more likely to make a purchase than females (23.2 percent vs. 18.8 percent, respectively). Regionally, meat snacks are the most popular c-store snack purchase in the Midwest and West regions of the U.S. Energy/nutrition bars, purchased For what reason do you typically shop at a convenience store? by 11.9 percent of the total, also BY AGE: draw more male buyers than female. TOTAL 18-24 25-34 35-44 45-54 55+ This type of snack, often perceived as (Base) (1,505) (191) (290) (331) (272) (421) “better-for-you,” is also more popuTo buy lar among the highest income group snacks 65.9% 73.3% 74.1% 70.7% 61.0% 56.3% earning $100,000 or more a year. Base: Respondents who shopped at a c-store in the past month Source: Convenience Store News Market Research, 2017

— Danielle Romano

Which snack products have you purchased at a convenience store in the past month? TOTAL

(Base) Packaged salty snacks (potato chips, pretzels, etc.) Packaged sweet snacks (cookies, doughnuts, etc.) Meat snacks Energy/nutrition bars Base: Respondents who shopped at a c-store in the past month Source: Convenience Store News Market Research, 2017

64 Guide to Consumer Insights | FEBRUARY 2017 | WWW.CSNEWS.COM

(1,505) 45.9% 35.4% 21.4% 11.9%

BY GENDER: MALE FEMALE

(879) 43.2% 31.7% 23.2% 13.8%

(626) 49.7% 40.6% 18.8% 9.3%

CHILDREN IN HOUSEHOLD YES NO

(632) 50.6% 40.3% 28.3% 14.9%

(873) 42.5% 31.8% 16.4% 9.7%

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Candy

andy and gum may be an impulsive purchase for some consumers, adding it to their baskets while making their way to the checkout counter, or even while at the counter. But for other consumers, their sweet tooth fuels their convenience store visits — whether it’s purchasing candy to feed a nightly indulgence, as an afternoon pick-me-up, or a special daily treat. The CSNews 2017 Realities of the Aisle consumer study found that in the last month, more than half of the shoppers surveyed (63.8 percent) made a candy or gum FREQUENT VS. purchase from INFREQUENT SHOPPERS a c-store. Of (Per Month) those who did, FREQUENT INFREQUENT females outC-STORE SHOPPER C-STORE SHOPPER weighed males % who purchase candy 68.8% 54.7% 68.8 percent to # of times 3.56 2.23 60.2 percent, Avg. $ spent $9.18 $6.85 respectively. And not surprisFrequent defined as daily or weekly shopper. Source: Convenience Store News Market Research, 2017 ingly, shoppers with children in the household made a candy or gum purchase more than shoppers without kids at home (72.2 percent vs. 57.7 percent, respectively). Looking at the purchasing habits of c-store candy and gum shoppers, the highest percentage buy twice a month (28.1 percent), followed by once a month (26.3 percent) and then four times a month (14.3 percent). Shoppers aged 25-34 purchase candy or gum the most frequently, averaging 3.4 times per month. The data also shows that even though upper-income shoppers are the most likely to make a candy/gum purchase, they average less buys in a month.

Approximately how much did you spend last month on candy at a convenience store? Less than $5 $5 - $9.99

$10 - $14.99 $15 - $19.99

$20 - $49.99 $50 or more

Average $8.49

6.2% 4.1%

0.9%

12.3%

48.5%

28.0%

Base: 881 respondents who purchased candy at a c-store in the past month Source: Convenience Store News Market Research, 2017

Shoppers spent $8.49, on average, for their candy and gum purchases in the past month. By income, consumers in the $35,000-$49,000 range posted the largest candy spend at $10.24 per month, followed by those with the biggest wallets, the $100,000 or more income bracket, whose monthly average was $10.09. By age, younger shoppers (aged 18-24) spent $12.66 on candy/gum in a month — a whopping 49 percent more than the average c-store candy and gum shopper. Even though candy is a popular c-store buy, consumers do tend to make confectionery purchases in other retail channels, too. Sixty-one percent of c-store candy purchasers report buying sweets at supercenters, while 58 Did you purchase candy from a convenience store percent make candy purchases at in the past month? supermarkets. Only 5 percent of BY GENDER: CHILDREN IN HOUSEHOLD shoppers are completely loyal to TOTAL MALE FEMALE YES NO c-stores when it comes to their (Base) (1,505) (879) (626) (632) (873) candy/gum spending. Yes No

63.8% 36.2

60.2% 39.8

68.8% 31.2

Base: Respondents who shopped at a c-store in the past month Source: Convenience Store News Market Research, 2017

66 Guide to Consumer Insights | FEBRUARY 2017 | WWW.CSNEWS.COM

72.2% 27.8

57.7% 42.3

— Danielle Romano

The Loyalty-Program Effect How do c-store shoppers enrolled in loyalty programs purchase differently? By Linda Lisanti

Demographics Snapshot

“I

t feels nice to be appreciated.” So said one of the respondents in this year’s Realities of the Aisle consumer study, which also delved into the purchasing behavior of convenience store shoppers enrolled in a c-store loyalty program vs. those not enrolled. Of the 1,505 consumers who participated in the study, a little more than a third of them (36.5 percent, or 550 respondents) said they are enrolled. While making shoppers feel appreciated certainly supports the single-minded focus on customer service that many convenience store retailers aspire to, providing customers with this positive feeling also translates into positive effects of the dollars-and-cents variety. When asked what products they have purchased at a convenience store in the past month, c-store loyalty program participants indexed significantly higher in the purchase of cold/frozen dispensed beverages (a 24.5-point differential vs. those not enrolled in a loyalty program) and hot dispensed beverages (a 21.2point differential). Prepared food was another category

Does your usual convenience store have a frequent shopper or loyalty program? Yes, and I am enrolled Yes, but I am not enrolled

No — if they did, I would enroll No — I would not enroll even if they did

(Base)

TOTAL

ENROLLED

NOT ENROLLED

(1,505)

(550)

(955)

58.4% 41.6

61.1% 38.9

56.9% 43.1

20.4% 23.4 37.1 19.1

21.8% 32.6 30.9 14.7

19.6% 18.1 40.7 21.6

12.7% 19.3 22.0 18.1 27.9

11.1% 19.3 27.5 19.6 22.5

13.6% 19.3 18.8 17.2 31.1

42.0% 58.0

50.0% 50.0

37.4% 62.6

19.9% 16.9 25.0 17.8 20.4

15.5% 16.7 28.4 17.3 22.1

22.4% 17.1 23.1 18.1 19.3

GENDER:

Male Female REGION:

Northeast Midwest South West AGE:

18-24 25-34 35-44 45-54 55+ CHILDREN UNDER THE AGE OF 18 IN HOUSEHOLD:

Yes No INCOME:

Less than $35,000 $35,000 to $49,999 $50,000 to $74,999 $75,000 to $99,999 $100,000 or more

Base: Respondents who shopped at a c-store in the past month Source: Convenience Store News Market Research, 2017

Which of the following products have you purchased at a convenience store in the past month?

14.2% 36.5% 36.1% 13.2% Base: 1,505 total respondents Source: Convenience Store News Market Research, 2017

Gasoline Packaged beverages Prepared food Cold/frozen dispensed Candy/gum Hot dispensed beverages Beer/malt beverages Cigarettes

TOTAL

ENROLLED

NOT ENROLLED

88.5% 81.8% 66.2% 65.7% 63.8% 63.2% 24.7% 23.1%

93.1% 86.4% 71.3% 75.1% 66.9% 71.1% 25.3% 24.4%

85.9% 79.2% 63.2% 60.3% 62.0% 58.6% 24.4% 22.3%

Base: Respondents who purchased each category Source: Convenience Store News Market Research, 2017

WWW.CSNEWS.COM | FEBRUARY 2017 | Guide to Consumer Insights 67

Overall, c-store shoppers enrolled in a loyalty program spent 38.7 percent more on their last purchase than c-store shoppers not enrolled — an $18.68 ring, compared to a $13.47 ring. How many times in the past month did you purchase each category at a convenience store? TOTAL

Cigarettes Hot dispensed beverages Cold/frozen dispensed Gasoline Beer/malt beverages Prepared food Packaged beverages Candy/gum

ENROLLED

8.32 6.13 5.20 4.68 4.65 4.24 4.04 3.15

NOT ENROLLED

9.86 7.31 6.02 5.09 5.62 4.74 4.80 3.45

7.38 5.29 4.59 4.42 4.05 3.91 3.56 2.96

Base: Respondents who purchased each category Source: Convenience Store News Market Research, 2017

How much did you spend in the past month on each category at a convenience store? TOTAL

Gasoline Cigarettes Beer/malt beverages Prepared food Hot dispensed beverages Packaged beverages Cold/frozen dispensed Candy/gum Average spent on last purchase

$96.81 $79.43 $37.89 $33.22 $15.89 $12.19 $11.79 $7.80 $15.59

ENROLLED

NOT ENROLLED

$107.80 $88.59 $45.98 $36.68 $17.63 $13.71 $13.89 $8.59 $18.68

$89.75 $73.05 $32.75 $30.87 $14.49 $11.21 $10.11 $7.25 $13.47

Base: Respondents who purchased each category Source: Convenience Store News Market Research, 2017

Do you typically shop at the same convenience store each time? Yes

Enrolled

34.0%

Not Enrolled

38.8% 66.0%

61.2%

Base: 1,505 total respondents Source: Convenience Store News Market Research, 2017

68 Guide to Consumer Insights | FEBRUARY 2017 | WWW.CSNEWS.COM

where a double-digit loyalty differential (12.7 points) was seen in the percentage who purchase. Loyalty program participation also has a notable impact on the number of times c-store shoppers purchase a particular product category in a given month. The categories demonstrating the biggest variance in purchase frequency, according to CSNews’ 2017 Realities of the Aisle research, are cigarettes and hot dispensed beverages. Those enrolled in a loyalty program buy cigarettes from a c-store 9.86 times per month on average, vs. 7.38 times for those not enrolled. Similarly, those enrolled purchase hot dispensed beverages — like coffee, tea, cappuccino and hot chocolate — an average of 7.31 times a month vs. 5.29 times, respectively. The most compelling difference between c-store loyalty program participants compared to non-participants, however, is seen in the amount spent on a particular product category in a given month. Those enrolled spend a whopping 40.4 percent more on beer/malt beverages per month than those not enrolled — $45.98 vs. $32.75. This category, by far, had the most variation. Other categories with a sizeable difference in spending among c-store loyalty program participants vs. non-participants are: cold/frozen dispensed beverages (participants spend 37.4 percent more per month); packaged beverages (22.3 percent more); hot dispensed beverages (21.7 percent more); cigarettes (21.3 percent more); and gasoline (20.1 percent more). Overall, c-store shoppers enrolled in a loyalty program spent 38.7 percent more on their last purchase than c-store shoppers not enrolled — an $18.68 ring, compared to a $13.47 ring. Considering these differentials, convenience store retailers should also take note that a little more than a third (36.1 percent) of the 1,505 consumers surveyed by CSNews said their usual convenience store does not have a loyalty program, but they would enroll if it did. “Loyalty programs are great. Even something as simple as ‘buy so many beverages, get one free’ works. Also, refill options make me come back,” one respondent suggested. “I am a big believer in loyalty programs, especially on gas and made-to-order beverages/food. Prices should be reasonable, not a huge mark-up,” another participant stated. CSN

You have the power to create customer loyalty. Wayne Smith, Male Age 31 BEFORE JOINING

6 Visits Fuel visits 4 per month

per month

AFTER JOINING

10 Visits 5 Fuel visits

per month

Every convenience store has a â&#x20AC;&#x153;Wayne Smith,â&#x20AC;? someone whose purchase behavior is brimming with potential. Six months ago, Wayne filled his tank and then signed up for the rewards program. Today, he visits the store more frequently and has added an extra fuel visit to his routine. Individual-level behavior data enables marketers to develop more profitable promotions, bolster sales in targeted categories, and motivate frequent fuel customers to make in-store purchases. High-fidelity software, 99.99% uptime, transaction speeds measured in milliseconds, and certified integrations with Verifone, Radiant, and Gilbarco make Paytronix the partner of choice for innovative, forward-thinking multiunit chains. Learn quickly, act instantly, and create revenue from carefully crafted customer relationships. Contact us today at (617) 649-3300, ext. 5, or visit paytronix.com.

Feel the power of L O YA L T Y P R O G R A M S > E M A I L C L U B S > C U S T O M E R I N S I G H T S

EXPERT’SVIEW NEW Horizons

How Stubborn Stereotypes Hold Women Back Women leaders are seen as competent or well-liked — rarely both

hink of a woman leader in your organization. Would you say she’s “assertive” or “bossy?” Is she “in control” or is she “cold?” Is she “hands on” or “a micromanager?” Women continue to face entrenched stereotypes that cast By Nancy Krawczyk, men (and only men) as “natural Network of leaders.” Maybe you, too, believe Executive Women the most effective business leaders are aggressive, driven men who never let their emotions play in business decisions. But have you considered how this stereotypical view of “strong leaders” pushes a double bind that penalizes women? Research shows when women take on “male” leadership traits, they’re deemed ruthless and too ambitious. If they don’t “lead like a man,” they’re judged “too soft” to be leaders. These stubborn stereotypes are not only holding women back, they’re also keeping men from developing a more effective, balanced leadership style, according to “Moving Beyond Male/Female Leadership,” a recent study from executive coaching firm Skyline Group Inc. Employees surveyed said they most respect assertive, competitive male leaders and communicative,

Convenience Store News is pleased to continue this series of exclusive educational columns by the Network of Executive Women (NEW), coinciding with the annual CSNews TOP WOMEN IN CONVENIENCE Top Women in Convenience awards given out each fall. More than 60 female managers, executives and directors who work in the convenience store industry were honored in our 2016 program. In addition to being a presentation sponsor for the Top Women in Convenience program, NEW

inclusive female leaders, but have less favorable feelings toward men and women who exhibit the other gender’s “accepted” leadership styles. What’s worse, the study found, women promote these gender stereotypes as much — or more — than men. SEVEN KEY FACTORS

The Skyline study found women who adopted “masculine behaviors” were viewed by male and female employees as bossy. The study looked at seven key

and CSNews have partnered to develop this series of columns directed at helping corporate leaders drive more inclusive company cultures. Sponsored by:

WWW.CSNEWS.COM | FEBRUARY 2017 | Convenience Store News 71

EXPERT’SVIEW NEW Horizons

facets of leadership: 1. Executive presence — Employees respond more favorably to women who display poise and authenticity and less favorably to those who “command respect.” 2. Self-confidence — Women who display confidence through actions are more appreciated than those who talk about their accomplishments. 3. Emotional control — Women leaders are expected to share their feelings or risk seeming “cold.” 4. Entrepreneurship — Men are praised for taking big risks, while women are expected to offer less-risky (and more) options. 5. Coaching & mentoring — Women leaders who create development plans are seen as bossy. Those who involve employees in planning and exploration aren’t. 6. Monitoring direct reports’ performance — Daily progress checks will label a woman as a micromanager. Looking at overall performance is seen as more effective. 7. Planning & organizing — When men make small decisions to yield a larger plan, they’re viewed as leaders. When women use the same strategy, they’re seen as dictatorial. Facing steadfast, but erroneous, stereotypes of what makes an effective leader, many women are pushed to continually recalibrate their behavior. As one Catalyst report put it, women are “damned if you do, doomed if you don’t.” Catalyst is a nonprofit organization with a mission to expand opportunities for women and business. WHAT COMPANIES CAN DO

So, what can companies do to chip away at these stereotypes so that they are able to leverage the best talent — male or female — in leadership roles? I agree with many of Catalyst’s recommendations: • Provide training that raises awareness of the effects of stereotypic perceptions. Include information on recognizing bias, inconsistencies between company values and actual behavior, and the causes and detrimental effects of gender inequality at work. Look at your formal evaluations. Are they based on well-defined criteria? If not, gender bias can creep in. • Assess the workplace and identify ways women are at risk of bias. What is the ratio of men to

72 Convenience Store News | FEBRUARY 2017 | WWW.CSNEWS.COM

Wiping out stereotypes — the first step in workplace transformation — starts with you.

women in the company, and in specific work teams or divisions? What’s the ratio of men to women at specific job levels? • Create innovative work practices that target stereotypic bias. Cultures that favor authoritative and hierarchical leadership styles are often less welcoming of women and/or supportive of their career goals. Take a few minutes and ask yourself: When you think about a woman leader, what qualities does she have? What are her strengths? Chances are your perceptions of what makes “a good woman leader” are similar to those of your colleagues. And that’s a problem. Because the way you think about effective leadership is likely based on gender stereotyping, which can derail women’s career goals; keep men and women from being their strongest, authentic selves at work; and, certainly, depress business results. Wiping out stereotypes — the first step in workplace transformation — starts with you. CSN Nancy Krawczyk is vice president, marketing and corporate partnerships for the Network of Executive Women, Retail and Consumer Goods, a learning and leadership community representing 10,000 members, 950 companies, more than 100 corporate partners and 20 regional groups in the United States and Canada. Learn more at newonline.org. Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News.

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WWW.CSNEWS.COM | FEBRUARY 2017 | Convenience Store News 73

HOTPRODUCTS Special Advertising Section

General Merchandise

C-Store Recruiters

74 Convenience Store News | FEBRUARY 2017 | WWW.CSNEWS.COM

HOTPRODUCTS Special Advertising Section

Skimming Prevention

Cup Dispenser

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ATMs

78 Convenience Store News | FEBRUARY 2017 | WWW.CSNEWS.COM

CLASSIFIED Air Vacs

POS/Supplies

WWW.CSNEWS.COM | FEBRUARY 2017 | Convenience Store News 79

CLASSIFIED Air Vacs

Equipment / Supplies

80 Convenience Store News | FEBRUARY 2017 | WWW.CSNEWS.COM

CLASSIFIED Plastics

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CLASSIFIED Age Verifier / POS

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Petroleum/Equiment

Age Verifier

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CLASSIFIED Services

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CLASSIFIED Financial Services

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Equipment / Supplies

Sunglasses

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ADINDEX Advance Pierre ...................................................................................70 Altria Group Distribution Company .................................................2-3 Bake’nJoy............................................................................................61 Boston Beer/Samuel Adams .............................................................31 Cash Depot..........................................................................................32 Coca Cola ............................................................................................29 Cookies United ...................................................................................59 E-Alternative Solutions .....................................................................13 Forte Products.....................................................................................15 Heineken.............................................................................................29 Home Market Foods ...........................................................................51 Imageworks Display ..........................................................................23 ITG .......................................................................................................57 John Middleton...................................................................................21 JT International U.S.A,Inc. ................................................................53 Liggett Vector Brands ........................................................................88 McKee/Little Debbie ..........................................................................37 McLane Company...............................................................................11 MTI/Autofry ........................................................................................60 Omegaflex ...........................................................................................14 Paytronix .............................................................................................69 Perfetti Van Melle...............................................................................44 Procter & Gamble...............................................................................9 RJ Reynolds Tobacco Company .......................................................7 Society Insurance...............................................................................41 Regional Stout Brewing Company, LLC...........................................................17 Sunny Sky Products...........................................................................33 Swisher International Inc. ................................................................47 Tillamook Country Smoker, Inc........................................................65,87 Tyson ...................................................................................................35,39 Universal Merchant Services............................................................Outsert The Wonderful Company/Fiji Water................................................5

570 Lake Cook Road, Suite 310, Deerfield IL 60015 Phone (224) 632-8200 Fax (224) 632-8266 www.ensembleiq.com Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by EnsembleIQ, 570 Lake Cook Rd. Deerfield, IL 60015. Copyright © 2017 by EnsembleIQ. All rights reserved. Subscriptions: One year, $93; two years, $152. One year, Canada, $110; two years, Canada, $175. One year, foreign, $150. Payable in advance with a bank draft drawn on a U.S. bank in U.S. funds. Single copies, $10, except foreign, where postage will be added. Printed in U.S.A. Periodicals postage paid at Deerfield, IL, and at additional mailing offices. POSTMASTER: Send address changes to Convenience Store News, P.O. Box 1842, Lowell, MA 01853.

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GETTINGTOTHECORE

The Weight of Healthy Options Shoppers say healthy c-store food is important to them, but they are not satisfied

he start of a new year always finds health and wellness top-of-mind for consumers. Carbonview Research, sister company of Convenience Store News, recently surveyed 500 U.S. consumers who shopped at a convenience store in the past month to find out how important it is to them to have healthy product options available, and how well c-stores are meeting their needs. One concerning stat for c-store operators is that more than half of those surveyed said they are cutting back on foods and beverages from convenience stores to maintain a healthier lifestyle.

How satisfied are you with the healthy options currently offered at convenience stores? Satisfied (net) Extremely satisfied Somewhat satisfied Neither satisfied nor unsatisfied Somewhat unsatisfied Not at all satisfied

TOTAL

BY AGE: 18-24

25-34

35-44

45-54

55-64

65+

31.6% 4.2% 27.4% 37.4% 24.0% 7.0%

37.0% 7.4% 29.6% 38.3% 19.8% 4.9%

32.1% 3.6% 28.6% 37.5% 23.2% 7.1%

28.4% 1.1% 27.3% 35.2% 26.1% 10.2%

24.5% 2.9% 21.6% 41.2% 26.5% 7.8%

36.6% 4.9% 31.7% 34.1% 23.2% 6.1%

34.3% 8.6% 25.7% 37.1% 25.7% 2.9%

Base: 500 respondents who shopped at a convenience store in the past month Source: Convenience Store News Market Research, 2017

Indicate how much you agree with the following statements regarding food and beverages at convenience stores and restaurants. Percent who completely/somewhat agree:

C-store shoppers are slightly more interested in healthier packaged foods vs. healthier foodservice items.

TOTAL

I am making an effort to choose healthier foodservice items at convenience stores (i.e., fresh-prepared foods, not packaged or frozen) I am making an effort to choose healthier packaged foods at convenience stores I am making an effort to choose healthier beverages at convenience stores I have cut back on foods and beverages from convenience stores to maintain a healthier lifestyle

The satisfaction level by age starts strong, takes a dip, and then rebounds. Consumers aged 18-24 are the most satisfied; those aged 45-54 are the least satisfied.

59.4% 61.0% 59.2% 56.8%

PURCHASE FOODSERVICE ITEMS AT LEAST ONCE A WEEK*

62.4% 64.2% 57.6% 53.3%

PURCHASE FOOD/ BEVERAGE AT LEAST ONCE A WEEK*

61.6% 64.4% 60.3% 36.1%

*45.6 percent of respondents purchase foodservice at least once a week; 77 percent purchase food and/or beverages at least once a week Base: 500 respondents who shopped at a convenience store in the past month Source: Convenience Store News Market Research, 2017

66.4% Want to collaborate and share expertise with your peers? The Council of Retail Experts (CORE) is an exclusive network of convenience store retail leaders who do just that. For more information on how to join CORE, please visit www.cvcoreinsights.com.

Survey respondents sourced via ProdegeMR, a leading provider of data collection solutions for the research industry. Visit www.prodegemr.com for more info.

86 Convenience Store News | FEBRUARY 2017 | WWW.CSNEWS.COM

The percentage of convenience store shoppers who say it is important to them for c-stores to offer healthy food and snack options.

31.6%

The percentage of convenience store shoppers who say they are satisfied with the healthy options currently offered at c-stores.

Females and consumers aged 25-34 are the demographic groups most likely to say it is important to them for convenience stores to offer healthy food and snacks.

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