CSN - June 2017 by ensembleiq

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VIEWPOINT By Don Longo, Editorial Director

Convenience Stores: Winners Now, and in the Future Technology will help the convenience channel continue to lead brick-and-mortar growth

he convenience store industry once again deserves a well-earned round of applause for turning in another record-breaking year of profits, while growing in-store sales at a faster pace than nearly every other retail trade channel. According to the 2017 Convenience Store News Industry Report, lower gas prices once again depressed total industry revenues by about 6 percent last year, not nearly the kind of plunge we saw in 2015 when total sales fell by 14 percent. Meanwhile, the industry set new highs in motor fuel gallons sold and fuel profits, in-store merchandise and foodservice sales, and gross profits. In our Report Card at a Glance (see page 48) we give the industry a grade of C in total sales because revenues declined for the fourth year in a row. We also give the industry a C+ in store count, as only about 340 net new c-stores were added in the United States last year. However, For comments, please contact Don Longo, Editorial Director, in-store sales (up 3.8 percent), at (201) 855-7606 or motor fuel business (revenue wasn’t dlongo@ensembleiq.com. down as much as 2015 and volume was up), profits (record gross profits for a third year in a row), and foodservice (continued impressive growth) all scored B grades, by our subjective grading system. From 2001 to 2016, the drugstore channel’s share of total retail sales declined from 10 percent to 8.9 percent,

and supermarkets’ share fell from 34.2 percent to just 23.1 percent, according to Nielsen. During that same timeframe, c-stores’ share of total retail sales increased from 7.4 percent to 8.2 percent. The biggest gainer, of course, was e-commerce, which skyrocketed from 2.3 percent to 13.2 percent of total retail sales over the past 15 years. Nielsen foresees c-store growth continuing in the near future. By 2021, c-stores will be the only brickand-mortar channel to show a larger share of total retail sales, according to the market research giant. C-stores’ share of total retail will reach 8.6 percent by 2021, while drugstores will decline to 8.9 percent and supermarkets will fall to 21.2 percent. Dollar stores and warehouse clubs are projected to remain static at 2.1 percent and 7.1 percent of sales, respectively. “I think the future is bright for c-stores,” said Carl Elliott, director of Nielsen’s convenience channel segment. “Technology is going to have a significant and positive impact on the convenience industry.” Developing technologies such as mobile ordering and payment, checkout-free stores, and same-day and drone delivery, will become pervasive in the c-store industry, predicts Elliott. What’s more, c-stores are perfectly positioned for the next generation of consumers. “Millennials grew up with their phones. Their first thought when they need something is to go to their mobile devices,” explained Elliott. “The c-stores that are investing in technology to serve these consumers will be the winners within the channel.”

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 | JUNE 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

Jack Lewis GPM Midwest

Kirk Leff McLane Co. Inc.

Roy Strasburger Convenience Management Services Inc.

Danielle Mattiussi Maverik Inc. Kyle McKeen Alon Brands Inc. Richard Mione GPM Southeast Jonathan Polonsky Plaid Pantries Inc. Greg Scriver Kwik Trip Inc.

ÂŠ2017 Goya Foods, Inc. *Top selling coconut water SKU (in Grocery outlets) Source: Nielsen Strategic Planner, Total US (unit sales), 52 weeks ending 12/17/16

CONTENTS JUNE 2017

30 | COVER STORY Convenience Stores: Retailing’s Anomaly

The convenience channel continues to thrive as other retailers face dire challenges.

VOLUME 53/NUMBER 6

INDUSTRY ROUNDUP 12 | C-store Chains Spread Their Wings 14 | Fast Facts 14 | FDA Hits Pause on Key Regulatory Matters 16 | Eye on Growth

FEATURES

18 | Seen on Social Media

70 | What’s Behind a Great C-store Shopping Trip? Consumers know you’re collecting data on them and want some payoff.

18 | Retailer Tidbits 18 | Supplier Tidbits 20 | People on the Move

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 | JUNE 2017 | WWW.CSNEWS.COM

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TECHNOLOGY

CONTENTS

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

CATEGORY MANAGEMENT

BRAND MANAGEMENT

FOODSERVICE

Group Brand Director (330) 840-9557

50 | Finding the Dough in Pizza The perfect grab-and-go item, pizza is on the rise in the convenience channel. FOODSERVICE

56 | Exploring Culinary Trends Retailers find inspiration at the 2017 Convenience Store News Foodservice Summit. FOODSERVICE

64 | Gourmet-Coffee Gains C-stores may not be Starbucks, but a higher coffee reputation is within reach.

DEPARTMENTS VIEWPOINT

4 | Convenience Stores: Winners Now, and in the Future Technology will help the convenience channel continue to lead brick-and-mortar growth. 10 | CSNews Online

22 | New Products

SMALL OPERATOR

24 | Making Foodservice the Focus After taking over a c-store in Minnesota, Tony Donatell transformed it — and the bottom line — with three unique foodservice concepts. EXPERT’S VIEW

78 | The Future of Work Big changes are on the horizon. Are you ready?

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 Associate Publisher & Midwest Sales Manager Kelly Fischer (773) 992-4464 kfischer@ensembleiq.com Associate Brand Director & Northeast Sales Manager Rachel McGaffigan (508) 385-2524 rmcgaffigan@ensembleiq.com Southeast Regional Sales Manager Erika Cann (330) 357-9207 ecann@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

CUSTOM MEDIA 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

MARKETING Strategic Marketing Director (224) 632-8214

Bruce Hendrickson bhendrickson@ensembleiq.com

AUDIENCE DEVELOPMENT 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

STORE SPOTLIGHT

ART/PRODUCTION

83 | Taking the ‘Cons’ Out of Convenience The GetGo Café + Market prototype seeks to change shoppers’ c-store perceptions.

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

OUT & ABOUT

85 | Viewing the C-store Offer Through Customers’ Eyes The 2017 NACS State of the Industry Summit highlighted how operators can capitalize on shifting consumer perceptions. GETTING TO THE CORE

98 | Mobile App Mojo Consider these research findings when devising a mobile marketing plan.

CORPORATE OFFICERS Executive Chairman Alan Glass President & CEO Peter Hoyt Chief Operating Officer Rich Rivera Chief Financial Officer Len Farrell Chief Business Development Officer & President, EnsembleIQ Canada Korry Stagnito Chief Customer Officer/President of Enterprise Solutions Ned Bardic Chief Digital Officer Joel Hughes Chief Human Resources Officer Greg Flores Chief Brand Officer Jeff Greisch

CONVENIENCE STORE NEWS AFFILIATIONS 8 Convenience Store News | JUNE 2017 | WWW.CSNEWS.COM

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CIGARETTES, MOIST SNUFF

CSNEWS.COM ONLINE EXCLUSIVE

TOP 5 Daily News Headlines The most viewed articles online.

1 | ITG Brands Adds to Winston Brand Family ITG Brands LLC is expanding its Winston cigarette family. Winston Select builds on the success of the brand by tapping into the opportunity in the non-menthol gold segment, according to the company. 2 | QuikTrip Tops GasBuddy’s Inaugural Quarterly Report Card If QuikTrip Corp. could receive a report card grade, it would be A+, according to GasBuddy’s inaugural quarterly C-store Report Card, which reveals how gas station/convenience stores stacked up in the first quarter of 2017. QuikTrip, the Tulsa, Okla.-based c-store operator, secured the top spot in the TopRated Overall category.

Rules of the Road for Effective Menuboards The menuboard is a convenience store’s most powerful sales tool when it comes to foodservice. A menuboard that has been optimized and strategically designed gets customers to spend more. An optimized menuboard can shave precious seconds off the customer’s order time, resulting in increased throughput. It can also result in an improved customer experience and increased customer loyalty. This is particularly important since c-store foodservice sales are expected to cool off somewhat in 2017. That being the case, an optimized menuboard can help your brand counter this.

3 | Tackling Tobacco: April 2017 Legislative & Regulatory Roundup Tobacco legislation and regulation is constantly under review at the local, state and federal levels. In this monthly roundup, Convenience Store News highlights the latest proposals and approved changes happening across the United States. 4 | Sunoco Eyes Substantial Retail Exit by Fourth Quarter Sunoco LP will look like a different company come the end of this year. With a pending sale of more than 1,000 convenience stores to 7-Eleven Inc. and hundreds of more stores still on the sales block, Sunoco “will have substantially exited the retail convenience store space in the continental United States by the end of 2017,” Bob Owens, president and CEO of Sunoco LP, said during the company’s first-quarter earnings call. 5 | ExxonMobil & Gilbarco Partner on EMV Upgrade Program ExxonMobil and Gilbarco Veeder-Root have teamed up to launch a program that encourages Exxon- and Mobil-branded wholesalers to convert or update their forecourt equipment and systems for EMV. The limited-time program features dispensers with cutting-edge technology, including the FlexPay IV CRIND for EMV payment acceptance.

For more exclusive stories, visit the Special Features section of www.csnews.com.

PRODUCT HIGHLIGHT

The most viewed New Product online.

Starburst All Pink For the first time ever, Starburst launched Starburst All Pink, a package of the chewy candy that contains only the strawberry-flavored pink Starbursts. The all-pink pack of the fruit chews is available for a limited time. Single sticks of Starburst All Pink are priced at 99 cents, while a laydown bag is priced at $3.19. Wm. Wrigley Jr. Co. Chicago (800) 974-4539 www.wrigley.com

OUT & ABOUT: NYC Gets a Taste of M&M’S Caramel M&M’S Caramel Chocolate Candies made its official debut May 10 at a special launch event held at M&M’S World in New York City’s Times Square — one of the most famous “squares” of all. Convenience Store News was among a small, select group of media representatives who got the inside scoop on the M&M’S brand’s newest sidekick and the national advertising campaign titled “#UnsquareCaramel” that will introduce “Caramel,” a walking, talking cube of caramel who is the epitome of square.

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

POLICY

TRADING

TAXES

INNOVATION

SERVICE

INSIGHT

INDUSTRYROUNDUP

C-store Chains Spread Their Wings At least five convenience retailers eye opportunities outside their traditional markets

017 may go down in history as the year convenience store chains branched out. One of Pennsylvania’s native sons, Rutter’s Farm Stores, plans to step outside its home state for the first time later this year. During a visit with Pennsylvania Gov. Tom Wolf on May 10, Rutter’s President and CEO Scott Hartman said the convenience store operator has plans to open locations in Maryland and West Virginia sometime in 2017. Fellow Pennsylvania-based chain, Wawa Inc. — fresh off its entrance into the state of Florida — now has its sights set on the nation’s capital. The retailer is reportedly planning 11 stores for Washington, D.C., and is hosting a mid-June event at the Newseum for local officials and the real estate and development community to unveil plans for the first Wawa store in the District of Columbia, including debuting a special design, the store location, and renderings. On the other side of the country, Lake Jackson, Texas-based Buc-ee’s is spreading its wings across the Southeast with new locations in Daytona Beach and

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

Fort Meyers, Fla., and Baldwin County, Ala. To date, the retailer has operated its 30-plus supersized stores all in Texas. And it’s not just long-time industry players that are ready to go in a new direction. New to the industry, Yesway intends to add stores under its management in Oklahoma and Arkansas. The operating brand of BW Gas & Convenience also acquired 35 Wes-T-Go and Chillerz convenience stores in Texas last month, and first stepped outside its Iowa home base in March when it purchased five Pic Quik convenience stores in Hutchinson, Kan. In addition, Getty Realty Corp. President and CEO Christopher Constant said during the company’s first-quarter earnings call, held May 5, that the company’s pipeline includes locations in geographic regions that both overlap with its existing sites where it would like to increase its presence, and new markets Getty finds attractive. The Southeast and Southwest regions of the United States are on Getty’s radar, according to Constant.

F M A O R M R F TO O G

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INDUSTRYROUNDUP FAST FACTS Mission and value alignment is a top contributing factor to employee loyalty and engagement. Source: CultureIQ

Eighty-four percent of consumers say a convenience store’s cleanliness is an important factor when considering whether to go inside to make a purchase. Source: NACS, the Association for Convenience & Fuel Retailing

Mars Chocolate North America, Wrigley, Ferrero Rocher, Lindt, Ghirardelli, Russell Stover, Ferrara Candy Co., and Nestlé USA will print calorie info on the front of 90 percent of their best-selling candy and chocolate products in the next five years. Source: Partnership for a Healthier America

Women now account for one-third of all convenience store shoppers and spend an average of 8 cents more per trip than men. Source: VideoMining C-store Shopper Impact MegaStudy

14 Convenience Store News | JUNE 2017 | WWW.CSNEWS.COM

FDA Hits Pause on Key Regulatory Matters The agency pushes back menu-labeling enforcement and deeming-rule deadlines

ust days before the federal menu-labeling rule was set to go into enforcement, the Food and Drug Administration (FDA) moved the compliance date back a year to May 7, 2018. At the same time, the agency issued a request for comments on how it can reduce the regulatory burden on retailers; alternative approaches for labeling self-service foods; additional methods for providing calorie information aside from on the menu; and criteria for distinguishing between a menu and other information, such as advertisements. All comments are due July 3. Similarly, the FDA gave a 90-day reprieve to several deadlines under its final deeming rule, which gives the agency the authority to regulate all tobacco products it previously did not regulate, like electronic cigarettes and cigars. The reprieve comes as the federal government faces legal challenges to some of the regulations included in the deeming rule.

This includes litigation brought against the agency by the Cigar Association of America, Cigar Rights of America, and the International Premium Cigar & Pipes Retailers Association. Recently, the U.S. Department of Justice informed the U.S. District Court in the District of Columbia that new leadership at the U.S. Department of Health and Human Services would like additional time to more fully consider the issues raised in the deeming rule. This extension is the second in the past two months. When the FDA requested the first extension, the three cigar trade groups requested that any additional extension to the court case should result in an equal delay to any future deadlines as part of the deeming rule. The 90-day reprieve applies to any deadlines set in the deeming rule that have yet to take hold, but keeps the final rule — and its regulations — in effect. The final rule took effect Aug. 8.

INDUSTRYROUNDUP

The Best Record for the Fuels of Today and Tomorrow!

eye on growth n Delek US Holdings Inc. expects to

close on its all-stock deal for Alon USA Energy Inc. on July 1. Delek US is acquiring the remaining 53 percent of Alon shares of common stock it does not already own. n The Hard Rock Rocksino

Northfield Park plans to open Rockstop Gas & Wash, a firstof-its-kind, Hard Rock-branded location in Northfield, Ohio. Construction of the Rockstop Gas & Wash is slated for completion in September. n Love’s Travel Stops &

Country Stores Inc. expanded its list of amenities available to truck drivers and travelers with the inclusion of a laundry facility at its new Macon, Ga., travel stop. This is the first of many laundry facilities the retailer plans.

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n Hy-Vee Inc. will build a small-

format store to serve as a pickup point for online grocery orders in West Des Moines, Iowa. The new concept will include groceries, a fueling station, and potentially a coffee shop.

Hy-Vee is reportedly considering the name “Hy-Vee Fast & Fresh” for this concept.

n Petroleum Marketing Group Inc.

bought the retail assets, and the branded and unbranded wholesale businesses, of Leonard E. Belcher Inc. The deal included 13 company-operated c-stores, one new-to-industry store, and one developmental property. n SuperAmerica LLC bought eight franchise SuperAmerica

gas stations in the Northland, Minn., area from Curtis Oil. Longtime Curtis Oil co-owner Jack Curtis is planning to retire after more than 45 years in the business.

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INDUSTRYROUNDUP SEEN on SOCIAL MEDIA

retailer tidbits

Rutter’s Farm Stores, York, Pa.

n Sheetz Inc. plans

Looking forward to a day on the golf course raising money for Rutter’s Children’s Charities!

to hire more than 3,400 new employees companywide. The retailer began interviews in early May for full- and part-time positions at all its 550 locations. n Wawa Inc.

rolled out its mobile ordering platform to all of its loyalty program members. The retailer began piloting the service earlier this year. n Cumberland Farms Inc. inked

a three-year partnership with the nonprofit Partnership for a

Family Express Corp., Valparaiso, Ind.

Did you know we give free fruit to kids on Fridays? Shout-out to Rusty of the @RailCats! Ty @ ValpoYMCA for a great cause!

n A subsidiary of Tyson

Foods Inc. is acquiring all of AdvancePierre Foods Holdings Inc. outstanding common shares. The total value of the deal is approximately $4.2 billion.

acquisition of Thanasi Foods LLC, maker of Duke’s meat snacks, and BIGS LLC, maker of BIGS seeds. Financial terms of the deal were not disclosed. The brands will continue to operate out of Boulder, Colo.

We’re growing in the community! Join us at our job fair today at American Jobs Center: 215 S Liberty Hill Rd, Morristown, TN from 9am-4pm.

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

n Casey’s General

Stores Inc. is adding E15 and E85 fuels to 17 Casey’s convenience stores in Illinois, Iowa and Kansas. Kwik Trip Inc. is also bringing E15 to its forecourts, with plans to offer the fuel blend at most of its more than 550 locations.

supplier tidbits

n Conagra Brands Inc. completed its

Weigel Stores Inc., Powell, Tenn.

Healthier America. More than 70 percent of The multi-part Cumberland Farms commitment is stores are located aimed at promotin food deserts. ing healthier food options in the states where the chain operates.

n Anheuser-Busch’s Michelob

ULTRA extended its designation as the Official Beer Sponsor of the PGA Tour O’Doul’s will also and PGA Tour continue to serve Champions as the Official Nonthrough 2020. Alcohol Brew.

n J. Polep Distribution Services

acquired certain assets of Garber Bros. Inc., a convenience distributor that serviced the Northeast before shutting down on April 10. Among the assets acquired is the Beantown Coffee program. n The Hershey Co.

signed a five-year extension with CBS Sports, Turner Sports and the NCAA to continue its role as Official Confectionery Partner. Its Reese’s brand will return as title sponsor of the Reese’s College All-Star Game. n E-Alternative Solutions (EAS)

launched a national advertising campaign for its Cue Vapor System. EAS is a sister company to Swisher International.

SHELF EDGE LABELS Speak Volumes

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INDUSTRYROUNDUP

people on the move n John Schaninger, former vice president

Schaninger racked

of sales and marketing at QuickChek up 38 years of industry experience Corp., launched The Schaninger at QuickChek. Group, a retail consulting firm. The group will use decades of experience to specialize in custom-designed and collaborative strategies, plans and programs for convenience retailers.

Convenience Store Hall of Fame. They were inducted May 11. n Rednerâ&#x20AC;&#x2122;s Markets President and CEO Richard Redner

has stepped down and is being succeeded by his son Ryan Redner. He will continue to serve as chairman of the board of directors, and assume the role of senior vice president of strategic planning.

n The National Confectionery Sales Association will wel-

come Rutterâ&#x20AC;&#x2122;s Holdings Inc. President and CEO Scott Hartman as a member of the Candy Hall of Fame. An induction ceremony will take place Oct. 14 as part of the Candy Hall of Fame weekend in Tampa, Fla.

n Conexxus inducted Sharon Scace of WEX Inc. and

David Ezell of Verifone Inc. into the Conexxus Hall of Fame during its annual meeting. The 2017 Conexxus Annual Conference was held April 23-27 in Annapolis, Md.

n The New York Association of Convenience Stores

welcomed Larry Bull, president and CEO of Bull Bros. Inc., and Mike Deuser, vice president of foodservice for Tripifoods Inc., into the 2017 New York

20 Convenience Store News | JUNE 2017 | WWW.CSNEWS.COM

n Donald C. Templin will take the reins as president of

Marathon Petroleum Corp. on July 1. Templin is currently president of the general partner of MPLX LP.

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NEWPRODUCTS Heineken COOLERPACK

Hershey Flavors of America Collection

In preparation for summer, Heineken launches the COOLERPACK, an engineered 18-pack cardboard packaging innovation that allows consumers to chill their Heineken beer by easily removing the top and adding ice. The COOLERPACK is the newest edition to the Heineken range of packaging configurations designed to bring convenience and occasion-based purchase choice to beer drinkers everywhere. Impactful point-of-sale materials will help enhance display presence in high-traffic areas of the store, driving awareness and trial of the COOLERPACK. Retailers can maximize volume and profit, and drive basket ring by cross-merchandising with ice, the company noted.

The Hershey Co.’s “Flavors of America” collection is an assortment of six classic products from iconic brands with summer-inspired flavors. The collection includes: Kit Kat Strawberry Flavored Candy, Hershey’s Kisses Coconut Almond Flavored Candies, PayDay BBQ Flavored Bars, Reese’s Honey Roasted Flavored Peanut Butter Cups, Twizzlers Key Lime Pie Flavored Twists, Twizzlers Orange Cream Pop Flavored Twists, and Hershey’s Cherry Cheesecake Flavored Bars. The Flavors of America collection is available while supplies last.

Heineken USA White Plains, N.Y. (914) 681-4100 heineken.com

The Hershey Co. Hershey, Pa. (800) 468-1714 thehersheycompany.com

Oscar Mayer Honey Ham & Cheddar Link

Mars Chocolate launched a new M&M’S ice cream bar in time for summer. Each 2.64-ounce bar is individually wrapped and features pieces of M&M’S milk chocolate candy, reducedfat vanilla ice cream, and a milk-chocolate coating. Individual bars have a suggested retail price of $1.79, while a six-count multipack is available for a suggested price of $3.99. The new M&M’S ice cream bar will be available across the United States.

The new Oscar Mayer Honey Ham and Cheddar Link provides another option for customers in search of on-the-go snacks. The roller grill offering features a pork link that combines ham, honey and Kraft Old English Cheddar Cheese. It is packed with rich, grilled ham and cheese flavor, according to the maker. Oscar Mayer is offering retailers a chance to save up to $150 with $2.50 off per case through Dec. 31. The company will also help promote the new roller grill offering with a free merchandising poster kit.

Mars Chocolate North America Hackettstown, N.J. (908) 852-1000 mars.com

The Kraft Heinz Co. Pittsburgh (412) 456-5700 kraftheinzcompany.com

M&M’S Ice Cream Bar

Chocolate Cake Twinkies Hostess introduces Chocolate Cake Twinkies, a new offering that comes in the same iconic Twinkie shape, but is made with chocolate cake and a creamy filling. Chocolate Cake Twinkies were launched following blind taste tests in which consumers showed enthusiasm for the product, according to the company. Also driven by consumer feedback, Hostess has reinvented the Chocodile, a Twinkie enrobed in a smooth fudge layer. Renaming it the Fudge Covered Twinkie, the product is now a larger size and has a higher crème-to-cake ratio, an intensified fudge coating, and a modified shape. Both new items are available nationwide in single-serve, twin-pack and multi-pack formats. Hostess Brands Inc. Irving, Texas (800) 483-7253 hostesscakes.com

22 Convenience Store News | JUNE 2017 | WWW.CSNEWS.COM

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Making Foodservice the Focus

After taking over a c-store in Minnesota, Tony Donatell transformed it — and the bottom line — with three unique foodservice concepts By Tammy Mastroberte

hen Tony Donatell took over Oasis Market, a convenience store in Eagan, Minn., back in February 2008, he knew right away that the store was not utilizing the full kitchen it had to its utmost capacity. First, the store was only offering hot deli foods from 11 a.m. to 2 p.m., and instead of made-to-order sandwiches, only prepackaged sandwiches were available. This was one of the first things he instinctively knew he had to change. “When we first took over, they were maybe selling $150 to $200 worth of prepared foods per day,” Donatell recalled. “Today, I would say half our profit comes from our foodservice operations, and just over $1 million in prepared food goes through the c-store per year.” Donatell, after graduating college with a business degree, had started working as a store manager for a local convenience store chain. Within a few years, he decided to venture out on his own and take over Oasis Market, which he rebranded as Lone Oak Market. The store is located within a strip mall, which offers more than 100 parking spots, and sells Shell-branded

The Burgers And Bottles concept is designed to be family-oriented.

fuel with five pumps and 10 fueling positions. He saw opportunity in the 6,000-square-foot location because it had a full kitchen with a hood, walk-in coolers and freezers, and tables for people to sit and eat. “We fell in love with the space,” he explained. “It just needed a lot of love.” CREATING A FOOD BRAND

The previous owners of Oasis Market offered a hot deli program with mashed potatoes, meatloaf, veggies, baked and fried chicken, and also a pizza program, but nothing was made from scratch. Donatell immediately changed the offering and built on what they had, making everything from scratch, including cutting their own French fries. The menu expanded to include made-to-order subs, barbeque sandwiches, burgers, salads, and eventually homemade breakfast sandwiches and burritos. Lone Oak Market also added an espresso bar, and began baking fresh cookies onsite every day. Farmer’s Grandson Eatery was Donatell’s first foodservice venture.

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

Q& A speaking with

ANDREW KATZ VP MARKETING, DOS EQUIS

WHY DOES DOS EQUIS® SPONSOR THE COLLEGE FOOTBALL PLAYOFF? HAS IT BEEN A POSITIVE ASSOCIATION FOR THE BRAND? Where there is football, invariably there is beer, and fans who are passionate about both. Now in the second year of the sponsorship, Dos Equis® is placing itself front and center once again amongst the College Football Playoff action. Passion for football and Dos Equis® combine to enliven game day experiences enjoyed with friends and family. Shoppers preparing for the action are three times more likely to purchase Dos Equis® beer for the sports viewing occasion1, are more likely to drink Dos Equis® during key football occasions versus other leading Mexican Imports,2 and Dos Equis® shoppers are 22% more likely to attend College football games.3 To this add the broad --over 26 million fans viewed the 2016 National Championship—and highly engaged audience, and the partnership brings Dos Equis® together with lovers of beer and college football.

WHAT WERE THE RESULTS OF THE 2016 PROGRAM? During the 2016 college football season, Dos Equis® grew sales in all channels, supported by over 27 channel-specific program activations. Dos Equis® Lager out-performed the Total Beer Category4, and in the Convenience channel grew +14.3% in Bowl markets, and +37.8% in Tampa, FL where the National Championship was played in 2016.5 Further, over 1 million total units of national and localized POS were placed in stores from August – January, driving impact and awareness of the brand, the program, and the sweepstakes. Limited time only packaging drove impact at the shelf and effective merchandising drove sweepstakes engagement through over 90 million bottle codes. Dos Equis® highlighted their partnership with the College Football Playoff and received over 1.1 million sweepstakes entries. Strong regional support resulted in 60+ custom local headlines and over 1,000 additional units of POS in highly relevant markets. Finally, a strong media plan delivered over 48 million impressions via both behavioral and geo-targeting. The 2016 edition was an overwhelming success that Dos Equis® will build on in 2017.

HOW DOES THE 2017 PROGRAM WORK? ARE THERE CHANGES FROM 2016? This September, Dos Equis® is returning as the official beer sponsor of the College Football Playoff and celebrating the fans who choose “Game Day Over Everything”. These passionate fans will be given a chance to win a VIP experience at the National Championship game in Atlanta, as well as numerous other exciting football themed prizes. Throughout the season, Dos Equis® will keep consumers engaged with on- and off-premise POS, out-of-home media, and new national TV commercials to heighten the drama during the Playoffs. Dos Equis® is giving college football fans more of what they want: More football, more prizes, more tickets to a NY6 game of their choice. A simple Text-Enter-Win sweepstakes gives consumers a chance at the grand prize --to revel in college football glory at the National Championship in Atlanta, GA. Convenience Store POS includes expandable case stackers, base wrap, localized tuck cards, price cards, cooler decals, and limited time only packaging. The program provides cross-merchandising opportunities with channel partners, including Avocados from Mexico®, On the Border® chips and dips, and Dr. Pepper®. This season, Dos Equis® strengthens its role in the fan occasion, offers brighter and more football-focused POS, and implements localized targeting for a select number of key markets to drive awareness and store traffic. With ongoing program support, consumer excitement, and the passion surrounding college football, Dos Equis® will help retailers finish the season strong.

HOW CAN CONVENIENCE STORE RETAILERS SUPPORT THE PROGRAM TO MAXIMIZE SALES? Convenience Store retailers who put their support behind Dos Equis® put their support behind a winning brand in a winning category. Mexican Imports continue +15% growth, Dos Equis® Lager continues to grow +9%, and Dos Equis® Cans are growing +43% in the Convenience Channel.6 Further, Dos Equis® buyers spend more and buy more versus other leading Mexican Imports and has a greater number of repeat buyers and loyal drinkers versus other leading Mexican Imports.7 When promoted, Dos Equis® yields higher dollar lifts with one third of the distribution of the leading Mexican Import.4 Combining this sales velocity and momentum with the reach and passionate following of the College Football Playoffs makes for an exciting and compelling retail program. Retailers who merchandise the support tools with customized Game Day specials and focus on single serve can maximize this impactful, sales-driving program.

SOURCES: 1. HUSA Occasion Profiles CI Study 2015 2. Nielsen Spectra National Behaviours Report – L52 w/e 1.17, listen, attend watch NFL/College Football 3. Nielsen Spectra National Behaviours Report – L52 w/e 1/19/16). 4. Nielsen FDCM+ $ Vol. % Chg vs YAG 52 w/e 12/31/16 5. Nielsen Market FC $ Vol. % Chg vs. YAG, Sept-Dec 2016 6. Nielsen: Total US Convenience – Latest 52 w/e 2/25/17 7. Nielsen Homescan: 2015 Total US

SPONSORED CONTENT

SMALLOPERATOR The cookies are sold in packs of two by the checkout. The foodservice side of the store is now known as Farmer’s Grandson Eatery. “It’s a fun customer group that likes a good value, but is not caught up in big-name restaurants. They want a good, hearty meal at a fair price,” Donatell said. “We already had the traffic coming in the c-store for energy drinks, cigarettes and gas. Our hope was to sell people food and build from there.” That hope has since been realized. The store has become a food destination, where people come for the food and will get gas and cigarettes because Donatell’s third foodservice venture, Volstead House, is a whiskey bar. they are there, rather than the other way around, according to Donatell. graphic artist that comes in and does the digital menu To keep its food program running smoothly, boards for us, including taking pictures of the food.” Lone Oak Market relies on its distributor FarnerLone Oak Market decided to add online ordering Bocken Co., which delivers twice a week. Carroll, a year and a half ago so that customers could order Iowa-based Farner-Bocken supplies the c-store merfrom Farmer’s Grandson Eatery through the business’ chandise as well as many of its food items, including website. The technology is powered by ChowNow, lettuce, tomatoes, chicken, bananas, prime rib and which provides a tablet to the store where all the ground beef. Lone Oak Market also uses Reinhart Foodservice for a number of other food- online orders are funneled for the staff. Customers can pay through the ChowNow app and just stop in to service-related items. pick up their food. The store also partners with a local “We also have drip cofIt’s a delivery company, Suit and Tie Delivery, which works fee from a third-party with 20 to 30 restaurants in town. that’s branded for the unique situation The delivery company sends a check to the store Eatery, and a capbecause everyone is a at the end of every week or month. It costs Lone Oak puccino machine for Market 20 percent of the gross food purchase to have self-service options,” competitor to us — both it delivered this way, but Donatell said it allows them Donatell noted. c-stores and restaurants — to reach customers who prefer this method without “Then, we have them having to incur the expense of delivery, including the espresso menu, but we are unique because drivers and insurance. with milkshakes and we bring everything Right now, approximately 10 percent of the Eatery’s smoothies, which can orders are made online, with these orders split 50/50 be ordered from the together. between customer pickup and the delivery option. same place customers — Tony Donatell, Owner Other technology in place at Lone Oak Market order their food.” includes the Verifone Topaz point-of-sale (POS) sysThe store does a couple of menu changes throughout the year, tem, and the MICROS POS system for the food side of the business, including kitchen display systems that and features limited-time offers, such as peppermint reside on a separate server. mocha coffee in the winter, and fresh fruit smoothies in the spring. Recently, the chef introduced a new item that puts macaroni and cheese on top of a EXPANSION OPPORTUNITIES burger. It’s selling really well, Donatell shared. With the success of Farmer’s Grandson Eatery, “If limited-time offers do well, we will add them Donatell jumped at the chance to open another foodto the next menu change,” he said. “We have a local service concept when the store next to his in the strip

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26 Convenience Store News | JUNE 2017 | WWW.CSNEWS.COM

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SMALLOPERATOR mall became available. “The e-cigarette shop moved out and the landlord came to us to see if we wanted the space,” he explained. “We came up with the Burgers And Bottles concept and opened in 2015. The c-store slows down in the evenings; we are busy for breakfast and lunch. So, instead of losing that customer, we decided to create the concept next door.” Burgers And Bottles utilizes the same kitchen, chefs and management as Farmer’s Grandson Eatery, but the restaurant has a different entrance and offers its own menu. This includes flame-grilled burgers, fresh-cut fries, appetizers, beer, wine and cocktails. The No. Farmer’s Grandson Eatery draws inspiration from Donatell’s memories of time 1-selling burger is the Wisconsin Cheese Curd spent at his great-grandfather’s farm. Burger, a combination of breaded white chedbay repair shop next door. He had been subleasing the dar cheese curds, thick-cut bacon, two grilled burger space to them, and when the lease expired, he turned it patties, and chipotle ranch sauce. into another restaurant called Volstead House. “It’s not your typical fast food. We make it our Volstead House is connected to the same kitchen own,” Donatell said. used for both the Eatery and Burgers And Bottles, The concept is a family-oriented restaurant, and so it operates with the same kitchen staff. However, although it’s only 1,000 square feet, Burgers And Volstead House has one major difference from the Bottles is always busy with a waitlist for tables. And other two concepts — it is a whiskey bar. like its next-door neighbor, it also offers online order“We put black curtains up in the back of Burgers ing for pickup or delivery. And Bottles that lead to Volstead House, and you have “It’s a unique situation because everyone is a to ask the host to go through a red door to get into competitor to us — both c-stores and restaurants it. You have to know it’s there or see something on — but we are unique because we bring everything Facebook about it,” Donatell explained. “It’s more of together. We offer a restaurant inside of a c-store,” a cocktail-focused bar.” he said. With everything operating around one kitchen, After the success of Burgers And Bottles, Donatell didn’t stop there. One year later, he took over the two- there have been upgrades over the years, such as a bigger hood system and additional equipment. Everything in the “Not your typical fast food” is what kitchen is new from when Donatell Donatell sets out to provide. first took over because the volume increased so much that everything had to be expanded, he shared. In addition to the $1 million of foodservice sales from Farmer’s Grandson Eatery, the other properties bring in more than $1.5 million in food sales, with the majority coming from Burgers And Bottles since Volstead House offers only a few small-plate items. “We’ve built it all into nearly a $3-million kitchen in total foodservice sales,” said Donatell. CSN

28 Convenience Store News | JUNE 2017 | WWW.CSNEWS.COM

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cover story

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t a time when brick-and-mortar retailers are struggling throughout the nation, convenience stores are proving to be an anomaly in the retail landscape. 2014 was a record year for profits. 2015 was even better. And 2016 was just as financially satisfying for most retailers doing business in the convenience store industry. Although total industry revenue declined by 6.3 percent last year, to $565 billion, due to continued falling fuel prices, in-store sales increased by 3.8 percent to a record $221 billion, according to the 42nd annual Convenience Store News Industry Report, the longestrunning, continuously published annual report on the health and performance of the convenience retail channel. The in-store sales gain was 50 percent better than overall U.S. retail sales (excluding autos), which increased only 2.5 percent last year, according to the U.S. Census Department. Supermarkets and other grocery store sales rose only 2.1 percent, and all general

Channel Dollar Share of Total Outlets E-Commerce Supercenters

Dollar Drug

Convenience/Gas Mass

Club Supermarkets

2.3%

1.1% 7.4% 5.6% 3.5% 10.0% 11.4%

2.1%

34.2% 2001

13.2% 8.2% 7.1% 7.8% 8.9% 4.4% 23.1%

19.2% 2.1%

2016

Source: Nielsen TDLinx & Nielsen Analytics

30 Convenience Store News | JUNE 2017 | WWW.CSNEWS.COM

8.6% 7.1% 7.3% 7.9% 4.0% 21.2% 2021 Forecast

merchandise store sales were flat last year, according to the government figures. Department stores and discount stores continued to lose sales to online retailers such as Amazon.com, suffering sales declines of 5.7 percent and 6.5 percent, respectively. In terms of store count, the c-store industry added only 340 net new stores last year to bring the total to 154,535. That figure still dwarfs the approximately 42,000 drugstores, 34,000 supermarkets and 29,000 dollar stores in the United States. In fact, the convenience channel has added almost 30,000 units since 2001 and more than 8,000 since 2010, according to Nielsen TDLinx. Last yearâ&#x20AC;&#x2122;s low gas prices kept motor fuel gallons flowing. Fuel volume sold increased 2.4 percent to 154.7 billion gallons, the highest figure in the past decade. On the other hand, motor fuel revenue, which declined by 11.8 percent to $343.7 billion, fell to a more than 10-year low of 61 percent of total industry sales. Industry gross profits were up 3.5 percent to $96.11 billion, while pretax profits were slightly down last year, but were also coming off a record year in 2015. In-store sales per store were also a record-high $1.4 million last year, a 1.74-percent increase. Foodservice sales growth again led the way, with a 6.6-percent sales gain, which though slightly less than the robust 7.1-percent increase of 2015, still represents a record high for the c-store industry. The top 10 product categories, as defined by Nielsen, accounted for nearly 90 percent of all insidethe-store sales. Cigarettes continued to lead the way at 30.1 percent of in-store sales, followed by foodservice, 16.1 percent; packaged beverages, 12.7 percent; and

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beer/malt beverages, 9.56 percent. Categories that gained share year over year were foodservice, packaged beverages, beer/malt beverages, other tobacco products, general merchandise, and salty snacks. In terms of percentage sales gains, the fastest-growing categories were cold dispensed beverages, up 13.8 percent; general merchandise, up 12.85 percent; wine and liquor, up 11.3 percent; ice, up 10 percent; and other tobacco products, up 9 percent. Prepared food, one of the most important categories inside the store, had a 5.9-percent sales gain, which represented a slight slowdown from the previous year’s 7.7-percent gain. Last year, retailers said their biggest challenge would be to manage both internal and external expectations. They anticipated lower fuel margins, but made up for it with increased sales and profits inside the store. Among this year’s concerns are the availability and cost of labor, especially as stores try to grow their more labor-intensive foodservice operations. Despite the recent strength in fuel volume, they must also prepare for an inevitable flattening or decline, as fuel efficiency increases and miles traveled level off in the coming years. And then, there’s increased competition from outside the industry. Starbucks plans to add 3,400 stores in the U.S. over the next five years. Dollar stores continue to grow and make inroads in c-store intensive categories, like tobacco, cold beverages, and even fueling stations. And Walmart will always be a specter with its seemingly never-ending search for the right c-store concept to expand. While Amazon presents a clear and present danger to many

Total Convenience Store Sales Total

Motor Fuels

In-Store

$564.90 2016

$343.7

-6.3%

-11.8%

$221.2 3.8% $602.92 -14.4% 2015

$389.9

-22.2%

$213.0 4.9% $704.50 -0.3% 2014

$501.4

-1.6%

$203.1 3.2% Source: Convenience Store News Market Research, 2017

Store Growth Analysis Total Store Count

Chains

Single Stores

2016

154,535 36.9%

63.1%

2015

154,195 36.9%

63.1%

2014

152,794 37.0%

63.0%

Source: Convenience Store News Market Research, 2017

Motor Fuel Volume 2016

2015

2014

154.7

151.3

147.0

GALLONS (billions)

% CHANGE

2.24%

2.9%

2.6%

Source: Convenience Store News Market Research, 2017

32 Convenience Store News | JUNE 2017 | WWW.CSNEWS.COM

Best Buy, Target and Walmart have already been negatively impacted by Amazon’s growth. C-stores have yet to feel the direct impact of the online retailer, but Amazon’s plans

retailers, the online giant now represents a future challenge for convenience stores, too. Larger brick-and-mortar retailers like Sears, JCPenney, Kohl’s, Macy’s,

cover story

to open up to 2,000 Amazon Go checkout-free, small grocery stores throughout the country are cause for concern. The record profitability of the past three years is likely to keep merger and acquisition activity on the front burner in 2017 as well, especially among the larger retail chains. Meanwhile, regional powerhouses that feature strong foodservice programs, like QuikTrip, Wawa, RaceTrac, Kwik Trip and Sheetz, will continue to thrive and grow in their markets and beyond. MOTOR FUELS

2016 was a year of contrast for motor fuel sales at convenience stores. The number of gallons sold rose 2.24 percent to 154.7 billion gallons industrywide. However, due to lower gas prices, dollar sales fell 11.8 percent to $343.7 billion. The average sales price per gallon, too, declined 12.45 percent to $2.25, and gross margin cents per gallon fell to 22.9 cents from 23.4 cents the previous year. Declining gas prices also resulted in the second straight year that the average price per gallon fell below the $3 mark. From 2011 to 2014, the average price per gallon was above that point, reaching as high as $3.68 in 2012. Last year also marked the second year that industrywide fuel dollar sales fell below $400 billion, to $343.7 billion; after smaller declines from 2012 to 2014, dollar sales fell from $501.4 billion in 2014 to $389.9 billion in 2015. The majority of c-stores continues to offer fuel sales, holding steady at 80.1 percent. As innovation in the automobile industry continues, c-store leaders are looking ahead to how gasoline sales will be affected, but not every forecast is close to becoming a reality yet.

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

natural gas, and even hydrogen have prompted people to write about the end of gas-powered vehicles. Today, only the hybrid format has become a mainstream alternative.” For the foreseeable future,

“There is a great deal of hype surrounding alternative ways to power cars and their impact on gasoline sales,” said Steven Montgomery, president of b2b Solutions LLC. “Hybrids, electric,

Industry Sales Mix IN-STORE

IN-STORE

39.3%

35.3%

28.8%

MOTOR FUELS

60.7%

64.7%

71.2%

2016

2015

2014

Source: Convenience Store News Market Research, 2017

Gross Profit Dollar Mix IN-STORE

IN-STORE

62.6%

61.9%

60.8%

MOTOR FUELS

37.4%

38.1%

39.2%

2016

2015

2014

Source: Convenience Store News Market Research, 2017

Industry Gross Profit 2016 $ BILLIONS

In-Store Motor Fuels TOTAL

$60.18 $35.93 $96.11

2015 $ BILLIONS

$57.42 $35.40 $92.824

% CHANGE

4.8% 1.5% 3.5%

Source: Convenience Store News Market Research, 2017

Pretax Profits 2016 2015 2014

TOTAL INDUSTRY PRETAX PROFIT (in billions)

% CHANGE

PRETAX PROFIT PER STORE

% CHANGE

$9.10 $9.28 $8.97

-1.91% 3.45% 34.11%

$58,886 $61,277 $59,889

-3.90% 2.32% 32.02%

Source: Convenience Store News Market Research, 2017

cover story

Montgomery expects a larger impact to come from the auto industry’s ability to produce vehicles that get more miles per gallon. “This will come from the use of lighter materials to build the cars or the increased use of turbo engines to drive them, or a combination of both,” he continued. “Turbos allow manufacturers to have smaller, lighter, more fuelefficient engines, thus lowering their fuel consumption. However, the increased use of turbo engines will mean a shift in demand to the higher-octane and higher-priced fuels that they require.” OPERATIONS

Convenience store operators saw direct-store operating expenses rise

In-Store Sales per Store SALES (in billions)

2016

% CHANGE

$1,431,390 1.74%

2015

$1,406,866 3.73%

2014

$1,356,301

1.57%

Source: Convenience Store News Market Research, 2017

again in 2016, reaching an average of $572,926 per store, or a 6.2-percent increase from the previous year. The expenses that saw the highest percentage jumps were workers compensation, which rose 16 percent to an average of $12,320 per store, and health insurance, which rose 10 percent to an average of $27,058 per store. Credit card fees and other benefits were the only expenses to see decreases of 2 percent and 11 percent, respectively.

Wages continued their upward trend, reaching an average of $285,320 per store in 2016 compared to $264,185 in 2015. The challenge of finding and properly compensating good employees while remaining profitable will continue, but industry experts acknowledge the importance of investing in the workforce. “Even the most beautiful new store doesn’t work without people,” Kevin Smartt, CEO of Kwik

In-Store Sales by Category PERCENT OF IN-STORE SALES 2016 2015 2014

MERCHANDISE Cigarettes Packaged beverages Beer/malt beverages Edible grocery Other tobacco products General merchandise Candy/gum Salty snacks Non-edible grocery Fluid milk products Wine & liquor Alternative snacks Ice cream & frozen novelties Health & beauty care Publications Ice Packaged sweet snacks All other merchandise Merchandise subtotal

30.11% 12.74 9.56 4.98 5.16 3.53 3.19 2.74 1.71 1.58 1.35 1.11 0.95 0.71 0.48 0.50 0.30 3.17 83.86%

TOTAL INDUSTRY SALES (in millions) % CHANGE 2015 % CHANGE

31.13% 12.41 9.67 5.13 4.89 3.25 3.26 2.71 1.91 1.90 1.19 1.05 0.93 0.73 0.53 0.44 0.29 3.18 84.62%

$66,612 28,176 21,138 11,021 11,404 7,808 7,054 6,069 3,780 3,495 2,989 2,452 2,098 1,567 1,063 1,102 660 7,012 $185,500

1.42% 4.22 4.39 1.28 9.01 12.85 2.80 4.37 -0.59 -3.50 11.30 5.96 5.00 0.90 -1.00 10.00 2.60 4.51 3.34%

$65,678 27,033 20,249 10,882 10,461 6,919 6,862 5,815 4,021 3,622 2,686 2,314 1,998 1,553 1,074 1,002 643 6,709 $179,521

FOODSERVICE Prepared food (prepared on- or off-site) 10.87% 10.65% 10.38% Hot dispensed beverages 3.38 3.26 3.23 Cold dispensed beverages 1.35 1.23 1.18 Frozen dispensed beverages 0.54 0.57 0.59 Foodservice subtotal 16.14% 15.71% 15.38% TOTAL IN-STORE 100.00% 100.00% 100.00%

$24,043 7,481 2,981 1,195 $35,700 $221,200

5.90% 7.70 13.80 -1.60 6.60% 3.80%

$22,694 6,944 2,618 1,214 $33,470 $212,991

Source: Convenience Store News Market Research, 2017

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

30.84% 12.69 9.51 5.11 4.91 3.25 3.22 2.73 1.89 1.70 1.26 1.09 0.94 0.73 0.50 0.47 0.30 3.15 84.29%

2016

3.9% 7.3 3.1 4.5 5.4 4.9 3.5 5.8 3.7 -6.4 10.7 8.4 5.3 4.6 -0.2 12.0 8.3 3.8 4.5%

7.70% 5.80 9.10 1.10 7.10% 4.90%

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Chek Food Stores Inc. and NACS Executive Committee vice chairman, research, remarked during the recent 2017 NACS State of the Industry (SOI) Summit. Although large convenience stores are becoming more common, the c-store industry as a whole isn’t making huge leaps in square footage. The average sales area and total property size saw slight increases, while the average nonsales area remained flat in 2016. In the future, the most competitive c-stores will also need to budget for new duties that employees will have to perform. “Delivery, mobile ordering and pickup, and curbside will be very common in the next two years for just about every segment — retail and foodservice,” said Tim Powell, vice president of consulting at Q1 Consulting Services. “It’s what 18- to 34-year-olds will become used to.”

Motor Fuel Sales & Margins Dollar sales (in billions) Gallons sold (in billions) Gross margin cents per gallon Average sales price per gallon*

2016

2015

% CHANGE

$343.70 154.7 22.9 $2.25

$389.90 151.3 23.4 $2.57

-11.80% 2.24% -2.10% -12.45%

*Weighted average, all grades and diesel Source: Convenience Store News Market Research, 2017

Retail Gasoline Prices (per gallon)

$2.25

$2.57

$3.44

$3.57

$3.68

2016

2015

2014

2013

2012

Prices include dollars per gallon for all grades, all formulations Source: U.S. Department of Energy/Energy Information Administration

Five-Year Trend: Motor Fuels 2016

Dollar sales (in billions) Gallons sold (in billions)

$343.70 154.7

2015

2014

$389.90 151.3

$501.40 147.0

2013

$509.60 143.3

2012

$515.40 141.0

Source: Convenience Store News Market Research, 2017

TOBACCO

Cigarettes made small gains in dollar sales in 2016, while unit volume trended toward flatness or losses. Premium cigarettes grew 2 percent in dollar sales despite a less than 1-percent unit volume decline. Subgeneric/ private label cigarettes increased 3.5 percent in dollar sales and 0.2 percent in unit volume. Fourth tier cigarettes, however, fell a whopping 12.1 percent in dollar sales and 16.6 percent in unit volume. Compared to cigarette sales jumping nearly 4 percent in 2015, the category saw just 1.42-percent growth in 2016. Margin percentage, though, increased to 15.2 percent, up from 13.36 percent. Despite the decline in units, price increases by manufacturers and taxes levied by local and state governments helped cigarettes’ share of in-store sales hold steady at 30.1 percent.

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

“Premium brand extensions over the last several years by the major manufacturers is a large reason for these trends. Many of these extensions, while classified as premium cigarettes, can sell at a deep discount — sometimes around 30 percent or more to others in the broader brand family,” explained David Bishop, managing partner of sales and marketing firm Balvor LLC. “This has helped to narrow price gaps with the lower price tiers, which helps explain to a degree fourth tier’s performance. At the same time, larger retailers are expanding their focus on private label as a way to counteract the margin pressures they’re experiencing, while also offering a strong opening price point for the more price-sensitive smoker.”

Stores Selling Motor Fuels (Percent of stores that sell motor fuel)

2016

80.1%

2015

80.7% Source: Nielsen TDLinx, December 2016

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Direct-Store Operating Expenses

DOLLARS PER STORE In the other tobacco products 2016 2015 % CHANGE (OTP) category, smokeless, cigars Wages $285,320 $264,185 8.00% and electronic cigarettes all saw Payroll taxes 16,163 15,106 7.00 12,320 10,621 16.0 increases in dollar sales and unit vol- Workers compensation 27,058 24,598 10.0 ume last year. Cigars and e-cigarettes Health insurance Other benefits 5,361 6,024 -11.0 made particularly good unit gains, Labor subtotal $346,222 $320,534 8.00% at 11.9 percent and 13.8 percent, Credit card fees 71,703.66 73,167 -2.00 respectively. Papers, pipe/cigarette All other expenses 155,000 146,000 6.10% tobacco, pipes and other OTP prodTOTAL $572,926 $539,701 6.20% ucts all declined in both dollar sales Source: Convenience Store News Market Research, 2017 and unit volume, with pipes decreasing a whopping 66.1 percent in dol- Five-Year Trend: Wages (dollars per store) lars and 27.1 percent in units. Over the last five years, OTP has seen fluctuations in its percentage of industry sales, but 2016 was a posi$285,320 $264,185 tive year, with the segment rising 9 $246,394 $229,275 $229,275 percent in sales from 5.4-percent growth in 2015. Margin percentage 2016 2015 2014 2013 2012 also rose to 28.06 percent from 24.34 Source: Convenience Store News Market Research, 2017 percent the previous year, and OTP’s share of in-store sales increased to 5.16 percent from 4.91 percent the previous year. “OTP sales continue to increase. However, result in up to 99 percent of the product on the market the longer-term impact of the Food and Drug today becoming unavailable.” Administration’s deeming rule on e-cigarettes and vape products has yet to be determined,” said Montgomery. FOODSERVICE “Should the rule stand, it has been estimated that Between its high margins and major opportunities for many, if not most, of the manufacturers impacted incremental growth, foodservice is perhaps the hottest will not go through the required process. This could product category in convenience retailing today. Yet all aspects of the category did not perform equally in 2016, with some segments considerably outpacing others. “Does gas stand for gas station or gastronomy? Category Analysis: Cigarettes Increasingly both,” NACS Chairman and CEO of (30.11% of in-store sales, down from 30.84% in 2015) 6040 LLC Rahim Budhwani said during the NACS DOLLAR SALES UNIT VOLUME SOI Summit. % CHANGE % CHANGE Premium 2.00% -0.40% Prepared food had a solid year in 2016, reflectBranded discount 0.00 -4.20 ing growing acceptance of c-stores as a destination Subgeneric/private label 3.50 0.20 for tasty, quality food. Dollar sales of prepared food Fourth tier -12.10 -16.60 increased 5.9 percent. Additionally, prepared food is Imports -4.20 -4.50 the foodservice segment that makes up the largest perTOTAL 1.42% -1.00% centage of in-store sales at 10.87 percent. Source: Convenience Store News Market Research, 2017 “The retail industry is changing based on the new shopper who is demanding food that is ready to eat,” Powell said. “In the superFive-Year Trend: Cigarettes market, the center store is taking 2016 2015 2014 2013 2012 Percent change in total sales 1.42% 3.9% 0.1% -0.3% 2.0% a hit and new designs are focusing Margin percentage 15.20% 13.36% 13.60% 13.80% 14.21% on the perimeter where the preShare of in-store sales 30.1% 30.8% 31.1% 32.1% 32.9% pared foods are located. C-stores Source: Convenience Store News Market Research, 2017 are no different.”

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

cover story

Category Analysis:

As fountain drinks, particularly carbonated soft Other Tobacco Products drinks, are among the items most commonly paired (5.16% of in-store sales, up from 4.91% in 2015) with a prepared food purchase, it is no surprise that DOLLAR SALES UNIT VOLUME cold dispensed beverages fared well last year. Dollar % CHANGE % CHANGE Smokeless 5.50% 0.60% sales rose 13.8 percent year over year, though cold disCigars 7.50 11.90 pensed beverages still account for just 1.35 percent of Electronic cigarettes 8.60 13.80 in-store sales. Papers -3.10 -4.50 Hot dispensed beverages had a solid year, rising 7.7 Pipe/cigarette tobacco -9.70 -12.10 percent in dollar sales. Not faring so well was frozen Pipes -66.10 -27.10 dispensed beverages. Following a year of flatness in Other -99.50 -98.90 2015, dollar sales of frozen dispensed beverages fell TOTAL 9.01% 6.70% 1.6 percent last year. Source: Convenience Store News Market Research, 2017 “It is odd that frozen dispensed is declining. I think the overall non-alcoholic beverage category is being diluted by so many Five-Year Trend: Other Tobacco Products 2016 2015 2014 2013 2012 other options — functional beverages, Percent change in total sales 9.0% 5.4% 4.3% 8.4% 4.7% bottled water, sparkling water, etc.,” Margin percentage 28.06% 24.34% 24.20% 24.71% 24.53% said Powell. “The 18- to 24-year-old Share of in-store sales 5.16% 4.91% 4.89% 4.83% 4.55% generation is more driven by health Source: Convenience Store News Market Research, 2017 and wellness and social consciousness claims than any other generation before it.” the second year in a row, hot dogs and pizza were In an analysis of the last five years, foodservice neck and neck as the second and third most-purchased has shown total sales growth of 6 percent or more prepared food items. Chicken ranked in fourth place every year. Growth declined slightly in 2016, but still for another year, but fell from 12.4 percent of prereached 6.6 percent. Although the margin percentpared food sales to 10.4 percent. age of foodservice declined slightly during the last Delving deeper into hot dispensed beverages, coffee five years, the category’s share of in-store sales has remains the critical foundation as it holds steady in increased every year, going from 14.31 percent in 2012 share, making up 74.7 percent of the segment’s sales. to 16.14 percent in 2016. Cappuccino/specialty drinks are a distant second at Sandwiches remain the No. 1 choice among pre17.8 percent of hot dispensed beverage sales. pared food, at 26.5 percent of the segment’s sales. For At the fountain, carbonated beverages are even more dominant, generating 86.7 percent of cold dispensed beverage sales, followed by non-carbonated. Category Analysis: Foodservice This indicates that despite the relative flatness that (16.14% of in-store sales, up from 15.71% in 2015) packaged carbonated soft drinks have seen in recent years, thirsty customers in the fountain area are still DOLLAR SALES UNIT VOLUME % CHANGE % CHANGE overwhelmingly likely to choose this option. Prepared food (prepared on- or off-site) Hot dispensed beverages Cold dispensed beverages Frozen dispensed beverages TOTAL

5.90% 7.70 13.80 -1.60 6.60%

10.38% 3.38 1.35 0.59 16.14%

Source: Convenience Store News Market Research, 2017

Five-Year Trend: Foodservice Percent change in total sales Margin percentage Share of in-store sales

2016

2015

2014

6.6% 43.70% 16.14%

7.1% 43.72% 15.71%

6.3% 44.13% 15.38%

Source: Convenience Store News Market Research, 2017

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

COLD VAULT

In the cold vault, carbonated soft drinks struggled again in 2016, declining in both dollars and units. However, the losses were relatively small: dollar sales fell 0.30 percent, and unit volume fell 1.10 percent. Juice/juice drinks and ready-to-drink iced tea also saw slight declines in 2013 2012 unit volume, but were flat or saw an 6.5% 7.6% uptick in dollar sales, respectively. 44.64% 45.05% Enhanced water saw the most 14.93% 14.31% significant growth in the packaged

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Category Analysis: Beer/Malt Beverages

Category Analysis: Packaged Beverages (12.74% of in-store sales, up from 12.69% in 2016) DOLLAR SALES % CHANGE

Carbonated soft drinks Energy drinks Bottled water Sports drinks Juice/juice drinks Iced tea (ready-to-drink) Enhanced water All other packaged beverages TOTAL

-0.30% 3.20 4.00 4.70 0.10 1.90 12.90 7.20 4.22%

-1.10% 1.50 2.90 4.00 -1.90 -0.08 9.90 5.80 0.90%

Source: Convenience Store News Market Research, 2017

Stores Selling Beer Percent of stores selling beer

77%

For stores selling beer: Percent of in-store sales Source: Convenience Store News Market Research, 2016

12.5%

DOLLAR SALES % CHANGE

Premium Import Budget Popular Flavored malt beverages Microbrews/craft Super premium Malt liquor Non-alcoholic TOTAL

UNIT VOLUME % CHANGE

-0.90% 16.30 -3.20 -1.90 2.00 15.20 18.30 -2.20 -10.30 4.39%

0.20% 15.80 0.60 -1.40 4.60 14.50 17.80 -4.20 -9.90 3.00%

Source: Convenience Store News Market Research, 2017

beverages category. Reflecting consumers’ growing interest in healthy and better-for-you food and drink choices, enhanced water rose 12.9 percent in dollar sales and 9.9 percent in unit volume. “This segment is also riding on the health-and-wellness wave as these products may be perceived by consumers as better for you than many of the beverage alternatives in the cold vault,” said Bishop of Balvor. Traditional bottled water grew 4 percent in dollars and 2.9 percent in units. Sports drinks likewise had a positive year, with dollar sales increasing 4.7 percent and unit volume increasing 4 percent. “More and more consumers are becoming health

2016

UNIT VOLUME % CHANGE

(9.56% of in-store sales, up from 9.51% in 2015)

Five-Year Trend: Packaged Beverages Percent change in total sales Margin percentage Share of in-store sales

2016

2015

2014

2013

2012

4.22% 41.40% 12.74%

7.3% 32.80% 12.69%

5.1% 32.67% 12.41%

4.0% 32.91% 12.18%

9.6% 32.83% 11.96%

Source: Convenience Store News Market Research, 2017

Five-Year Trend: Beer/Malt Beverages Percent change in total sales Margin percentage Share of in-store sales

2016

2015

2014

2013

2012

4.39% 19.10% 9.56%

3.1% 18.71% 9.51%

3.0% 18.57% 9.67%

1.8% 18.17% 9.69%

5.3% 18.15% 9.72%

Source: Convenience Store News Market Research, 2017

conscious and this will this continue to drive this category’s growth. This results in retailers devoting more space to functional beverages, which in turn creates more awareness of the category, leading to more trial and adoption,” said Montgomery of b2b Solutions. “What is interesting is that this has 2015 not resulted in a decline in dollar or unit volume of bottled water and/or sports drinks.” Although the packaged 75.3% beverages category has seen ups and downs in its 12.6% rate of growth over the last five years, each year since 2012 has turned

44 Convenience Store News | JUNE 2017 | WWW.CSNEWS.COM

in positive growth. Total sales increased 4.22 percent in 2016, down from 7.3 percent in 2015. Margin percentage jumped significantly to 41.4 percent in 2016, up from 32.8 percent the previous year. The category’s share of instore sales has held steady, increasing by less than 1 percent from 2012 to 2016. The alcoholic side of the cold vault last year saw more ups and downs, depending on the segment. Super premium, imports and microbrews/craft beer all generated double-digit growth in dollar sales and unit volume. But budget, malt liquor, popular and premium beer all saw declines in dollar sales and declines or flat growth in unit volume.

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Category Analysis: Candy

Category Analysis: Alternative Snacks

(3.19% percent of in-store sales, down from 3.22% in 2015) DOLLAR SALES % CHANGE

Chocolate bars/packs Bagged/repacked peg candy Gum Novelties/seasonal Non-chocolate bars/packs Candy rolls, mints, drops TOTAL

(1.11% percent of in-store sales, up from 1.09% in 2015)

UNIT VOLUME % CHANGE

-2.20% 5.50 -4.00 8.90 -13.30 -1.90 2.80%

DOLLAR SALES % CHANGE

-3.50% 3.00 -5.90 1.40 -11.80 -4.00 -1.90%

Meat snacks Health/energy bars Granola/yogurt bars Other alternative snacks TOTAL

1.00% 1.80 7.00 3.70 5.96%

UNIT VOLUME % CHANGE

-0.50% -2.60 5.90 2.00 -0.40%

Source: Convenience Store News Market Research, 2017

“Having a wide selection of craft beers can be a point of differentiation for a retailer. However, the traditional brands still dominate beer sales,” Montgomery said. “Balancing the space devoted to craft beers and the traditional brands will require careful monitoring.” The number of c-stores that sell beer has increased in recent years, rising to 77 percent in 2016. For stores that do sell beer, beer sales make up 12.5 percent of their in-store sales. Despite the variations in the different beer segments, overall sales growth of beer and malt beverages has increased consistently for the past several years following a growth slowdown in 2013. Sales of beer and malt beverages increased 4.39 percent in 2016, a jump from the 3.1-percent growth seen the previous year.

Category Analysis: Salty Snacks (2.74% of in-store sales, up from 2.73% in 2015) DOLLAR SALES % CHANGE

Potato chips Tortilla/corn chips Nuts/seeds Puffed cheese Mixed Crackers Pretzels Popcorn (ready-to-eat) Other salty snacks TOTAL

Margin percentage likewise rose to 19.1 percent in 2016 from 18.71 percent the previous year.

2016

2015

2014

2013

2012

2.8% 47.00% 3.19%

3.5% 42.49% 3.22%

3.2% 41.20% 3.26%

3.2% 41.05% 3.26%

5.2% 40.92% 3.23%%

Source: Convenience Store News Market Research, 2017

Five-Year Trend: Alternative Snacks Percent change in total sales Margin percentage Share of in-store sales

2016

2015

2014

2013

2012

5.96% 43.70% 1.11%

8.4% 35.91% 1.09%

9.9% 36.02% 1.05%

4.9% 34.12% 0.99%

12.8% 33.48% 0.96%

Source: Convenience Store News Market Research, 2017

Five-Year Trend: Salty Snacks Percent change in total sales Margin percentage Share of in-store sales

2016

2015

2014

2013

2012

4.37% 36.60% 2.74%

5.8% 31.47% 2.73%

6.3% 31.17% 2.71%

5.9% 29.93% 2.63%

10.8% 29.30% 2.53%

Source: Convenience Store News Market Research, 2017

46 Convenience Store News | JUNE 2017 | WWW.CSNEWS.COM

3.10% 3.40 -5.50 7.20 -0.90 1.00 -7.00 3.60 1.50 1.10%

Source: Convenience Store News Market Research, 2017

Five-Year Trend: Candy Percent change in total sales Margin percentage Share of in-store sales

4.80% 2.00 -2.70 7.20 1.20 4.60 -4.50 4.00 3.60 4.37%

UNIT VOLUME % CHANGE

CANDY & SNACKS

Within the candy category, only two segments saw positive growth in 2016: bagged/repackaged peg candy increased 5.5 percent in dollar sales and 3 percent in unit volume, and novelties/seasonal candy increased 8.9 percent in dollar sales and 1.4 percent in unit volume. All the other candy segments declined in both dollars and units. Non-chocolate bars/packs struggled the most and was the only segment to reach negative double-digits, declining 13.3 percent in dollar sales and 11.8 percent in unit volume. Overall, candy as a whole, fell 1.9 percent in unit volume while dollar sales rose 2.8 percent.

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cover story

“One factor may be that some retailers have rationalized their candy sets to allow more room for bagged items. The branded sharable size lines now include many of the most popular items, thus contributing to the increased sales,” said Montgomery. “They also provide a higher ring and larger penny gross profit per sales, making devoting more space to them more attractive to the retailer. The repackaged items still provide customers with a wide selection of items at a great price point.” The declines of 2016 reflect a trend observed over the last five years — candy’s growth in sales and share of in-store sales have both declined, but not sharply. From 2015 to 2016, candy’s change in total sales and share of in-store sales fell less than 1 percent. Additionally, margin percentage increased every year over the last five years, reaching 47 percent in 2016. Snacks had a better year in 2016, reflecting Americans’ shift toward snacking on the go as a replacement for regular sit-down meals. “Snacking is now an all-day reality and activity,” Andy Jones, president and CEO of Sprint Food Stores and NACS Research Committee Member, noted at the SOI Summit. In the salty snacks category, only nut/seeds and pretzels saw both unit volume and dollar sales drop. Conversely, puffed cheese led the way, with dollar sales

2016 REPORT CARD AT A GLANCE

C B B

TOTAL SALES

C+ B B

STORE COUNT Added only about 340 net new stores, but still has many more units than any other retail channel.

Declined for fourth year in a row due to lower fuel prices. IN-STORE SALES A 3.8-percent increase is better than most other retail channels. MOTOR FUEL BUSINESS Revenue wasn’t down as much as the previous year and volume was up another 2.2 percent.

PROFITS Record gross profits and pretax profits were just slightly off the previous year’s record high. FOODSERVICE SALES About a half percentage point off the previous year’s sales gain, but still impressive.

48 Convenience Store News | JUNE 2017 | WWW.CSNEWS.COM

METHODOLOGY

The 42nd annual Convenience Store News Industry Report features data from a variety of sources in order to provide a complete picture of the convenience store industry. Store census data was provided by Nielsen TDLinx, which maintains a national count of c-store locations based on NACS’ definition of a convenience store. Dollar sales and unit volume data for a variety of categories was provided by The Nielsen Co. from its Convenience Track retail measurement service, which is based on UPC sales and other methods that are counted through the use of point-of-sale scan data, as well as from data captured via electronic invoice and sales audits. Additional, non-UPC coded merchandise, including prepared food, hot, cold and frozen dispensed beverages, is provided by EnsembleIQ Research Solutions, a sister company of Convenience Store News. Government sources include the Census Bureau, Bureau of Labor Statistics, the Department of Energy, and the Federal Tax Administration.

and unit volume both increasing 7.2 percent. Potato chips also saw solid growth, with dollar sales rising 4.8 percent and unit volume rising 3.1 percent, indicating that not all snackers are looking for healthy fare. Overall, salty snacks increased 4.37 percent in dollar sales and 1.1 percent in unit volume. Similar to candy, over the last five years, salty snacks have seen a decline in total sales growth and stayed flat in its share of in-store sales. However, its margin percentage has increased, jumping to 36.6 percent in 2016 from 31.47 percent the previous year. Alternative snacks saw a slight decline of 0.4 percent in unit volume in 2016, but dollar sales increased 5.96 percent. This was led by granola/yogurt bars, which increased 5.9 percent in unit volume and 7 percent in dollar sales. The growth of alternative snacks slowed last year, with the change in total sales falling to 5.96 percent from 8.4 percent in 2015, but its share of in-store sales has held steady over the last five years. Alternative snacks’ margin percentage jumped sharply to 43.7 percent in 2016. “Snacking will continue to grow as more and more people eat snacks as meal replacements. However, the c-store industry has always had very strong snack sales,” Montgomery said. “The growth percentage may have declined, but the industry has seen consistent margin growth. I expect both of these trends to continue.” CSN

FOODSERVICE

Prepared Food + Hot, Cold, Frozen Dispensed Beverages

Finding the Dough in Pizza The perfect grab-and-go item, pizza is on the rise in the convenience channel By Renée M. Covino

izza has gained a solid foothold in the convenience channel and continues to rise. Pizza has helped bring convenience foodservice to the next level as “an impulse buy for single-serve, or as a last-minute stop on the way home to feed the modern family on the go,” said James Viti, vice president of sales and marketing for Delorio Foods Inc., a pizza supplier to the convenience store industry, as well as other channels. Pizza has matured in the convenience channel from 10 years ago when fully topped pizza was the only option. Now that customer Pizza is a very portable item, making it well-suited for convenience stores. expectations for quality have risen, so too has the quality of the convenience store pizza. pizzas, Cheri Marchionda, director of sales, convePizza program/ingredient providers are helping nience, for Buffalo, N.Y.-based Rich Products Corp., c-store retailers identify trends and realize more told Convenience Store News. “That part of our indusprofit potential — in other words, helping them find try has grown twofold. Everyone wants a better-quality more dough. eating experience with their pizza.” “Pizza is a very portable food, so it really This spells out more profit for the channel, too. plays into the grab-and-go conFresh pizza programs and better-quality programs can sumption trend,” produce profit margins in the 60-65 percent range, relayed Dee whereas frozen or pre-topped pizza is typically in the Cleveland, 50-55 percent range, according to Dana Evaro, vice brand managepresident of marketing for Landmark Products Inc., ment and marbased in Milford, Iowa. keting executive While the fast-food industry has been relatively flat for Hunt Brothers for the past five years, c-stores are growing 8-10 perPizza. “Pizza fits nicely cent a year in foodservice, with pizza topping the list, into this category because of Evaro noted. the nature of the product and Corner Market Pizza is a new “C-store consumers are evolving and they are buyhow well it holds up. Pizza is a very turnkey program from Rich’s. ing more food from the convenience channel than they familiar product and one that has ever have. They are choosing to buy from c-stores as very low risk for consumers when considering a grabopposed to fast-food restaurants; it’s more convenient and-go option.” and quick,” said Evaro. “To understand the future, we Within the last couple of years, a good half of the have to adapt to provide more relevant and better food convenience channel has begun emulating quick-ser— that means fresh and that means quality.” vice restaurant pizza, offering more component-based

50 Convenience Store News | JUNE 2017 | WWW.CSNEWS.COM

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Prepared Food + Hot, Cold, Frozen Dispensed Beverages

PIZZA PROGRAM DO’S

PARTNERS IN PIZZA Pizza ingredient and program providers want to help convenience stores evolve in the category, and they’re doing so through their own program evolutions and updates. Earlier this year, Rich’s Foodservice introduced a turnkey Corner Market Pizza program that was created to enable a convenience store to launch its first pizza program for as little as $1,080 (its own program) or up to $1,440 for the all-inclusive Corner Market Pizza package, plus the cost of the pizza. An operator who sells an average of 120 slices per day can earn as much as $215 in gross profit per day, according to Cheri Marchionda, director of sales, convenience, for Buffalo, N.Y.-based Rich Products Corp. This initial fully topped pizza program is the first phase. The company is planning to introduce a “live dough” turnkey program in time for the NACS Show in October. “We want to do for convenience pizza what we did for convenience bakery,” Marchionda said. Hunt Brothers Pizza, meanwhile, has designed its program on the premise of “All Toppings No Extra Charge,” so customers are not penalized for loading their pizzas with fresh veggies and other toppings. Limited-time offers (LTOs) are also part of its evolution. “Our LTO pizza flavors often incorporate chicken, which is a very popular pizza protein,” said Dee Cleveland, brand management and marketing executive for Hunt Brothers. “Through our LTO program, we are really able to push the boundaries on the flavors we offer customers, as well as play into trending flavor varieties, while still maintaining a consistent program that is easy for the store to execute.” Landmark Products Inc. likewise has found LTOs to be a key factor in its program evolution. “We just launched the Un-Burger Pizza, which is a copy of a popular fast-food burger sandwich. It tastes just like that,” said Dana Evaro, vice president of marketing. The company maintains a “very progressive” LTO strategy — up to four LTOs a year, or roughly one a quarter, according to Evaro. Each runs about three to six months. “Some do better than others. One out of every seven or eight are grand slams. But each one has a little niche,” he explained. “We roll them out and our stores can choose whether to keep them longer or not. But we always recommend that they don’t want to have too big a menu because it’s hard to manage.” Landmark is also helping convenience stores evolve with pizza through a new online ordering app. “It’s got all the bells and whistles. It locates you and reveals the closest store to you, so you can order now or for later in the day,” Evaro said. Versatility and the understanding that “what works for the store up the road may not work best for you” is the foundation of Delorio Foods Inc.’s pizza program, according to James Viti, vice president of sales and marketing. The company has developed programs for c-stores that range from dough balls pressed onsite to self-rising topped pizzas that can be ready in less than five minutes. “Our focus is not to oversell on product or equipment. Building a great program takes time. You need to prove consistency in your product to attain the loyalty from your customers,” said Viti. “We don’t want our customers to sell pizza just so they can say they offer pizza. We want them to have the confidence that they have the best pizza around. This is the type of program that is evolving and giving quick-service restaurants and quick-casuals a run for the foodservice dollar.”

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So, what are the best practices for a successful convenience store pizza program? Investigate Food Traffic Wisely and Periodically. Analyze traffic to determine the best type of product and equipment to suit your needs, advised Viti of Delorio Foods. “Consult with your customers, your distributor, and equipment or product manufacturers for their input. There is no need for a large investment when you’re starting out, unless you are confident the food traffic and impulse sales dictate otherwise.” Look Outward to the Horizon. Determining where a c-store sees itself in three to five years with pizza is also an important step to take right from the start, according to Rich Products’ Marchionda, who said she often acts as a program consultant for operators. Building a quality pizza brand and program is a continual work in progress. Be Nimble, Be Quick. In these days of advanced internet and app technology, trends can catch fire quicker than they have at any time in history, and trends can move out just as quickly. “The trick is to be nimble,” said Viti. “Have an eye on all the pizza offerings

and articles and blogs and briefs. Be ready to bring in that special new sauce to top your pizza.” He also recommends taking advantage of all three of the components that constitute pizza: the dough, sauce and toppings. “They allow for immense versatility, as you can change out or mix-and-match to be on top of the trends. Today’s consumer expects customization. A good pizza program should allow for that.” Consider the Labor Pains. If a store is going to do a fresh vs. frozen pizza program, it must have dedicated labor — at least one person, according to Landmark Products’ Evaro. Otherwise, stores should look for programs that reduce human involvement, according to Cleveland of Hunt Brothers. “We have incorporated a conveyor oven so the employee can put the prepared pizza in the oven, let it run through on the conveyor belt, and know that they don’t have to sit around watching the pizza bake or waiting for a timer to sound,” she said. “A pizza program should easily fit into your employees’ routines and responsibilities, not create roadblocks to their success.”

“All Toppings No Extra Charge” is the promise of Hunt Brothers Pizza.

PIZZA PROGRAM DON’TS

On the other hand, there are some things to avoid to ensure an effective pizza program. Don’t Think You Have to Recreate the Pizza Wheel. “People love pizza and they love what they are used to — the classics,” said Cleveland. Hunt Brothers mixes in limited-time offers to reengage current customers and excite new fans, “but the

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FOODSERVICE

Prepared Food + Hot, Cold, Frozen Dispensed Beverages

Exploring Culinary Trends

Retailers find inspiration at the 2017 Convenience Store News Foodservice Summit By Linda Lisanti

oug Rauch, former president of Trader Joe’s, believes that for any organization, there is one question that is most important for them to answer: “Why do we exist?” “Who would miss you if you disappeared? If the answer is no one, then you have a business model problem,” Rauch told attendees of the 2017 Convenience Store News Foodservice Summit, held April 18-20 in Napa, Calif., in partnership with Tyson Convenience. Rauch served as the closing guest speaker for the sixth-annual Foodservice Summit, which provided Student chefs at the Culinary Institute of America shared their thoughts on the future of convenience foodservice executives from around the country with a culi- convenience foodservice at this year’s Convenience Store News Foodservice Summit. nary tour de force of the latest food and beverage trends sweeping the nation. This year’s Foodservice Summit participants includ- Trip Inc., Maverik Inc., RaceTrac Petroleum Inc., ed top category executives from 7-Eleven Inc., BP/ Wawa Inc. and Rutter’s Farm Stores. ampm, Circle K Stores Inc., Country Fair Inc., Kwik In his presentation discussing how to build a brand, Rauch shared the backstory of Trader’s Joe, which actually got its start in Southern California as a convenience store chain; a “knockoff of 7-Eleven,” he recalled. 7-Eleven was operating only in Texas at the time. Originally called Pronto Markets, the business grew from a small, nine-store chain in Southern California into today’s nationally acclaimed retail success story with more than 340 stores in 30 states. Rauch, who spent 31 years with Trader Joe’s (the last 14 years as president), developed the company’s prized buying philosophy, created its unique private-label food program, and wrote and executed the business plan for expanding Trader Joe’s nationally. Through this experience, he learned to be a master CIA Professor of Culinary Arts, Chef William Briwa, explored sensory of innovation. and flavor sensations with leading c-store foodservice executives.

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FOODSERVICE

Prepared Food + Hot, Cold, Frozen Dispensed Beverages

A tour of Oxbow Public Market in Napa, Calif., showcased some of the latest food trends that appeal to young consumers and foodies.

“You innovate or you die,” Rauch told the retailers at the Foodservice Summit. “The marketplace is continuously changing. There’s continuous disruption. … It’s critical that together you and your team are thinking, ‘What are we doing better today than we were yesterday?’” When it comes to innovation, Rauch said there are three benchmarks: • Feasibility: Can it be done? • Viability: Can you do it and make money doing it? • Desirability: Does anyone want it? Many steps were taken in “reinventing Trader Joe’s” from a c-store chain into its current model. Two major areas of reinvention, though, were buying philosophy and customer experience. On the buying side, Trader Joe’s started actively buying rather than passively; began buying direct; limited its SKUs; and redefined value to mean high quality, low

price. On the customer experience side, the company began telling its story with humor; employing an artist in every store to create unique, playful signage; and doing in-store product demonstrations. “This isn’t about selling product. It’s about serving human beings. Caring about your customers like they’re your honored guests; like you’ve invited them into your home,” explained Rauch, who retired from Trader Joe’s in 2008 and is now CEO of Conscious Capitalism, an organization whose goal is to help produce businesses that are good, ethical, noble and heroic. “You have to have congruence between what you say and what you do,” Rauch stressed. “If you want to be known for fresh, are you leading with that in your ads? Are you communicating that to customers?” He pointed to international

A private tour of the Ridge Hill Vineyards in Napa Valley was one of several Foodservice Summit events that combined education with networking.

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FOODSERVICE

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sandwich shop chain Pret a Manger and its brand promise of “Made Today, Gone Today” as an example of achieving congruence. Of course, Rauch acknowledged that in any reinvention, there will be failures along the way. In fact, he said he’s learned in business to “fail on purpose.” He urged the retailers at the Foodservice Summit to experiment around their purpose, and when there are failures, to share them with the whole organization so that others in the company won’t repeat them. “You want your failings to be meaningful. Learn from them,” he said. TALKS, TOURS & TASTINGS

Leading up to Rauch’s presentation on the final day of the Foodservice Summit, attendees took part in a host of interactive experiences and roundtable discussions. This year’s event featured a variety of foodservice learning experiences centered on the theme of “Driving Culinary Culture,” something of increasing importance as the convenience channel advances in prepared food. Hosted at the Napa Valley headquarters of the venerable Culinary Institute of America (CIA), the group Former Trader Joe’s president, Doug Rauch (top), and CIA’s Director of Consulting and Industry Programs Brad Barnes were among this year’s quality guest presenters.

What’s Appealing About Food?

As part of this year’s Convenience Store News Foodservice Summit, a panel of four Culinary Institute of America students shared their thoughts on the present and future of convenience foodservice. When asked what’s appealing about food, they had this to say: • Color (especially green) • Presentation • Seeing the food being made • Healthier options (especially vegetables) • Environment • Customer service • Atmosphere/vibe • Positive word-of-mouth from friends • Being able to research the menu online ahead of time

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of c-store retailers got the opportunity to tour one of the nation’s most successful public markets; hear interactive presentations from CIA chefs and instructors; interact with a panel of culinary students about the present and future of convenience foodservice; and engage in meaningful dialog with each other on the key issues impacting the growth of foodservice sales at convenience stores. There were also plenty of networking activities, such as a special wine tasting and tour at the Cabernet Caves of Pine Ridge Vineyards. Guided by CIA’s Director of Consulting and Industry Programs Brad Barnes, retailers toured Oxbow Public Market, an indoor market containing some of California’s most popular restaurants and artisan food retailers. Here, the group viewed the newest up-and-coming food trends that appeal to young consumers and foodies. This visit was followed by a short walk to the Culinary Institute of America’s Copia facility, the CIA’s public campus, where the c-store retailers met to discuss and share their accomplishments and challenges.

FOODSERVICE

Prepared Food + Hot, Cold, Frozen Dispensed Beverages

From there, it was on to the CIA’s Greystone headquarters, a 19th century structure listed in the National Registry of Historic Places. At Greystone, the retailers were immersed in a custom-designed exploration of sensory dynamics and flavor sensations with CIA Professor of Culinary Arts, Chef William Briwa. Then, more discussion took place around key issues such as leveraging technology for a competitive advantage, the latest word on healthy eating, and building a “culinary culture” in organizations. The full day of programming wrapped up with the moderated student panel discussion, and a special dinner curated by CIA chefs. CSNews and Tyson Convenience hosted nine of the most advanced convenience During the roundtable discussions, the foodservice retailers at the CIA’s Greystone facility in Napa Valley in April. importance of customer service, food quality and healthy eating were much-talked-about topics amongst the group. One retailer shared that retailers reported that they are working toward their company recently completed a follow-up to a being “clean label.” While there is no universal 2012 study and found that they have made progress definition for “clean label,” it most often means in freshness and quality of food, but lost ground in all-natural ingredients; containing no artificial service and hospitality. ingredients or chemicals. All the retailers agreed that attributes like hospitalRyan Krebs, Rutter’s director of foodservice, said ity are becoming more and more important. his chain recently brought in a clean label turkey sau“They’ll buy the roller grill and may tolerate sage and identified the item as clean label on its touchunfriendliness, but they won’t buy the $6 sandwich. As screen ordering kiosks. “We boosted sales a significant we’re putting together more expansive food programs, percentage by simply adding the ‘clean label’ callout to the customers’ expectations are higher, so we need to our touchscreen kiosks,” shared Krebs. make sure we’re providing a higher level of hospitalWawa, another Pennsylvania-based chain, is also ity,” remarked Steve Turner, director of foodservice venturing into clean label. Wendi Clauss, concept and dispensed beverage at RaceTrac. development manager for Wawa, said the company “Having the right food is not enough,” agreed Kelly recently formed a council to address transparency, Buckley, vice president of fresh food innovation at food safety, and animal practices. 7-Eleven, where she leads the overall fresh food strategy. One last topic that generated a lot of discussion On the topic of food quality, several of the around the table was new product innovation in the foodservice category. Empanadas and apple fritters are two new items seeing success at Kwik Trip stores, according to Paul Servais, the chain’s retail foodservice director. RaceTrac’s Turner and Rich Green, executive director of foodservice at Maverik, both shared that their companies are in the midst of launching new madeto-order prepared food programs. Maverik’s program, currently in 40 stores, is centered on tacos and pizza. RaceTrac’s program, in just over 50 stores, includes breakfast and lunch sandwiches, personal pizzas and slices, espresso beverages, milkshakes and smoothies made fresh on demand. “Every time we improve quality, we’re going to sell Wine tasting and dinner at the Cabernet Caves of Pine Ridge Vineyards more food,” said Turner. CSN added to the experience that makes the Foodservice Summit so unique.

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Gourmet-Coffee Gains C-stores may not be Starbucks, but a higher coffee reputation is within reach By Renée M. Covino

t is the age of gourmet coffee and its connoisseur creatures, otherwise known as millennials. But are today’s convenience stores up to the higher java challenge? The data indicates the convenience channel could benefit from making more of an effort. From the latest preparation techniques to sourcing the beans themselves, going the extra gourmet mile is what the new generation of coffee lovers want; they are clearly not satisfied with their parents’ drip brew, according to the National Coffee Association (NCA). The association’s National Coffee Drinking Trends (NCDT) report surveyed 3,000 people, of which 62 percent reported drinking coffee the previous day — up five percentage points from last year’s survey. Of that 62 percent, nearly a quarter had opted for an espresso-based beverage the previous day, compared to 18 percent in 2016. Other findings from the report include: • “Gourmet” coffee-drinking is on the rise, with 59 percent of daily coffee drinkers indulging regularly in gourmet coffee this year, a 13-percent increase. • “Specialty” coffee beverages are becoming a part

of regular coffee drinkers’ weekly consumption habits: frozen/blended (14 percent), cold brew (11 percent), and nitrogen-infused coffee (3 percent). • The biggest coffee drinkers by age are those 60-plus (68 percent), followed by those aged 40-59 (64 percent), 25-39 (63 percent), 18-24 (50 percent) and 13-18 (37 percent). While those between the ages of 25-29 are in the middle of the pack when it comes to daily consumption, they are the biggest consumers of “gourmet” coffee (50 percent). In summary, the NCDT report found that young adult consumers have become more invested in their coffee than the young adult generations that came before them, mostly through espresso-based and “gourmet” beverage choices. Gourmet coffee beverages are what most people think of as specialty coffee, which includes gourmet traditional coffee, espresso-based beverages, and iced or frozen coffee drinks. Older millennials are the most likely to drink espresso-based beverages, cappuccino, mocha, espresso, gourmet coffee, cafe Americano, flat white, cold brew and nitrogen-infused in the past week, the NCDT data also revealed. What’s more, an increasing number of millennials are drinking their coffee out-of-home, “turning coffee consumption into a public expression of individuality,” the report states. “In the age of Instagram, every detail needs to be on-brand — nothing is really private.” CONVENIENCE CONNOTATIONS

How much does this really concern the convenience channel? If c-store operators want to sell good coffee, it should concern them, according to experts. “Convenience stores are not Starbucks and they shouldn’t try to be, but there is room in between,” reasoned Don Stuart, a managing partner with Cadent Consulting Group in Wilton, Conn. “They could do more, in my mind, with the coffee experience that’s

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FOODSERVICE

Prepared Food + Hot, Cold, Frozen Dispensed Beverages

trending with millennials nowadays.” Here are six quick market sips/industry tips to help c-stores reach higher coffee ground: All-Day Coffee Is Making Night Moves Coffee increases its sales power when paired with other hot trends that blur the lines of traditional mealtimes and eating occasions, food equipment and technology company FETCO reported in a recent quarterly newsletter. Breaking free from traditional mealtimes is pushing coffee into new dayparts, the supplier explained. What this means for c-stores: Just like breakfast foods are trending to be extended and incorporated into all meals of the day, so, too, can coffee. This means maintaining signage, aromas and pristine coffee areas all day and into the night. The c-store has an opportunity to reinvent itself as the late-night coffee stop. For those looking to really change it up, there is an additional opportunity to leverage more hotbeverage products as a way for customers to achieve a sense of calm before bedtime, such as lavender and chamomile tea options. Brewing Gadgetry Goes Gangbusters Younger audiences (i.e., millennials) are immersed in technology and very open to change, according to the aforementioned NCDT report. Younger consumers are drawn to innovative products and, therefore, notice the machine that’s brewing their coffee. What this means for c-stores: “There’s enough going on with coffee automation and equipment that even without staffing the way Dunkin’ [Donuts] does, c-stores can still utilize more coffee machine technology,” said Stuart. At the top of the major equipment trends is high-quality brewing. “Self-service single and dual-station machines with touchscreen technology bring barista-level coffee to c-stores,” added Katie Hered, senior business analyst at Cadent Consulting. Another equipment trend is flavor enhancement and unique-to-me coffee. Creamer machines and sweetener dispensers are a way for c-stores to take a step up. Cold Is Heating Up Cold brew sales jumped 580 percent between 2011 and 2016, according to a Mintel report. The

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market researcher also identified 2017 as the breakout year for nitro coffee, which is created by adding nitrogen to cold brew coffee, resulting in a drink with a naturally creamy mouthfeel. What this means for c-stores: It’s true that a large percentage of cold brew sales have taken place at coffee shops, but that doesn’t mean c-stores can’t get in on the trend, especially as a special summertime offering. Altoona, Pa.-based Sheetz Inc., with more than 500 locations throughout Pennsylvania, West Virginia, Virginia, Maryland, Ohio and North Carolina, added cold brew coffee offerings to all its convenience stores in the early fall of last year. “Cold brew is, without a doubt, the best way to make cold coffee because the flavors have a chance to infuse rather than burn,” said Matt Gray, coffee concepts manager at Sheetz. And now that the nitro trend has hit select Starbucks stores nationwide, it, too, is becoming more mainstream and up for forward-thinking convenience store consideration. Wake Up & Smell the Coffee Gifting Food and beverage gifting is on the rise across the nation, with Packaged Facts reporting that U.S. consumer and corporate food gifting sales approached $18 billion last year, up 3.5 percent from 2015. The majority was attributed to consumer sales. Widely purchased food gifts include gourmet coffee/tea/hot chocolate gifts. What this means for c-stores: They can increase their gourmet coffee image with supplemental coffee gifts made available during fourth-quarter time in baskets near the coffee section. Grab-and-go gifting can be achieved with actual gourmet coffee products and/ or ancillary items such as flavorings and fancy stirrers. The Sideways Gourmet Achieving gourmet coffee status is not just about providing good/specialty coffee. It’s also about becoming synonymous with selling drinks that provide a functional benefit, such as energy-boosting, anti-inflammatory, relaxing or antioxidant. More than a third of young adults say they would pay more for coffee/tea with added health benefits, according to Mintel research. And oftentimes, these are the same

FOODSERVICE

Prepared Food + Hot, Cold, Frozen Dispensed Beverages

consumers seeking more “personalized” coffee. What this means for c-stores: They should be looking at the gourmet coffee trend from a sideways angle, too, meaning they can increase gourmet perception — and sales, for that matter — with functional drinks in their ready-to-drink (RTD) section. Matcha, herbal tea drinks, and kombucha are alternative versions of gourmet coffee self-expression by the millennial set. An App With Your Coffee There seems to be an app for

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everything these days, so why not your coffee? “Apps are changing the way people are buying their coffee,” according to David Sprinkle, research director for Packaged Facts. What this means for c-stores: Convenience stores that are on the mobile-app train should avoid a straight sales pitch to coffee consumers, advised Sprinkle. “Don’t just hawk your coffee product, but provide information and services that are of interest to your coffee consumer.” Perhaps easier said than done, but worth looking into for those who believe mobile millennials will be their future core customers. CSN

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What’s Behind

a Great C-store

Shopping Trip? Consumers know you’re collecting data on them and want some payoff By Renée M. Covino

xperience counts. More consumers today are seeking a great, if not exceptional, experience when they shop — and yes, that includes within the convenience channel. In fact, the interpretation of “convenience” is changing across the spectrum, and has a lot to do with a customer’s perception of what constitutes a good or bad shopping trip. “Five or 10 years ago, convenience was what consumers were willing to accept, by way of smaller product selection and food that was prepackaged and produced en masse, in exchange for faster service,” said Amina Altaf, director of product marketing for Boston-based technology company GasBuddy. “More and more, c-store retailers are figuring out how to give customers more ‘bang for their minutes,’ matching quick-service restaurants (QSRs) and grocery stores on healthy and fresh food options for shoppers who are still pressed for time, but unwilling to compromise on excellence.” Through a recent launch of a ratings and reviews feature on its free mobile app, GasBuddy can now report on which c-stores rank the highest among consumers by state and by various categories, such as Best Customer Service or Best Coffee. “For retailers and consumers alike, ‘convenience’ now applies less to the product — the old notion of whatever can be held in one hand, while the other is

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on the wheel — and more to the customer experience — a high-quality selection of food and merchandise, fast and friendly service, clean stores and restrooms, and well-thought-out signage and store layouts,” Altaf explained. Convenience stores have a great opportunity to localize and customize (by affluence, ethnicity, age, brand affinity, and more, according to Altaf) and then tailor their product offering to meet, and eventually exceed, what they know of their customers’ expectations. “Convenience stores that stray from the one-size-fitsall mindset give consumers a reason to choose one store over another, and the success of a convenience store reflects their ability to create custom offerings that are in demand and reflect the local market,” she said. Along the same lines, today’s customers are exceptionally savvy, noted Erin Rease, senior vice president of customer loyalty and global loyalty solutions at Aimia, a data-driven marketing and loyalty analytics company based in Montreal, Canada. “[Consumers] know businesses have the tools to learn who they are and understand their needs, and they expect them to use this knowledge at every interaction to improve their experience,” said Rease. “They want personalized and relevant experiences. This, in turn, has an incredible influence on their loyalty.” As more customer data is being actively and passively collected, “shoppers want some payoff in the

form of a clear demonstration that you know them and are tailoring the experience for them,” agreed DyShaun Muhammad, senior vice president of client services at Catapult Marketing, an agency headquartered in Westport, Conn. Citing examples outside of convenience, Muhammad said retailers like Sephora and Wegmans over-deliver on experience, continuously creating an army of super-fans that attract more shoppers to those outlets who want to enjoy similar remarkable experiences. “Great experiences, when done well, become an engine that feeds traffic growth and loyalty,” he told Convenience Store News. THE FUNDAMENTALS

So, what constitutes the fundamentals of a great convenience store shopping experience?

The Importance of Ratings & Reviews Online feedback can play an important role if retailers positively respond

n the scheme of creating outstanding customer experiences, ratings and reviews can play an important role, according to industry experts. “Ratings matter,” stressed Amina Altaf, director of product marketing for Boston-based technology company GasBuddy. In a recent survey of nearly 1,000 GasBuddies (those who use the free GasBuddy app), 74 percent of respondents reported that they take ratings and reviews into account when they are deciding where to fuel up or shop. Three out of four said they wouldn’t visit a station that has less than three stars.

First off, every c-store needs to have the basics solidified; those factors that should be a “given.” These include cleanliness, associate helpfulness, product availability and merchandising order, according to Raj Shroff, vice president of brand, strategy and design for Dublin, Ohio-based WD Partners, consultants in customer experience for global retail and consumer goods brands. With those basics in place, it’s also important to realize that some things aren’t changing. “People still go to a convenience store for convenience, product breadth, consistency and price,” said Scott Bauer, of PwC (PricewaterhouseCoopers) U.S. Consumer Markets Partner. Some techniques to differentiate and thereby drive traffic into a store that Bauer and PwC are seeing include: increased use of AdWords in search; mobilebased coupon offers that are regularly changing; and testing of proximity marketing or alerting customers via mobile alert of time-sensitive offers, he outlined for CSNews. On the flip side, what’s driving customers away from the convenience channel these days is a lack of consistency, either in service, cleanliness or product availability. “We’ve seen some experimentation in the use of technology to improve consistency,” Bauer said. Examples he cited are: computer monitoring of queues and how many customers abandon due to long queues or similarly alerting management to open an additional

Scott Bauer, of PwC (PricewaterhouseCoopers) U.S. Consumer Markets Partner, agrees that online reviews increasingly matter and are integral to the shopping journey. In PwC’s 2016 Total Retail Survey, 39 percent of consumers indicated that they use social networks as inspiration for purchases and 35 percent said they use price comparison websites. “This data reflects all retail segments, and when it comes to convenience specifically, consumers tend to use their mobile phone during search for locations on third-party user-generated content sites like Yelp or Google maps,” said Bauer. “Each of these allows users to rate and comment on service, products and selection. As consumers increasingly use consumer reviews in decision-mak-

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ing — outside of convenience — and with a growing use of mobile throughout the day for check-ins, mapping and digital couponing, there are only increased opportunities and propensity for users to post their experience.” Online reviews are likewise a great way to engage customers. “It allows them to provide feedback, interact with your brand, and become part of a community. Most importantly, it makes customers feel like they’re being heard,” advised Erin Rease, senior vice president of customer loyalty and global loyalty solutions at Aimia, a data-driven marketing and loyalty analytics company based in Montreal, Canada. “While there is always a risk of receiving negative

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till; sensors applied to mops and cleaning supplies to monitor frequency of bathroom cleaning; and sensors on shelves or coolers to alert staff and headquarters to out-of-stocks. The way Muhammad of Catapult Marketing sees it, great customer experiences boil down to a trinity of factors: “personally relevant, frictionless and remarkable.” Personal relevance refers to dynamic merchandising techniques, such as mining loyalty clubs to segment offers and email invites to special events based on purchase habits. Small touches beyond just addressing the customer by name are noticed and rewarded. For frictionless experiences, he emphasizes that “a single view of the customer across touchpoints is required so that an experience that starts in one channel can be completed in another.” While this may be a stretch for the convenience channel at the moment, it can apply to exactly aligning online and social media information to what’s in-store. “The infrastructure must be transparent to the customer and require as few actions from the customer as possible to engage and get their needs filled,” he stated. Finally, remarkable experiences have “social currency that customers want to share due to the positive

feedback, businesses and their customers are increasingly open to this type of authentic interaction.”

How to Turn Negative Feedback into a Positive But what about negative feedback? It will kill a retailer’s chances for an extraordinary customer experience, right? Not necessarily. In fact, it can be a good thing, depending on how the retailer reacts. “Any feedback from customers should be of value to retailers, but negative reviews actually present the greatest opportunity,” said Altaf. First off, negative reviews can alert stations or stores to problems that can be quickly and easily remedied, such as dirty restrooms or broken fuel pumps. They can also, when reported by numerous customers, provide insight into a larger underlying problem, such as that cashiers have not been properly trained.

impressions they leave, or the surprise and delight that is delivered,” according to Muhammad. SHINING EXAMPLES

Which convenience store chains have tapped into outstanding customer experiences? According to a data analysis executed by GasBuddy of more than 7 million consumer-generated ratings of convenience stores and gas stations in all 50 states, Kwik Trip, QuikTrip, Wawa, Fred Meyer and Hy-Vee are the top five “Best Overall” experiences. Aimia’s Rease also offers up Maverik, based in Salt Lake City with more than 270 convenience stores in the western United States, as a top pick for customer experience. She says Maverik has “cracked the code on how to create loyal customers.” Rease highlighted Maverik’s in-store environment focused on its “Adventure’s First Stop” image — complete with proprietary on-the-go food items and adventure- and action-themed décor, as well as a loyalty program that allows for additional customer touchpoints, offering desirable benefits and supporting customers on their next adventure. “It took what’s typically a commodity and created an adventure-focused brand that delivers unique and exciting customer experiences,” Rease said of Maverik. Louisville, Ky.-based Thorntons, with 185 locations, is another stellar example of the convenience store experience, according to Kristen Kolb, director

“The reality is that negative reviews are read and remembered more than positive reviews, but retailers can make the most out of complaints from dissatisfied customers,” Altaf said. “Just demonstrating that your organization is open and willing to accept feedback creates goodwill between the brand and the consumer.” Retailers can go a step further and prove they are listening by responding to negative reviews in a “polite and courteous manner,” Altaf offered. The response should come with a plan of action to remedy the problem, she said, adding that following through on that plan

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is equally key. In GasBuddy’s survey referenced earlier, 72 percent of respondents said they would return to a station or store if their complaint was resolved quickly, and 80 percent said a personal response from the owner or company would influence their decision to return. “If possible, retailers should offer the reviewer an incentive to come back, to right the wrong,” Altaf said. “Not only is this a way to turn unhappy customers into big fans and loyalists, but also the exchange may be visible to other customers, creating a positive perception of your brand.” When companies regularly review and respond to feedback,

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of strategic consulting at Catapult Marketing. As a millennial woman, she relayed her overall “delightful” experience stopping for coffee at Thorntons on her way to work: “The coffee is always fresh and clearly marked as organic/free trade, but the kicker is the sugar and creamer station — Godiva chocolate and caramel syrups, mini marshmallows, and even whipped cream. All for 99 cents, no matter what size you buy,” she shared. “Who needs Starbucks? Thorntons realized a sweet space — the desire for good, quality coffee that is reasonably priced and doesn’t have a wait line, which is a huge pain for all people, but women in particular, in the mornings,” Kolb continued. Generally speaking, prepared and ready-to-eat foods are a big customer-experience draw these days at convenience stores, particularly with millennial shoppers, stated Mike Grimes, chief retail officer at Bostonbased retail analytics firm Mobee. While this trend is hurting traditional QSRs, it provides c-stores with greater opportunities to create exceptional experiences, Grimes believes. But he stressed that c-stores have to take the foodservice ball and run flawlessly with it. “Customers want newness, but they also want neatness,” he said. “Don’t underestimate the impact of empty shelves, mislabeled prepared food stations, or an olive in the buffalo wing pan.” Loyalty programs and little perks are another great

they build even stronger relationships with their customers, agreed Rease. “Often, retailers can even request reviews via their loyalty program to further entice customers to leave their thoughts, with the intent to create more touchpoints, more interaction and deeper engagement,” she said. When strategizing how to deal with negative feedback, retailers should remember to be human, according to Raj Shroff, vice president of brand, strategy and design for Dublin, Ohio-based WD Partners consultancy. “A human we like takes constructive criticism and course-corrects. A human we like takes accountability. A human we like pays attention to the details,” he told CSNews. “If retailers ignore the issue, it will surface in negative ways that will be hard to

way for convenience stores to encourage foot traffic and leave an above-average customer experience impression, according to Kolb. “Imagine stopping in for coffee, grabbing a salad for lunch and then at checkout, the cashier places a few small chocolate squares in your bag,” she suggested. “The overall cost of these small symbols of gratitude is minimal, but combined with a loyalty program, they can offer a 1-2 punch to keep shoppers coming back for more.” More organizations are implementing new technology into their customer acquisition and retention strategies. “The companies that are winning are the companies that are ahead of the technology curve and implementing technology that aims to foster the evolution of the customer experience, creating transparency and putting them first,” said Kerry Liu, CEO and cofounder of Toronto-based Rubikloud, an intelligence platform for retailers. CSN

quantify until it’s too late.” Interestingly, some studies have shown that a brand with some negative reviews will often perform better than a brand with only positive reviews or no reviews at all. “This social proof is a critical part of the total value equation for shoppers as they evaluate products and services to ensure they are relevant for them,” stated DyShaun Muhammad, senior vice president of client services at Catapult Marketing, an agency headquartered in Westport, Conn. Bauer agrees and has four “golden rules” for responding to negative feedback: 1. Respond quickly and do not ignore. 2. Take the opportunity to make it right for the customer. 3. Keep it short, but show you care. 4. Make it human. Don’t respond or

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sign your comments from “Corporate” or cite company policy to defend or explain the experience. “A curt, corporate reply can quickly turn into a viral thread that spins out of control,” Bauer cautioned. “Airlines, hotels and restaurants have all had multimillion-viewed negative comments that started with a poor online response to a physical experience.” Once a c-store loses a customer, “the overhead to reacquire their loyalty can be costly,” explained Kerry Liu, CEO and cofounder of Toronto-based Rubikloud, an intelligence platform for retailers. Ways to mitigate a poor review are to offer a refund or coupon, “something that makes the customer feel that the brand cares about their experience, and ultimately allows the customer to maintain trust with that brand.”

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EXPERT’SVIEW NEW Horizons

The Future of Work Big changes are on the horizon. Are you ready?

new, more diverse generation is taking center stage. And new technologies are changing the way people shop, buy and sell, and work. We know that in the next 10 years, the retail workforce will be reshaped by millennials, who will make up an estimated By Nancy Krawczyk, 75 percent of all employees by 2025. This Network of generation expects companies to have Executive Women digital acumen. They hunger for meaningful work and want an engaging culture with a personalized experience. Technology will be a key driver, disrupting how the industry handles finding talent, how you and others in retail do the work, and how you’re trained and developed for the next step in your career. Are you and your company ready to take advantage of these changes — or will you surrender the edge to your competition? Consider these top trends that experts say will change who you work with and how you work together:

and “in the room” when plum assignments are awarded, when promotions are decided, and when compensation is calculated. “Companies that create an inclusive culture for all of their people will be most successful at attracting, retaining and promoting women throughout the leadership ranks, according to NEW board member Beth Marrion, managing director of retail at Accenture. Do the women at your company have clear career paths to leadership roles? Are men and women offered the same mentoring, sponsorship, development and opportunities that lead to leadership roles?

WOMEN LEADERS

Despite the stubborn gender gap in corporate America, I’m confident female leaders will be more prevalent in the retail workplace of the future — business demands it. Women make up more than half our workforce and twothirds of shopping trips. But companies need to build more inclusive cultures that put women “at the table”

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 Top Women in Convenience CONVENIENCE awards given out each fall. Fifty female managers, executives and directors who work in the convenience store industry will be honored in our 2017 program. In addition to being a presentation sponsor for the Top Women in Convenience program, NEW and

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JOB AUTOMATION

Marrion cites futurist Thomas Frey, who says 60 percent of the best jobs in the next 10 years haven’t been invented yet — think drone pilot, digital reputation consultant, digital archeologist, and chief experience officer. At Deloitte, clients are looking at in-sourcing

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EXPERT’SVIEW NEW Horizons

capabilities like artificial intelligence, robots and other “productivity accelerators” that can take on routinized tasks, repetitive analysis and the like, joining humans to form a hybrid workforce of machine learning/automation and human insights and analysis, according to past NEW Chair Alison Kenney Paul, vice chairman, global lead, client service partner at Deloitte. “This will be a trend in white-collar work as the war for data scientists and other hard-to-hire professionals becomes more challenging,” Paul says. Consider the checkout-free Amazon Go convenience store powered by “Just Walk Out” technology in Seattle and the online shopping giant’s plans to supermarket-size the concept this year. Different skills, in different areas of expertise, will be needed to operate the retail store of the not-too-distant future. YOUNG MANAGERS

In the multi-generational workplace — where young professionals may be savvier about new technology and changing trends — leaders need to connect with emerging leaders and develop them faster. Is There’s only one way your company incorporating millennials’ ideas to succeed as a retailer and points of view by creating an open and today and that’s by safe work environment leveraging the where everyone’s contributions are valued, newest technology regardless of tenure? and best talent, no “Diversity drives innovation and that matter their gender, includes generational age or career stage. diversity,” Paul says. “Deloitte data tells us that 80 percent of millennials expect to be able to give a performance appraisal to their boss.” TRANSPARENCY IS KEY

Deloitte research shows culture is crucial to attracting high-quality talent. And culture without transparency will fade. “Retention and engagement rely on regular feedback, not once-a-year performance reviews,” Paul says. “If our newest employees are used to getting thousands of ‘likes’ for their point of view — in a few hours — they will not sit still for a once-every-12months discussion of their progress. Companies will

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need to build in regular feedback, coupled with great learning opportunities, to hang on to the best talent.” THE “BOOMERANG EMPLOYEE”

A boomerang employee is one that leaves a company, but returns later. Deloitte has created “Colleagues for Life,” a talent strategy focused on alumni. Embracing boomerang employees is a benefit for all, says Paul, and a solution to the work/life balance conundrum where “road warriors” want to move to roles in corporations with less travel and more predictable schedules to meet family responsibilities. THE GIG ECONOMY

According to the Accenture Skills and Employment Trend Survey, 43 percent of the U.S. workforce is expected to be freelancers by 2020, Marrion notes. “The ‘gig economy’ is here,” Paul agrees. “We are using the ‘crowd’ to source solutions, get the best thinking, and solve problems fast. Let’s face it, not everyone is cut out for corporate America, nor is every project a full-time job.” There’s only one way to succeed as a retailer today and that’s by leveraging the newest technology and best talent, no matter their gender, age or career stage. CSN Nancy Krawczyk is vice president, corporate partnerships and engagement, for the Network of Executive Women, Retail and Consumer Goods, a learning and leadership community representing more than 10,000 members, 950 companies, 109 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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STORESPOTLIGHT GetGo Café + Market

Taking the ‘Cons’ Out of Convenience

The GetGo Café + Market prototype seeks to change shoppers’ c-store perceptions By Danielle Romano

he convenience channel continues to challenge shoppers’ long-held view of “gas station food” with new store environments that are on par with markets, as seen with Fullerton, Calif.-based Mission Market and Parker’s Urban Market Gourmet in Savannah, Ga. One more contender jumping into the ring is the GetGo Café + Market. Accounting for 17 locations across GetGo’s 199store footprint, the Café + Market format is part of the metamorphosis of Pittsburgh-based Giant Eagle’s evolving GetGo model. The concept, which can currently be found in Pennsylvania, Ohio and Indiana, taps into an opportunity at the intersection of fast food/ quick-service restaurant, traditional convenience store, and fuel station, GetGo spokesperson Jannah Jablonowski told Convenience Store News. Speaking especially to millennials and time-starved consumers, GetGo Café + Market not only caters to the changing convenience retail landscape, but also harkens back to the company’s commitment to meeting customers’ shifting needs. “With every GetGo Cafe + Market location we build, we’re striving to reshape how customers perceive ‘convenience’ — we’re taking the cons out,” Jablonowski articulated. “We never want our customers to feel like they have to sacrifice.”

A LITTLE FINE-TUNING

The goal behind GetGo Café + Market wasn’t total reinvention; instead, it was refinement of GetGo’s original vision of “Get In. Get Out. Get Going.” The company sought to communicate to consumers that it had upped its foodservice game and also created a fun and comfortable environment for customers to leisurely enjoy. To relay this message, GetGo enlisted Chicagobased thinktank Adrienne Weiss Corp. (AWC), which has worked with the retailer over the last 15 years to develop the original GetGo concept, as well as Giant Eagle’s Market District grocery stores, Market District Express format, and a pharmacy concept. For GetGo Café + Market, AWC and GetGo collaborated to create an environment that brought the brand’s promise to life by developing a new store interior and exterior, signage, uniforms, printed collateral, electronic menuboards, and everything else customers may see or touch in the store. “We take all of these assets and push them through a filter of the GetGo brand story, so the customer experiences one holistic experience,” explained Greg Weiss, president of AWC. “ … The experience of walking into a GetGo Café + Market, ordering delicious food and eating in a comfortable and fun environment, is truly an elevated convenience store experience.”

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STORESPOTLIGHT GetGo Café + Market

A smoothie and espresso bar are part of the elevated convenience store experience.

Chef-inspired sandwiches, salads and bowls are ready for quick grab-and-go.

“

When it comes to foodservice, GetGo Café + Market shies away from traditional with a selection of made-fresh-to-order subs, breakfast sandwiches, burgers and wraps. The stores also feature a smoothie and espresso bar. On the packaged side, there’s an assortment of better-for-you snacking options like nut mixes, protein bars, and protein shakes. To further its message of quality foodservice, select Café + Market locations in the Pittsburgh market will soon add “Great to Go by Market District” items to the foodservice selection. These items will encompass

customers were unfamiliar with; we wanted to refine an experience they already enjoyed. GetGo has built a great brand since 2003 and we wanted to leverage that brand equity, not replace it,” Weiss commented. GOING FORWARD

While many retailers with new prototypes are quick to transition existing locations to their new-to-industry concept, Jablonowski divulged that GetGo will not roll out Café + Market across existing stores. Instead, it will focus future growth of the prototype via new locations.

GetGo Café + Market is now a place where the food is even better, the atmosphere is even more inviting, and the food and convenience offerings are even broader. We did not want to make a brand-new experience that the customers were unfamiliar with; we wanted to refine an experience they already enjoyed. GetGo has built a great brand since 2003 and we wanted to leverage that brand equity, not replace it.

”

— Greg Weiss, Adrienne Weiss Corp.

grab-and-go prepackaged, chef-inspired sandwiches, salads and bowls. Still, the prototype has not forgotten to include customary convenience store fare, including fresh coffee, candy, snacks, tobacco products, an extensive variety of beer, and fountain beverages. Among the other amenities are: indoor/outdoor café seating; surcharge-free ATMs; free air for tires; an expansive selection of retailer gift cards; lottery for purchase; and onsite parking. “GetGo Café + Market is now a place where the food is even better, the atmosphere is even more inviting, and the food and convenience offerings are even broader. We did not want to make a brand-new experience that the

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“All of our current format types share the passion for saving customers time and the commitment to community that is intrinsic to the GetGo brand,” she said. When it comes to what Giant Eagle wants customers to think of when they think of GetGo Café + Market, the retailer hopes the store’s uniqueness shines through. “When a customer thinks of GetGo Cafe + Market, we hope they think: This is far different than any ‘convenience store’ I know. Not only can I pick up a fresh, well-made meal for myself or my family on-the-go, but I can also grab a few pantry staples to save myself a stop on the way home. All in the same place where I fill my tank and a helpful Go-Getter is cheering me on as I go through my busy day,” concluded Jablonowski. CSN

OUTABOUT &

Spotlighting major industry events

Viewing the C-store Offer Through Customers’ Eyes

The 2017 NACS State of the Industry Summit highlighted how operators can capitalize on shifting consumer perceptions By Angela Hanson

onvenience is the name of the industry, but convenience store operators can do more to “own” convenience. Jeff Lenard, vice president of strategic industry initiatives for NACS, the Association for Convenience & Fuel Retailing, discussed how consumers view convenience stores and the opportunities available to retailers based on these views during the 2017 NACS State of the Industry Summit, held in Chicago in early April. Lenard cited data from a 2013 NACS benchmark consumer survey, along with more recent research revealing details on what consumers think about c-stores and why they visit them. In the 2013 survey, consumers said they liked the basic value proposition of c-stores; unhealthy food and NACS State of the snacks were strongly associIndustry Summit ated with c-stores; and the April 4-6, 2017 opening of new c-stores Chicago raised local concerns, as c-stores were perceived as disconnected from the community and offering little opportunity for employee advancement. Since that 2013 benchmark survey, convenience stores have evolved, and new NACS research shows consumers are taking notice. When asked to list in-store trends they have observed at c-stores, consumers pointed to the additions of prepared foods and healthy options. So, how can c-store operators capitalize on the changing perception of the industry? The morning daypart presents a prime opportunity, according to Lenard, who noted that people are most likely to think about healthy products at breakfast time. “They wake up very aspirational. As the day wears on, it’s cheeseburgers and beer for dinner. But they start the day thinking healthy,” he said. Consumers are increasingly skipping breakfast,

NACS VP Jeff Lenard discussed the evolution of c-stores.

with a significant number of younger consumers saying they do so because they don’t have time for it. This gives c-stores the chance to make breakfast easier for consumers, save them time, and become part of their routine. “Which items do people typically eat for breakfast? We sell pretty much everything on that list,” Lenard pointed out. The number of consumers who believe c-stores are a good fit with their community’s values has also risen, but there’s still more store operators can do. If stores “think local” and sell locally-produced products, it will continue to shift perception, according to the NACS executive. Increased focus on nutrition is another way to combat the local “not in my backyard” (NIMBY) resistance to opening new c-stores. Those opposed to opening new stores cited “becoming an outlet for fresh/healthy food” as something that would make them more favorable to a c-store opening in their community. Additionally, a survey from earlier this year revealed that if consumers could tell a c-store owner to do one thing differently, it would be to either lower their prices or clean more, especially their bathrooms. Above all, Lenard encouraged the audience to go beyond what’s expected in terms of how they serve their community. “Don’t just do what you’re supposed to do,” he said. CSN

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ADINDEX Add Systems .......................................................................................39 Advance Pierre Foods ........................................................................35 Altria Group Distribution Company .................................................2-3 Cash Depot..........................................................................................54 Cenex, CHS Inc. ..................................................................................79 Regional Cheyenne International ....................................................................49 Chobani, LLC.......................................................................................69 Cookies United ...................................................................................67 Delorio Foods Inc................................................................................53 Del Monte Fresh Produce ..................................................................23 E-Alternative Solutions .....................................................................2 Fini Sweets .........................................................................................65 FGX International ...............................................................................73 Forte Products .....................................................................................20 Goya .....................................................................................................5 Heineken .............................................................................................82 Home Market Foods ...........................................................................99 Hunt Brothers Pizza ...........................................................................51 Imageworks Display ..........................................................................15 InLine Plastics.....................................................................................68 ITG Brands ..........................................................................................71 J&J Snack Food Corp. ........................................................................29 JT International ..................................................................................41 JTM/JJ’s Bakery..................................................................................47 John Middleton...................................................................................25 Kretek ..................................................................................................31 Krispy Krunchy Chicken....................................................................61 Liggett Vector Brands ........................................................................45 Mars Chocolate NA.............................................................................57 McKee/ Little Debbie .........................................................................63 Milk Pep...............................................................................................13 National Grid.......................................................................................75 Regional Omega Flex, Inc. .................................................................................16 Perfetti Van Melle...............................................................................43 Premier Manufacturing......................................................................8 Procter and Gamble ...........................................................................7 Renewable Energy Group.................................................................11 RJ Reynolds Tobacco Company .......................................................9 Sato America.......................................................................................19 Society Insurance...............................................................................82 Regional Stout Beverages .................................................................................55 Subway................................................................................................17 Swisher International, Inc. ...............................................................37,77 Tillamook Country Smoker, Inc. .......................................................59 Tyson ...................................................................................................33,100 Universal Merchant Services ............................................................Outsert White Castle .......................................................................................27

570 Lake Cook Road, Suite 310, Deerfield IL 60015 Phone (224) 632-8200 Fax (224) 632-8266 www.ensembleiq.com

WWW.CSNEWS.COM | JUNE 2017 | Convenience Store News 97

GETTINGTOTHECORE

Mobile App Mojo

18.5%

Consider these research findings when devising a mobile marketing plan

The percentage of respondents who say they currently use convenience store mobile apps.

re you looking to entice new customers to visit your convenience store? If so, a mobile app may be your solution. EnsembleIQ Research, sister company of Convenience Store News, recently surveyed roughly 500 U.S. consumers who shopped at a convenience store in the past month and found that nearly 85 percent of respondents say coupons offered via mobile app would entice them to visit a convenience store when they might not normally shop there.

Surprisingly, convenience store shoppers in the highest income bracket, earning $100,000 or more annually, are the most apt to say that coupons offered via mobile app would entice them to visit a convenience store when they might not normally shop there.

Thinking about coupons available through mobile apps, which product categories are you most interested in getting offers for? Grocery Motor fuels Snacks (packaged chips, cookies, etc.) Hot beverages (coffee, etc.) Packaged beverages Cold & frozen beverages (fountain sodas, slushies, etc.)

Health & beauty care Prepared food Candy Alcoholic beverages (beer, wine, etc.) Tobacco

71.1% 57.6% 54.4% 53.2% 47.8%

C-store shoppers are most interested in mobile app coupons that will save them money on grocery items.

46.8% 44.6% 43.8% 36.9% 35.1% 15.5%

Base: 502 consumers who purchase food or beverages from a c-store at least once a month Source: Convenience Store News Market Research, 2017

Who are the biggest users of convenience store mobile apps? According to the research, the answer is threefold: men; shoppers aged 35-44; and those living on the West Coast.

Which types of mobile app coupons are most appealing to you? Free item with purchase Buy one, get one free 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.

98 Convenience Store News | JUNE 2017 | WWW.CSNEWS.COM

Percent-off discount Standard discounted price Buy 6, get 7th free

77.7% 68.1% 58.0% 49.4% 17.5%

Base: 502 consumers who purchase food or beverages from a c-store at least once a month Source: Convenience Store News Market Research, 2017

The old adage, â&#x20AC;&#x153;The best things in life are free,â&#x20AC;? apparently holds true when it comes to mobile app coupons.

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