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Convenience Store News July 2022

W H AT ’ S N E X T I N C O N V E N I E N C E A N D F U E L R E TA I L I N G

THE PAYMENT EVOLUTION

NAVIGATING

ROADBLOCKS Despite obstacles, the convenience store industry’s small operators are continuing to invest in bettering their businesses.

Volume 58, Number 7

J U LY 2 0 2 2

CSNEWS.COM

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EDITOR’S NOTE

A Rising Tide Lifts All Boats “Convenience” has become a hot commodity, but more support is needed for the industry’s single-store and small operators to reap equal benefits President John F. Kennedy, the phrase “a rising tide lifts all boats” is mainly used by politicians and economists to convey the idea that if the economy improves, every participant in the economy will be in an improved financial position.

COINED BY

The way I see it, in a perfect world, this phrase can also apply to the U.S. convenience store industry when it comes to the state of the industry’s single-store and small operators vs. the industry’s midsize players and large chains. “Convenience” has become a hot commodity in the age of COVID, putting convenience stores at an advantage. But right now, every participant in the industry is not reaping equal benefits. The rising tide is not lifting all boats.

The number of single-store operators in the convenience channel declined for the fourth straight year in 2021, dropping by another 3.1 percent. While these operators still account for 60.4 percent of all convenience stores, single-store owners made up a record 63.2 percent of the industry in 2017. And this multiyear trend shows no sign of reversing.

According to the third-annual Convenience Store News State of the Small Operator Study (see page 32), there are more small operators (1-20 stores) who are currently thinking about downsizing or throwing in the towel completely. Roughly 14 percent of the small operators we surveyed said they expect to either decrease their store count or sell all their stores and exit the business by the end of this year — a sharp jump from the 6.8 percent who said the same a year ago.

Given the current retail landscape, I guess it’s not all that surprising to see such a jump. The labor shortage is still ongoing. Supply chain issues continue to plague retailers,

distributors and suppliers. Inflation is running rampant. And rising gas prices are threatening the strong summer season that convenience retailers of all sizes were anticipating just a few months ago.

Despite these obstacles and others, though, the majority of the convenience store industry’s small operators are not giving up. They are continuing to invest in bettering their businesses, from rolling out enhanced foodservice options to implementing digital marketing.

For the foreseeable future, “convenience” is going to continue being a key factor for Americans in where they choose to shop, which bodes well for all convenience stores.

However, for the tide to rise and lift all boats, there needs to be more support for the industry’s single-store and small operators, and more resources specifically designed and tailored to their unique needs.

Convenience Store News has been doing its part with our annual State of the Small Operator Study, Small Operator content in every issue of the magazine, an entire Small Operator section of our website, and a weekly Small Operator newsletter delivered to inboxes every Monday.

Convenience Store News’ mission is to deliver the insights, analysis, market research and business intelligence that helps c-store retailers stay ahead of what’s next — and that includes the industry’s single-store owners, small operators, midsize players and large chains.

As the new leader of editorial content for Convenience Store News, this mission is one that I take very seriously, and I am excited to find new, innovative ways to deliver on this mission.

For comments, please contact Linda Lisanti, Editor-in-Chief, at llisanti@ensembleiq.com.

EDITORIAL EXCELLENCE AWARDS (2016-2022)

EDITORIAL ADVISORY BOARD

2021 Jesse H. Neal National Business Journalism Award Finalist, Best Infographics, June 2021

2018 Jesse H. Neal National Business Journalism Award Finalist, Best Editorial Use of Data, June 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

2020 Eddie Award, Folio: magazine Business to Business, Retail, Series of Articles, September 2019 2018 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Website Business to Business, Retail, Full Issue, October 2017 Business to Business, Editorial Use of Data, June 2017 2017 Eddie Award, Folio: magazine Winner, Business to Business, Retail, Single/Series of Articles, May 2017 Honorable Mention, Business to Business, Retail, Single/Series of Articles, June 2016 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

Ray Johnson Speedee Mart

Chad Beck Core-Mark

Ruth Ann Lilly GPM Investments LLC

Edward Davidson Ed Davidson & Associates (7-Eleven Inc., retired) Robert Falciani ExtraMile Convenience Stores Jim Hachtel Eby-Brown Co.

2020 Trade Association Business Publications Intl. Tabbie Awards Honorable Mention, Best Single Issue, September 2019

Chris Hartman Rutter’s

2016 Trade Association Business Publications Intl. Tabbie Awards Silver, Front Cover Illustration, June 2015

J ULY

03.EdNote_CSN_0722.indd 3

Laura Aufleger OnCue Express

20 22

Vito Maurici McLane Co. Inc. Matt Paduano Lakeport Markets Jonathan Polansky Plaid Pantries Inc. Greg Scriver Kwik Trip Inc. Roy Strasburger StrasGlobal

Convenience Store News 3

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VIEWPOINT

Not Goodbye Every new beginning comes from some other beginning’s end ON JULY 1, I transitioned to the new role of Editorial Director Emeritus at Convenience Store News. As part of this transition, Editor-in-Chief Linda Lisanti assumed additional responsibilities, and Senior News Editor Melissa Kress became Executive Editor.

For at least the next year, I’ll still be around to collaborate with Linda and Melissa on delivering insightful content and growing audience engagement for the leading source of business intelligence in the convenience store industry.

It’s the beginning of a new and exciting era for CSNews. Linda is the only editor here who pre-dates me on the team. I couldn’t have had a more indispensable consigliore or right-hand-woman for the past 16 years. I know that in Linda and Melissa, I leave the editorial management in extremely competent hands. Also, in Paula Lashinsky, I couldn’t have had a better publisher to work with.

I’m so proud to have played a role in guiding, growing and championing CSNews’ journalism across our print, digital and event platforms for the past 16 years.

I’m so proud to have played a role in guiding, growing and championing CSNews’ journalism across our print, digital and event platforms for the past 16 years. Our team of editors has grown in both numbers and expertise. We’ve pushed past the competition to become the No. 1 c-store industry media brand in market share. We pioneered digital-first reporting and dedicated ourselves to providing breaking news and distinctive in-depth analysis.

We’ve identified and stayed abreast of emerging category trends, from energy shots to e-cigs to CBD products. We’ve broadened our coverage of growing topics like foodservice and technology. We’ve invested in new platforms to serve our audience better, such as our Top Women in Convenience program, our Future Leaders in Convenience awards, our Convenience Foodservice Alliance membership community, our Technology Academy online learning module, and our Diversity & Inclusion educational platform.

Over the past 40 years, I’ve led the editorial efforts of four business publications that covered many different retail industries, from apparel to drug stores to building supply and home centers to mass merchandisers and grocery stores. The c-store channel has, by far, been my favorite. No other retail channel can match the entrepreneurial spirit, the resiliency, the congeniality and the graciousness of the retailers and suppliers who work in the convenience channel.

When I finally ride off into the sunset, I want to be known not just for the editorial successes of the publications I led, but also for what I gave back to the companies I worked for, the editors and reporters who worked for me, and the retail industries I reported on and served.

For comments, please contact Don Longo, Editorial Director Emeritus, at dlongo@ensembleiq.com.

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Convenience Store News July 2022

CONTENTS JULY 22

VOLUME 58 N UMB ER 7

W H AT ’ S N E X T I N C O N V E N I E N C E A N D F U E L R E TA I L I N G

COVER STORY PAGE 32

76 Volume 58, Number 7

98 FEATURES

DEPARTMENTS

COVER STORY

EDITOR’S NOTE

VIEWPOINT

3 A Rising Tide Lifts All Boats “Convenience” has become a hot commodity, but more support is needed for the industry’s single-store and small operators to reap equal benefits.

4 Not Goodbye Every new beginning comes from some other beginning’s end.

32 Navigating Roadblocks Despite obstacles, the convenience store industry’s small operators are continuing to invest in bettering their businesses.

24

10 CSNews Online 24 New Products AN EYE ON D&I

76 Building Trust in Diversity, Equity & Inclusion Commitments Operational success can suffer if employees cannot trust their employer to fulfill the commitments they have made.

STORE SPOTLIGHT

78 Showing Off New Tricks Sporting a canine logo, Curby’s Express Market aims to be a new breed of convenience.

INSIDE THE CONSUMER MIND

98 Charged Up More convenience store customers are considering the switch to an electric vehicle.

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CONTENTS JULY 22

VOLUME 58 N UMB ER 7

12

8550 W. Bryn Mawr Ave., Ste. 200, Chicago, IL 60631 (773) 992-4450 Fax: (773) 992-4455 www.csnews.com

BRAND MANAGEMENT Vice President/Group Brand Director Paula Lashinsky (917) 446-4117 plashinsky@ensembleiq.com EDITORIAL Editor-in-Chief

Linda Lisanti llisanti@ensembleiq.com

Executive Editor

Melissa Kress mkress@ensembleiq.com

Senior Editor

Angela Hanson ahanson@ensembleiq.com

Managing Editor

INDUSTRY ROUNDUP

CATEGORY MANAGEMENT

12 Shell Seals the Deal for Timewise Stores

FOODSERVICE STUDY

16 Eye on Growth

48 An Appetizing Opportunity Convenience store retailers are bullish about investing in foodservice despite rising costs and operational challenges.

18 Retailer Tidbits

TOBACCO

14 Couche-Tard Puts More Circle K Stores on the Market

20 Supplier Tidbits TECHNOLOGY 70 The Payment Evolution C-store retailers adapt to the ways consumers want to pay online, in-store and at the pump.

Danielle Romano dromano@ensembleiq.com

Associate Editor

Sanestina Hunter shunter@ensembleiq.com

Editorial Director Emeritus

Don Longo dlongo@ensembleiq.com

Contributing Editor

Renée M. Covino reneek@aol.com

Contributing Editor

Tammy Mastroberte tmastroberte@gmail.com

ADVERTISING SALES & BUSINESS Associate Brand Director & Northeast Sales Manager (774) 212-6455

Rachel McGaffigan rmcgaffigan@ensembleiq.com

Associate Brand Director & Western Sales Manager (330) 840-9557

Ron Lowy rlowy@ensembleiq.com

60 Marketing Revolutionaries Advanced digital strategies, loyalty programs and more are fueling a promotional evolution in the tobacco category.

Associate Publisher & Midwest Sales Manager Kelly Fischer (773) 992-4464 kfischer@ensembleiq.com

SNACKS

List Rental (914) 309-3378

66 Ingenuity on Display The 2022 Sweets & Snacks Expo showcased the resiliency and inventiveness of the industry as it emerges from a tumultuous period.

Account Executive & Classified Advertising Terry Kanganis (201) 855-7615 tkanganis@ensembleiq.com Classified Production Manager Mary Beth Medley (856) 809-0050 marybeth@marybethmedley.com AUDIENCE MeritDirect Marie Briganti

Subscriber Services/Customer Care TOLL-FREE: (877) 687-7321 FAX: (888) 520-3608

contact@csnews.com

PROJECT MANAGEMENT/PRODUCTION/ART Creative Director (973) 607-1320

Colette Magliaro cmagliaro@ensembleiq.com

Advertising/Production Manager (773) 992-4418

Ed Ward eward@ensembleiq.com

Art Director (973) 607-1321

Lauren DiMeo ldimeo@ensembleiq.com

CORPORATE OFFICERS Chief Executive Officer

66

Jennifer Litterick

Chief Financial Officer

Jane Volland

Chief Human Resources Officer

Ann Jadown

Executive Vice President, Content

Joe Territo

Executive Vice President, Production

Derek Estey

CONVENIENCE STORE NEWS AFFILIATIONS Premier Trade Press Exhibitor

The contents of this publication may not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for product claims and representations.

Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by EnsembleIQ, 8550 W. Bryn Mawr Ave., Ste. 200, Chicago, IL 60631. Subscription rates: Subscription rate in the United States: $125 one year; $230 two year; $14 single issue copy; Canada and Mexico: $150 one year; $270 two year; $16 single issue copy; Foreign: $170 one year; $325 two year; $16 single issue copy; Digital One year, digital $87; two year, $161. Periodical postage paid at Chicago, IL 60631, and additional mailing addresses. Copyright 2022 by EnsembleIQ. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or information storage and retrieval system, without permission in writing from the publisher.

Reprints, permissions and licensing, please contact Wright’s Media at ensembleiq@wrightsmedia.com or (877) 652-5295. POSTMASTER: send address changes to Convenience Store News, 8550 W. Bryn Mawr Ave. Ste. 200, Chicago, IL 60631.

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CSNEWS ONLINE

ONLINE EXCLUSIVE

TOP VIEWED STORIES

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2

Five C-store Chains Recognized Among America’s Best Retailers for 2022

3

7-Eleven Unveils Next Iteration of Its ‘Evolution Store’

The Texas-based operator began ringing up customers at its Florence, S.C., store on May 16. The site, located at the northeast corner of Interstate 95 and North Williston Road, occupies more than 53,000 square feet and offers 120 fueling positions.

Newsweek partnered with Statista to create the 2022 America’s Best Retailers list, which includes Wawa Inc., Sheetz Inc., Thorntons, QuikTrip Corp. and Pilot Flying J. Rankings were based on an independent survey of more than 10,000 U.S. customers who have shopped at the retailers in-person in the past three years.

The chain’s ninth Evolution location opened in Dallas and features customizable beverage options, a premium cigar humidor, and the latest digital innovations. It also has a covered patio for Laredo Taco Co. customers to enjoy authentic tacos in an outdoor seating area.

4

R.J. Reynolds Vapor Receives FDA Authorization for Additional Products

The agency gave the greenlight for certain Vuse Ciro and Vuse Vibe products to remain on the market. The decision applies to the products’ original flavors, while menthol remains under review and can remain on the market pending a later decision by the FDA.

5

Kum & Go Relaunches Food Program Based on Pilot Program Findings

The retailer relaunched its fresh food menu at stores in and around Omaha, Neb., and Little Rock, Ark. After trial and feedback from its original new menu launch last fall, the company added other new menu items to increase choice and meet customer needs.

PHOTO GALLERY:

Pilot Co. Unveils First Remodels Under $1B New Horizons Initiative Pilot Co. is ringing up customers at four newly upgraded travel centers, the first to be completed as part of its $1-billion New Horizons initiative. The revamped sites are in Valdosta, Ga.; Shelbyville, Ind.; Sulphur, Ky.; and Tucumcari, N.M. “This is just the beginning of our plans for the future as we continue to listen to our guests and strive to make their travel easier and more enjoyable,” said Allison Cornish, vice president of store modernization at Pilot Co. For more store photo galleries, visit csnews.com.

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C-store Operators Share Pandemic Lessons at 2022 National Restaurant Association Show

Jones Soda Co. enters the cannabisinfused beverage and edibles business with the creation of a new division operating under the Mary Jones brand. ​​​ Initially launching in California, the Mary Jones portfolio includes 16 SKUs of singleand multi-dose infused sodas, syrups and gummies. The products come in four of the most popular Jones Soda flavors: Root Beer, Berry Lemonade, Green Apple, and Orange Cream. A rotating selection of seasonal and limited-edition flavors are planned for future release.

Although the foodservice category was already vital to the convenience store industry prior to the arrival of COVID-19, the early days of the pandemic prompted many consumers to recognize a core aspect of the channel. “We offered solutions,” Farley Kaiser, director of culinary and innovation at GetGo Café + Market, said during an education session at the 2022 National Restaurant Association Show titled “Lessons from C-stores: Innovations Driving Customer Traffic.”

Fellow presenter Jac Moskalik, vice president of food innovation at Des Moines-based Kum & Go, discussed how the c-store chain worked with external parties to determine what was missing in their trade area and what their value proposition should be.

“Our thought process is trying to democratize healthy while making craveable food,” Moskalik said, advising foodservice operators to think in two different timeframes. “You have to understand what people need now and what people are going to need in five years.”

Jones Soda Co. Seattle gomaryjones.com

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INDUSTRY ROUNDUP

Shell Seals the Deal for Timewise Stores The chain changes hands as part of a bigger deal with parent company Landmark and Convenience Operations LLC, a wholly owned subsidiary of Shell Oil Products US, strengthens its U.S. market presence with the completed acquisition of Timewise Stores.

The banner is part of Shell’s deal with the Houston-based Landmark group of companies.

SHELL RETAIL

Timewise began operations in 1982 with one convenience store in Hempstead, Texas. Over the past 40 years, the brand has grown in the Lone Star State to comprise more than 200 stores in and around the Houston, San Antonio, Austin and Laredo markets.

Shell’s transaction with Landmark also includes supply agreements for the independently operated fuel and convenience retail sites.

With this acquisition, Shell advances its “Powering Progress” strategy in three ways: • By growing its retail footprint in a core market; • By providing opportunities to offer customers expanded fueling options (including electric vehicle charging, hydrogen, biofuels, and lower-carbon premium fuels); and • By allowing for the growth of non-fuel sales through an enhanced convenience offering.

When the pact was initially announced in October 2021, the deal included 248 company-

owned convenience stores and gas stations.

However, the two sides amended the agreement to remove 64 company-owned Landmark sites that currently sell Exxon and Mobil branded fuels.

Additionally, the agreement was adjusted to remove fuel supply agreements for nine dealerowned sites that currently sell Chevron and Texaco branded fuels.

The transaction also called for Shell to purchase the remaining 50-percent share in Texas Petroleum Group LLC (TPG), previously a 50/50 joint venture between Equilon Enterprises LLC dba Shell Oil Products US and Landmark Industries Holdings Ltd. TPG will now be a wholly owned subsidiary of Shell Retail and Convenience Operations LLC, operating within Shell’s downstream mobility business.

“Shell remains committed to collaborating with wholesalers and dealers to serve customers, drive business value and thrive through the energy transition,” the company said in a statement. In addition, the company “will continue to support and grow with our wholesalers, dealers and JV partners who own and operate more than 13,000 Shell-branded sites across the U.S.” Shell Oil Products US is an affiliate of Royal Dutch Shell plc, a global group of energy and petrochemical companies with operations in more than 70 countries. In the United States, Shell operates Shell branded stations across all 50 states.

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INDUSTRY ROUNDUP

Couche-Tard Puts More Circle K Stores on the Market The sale of 109 sites is part of the company’s ongoing optimization efforts MORE THAN 100 CIRCLE K stores

have been placed for sale as parent company Alimentation Couche-Tard Inc. aims to maximize its portfolio as part of a network optimization effort.

Couche-Tard retained NRC Realty & Capital Advisors LLC to coordinate and manage the sale of 109 Circle K and Couche-Tard sites in the United States and Canada. The sale includes 31 sites across three provinces in Canada and 78 sites across 19 states in the U.S., with an average store size of 2,209 square feet and an average lot size of 28,214 square feet.

Of the 109 sites, 61 properties sell fuel, while 48 are convenience stores only. The properties are all offered without fuel supply and without convenience store brand.

Couche-Tard previously retained NRC to sell

260 U.S. sites in 2021, with these stores averaging roughly 2,600 square feet and sitting on an average lot size of 29,500 square feet.

Majors Management LLC and its affiliates took ownership of 69 of the Circle K stores in a fourth-quarter transaction. The acquired stores are located in Louisiana, Alabama, Florida, South Carolina, North Carolina and Virginia. The acquisition extended Majors’ geography into Virginia and expanded the company’s footprint in the other southeastern states. Thirty-four of the sites are converting to franchised Kangaroo Express locations.

In addition, Couche-Tard sold 25 Circle K, Kangaroo Express or Flash Foods branded sites in Georgia, Tennessee and South Carolina to AS Capital LLC, a new company established by the principals of Gas Express LLC (GX) and Synergy Capital Investments.

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INDUSTRY ROUNDUP

Eye on Growth

Refuel Operating Co. acquired certain assets of Embark Energy LLC. The transaction included 11 company-owned and -operated Fast Break stores in the Austin, Texas, area.

Wawa also plans to expand the number of locations it operates in central Pennsylvania by adding more stores along the Susquehanna River.

Wawa Inc. is expanding its footprint into the Nashville, Tenn., area. The first store is slated to open in Music City in 2025. The retailer plans to open up to 40 stores in the market over the coming years.

BreakTime Corner Market LLC acquired 48 stores from CEFCO Convenience Stores, while Refuel Operating Co. acquired two stores. These sales will allow CEFCO to focus on new store builds and remodels.

BP Products North America Inc. entered into a branded jobber contract with Blue Earth Resources Inc. Blue Earth will receive revenue from fuel sales, merchant services, and fuel transportation.

Cumberland Farms opened new locations in Orange Beach, Ala., and Santa Rosa Beach, Fla. They are the first of several Cumberland Farms convenience stores that EG Group plans to open in the Gulf Coast over the next 24 months.

Colonial Oil Industries Inc. joined forces with petroleum marketer Peak Energy/ Haywood Oil Co. The acquisition will allow the company’s Colonial Group Inc. subsidiary to serve more customers in the Asheville, N.C., market.

16 Convenience Store News C S N E W S . c o m

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INDUSTRY ROUNDUP

Retailer Tidbits

Kwik Trip Inc. is launching multiple ordering and delivery related services through its Kwik Rewards mobile app. Customers can now use the app to select carryout, curbside pickup or delivery for their purchases.

Wages have risen by more than 60 percent since December 2019.

Rutter’s increased its starting wage to $17 an hour. While this is the first time in 2022 that the convenience store chain is upping its rate, it is the sixth time Rutter’s has raised wages in the past three years.

Alimentation Couche-Tard Inc. will deploy more than 10,000 Mashgin Touchless Checkout Systems at more than 7,000 of its Circle K and Couche-Tard stores.

The rollout will occur over the next three years.

Casey’s General Stores Inc. enrolled more than 5 million members in its loyalty program, Casey’s Rewards. The convenience store retailer accomplished this milestone in just over two years since the program’s launch.

United Dairy Farmers launched a text club across its 177-store network in partnership with Mobivity Holdings Corp. Through the text club, the retailer seeks to increase enrollment in its U-Drive loyalty program.

Stewart’s Shops has remodeled more than 10 of its stores so far this year. Changes include new countertops, a fresh coat of paint, new floors, and upgraded bathrooms.

It also enhanced the outdoor space at these locations.

Marathon Petroleum Corp. debuted a new image for its Marathon branded locations to represent the retail brand into the next decade. The company will test the new look this month at three prototype sites in Findlay, Ohio.

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INDUSTRY ROUNDUP

Supplier Tidbits

Upside raised $65 million in equity financing and $100 million in debt financing from General Catalyst, with participation from existing investors including Bessemer Ventures and Builders VC. The fundraising brings Upside’s valuation to $1.5 billion.

industry verticals, such as parking, retail and other sectors.

Zippin estimates that its frictionless retail experience reduces the average shopping trip by 10 minutes.

Hunt Brothers Pizza expanded its distribution services to the New Mexico market. Its foodservice distribution partner TBHC Delivers will now service the state.

Inline Plastics opened a manufacturing plant in Gladwin, Mich., at the former Cam Packaging facility. This addition secures a Midwest facility to complement Inline’s other manufacturing facilities in Connecticut, Georgia and Utah.

PayByCar completed a $4-million seed funding round. The funding will support PayByCar’s next chapter by financing the expansion of its services across states and

Zippin reached a key milestone of servicing more than 1 million shoppers in one its 50 Zippin-powered stores. The company calculates that it has saved consumers more than 83,000 hours to date.

VideoMining introduced Behavior Labs, a retailer-specific “test & learn” platform for optimizing retail performance using advanced shopper analytics. Its programs help incorporate the true voice of the shopper into retail strategy.

Kenan Advantage Group Inc. (KAG) is transitioning its fuel subsidiaries to KAG Energy LLC. This is the first step in combining the company’s five KAG Fuels operating companies under one brand.

20 Convenience Store News C S N E W S . c o m

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HOW DIGITAL AGILITY OPENS DOORS TO NEW C-STORE OPPORTUNITIES

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enablers of digital agility?’

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business needs, using

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connected ‘blocks’ of software tied to

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1. White Owl Black Sweets Pipe-Tipped Cigars

2. Neon Burst Sparkling Hard Beverages

White Owl seeks to shake up the Homogenized Tobacco Leaf (HTL) pipe segment with the introduction of White Owl Black Sweets PipeTipped Cigars, which will be available nationwide in early July 2022. Packaged in 25-count single stick uprights, the product comes in two tip styles (plastic and wood), two flavors (classic and wine), and two attractive price points (prepriced and unpriced). White Owl Black Sweets PipeTipped Cigars feature the first-ever FilmFresh clear wrapper that provides the same barrier protection as foil and is 100 percent airtight, so the cigars stay as fresh as the day they were made.

Anheuser-Busch introduces its latest product innovation: Neon Burst Sparkling Hard Beverages. Available nationwide, the bold, full-flavored, 8 percent ABV beverages were designed specifically to catch the eye on-shelf at convenience stores with vibrant packaging and wild flavors.

The product is offered in two varieties: Neon Burst Punch Blast, which blends tropical flavors including pineapple, passionfruit, orange, raspberry, cherry and apple; and Neon Burst Grape Blowout, which the company describes as “an explosion of grape flavor and citrus tartness.” Neon Burst Sparkling Hard Beverages come in 25-ounce and 16-ounce single cans.

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Anheuser-Busch St. Louis drinkneonburst.com

3. New Snoop Dogg 4. Old Trapper & Martha Stewart Beef Jerky BIC EZ Reach Family Size Lighter Designs In response to consumer Entertainment legend Snoop Dogg and lifestyle innovator Martha Stewart have released new BIC EZ Reach lighter designs inspired by their personalities and aesthetics. Snoop’s refreshed seven-lighter lineup features iconic photographs of the star along with illustrations that represent him as an artist.

Stewart’s refreshed eightlighter lineup features different stone surfaces, including terrazzo, marble and granite. Equipped with a 1.45-inch wand on a body the size of a pocket lighter, the BIC EZ Reach lighter is designed for lighting hard-to-reach places while helping keep fingers away from the flame.

demand for larger, sharing sized bags, Old Trapper Beef Jerky introduces an 18-ounce family size bag — the brand’s largest package size on the market to date. Available nationwide, Old Trapper’s family size is perfect for road trips, to take to outdoor activities, and to stock pantries, according to the company. All four of Old Trapper’s signature beef jerky flavors — Old Fashioned, Peppered, Teriyaki, and Hot & Spicy — come in the 18-ounce bags. The suggested retail price is $21.99 per bag.

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BIC USA Inc. Shelton, Conn. us.bic.com/en_us/ bic-lighters.html

5. ¡Hola! Churros

5

J&J Snacks Foods unveils ¡Hola! Churros, a colorful rebranding of its foodservice churro portfolio. ¡Hola! Churros will now serve as a master brand for the company’s broad portfolio of churro products. J&J will offer foodservice customers two recipes under the brand: the Authentic Spanish Recipe stays true to the Spanish origins of the product with a cake-like texture, while the Crispy Southwest Recipe is a bit crispier on the outside and light and fluffy on the inside. Both recipes will be available in a variety of shapes and sizes, and can be ordered with fillings.

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Pennsauken, N.J. jjsnack.com 24 Convenience Store News C S N E W S . c o m

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6. Mike’s Hard Freeze Mike’s Hard Lemonade brings back the 90s with the launch of Mike’s Hard Freeze, a collection of four refreshing throwback flavors designed to remind consumers of their favorite slushy flavors. The varieties are: Blue Freeze, which tastes like a melted blue raspberry slushy; Red Freeze, which tastes like the classic red cherry berry slushy; White Freeze, which is inspired by a creamsicle flavor; and Pink Freeze, which tastes like a pink lemonade slushy. All four flavors have a 5 percent ABV and are featured in a 12-can variety pack.

The Blue Freeze and Red Freeze beverages are also available in 23.5-ounce single-serve cans.

Mike’s Hard Lemonade Co. Chicago mikeshard.com/ new-freeze

7. Juicy Drop Remix Bazooka Candy Brands, a division of The Bazooka Companies Inc., launched the latest extension of its Juicy Drop line: Juicy Drop Remix. Keeping with the company’s focus on “edible entertainment,” Juicy Drop Remix features both sweet and sour bite-sized chewy candies in an innovative, fun-to-use container. Using the dual compartment dispenser, consumers can have fun creating their perfect mix by sliding to the left for sweet chewy candies and to the right for sour chewy candies.

The product is available in three favorite Juicy Drop flavors: Knock-Out Punch, Blue Rebel, and Wild Cherry Berry.

Bazooka Candy Brands New York bazookacandybrands.com

8. Mint Chocolate Hostess Cr!spy Minis Hostess Brands is adding a mint chocolate variety to its Hostess Cr!spy Minis line. The new product features two layers of creamy, refreshing mint filling between crisp wafers topped with a chocolate-flavored layer for “a perfectly balanced bite,” according to the maker. Made with real mint and real cocoa, Mint Chocolate Hostess Cr!spy Minis ​​​​​are free of highfructose corn syrup and artificial colors and flavors.

They are available in a 7.3-ounce resealable standup pouch for optimal shareability, at a suggested retail price of $3.49.

Hostess Brands Inc. Lenexa, Kan. hostesscakes.com

10. Purell All-Weather Dispensing System While traditional dispensing solutions are generally designed for indoor settings, the Purell CS4 All-Weather Dispensing System enables convenience stores and fuel stations to confidently offer hand sanitizer and hand soap in outdoor or high-traffic environments. The cutting-edge dispenser is made of engineered resin that is more than three times stronger than materials used in most dispensers, according to the maker. It is water-resistant, and special graphite paint makes it resistant to UV fading. Additionally, a large and durable sight window makes it easier to see when a refill is needed, helping reduce labor and maintenance costs.

9. CBD Living Disposable Vapes Revamp CBD Living upgraded its line of Disposable Vapes to contain double the amount of CBD — increasing to 500 milligrams from 250 milligrams — at the same price point. The new 1-gram vapes, which are non-GMO and vegan, are available in three fruity flavors: Piña, Mango, and Strawberry Banana. They are manufactured using only 100 percent natural CO2-extracted oil and boast a full terpene profile, including CBC, CBG and CBN. CBD Living Disposable Vapes come pre-charged, and users can simply dispose of them once they are empty.

CBD Living Corona, Calif. cdbliving.com

10

GOJO Industries Inc. Akron, Ohio gojo.com 26 Convenience Store News C S N E W S . c o m

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Sponsored by

SPECIAL REPORT: REAL TALK, REAL ISSUES

Rebuilding Traffic, Building Baskets Staffing and supply chain hurdles are still affecting store operations

By Kathleen Furore

AFTER A COVID-FUELED FOOT TRAFFIC DECLINE,

customers are returning to in-person shopping — a development especially positive for the convenience store industry.

“As consumers have returned to their busy lives and continue their cadence with e-commerce, the demand for convenience has gradually increased across channels,” NielsenIQ reports. “Convenience retailers have an added advantage here given the premise of their store formats.”

But as c-store operators on the front lines know all too well, many obstacles remain.

“Staffing and supply chain are our biggest hurdles right now. It is very challenging to find enough folks willing to work; and with lower staffing levels, execution suffers,” says Jonathan Polonsky, chairman and CEO of Beaverton, Ore.-based Plaid Pantry, a convenience store chain serving the Northwest. “We have struggled to maintain appearance consistent with our brand — our shelves are not always fronted and faced the way we would like them to be — and to maintain morale so that our associates can deliver the friendly service we have built our reputation on.”

The fact that similar obstacles are hampering the industry’s suppliers has only heightened the challenges.

“Our vendor partners are facing the same issues, resulting in an additional load on our associates to order and work freight, a responsibility that was not on their plate prior to the pandemic,” Polonsky points out. “In general, supply chain reliability is still very low; the fill rates from our suppliers have not improved much over the last year, and we don’t expect much relief until fall.”

Derek Gaskins, chief marketing officer for Des Moines, Iowa-based Yesway Inc., which operates Yesway and Allsup’s branded convenience stores in Texas, New Mexico, South Dakota, Iowa, Kansas, Missouri, Wyoming, Oklahoma and Nebraska, echoes Polonsky.

“Yesway, like other convenience retailers, faced labor challenges, supply chain disruptions, and rapidly changing consumer expectations [during the pandemic],” Gaskins says. “While COVID pressures have lessened in some areas, these are still the main obstacles faced by the channel. Also, the rapidly increasing inflationary environment the past year has emerged today as our biggest obstacle.”

Michael Bloom, executive vice president and chief merchandising and marketing officer at Richmond, Va.-based ARKO Corp., acknowledges these same obstacles, but tries to view them in a positive light. “We think of obstacles J ULY

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SPECIAL REPORT: REAL TALK, REAL ISSUES

“We have struggled to maintain appearance consistent with our brand — our shelves are not always fronted and faced the way we would like them to be — and to maintain morale so that our associates can deliver the friendly service we have built our reputation on.”

— Jonathan Polonsky, Plaid Pantry

as creating opportunities,” he says. “The pandemic made us think differently about how we serve our customers.”

ARKO is the parent company of GPM Investments LLC, one of the largest operators of convenience stores in the United States.

TACKLING THE CHALLENGES Across the convenience channel, there are several ways operators are showing their ingenuity and tackling the challenges in their quest to boost foot traffic and sales.

Value Pricing & Rewards “How much does it cost?” is the question on most everyone’s minds as they navigate prices that seem to keep soaring. Yesway’s Gaskins believes the way a c-store answers that question can give them a competitive advantage.

“As consumers trade down from other channels, Yesway and other convenience operators are well-positioned for growth. Consumers looking to save on gas will stay closer to home, which will serve us well as it did during COVID shutdowns,” he says. “We can capture more foodservice, grocery, tobacco, beverage and other category dollars by ensuring we are reasonably priced on core items.”

It is a pricing strategy Yesway has focused on, and continues to do so.

“We have worked hard to deliver compelling key value items (KVIs) across categories throughout our stores.

We offer twofers on most own-brand products now that people are seeking value. And we have a robust array of Allsup’s and Yesway own-branded products at great everyday values that have been embraced by consumers,” Gaskins reports.

“Our Allsup’s bread, milk and eggs are competitively retailed with grocery stores and Walmart, and we have partnered with national brands for great values on

staples like cereal, case pack water, condiments and HBA [health and beauty aid] products — for example, Kellogg’s cereal program,” he continued. “We have partnered to not have insult pricing. Our retails on full boxes of cereal are comparable to Walmart and grocery, as are our costs.”

Rewards programs also play an important role. Yesway has leveraged its award-winning Yesway and Allsup’s Rewards programs to drive traffic and excitement in the stores.

“We employ strategies such as stackable fuel rewards on destination category purchases that consumers make,” Gaskins says. “Partnering with our suppliers to deliver cents-off savings per gallon for products purchased through our rewards program has been well received, especially as the retail price of fuel has risen the past few months.”

Bloom says ARKO has seen positive results from its fas REWARDS loyalty program, too.

“Our enrolled loyalty program members visit us seven more times per month than non-loyal customers, spending approximately $90 more a month as well,” he reports.

Most recently, ARKO debuted a new “Buy More, Stack More, Save More” benefit as part of its annual “100 Days of Summer’” promotional program. “This allows enrolled loyalty members to save on fuel by ‘stacking’ savings of up to $1 off their next fuel purchase, for up to 20 gallons of fuel,” Bloom explains. “Loyalty members in Connecticut, Missouri and Wisconsin can stack points, which turn into fas BUCKS at their local GPM stores.”

More loyalty program features, such as a new app with additional benefits, are on tap for later this year. “We want to continue providing excellent value to these customers,” says Bloom.

Enhanced Food & Beverage Options Foodservice, including grab-and-go, has become an important component of convenience retailing — one ARKO embraced during the pandemic. The company installed freezers and expanded grab-and-go options when the shift to remote work began. The move is still paying off today.

“With a limited budget, a customer might opt to purchase a frozen dinner from their local c-store over dining out at a restaurant or paying a higher price for delivery,” Bloom says. “Customers are shifting toward more cost-effective, readily available food options, and by offering frozen items such as pizza and chicken, along with pre-made options, we are seeing an increase in sales for those categories.”

The company also is building out 50 new Sbarro pizza counters in its stores. “We believe that delicious, high-quality pizza at a reasonable price is a compelling value proposition for our customers, and we work

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Sponsored by

“We have worked hard to deliver compelling key value items (KVIs) across categories throughout our stores.”

— Derek Gaskins, Yesway Inc.

to ensure they know when a Sbarro is open in their market through targeted communications campaigns,” Bloom notes.

Automating foodservice processes to give associates more time to focus on customer service has been another plus for ARKO. The installation of bean-to-cup coffee machines in 525 stores is one example.

“That reduces waste and streamlines production of a very popular, low-cost essential item,” Bloom says.

“These coffee machines are simple to use, grind beans on demand, and give our customers delicious hot or iced coffee whenever they want it.”

Mobile apps, which he calls “the primary lifeline connecting the customer with the in-store experience,” should be a crucial part of the strategy.

“When tied to a loyalty program, mobile helps increase store visits through personalized offers and deals, while also enabling customers to track purchases and rewards quickly and conveniently from the palm of their hand,” Turner says. “Mobile features such as fastlane checkout or a cashless checkout system, would also be extremely appealing to today’s modern convenience store customer.”

“With a limited budget, a customer might opt to purchase a frozen dinner from their local c-store over dining out at a restaurant or paying a higher price for delivery.”

Leaning Into Technology

— Michael Bloom, ARKO Corp.

Technology now plays a key role in driving consumers into stores.

“We are leaning into social media more than we have in the past to reach new Plaid shoppers,” says Polonsky.

This outreach includes a summer campaign that he says offers customers “many compelling ‘Plaid-Tastic’ deals on Instagram and on our app.” Recently, the retailer promoted an offer of buy two 20-ounce Dr Peppers, get one free.

“Once [they’re] inside, we will have additional bundled offerings to encourage customers to build their basket,” he explains. “The bundles are a combination of offers promoted on those platforms and some in-store-only deals that are more ‘on the fly’ promotions. These strategies are not new to retailing, but I think there is now a premium on offering the customer different and unique value propositions. The days of ‘pile it high and let it fly’ are not as effective as they once were.”

It’s the kind of move Sean Turner, cofounder and chief technology officer at Swiftly, says is essential for any retailer hoping to build traffic and sales. Swiftly is a digital ecosystem that harnesses the power of artificial intelligence (AI) to help retailers build strong digital relationships with customers, empowering them to grow sales and build loyalty.

“Without a comprehensive technology strategy that links the digital and in-store experience to deliver savings and customer engagement, convenience stores will continue to struggle building and retaining a loyal customer base,” Turner cautions.

Supply Chain Management No matter the value or rewards offered or the outreach that convenience store operators do, they won’t succeed if products aren’t on-shelf when the customer arrives.

“To ensure their products are in stock, convenience store retailers will have to modernize their existing supply chain operations unless they want to be beat out by larger retailers,” stresses Kevin Beasley, chief information officer at VAI, a provider of enterprise resource planning (ERP) software solutions. “Optimizing their ERP system by utilizing cloud-based technology and predictive analytics with AI is becoming necessary for these smaller convenience stores to gain clear visibility into supply chain, warehouse operations, and product lines.”

Ultimately, keeping the shelves stocked is key to generating traffic, building baskets and engendering long-term loyalty, particularly in the current retail landscape.

“Sticking to the fundamentals of category management and focusing on keeping our shelves stocked has helped increase basket size,” says Gaskins, who notes that Yesway works with multiple distributors including mainline wholesalers Affiliated, AMCON and Core-Mark, and supplements with many others “so we can pivot in case of supply chain disruptions.”

“Remember, the No. 1 ability is availability,” Gaskin concludes, “so ensuring consistent in-stock positions also leads to sales growth.” CSN J ULY

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COVER STORY

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Navigating

Roadblocks Despite obstacles, the convenience store industry’s small operators are continuing to invest in bettering their businesses

BY ANGELA HANSON & DON LONGO

DESPITE AN ENCOURAGING upward trend in sales in 2021 and positive momentum so far this year, the convenience store industry’s single-store and small chain operators still have plenty of challenges keeping them up at night.

According to the third-annual Convenience Store News State of the Small Operator Study, the issue that gives them the most worry is one common across the retail industry and beyond: labor. Not only are they competing with larger c-store chains with more resources for compensation, but they are also competing against businesses outside the convenience channel as low unemployment and a steady rollout of wage increases create a tight and expensive labor market.

TITLE SPONSOR

J ULY

20 22

Convenience Store News 33

COVER STORY

What Keeps Independent Retailers Up at Night 59%

Staff/labor 52%

Price increases

51%

Supply chain All things COVID

45%

Overhead costs

31% 27%

Competitive threats Keeping up with technology

24%

E-commerce

20%

Vendor relations

18%

Trust/reputation Other

11% 3%

“Payroll, taxes, safety, all these are going up and the costs to do business daily are exceeding the profits,” one independent retailer lamented. “We need to protect the stores with local support, local hiring and local marketing.”

Price increases (cited by 52 percent) and the supply chain (cited by 51 percent) are virtually neck and neck as small operators’ next-largest concern. The cost of in-store products is going up as supply chain bottlenecks result in out-of-stocks. One retailer pointed out that they are unable to achieve the same supply chain efficiencies as larger, self-distributed players and can’t benefit from some of the cost structures these companies reach through their volumes.

“Cost of goods and pricing are becoming controlled by the large distribution companies. In the near future, there will be no more small competition,” predicted one retailer who claimed to be seeing similar controlling behavior from multiple large supplier companies. “They want to be a distribution company and not a sales company. With no competition comes no growth and the retailers are the only ones who suffer.”

Rising rent and the necessity of implementing new technology are other cost concerns.

Additionally, 45 percent of single-store and small operators cite one of their major worries as “all things

Other: Cybersecurity Energy regulation Governmental overreach

COVID,” which could arguably be a factor in most other concerns. Retailers also point to overhead costs and competitive threats as current challenges.

Despite these obstacles, the convenience store industry’s independent retailers are continuing to invest in bettering their businesses to retain existing customers and attract new ones.

Developing or expanding a fresh prepared food program is their No. 1 investment priority. The major recovery of the foodservice category in 2021 has prompted 57 percent of single-store and small operators to focus on this aspect of their operations this year.

In addition to the rebound of foodservice sales over the past year and a half, it makes sense that small operators want to make strides in this category as their foodservice offerings are often more limited than those of larger chains. Slightly more than half of independent c-store retailers (51 percent) describe their foodservice offerings as limited, while just 43 percent call their foodservice offerings robust — indicating significant opportunity for advancement.

Tying in with the ongoing labor challenges, staff training and retention programs is the secondhighest investment priority, cited by 56 percent of respondents. And at least four in 10 operators also cite digital marketing/personalization, new

34 Convenience Store News C S N E W S . c o m

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COVER STORY

Independent C-store Investment Priorities in 2022 Develop/expand fresh-prepared food programs

57%

Training & retention programs

56%

Digital marketing/personalization

45%

New store construction

45%

Supply chain & logistics

43% 41%

Store remodeling

40%

Develop/enhance social media strategy Develop/enhance sustainability strategy

35% 34%

Investments in technology 28%

Expand assortments

27%

Store displays 24%

Streamline assortments/reduce SKUs

24%

Develop diversity & inclusion initiatives Add/update order & delivery options

23%

E-commerce fulfillment

23%

Overhaul loyalty program Other

store construction, supply chain and logistics, store remodeling and developing/enhancing social media strategy as top priorities.

Other: Pump upgrades Self-checkout Mobile ordering Third-party delivery Start a loyalty program

22% 9%

Foodservice Offerings of Independent Retailers 6%

2022 PERFORMANCE TO DATE Although the number of single-store owners in the convenience channel declined for the fifth straight year in 2021, the majority of small operators surveyed

by CSNews say they plan to keep their store counts steady this year, with more than two-thirds reporting that they expect the number of c-stores they operate to remain the same year over year.

Still, there are some who are thinking about downsizing or throwing in the towel completely. Roughly 14 percent say they expect to either decrease their store count or sell all their stores and exit the business by the end of the year, a sharp jump from the 6.8 percent who said the same last year. More retailers expect to sell and exit (10.3 percent) than to decrease store count (3.8 percent), indicating that consolidation within the industry is still ongoing.

Meanwhile, the percentage of small operators who say they plan to increase their store count slipped to 17.9 percent, down from roughly a quarter a year ago.

51% 43%

None Robust Limited

Store Count Plan for 2022

67.9% 10.3%

17.9%

We plan to increase our total store count We plan to decrease our total store count Our store count will remain the same

3.8%

We plan to sell our stores and exit the business

When looking at the overall sales and profit perfor-

36 Convenience Store News C S N E W S . c o m

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7/6/22 11:37 AM

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COVER STORY

mance among the industry’s small operators thus far in 2022, the numbers are trending somewhat below the rebounded results of last year. About two-thirds of small operators report that their year-to-date sales and profits are either slightly lower than 2021 (37.2 percent) or about the same as 2021 (30.8 percent).

Just 23.1 percent of retailers say their overall sales and profit performance this year to date is better than in 2021, down from 42.5 percent who said the same one year ago.

Small operators are reporting similar results for motor fuel volume to date in 2022, with around two-thirds reporting results that are slightly lower (34.6 percent) or about the same (32.1 percent) as 2021. However, the percentage of retailers who report their motor fuel volume is significantly lower than last year jumped to 12.8 percent, likely related to the record-high gas prices in the wake of Russia’s invasion of Ukraine, although fuel prices were rising before the outbreak of war.

Roughly 14% say they expect to either decrease their store count or sell all their stores and exit the business by the end of the year.

Overall Sales & Profit Performance in 2022 to Date

30.8%

One of our best years ever

23.1%

2021 PERFORMANCE When looking at the overall sales and profit performance for full-year 2021, a large majority of single-store and small chain operators (nearly eight out of 10) saw their overall sales per store increase last year. Only 7.4 percent reported a decrease, much improved from the nearly two-thirds of operators who reported a decline in 2020, during the worst of the COVID-19 pandemic.

On average, single-store and small chain operators reported their average per-store sales increased by 21.7 percent last year. That’s a significant change from the average 14.6-percent decline these retailers

5.1% 3.8%

Better than in 2021 About the same as 2021 Slightly lower than 2021 Significantly lower than 2021

Motor Fuel Volume in 2022 to Date

34.6%

32.1%

One of our best years ever Better than in 2021

15.4%

About the same as 2021

12.8%

Slightly lower than 2021 Significantly lower than 2021

5.1%

In-Store Merchandise Sales in 2022 to Date

The present state of in-store sales looks rosier, as 30.8 percent of single-store and small operators say their merchandise sales in 2022 are trending better than last year, and 29.5 percent report their sales are about the same. Just over a quarter say their sales are slightly lower.

Foodservice is performing even better, with 26.9 percent reporting better sales to date than in 2021, and 39.7 percent saying they are about the same. It can’t be overlooked, though, that 16.7 percent report their current foodservice sales are significantly lower than last year.

37.2%

25.6%

9% 5.1% One of our best years ever

29.5%

Better than in 2021 About the same as 2021

30.8%

Slightly lower than 2021 Significantly lower than 2021

Foodservice Sales in 2022 to Date 14.1%

16.7% 5.1%

39.7%

One of our best years ever

26.9%

Better than in 2021 About the same as 2021 Slightly lower than 2021 Significantly lower than 2021

38 Convenience Store News C S N E W S . c o m

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7/6/22 11:37 AM

GROWING CUSTOMER LOYALTY WITH COFFEE Growing customer loyalty while navigating a pandemic is challenging. According to the NACS State of the Industry Report of 2020 Data, the average number of weekly trips has continued to fall, resulting in an erosion of 1.3 trips per shopper per week since 2016.

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7/6/22 10:20 AM

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EV CHARGING STATIONS AND INTEGRATED POS:

The Next C-Store Evolution Rising consumer demand for convenience (53,000+ stores are expected to open over the next few years); growing preference for fresher, healthy, sustainable products; and record sales of electric vehicles (EVs) are compelling c-store operators to re-think ways to improve the in-store experience. For many, this means updating store designs and integrating engaging in-store technologies to remove friction and increase customer satisfaction as they alter their focus from “petroleum plus merchandise” to “merchandise plus petroleum.” For savvy industry players with forecourts, it also involves adding EV charging stations. CSN sat down with Reint Jan Holterman, Product Marketing Manager for EV Charging Services at Diebold Nixdorf, to discuss the benefits of implementing EV charging and the rationale for integrating EV charging technology with self-service at the point-of-sale.

CSN: Why is deploying EV charging stations an important step in the evolution of c-stores?

RJH: Customers with EVs are a captive audience. While it takes very little time to fuel up a vehicle, charging an EV takes about 20-30 minutes. If your c-store gives customers what they want—fresh, healthy food options—they’ll spend money, and more of it, in your stores instead of going someplace else.

CSN: Why integrate EV charging stations with self-checkout technology and loyalty applications?

RJH: Customers increasingly expect a convenient, frictionless shopping experience best delivered by letting them pay for all their purchases, complete any loyalty program activities (for example, redeeming offers), and handle EV charging fees in a single self-checkout transaction. Considering that non-fuel purchases account for the majority of c-store profits, integrating EV charging stations with the point-of-sale increases the chances of in-store purchases and gives EV drivers a compelling reason to leave their car to shop or have a meal while charging their car.

CSN: Where should c-store operators start once they’ve decided to add EV charging stations to their tech toolbox?

How do they maximize their potential to benefit from such a move?

RJH: There is no “one size fits all approach. It’s important to first understand the needs of each operator and their customers. Only then is it possible to define the optimal solution and move to the next step: choosing the right hardware provider and installing and integrate all the systems.

C-stores that offer EV charging services must implement a unique set of consumer-facing technologies and equipment and manage them proactively. The best means of approaching this entails selecting one partner to handle this process and serve as a single point of contact when technical support is needed. It ensures that all management and maintenance matters are addressed and that EV charging services are always available when customers want them. If these services are unavailable, consumers will deflect to the competition.

CSN: What solution does Diebold Nixdorf offer to c-store operators on the EV charging services front?

RJH: Our solution covers four pillars: • Consultancy. Acting as a sole business partner and starting at the planning stage, we apply our extensive self-service market experience and expertise to help c-stores identify the best EV charging solution—one that is tailored to meet their needs and those of their customers.

• Hardware. We don’t offer our own EV hardware, but do work with several industry-leading charger hardware provider partners from which we source it.

In addition to sourcing and helping c-stores choose hardware whose capabilities suit their business, we assist with installation. Clients can also use our artificial intelligence (AI)-based tools, such as smart remote and on-site maintenance tools.

• Software. We can integrate loyalty, security, payments, and omnichannel retail software solutions with existing EV charging management software platforms.

• Services. Diebold Nixdorf has a global network of 11,000 specialized services technicians who provide assistance with all types of EV charger hardware from any manufacturer. This assistance ranges from installation services and first- and second-level support to repairs, parts replacements, and preventive maintenance, optimizing service availability and keeping EV services operational. A 24/7 help desk supports clients in 25 different languages. We also offer efficient logistics and spare parts coordination from 5,000 stocking locations. As such, we can fulfill service level agreements (SLAs) of 4 hours in case of malfunctioning.

In short, with Diebold Nixdorf, all service station processes, self-checkouts and assisted POS systems are managed reliably and efficiently, through one point of contact for your global fleet—no matter the problem or technology provider. You maintain the highest uptime at the lowest TCO while fulfilling the needs of your customers—and keeping them coming back.

TO LEARN MORE about Diebold Nixdorf’s EV Charging and retail self-service offerings, visit https://www.dieboldnixdorf.com/en-us/retail/solutions.

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7/6/22 1:44 PM

COVER STORY

netted in 2020. Still, smaller operators underperformed their larger brethren by about 3 percentage points.

Average per-store sales among the whole U.S. c-store industry increased by 24.5 percent last year, according to the recently released CSNews Industry Report.

The number of single-store owners declined in 2021 by 2,860. That was after a near 3,000-unit decline in 2020. This disturbing decline shouldn’t be a surprise as almost 7 percent of single-store and small operators last year said they expected to either decrease their number of stores or sell them and exit the business after weathering 18 months of pandemic-related setbacks.

In 2021, small operators underperformed their larger brethren by about 3 percentage points in average per-store sales growth.

Yet, in a sign that pandemic-related mobility issues are in the rearview mirror, three-quarters of singlestore and small operators reported their motor fuel sales dollars increased last year. In 2020, nearly threequarters reported their fuel sales revenue declined.

The average net increase in fuel revenue last year was 37.4 percent, up from a 24.5-percent decline the year before.

Three-quarters of single-store and small operators also reported their in-store merchandise sales increased last year. The net average increase of 5.2 percent was slightly off from the previous year’s 5.3-percent gain when 61.6 percent of operators reported an increase.

The average number of weekly transactions inside the store rose by 8.1 percent to 2,774 transactions per store per week. Motor fuel transactions increased by 4.3 percent to 1,886 transactions per store per week.

Both increases were very close to the industrywide average increases of 8.4 percent for in-store and 4.7 percent for fuel.

The average dollar amount per transaction also closely followed the overall industry trend. The average in-store transaction amount for small operators last year rose 6.1 percent to $14.01, while the average motor fuel transaction amount rose 21.4 percent to $32.55.

Industrywide, those increases were 5.8 percent for in-store and 21.6 percent for fuel.

A big reason for the bounceback of in-store sales was the strong performance of foodservice. Three-quarters of the small operators surveyed said their prepared food dollar sales increased last year, with a net average

Average Total Dollar Sales per Store 2021 vs. 2020 Increased 77.8%

Stayed the same 14.8%

Decreased 7.4%

Net change 21.7%

Average Motor Fuel Dollar Sales per Store 2021 vs. 2020 Increased 75.0%

Stayed the same 18.8%

Decreased 6.3%

Net change 37.4%

Average In-Store Merchandise Sales per Store 2021 vs. 2020 Increased 76.9%

Stayed the same 15.4%

Decreased 7.7%

Net change 5.2%

Average Number of Weekly Transactions per Store

2021

2020

In-store

2,774

2,566

8.1%

1,808

4.3%

% CHANGE

(including merchandise & foodservice)

Motor fuels

1,886

Average Dollar Amount per Transaction

In-store

2021

$14.01

2020

% CHANGE

$13.20

6.1%

$26.81

21.4%

(including merchandise & foodservice)

Motor fuels

$32.55

42 Convenience Store News C S N E W S . c o m

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COVER STORY

increase of 24.3 percent. In 2020, only 23.1 percent of respondents reported an increase and overall, they reported a net decrease of 6.1 percent.

The same turnaround trend was evident across the hot, cold and frozen dispensed beverage segments. More than 70 percent of small operators saw an increase in hot beverage sales last year, for an average gain of 18.4 percent. That comes on the heels of an average decline of 21.4 percent the year before.

Sixty-three percent of respondents saw an increase in cold dispensed beverage sales, for a net gain of 12.4 percent. That again compared favorably to a 2020 net decline of 5.3 percent.

Likewise, in frozen dispensed beverages, more than 80 percent of respondents reported improvement, with the average sales increase reaching 21.2 percent. In 2020, retailers reported an average decrease of 5.9 percent in frozen beverage sales.

In the other major in-store merchandise categories, 75 percent of small operators reported that their cigarette dollar sales increased in 2021, up from 63.6 percent the prior year. However, the net increase of 2.1 percent was slightly lower than the year before, when respondents reported an average increase of 4.7 percent in cigarette dollar sales.

The other tobacco products (OTP) category performed better. More small operators saw a rise in OTP dollar sales: 82.1 percent vs. 66.7 percent the year before. But the average increase was about the same: 8.3 percent in 2021, compared to 8.6 percent in 2020.

Packaged beverages had a good year, with 81.5 percent of small operators saying category dollar sales rose for them in 2021. This is significantly ahead of the 58.3 percent who said the same a year ago, despite the fact that many customers turned to the cold vault for beverage purchases when fountain units were closed early in the pandemic.

The average sales gain was 12.4 percent, again significantly higher than the category’s average net increase of

The Desire for Partnership The importance of distributor and manufacturer support to the convenience store industry’s single-store and small operators cannot be overstated. However, these retailers express that the current level of support they are receiving leaves room for improvement.

About one-third of independent c-store retailers (32 percent) work only with distributors, while more than half (56 percent) work with both manufacturers and distributors, according to the third-annual Convenience Store News State of the Small Operator Study.

“My distributors work with me with a common goal, and they use online sales to drive my business,” one retailer remarked.

The best partners, retailers say, are those who help independent operators boost their sales through promotions and support of loyalty and rewards programs. This group also appreciates companies that keep up with supply, or offer complementary products when out-of-stocks occur.

“The best relationships are with our beverage partners who support us with insights, promotions and funding,” another operator commented.

On the flip side, single-store and small operators say their top unmet needs are: • • • •

Lower prices/deals/discounts; Supply/inventory solutions/guarantees; Better communication; and Honesty/trust.

“I would love the ability to say no to certain rebate programs (tobacco, especially) and contracts, and not be so punished by pricing that we feel like we don’t have a choice,” said one retailer.

Some independent operators also criticize their status as “low man on the supply chain,” which results in them not getting certain products that are in short supply. Even when outages can’t be avoided, independent operators would prefer to be informed, so they can pivot rather than wait for “an eleventhhour surprise.”

Additionally, retailers express the need for practical help with matters such as pricing and consistent supply. Strong communication is highly valued as well.

One c-store operator expressed a strong desire for “real insight” into the supply-chain struggle and what the future is going to look like. “COVID has allowed people the excuse to just blame COVID for manufacturer shortfalls and product issues, but actually being open and honest about the challenges they are facing and when they expect to resolve would be amazing,” they said.

44 Convenience Store News C S N E W S . c o m

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7/5/22 2:01 PM

COVER STORY

CATEGORY DOLLAR SALES 2021 vs. 2020 INCREASED

DECREASED

STAYED THE SAME

NET CHANGE

MERCHANDISE Cigarettes

75.0%

7.1%

17.9%

2.1%

Packaged beverages

81.5%

7.4%

11.1%

12.4%

Beer/malt beverages

46.2%

38.5%

15.4%

-1.6%

Other tobacco products

82.1%

7.1%

10.7%

8.3%

Edible grocery

66.7%

14.8%

18.5%

5.7%

General merchandise

57.7%

11.5%

30.8%

5.3%

Candy

73.1%

7.7%

19.2%

13.2%

Salty snacks

70.4%

7.4%

22.2%

11.6%

Wine & liquor

57.1%

14.3%

28.6%

8.0%

Non-edible grocery

42.3%

46.2%

11.5%

-2.1%

Alternative snacks

82.6%

4.3%

13.0%

20.2%

Health & beauty care

56.0%

12.0%

32.0%

5.8%

Prepared food (prepared on-site or off-site)

75.9%

0.0%

24.1%

24.3%

Hot dispensed beverages

71.4%

10.7%

17.9%

18.4%

Cold dispensed beverages

63.0%

7.4%

29.6%

12.4%

Frozen dispensed beverages

80.8%

3.8%

15.4%

21.2%

FOODSERVICE

4.1 percent in 2020.

After performing strongly during the pandemic, sales of beer and malt beverages fell back down to earth last year. Less than half of respondents (46.2 percent) reported their sales in this category grew in 2021, compared to 62.5 percent who saw an increase the year before. On average, beer sales declined by 1.6 percent, following a whopping 15.2-percent average increase in 2020.

In the center of the store, candy, salty snacks and alternative snacks all bounced back for the c-store industry’s small operators in 2021 as in-store foot traffic rebounded.

For the candy category, 73.1 percent saw dollar sales rise, up from 57.1 percent in 2020. The average

net gain was 13.2 percent, a big jump from the prior year’s 2.3-percent gain.

In the salty snacks category, 70.4 percent of small operators saw dollar sales increase last year, more than doubling the 30.4 percent who said dollar sales rose in 2020. The net average increase was 11.6 percent, reversing the 3.1-percent decline of the prior year and then some.

A whopping 82.6 percent of small operators saw dollar sales of alternative snacks increase in 2021, a more than 20-point jump from the 61.5 percent who reported an increase in this category the previous year. The average net gain also surged to 20.2 percent, far ahead of the average 3.3-percent gain of 2020. CSN

46 Convenience Store News C S N E W S . c o m

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7/6/22 11:38 AM

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7/5/22 2:01 PM

FOODSERVICE

An Appetizing Opportunity Convenience store retailers are bullish about investing in foodservice despite rising costs and operational challenges

By Angela Hanson

underwent a period of recovery in 2021, bouncing back from the major blow dealt by the COVID-19 pandemic, as foot traffic rebounded and convenience store operators revisited their approaches to all aspects of category operations to meet consumers’ changing needs.

THE FOODSERVICE CATEGORY

2022 marks a transition period as c-store retailers make more concrete plans for a post-pandemic world. Store traffic and in-store sales are up, and c-store operators are bullish about their plans for new foodservice amenities and other category improvements.

However, it’s not all rosy, as certain COVID-19related issues are presenting larger challenges

even as others wane, and profits in the face of rising costs are a concern.

Still, despite these difficulties, retailers are clear in their intentions to further invest in foodservice as they look to the long-term strength of the category, according to the participants in the exclusive 2022 Convenience Store News Foodservice Study.

“We are putting massive resources into coffee and food,” said one operator when describing planned category enhancements. “Building an app and doubling the kitchen size.”

After experiencing varying levels of decline in 2021 due to the effects of the pandemic, all foodservice

Foodservice Segments Offered % offering foodservice segment

Average % of total foodservice sales

2022

2021

2020

2022

2021

2020

Hot dispensed beverages

99%

89%

97%

22%

21%

25%

Prepared food

97%

89%

92%

53%

51%

47%

Cold dispensed beverages

88%

86%

90%

22%

24%

27%

Frozen dispensed beverages

78%

76%

74%

10%

11%

12%

SPONSORED BY

48 Convenience Store News C S N E W S . c o m

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7/5/22 2:01 PM

FOODSERVICE

Foodservice Sales by Daypart (average % of sales)

32%

29% 24% 22%

30%

30% 12% 9%

Breakfast (6-8:59 a.m.)

2022 2021 2020

Morning snack (9-10:59 a.m.)

11%

Lunch (11 a.m.-1:59 p.m.)

10% 9%

Retailers predict breakfast will lead sales growth for full-year 2022. Meanwhile, some respondents in this year’s study indicate concern about nighttime occasions experiencing sales drops. Evening snack time and dinner are the dayparts they predict to have the biggest sales declines for full-year 2022.

7% 7%

13%

8%

Afternoon snack (2-3:59 p.m.)

segments have seen their availability at convenience stores increase in 2022. Prepared food, which constitutes more than half of all foodservice category revenue, and hot dispensed beverages are again being offered by virtually all c-stores.

Breakfast and lunch are generating the majority of foodservice sales. An especially encouraging stat is that sales in the 6 a.m. to 8:59 a.m. daypart increased 5 percentage points from 2021 to 2022 — likely a result of people returning to the office and resuming their morning commutes. Breakfast now accounts for 29 percent of foodservice sales vs. 32 percent for lunchtime.

14% 15% 4% 4%

5% Dinner (4-6:59 p.m.)

Evening snack (7-9:59 p.m.)

3% Late night (10 p.m. or later)

Actual 2022 Foodservice Sales (January - May)

64%

74%

30% 6%

10% 2022 Increase

16%

36% 12% 53%

2021

2020

Stay the same

Decrease

Expected Full-Year 2022 Foodservice Sales

The Ups & Downs of Recovery From January through May 2022, c-store foodservice sales have continued their recovery from the major losses sustained in 2020.

Nearly two-thirds of operators (64 percent) report that their foodservice sales increased from January through May. Sentiment is even

70%

Increase

Stay the same

19%

10%

Decrease

more positive for the full year, with 70 percent of operators saying they expect their foodservice sales for all of 2022 to increase compared to 2021.

Foodservice profits are a different story. Less than half of operators (45 percent) report that their profits increased from January through May, while nearly a quarter say their profits decreased during this time. Expectations 50 Convenience Store News C S N E W S . c o m

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7/6/22 2:29 PM

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FOODSERVICE

for foodservice profits for all of 2022 are more positive but still tempered compared to sales expectations, with 57 percent predicting increased profits for the year.

Actual 2022 Foodservice Profits (January - May)

Study participants who expect sales and profits to either decline or hold steady point to factors strongly tied to lingering effects of the pandemic and Russia’s war with Ukraine as the primary causes. Rising costs, high gas prices and supply chain issues were listed by most.

On the opposite end of the spectrum, operators who are optimistic about future sales and profits point to factors related to the long-term health of the category. Numerous participants cited business volume gains that prompted expansion of their programs and physical spaces.

Increased foot traffic and consumer awareness that c-stores are viable alternatives to the quick-service restaurant channel are also favorable to category growth. One retailer noted that consumers “discovered food with c-stores during the pandemic and found it quick and easy.”

New menu options are also a significant driver.

While supply chain issues have interfered with the introduction of new products for some, others have used this as a push to innovate.

45%

27%

71%

22%

31% 24% 2022

9%

Increase

51%

20% 2021

2020

Stay the same

Decrease

Expected Full-Year 2022 Foodservice Profits

57%

Increase

22%

Stay the same

21%

Decrease

“Supply chain issues continue to be challenging.

Biggest Obstacles to Foodservice Success 2022

2021

2020

Supply chain

84%

42%

28%

Difficulty in hiring & retaining employees

75%

80%

35%

Finding the right products/programs

33%

16%

12%

Changes in store traffic/trips due to COVID-19

31%

36%

62%

Operational inefficiencies at store level

27%

16%

15%

Increasing competition for foodservice business

22%

17%

13%

Lower foot traffic in stores

22%

36%

49%

Negative consumer perceptions around c-store foodservice

19%

24%

23%

Lack of alternative shopping options (e.g. mobile ordering, curbside pickup, delivery)

16%

14%

17%

Other

5%

5%

6%

52 Convenience Store News C S N E W S . c o m

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7/5/22 2:02 PM

FOODSERVICE

Supply Chain Issues

However, this is driving us to be more open to various foods that we normally wouldn’t try,” one respondent noted.

12%

The vast majority of c-stores are asking their customers to pay more for their food and beverage offerings these days. Ninety-four percent of this year’s study participants say they have raised their prices within the last year. Among them, 64 percent have raised prices across the board, while 30 percent have raised them only on select items.

Compared to last year, operators are significantly more likely this year to say they are maintaining promotional levels. More than six in 10 report that they have not changed the number of foodservice promotions at their stores in the last year. Price discounts and bundling/meal deals are the most effective promotions, according to operators.

Lower-cost promotional channels such as social media and signage at the fuel pump and outside the store remain the most popular.

Then again, the percentage of retailers offering promotions via loyalty programs — which many industry experts believe is critical to maximizing foodservice sales and profits — continues its multi-year growth to reach above 50 percent this year.

34%

31%

28% 55% 2%

January - May 2022 Improved Worsened

30% 8%

Stay the same Don't know

Removed Menu Item Because of Supply Chain Issues

No 27%

Obstacles on the Road to Success While convenience store operators are uniform in their assessment that foodservice is an important and growing category that is worth long-term investment, they acknowledge numerous challenges in the present and near-future.

More than half of this year’s study participants (55 percent) say supply chain issues worsened from January through May 2022, while just 12 percent say the supply chain improved. There is some optimism for the second half of the year, as 34 percent predict supply chain issues will improve by the end of 2022. However, 30 percent expect issues to further

Prediction for rest of 2022

Yes 73%

ARE THEY PERMANENTLY REMOVED? Some brought back, some permanently removed

78%

All items will be brought back

22%

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FOODSERVICE

Raised Prices of Foodservice Items in Past Year No, but I am considering it 6%

Yes, across the board 64%

Yes, some items

30%

worsen and 28 percent expect no change, indicating a rather mixed perspective on the future.

To cope with the present state of the supply chain, nearly three-quarters of c-stores are offering a smaller foodservice menu. Seventy-three percent of study participants say they have removed at least one food item because of supply chain issues. Among these retailers, 22 percent expect to eventually bring back all items, whereas 78 percent expect to only bring back some.

Unsurprisingly, when asked to identify their biggest obstacle to foodservice success, c-store operators overwhelmingly point to the supply chain — with 84 percent of respondents citing this, a sharp jump from the 42 percent that cited it as a major obstacle a year ago.

RAISED PRICES (NET):

94%

When asked to identify their biggest obstacle to foodservice success, c-store operators overwhelmingly point to the supply chain.

The tight labor market is also a problem, with 75 percent citing difficulty in hiring and retaining employees as an obstacle. As a small silver lining, the percentage of retailers citing lower in-store foot traffic as an obstacle fell from 36 percent last year to 22 percent this year.

Despite these roadblocks, c-store retailers are ready to put their foot on the gas and cruise to a more profitable foodservice future. Their planned category enhancements range from smaller-scale changes such as menu innovation, to larger-scale initiatives such as developing or enhancing a mobile app, expanding the kitchen, and remodeling the store.

It’s not enough to offer the same old menu items at just-good-enough quality. One retailer noted that they plan to “make changes to the menu with better-quality ingredients, sell trending flavors, [and] offer menu or flavor/ variety extensions to what we currently sell.”

Retailers also point to plans to expand takehome products, pizza and barbecue offerings; add products like scoop ice cream, rotisserie chicken, meatless items and ethnic foods; and streamline their menus to make in-store operations easier.

Operators also note that they want to add more food and beverage customization; make their foodservice areas “brighter and more functional;” and, perhaps most importantly, “listen to customers, bring in what they want.” CSN

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Sweet profits.

Naturally.

Bring natural sweetness and profitability to your C-Store Coffee Counter with N’Robed – a new kind of sugar.

Our innovative enrobing process coats sugar crystals with reb-M from fermented sugarcane – making N’Robed sugar twice as sweet with half the calories and carbs as traditional sugar.

Because customers only use ½ the amount, N’Robed Sugar Crystals deliver significant cost savings, better yields, reduced storage and many other operational benefits.

Popular flavors and creamers under the N’JOY Brand let customers make over 100 varieties of coffee “their way.”

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pre-rolled cone sales are up

20% vs. 1 year ag ago*

Category Volume

127.3mm in retail locations* Carried in

86k retail stores*

2020 20

2021 20

today it’s all about

green & clean

™

Made with Organic Hemp

Vegan

Non-GMO Hemp

Hempire Cones are made from organic hemp to deliver a clean and slow-burning experience *Source: Swisher - MSAi Database as of 4/23/22. Retail data 52 weeks ending 4/23/22.

Data reflects volume through traditional outlets.

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that does not interfere with the taste of the herbal mix. Unbleached and vegan. No wonder these are the cones everyone’s looking for.

7/6/22 10:24 AM

ADVERTORIAL

HEMP’S GROWTH:

A Key Component in the Future of Convenience A Q&A WITH NICO PETTERSSON, SWISHER DIRECTOR – BRAND STRATEGY, ADJACENT BRANDS It’s no secret that adult consumers have taken more interest in hemp products in recent years. How have you seen the sector and product demand evolve in that time?

The combustible hemp category has shown consistent growth year over year and there are no signs of that trend slowing down.

For example, the hemp segment of the wraps category is responsible for 87.5 million wraps sold in the last 52 weeks ending April 23, 2022, up 61% from the same 52-week period one year ago. This substantial growth in volume is coupled with a distribution increase of over 8%, with an additional 14,900 stores receiving hemp wraps, raising total stores receiving to about 47,400.

Additionally, the cones category continues to perform well, with volume growth up 20%, and the hemp segment continues to outperform the category, up 29%.

Two key drivers in that growth have been adult consumers’ interest in more natural products and the desire for alternatives to combustible tobacco.

Coupled with the higher margins hemp products offer due to being exempt from most tobacco tax, c-stores are increasingly considering hemp products in their planograms.

How has the Hempire product line expanded over the past five years since joining the Swisher portfolio, especially as the hemp sector continues to grow?

We started with Swisher back in 2017 with 11 different hemp rolling paper SKUs. We focused on being as strategic

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as possible and we did a lot of listening and learning. This due diligence led to the release of our Hempire Wraps product line in July 2021. This product experienced immediate success in the c-store channel as a lot of synergy and familiarity already existed between the blends of Swisher’s legacy tobacco products and our hemp wraps.

Specifically, we have already sold over 30.4 million wraps, accounting for 35% of all hemp wraps sold since the July 2021 launch. Hempire Wraps are in over 25,900 retail locations, which accounts for 55% of all stores receiving hemp wraps. This early success has led to earning several recognitions from the industry, including CSNews’ 2021 Best New Product award.

And just this year, we released Hempire Cones – a product line that

we anticipate will serve as a key growth driver moving forward. This is especially true in the short term – after a strong initial launch period, we’re already seeing our cones in 11% of all retail locations carrying cones.

Overall, the last five years have been filled with excitement and momentum, which has only grown in the past 24 months. And the most promising part is that we are only getting started.

How has the emergence of alternative raw materials in convenience stores impacted the business?

The emergence of these materials in the c-store channel has had a positive impact not only on our business, but also the hemp sector as a whole. Once again, a byproduct of the evolving tobacco regulation is the ongoing acceptance of herbals. This increase in acceptance has led to a stronger understanding and awareness of the products available across the hemp sector.

This represents a unique and significant growth opportunity for hemp-based products to become more prevalent and widely used nationwide.

What do the next five years look like for Hempire and the hemp sector?

Given the past and projected future growth of the hemp sector, we will continue to increase our presence across the U.S. and look for opportunities to expand overseas when the time and opportunity are right. We will also continue to invest in digital transformation so that our products are even more accessible to adult consumers seeking alternatives.

We will be watching the hemp sector’s growth closely as it represents a massive opportunity in its pursuit of playing a larger role in the future of convenience.

Source: MSAi Database as of 4/23/22.

Data reflects volume through traditional outlets – 52 weeks ending 4/23/22.

6/3/22 10:44 AM 7/6/22 10:25 AM

TOBACCO

Marketing Revolutionaries Advanced digital strategies, loyalty programs and more are fueling a promotional evolution in the tobacco category

By Renée M. Covino AS ALTERNATIVE tobacco products evolve, so does the marketing activity behind them.

New technologies adopted by age-restricted (AR) manufacturers have helped enable “tremendous evolution in tobacco nicotine product marketing,” according to Ryan Griffin, senior director of age-restricted brand partnerships for Atlanta-based Professional Datasolutions Inc. (PDI), a provider of enterprise management software to the convenience store industry.

Loyalty-based digital solutions, like those offered

by PDI, are creating scenarios where “everyone is winning,” Griffin said. Adult consumers are receiving more targeted promotions that meet their individual needs; retailers of any size can participate at a local level; and manufacturers are learning more about their customers through data and insights.

“The industry is committed to fostering responsible use, which makes age verification and opt-in technology that much more critical for everyone involved,” he explained. “A robust digital offer network allows the introduction of emerging options, and a chance to educate consumers as their preferences change.”

As part of their commitment to responsible use, tobacco manufacturers are innovating to create more and more products with potentially reduced risks.

“The best-in-class companies are utilizing digital strategies, appropriate social channels, retail partner systems and shared databases to not only promote products, but also to engage with and enhance the brand relationship with adult consumers. There is no magic bullet, but the most effective programs are ecosystem-centric, not transaction-based,” John Miller, president of the tobacco division for 22nd Century Group, maker of reduced-nicotine VLN Cigarettes, told Convenience Store News.

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TOBACCO

He noted, however, that the reality is many tobacco manufacturers have not made this organizational jump and “still rely on past practices while expecting different results.”

Because tobacco is a category with extreme brand loyalty, there is opportunity to learn from it and set new promotional standards for many other consumable products, too.

“As we create and refine digital marketing solutions to support the needs of consumers, retailers and manufacturers alike, we’re looking at changing how offers are done across the entire convenience store,” stated Brian Lind, PDI’s vice president of product strategy and partnerships. “Packaged beverages, confectionery and other CPGs, take note: Where we’re going in AR with personalized value delivery based on past purchase history has the potential to impact the convenience channel as a whole for the better.”

Changing With the Times Forward-thinking tobacco manufacturers are positioning their promotional programs to change with the changing times, trying to stay ahead of the everevolving adult consumer.

E-Alternative Solutions (EAS), the maker of Leap and Leap Go products, earned CSNews’ 2022 Category Captain award for e-cigarettes and vapor products, partly due to its advancements in marketing.

EAS recently expanded its Leap Smart Rewards loyalty program, which offers seasonal giveaways and sweepstakes to the most engaged Leap fans, and entices customers to come back to the store.

What’s more, it was recently announced that Leap Smart Rewards is developing market research surveys to better understand the evolving attitudes, desires and lifestyles of adult vapers.

The program is also building a catalog of prize incentives to best complement these consumers.

22nd Century Group’s VLN brand is also launching a new rewards program, VLN Rewards, with a community feature and discounts. Additionally, the company is currently working with DigiVerum, a technology company that specializes in regulated products subject to age verification, on pricing/promotional

“The best-in-class companies are utilizing digital strategies, appropriate social channels, retail partner systems and shared databases to not only promote products, but also to engage with and enhance the brand relationship with adult consumers.”

— John Miller, 22nd Century Group

activities and appropriate adult communication.

“It’s going to change how we communicate and interact with adult smokers in licensed tobacco retail stores,” Miller said, explaining that the first phase of the program is entirely optimized around a mobile device experience, including a store locator and store-specific promotions that will be executed on a weekby-week basis. The second phase will focus on transformational ways to engage with adult smokers who are struggling with transitioning from high-nicotine cigarettes to reduced-nicotine cigarettes as part of their journey to cessation.

As the first combustible cigarette authorized by the Food and Drug Administration (FDA) as a Modified Risk Tobacco Product (MRTP), VLN Cigarettes launched as part of a pilot program in 159 Circle K stores in the Chicago area. The supplier’s goal is to finalize the pilot this summer and then coordinate the next steps to launch the brand nationally.

“The learnings from the program will enhance the next phase of the launch to help adult smokers across the United States smoke less,” Miller said.

Before even stocking the shelves for the pilot program, VLN reached out to the medical community in Chicago for what would lead to a unique tobacco marketing opportunity. This April, when the pilot was nearly ready to launch, VLN’s Vice President of Regulatory Sciences John Pritchard met with representatives of the Chicago Medical Society, including the organization’s president Dr. Tariq Butt. In advance of this meeting, Pritchard provided the organization with the company’s rigorous clinical studies, so the conversation could focus on answering their questions from a scientific standpoint, Miller relayed.

After this meeting, Butt stated in the Chicago Tribune: “We can’t ignore new products that could help people smoke less.

If the FDA says this reduced-nicotine cigarette will help people smoke less, then as doctors, it’s something we need to consider for patients.”

VLN’s conversations with the Chicago Medical Society have continued. “We are optimistic about communicating to their nearly 7,000 members about how our product helps adult smokers who have been unable or unwilling to quit smoking,” said Miller. “As Dr. Butt told us, and which research supports,

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TOBACCO

many patients have not had success with cessation products like gum, lozenges or patches. Our leading claim is simply ‘helps you smoke less,’ which the FDA demanded we use. We are the first tobacco product whose slogan was created by the FDA.”

“A robust digital offer network allows the introduction of emerging options, and a chance to educate consumers as their preferences change.”

Smaller Players, Big Vision The convenience store industry’s singlestore owners and small operators are not being left out of the new tobacco marketing equation, according to PDI. The company’s PDI CStore Essentials, which is aimed at smaller operators, is one of its fastest-growing solutions.

“Retailers of all sizes are investing in digital — from mobile platforms to loyalty solutions and more — so they can fully participate in AR marketing programs to realize their complete value,” said Alvin Prasia, director of consumer engagement at PDI. The company’s tobacco loyalty solution for smaller operators upgrades their benefits to resemble those of larger retailers, such as: connecting with pointof-sale systems though a loyalty host to

— Ryan Griffin, Professional Datasolutions Inc. manage all transactions; data and reporting compliance directly with tobacco manufacturers; connecting customers’ purchase data and unique loyalty ID; enabling tobacco rebates from manufacturers through automated scan data reporting; allowing consumers to receive tobacco discounts using their phone number or alternate loyalty ID; and automatically passing on savings to consumers.

According to Miller, the ultimate goal is to get away from Big Tobacco “monopolizing space and margin for retailers of all sizes and be able to focus more on alternatives that consumers want.”

The new imperative, he said, is to “help convenience retailers pioneer this emerging category through trade incentives, world-class marketing programs and effective adult consumer communication, so adult smokers and tobacco retailers can reach their unique goals.” CSN

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CANDY & SNACKS

Ingenuity on Display The 2022 Sweets & Snacks Expo showcased the resiliency and inventiveness of the industry as it emerges from a tumultuous period

By Angela Hanson AS THE 2022 SWEETS & SNACKS EXPO celebrated its silver anniversary in May, the many innovative new offerings and category trends seen on the show floor came together to send a single message: the next 25 years may be even better.

Weathering the COVID-19 pandemic, supply chain difficulties and other challenges, the candy and snacks industry has proven it is resilient, evolving, and an evergreen source of enjoyment and indulgence for consumers.

Nearly 700 exhibitors and roughly 16,000 attendees filled 4.5 acres of candy and snack innovation at the annual event, which is hosted by the National Confectioners Association (NCA) and was held May 23-26 at Chicago's McCormick Place. A wide range of products were on display from chocolate to nonchocolate, gum, mints, and sweet and savory snacks.

"There's no better way to celebrate this milestone anniversary for the Sweets & Snacks Expo than in Chicago with the full industry on display," said John Downs, president and CEO of the National Confectioners Association.

"Throughout its history, the show has served as a launch pad for new products and companies, and brought new ideas to the forefront of the candy and snack industries. I am proud of the work we have done to make the Sweets & Snacks Expo the premier trade show for the

“Snacking is a lifestyle in the United States. This is not something that’s going away anytime soon.”

— Sally Lyons Wyatt, IRI candy and snack industries, and I can't wait to see what the next 25 years of innovation looks like from these dynamic and resilient categories."

Even during this period of inflation and rising fuel prices, which has prompted consumers to tighten their spending, candy and snacks are in a relatively strong position as many shoppers view them as affordable indulgences. Because of this, there was no lack of creativity seen from the supplier companies exhibiting on the expo floor.

What should convenience store retailers consider stocking in their stores in the near future? Some of the top trends on display at the 2022 Sweets & Snacks Expo included: Extreme Flavors Mega-spicy is a hot trend, with everything from potato chips to meat snacks to ready-to-eat popcorn adding a heavy dose of heat. Takis, which made a name for itself in the spicy snack market with its rolled tortilla chips, has extended the brand to other product types.

Meanwhile, Pringles teamed up with hot sauce-themed talk show "Hot Ones" for a new line of Scorchin' chips. Plenty of other brands are also kicking up the

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CANDY & SNACKS

This year's Sweets & Snacks Expo featured 4.5 acres of candy and snack innovation.

temperature. Intensely sweet or sour flavors were widely seen, too.

S'more S'mores Consumers won't have to make their own s'mores this summer as s'moresthemed treats are gaining popularity.

While demand is sure to be high during the summer due to the strong association with the season, the NCA expects a variety of s'mores items to remain popular throughout the year.

Clean Ingredients Candy and snack consumers haven't turned their backs on indulgence, but there is a solid and growing base of shoppers who appreciate and actively look for better-for-you products and items made with clean ingredients. The expo floor showcased cleaner versions of established treats, such as Red Vines Made Simple, which are non-GMO and use cane sugar, and packaged meat snacks made with grass-fed beef. Additionally, research from IRI indicates that while plant-based snacks do not yet appeal to the masses, they are gaining penetration and increasing sales.

"Newstalgia" Consumers want more of their favorite classic treats, but they also want more than the same old, same old. Thus, suppliers are offering them fresh and innovative twists on items they already know and love, combining the comfort of familiarity with the excitement of something new.

Package Variety Because everyone enjoys their treats differently, and consumers have changed up their snack patterns over the past few years, candy and snack suppliers are offering a wider range of package sizes. Smaller options cater to those who just want a quick, small treat, while larger units and multipacks cater to those who want to stock up or share.

THE STATE OF CANDY IN 2022 The candy category had a solid first half of 2022 and has plenty of opportunities to finish the year strong despite ongoing challenges. Currently, rising inflation means that dollar sales are outperforming unit volume, experts shared during the Sweets & Snacks Expo.

Experimentation is key for fueling candy sales — not just old favorites, but new items that catch the shopper's eye, AnneMarie Roerink, president of 210 Analytics, said during her "State of Treating" presentation at the event. Forty-three percent of consumers report "trying something new" as a reason for buying a different brand, package size or product type. This should encourage further innovation from suppliers and the addition of new items by retailers to their store shelves.

While the four major candy holidays — Valentine's Day, Easter, Halloween and Christmas — remain strong drivers of candy sales, there are many other occasions that can be profitable if retailers properly capitalize on them. This includes events like summer road trips, backyard barbecues, graduation days, and the Super Bowl.

"We have big opportunities," Roerink said. She even encourages retailers to try promoting self-invented holidays, such as S'mores Sundays, with appropriate product displays.

Roerink also shared a list of key pieces of advice that can present store operators with "a world of opportunities": • In an omnichannel world, impress consumers inside the store.

• Capitalize on continued growth in e-commerce.

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• Underscore candy's role in a happy, balanced lifestyle.

• Celebrate all the seasons and create your own.

• Narrow the gap between inspiration and purchase.

• Have fun with social media — you could be the next viral trend.

• Be transparent in all areas of sustainability.

• Proactively address economic pressure.

To decipher between longer-term trends and fleeting fads that will not persist, IRI's Dan Sadler, principal of client insights, noted that families with children have continued to be important to candy sales throughout the pandemic, but that not all families are created equal. Purchase behavior can vary significantly based on economic segmentation.

Therefore, it is important to understand the attitudes of target segments and how they shop to maximize the return on investment of promotional spend, according to Sadler. For example, "savvy shoppers" have a strong economic position and outlook, but strongly care about value, while "optimistics" are in a stable financial position and consider both price and premium quality to be relevant to them.

Convenience stores are experiencing strong quarter-over-quarter growth in candy sales, with chains outpacing independents, according to Sadler.

Increased consumer mobility and the lifting of COVID-related restrictions have contributed to this, but a transition to larger package sizes is also playing a key role in fueling c-store sales.

The better-for-you candy segment is worth keeping an eye on, too, as consumers continue to purchase items that support their dietary lifestyles, such as vegan, non-GMO and natural sweeteners. Zero sugar/no sugar added is also an area of strong growth, with year-over-year dollar sales up 132 percent as of February 2022. "It's here to stay," Sadler said.

THE STATE OF SNACKS IN 2022 Snacking remains a multiple-times-perday habit for consumers everywhere.

“Snacking is a lifestyle in the United States.

This is not something that’s going away anytime soon,” Sally Lyons Wyatt, executive vice president and practice leader at IRI,

said during her “State of Snacking” presentation at this year’s Sweets & Snacks Expo.

As of spring 2022, multipack offerings have been a notable growth driver in the category, while meat snacks stand out as a particular snack type that had "phenomenal growth across the board" in 2021, Wyatt noted. A high number of new snacking brands have also arrived and are bringing excitement to the category.

A top hazard to snack success is keeping items in stock despite supply chain challenges. As Wyatt noted, “if we don’t have products on the shelf, the consumer can’t buy them.”

Inflation or a potential recession could also harm sales, although certain snack products are less sensitive to price, such as potato chips, tortilla chips, and dried meat snacks.

Convenience stores are well positioned to continue growing snack sales based on their success in maximizing daypart sales and capitalizing on consumer preferences for snack types — 51 percent of Americans are looking for snacks that can be eaten on the go.

Wyatt pointed to three major influences on snack purchases: 74 percent of U.S. consumers are influenced by previous usage and trust of brands; 74 percent are influenced by item price; and 53 percent of consumers are influenced by product label/packaging.

At the same time, operators should consider the value of social influencers and social/digital communications. “Tik Tok has become a home for influencers,” she cited.

Sustainability, local credentials and evolved holistic health factors can also be influential — in other words, consumers are looking for more than one benefit in their snacks.

Discussing the future of snacks, PepsiCo Inc.’s Mike Gervasio, vice president of category leadership, noted that the company has shifted its approach from a category-based view to a consumerbased view. Rather than focus narrowly on traditional snacks like popcorn, pretzels and potato chips, he said retailers and suppliers should recognize that snacking occasions have expanded significantly. Depending on the format, almost anything can be a snack now, even pizza leftover from the night before.

“Consumption has changed dramatically, so we’re here to change with it,” Gervasio said.

To keep up with these evolving consumption trends, companies should consider: • Need states: What needs must be met during this snacking occasion?

• Location: Where does this occasion take place?

• Who they’re with: Is the snacker alone or with other people?

• Purchase location: Where is the item being purchased?

• Meal type: Would this be considered a snack, a small meal, etc.?

• Accompaniment: What role does the product play in the meal?

By considering these factors, companies can determine how a product is likely to fulfill a particular consumer need: uplift, indulgence, satisfaction, energy or nourishment.

“Each category is DNA within the need state,” Gervasio said. CSN J ULY

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TECHNOLOGY

Grabango allows shoppers to skip the checkout line entirely.

The Payment Evolution C-store retailers adapt to the ways consumers want to pay online, in-store and at the pump

By Tammy Mastroberte

consumers use to pay for goods and services were previously a matter of credit, debit or cash, but in today’s world of mobile phones, online banking and even cryptocurrency, payment options have become so much more.

THE METHODS

While innovation in payment has been occurring for years, it picked up speed in the last two years since the onset of the COVID-19 pandemic, especially contactless options.

“Some of the newest payment options available in convenience and fuel retail today have been heavily influenced by consumer demand based on the events of the past two years,” Gabe Olives, chief information officer at Impact 21, a retail consult-

ing firm based in Lexington, Ky., told Convenience Store News.

“During the pandemic, retailers turned their attention to serving customers in touchless, sanitary and time-saving ways.”

In February 2022, the U.S. Payments Forum and the Secure Technology Alliance had a meeting and discussed the transition to contactless since the pandemic, noting how there’s been a “significant pickup,” according to Executive Director Jason Bohrer.

“Some of the stats show a 160-percent increase year over year in contactless, and Visa said 20 percent of all transactions are now contactless, with some percentages higher in larger metropolitan areas like New York and San Francisco,” Bohrer cited.

Other innovative payment options have also begun making their way into the convenience store market — both in-store and at the pump — including mobile payment, self-checkout with artificial intelligence (AI), electronic benefits transfer (EBT), PayPal, Venmo and other peer-to-peer transactions, and cryptocurrency.

The option of Buy Now, Pay Later is making some headway as

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well, first introduced by Chevron where the company allowed consumers to pay for purchases in four installments over six weeks through Zip or Klarna.

“The big post-COVID surprise was Chevron’s Buy Now, Pay Later at the pump, but this is something available elsewhere that is coming to the c-store industry,” said Kevin Struthers, associate director of digital at W. Capra Consulting, a retail technology consulting company based in Chicago. “There is nothing being introduced in the c-store industry that is not available elsewhere, so it’s about what your consumer base is wanting to use.”

Adoption of Buy Now, Pay Later is currently infiltrating the United Kingdom and Europe, according to Elliott Winskill, head of solutions at PMC Retail, based in the United Kingdom. This option is popular with millennials because “while many are earning good salaries, capital is not always available every time they need it,” he said.

When it comes to implementing payment options in the c-store space, there are really two pieces of the puzzle that operators must look at and understand. The first is understanding what their actual customers want, and the second is finding and working with a payment processor that can provide what is needed.

“Data is the key driver in the end for understanding what your customer wants, what they are doing, and how they are making purchases because it moves past your own bias or point of view,” noted Struthers. “Use the data that comes into your store and augment it with third-party data.”

And because the payment space is evolving so quickly, a solid relationship with a payment provider is important to keep up with the changes, advised Bohrer, noting “they should be able to sift through the offerings and create a user experience that is compelling for customers.”

AI & Computer Vision Thanks to Amazon and its Amazon Go stores, artificial intelligence and computer vision have entered the retail marketplace and become more accessible.

Companies such as Standard AI and Grabango are being used by c-store retailers, including Circle K and BP America, respectively. Both solutions allow consumers to grab items off the shelves and pay with their mobile devices as they walk out of the store.

“With Grabango, once you have downloaded the app, you just walk into the store, pick up the items you want and as you exit the store, you are charged through the app,” said Gregory Franks, senior vice president of mobility and convenience at BP America, based in Warrenville, Ill. The Grabango technology is easy to retrofit into existing stores, and is currently in 10 BP stores so far, according to Franks. “It’s a one-time app setup for consumers and then once they elect to use it, they just walk in, get their items and leave,” he said.

BP is testing Mashgin's artificial intelligence powered self-checkout system at select ampm stores.

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ADVERTORIAL

CPI solutions enhance your customer experience, reduce labor costs, and increase throughput.

Done Right, Self-Checkout Yields

BIG BENEFITS It’s no secret that consumers crave self-checkout; in fact, 87% of consumers queried by Bloomberg said they prefer shopping in stores with robust self-checkout options. But introducing self-checkout does more for c-stores than delivering on customer demand. It also benefits the business—in more ways than one. CSN recently sat down with Bassam Estaitieh, business development strategic marketing director, retail at CPI, to discuss these benefits and how to maximize them.

CSN: CPI recently added end-user companies, including c-store operators, to its customer base while continuing to work with OEMs. Why? BE: We’ve found that we can provide additional value to customers by leveraging our history and expertise in cash management to advise on improving cash management practices in stores in general. Focusing on OEMs as well as retailers helps them optimize their cash

management practices, because we also have other equipment in our portfolio— like back-office cash counters and safes, so we have many ideas on how to make the whole process seamless. Regardless, we ensure that the system we sell to each operator suits its needs and is not a ‘one-size-fits-all’ configuration. We can streamline implementation and provide c-stores—and all retailers—with a complete range of support and services.

CPI develops integrated technologies that keep customers moving. Our full portfolio includes everything from self-checkout, custom kiosks, and attended lane automation to smart safes, cash processing and fourth wall revenue solutions. With 30 million devices in operation, processing 40 million cash payments and powering 4 billion transactions each week, we have everything customers need for productivity and peace of mind.

Whether you’re a local independent or a large multinational,

CSN: How does self-checkout technology benefit c-stores’ business?

BE: Automation—including self-checkout—is the future of solving business problems and reaping business benefits. Let’s start with labor and relieving pressure tied to the labor shortage. With self-checkout stations, you still need cashiers, especially to accommodate customers who are unwilling or unable to use self-checkout machines. However, you don’t need as many of them—instead of assigning a cashier to each register, you may only need one employee to monitor several self-checkout stations.

But the story goes beyond this.

Self-checkout frees up employees to spend time helping customers, contributing to a better customer experience and bottom line. Instead of assigning many of their associates to a cashier station, c-stores can ‘repurpose’ to help build relationships with customers and assist them in using self-checkout stations. According to a study by Mindtree, shoppers who interact with a sales associate are 43% more likely to purchase a product, and their transactions have 81% more value, compared to those who don’t interact with an associate. Regular customers are the core of business, and it’s important to maintain relationships with them. Removing physical barriers between staff and customers—allowing employees to step into floor space to speak with shoppers— can help with this. And of course, freed-up associates can also handle other important tasks, like stocking products and cleaning.

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ADVERTORIAL

Then, there’s optimizing the shopper experience. The better that experience, the more satisfied customers are and the greater the potential to prevent lost sales and cultivate shopper loyalty. Figures from Fidelity Payment Services indicate that 81% of consumers avoid stores where they think lines are too long, and a study

by Intel and Box Technologies shows that 41% of customers will abandon a purchase because of long checkout lines.

Self-checkout creates the opposite effect.

Self-checkout can also save c-store operators a lot of money and increase business efficiencies. Take cash-handling.

IHL Consulting says two-thirds of the cost of handling cash is the labor involved in manual cash drawer processing—opening and closing the cash drawer, counting and providing change, and reconciling the cash drawer at shift’s end. IHL also found that the average cost of cash in the c-store segment is 8.3%—versus the approximately 2% of each purchase retailers pay in credit card processing fees. And physically making deposits can be time-consuming as well as expensive.

While implementing self-checkouts means an up-front investment, the savings on cash handling and the increase in margins quickly yield a quantifiable benefit.

CSN: How can c-store operators maximize the potential of selfcheckout to overcome their business challenges?

BE: Insist on self-checkout technology that accepts cash payments along with electronic ones. If you only accept credit and debit card payments, you’re sacrificing sales. Consider the numbers: According to the Federal Reserve, 47% of transactions under $25 are paid in cash.

A study by Cardtronics found that 63% of convenience store purchases are made in cash. Self-checkout payments with loyalty card apps should also be an option.

Think about this, too. To reap a real ROI from self-checkout, you need to

C-STORE OPERATORS SHOULD CHOOSE A TECHNOLOGY PROVIDER THAT ALSO SERVES AS A TRUSTED PARTNER

automate cash. The labor savings from cash management increases ROI much more significantly than is the case with card-based transactions. With cashless-only self-checkout, c-stores can’t fully eliminate a cashier, as cash would need to be taken in the staffed POS lane, increasing lines.

Additionally, some c-store operators have been moving away from accepting cash because they assume cash transactions add to their costs and their financial challenges, when in fact inflation has significantly increased the cost associated with credit card transactions. Remember, card processing fees are a percentage of the transaction, and as transaction totals are higher because merchandise now costs more, processing fees are higher as well. Conversely, the cost of managing cash is the same no matter what—it’s becoming cheaper to handle as inflation boosts prices.

Just as important, building relationships with customers and carrying a wide assortment of products can be a challenge for c-stores. Opting not to accept cash in self-checkout lanes is unfair to customers who prefer to pay in cash, as well as to unbanked and underbanked shoppers who have no choice but to do so—and it can be a turnoff for them. Plus, taking cash at the self-checkout allows customers to get cash back, possibly eliminating the need for an in-store ATM and freeing up floor space for additional merchandise.

C-store operators should also choose a technology provider that also serves as a trusted partner. As I’ve already mentioned, we work one-on-one with c-store operators to create a self-checkout configuration that will accommodate their current and future needs, as well as to plan a streamlined implementation that will work for them. We’ve developed a suite of preventive maintenance and other services to meet individual c-store operators’ specific requirements and can recommend the right plan for each of our customers depending on what those requirements are.

Our in-house service and support team comprises more than 500 service personnel, which gives our c-store operator partners easy, quick access to help from a CPI technician. Our technicians will also visit stores on request just to ensure that retailers’ CPI equipment is in good working order. Additionally, we’re committed to resolving service and support issues within 24 hours. It’s part of our preventive maintenance agreements.

As it’s easy to see, self-checkout offers many benefits to c-store operators—and mitigates multiple business challenges— when done right. We can help.

TO LEARN MORE ABOUT CPI, http://learn.cranepi.com/cstore

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TECHNOLOGY

While BP already has traditional self-checkout in some of its locations, including its acquired Thorntons stores, the company is also testing AI-powered self-checkout with devices by Mashgin at four locations. Mashgin uses computer vision rather than scanning barcodes and allows customers to pay for their items in the traditional way.

“You walk up to the self-checkout and there is an area where you can sit products down. Then, about two feet above the checkout is a camera that takes an image of the products to recognize what they are within a split second — even food items, which can be challenging with traditional self-checkouts,” Franks explained. “It brings it up on the screen and then consumers can pay. It can be done in less than 10 seconds.”

While Amazon uses both computer vision and sensor fusion, using computer vision only is much more cost effective, according to W. Capra Consulting’s Struthers.

Computer vision is rapidly advancing and will likely remain in play at stores in the future, he predicts.

“The density or amount of cameras needed is going down as these technology companies get their algorithms better, and the adoption of this is moving faster than other technologies in the past,” said Struthers, comparing the adoption of this technology to scanning, which was patented in the 1950s, but not really used until the 1970s. “In the past, you would need a camera every eight square feet and now it’s every 20,” he added.

Amazon has gone even a step further with its Amazon One technology, whereby consumers can scan their palm as they walk through a turnstile on their way into a store and no longer have to get their phone out to pay.

“Facial recognition, holographic barcodes and ‘just walk out’ methods like Amazon One are all on the horizon,” said Olives. “Trends in consumer privacy and emerging data protection legislation will help determine which of these become mainstream.”

EBT, Crypto & Peer to Peer 7-Eleven Hawaii became the first c-store retailer to launch online EBT food stamp payments in January 2022. Wesco

“Facial recognition, holographic barcodes and ‘just walk out’ methods like Amazon One are all on the horizon. Trends in consumer privacy and emerging data protection legislation will help determine which of these become mainstream.”

— Gabe Olives, Impact 21

announced the addition of EBT to its online order platform through Vroom Delivery in March 2022. Instacart also added EBT processing as part of its platform in early 2022, along with Target and a number of grocery stores.

“With the increased traffic in c-stores spurred by shifting consumer patterns, the acceptance of EBT should be seriously considered,” said Olives. “This can be accomplished via standalone terminals or through integrations to your card processor. EBT functionality has been added by most payment processors, and the integration requires pointof-sale, payment server and back-office support to ensure compliance with program requirements, which can vary by jurisdiction.”

Another payment option already popular online and now making its way into the c-store space both online and in-store is peer-to-peer transactions available through companies like Paypal, Venmo, WePay, WhatsApp, Revolut and Zelle. These options are often more convenient for people

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“For us, it’s about really driving to innovate for consumers and understanding that they want faster and more frictionless experiences.”

— Gregory Franks, BP America

than pulling out a credit card, and since the cornerstone of the c-store industry is convenience, these payment methods are something to watch, said Struthers.

“Peer to peer payments have grown in popularity over the past five years.

The initial adoption by millennials has spread to Gen X and baby boomers,” noted Olives. “Retailers would be wise to create linkages to the plans with the highest volumes as a core group of options, and then add others selectively and as customers express interest.”

In August 2021, Giant Eagle’s GetGo Café and Market c-stores began accepting both Paypal and Venmo as payment options at its more than 400 locations, and even offered customers $10 cash back for using the options when first launched. Additionally, BP added Paypal as an option within its BP Rewards program for payment through the app for fuel, and will be looking to add more such options in the future, according to Franks.

“For us, it’s about really driving to innovate for consumers and understanding that they want faster and more frictionless experiences,” he said.

Yet another form of payment in retail and c-stores is cryptocurrency, although on a very limited basis at this point.

Some experts believe crypto will eventually become mainstream, whereas others think there are a lot of aspects to be ironed out before this occurs.

“I think it’s a very narrow segment, but

the users of cryptocurrency over-index as white males from age 20 to 44, so it goes back to realizing if this segment is important to your store,” Struthers explained. “The challenge for merchants now is this can shift quickly, so you have to be looking at it.”

Sheetz Inc. became the first c-store chain to accept the digital currency bitcoin both in-store and at the pump in May 2021. Last July, Circle K also announced an exclusive, international partnership with Bitcoin Depot to install cryptocurrency ATM kiosks at its stores across the United States and Canada. Additionally, retail technology provider NCR acquired LibertyX to give its customers the ability to accept digital currency payments across digital and physical channels.

BP is likewise testing this concept in its Thorntons stores with 200 digital cryptocurrency machines installed in February and March 2022. The chain is promoting it through marketing efforts to see if it’s something customers want from the retailer, said Franks.

One challenge right now is that cryptocurrency is very volatile. This makes it harder for retailers to work with it and accept it as payment because they can take a payment at 9 a.m. and by 9:05 a.m., it could be worth nothing, according to Winskill.

“I think it will stabilize and it will become a very valid tender across retail, but I think it has a few years,” he projected.

When all is said and done, it remains to be seen which new payment methods stick — although many are viable depending on the customer base and market. This is where c-store retailers need to start when deciding which offerings to jump into at their locations.

“Listening to customers is always a good place to start,” said Olives. “Gauging customer demand is more important over the long-term than making a decision to implement a new payment method based on economics alone.”

He also urged retailers to keep an eye on adjacent areas of retail and other industries to gauge where they should be placing their attention and effort. Consumer expectations of the c-store space or any retail merchant are often based on their “favorite aspects of the shopping experience” at other retailers they shop frequently, he said.

In addition, c-store retailers must analyze their site infrastructure to make sure it can handle fast changes so that they can easily plug and play with other vendors and options as they become available. Problems with Wi-Fi and connectivity will impact the rollout of these newer options, Winskill cautioned.

“Those who are slightly further behind in upgrading their site networking need to start here because Wi-Fi, connectivity and mobility are needed for all digital payments,” he explained. “Make sure you invest in infrastructure to have the right technology and flexibility to embrace these new payment mechanisms.” CSN

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AN EYE ON D&I

Building Trust in Diversity, Equity & Inclusion Commitments Operational success can suffer if employees cannot trust their employer to fulfill the commitments they have made

By Don Longo OVER THE PAST YEAR AND A HALF, many studies have noted workers’ concerns about their organizations’ diversity, equity and inclusion (DEI) commitments. Some believe their employers haven’t set their ambitions high enough; and, perhaps more troubling, others noted that their employers had made promises they weren’t keeping.

To understand the level of trust that workers have in their organizations’ DEI initiatives, Deloitte, a multinational advisory and consulting firm, surveyed more than 1,500 workers across U.S. regions, industry sectors, age groups, and functional roles. Conducted in August and September 2021, the survey targeted larger samples of diverse respondents to capture their perspectives on the evolution of these types of programs and the impact on their work lives and relationships with their employers.

Findings from the survey were analyzed along with other similar DEI employee studies, as well as with the perspectives of subject matter specialists in human capital, culture and purpose-related disciplines. The results were recently published in a whitepaper entitled “Build Trust in Diversity, Equity and Inclusion Commitments.”

According to the report, trust begins with making and demonstrating effort.

“When stakeholders, including workers, perceive an organization as lacking the ability to execute its DEI strategy, or the accountability to fulfill its commitments, their trust in the organization can dwindle. When promises are not kept, perceptions of organizational integrity can erode,” according to Deloitte. This can lead an organization to develop a reputation for performative activism or virtue signaling: the perception that the organization is involved in activism primarily for image enhancement without genuine commitment to back it up.

Despite these pitfalls, however, Deloitte’s survey results indicate that some organizations are learning how to earn their workers’ trust and, by and large, workers do currently trust their organizations’ and leaders’ commitments to DEI and their ability to execute successful DEI programs.

Significantly, these results are consistent across demographic groups.

Trust can be a critical factor in the relationship between a worker’s performance and operational success. Prior research indicates that if employees cannot trust their employers to fulfill the commitments they have made, their levels of engagement could decrease, and they may become more likely to withhold their best efforts.

Alternatively, if employees trust their employer’s commitments, their engagement level can increase up to 20 percent, and the likelihood they will leave their organization decreases by 87 percent. Additionally, amid

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DEI SURVEY FINDINGS

If I can’t trust my organization to fulfill its DEI commitments...

40% of total respondents

56% of total respondents would

would consider leaving

not feel comfortable recommending it as a place to work to their friends or family

84% of respondents say

80% of respondents

are confident their

that their leaders who

believe their leaders

organization will

make public statements

are sincere in their

achieve its targeted

on DEI back their

commitment to achieve

DEI outcomes

words with action

targeted outcomes

80% of respondents

Respondents who agreed or strongly agreed included: Ethnically or racially diverse 80%

Respondents who agreed or strongly agreed included:

84%

78%

86%

81%

LGBTQIA+ 79%

45% of respondents aged 18-44

45% of ethnically or racially diverse

54% of respondents in upper

respondents

management roles

62% of respondents in upper

57% of LGBTQIA+ respondents

management roles 63% of LGBTQIA+ respondents

Agender, female, gender-nonconforming, and nonbinary 76%

80%

77%

the “Great Resignation,” there has been a notable shift in workers’ feelings about the role of work in their lives and increasing expectations that employers share and reflect their workers’ values, including commitments to DEI. “What we’ve found in our research is encouraging.

Workers, including those who as part of our survey demographic questions self-identified as members of diverse populations, currently trust their employers’ DEI efforts. But our research also shows that it would be a mistake to take this trust for granted, and that organizations may already be at risk of drifting off course from the commitments they made,” stated Deloitte.

Failing to meet DEI commitments can damage worker trust. Developing strategies to stay true to the commitments they made can help organizations create long-lasting, successful DEI programs, contributing to trust within their workforce.

Deloitte’s paper explains its definitions for trust, diversity, equity and inclusion as: • Trust is the foundation of a meaningful relationship

between an organization and its stakeholders, at both the individual and organizational levels.

• Diversity is the characteristics with which we are born and gain through experience, both seen and unseen, that make us different and similar.

• Equity is the outcome of diversity, inclusion and anti-oppression actions, wherein all people have fair access, opportunity, resources and power to thrive, with consideration for and elimination of historical and systemic barriers and privileges that cause oppression.

• Inclusion is the actions taken to understand, embrace and leverage the unique strengths and facets of identity for all individuals so that all feel welcomed, valued and supported.

The report goes on to outline the consequences of not following through on DEI commitments, and offers ideas from study respondents on how an organization can build trusted DEI programs over time and who within the organization should be accountable for different elements of a successful program. The full report can be viewed at deloitte.com/us/en.html.

The firm concludes by reminding readers that DEI is a journey without a finish line. CSN

Convenience Store News has launched a new industrywide initiative to facilitate engagement among all stakeholders in the convenience channel around diversity and inclusion, with underwriting support from Altria Group Distribution Co., The Coca-Cola Co., The Hershey Co. and WorkJam. The mission is to show retailers the business case for diversity and inclusion through education and the sharing of best practices.

CSNews appreciates the support of our 2022 Diversity & Inclusion Advisory Board: • • • • • •

Carlton Austin, The Coca-Cola Co. Treasa Bowers, 7-Eleven Inc. Rahim Budhwani, Encore Franchises LLC Emil Cantrell, Imperial Trading Co. Derek Gaskins, Yesway Inc. Elisa Goria, Alimentation Couche-Tard Inc./Circle K

• • • • • •

Danielle Holloway, Altria Group Distribution Co. Steven Kramer, WorkJam Lonnie McQuirter, 36 Lyn Refuel Station Alicia Petross, The Hershey Co. Tonya Robinson, Thorntons LLC Heather Schott, Kum & Go LC

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STORE SPOTLIGHT

Showing Off New Tricks Sporting a canine logo, Curby’s Express Market aims to be a new breed of convenience

By Renée M. Covino YOU DON’T have

At a Glance Curby’s Express Market Opened: February 2022 Location: Lubbock, Texas Size: 4,000 square feet Unique features: A progressive market-style shopping experience; double-lane covered drive-thru with everything in the store available at the window; proprietary madeto-order energy drinks called Zoomies; a 20-foot self-serve tea bar; sandwich melts made on toasted brioche bread

to be a dog lover to recognize the friendly appeal of a happy canine with his head hanging out the window of a moving car. This is the logo of Curby’s Express Market, which opened its first store in Lubbock, Texas, in February.

“We consider it the next generation of c-store retailing,” Tony Sparks, head of Customer Wow for Curby’s, said of the “progressive” concept that had been in the works by its Dallas-based commercial developer parent company for three years.

And yes, Sparks recognizes that his job title “tells you right there, this is different.”

What most convenience store chains have in common, he said, is a half quick-service restaurant, half traditional consumer packaged goods approach. But this is not what Curby’s Express Market is modeled after.

“We wanted to go back to a smallformat grocery idea, like how Wawa

started — and with no fuel,” Sparks explained. “We’re also going for more of a progressive, innovative customer experience.”

He highlighted four elements that are “super important” to the Curby’s concept: A modern-market shopping experience; 2. A protected drive-thru emphasizing speed of service; 3. A fresh, made-to-order primary menu of melts and flatbreads; and 4. Made-to-order beverages, including energy drinks and a tea bar.

1.

This core quad captures the changing nature of consumers today and speaks to what they are now demanding from convenience retail, according to Sparks.

Something Different Curby’s Express Market is homing in on a different experience for customers than they would get from a traditional convenience store. “We’re using that word

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STORE SPOTLIGHT

‘market’ intentionally. We’re not tethered to the ugliness of fuel,” Sparks said.

Design-wise, Curby’s doesn’t use linear gondolas. Instead, it uses four-sided shelving that Sparks refers to as “pods.”

When customers enter the store, they see wine, produce, flowers and specialty bread in a unique freshness cube.

“They already know something is different from that of a typical c-store,” he said.

Every part of the business has some design element to it, he noted. For instance, the open-concept store features an angled roof, and the glass that divides the tea bar lights up in panels, a feature the retailer replicated from a movie theater.

“We’re not ashamed of replication,” he told Convenience Store News. “We looked at tons of food and beverage concepts.

We took inspiration from a lot of different retailers and brought it into this concept.”

Curby’s double-lane, covered, temperature-modified drive-thru — where anything in the store can be purchased without ever leaving the car — is “a big piece of what this concept is about,” according to Sparks, who admitted the goal was to replicate the customer experience at a Chick-fil-A drive-thru.

Like the popular fast-food chain, Curby’s drive-thru is staffed by order-takers who greet customers with a tablet and paper menus. Customers pull around the covered bay area and up to a window to receive their orders.

Curby’s offers everything in the store at its double-lane, covered, temperature-modified drive-thru.

Finding a Foodservice Niche Working with an industry food consultant, Curby’s landed on its niche in the foodservice space: sandwich melts for all dayparts. “What’s great about them is we’re limited only by the imagination for melt ideas,” Sparks said.

Options include the Cinnamon Toast Sausage Egg & Cheese Melt, Grown Up Grilled Cheese Melt, Brisket Melt, Caprese Melt, and Buffalo Fried Chicken Melt.

Made on toasted brioche bread, the melts are its flagship food line, but Curby’s also serves flatbread pizza “similar to Panera,” according to Sparks. Additionally, the company partners with Johnsonville to sell kolaches (flavored sausages wrapped in a bun).

Curby’s doesn’t offer “grab-and-go food.” Rather, the retailer features its menu items “very deli style,” where all the food is presented behind glass, and everything is made in front of the customers, Sparks explained. This approach helps foster a personal connection between customers and employees.

On the beverage side, Curby’s considers itself a more modern Starbucks; a progressive coffeehouse “with a younger vibe that’s more fun and inviting,” he said.

While there are coffee classics on the menu like Americano, cappuccino, Café Latte, espresso (served hot or iced) and freshbrewed coffee, more exotic creations boast names such as Old Yeller (espresso blended with caramel, vanilla, breve, and topped with whipped cream) and White Fang (espresso blended with white chocolate, Irish cream, breve, and topped with whipped cream).

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Made-to-order food and beverages are a core component of the Curby’s experience.

Zoomies, which refers to those frenetic explosions of energy that dogs have on occasion, is the name of Curby’s colorfully vibrant line of made-to-order energy drinks. Customers can choose the Sparky, Curby’s Tail Chaser, Dog Days, and Pretty Paws Zoomies.

Using stacked flavors/colors, as many as three in a beverage, makes for a “beautiful” presentation, Sparks said, pointing out that Zoomies provide the most stimulant per ounce of anything you can buy, and they are all natural and sugar-free. “They’re super on-trend, especially here in the Dallas area,” he said.

Curby’s also offers a 20-foot self-serve tea bar, with 18 flavors of tea in sugar and sugar-free versions served from fountain heads. “It’s very high-quality loose-leaf tea that we’re brewing every minute of every day,” he said. “We thought it would do well, but it’s exceeding what we thought.

We hired people to just brew tea; that’s how big it is.”

Sparks guesstimates that 200 drive-thru transactions a day include its tea.

Curby’s tea is sold in gallon jugs as well.

“We brew it and bottle it and sell it in our open-air case with the Curby’s name,” he added.

Multiplying Soon Curby’s will not be a lone dog for long.

Two more stores are slated to open in Lubbock before the end of this year. “We will run these three for a time to prove the concept and figure out what we’re doing wrong — or not right enough,” Sparks relayed.

Even though its first location has only been open since February, Curby’s has already taken note of some areas that can be tweaked. For instance, it was initially prepping and holding food, but has since stopped that because of quality issues.

The retailer also wants to find a better, fully automatic espresso machine. And it plans to move the tea bar in future locations to the food side of the store, rather than the packaged goods side where it is now. “We wanted a balance [of consumables] on the left and right but in hindsight, it makes more sense to put it with the food,” Sparks said.

Once the concept has been finetuned, the company plans to acquire/revamp locations simultaneously, and is aiming to have a total of 10 stores in its first 24-36 months.

“The ambition is to make this the Shake Shack of convenience retailing. The expectation is for us to grow rapidly once we finish up proof of concept and work out the bugs,” said Sparks. CSN J ULY

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Credit Card Processing / Merchant Services

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87

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CLASSIFIEDS

Services

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CLASSIFIEDS

Credit Card Processing / Merchant Services

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2022

Convenience Store News

89

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CLASSIFIEDS

Air Vacs

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Credit Card Processing / Merchant Services

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91

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CLASSIFIEDS

ATM’s

ATM’s

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CLASSIFIEDS

Plastics

Air Vacs

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93

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Equipment/Supplies

C-store Services

Spill Response Solutions

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CLASSIFIEDS

ATMs

Help Wanted

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Convenience Store News

95

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CLASSIFIEDS

Age Verifier

ATM’s

Credit Card Processing

Petroleum/Equiment

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CLASSIFIEDS

Sunglasses

POS/ Equipment

ADINDEX Wholesale Refrigeration 22nd Century Group Inc...................61

ITG Brands...........................................47

Altria Group Distribution.................2

J&J Snack Foods Corp......................67

BelGioioso Cheese, Inc.....................43

Krispy Krunchy Chicken...................51

BIC USA Inc.........................................7

Liggett Vector Brands......................65

Brinks INC............................................37

MPACT Beverage...............................27

Calico Brands, Inc..............................16

Petrosoft LLC .....................................35

Chester’s International.....................45

Premier Manufacturing.....................21

Chevron Corporation........................13

Reynolds American Trade Marketing Services............................28–31

Crane Payment Innovations............72–73 Diebold Nixdorf Incorporated........40–41 E-Alternative Solutions....................15 Federal Industries Inc.......................20 Forte Products....................................18 Freezing Point LLC Frazil...............1 Furmano Foods..................................17 GlaxoSmithKline Consumer Health Care......................11, 63 Hunt Brothers Pizza LLC .................19

8550 W. Bryn Mawr Ave, Suite 200, Chicago, IL 60631 Phone 773-992-4450 Fax 773-992-4455 www.ensembleiq.com

Sugar Foods Corporation................57 Swedish Match North America LLC 9, 25, 79, 100 Swisher International, Inc................5, 58–59 TransAct Technologies Inc...............55 Tyson Foods........................................49 Uno Foods...........................................53 Universal Merchant Services...........Outsert

Invenco.................................................22–23

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SEB Professional................................39

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INSIDE THE CONSUMER MIND

Charged Up More convenience store customers are considering the switch to an electric vehicle While only one in 10 convenience store customers currently owns an electric vehicle, more are considering making the switch, especially amid the record-high gas prices of late. The 2022 Convenience Store News Realities of the Aisle Study, which surveyed 1,500-plus consumers who shop a c-store at least once a month, showed an increase in the percentage of c-store shoppers who say they’re extremely/very likely to consider purchasing an electric vehicle within the next two to three years, as well an increase among those who say they’re somewhat likely.

10% of U.S. convenience store shoppers own a plug-in electric vehicle vs.

9% in 2021.

Likelihood to Consider Purchasing an Electric Vehicle in Next 2-3 Years Extremely/ very likely 16%

Somewhat likely 23%

Not at all/not very likely 61%

+4 points +3 points -8 points YOY

YOY

YOY

86% of these current owners indicate that they charge their electric vehicles at least some of the time when making convenience store visits.

70% Among c-shoppers who currently own an electric vehicle, 70% say it is extremely/very important to them that a convenience store has a charging station for plug-in electric vehicles.

98 Convenience Store News CSNEWS.com

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7/5/22 2:38 PM

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