Volume 29 • Number 1 • JANUARY 2018 Business Solutions for Retail Decision Makers
® A
H A R B O R COMMUNICATIONS
P U B L I C AT I O N
C-Stores Meeting
New Fuel Demands Whether it’s teaming with Tesla to install charging stations or integrating alternative fuel solutions, retailers are part of a changing transportation landscape.
INSIDE: Foodservice Favorites Radiate 28 New Cigarette Regulations 32 The 2018 Social Media Awards 46 January Cover copy.indd 1
12/22/17 2:28 PM
Crisp Menthol Flavor. Cool To The Finish.
COMING FEB 2018 Introducing the New Reseal Pack available only on Marlboro Ice. It’s designed to be durable and crush resistant while eliminating the need to remove foil when opening. The packaging also provides a neater, more organized appearance and helps contain cigarettes and loose tobacco. Talk to your Altria Rep or wholesaler to add Marlboro Ice to your product mix.
Š Philip Morris USA 2017 | For trade purposes only.
CSD_Ad_Template.indd 2 7305 Marlboro Ice_CSD_MECH.indd 1
12/21/17 9:06 AM 11/20/17 11:56 AM
OPERATIONS
LOSS PREVENTION
REDEPLOY LABOR FOR AN IMPROVED SHOPPING EXPERIENCE
REDUCE CASH LOSSES BY UP TO 90%
REAL-TIME CASH RECONCILIATION AT THE POS
DATA ANALYTICS
SECURITY ALERTS ON CASH TRANSACTION ERRORS
TREASURY
REDUCE CIT FEES AND REINVEST YOUR ‘DEAD’ CASH
APG’s SMARTtill® Solution Gulfcoast Storekeeper™ Volumatic CounterCache intelligent® (CCi) information@gulfcoastsoftware.com www.gulfcoastsoftware.com | 727.449.2296
CSD_Ad_Template.indd 11
12/21/17 9:18 AM
January 2018
Vol. 28 • No. 1
CONTENTS 22 COVER STORY
C-Stores Meeting New Fuel Demands
Whether it’s teaming with Tesla to install charging stations or integrating alternative fuel solutions, retailers are part of a changing transportation marketplace.
EDITOR'S MEMO
OPERATIONS
8 Embrace
54 Plugging
New Opportunities in the New Year
FRONT END 10 Profile:
Quicklee’s Expands with Travel Center 16 CSD’s Quick Bites 18 Industry News 19 Tax Reform to Benefit Retailers 20 Executive Corner: Delving Into Industry Issues 21 Convenience Store Solutions: New Year Brings Hope
Into Alternative Payments 58 Wages Are All the Rage BACK END 60 Product
Showcase Stop 65 Ad Index 66 Industry Perspectives: Ransom Ware Threatens Marketers 64 Quick
FOODSERVICE 28 Foodservice
28
Favorites Radiate
CATEGORY MANAGEMENT 32 New
Year = New Cigarette Regulations Powers Snack Sales 40 Energy Drinks Show Vitality 44 Bottling Better Beer Sales 36 Protein
10
46
TECHNOLOGY 46 The
2018 Social Media Awards A Better Path to Inventorying
50 Column:
4 Convenience Store Decisions January 2018
04_TOC.indd 4
44 cstoredecisions.com
12/28/17 12:27 PM
CSP 2018 Template.indd 1
CSD_Ad_Template.indd 6
12/15/17 1:25 PM
12/21/17 9:13 AM
THE CSD GROUP Convenience Store Decisions • Leading Through Innovation A H A R B O R C O M M U N I C AT I O N S L L C C O .
Convenience Store Decisions
EDITORIAL
Vice President, Editor-in-Chief John Lofstock jlofstock@csdecisions.com Senior Editor David Bennett dbennett@csdecisions.com Senior Editor/News & Online Erin Del Conte edelconte@csdecisions.com Associate Editor Howard Riell hriell@csdecisions.com Associate Editor Marilyn Odesser-Torpey mot@csdecisions.com
EDITORIAL ADVISORY BOARD
Robert Buhler, President and CEO Open Pantry Food Marts Pleasant Prairie, Wis. Jim Callahan, Director of Marketing (Retired) Geo. H. Green Oil Inc. • Fairburn, Ga.
Contributing Editors Anne Baye Ericksen Brad Perkins Jeff Steele Lisa White Columnists Jim Callahan Ed Collupy Mark Radosevich Creative Director Erin Canetta ecanetta@csdecisions.com Production Manager Barbra Martin bmartin@csdecisions.com Webmaster Dave Miyares dmiyares@csdecisions.com NATIONAL ADVISORY GROUP BOARD
Patrick J. Lewis, Managing Partner Oasis Stop 'N Go • Twin Falls, Idaho Scott Zaremba, President and CEO Zarco 66 • Lawrence, Kan.
Peter Tamburro, Board Chairman Clifford Fuel Co. • Utica, N.Y. Mary Banmiller, Director of Retail Operations Warrenton Oil Inc. • Truesdale, Mo. Greg Ehrlich, Chief Operating Officer Beck Suppliers Inc. • Freemont, Ohio Doug Galli, Vice President, General Manager Reid Stores Inc./Crosby’s • Brockport, N.Y. Joe Hamza, Chief Operating Officer Nouria Energy Corp • Worcester, Mass. Brent Mouton, President and CEO Hit-n-Run Food Stores • Lafayette, La. Robert O’Connor, President and CEO O’Connor Petroleum Co. • Hales Corners, Wis. Vernon Young, President and CEO Young Oil Co. • Piedmont, Ala.
OFFICE LOCATIONS
SUBSCRIPTION INQUIRIES
Brad Call, President Colour Du Jour • Salt Lake City Greg Lorance, Dispensed Category Manager Cumberland Farms • Framingham, Mass. Kyle McKeen, President and CEO Alon Brands • Dallas Billy Milam, President RaceTrac Petroleum Inc. • Atlanta
Headquarters 19111 Detroit Rd., Ste 201 Rocky River, OH 44116 P: 440-250-1583 • F: 440-333-1892 Editorial and NAG 1420 Queen Anne Rd., Suite 4 Teaneck, NJ 07666 (201) 837-2177 http://twitter.com/CStoreDecisions www.facebook.com/CStoreDecisions www.linkedin.com/CStoreDecisions 6 Convenience Store Decisions January 2018
06_Masthead_0118.indd 6
To enter, change or cancel a subscription: Web (fastest service): www.ezsub.com/csd Phone: (844) 862-9286 (U.S. only, toll-free) Fax: (440) 333-1892 Mail: Convenience Store Decisions P.O. Box 986, Levittown, PA 19058 Copyright 2018, Harbor Communications, LLC
ADVERTISING
President, Harbor Communications Dan Ramella dramella@csdecisions.com 440-250-1583 Group Publisher Tom McIntyre tmcintyre@csdecisions.com 440-250-1583 Publisher John Petersen jpetersen@csdecisions.com 440-250-1583 Vice President, Sales Tony Bolla tbolla@csdecisions.com 773-267-1897
YEO BOARD OF DIRECTORS Jared Sturtevant, Board Chairman CST Brands, Director of Marketing
Alex Olympidis, Board Vice Chairman Family Express Corp., Director of Operations Alli Bixler, Director of Special Projects The Kent Cos. Sharif Jamal, Corporate Training Manager Chestnut Petroleum Distributors Lindsay Lyden, Vice President, Development Truenorth Energy Dana Moloney, Strategic Workforce Partner Warrenton Oil Co. Jeremie Myhren, Vice President, IT Road Ranger Bart Stransky, Executive Director, Merchandising RaceTrac Petroleum Inc.
Convenience Store Decisions is a three-time winner of the Neal Award, the American Business Press’s highest recognition of editorial excellence.
Convenience Store Decisions (ISSN 1054-7797) is published monthly by Harbor Communications, LLC., 19111 Detroit Rd., Suite 201, Rocky River, OH 44116, for petroleum company and convenience store operators, owners, managers. Qualified U.S. subscribers receive Convenience Store Decisions at no charge. For others, the cost is $80 a year in the U.S. and Possessions, $95 in Canada, and $150 in all other countries. Single copies are available at $9 each in the U.S. and Possessions, $10 each in Canada and $13 in all other countries. The annual Sales Trend Handbook can be purchased for $75. Periodicals postage paid at Cleveland, OH, and additional mailing offices. POSTMASTER: Send address changes to Convenience Store Decisions, P.O. Box 986, Levittown, PA 19058. GST #R126431964, Canadian Publication Sales Agreement No: #40026880. Materials in this publication must not be reproduced in any form without written permission of the publisher. Direct requests to: Editorial Department, 1420 Queen Ann Rd., Teaneck, Suite 4, NJ 07666. Phone: (917) 601-9623. Copyright 2016, Harbor Communications LLC. All rights reserved. Circulation audited by Business Publications Audit of Circulation, Inc.
cstoredecisions.com
12/22/17 2:40 PM
CSP 2018 Template.indd 1
CSD_Ad_Template.indd 7
12/15/17 1:23 PM
12/21/17 9:13 AM
Edit Memo
Embrace New Opportunities in the New Year
T
If you have any questions about the redesign or have suggestions for future issues, please don’t hesitate to contact me at jlofstock@csdecisions.com.
HERE’S NO DOUBT THAT 2017 will be regarded The average store selling fuel has as one of the most challenging years ever for the around 1,100 customers per day. The industry has worked hard to convenience store and petroleum industry. While the economy has strengthened, the stock market ral- build this loyalty, yet the unintenlied and unemployment fell to a 15-year low, the conve- tional by-product of this success is nience store industry was hit hard by a host of local and that lawmakers have noticed, many of whom view c-stores as a cash cow federal regulations that threaten sales and profits. What’s more concerning is that these regulations span to bankroll their lofty, and often unso many different areas forcing retailers to engage in a necessary, regulations. In short, 2018 will be a critical multisided battle often against lawmakers who care very election year for convenience store little about their financial wellbeing. Whether it is menu labeling, restrictions on tobacco, owners on crucial issues ranging increasing the minimum wage, overtime regulations, from wage hikes and tobacco regulations to debit card fees and fuel standards. Where you stand on the issues is not nearly as important as 2018 will be a critical election year for convenience your active support of the industry’s grassstore owners on crucial issues ranging from wage roots efforts to promote legislation that is in the best interest of convenience store hikes and tobacco regulations to debit card fees and owners. The stakes are much too high to fuel standards. sit this one out. It’s time to let your voice be heard. SNAP, transportation and infrastructure funding or swipe fees, convenience stores cannot afford to give up the New Year, New Design With the start of the New Year, Convenience Store fight. In fact, battling government at all levels has become as much a part of the convenience store business Decisions is proud to launch a redesign of our editorial pages. Working collaboratively with the editorial team, as selling snacks and beverages. To ensure that the industry is successful in the future, Creative Director Erin Canetta designed a distinct visual retailers must embrace advocacy. Against the odds, con- identity for each section of the magazine and adopted venience store and petroleum marketers have gained a new system of grids, fonts and visual devices to reflect so much over the past decade. It stands to reason then the highly modern sensibility of the magazine. The new design is cleaner with an easier-to-read font that the industry also has so much to lose by this recent spate of legislation that seems aimed at backing market- and extra white space to make the pages more visually appealing. We’ve also rebranded and redesigned the ers into a corner. Fortunately, the convenience store industry has ma- new products section to reflect how important product tured through the years and excels at meeting the cus- innovation is to c-store sales. In addition to upgrading our look, we are committed tomers’ needs. Consumer loyalty and repeat visits are by-products of the industry’s outstanding service and to using more infographics, professional photography, recommitment to convenience. Loyalty to the c-stores tailer guest columns and incorporating social media to enis evident in the numbers. According to NACS, con- sure that retailers can make their voices heard in real time venience stores serve 160 million customers per day— as they react to crucial issues affecting their businesses. In short, our goal is to create a platform that helps you that’s more than 58 billion customers annually—nearly become a more successful operator and is a trusted part6% of the total U.S. economy. Convenience stores aren’t just a part of American cul- ner in your quest to find useful industry information—no ture, they are central to our daily lives. There are 155,000 ego, no pretense. c-stores in the U.S., or one store for about every 2,100 people. The average time it takes a customer to walk in, purchase an item and depart is between 3 to 4 minutes.
“
”
8 Convenience Store Decisions January 2018
08_Jan_EditMemo.indd 8
cstoredecisions.com
12/28/17 2:17 PM
CSP 2018 Template.indd 1
CSD_Ad_Template.indd 8
12/15/17 1:28 PM
12/21/17 9:14 AM
FRONTEND
Profile
Quicklee’s Expands with Travel Center
Avon, N.Y.-based chain prepares for rapid growth in 2018, with planned acquisitions, remodels and more. By Erin Del Conte, Senior Editor
P
EMM INC.’S QUICKLEE’S CONVENIENCE STORES, a 14-store chain in upstate New York, has its eye on expansion, is aggressively remodeling its fleet of stores and recently debuted a new 11,500-square-foot travel center complete with two c-stores, amenities for professional drivers and a food court. LAND AHOY Avon, N.Y.-based Quicklee’s launched in 1995 when Peter Bruckel saw a parcel of land available next to his bridge-painting company’s office, near an interstate highway in Avon, N.Y. He knew the property would make an ideal location for a gas station, and decided to purchase the land, start PEMM LLC, build a store and try his hand at the convenience store business—all in short order. Today, Bruckel runs several businesses. In addition to the industrial bridge-painting company and c10 Convenience Store Decisions January 2018
10-14_Profile.indd 10
store business, he runs adult care facilities and a senior apartment complex. Bruckel and his four children are all owners and some of his children work in various areas of the business. On the c-store side, Bruckel’s son-in-law, Ken Perelli, serves as vice president. A few years after the Avon, N.Y. site opened, Bruckel built a second c-store in Geneseo, N.Y., about five miles outside of Avon. Over the next two years he built a station in Webster, N.Y. and Henrietta, N.Y. Then, he began to acquire stores— three, in 2010, five in 2013 and so on, bringing the chain to the 14 locations it has today. TRAVEL CENTER EXPANSION Twenty-two years after the Avon location was constructed, Quicklee’s did a raze-and-rebuild, turning the original location into a travel center. The new Avon, N.Y. truckstop
The food court area of Quicklee’s travel center features a three-dimensional mural Dfab created using a collage of historical photos from the four neighboring communities taken during the late 1800s and early 1900s.
opened in June of 2017, following a 14-month planning process from concept to approval. Construction began in September 2016. “We were seeing increased truck traffic along Highway 390, and more trucks parked in rest stops and on the side of the road,” said Perelli. “We owned 20 existing acres behind the gas station and saw an opportunity to build a bigger travel facility that would accommodate professional drivers, as well as our local business clientele.” The previous Quicklee’s spanned
cstoredecisions.com
12/22/17 2:44 PM
Little Debbie products are the sales leader*. Let us break this down for you – 55 Little Debbie products are purchased every second of every day. Plus, when your customers stop by for a beverage, they’ll appreciate that you have Little Debbie snacks to go along with their drink. To learn more, call (800) 315-6208 or visit LittleDebbieCStore.com. Little Debbie products are sold DSD by wholesale distributors. *Nielsen ScanTrack, Convenience Stores channel of trade, 52 weeks ending July 29, 2017.
CSD_Ad_Template.indd 15
12/21/17 9:21 AM
FRONTEND
Profile
The travel center includes a traditional c-store with a Dunkin’ Donuts, a food court with seating for 50, a Calabresella’s, a truckstop c-store, laundry and shower facilities, among other amenities.
DESIGNING FOR SUCCESS Quicklee’s looked to long-time design partner Dfab, based in Michigan,
to create the design elements for the new travel stop. Quicklee’s first partnered with Dfab four years ago when it was first rolling out the Quicklee’s banner. While its gas is almost exclusively branded Mobil, for its first 18 years, Quicklee’s didn’t have a c-store brand. When it introduced the Quicklee’s name in 2013, Dfab developed the branded design elements, carrying Quicklee’s “clock ticker” logo into the store via wallpaper, wall stenciling and window decals that give the appearance of etched glass. Dfab also created the chain’s color palette with blues and greens from the logo mixed with white and grays, and an elm wood featured prominently throughout the store. It also built the chain’s catch phrase, “fast, clean, friendly,” into the design. Since then, Quicklee’s has been actively remodeling all of its locations to the new design. When the opportunity to revamp its original site into a travel center appeared, it turned to Dfab to help carry that design into the travel center. “If you imagine the building being broken up into thirds, the left side features a traditional c-store with a Dunkin’ Donuts. The middle third is actually a food court with seating for 50, and the right side features the Calabresella’s and the truck-stop convenience store. The far side of the truck
12 Convenience Store Decisions January 2018
2.5 acres with a 3,500-square-foot cstore featuring a Dunkin’ Donuts, as well as a separate car wash. “We tore down the 3,500-square-foot building and its existing gas canopy, which had five pumps total,” Perelli said. Quicklee’s expanded the property by an additional six acres, constructing a new, 11,500-square-foot building. The forecourt includes six diesel, non-ethanol pumps and six highspeed diesel and DEF (diesel exhaust fluid) dispensers out back. The car wash remained, and the chain added a 7,500-square-foot truck maintenance building and a CAT scale. By converting the property to a travel center, Quicklee’s was able to offer its local community a bigger, allinclusive c-store. “In the main building area we have two convenience stores—each about 2,500 square feet. One has traditional convenience items. Then we have a truck-specific convenience store. We still have Dunkin’ Donuts and we have a New York-style deli called Calabresella’s,” Perelli said. Calabresella’s serves both hot and cold foods, including wraps, pasta and potato salads, specialty Italian sodas, and also sells meats and cheeses by the pound.
10-14_Profile.indd 12
stop features a laundry facility, changing area, four private showers and restrooms with heated floors,” Perelli said. The site can easily accommodate 100 guests within a few minutes. The food court features a proprietary food area called the “Chill and Fill,” as well as a fireplace, a large screen TV, leather chairs and sofas. Food options include a soda fountain, a soup bar, a pizza station, chicken dinner, chicken fingers, pretzel rolls, corn dogs, hot dogs, mashed potatoes and mac n cheese. Grab-and-go options also abound, including salads, puddings, string cheese and cold-cut sandwiches. Quicklee’s went to Dfab with a blank slate on the food court design. “They built in lighting elements, hanging elements, cabinets, counter tops, floor tile, wall décor, wallpaper, signage, way finding,” Perelli said. Drum lights of various sizes feature the chain’s blue-and- green color scheme and hang from the food court’s 16foot ceiling. All interior lights are LED. Wood beams jut from the ceiling and walls for added flare. While drivers eat, they can enjoy a 20-foot by 16-foot three-dimensional mural Dfab created using a collage of historical photos from the four neighboring communities taken during the late 1800s and early 1900s. “Avon was known for its locomotive, and this was a travel destination for the steamers. It’s also next to Conesus Lake, which used to have large steam ferry boats,” he said. Both the ferry and locomotive are featured prominently in the mural. Quicklee’s also partnered with a Rochester, N.Y.-based digital sign
cstoredecisions.com
12/22/17 2:44 PM
SMOOTH TASTE. UNMISTAKABLE AROMA. NEW Ultra Smooth Let the unique taste of Djarum Black Ultra Smooth strengthen your tobacco line. Its smooth, easy draw made of the ďŹ nest tobacco provides a new and exciting smoking experience.
www.djarumcigar.com WARNING: This product can expose you to chemicals including tobacco smoke, which is known to the State of California to cause cancer and birth defects or other reproductive harm. For more information go to www.P65Warnings.ca.gov.
Ask your Kretek representative for details at salesinfo@kretek.com
WARNING: Smoking cigars causes lung cancer, heart disease, and emphysema, and may complicate pregnancy.
CSD_Ad_Template.indd 12
12/21/17 9:19 AM
FRONTEND
Profile
company, Empire Digital to created a touchscreen display of the mural photos, so customers can learn the history behind each photo. On the c-store side, signs made of porous corrugated steel announce
each cooler section, with LEDs backlighting the wall behind each sign. “You get like a perforated lighting coming through the cooler signage which is a really neat element,” Perelli said.
Introducing LSI’s all new...
Scottsdale® Vertex
TM
The Intersection of Performance and Technology Top-Performing LED Canopy Fixture Multiple Distributions using Precision Silicone Optics
Quicklee’s partners with Dunkin’ Donuts at eight locations and is now partnering with a new food chain to introduce Mexican food to some of its smaller convenience stores.
Low Profile Design Simple Installation Many Lumen Packages
Photocell and Motion Sensors Field Serviceable Driver LSI Support Team of Lighting Placement Experts Advanced Wireless Controls
LSI Industries... Pioneering Canopy Lighting since 1976 Learn more about the Scottsdale® VertexTM online or by contacting your LSI representative today!
www.lsi-industries.com/vertex 14 Convenience Store Decisions January 2018
10-14_Profile.indd 14
FUTURE OUTLOOK Quicklee’s brings foodservice into its locations via eight Dunkin’ Donuts, and a local pizza chain, Mozzeroni, at one location. It is currently working with a new food chain to roll out Mexican food to some of its smaller locations. Quicklee’s implemented a loyalty program in November hosted and designed by Points to Partners and is working with brand specialist company, Archer Communication, to create a website at quicklees.com, as well as develop the chain’s social media presence. Six stores have been reimaged thus far using Dfab’s design, and Quicklee’s is continuing to roll out the design to all locations. Meanwhile, it’s prepared to grow in store count too. Quicklee’s is currently considering two pieces of raw land for ground-up builds, and is looking at small chain acquisitions. The chain is currently under contract to acquire three locations in the new year. “We’ll have 17 locations by midJanuary,” Perelli said. “I would like to be at 20 locations by the end of 2018, ideally.” • cstoredecisions.com
12/22/17 2:45 PM
CSD_Ad_Template.indd 21
12/21/17 10:07 AM
QuickBites Are You Connecting With your Community?
Retailers, that reflect the communities they serve, appeal more to today’s shoppers. “Localism” is a dominant theme to help communities feel connected. Source: IDDBA’s “What’s in Store 2018” Channels and Competition chapter.
Gas Island Signage Sways Purchasing Three-quarters of all c-store fuel shoppers purchase no in-store merchandise.
52%
32% 22%
shoppers purchase fuel only and pay at the pump.
purchase fuel only and pay inside.
purchase fuel and make an in-store purchase.
Source: Coca-Cola proprietary, “Thursday Insights Research Survey Tracker” (THIRST), July 2017.
Burger, Gourmet Coffee QSRs Drive Foodservice Traffic
21%
26% noticed signage for a product or promotion that influenced a purchase on the same visit.
noticed signage for a product or promotion that influenced a future purchase.
Bakery Transparency in Demand
In the third quarter (endingSeptember 2017) quick-service burger and gourmet coffee chains drove total U.S. foodservice traffic up 1% after six consecutive quarters of flat or negative traffic. Dealrelated traffic for these restaurant categories was up by 7%, the strongest seen in quite some time. Additionally, non-deal traffic for these chains rose 4%.
50% of American consumers said the idea of on-pack information that allows you to see where a product was made is “very appealing.” Source: IDDBA, “What’s in Store 2018,” Bakery Sales and Retail Trends chapter.
Source: The NPD Group’s CREST, which daily tracks consumers’ use of foodservice and restaurants.
Looking Ahead in 2018 Mintel predicts 2018 will see the blurring of retail, foodservice and social media, as well as health and indulgence. Food incubators will foster creativity, with shared kitchens and small spaces, giving chefs the ability to let their creativity flourish. Automated order and delivery processes will meet the need for convenience. 16 Convenience Store Decisions January 2018
_QuickBites.indd 16
Shopping Starts Slow
U.S. consumer spending didn’t match reports of in-store crowds on Thanksgiving and Black Friday weekend in 2017. Big increases in online buyer activity translated into mediocre spending increases. Dollar sales in the 4th week of November 2017 were 2% lower than in 2016. Source: NPD Group
cstoredecisions.com
12/27/17 9:30 AM
SOMETHING NEW...
NOT FOR SALE TO MINORS. ©2017 Fontem. WARNING: This product contains nicotine derived from tobacco. Nicotine is an addictive chemical. ® blu , the blu logo, the my blu™ logo and Something Better™ are trademarks of Fontem Holdings 4 B.V.
CSD_Ad_Template.indd 5
12/21/17 9:07 AM
INDUSTRY
News
Gallagher Brothers Lead Smoker Friendly Keelan Gallagher and Colin Gallagher have assumed responsibility for the day-to-day operation of the Smoker Friendly Authorized Dealer Program. The brothers will develop Smoker Friendly’s sales and marketing strategy with the goal of expanding the Smoker Keelan Gallagher Friendly Authorized Dealer network of stores. Colin Gallagher assumes the role of director of operations and business development. Keelan Gallagher will be the director of trade marketing and brands, tasked with managing the Smoker Friendly Private Label brand, the relationships with Smoker Friendly’s manufacturing partners as well as designing and implementing the brand’s promotional strategy. Colin Gallagher
Buck, The Hershey Co. president and CEO. “Hershey’s snack mix and meat snacks products, combined with Amplify’s Skinny Pop, Tyrrells, Oatmega, Paqui and other international brands, will allow us to capture more consumer snacking occasions by creating a broader portfolio of brands.”
Weigel’s Names McMullen CEO Ken McMullen, president of Knoxville, Tenn.-based Weigel’s Convenience Stores since 2001, is taking the helm as Weigel’s CEO. Doug Yawberry, a nine-year veteran with Weigel’s will move from vice president of operations to president and chief operations officer. Bill Weigel, son of one the company’s founders, who has led the company for three decades, will now serve as the company’s chairman. Ken McMullen Weigel will retain an active role in the company’s future growth and direction.
Hershey Buying Amplify Snack Brands
Campbell’s To Acquire Snyder’s-Lance
The Hershey Co. is set to acquire all outstanding shares of Amplify Snack Brands Inc. for $12 per share in cash. The deal is expected to close in the first quarter of 2018.
Campbell Soup Co. is set to acquire snack company Snyder’s-Lance for $50 per share in an all-cash transaction. The acquisition, which has been approved by the Boards of Directors of both companies, will enable Campbell’s to expand its portfolio of leading snacking brands. Snyder’s-Lance’s portfolio includes well-known brands such as Snyder’s of Hanover, Lance, Kettle Brand, KETTLE Chips, Cape Cod, Snack Factory Pretzel Crisps, Pop Secret,
”The acquisition of Amplify and its product portfolio is an important step in our journey to becoming an innovative snacking powerhouse as together it will enable us to bring scale and category management capabilities to a key sub-segment of the warehouse snack aisle,” said Michele 18 Convenience Store Decisions January 2018
18_IndusytryNews.indd 18
Emerald and Late July. The acquisition of Snyder’s-Lance will accelerate Campbell’s access to faster-growing distribution channels including the convenience and natural channels, two high-growth areas. Closing is expected by the early second quarter of calendar 2018. This is Campbell’s sixth acquisition in the last five years.
7-Eleven Tests Mobile Ordering
7-Eleven Inc. is introducing the new 7ElevenNOW mobile app, and using it to test on-demand ordering for delivery or in-store pickup at select Dallas-based stores. Currently being tested in 10 downtown and uptown 7-Eleven stores, 7-ElevenNOW is expected to roll out to other U.S. locations in 2018. When ordering items through 7-ElevenNOW, 7-Eleven customers can choose to receive direct delivery to their location or pick up their prepared order—choosing from a wide selection of snacks, beverages and other products—at the participating store of their choice within the 7-ElevenNOW footprint.
Target Acquires Delivery Outfit Target Corp. is acquiring Shipt Inc., an online same-day delivery platform, for $550 million in cash. The big box store plans to bring same-day delivery services to guests at approximately 50% of Target stores by early 2018. The acquisition was expected to close prior to the end of calendar year 2017. cstoredecisions.com
12/27/17 12:40 PM
FRONTEND
News
Tax Reform to Benefit Retailers More competitive tax code will provide retailers the ability to modernize stores and invest in their workforce. By CSD Staff
L
ike many other U.S. business groups, retailers are in a position to benefit from the sweeping tax reform bill signed into law before Christmas. The U.S. Senate on Dec. 20 approved the final version of the bill, formally titled the Tax Cuts and Jobs Act, which passed along party lines, 51-48. The bill was then voted on a second time in the House and passed with a vote of 224-201. President Trump signed the bill into law Dec. 22. The passage of the bill was celebrated by The National Retail Federation (NRF) and The Retail Industry Leaders Association. TAX OVERHAUL “Retailers have long advocated for comprehensive tax reform that eases the tax burden that American consumers and businesses face,” said Sandy Kennedy, president of the Retail Industry Leaders Association (RILA). “Today, with the final passage of comprehensive tax reform and the president’s signature imminent, the goal of a fairer, more globally-competitive tax code that provides middle income taxpayers with critical relief will soon be realized. We applaud the president and Congress for their commitment to reforming the tax code and we look forward to working with the administration on the implementation of these critical reforms.” According to Kennedy, retailers have traditionally paid one of the highest effective corporate tax rates. “A fairer and more competitive tax code will give retailers the ability to modernize stores, invest in their workforce and continue to transform the shopping experience for consumers,” she said. “The fierce competition of today’s retail environment means the ultimate winner in tax reform will be our customers.” The legislation would be the biggest tax rewrite in decades, and would slash the corporate tax rate for the first time in 30 years, overhaul the taxation of both small and large businesses and reduce rates on individuals. While the $1.4 trillion tax bill proposes to slash corporate taxes starting in 2019, it would lower the rates paid by individuals and families through 2025. It would also repeal a portion of the Affordable Care
cstoredecisions.com
19_News.indd 19
Act that sets up penalties if Americans don’t sign up for health insurance. The lower rate will allow retailers the ability to grow, hire and expand,” said Matthew Shay, NRF president and CEO, following the House and Senate passage of the tax-reform package. “Passage of tax reform is a major victory for retailers who currently pay the highest tax rate of any business sector, and for the millions of consumers they serve every single day,” Shay said. “Our priorities were clear: reform must jumpstart the economy, encourage companies to invest here in the U.S., increase wages and expand opportunities for employees, and protect our small business community, of which the vast majority are retailers. That’s exactly what this legislation will achieve. Most importantly, this historic tax reform will put more money in the pockets of consumers— the best Christmas gift middle-class Americans could ask for this holiday season.” LOWER EXPECTATIONS The new law slashes the corporate tax rate to 21% from 35%. It applies a low one-time tax to the profits that corporations have long kept overseas to avoid paying taxes under the current higher rate. It also delivers a windfall to people who pay personal taxes on business earnings. It lets companies immediately write off the full cost of new equipment. The tax measure distributes benefits across a range of American industries, from construction to craft beer makers. In dollars, the biggest tax savings from 2018 through 2027 go to manufacturers: $261.5 billion, according to an analysis by the University of Pennsylvania’s Penn Wharton Budget Model as reported by the Chicago Tribune. The next big beneficiaries are insurance and finance companies ($249.4 billion) and retailers ($171.4 billion). The NRF has led the retail industry’s fight for tax reform for years, calling on Congress to eliminate tax breaks that benefit only some industries and to use the revenue saved to lower rates for all companies, including small businesses.
January 2018 Convenience Store Decisions 19
12/28/17 1:32 PM
EXECUTIVECORNER
Delving Into Industry Issues
Convenience Store Decisions introduces a new format for leaders to share their views. By David Bennett, Senior Editor
T
o ring in the new year, CSD is introducing a new feature entitled the Executive Corner, which will appear quarterly. Within, we explore current issues with a company leader, which are affecting his or her company and the industry as a whole. Jonathan Polonsky, president and chief operating officer of Plaid Pantry, a 109-store chain based in Beaverton, Ore., this month answers questions relating to the workforce, healthcare and what 2018 might hold in store. Convenience Store Decisions (CSD): In your view, what is one of the biggest challenges convenience store operators face in 2018? Jonathan Polonsky (JP): We need to continue to find ways to attract and retain nontraditional convenience store customers. This is truly such a challenge because there is no one new idea or category to draw that person into the store. It will be accomplished by evolving our product mix and services to meet the immediate wants and needs of those consumers. The environments most of us operate in are becoming more competitive and diverse so making a connection with a new customer is more difficult than ever.
CSD: Finding good employees is always a challenge. Has the industry made strides when it comes to being a desired workplace for the younger generation, or does it still have a distance to go? JP: The convenience store business doesn’t have the best reputation as a great place to work and I don’t think many potential young workers view it as a viable long-term career path. We have taken a few steps internally to communicate with our newer associates that we offer a great place to work and how they can have a successful long-term career in retail. Our new-hire Buddy System rewards existing associates who successfully recruit employees. Existing associates receive cash incentives when a person they have referred gets hired. They continue to get rewarded as their referral reached his or her one-, three- and six-month anniversaries. CSD: For the first time in a long time, a business–friendly climate seems to have settled on Washington, D.C. Are you optimistic that the political direction the country appears headed? Why? JP: Yes and no. I agree that at the federal level policy has started to tilt toward a more business-friendly agenda, 20 Convenience Store Decisions January 2018
20_Executve Corner.indd 20
particularly in the form of greater deregulation. Stores face huge differences in operating challenges depending on what state, county or city they are located in. I’m a big advocate of local political involvement; it’s the best chance you have to influence the policies that will have a very significant impact on your day-to-day business. CSD: Would you say that Jonathan Polonsky your company has developed a workable plan to combat rising healthcare costs, or does it remain an ongoing battle? JP: Like most companies our size, we can do only so much to deal with this ballooning cost. We regularly shop our plan to maximize the benefits we can offer our associates. Providing our people affordable health insurance is extremely important to us and we continue to offset a significantly higher portion of that cost relative to our peers. CSD: Our cover story focuses on changes within the fuel category. In the next few years, do you see fuel sales being as important to convenience retailers as they have been in the past? JP: Demand should remain pretty stable, balanced by increases from the overall economy, which looks like it still has room to grow and decreases from fleet efficiency, electrification and Uber. CSD: In your opinion, is the c-store industry doing an adequate job of integrating technology to accommodate today’s customer, or should it step up its game? JP: My sense is that the industry has done a good job with core technology infrastructure related to security, sales analysis and inventory management. There are opportunities to make improvements in customer and employee facing technologies to better communicate and engage with them but it can be difficult to justify those investments when you have many stores scattered versus large big box formats. I don’t think our industry will be penalized that much by not being at the cutting edge of technology.
cstoredecisions.com
12/22/17 2:51 PM
CONVENIENCE STORE SOLUTIONS
New Year Brings Hope
To make 2018 the best ever, don’t let life get you down. By Jim Callahan, Contributing Editor
T
HERE IS INDEED REASON TO be positive about 2018. In fact, I’m going so far as to label the new year “20-Greateen.” Did I mention that I’m at a public library typing this because the door of my residence was recently kicked in and the culprits got away with my personal computer and some other valuables? Sure, that was a big blow, but then again, I thank God for public libraries because I couldn’t communicate all of what has happened to me at the closing of last year. I tell people that life is about keeping a balance. Sure, my computer was stolen and yes, my insurance has a $500 deductible. However, no one got hurt and by the way, who do you think decided to save a few bucks and agree to a $500 deductible? That’s balance, I guess.
NO STONE UNTURNED At the time my computer was being hijacked, I was 40 miles into a 400-mile business trip. It was at this time, a kidney stone loomed large. I toughed it out and made the trip successfully. I then spent three days in the hospital and left there with the stone still inside me, accompanied by a very uncomfortable stent. It seems that the stone settled in a bad spot and somehow infected the kidney. After two weeks of antibiotics to clear the infection, the medical experts now will attempt to retrieve or crush the stone and I will feel like a whole new man. Talking about keeping your balance. There are literally thousands of ailments worse than a kidney stone and I’m grateful—not for having the stone but that the damage caused by the stone is reversible and I get to fight another day. At age 77, I’m still somewhat relevant and get to do what is most important to me: trying to make a difference. And, there’s no better time to make a positive difference than the present. So what are your plans for a“20-Greateen?” Do you have a course of action to improve your lot in life, or your position at your company, or maybe your relationships— whether they are with your spouse, siblings, children or close friends? cstoredecisions.com
21_CSS.indd 21
Jim Callahan has more than 40 years of experience as a convenience store and petroleum expert. His Convenience Store Solutions column appears at CStoreDecisions.com. Jim can be reached at (678)4854773 or via e-mail at jfcallahan1160@gmail. com.
APPEARANCE MATTERS Indeed, what can you do to improve your productivity and performance? What better way of signaling a serious change in attitude than a change in appearance? I’m not suggesting your appearance is poor or that you need to spend a ton of dollars. I’m suggesting that often when we feel stuck or stymied, changing your appearance can free you from the rut in which you may find yourself. A different hairstyle can do wonders. A new suit can make the boss take notice. Even putting an extra shine on your shoes can make you feel like you can tackle the world. Many years ago, during my growth and glory years, I felt that I dressed impeccably. One day I was pulled aside by the general manager of what is now a defunct company known as W. T. Grant. A very successful retail company in its heyday, by the time the founder died in 1972 at age 96, his chain of W. T. Grant Stores had grown to almost 1,200. Getting back to the general manager—himself an excellent example of portraying a great personal look—he informed me very nicely that while I dressed well, I lost serious points by not keeping my shoes highly shined. It hit home and most of my fellow workers over the years would tell you they witnessed my version of shoe shining magic early every morning. So thanks to that particular general manager for shaping my view. You get the point. It’s my opinion that when you are unhappy because you have fallen into an uncomfortable spot, whether it’s work, a marriage or just life, it’s easy to let your attitude and style slip a bit. Instead, take charge at work or take on that project you have been avoiding. If anything, ensure you have your insurance needs in check and don’t fret if the deductible comes due. Take personal inventory of your place in life and be honest with yourself about what you need to do to improve upon it. Indeed, turn 2018 into “20-Greateen.” January 2018 Convenience Store Decisions 21
12/28/17 2:05 PM
with
INNOVATION
CSD_Ad_Template.indd 3
1/3/18 9:59 AM
Bringing you incremental category growth through consumer-led innovation. Join the Conversation: @HersheyCompany The-Hershey-Company thehersheycompany.com
CSD_Ad_Template.indd 4
1/3/18 10:00 AM
/
Cover Story
New Fuel Demands
C-Stores Meeting
New Fuel Demands
Whether it’s teaming with Tesla to install charging stations or integrating alternative fuel solutions, retailers are part of a changing transportation marketplace. By David Bennett, Senior Editor
F
iguring out what the future of the U.S. transportation industry holds is clear, depending on which expert you ask. Some analysts insist the internal combustion engine has been around more than a century and should be around for decades to come, powering the country’s future fleets of sedans, pick-ups and sport utility vehicles. Then there are other authorities who forewarn that gas-powered cars and trucks will eventually appear on the endangered list—easy pickings for new electrification and alternate fuel technologies currently being tested to take over the country’s highways. Tony Seba, an instructor at Stanford University, is one such prognosticator. A teacher of industry disruptors and clean energy, Seba predicts there will be no more gasoline- and diesel-powered cars, buses or trucks sold anywhere by 2025. This drastic transformation will be brought on by a mass switch to fully-electric vehicles (EV), plug-in hybrids and self-drive alternatives, leading to a collapse of oil prices and the demise of the petroleum industry. Chew on that for a moment. Does this mean convenience stores should now be contracting with vendors to develop digital advertising signage that ties into EV charging stations? For now, retailers still have an adequate amount of time before such a move is necessary. C-stores do depend on fuel offerings and strategic forecourt marketing to help drive instore sales. However, an incremental shift in the public’s perception of the fossil fuel industry and its effect on the environment, as well as stronger support for alternative fuel solutions, raises questions about the future of fuel sales and how the c-store industry will react to what lies ahead. In terms of anticipating what fuel category concerns may be coming down the road, including how EV and other transportation innovations will shape the marketplace, some convenience retailers are already ahead of the curve.
22 Convenience Store Decisions January 2018
22-26_CVR_Fuel.indd 22
cstoredecisions.com
12/28/17 1:54 PM
‘EV’OKING CHANGE According to a report published in 2016 by the consulting firm Wood Mackenzie, electric cars are likely to reduce gasoline demand in the U.S. by 5%—and possibly by as much as 20%—by 2035. When Tesla announced new expansion plans for its Supercharger network earlier last year, the automaker managed to ease some of the concerns Tesla owners had over the network becoming overcrowded, especially with the launch of its new, more basic Model 3—priced at about $35,000. As part of its strategy to provide car owners more charging locations, Tesla has solicited a growing number of c-stores including Love’s Travel Stops, Quick Chek, Royal Farms, Sheetz and Wawa to provide locations for charging stations to operate. Unlike a hybrid car, which uses a gas-powered internal combustion engine to generate electrical power to turn a generator and power the electric drive motor, Tesla cars — the Model S included—are 100% electric. These charging stations have been placed at convenient community locations such as grocery stores, downtown districts and shopping centers. It appears as the Supercharger network expands, more c-store chains will likely be enlisted to join. At a Supercharger charging station, Tesla owners can power their vehicle in a fraction of the time of older charging technology. Now, Tesla drivers typically spend 20 or 30 minutes at roadside Superchargers, about how long it takes to add about 170 miles worth of battery power. For c-store operators that depend on in-store sales, it raises the question: What will motorists do during that time their car is charging? A five-minute fuel stop is an adequate window to grab a cup of coffee and get back on the road. A 30-minute stopover conflicts with the traditional convenience store mission of quick service. As the EV charging infrastructure grows—not only via Tesla, but other automakers as well—there will be a place for c-stores, said Sanya Carley, an associate professor at the School of Public and Environmental Affairs at Indiana University, where she also serves as a chair of the policy analysis and public finance faculty group. “One area where the convenience store industry may see some growth is in highway stops for EVs. The vehicles’ limited range makes stopping for an hour or two on longer road trips a necessity,” said Carley. “Tesla has worked to build charging infrastructure around existing attractions such as restaurants. Larger highway stops with seating areas and a selection of food options could become more desirable with the addition of EV charging infrastructure.” Though c-stores currently make a small sampling of Tesla’s network, those convenience operators that offer a full foodservice program, especially related amenities such as free Wi-Fi and indoor seating will have a competitive advantage over c-stores with modest foodservice offerings and little else to keep EV motorists occupied.
“
One area where the convenience store industry may see some growth is in highway stops for EVs. The vehicles’ limited range makes stopping for an hour or two on longer road trips a necessity.”
”
–Sanya Carley, an associate professor at the School of Public
and Environmental Affairs at Indiana University cstoredecisions.com
22-26_CVR_Fuel.indd 23
January 2018 Convenience Store Decisions 23
12/28/17 1:37 PM
/
Cover Story
New Fuel Demands
While some convenience retailers are partnering with automakers such as Tesla, Maverik Inc. is colloborating with public organizations in Utah to provide electric vehicle charging stations to motorists traveling the Mighty Five Electric Vehicle Corridor.
BUILT FOR INNOVATION Cory Schneider, director of fuels at Ricker’s, said as the growth of the traditional car industry has been fed by the road-side operations of gas stations and c-stores, those same chains, including Ricker’s, are wellpositioned to serve a changing transportation marketplace. Ricker’s, based in Anderson, Ind., launched its “No Charge to Charge” program with Nissan and the Greater Indiana Clean Cities Coalition in 2014, providing nearly a dozen DC fast-charging stations in and around central Indiana. The stations are part of the Greenlots charging network. The c-store industry, Schneider explained, has a track record of meeting the changes in the transportation marketplace and will continue to do so—whatever the future brings. 24 Convenience Store Decisions January 2018
22-26_CVR_Fuel.indd 24
“The convenience store industry has been exposed to significant changes over the last several decades,” said Schneider. “With those changes, the industry has been able to adapt rather quickly. The evolution of electric vehicles introduces a new type of change, a change that impacts the largest revenue segment of the industry. The future of EVs is still unclear, but the convenience store industry will make changes when necessary and will remain competitive for years to come.” A lot of times those changes are industry driven. Some are community driven. In Utah, officials are planning now to meet the future demand of EV motorists. Again, a c-store chain is helping to clear the way. A lot of the newer electric vehicles have a range of about 200 miles, a collaboration between the Utah’s Office of Energy Development, Utah Clean Air Partnership and Maverik Inc. is looking to expand upon that range. The c-store chain, based in Salt Lake City, last year added two fast-charging EV stations at Maverik locations in
central and southern Utah, part of the Mighty Five Electric Vehicle Corridor initiative. It’s important retailers remain on the forefront of these transportation trends, said Aaron Simpson, chief marketing officer for Maverik. “As driver’s needs (and EV) continue to evolve, Maverik wants to be out in front of those changes vs. trying to catch up later,” said Simpson. “We also want to make sure we’re always our customers’ first stop on the way to adventure and electrifying the corridors to the national parks where we live and work is an important way of doing that.” Maverik doesn’t project a crush of EV motorists will necessitate reconfiguring the chain’s whole fuel operation. However, if consumer demand dictates further EV and hybrid auto production, Maverik plans to be ready. “Honestly, right now demand is limited, so that alone doesn’t justify adding the charging stations. But, we’re learning a lot from it and it helps us stay on top of the important changes that are happening and makes us better prepared if and when those changes accelerate. We will likely continue to add additional chargers with our partners at other highway corridors in our footprint.” Currently, many automakers are pushing their own EV envelope. Over the next 18 months, General Motors will introduce two new all-electric vehicles—the first two of at least 20 EVs to be launched by 2023, the company announced. The new 2020 plug-in electric vehicles sales target at BMW is 500,000 units, the company’s CEO, Harald Krueger, has stated in an interview with the German newspaper WirtschaftsWoche. Ford in 2017 announced its plans to introduce 13 electrified models by 2020; among them are some hybrids and plug-in hybrids—like Ford Mustang and F-150 hybrid versions and plug-in hybrid SUVs. Thinking even bigger, Telsa CEO Elon Musk has projected that the Tesla
cstoredecisions.com
12/28/17 1:37 PM
semi-truck would haul an extraordinary 80,000 pounds for 500 miles on a single charge, then recharge 400 miles of range in 30 minutes. UPS Inc. recently announced it’s making a big investment in all-electric big rigs by placing an order for 125 of the pilot semitrucks from Tesla. Even Apple is reportedly stepping up its efforts to create an electric car with a ship date of 2019. So if they build them, will consumers come? The Fuels Institute, a think tank based in Alexandria, Va. late last year released a report, entitled “Consumers and Alternative Fuels 2017.” Among its findings, the report indicated that factors influencing the gap between consumer interest and actual vehicle purchases included low gas prices, lack of battery charging infrastructure, range anxiety and battery replacement costs. Other data suggests that a significant cultural shift may be needed to swap combustible engine vehicles for environmentally-friendly alternatives. A financial incentive in the form of a $7,500 tax credit, which was popular under the Obama administration, was in jeopardy of being eliminated in recent federal tax reform legislation, which was written into law in late December. At the last minute, legislators chose keep the tax credit for new EV owners intact. The credits are available on the first 200,000 electric vehicles a manufacturer sells. Once a company reaches that threshold, the $7,500 income-tax credit continues through the end of that calendar quarter. In terms of wider EV adoption in the U.S. every small step is still a step forward, said Indiana University’s Carley. “Yes, a shared perception among EV stakeholders is that EVs’ fundamental differences from internal combustion engine-powered vehicles are simultaneously their greatest weakness and strength in terms of adoption,” said Carley. “EVs’ limited range can require changes in driving cstoredecisions.com
22-26_CVR_Fuel.indd 25
behavior, and ‘confidence that an EV will fit my lifestyle’ is regularly cited as a hurdle for consumers considering purchasing an EV. On the other hand, EVs’ differences are also a huge part of what makes them an attractive technological advancement.”
FROM ELECTRIC TO CORN Casey’s General Stores Inc., a Ankeny, Iowa-based c-store chain with 2,000 store locations, last year announced it would offer higher ethanol blends of E15 and E85 at 17 newly-built store sites in Illinois, Iowa and Kansas. E15 is a fuel that contains 15% ethanol and works well for any car 2001 and newer. E85 contains up to 83% ethanol and is a choice for flexfuel vehicle owners. According to IHS Automotive, there are nearly 20 million flexible fuel vehicles (FFVs) on U.S. roads today. The Illinois Corn Marketing Board, Iowa Corn Promotion Board and Kansas Corn Commission along with Growth Energy are assisting Casey’s with their new program. The company’s adoption of higher biofuel blends marks a major milestone for renewable fuel availability, especially across rural America where demand for higher ethanol blends is high, said Doug Beech, legal counsel and director of government relations for Casey’s. While some of the sites are already operating, it’s too early to track customer feedback, said Beech. However, expanding fueling choices for its customers is important, as is balancing the return on investment. “That was part of the test,” said. Beech. “You have additional pump costs, you have additional tank costs, you have additional line costs; those all have to be factored in. That’s why we tried it in the new stores.” According to Growth Energy, a nonprofit that promotes the ethanol industry, there were more than 3,900 stations selling E85 nationwide at the end of 2017. Comparably, the number of stations in the U.S. selling E15
ASSESSING ETHANOL DEMAND
The growth of E15 and E85 stations in the U.S has grown steadily during the last three years. YEAR
E85
E15
2015
2850
105
2016
3233
431
2017
3913
1214
Source: Growth Energy
jumped to 1,214 in 2017 from 431 in 2016, an increase of nearly 182%. Mike O’Brien, vice president of market development for Growth Energy, said the steady progress of blended-fuel integration in the industry is measurable, and encouraging. “Consumers have surpassed more than 2.5 billion worry-free miles on E15. It took about four years of E15 sales to generate the first billion miles driven on E15,” O’Brien said. “However, the second billion miles driven on E15 was reached in just a few months—between May 2017 and October 2017. This highlights that our efforts are rapidly accelerating consumer demand for E15.” That demand is prompting c-stores big and small to step up their blended fuel offerings. One example is Kum & Go L.C., which has been progressive in introducing both E85 and E15 blends to various service locations. Kum & Go carries E85 at at least 205 stores and E15 at at least 105 stores in such states as Colorado, Iowa, Oklahoma, Nebraska and South Dakota. The U.S. Environmental Protection Agency (EPA) at the end of November 2017 released final 2018 renewable volume obligations (RVOs) under the Renewable Fuel Standard, setting the January 2018 Convenience Store Decisions 25
12/28/17 2:03 PM
/
Cover Story
New Fuel Demands
According to one report, electric cars are likely to reduce gasoline demand in the U.S. by —and possibly by as much as —by 2035.
5% 20%
and/or more E85 is widely used, RIN values are expected to recede.” Jetz Convenience Centers last fall added to its ethanol offering at its Muskego, Wis.-based station with the addition of five new Unleaded-88 (E15) pumps and four new E85 blender pumps, supported with funding through the federal Biofuels Infrastructure Program via Biofuels RUNNING ON RINS Also included in the overall mix Retail Advancement in Wisconsin of blended fuel offerings is the Transportation grant funds. Jetz first Renewable Fuel Standard, which began offering blended fuel at its creates a strong incentive for fuel mar- Milwaukee location in November 2016. Bob O’Connor, Jetz president, keters to blend renewable fuels into the fuel supply while lowering the price said RINs are a necessary part of the at the pump for consumers. Credits blended-fuel market, but in the end, called Renewable Identification fuel retailers have to look after their Numbers (RINs) are the mechanism for own self-interest. “In my opinion, if you’re not getting insuring that the prescribed levels of credit for the RINs, it’s a deal breaker,” blending are reached. The EPA is responsible for oversee- said O’Connor. “In order to be coming and enforcing blending mandates petitive in this space, there has to be and developing regulations for RINs. cooperation on those RINs. Period.” The credit program the EPA created was to ensure RFS compliance. CLEANER AIR “Current market conditions are Japan is the biggest market for creating strong values for RINs, which hydrogen cars, and is home to just in turn creates a strong incentive for under 100 hydrogen filling stations. higher level blends like E15 and E85,” That’s considerably more than the said Bob Dinneen, president and CEO number of hydrogen stations in the of the Renewable Fuels Association U.S. Hydrogen proponents say the (RFA). “This environment will persist alternative fuel offering is superior to at least through 2018 because the combustible options, but acknowlEPA just recently finalized strong RFS edge that the wide-spread adoption requirements for next year. Over the of hydrogen cars in the U.S. is some longer term, we expect RIN prices time away. to remain relatively strong until they Of course there are other fuel have succeeded in driving widespread options that have taken hold at many use of E15 and other higher-etha- c-stores and travel centers including nol blends. Once E15 is the ‘new E10’ compressed natural gas (CNG), which RVO for total renewable fuel at 19.29 billion gallons, including 288 million gallons of cellulosic biofuel, 2.1 billion gallons of biomass-based diesel, and 4.29 billion gallons of advanced biofuel. In addition, the agency has set the 2019 RVO for biomass-based diesel at 2.1 billion gallons.
26 Convenience Store Decisions January 2018
22-26_CVR_Fuel.indd 26
is considered a cleaner alternative to gasoline or diesel because of association with cleaner air quality. While the installation of CNG was robust in the industry a few years back, low gasoline prices have adversely affected many of those CNG operations. The price of U.S. crude oil remains low as a global supply glut persists, despite the disruption brought on by Hurricane Harvey, providing retailers pricing stability. It isn’t as though Hurricane Harvey actually made a dent in the ample amount of gasoline available in this country. Analysts report that U.S. crude production is still climbing currently, pushing gasoline prices lower. Just before Christmas, AAA noted that weekly gasoline inventories increased by 5.7 million barrels of oil, according to an Energy Information Administration report. Jiffy Trip operates 28 convenience stores across central and northwestern Oklahoma. Alex Williams, Jiffy Trip’s chief operating officer, said up until a year ago, the c-store chain enjoyed strong CNG sales to fleets that operated flex vehicles. But over time, the company has curtailed its CNG offering at some locations because of declining CNG sales, coupled with higher maintenance costs associated with CNG service. Today, the chain is operating one CNG location. “I think that’s why you see so many people shutting them down, because gas is $2,” Williams said. CSD
cstoredecisions.com
12/28/17 2:03 PM
YOUR SECRET WEAPON The bold, balanced flavor of Texas Pete® Hot Sauce is the secret ingredient for your kitchen. No matter the cuisine or operation, Texas Pete® will make your menu legendary. Add it to your arsenal today. TexasPeteFoodservice.com
©2017 Texas Pete® is a registered trademark of TW Garner Food Company. 746-0617
CSD_Ad_Template.indd 20
12/21/17 9:31 AM
/
Foodservice
Pizza & Roller Grill
Foodservice
Favorites
Radiate Convenience store pizza programs have become more extensive in the convenience channel, as the roller grill segment continues to evolve. By Lisa White, Contributing Editor
W Fast Facts: » More than half of all c-stores offer some type of pizza program. » Roller grill eaters are marginally concerned with artificial ingredients. » Consumers want a variety of roller grill types, more toppings and different dipping sauces.
28 Convenience Store Decisions January 2018
28-31_Fdsv_RollerGrill.indd 28
hen Ryan Krebs, director of foodservice at York, Pa.-based Rutter’s Farm Stores, joined the 69-store chain three years ago, each location offered a standard personal pan pizza, ordered from a made-to-order kiosk. “Sales were declining, so we did our research to find a program that was highquality and relevant,” said Krebs. “The goal was to add a larger family-style pizza that customers could take home for dinner.” Rutter’s redo incorporated a pizza made from self-activating yeast dough that simulates a brick-oven baked product when cooked. Despite longer ticket times, the chain has experienced a big increase in volume sales since instituting the new program. “We don’t offer pizza by the slice like other c-stores,” said Krebs. “People have tried to sell me that program, but offering eight- and 16-inch size pies has worked well for us.” According to London-based market research firm Mintel’s 2017 Menu Insights report, pizza is a mainstay at c-stores, with 52% of these retailers offering a pizza program product.
PERFECTING PIZZA For those not yet taking advantage of this money maker, there are a number of pizza program options geared for c-stores. Those with the space and commitment can produce a scratch product using fresh or par-baked dough with customized ingredients. According to some pizza program experts, this requires a minimum of 100 square feet to accommodate the necessary equipment, including an oven, prep table, warmers and merchandisers. Labor is more extensive, with at least one employee dedicated to pizza making. For stores with inexperienced staff, dough flats or shells, as opposed to balls that need to be expertly formed, are recommended. cstoredecisions.com
12/22/17 2:53 PM
NOW A
GREAT ADDITION NOW NOW NOW to theA NOW NOW NOW AA AA A NOW NOW NOW NOW NOW NOWA AA AA A
GREAT GREAT GREAT ADDITION ADDITION ADDITION HOME MARKET FOODS to to to the the the GREAT GREAT GREAT ADDITION ADDITION ADDITION to to to the the the FAMILY OF QUALITY BRANDS to the the HOME HOME HOME MARKET MARKET FOODS FOODS toto toto tothe the the the FOODS HOME HOME HOMEMARKET MARKET MARKET MARKET FOODS FOODS FOODS FAMILY FAMILY FAMILY OF OF OF QUALITY QUALITY QUALITY BRANDS BRANDS BRANDS HOME HOME HOME MARKET MARKET MARKET FOODS FOODS FOODS FAMILY FAMILY FAMILY OF OF OF QUALITY QUALITY QUALITY BRANDS BRANDS BRANDS HOME HOME HOMEMARKET MARKET MARKETFOODS FOODS FOODS FAMILY FAMILY FAMILY OF OF QUALITY QUALITY BRANDS BRANDS FAMILY FAMILY FAMILYOF OF OF OFQUALITY QUALITY QUALITY QUALITYBRANDS BRANDS BRANDS BRANDS
With With With anan authentic, an authentic, authentic, natural natural natural taste, taste, taste, Eisenberg Eisenberg Eisenberg franks franks franks are are not are not not your your your average average average dogs. dogs. dogs. With With authentic, an authentic, authentic, natural natural natural taste, taste, taste, Eisenberg Eisenberg Eisenberg franks franks franks are are not are not not your average average average dogs. dogs. dogs. Deliver Deliver Deliver a With taste a an taste a an taste experience experience experience your your your customers customers customers won’t won’t won’t soon soon soon forget forget forget – that’s –your that’s –your that’s the the the Eisenberg Eisenberg Eisenberg way. way. way. Deliver Deliver Deliver a taste aGet taste aGet taste experience experience experience your your your customers customers customers won’t won’t won’t soon soon soon forget forget forget – that’s – that’s – that’s the the the Eisenberg Eisenberg Eisenberg way. way. way. Get rolling rolling rolling with with with Eisenberg Eisenberg Eisenberg franks franks franks atat info@HomeMarketFoods.com at info@HomeMarketFoods.com info@HomeMarketFoods.com With an authentic, natural taste, Eisenberg franks are not your average dogs. Get Get Get rolling rolling rolling with with with Eisenberg Eisenberg Eisenberg franks franks franks atat info@HomeMarketFoods.com at info@HomeMarketFoods.com info@HomeMarketFoods.com
Deliver a taste experience your customers won’t soon forget –average that’s the Eisenberg way. With With With anan authentic, an authentic, authentic, natural natural natural taste, taste, taste, Eisenberg Eisenberg Eisenberg franks franks franks are are not are not not your your your average average dogs. dogs. dogs. With With With an an authentic, an authentic, authentic, natural natural natural taste, taste, taste, Eisenberg Eisenberg Eisenberg franks franks franks are are not are not not your your your average average average dogs. dogs. dogs. Get with Eisenberg franks at info@HomeMarketFoods.com Deliver Deliver Deliver a rolling taste a taste a taste experience experience experience your your your customers customers customers won’t won’t won’t soon soon soon forget forget forget – that’s – that’s – that’s the the the Eisenberg Eisenberg Eisenberg way. way. way. www.HomeMarketFoods.com www.HomeMarketFoods.com www.HomeMarketFoods.com | | info@homemarketfoods.com | info@homemarketfoods.com info@homemarketfoods.com | Eisenberg | 800.367.8325 | 800.367.8325 800.367.8325 Deliver Deliver Deliver a taste a taste a taste experience experience experience your your your customers customers customers won’t won’t won’t soon soon soon forget forget forget – that’s – that’s – that’s the the the Eisenberg Eisenberg way. way. way. Get Get Get rolling rolling rolling with with with Eisenberg Eisenberg Eisenberg franks franks franks at at info@HomeMarketFoods.com at info@HomeMarketFoods.com info@HomeMarketFoods.com www.HomeMarketFoods.com www.HomeMarketFoods.com www.HomeMarketFoods.com | | info@homemarketfoods.com | info@homemarketfoods.com info@homemarketfoods.com | | 800.367.8325 | 800.367.8325 800.367.8325 ©2017 ©2017 ©2017 Home Home Home Market Market Market Foods, Foods, Foods, Inc. Inc. 140 Inc. 140 Morgan 140 Morgan Morgan Drive, Drive, Drive, Norwood, Norwood, Norwood, MA MA 02062-5013 MA 02062-5013 02062-5013 Get Get Get rolling rolling rolling with with with Eisenberg Eisenberg Eisenberg franks franks franks atat info@HomeMarketFoods.com at info@HomeMarketFoods.com info@HomeMarketFoods.com ©2017 ©2017 ©2017 Home Home Home Market Market Market Foods, Foods, Foods, Inc.Inc. 140 Inc. 140 Morgan 140 Morgan Morgan Drive, Drive, Drive, Norwood, Norwood, Norwood, MAMA 02062-5013 MA 02062-5013 02062-5013
www.HomeMarketFoods.com | | | info@homemarketfoods.com | 800.367.8325 www.HomeMarketFoods.com www.HomeMarketFoods.com www.HomeMarketFoods.com info@homemarketfoods.com | info@homemarketfoods.com info@homemarketfoods.com | | 800.367.8325 | 800.367.8325 800.367.8325 www.HomeMarketFoods.com www.HomeMarketFoods.com www.HomeMarketFoods.com |Foods, |Foods, info@homemarketfoods.com | info@homemarketfoods.com info@homemarketfoods.com | | 800.367.8325 | 800.367.8325 800.367.8325 ©2017©2017 Home Market Foods, Inc. 140 Morgan Drive, Norwood, MA 02062-5013 ©2017 ©2017 Home Home Home Market Market Market Foods, Inc.Inc. 140 Inc. 140 Morgan 140 Morgan Morgan Drive, Drive, Drive, Norwood, Norwood, Norwood, MAMA 02062-5013 MA 02062-5013 02062-5013 ©2017 ©2017 ©2017 Home Home Home Market Market Market Foods, Foods, Foods, Inc.Inc. 140 Inc. 140 Morgan 140 Morgan Morgan Drive, Drive, Drive, Norwood, Norwood, Norwood, MAMA 02062-5013 MA 02062-5013 02062-5013
CSD_Ad_Template.indd 23
12/27/17 10:11 AM
/
Foodservice
Pizza & Roller Grill
Pittsburgh-based CoGo’s has grown its pizza offering over the last few years, but a staple of the 42-store chain remains its pepperoni rolls, a patron best seller.
Retailers with less resources and a more limited footprint that don’t want to make a big investment can sell pizza by the slice that’s pre-made and just needs heating. Mintel’s report reveals that 43% of consumers are interested in personal-sized pizza. Atlanta-based RaceTrac has more than 240 stores offering grab-and-go pizza slices and more than 100 stores selling personal pan pizzas. Both types will be a part of all stores moving forward. “Our pizza program is in the early stages; we rolled out our first pizza store in February 2015,” said Michael Elliott, RaceTrac’s category manager of hot foods. “This test was successful, and we [recently] began rolling out the program to additional stores.”
PITTSBURGH PIZZAZZ At Pittsburgh-based CoGo’s Co.’s 42 stores, located in western and central Pennsylvania, West Virginia and Maryland, customer interest in pizza is on the rise. The chain’s 14-inch pies, which are sold whole or by the slice, are prepared on site using frozen dough thawed on site; then topped with sauce, cheese and other ingredients; and baked at the store level. “With our build-your-own pizza program, we can offer a better price, and it’s popular with consumers,” said John
Eby III, CoGo’s president and CEO. “The program is more labor intensive, but produces a better product that we charge a premium for.” Higher-volume CoGo’s locations use a dedicated conveyor oven and all sites have a convection oven for baking pies. When it comes to pizza toppings, the convenience channel is taking its cues from the foodservice industry by getting creative. Rutter’s offers approximately 50 options, with all vegetable ingredients, free of charge. “We want to promote healthier toppings, but we’ll put anything on our pies,” said Krebs. “We have customers asking for fried bologna or shrimp. Fried chicken with buffalo sauce sells well. We also offer a breakfast pizza with eggs and breakfast sausage.” The top-selling pizzas at Rutter’s are pepperoni and sausage, with black olives and banana peppers also popular choices. RaceTrac’s personal pan pizzas offer more than 12 meat and vegetable topping choices, including both Buffalo Chicken and Chicken Cheddar Bacon Ranch pizza varieties. “Convenience and customization have always been important to our guests, and that has not changed,” said Elliott.
PROMOTING THE PRODUCT The pizza business in c-stores relies on effective marketing and merchandising to ensure potential customers are aware of what’s being offered as well as set the store apart. “Signage is key for marketing our pizza, as it’s important to have great visuals,” said Elliott. “We market both outside at the pumps and inside the store at the point of purchase.” RaceTrac’s stores also have incorporated eye-catching, custom-printed red boxes for slices that provide added product visibility with a window on top. For made-to-order personal pan pizza, the images are present on printed menu boards as well as the ordering kiosk. CoGo’s has expanded its pizza program with signature pepperoni rolls, which have become a long-term hot seller. “We created our own recipe to bake the rolls and serve them warm,” said Eby. “This product is six inches long and about five inches in diameter, so it’s more of a meal than a snack.”
43
Mintel indicates that % of consumers are interested in personal-sized pizza. 30 Convenience Store Decisions January 2018
28-31_Fdsv_RollerGrill.indd 30
cstoredecisions.com
12/22/17 2:53 PM
In addition to creative toppings and marketing, the current trend in c-store pizza programs centers around ordering options. To better compete with foodservice, a number of retailers are taking pie orders by phone, implementing online ordering capabilities for these products and considering delivery services. “Casey’s General Stores was the king of c-store pizza programs, and now they’re delivering pizza,” said Krebs. “[This channel] will see an increase in the relevance of pizza delivery.” Rutter’s recently added a call-in program so customers can order pizzas by phone in advance, which has added incremental sales to its bottom line. The chain plans on adding online ordering in 2018 and potentially curbside pickup. CoGo’s doesn’t currently offer pizza delivery, but is considering what’s involved. “We’re going through the process of implementing this, and we also are looking at adding online ordering,” said Eby. “We do take phone orders, but don’t advertise this service.”
REAPING FROM ROLLER GRILL Like with pizza programs, c-stores can diversify their offerings by getting creative at the roller grill. With these items, it’s all about offering value, innovative flavors and healthful options. According to Mintel, over half of consumers want to see roller grill value meals, with 34% seeking products without artificial ingredients. “Roller grills used to be c-stores’ bread and butter, but now we’re seeing these sales flat overall,” said Krebs. “This is due to the increase in other offerings that have better margins as well as generations coming in that are not as interested in roller grill items, particularly hot dogs.” Krebs said hot dogs are still strong sellers to those over the age of 35. He pointed out that Millennials are concerned about sodium and additives and tend to avoid these products. As with the pizza segment, unique offerings can pay off big. About a year ago, Rutter’s introduced a bacon-andcheese wrapped hot dog in an effort to revitalize its roller grill options. “We wanted to get creative and see what was trending, and bacon was hot,” said Krebs. “Visually on the roller grill, this product looks different and catches customers’ attention. Now, it’s our second best-selling item behind the traditional hot dog.” Over the next year, Rutter’s plans to look at alternative proteins for the roller grill, such as chicken sausages. “We’re considering adding products with an edgier concept and potentially non-meat items that are healthier,” said Krebs. “These are geared for Millennials who like the hot dog experience, but are looking for something healthier. It may be a little before our time in this channel, but it’s where the category is headed.” RaceTrac’s locations contain between two and six roller cstoredecisions.com
28-31_Fdsv_RollerGrill.indd 31
grills, depending on the store size, age and food offerings. Its 11 different products include hot dogs, Cheesy Buffalo Ranch Chicken Roller Bites, three flavors of taquitos and its signature pork tamale in a corn husk. “We have guests that eat off of our roller grills several times per week, or some even daily,” said Elliott. “For them, the key is keeping the offer fresh and relevant.” The chain generally offers three to four LTOs on the roller grill per year. In the past, these have included Chicken and Waffle Taquitos, Guinness Beer Brats, Bacon Cheddar Dogs and a Pork Egg Roll. CoGo’s has been phasing out roller grills from its 36 company-owned locations over the last year. “We may only have two to four roller grills left in our stores,” said Eby. “We’ve been focusing more on the pizza and sandwich side, due to our limited real estate.” CSD
Cut Whole Pizzas Into Equal Slices Every Time! • Custom-Made To Each Customer’s Pizza Size And Slice Application • Made From FDA Approved Composition Material Improves Efficiencies, Reduces Food Waste, Increases Profits • Used By Some Of The Largest Convenience Store Chains
Visit www.portionpadl.com for more information or Contact Greg Getzinger at greg@portionpadl.com Call 330-608-5928 For Volume Discounting
Portion Padl.indd 1
January 2018 Convenience Store Decisions 31
12/19/17 3:33 PM
12/22/17 2:53 PM
/
Category Management
Cigarettes
New Year
= New Regulations C-stores face more restrictions and taxes on cigarettes in 2018. By Anne Baye Ericksen, Contributing Editor
A
Fast Facts: » Regulations are taking
a toll. Cigarette unit sales in the c-store channel fell by 4.9% for the four weeks ending Dec. 2.
» More than 270 com-
munities across 18 states have raised the minimum purchase age for tobacco products to 21.
» New York State leads the
nation in cigarette smuggling with 56.8% of cigarettes consumed in the state considered contraband.
s of Jan. 1, smokers in Aspen, Colo., are paying $3 more per pack of cigarettes than they did last month. Also, Oregonians must now be 21 in order to purchase any type of tobacco products in the state. That’s two different communities and two different regulatory policies, but it all adds up to one thing in 2018: The cigarette category faces more pressure than ever before. The most heavily regulated categories in c-stores, cigarettes and other tobacco products (OTP) incurred a slew of new restrictions and taxes in 2017, and 2018 looks to be no different. While anti-smoking advocates hail these regulations as a victory in the battle to discourage new generations of smokers, for c-stores it serves as another burden on a category that’s already under fire. “Cigarette volumes are declining at a rate of 3%, which is consistent with past trends,” observed Todd Badgley, president of Moto Convenience Stores. The Belleville, Ill.-based convenience chain operates nearly 80 store sites in six states in the Midwest.
32 Convenience Store Decisions January 2018
32-35_CM_Cigarettes.indd 32
Wells Fargo Securities reported cigarette dollar sales in all retail channels dropped by 0.3% for the four weeks ending Dec. 2, and dollar sales in c-stores were down by 0.1%. However, dollar sales were supported by an increase in pricing of more than 5% while volume continued its downward trend. Unit sales in the convenience store channel fell by 4.9% for the same four weeks. Also, analysts predict cigarettes dollar sales for all of 2017 will end up with a loss of at least 3.5%. C-store owners and category managers point to expanding regulations as a significant contributing factor for decelerating cigarette sales as well as lighter foot traffic for some locations. When local authorities levy taxes, flavor bans or age restrictions, it increases the likelihood of customers driving to another community without those prohibitions to buy their cigarettes along with other basket items. Such losses quickly cut into a business’ profits because tobacco still accounts for a substantial percentage of total sales. According to Nielsen Homescan data, tobacco generated cstoredecisions.com
12/27/17 12:40 PM
CSD_Ad_Template.indd 13
12/21/17 9:20 AM
/
Category Management
Cigarettes
2017-2018 LEGISLATIVE OVERVIEW Here's a sampling of some of the local and state regulations implemented over the past year: Location (state / city) California Effective April 2017
Tax Increase
21 Minimum Age
X ($2/pack)
Oklahoma Signed May 2017
X ($1.50/pack)
Delaware Signed July 2017
X ($0.50/pack)
Rhode Island Effective August 2017
X ($0.50/pack)
New Jersey Effective November 2017
X
Topeka, Kan. Passed December 2017
X
Connecticut Effective December 2017 Aspen, Colo. Effective January 2018
Flavor/ Menthol Ban
X ($0.45/pack) X ($3/pack)
X
Easthampton, Mass. Effective January 2018
X
Elk Grove Village, Ill. Effective January 2018
X
Maine Enforcement begins January 2018
X
San Francisco, Calif. Effective April 2018
X
Minneapolis, Minn. Effective August 2018
X
St. Paul, Minn. Effective October 2018
X
38% of all c-store sales in 2016, totaling nearly $53 billion. “We need to figure out how to replace those items because we’ll be losing in the tobacco category,” said Lance Klatt, executive director of the Minnesota Service Station and Convenience Store Association. “[City council members] don’t know how much stores can lose in sales on ancillary products, such as milk,
candy and gasoline. We feel like our industry is being discriminated against and city councils don’t like our small businesses,”he added.
34 Convenience Store Decisions January 2018
32-35_CM_Cigarettes.indd 34
STATE TAXES Tax increases on cigarettes have always been a thorn for smokers and retailers, and last year was no exception. “During 2017, only a couple of
states actually enacted higher cigarette taxes. Those include Connecticut with a 45-cents per pack cigarette tax increase and Delaware with a 50-cents per pack cigarette tax increase,” said Thomas Briant, executive director of the National Association of Tobacco Outlets. “A bill to raise the New York State cigarette tax is pending, but has not passed the state legislature.” Both Oklahoma and Rhode Island advanced cigarette tax increases, too. In 2018, though, New York City smokers will be paying the most. As of June 1, a single pack will cost $13. “We haven’t had a state-level excise tax increase since 2010, but we’re still the highest in the country at $4.35 a pack,” said Jim Calvin, president of the New York Association of Convenience Stores (NYACS). “An additional $1.50 in New York City plus an average 8% sales tax on top of that combines to create massive tax evasion and loss of tobacco and ancillary sales to licensed, tax-collecting retailers. “The non-partisan Tax Foundation just reported that New York state continues to lead the nation in cigarette smuggling with 56.8% of cigarettes consumed in the state derived from ‘smuggled sources,’” Calvin continued. “A big chunk of that is in the New York metropolitan area where finding smokers yearning for cheaper, untaxed contraband product is as easy as walking down the street.”
LOCAL AUTHORITY Whereas some legislative bodies and city councils may have backed off issuing new cigarette tax hikes, a growing number have proposed and passed bans on flavored tobacco products, including menthol. It’s a trend that’s been developing for some time. “Since 2012, approximately 160 local governments have enacted some form of flavor ban, either prohibiting the sale of flavored cigar products to, more recently, banning the sale of all flavored products, including menthol cigarettes and mint and wintergreen smokeless tobacco products,” said Briant.
cstoredecisions.com
12/22/17 2:55 PM
Several cities in Minnesota have taken this step. Plymouth, Shoreview and St. Louis Park, all suburbs of the Twin Cities, have enacted flavor bans. Plus, officials in both Minneapolis and St. Paul voted in favor of flavor bans, including restrictions on menthol sales, for their respective cities. T h e M i n n e a p o l i s re g u l a t i o n becomes law Aug. 1, and St. Paul’s goes live on Oct. 1, each with an exemption for businesses that receive at least 90% of their income from tobacco sales. “In 2018, Duluth is looking at a flavor ban,” said Klatt. Some retailers fear such bans that include menthol cigarettes. “We have experienced a ban on menthol cigarettes and flavored cigars. Although neither is good for business, a menthol ban on cigarettes is worse than a ban on cigar flavors,” said Badgley. “On a state level, an OTP flavoring ban bill has been introduced each of the last eight years, but NYACS and its allies have succeeded in blocking it to date,” said Calvin. “For now, c-stores view OTP flavoring as a bigger threat [than cigarette and cigar flavor bans] because it’s a growing category.” Also last year, several cities and three states raised the legal age to purchase tobacco products. New Jersey, Maine, and Oregon joined California and Hawaii in issuing a statewide minimum of 21. Numerous cities joined the 21 club, too. According to NACS, more than 270 communities across 18 states have raised the minimum purchase age to 21. Like flavor bans, this restriction disproportionately affects stores in communities that border cities that still have an 18 or 19 years old minimum age limit.
NEW YEAR’S RESOLUTION While it may be too early to predict what legislative developments will occur this year, Briant urges convenience store owners and managers to become active industry representacstoredecisions.com
32-35_CM_Cigarettes.indd 35
tives in their local communities. This includes inviting city council members or legislators to tour stores and witness the extent to which operators and employees go to prevent unauthorized cigarette and OTP sales. “Retailers should make a New Year’s
resolution to develop a relationship with their local and state lawmakers, to educate them about the impact of potential tax increases or restrictions before such actions are proposed so lawmakers are knowledgeable about the potential impact,” he said. CSD
PA R T N E R I N G ➤ Low investment ➤ Simple operation ➤ Floor plan flexibility ➤ Portable made-to-order sandwiches & salads ➤ Great fresh food options for all day-parts ➤ Proven operational & control systems
Whether you are looking to own and operate a SUBWAY® restaurant yourself or lease space to an existing SUBWAY® franchisee and earn rental income, the SUBWAY® restaurant chain can offer a formula that works. www.subway.com call Allison Morrow 800.888.4848 x1736 or 203.877.4281 x1736 e-mail: morrow_a@subway.com
SUBWAY® is a Registered Trademark of Subway IP Inc. ©2016 Subway IP Inc.
January 2018 Convenience Store Decisions 35
12/22/17 2:55 PM
/
Category Management
Meat Snacks
Protein
Powers Snack Sales
More and more, meat snacks are demonstrating their allure with consumers. By Marilyn Odesser-Torpey, Associate Editor
W
hether consumers are choosing them to get a convenient boost of protein or to quell between-meal hunger pangs, meat snacks in a growing variety of forms and flavors are continuing to climb the ranks in the on-the-go snack category. As of July 1, 2017, meat snacks generated $1.4 billion in c-stores, a hike of 3.2% over the previous year, reported Nielsen Co. in its Total U.S. Convenience Channel View. For the 52 weeks ending Sept. 9, 2017, Nielsen revealed that meat snacks are a 9% share of the on-the-go snacking category within the convenience channel, growing at a rate of 5% or $547 million over the past year. That’s an impressive increase, especially because total on-the-go snacking rose 1.2%, said Carl Elliott, Nielsen’s director of convenience retail. Elliott pointed out that meat snacks are the third most important on-thego snack category in the convenience channel with a 14% share, the same share as salty snacks, and trailing only confections and baked goods. “Meat snacks have an advantage because 39% more food items with ‘high protein’ claims are selling now vs. four years ago,” said Elliott. “The health halo over meat snacks makes this category a great one for the convenience channel because 44.2% of consumers are willing to pay a premium price at the convenience store for a more healthful snack.” A March report from Nielsen showed that jerky had a particularly strong year, showing a sales growth of nearly 7%. At the same time, stick sales were flat. Those are the trends that category manager Ian Stewart has seen at
36 Convenience Store Decisions January 2018
36-39_CM_Meat Snacks.indd 36
Fast Facts: » Big bags bring high rings. » Healthful halo attracts
women, younger buyers.
» Fiery flavors have widespread appeal.
cstoredecisions.com
12/22/17 2:56 PM
BIGGER is BETTER 10 generous ounces of USDA Steak
SLOW-COOKED for a TENDER BITE USDA CERTIFIED STEAK, no gimmicks
#Cattlemanscut @Cattlemanscut
Trade-Up Consumers to Higher Ring at a BETTER VALUE Oberto Brands | 87 7. 234 .7 904 | w w w.cattleman scut.com
CSD_Ad_Template.indd 16
12/21/17 9:23 AM
/
Category Management
Meat Snacks
Gassaway, W. Va.-based Go-Mart stores. But the big story at Go-Mart, which has 23 stores in West Virginia, Ohio and Virginia, is the fact that meat snacks have become a highring item since a year ago when sales of 10-ounce bags of Oberto Cattleman’s Cut jerky in original, teriyaki and peppered steakhouse flavors caught fire. Potato chips may reign as America’s su“We were surprised at the success of the 10-ounce bag preme snack, but Nielsen research revealed that because we had tried to sell larger bags before and they consumers spend about twice as much per trip didn’t go so well,” said Stewart. “We figured that the price on meat sticks and jerky ($7.42) as they do on points were too high.” potato chips ($3.61) and pretzels ($4.01). At an “everyday low price” of $11.99, the Cattleman’s The researchers also found that Asian-AmerCut is still a high ring, but Stewart attributes at least part of icans are over 22% more likely to buy meat the positive customer response to the attractiveness of the snacks than the average shopper. Looking at age product in its see-through bag. The reduced price (the jerky demographics, baby boomers are the biggest retails for $15.99 on Oberto’s web shopping site) is part of a buyers and are 10% more likely to buy meat promotion with the manufacturer, one that Stewart is eager snacks than the average shopper. to continue into 2018. According to a Nielsen Grocery/Convenience report for the 52 weeks ending Oct. 21, 2017, Stewart is not alone in seeing a surge in large-bag sales. Extra-large (XL) 10-12“Clear is what consumers are looking for,” Roccagli said. ounce packages make up 23% of jerky sales and, reported a Nielsen Convenience year-to-date study ending Nov. 18, “They want to see exactly what they’re buying.” 2017, the three top growth brands are all packaged in clear, XL bags. BRINGING THE HEAT Ted Roccagli, director of partnerships and preferred venAs far as flavors go, heat sells, he said. Even the tradidor program for Empire Petroleum Partners, which services tional sticks are getting sassy with spicy seasonings such as c-stores in 30 states and operates 80 of its own, agreed Tabasco and nacho. that large value clear bags are gaining in popularity, espeAt Go-Mart, customers are willing to try something cially the 10-ounce packages from Cattleman’s Cut and Old new as long as it doesn’t stray too far from the familiar, Trapper. Brands like Chef’s Cut are also gaining momentum. Stewart said. A 10-ounce sausage stick from Cattleman’s Cut recently sold so well in Go-Mart stores during testing that it earned a place on the stores’ planogram, Stewart pointed out. He added that a pepperoni jerky recently debuted by Oberto will likely follow suit. “But flavors like Korean BBQ are too far out for most of our customers,” Stewart said. Anna Bettencourt, snack category manager for VERC Enterprises, with 26 stores (24 in southeastern Massachusetts, one in southern New Hampshire and one superette), thinks she played it a little too close to the vest when it came to meat snack forms and flavors in 2017. But she has a far different game plan in mind for 2018. “I stayed mostly with the core SKUs— original, teriyaki and peppered—and had growth in the category, but probably not what I would have had if I would have tried a few more bolder flavors in shippers,” Bettencourt said. “This year, I’m looking to create a more diverse profile.” She is specifically looking to Jack Link’s Source: Nielse Homescan
Meaty Matters
38 Convenience Store Decisions January 2018
36-39_CM_Meat Snacks.indd 38
cstoredecisions.com
12/22/17 2:57 PM
As of July 1, 2017, convenience channel meat snack sales grew over the previous year.
5% or $547
million
and Conagra’s recently acquired Duke’s brand for product diversity and innovation because “they’re doing some very interesting stuff” such as Jack Link’s Tender Bites and a meat bar, both departures from the brand’s top-selling stick and Duke’s Shorty Sausages in “cool flavors” like chorizo lime and tomato basil. Also, newer brands such as Jack Link’sowned Larissa’s Kitchen are creating their own niches with younger and female consumers by using brighter packaging, calling out health benefits such as high protein and low carbs, and offering unique flavor profiles, said Bettencourt. Targeting consumers who are more health-conscious and/or adventurous of palate are jerkys that are positioned as more upscale and gourmet such as Hershey’s Krave brand meat snacks and Source: Nielse Homescan the small but growing Perky Jerky brand, said Roccagli. And, he added, snackers looking for a serious kick in the tastebuds are finding it in the pickled sausage offerings from Penrose, another Conagra brand. These on an end cap as well as inline displays. “On an end cap, the dollar density [sales per square inch] snacks flaunt their bold flavors with names like Big Mama, is huge,” he explained. Tijuana Mama and Firecracker. In half of her stores, depending on the percentage of While flavor is certainly a major factor and attention to the “better-for-you” positioning by some brands is drawing sales the category accounts for and customer traffic flow, in new age and gender demographics, for most customers, Bettencourt displays meat snacks on end caps. If there is one thing Bettencourt would ask of suppliers the convenience of meat snacks is their main selling point. “They’re satisfying enough to hold you over between and brokers, it would be that they provide more informameals, say if you just got out of work and you have to pick tion about the markets and customer bases surrounding her the kids up from practice,” said VERC’s Bettencourt. “You stores. “Our store in Boston, for example, is in a spicy market,” can drive while you eat it, making it the perfect snack on she said. “That kind of information would help us to more the go.” To maximize customer exposure to the wide array of accurately choose the products and flavor profiles that are meat snack options, Roccagli recommends displaying them most likely to sell in our stores.” CSD cstoredecisions.com
36-39_CM_Meat Snacks.indd 39
January 2018 Convenience Store Decisions 39
12/22/17 2:57 PM
/
Category Management
Energy Drinks
Energy Drinks Show
Vitality Manufacturers continue to invent various healthier-for-you energy drink offerings for health-conscious consumers. By Jeffrey Steele, Contributing Editor
Fast Facts: » Overall, annual energy drink sales in convenience stores totaled more than $9 billion.
» A perennial favorite
among c-store customers, Red Bull sales again led the energy drink category.
» For the year, con-
venience store dollar sales of energy shots declined 7.4%, to nearly $721 million.
D
uring the last few years, convenience stores have provided a big boost to the energy drink category. Patrons finding their get-up-and-go flagging can quickly locate just the tonic to revive their drive and stamina, and be on their way. During that same time, the category has seen robust competition as manufacturers vying for more market share have developed different flavor profiles to capture new consumers. Some examples are acai berry and kiwi apple. Such innovations, said Susan Viamari, vice president of thought leadership for Chicago-based IRI, continue to show momentum in this category, [as] a result of consumers looking to keep things different and enjoyable. Manufacturers also continue to invent various healthier-foryou options. Some examples include drinks with low sugar, and added vitamins and minerals to appeal to health-conscious consumer segments, said Viamari. Energy drink sales have remained relatively stable during the past year,
40 Convenience Store Decisions January 2018
40-42_CM_Energy.indd 40
Viamari added. Convenience store dollar sales in the 52 weeks ending Nov. 5, 2017 increased about 0.9% to more than $9 billion. Most of the growth is attributable to the non-aseptic shelf-stable (SS) drink sector, where sales rose nearly 1.7% to $8.3 billion, compared to the previous year. Comparably energy drink mix sales spiked 23% to $1.9 million during the same period. Meantime, energy shots have witnessed a slowing of sales after several years of steady growth. Convenience store dollar sales in the 52 weeks ending Nov. 5, 2017 declined 7.4%, to nearly $721 million, compared to the previous year. Leading the way, 5-hour Energy Shots earned almost $666 million during that period. “Convenience stores are well-positioned as a provider of energy shots,” Viamari said. “As an impulse and convenience-driven channel, it’s a great spot for a quick hit of energy on the go. C-store retailers need to capitalize on this by offering very convenient merchandising, cstoredecisions.com
12/27/17 12:21 PM
CSD_Ad_Template.indd 10 CUE01000004_CONVENIENCE_STORE_DECISIONS.indd 1
12/21/17 8/22/17 9:17 5:47AM PM
/
Category Management
Energy Drinks
next to the register for instance, for quick grab and go.” The energy drink market is heavily focused on Millennial and younger Gen-X shoppers, Viamari added. “Messaging needs to convey the needs and wants of those shoppers, tailored for unique needs and wants because these shoppers are more focused than others on being seen as individuals; local feel [in] flavors, product forms and packaging; natural flavors; additional functionality; and personal-emotional connection,” Viamari said.
HEAVY HITTERS At Saukville, Wis.-based Mad Max Convenience Stores, with 10 stores extending from Oshkosh down to Port Washington, energy drinks are flat to up 1-2% this year, said Steve Magestro, company president. “Monster and Red Bull are still the heavy hitters in this category,” said Magestro. “We run a two-for program on all our energy drinks all year long internally. But it is always nice to have the brand promote with you, for better retails and profits.” ROCKSTAR continues to build market share by conducting three-for-one promotions at or almost at the same retail as two-for promotions, he added. AMP, NOS and Full Throttle are losing ground, but Mountain Dew’s Kickstart is increasing in sales at Mad Max locations. There are no new brands breaking ground at his stores, but Magestro is eyeing a new brand called Bang Energy to carry at all Mad Max locations, due to cost and retail. “We will bring it in shortly and see how it goes,” he said. “If it does not do well, out it goes. If it does well, then we’ll make a home for it in our carbonated soft drinks (CSDs). I am also looking at what it would take to private label energy drinks.” Energy drinks sell best in that space, because consumers want the drinks cold, Magestro said. Mad Max sells energy shots exclusively at the front counter. While the two-for-one campaigns are offered year round, Mad Max uses threefor-one promotions to promote the products of brands wishing to push sales for a month or quarter. Other marketing initiatives include the use of website promotions and point-of-purchase displays. When deep discounting is undertaken at Mad Max, sales rise and margins fall. “Usually the deals help the customers but rarely help the stores make more profit,” Magestro said. “I do not think it brings in new customers, but it does help retain them.” Energy drinks don’t play a major role in Mad Max’s overall day-to-day business, Magestro said. However, they do play a significant role in the CSD space. What growth energy drinks display appears to be coming at the expense of carbonated beverages, whose sales continue to ebb. “I am currently looking at different layouts for our CSD as new 2018 agreements will be coming up,” Magestro said. 42 Convenience Store Decisions January 2018
40-42_CM_Energy.indd 42
Magestro expects more changes in the CSD space at the retail chain. “I am thinking about not having any contracts with the soda companies this coming year so we can try whatever we want in our CSD space,” he said. “There are so many other liquids we could sell [in space] that these contracts make us take.”
SPACE RACE Noting “energy drinks and shots are tremendous items that continue to grow,” Scott Zaremba said his three Zarco USA stores in Lawrence, Kan., where “Discover the Oasis” is the tagline, are responding accordingly.
$ Sales
$ Sales % Chg YAgo
SS Energy Drinks Non-Aseptic
$8,301,987,328
1.66%
Red Bull North America Inc.
$3,418,163,200
2.01%
Monster Beverage Corp.
$3,350,046,464
1.58%
Rockstar Inc.
$747,735,424
0.29%
High Performance Beverage
$374,552,320
6.9%
Pepsico Inc.
$128,294,280
-26.4%
Category/Brands
Source: IRI’s InfoScan Review of convenience store sales for the 52 weeks ending Nov 5, 2017
“We’re continuing to add shelf space and secondary cooler space,” said Zaremba. “It doesn’t matter whether it’s in the cooler or not. It’s what specific promotions are coming up for these items. Customers are buying multiples of the products, not just singles.” “If they’re a specific brand purchaser, they’re buying multiples of that brand. And I’m seeing multiple flavors being purchased. [For instance] they are not buying three grape energy drinks, they’re buying multiple flavors in that brand,” he added. Red Bull and Monster are the big players in Zarco USA stores, Zaremba added. The company has had ROCKSTAR, Full Throttle and Kickstart for some time, but the newer names in the category are not able to unseat the favorites. Promotions tend to center around two-for and three-forone deals, he added. Which are chosen depends on what promotional support is forthcoming from manufacturers. Like others, Zaremba is not seeing the same sales volume in the shots as in the drinks. “I can’t nail down who’s purchasing, but Millennials are in the particularly active group of buyers,” he added. “A lot of the purchasing is across the board. And it’s the males that are getting the larger product purchases.” CSD
cstoredecisions.com
12/27/17 3:05 PM
2018
SAVE THE DATE
Line up for NAG 2018 at the beautiful Ponte Vedra Inn & Club September 9th thru 12th II Ponte Vedra Beach, FL Committed to building relationships and profits! The National Advisory Group (NAG) is an association of small to mid-size and familyowned chains and the executives that run them. This group convenes at an annual conference to exchange ideas with the motivation to improve their business performance and ultimately their bottom line. The setting of this conference encourages an extremely educational, yet highly social environment. The schedule consists of top notch speakers, retail information exchanges, opportunities to address burning issues within your business, a chance to get to know your peers in similar size operations and much more!
2018_NAG_STD_HouseAd.indd 1
For more information: RETAILERS should contact John Lofstock at 201.837.2177 jlofstock@csdecisions.com SUPPLIERS should contact John Petersen at 440.250.1583 info@nagconvenience.com
8/15/17 4:17 PM
/
Category Management
Beer
Bottling
Better Beer Sales Consumer preferences continue to trend toward craft, import and flavored malt beverages. By Brad Perkins, Contributing Editor
I
n convenience stores, overall beer sales—impacted mostly by dragging domestic sales—rose less than 1% for the 52 weeks between October 2016 and October 2017, and down 1.2% for the month of October, according to Nielsen C-Store Data. The Brewers Association, which promotes small and independent American brewers, announced in December that there are now more than 6,000 craft breweries in the U.S. These “small, independent and traditional” breweries accounted for $23.5 billion in retail sales and a 6.2% increase in volume sales last year, which is driving craft beer sales in many regions. “The high end is beginning to hit critical mass with over 40% share of beer volume,” said Brian Sudano, managing partner of Beverage Marketing Corp. “We expect the high end to grow in mid-single digits, which will offset declines of around 2% we are projecting for premium and value brands.” As tastes change and shift away from macrobreweries and value brands, craft beer and imports can be the main driver of a successful beer strategy. “You can count on Bud Light leading the majority of markets, which is why it’s hard to win as they have been down mid-single digits in 2017,” said Chris Cope, category manager at Pilot Flying J. “Beyond the leader, the trends for craft, import and flavored malt beverages (FMB) are going to be strong.” Of course, there will always be stalwart followers of Budweiser, Miller and Coors. But with higher price points, more distinct and varied flavors and nontraditional sizes of packaging, craft beer will continue to grow. “We are definitely seeing a shift to craft beers, imports and FMBs,” said Mike Clifford, category manager at Clifford Fuel, which operates 18 stores in central and western New York. “It’s a premium price point that you don’t have to 44 Convenience Store Decisions January 2018
44-45_CM Beer.indd 44
Fast Facts: » Despite domestic beer sales
remaining somewhat stagnant, craft beer sales continue to grow.
» Craft beer offers higher price points, more distinct and varied flavors and non-traditional sizes of packaging, including single-serve cans, large format bottles and four-packs.
» Partnering with local brew-
eries, taking advice of suppliers who know the market and offering dedicated space or shelves for craft beer can drive increased sales.
cstoredecisions.com
12/22/17 3:00 PM
put a discount to, so you can make more margin off those categories.” That’s important as market changes and tastes dictate greater discrepancy in offerings. “It has become tremendously more challenging to meet the demands of today’s customer as it has transitioned from three light beers and three value beers to every region with up to 10 subcategories,” Cope said. “With more options than ever, customers expect to find a product that meets the occasion.”
CONSUMING LOCALLY It’s clear that expanding beer options is a key component to success. But how do convenience stores get started? By partnering with suppliers and local breweries and using social media tools that show what’s popular in a given area. “With the number of breweries dramatically increasing over the past five years, the definition of ‘local’ beer is becoming a smaller radius around each brewery,” said Jake Hafele, category manager at Kum & Go. “Consumers are looking for more “hyper-local” options when purchasing. We use our partnerships with local breweries and beer distributors to keep a pulse on the demands of local consumers. We rely on their expertise to help us identify the correct beers for the correct stores. We also use beer rating websites and apps such as Untappd to see what beers consumers are excited about and recommending to their friends.” Although well-known brands still take up the majority of shelf space, customers are looking for options beyond the usual six- or 12-pack of lager. “Imports and premium options such as Corona, Modelo and Michelob Ultra continue to flourish,” Cope said. “Flavored malt beverages such as Mike’s, Twisted Tea and Four Loko will continue to grow within the single-serve markets. We should also see established craft brew players emerge as front runners; for example Goose Island, Lagunitas and Sweetwater. With single serve continuing to drive growth and margin, it is important to have a great promotional strategy and sku assortment to compete.” Single serve is a key area of growth, as breweries experiment with different-sized cans. Founders was the first to
release a 19.2-ounce can with its All Day IPA. Other brewers like Sierra Nevada, Lagunitas, Dogfish Head and New Belgium are also reportedly coming out with the large size cans. “A lot of them have come out with 16-ounce and 19.2ounce cans,” said Clifford. “It seems like it’s a focus from the bigger craft breweries. That was the one thing that we were missing. Now we’re able to have the craft offering for the single offering.”
HIGH ABV Mintel’s research showed that can production has increased 30% since 2012, while bottle output decreased the same amount. In addition to cans, breweries are also experimenting with higher ABV in larger packages and lower ABV session offerings that will vary from the usual IPA into golden ales or lagers. “High ABV beer products are experiencing strong growth, especially in flavored malt beverages,” Sudano said. “Major brewers going after the high ABV space. Large bottle and can sizes are expanding as companies launch increasing numbers of brands in large multi-serve packages.” In addition to adding shelf space, many stores are adding dedicated spaces. Clifford Fuel added beer caves in two new stores that led to double-digit increases in sales percentage. And Kum & Go partnered with local breweries to add growler filling stations. “Adding growlers to our beer offering has helped expand our beer sales and attract new customers,” Hafele said. “Consumers are looking to have beer packaged in a way that is convenient for their specific needs at the time, whether that is craft beer in a single serve, a package of cans, bottles or even a growler. And with consumers in search of more local beer options, selling growlers has been a great way to meet this demand.” Tailoring stock to what’s popular in the each area helps. But it still comes down to offering choice. “Expand offerings of high-end beer,” Sudano said. “Focus on local craft, Mexican imports and high ABV FMBs. Mainstream beer should be reduced as part of mix as there is still demand for it but it is shrinking.” And craft beer, FMBs and ciders can replace such demand, enabling c-stores to bring in new customers, Cope said. CSD
Consumer interest in bottles decreased
30.1% in the last five years, according
to Mintel’s “Beer Launches by Pack Type 2012-2017” while cans increased %.
31.1
cstoredecisions.com
44-45_CM Beer.indd 45
January 2018 Convenience Store Decisions 45
12/27/17 12:41 PM
/
Technology
Social Media Awards
The 2018
Awards
CSD’s sixth annual social media review focuses on trends and best practices in the year ahead and c-store retailers making strides on social platforms. By Erin Del Conte, Senior Editor
F
o r t h e s i x t h c o n s e c u t i v e y e a r, Convenience Store Decisions reviewed the Facebook (FB) and Twitter pages of 80 c-store chains and is recognizing those chains working to grow their audience and using creativity to expand engagement. In 2018, “social media is going to grow in importance for c-store retailers, especially as Gen Z increases their influence,” said Sheila Murray, COLLOQUY editor-in-chief and assistant vice president of marketing, global solutions, for LoyaltyOne. “Even more so than Millennials, these young shoppers expect personalized and mobileenhanced in-store experiences and social media offers a great opportunity to do both.” In the New Year, Murray expects to see c-stores continue to offer followers personalized or exclusive deals via social as well as introduce new products. “Social can also be used to build excitement for in-store events like 7-Eleven’s ‘Bring Your Own Cup Day,’ which wouldn’t have gained the prominence it has without fans talking it up on Twitter and FB,” Murray said. In 2018, c-store retailers should keep an eye on Instagram and Snapchat. Snapchat is the preferred network for Gen Z and younger Millennials. Stories is a must-use feature in 2018 on Instagram and FB. “Brands should consider using time-limited features across platforms to create
46 Convenience Store Decisions January 2018
46-49_Tech_Social Media.indd 46
must-see, in-the-moment content,” Murray said. Photos and stories posted to Instagram are successful when they have a purpose and offer value. Augmented reality (AR) is also expected to become more prominent on social media in 2018. “Enhanced or digitally augmented experiences are an excellent way to get younger shoppers into the store, so it makes sense that AR will make its way into retailers’ marketing budgets,” Murray said. “Social media is an important tool for promoting these experiences by offering reach, access and sponsored opportunities within the platforms themselves. Snapchat has already made significant inroads in creating catered AR-user experiences, and the more you can incite customers to share with their networks, the more value you’ll get out of those efforts.” Consider using an influencer strategy. Murray pointed out that studies show younger consumers trust “influencers” more than traditional advertising. According to a 2016 LoyaltyOne proprietary study, 21% of Millennials distrust advertising altogether. “As c-store brands look to appeal more to those demographics, working with influencers to create original content on Facebook, Instagram or elsewhere is going to become table stakes,” Murray said. Meanwhile, live streaming offers “an immediacy” that can help chains stand out. “Working with a digcstoredecisions.com
12/27/17 12:22 PM
POWERFUL BRAND. HOMETOWN FEEL.
RUNNING YOUR BUSINESS YOUR WAY. POWERED LOCALLY.
We know that the true power behind the Cenex® brand comes from our locally-owned retailers – valued partners who are invested in their customers and community. That’s why we’re committed to your success and helping you build your business from the moment you become a Cenex® retailer. From flexible brand conversion and marketing, to convenient payment processing and training programs, we can provide your business with the support it needs to help you grow.
© 2017 CHS Inc.
CSD_Ad_Template.indd 9
A name your customers trust, a brand you can count on – visit cenex.com/businessopportunities to learn more.
12/21/17 9:16 AM
/
Technology
Social Media Awards
ital influencer to broadcast a live in-store is a great way to create ‘appointment viewing’ and build buzz,” Murray said. But above all “authenticity” is perhaps the most important quality successful social media pages provide. “Influencers should align with your brand and what it represents, these need to be collaborative relationships connecting like-minded individuals via a brand experience,” Murray explained. What’s more, Murray stressed that social is a channel, not a tactic, and as such it will continue to evolve. “Using it successfully requires an agile, test and fail mentality,” she said. “As with any new, still developing marketing tool, social efforts will only be as strong as the backbone of your brand and the process you use to bring your efforts to market.”
THE AWARDS
FAN-BASED GROWTH AWARDS Most overall growth on FB and Twitter combined. This award calculates the number of new FB fans (number of people who like the page) and Twitter followers between Dec. 2, 2016 and Dec. 5, 2017. Winner: Speedway grew 138,168 new FB fans and 32,000 new Twitter followers in 2017 for a total of 170,168 new fans/followers. Runner Up: Wawa grew 46,378 new FB fans and 104,000 new Twitter followers in 2017 for a total of 150,378 new fans/followers.
MOST TWITTER FOLLOWER GROWTH IN 2017 This award recognizes the chain with the most follower percentage growth between Dec. 2, 2016 and Dec. 5, 2017. To be considered, chains needed a minimum of 5,000 followers on Twitter. Winner: Wawa grew its Twitter followers from 216,000 to 320,000 (48% growth). Runner Up: Cumberland Farms, a 560-store chain based in Westboro, Mass., grew its Twitter followers from 13,000 to 18,000 (38% growth).
SHOUT OUTS Numbers are only part of the story when it comes to social media. This year’s Shout Out award recognizes a chain using promotions or ongoing campaigns on FB to connect with its core consumer base in a particularly creative way, consistently throughout the year. While there were many nominations, we’ve narrowed it down to two chains that exemplify the art of creative posting.
BEST OVERALL ENGAGEMENT THROUGH ONGOING CAMPAIGNS Winner: Rhodes 101 Stops, a 31-store chain based in Cape Girardeau, Mo. Rhodes 101 Stops used numerous creative, omnichannel campaigns in 2017 to engage customers on FB and drive them into the store. Here are a few. This May, the Missouri chain aspired to break the Guinness World Record for largest glass of soft drink, MOST FACEBOOK FAN GROWTH IN 2017 This award recognizes the chain with the most fan per- and engaged customers in the attempt. On FB, Rhodes centage growth between Dec. 1, 2016 and Dec. 5, 2017. presented a “press conference” on the event and via subTo be considered chains needed a minimum of 10,000 fans. sequent posts, challenged fans to visit Rhodes and buy Winner: MAPCO grew from 48,945 fans to 71,243 (46% fountain drinks between May 26 and July 31—each purchase would add one ounce to the size of the giant cup, growth). Runner Up: Salt Lake City-based Maverik grew its fan helping it topple the world record. “We announced 25-cent drink hours every other day ($1 base from 117,638 fans to 157,576 (34% growth). This past year, MAPCO grew its audience on Facebook is our normal price),” said Lindsey Wagoner, vice president of marketing and Rhodes. The timing of these 25-cent by applying feedback from its core demographic. “MAPCO has focused on great content that displays our hours was a secret, and announced via social media only 15 brand personality and culture. We listen to what our audi- minutes before the hour began. Fans could then dash to ence wants to see from us and on the channel they want Rhodes to take advantage of the promotion. “This approach kept our customers watching and engagto see it,” said Bobbe Morhiser, senior guest experience ing with us on social media throughout the summer,” manager. Wagoner added. Rhodes used a “news theme” in posts throughout the summer, using actual Rhodes employees and held 25-cent drink parties that it publicized on FB. Images of the giant cup appeared on FB looming over locations and landmarks to draw excitement. - Sheila Murray, COLLOQUY editor-in-chief and assistant vice president In a salute to National Lemonade of marketing, global solutions, for LoyaltyOne
“
As with any new, still developing marketing tool, social efforts will only be as strong as the backbone of your brand and the process you use to bring your efforts to market.
”
48 Convenience Store Decisions January 2018
46-49_Tech_Social Media.indd 48
cstoredecisions.com
12/27/17 12:23 PM
to enjoy the following weekend. This holiday season, Rhodes introduced its Christmas “How To” Video Series on FB, playing off the You Tube “how to” craze, focused on incorporating Rhodes-branded products into typical Christmas traditions. Several posts were paired with giveaways and also drove fans to the store with a call-to-action related to giving Rhodes’ gift cards as Christmas gifts. “Engagement can’t be deposited in the bank, but increased foot traffic increases sales potential…That’s why our Facebook videos and posts include calls-to-action that result in store visits,” she said. BEST ENGAGEMENT WITH A SERIES OF SINGLE Day, Rhodes on Aug. 20 hosted a party where the giant cup PROMOTIONS Winner: Parker’s was filled with lemonade and consumed by the public, as a Parker’s used a range of creative promotions to engage Guinness World Records adjudicator evaluated the attempt. with fans. Here are a few. The party was advertised via FB. Its March Madness promotion included all Parker’s“Leading up to the party, we made Snapchat Geofilters available at several locations. They marked the number of produced food and drink items facing off for each bracket. days until the party and our official Guinness World Record FB fans used reaction buttons (heart or thumbs up) to vote. “It’s easier to vote with a reaction button and you get attempt,” Wagoner said. Rhodes also used the event to unveil a new fountain more interaction that way,” said Jillian Stafford, who handrink cup design. FB followers were invited to offer sug- dles social media for Parker’s, which operates 51 c-stores in gestions on what the refreshed style should look like. “We Georgia and South Carolina. “Page posts that have a lot of made a special Snapchat Geofilter available at the party for reactions trend higher in the algorithm, therefore increasing the exposure of each voting post.” visitors to take photos of themselves with the giant cup.” Another FB promotion that thrilled fans featured a horse Rhodes exceeded the previous 3,200-plus gallon record who loves the chain’s signature Chewy Ice and sweet tea. and now holds the world record at 4,795 U.S. gallons. In conjunction with its world-record attempt on National The horse works at a nonprofit organization that provides Lemonade Day, Rhodes tied in an ongoing creative promo- equine therapy to disabled children and adults and the post tion to spread the word about its fruit-flavored lemonades boosted awareness about throughout the summer. It partnered with a local kids drama both Parker’s products group and created video stories about the kids’ lemonade and the equine therapy stand competing with a Rhodes’ fruit-flavored lemonade initiative. In another unique stand. The videos included actual employees. “Highlighting our team members in our social media post, Parker’s celebrated campaign gets our customers excited to watch and pay the solar eclipse with a attention making our advertising much more effective,” said video showing a moon Wagoner. “Many of our customers visit their favorite Rhodes pie moving across a bag location on a daily basis. Over time, they get to know our of sun chips. When Hurricane Irma team members personally…On social media, people want came barreling into the to see people they know and interact with them.” As football season kicked off, Rhodes introduced a FB chain’s area in September, campaign about being in-stock on “HomeGating” prod- Parker’s posted videos to ucts, i.e. enjoying a football game at home with snacks FB to show customers it was there for them. Twice daily and other items. Rhodes again incorporated its employees the chain updated customers on which stores were open as into its video and photo series depicting them as a foot- staff had to consolidate at specific stores. On Veterans Day, Parker’s again connected with its comball team—complete with special Rhodes jerseys—making “plays” with in-store products. The campaign included munity by featuring its employees who have served the weekly giveaways via a drawing publicized on FB for a country. Parker’s recently entertained fans on FB with its HomeGate Party. The promotion drove fans to the store as Very Merry Gas Giveaway, in which company mascot Chewy winners could redeem their party at a local Rhodes location surprised customers with a free tank of gas. CSD cstoredecisions.com
46-49_Tech_Social Media.indd 49
January 2018 Convenience Store Decisions 49
12/27/17 12:23 PM
TECHNLOGY
Column
A Better Path to Inventorying
Ed Collupy, executive consultant at W. Capra Consulting Group can be reached at ecollupy@wcapra.com. Visit www.capraplus. com for more retail technology and business insights. Collupy has IT leadership and business team experience providing strategic, operational, and project leadership to retailers, emerging businesses and technology companies.
Gaining control over store inventory is a necessary step to boosting your bottom line. By Ed Collupy
W
hen store operators talk about inventory and cash management I always hear them talk about it in terms of accountability, control and operational improvement. How they get there, even with similar objectives, isn’t always the same. Many put technology to use, prioritizing what’s important to them and later widening the circle to learn more about their system to make further improvements. CIRCLING THE SUPPLY CHAIN Sam Nino, operator of Cabazon Fuel Centers in Southern California, described his inventory management process to me as a circle of activities that need to work together. That’s exactly how I describe the procurement-to-pay process. Each step in the inventory management supply chain has its own processes and opportunity to put technology to work—let’s move around the circle and look at a few of them. Vendor Management. Centrally managing vendors and the items that are authorized for each store is a key component and putting to use the Price Book functionality of your back-office system is a step that can help to ensure availability of product for the store personnel to place an order. There are case studies throughout the industry where retailers have stopped unauthorized inventory by disallowing open item purchases, resulting in immediate inventory control and vendors’ unauthorized items are immediately returned. Ordering. A colleague of mine says “the prize” that comes about from taking progressive steps in inventory management is Computer Assisted Ordering (CAO). But before you get there most back-office solutions support different types of orders: • The ability to walk the c-store and order against the authorized Price Book. • The ability to copy or re-use a prior order. • View a theoretical on-hand during the order process as well as the last few weeks of sales history. At a recent gathering of industry back-office solution 50 Convenience Store Decisions January 2018
50-53_Cash Managment.indd 50
users, they learned more about implementing some form of automated ordering capability. For those already on this journey there was advice to take it in steps—ensuring first that new inventory processes have been mastered in terms of execution and timeliness. CAO offers the most return on investment for any inventory management technology implementation that a c-store might be pondering. Receiving. With the use of technology/processes comes a great opportunity to introduce and automate policies that are critical to managing vendors delivering product. Earlier identification of cost discrepancies is an opportunity in the receiving process that can’t be minimized. When a vendor delivers, in most back-office systems, the store staff will have immediate visibility of a cost from the central Price Book being different from the vendor’s invoice. Nino noted vendor controls like these “gives you accountability.” Adjustments & Counts. There are many types of modifications that need to be made to maintain an accurate store level inventory: returns/credits, transfers and waste. Entry of adjustments into your system is critical to maintain an accurate perpetual inventory. Having the capability to report on adjustments helps identify causes of margin erosion and true shrinkage allowing for action planning. Inventory counts are completed based on your inventory management method—full c-store, partial count, category and/or item level filters. Your back-office system should help track sales during the count process. Counts also allow you to see the result in shrinkage and overages as a performance measure and guide. Invoices. A true time saver at store level and an overall business process improvement that Donna Perkins, Price Book manager at E-Z Stop Foodmarts, spoke about when she led the recent Conexxus webinar “How Much Can You Save with Electronic Data” is importing an electronic in-
cstoredecisions.com
12/27/17 12:24 PM
SafePoint by Loomis ®
We’re driving the future of cash management. SafePoint by Loomis is the industry’s premier cash management solution and combines cutting-edge technology with Loomis’ unmatched quality, service, and expertise. This comprehensive ecosystem is designed from the ground up to help cut cash-handling costs, increase efficiency, protect employees and customers, and boost profitability for retailers and operators in the convenience store industry.
SAFEPOINT INCLUDES:
Advanced proprietary smart safe technology
Dedicated in-house IT development and customer support
Real-time data and reporting tools with Loomis Direct customer portal
Secure, state-of-the-art processing and cash-in-transit services
Power your business with cutting-edge cash management solutions built to meet your needs today—and in the future.
loomis.us/SafePoint © 2017 Loomis Armored US, LLC. All rights reserved.
SafePoint by Loomis
CSD_Ad_Template.indd 14 31157_Loomis_US_Tradeshow_ad_PROD.indd 1
CASH MANAGEMENT. MOVING FORWARD.
12/21/17 AM 12/20/17 9:20 3:44 PM
TECHNLOGY
Column
a hand-held terminal during the inventory management process is “aUsing key technology that many grocery wholesalers and back-office solutions
offer to improve inventory accuracy. A solution that is integrated with the Price Book will enable further efficiencies.
”
voice from wholesalers and direct delivery vendors. This system-based process allows for the tracking of transactions from ordering to receiving to returns and audits. Identification of cost and quantity discrepancies before the vendor leaves the c-store allows these exceptions to be identified and resolved before they update your financial system and reduce overpayment. Perkins reported that with just one vendor they have saved over $23,000/year and knows that this will grow as they continue importing new vendor invoices. A HANDFUL OF USES Using a hand-held terminal during the inventory management process is a key technology that many grocery wholesalers and back-office solutions offer to improve
inventory accuracy. A solution that is integrated with the Price Book will enable further efficiencies. “Time is everything,” said Nino, who has been able to delegate the receiving process to cashiers because using the hand-held is “simple and easy to do.” His hand-held uses a docking station to upload data but he knows that wireless devices and real-time updates are available. The hand-held is best used to complete the inventory management circle: • Display calculated on-hands when ordering. • Receiving against the order once the items are delivered. • Matching the order and receiving to the e-invoice. • Facilitate faster and more accurate counts. A hand-held device also removes duplication of effort,
THERE WHEN YOU CALL. ATM, Air, and Vac with super-human customer support.
52 Convenience Store Decisions January 2018
50-53_Cash Managment.indd 52
cstoredecisions.com
12/27/17 12:25 PM
in terms of matching and counting manually against the order and/or paper or e-invoice and then requiring entry into another system. The introduction of substitution products or unauthorized products prior to arriving at the point of sale (POS) is prevented. Brandy Clark of Clark’s Pump N Shop refers to the proverb “time is money” when she points to the inventory management processes she uses along with what’s close at hand, her smart phone or tablet, wherever and whenever she needs information. Nino sees the day when he and his employees will use a tablet in the ordering process that will “keep operations as streamlined as possible.” EVERY PENNY COUNTS Smart operators make it a point to follow Ben Franklin’s “a penny saved is a penny earned” advice when it comes to business. Technology-based cash management practices are able to quickly identify actionable steps to bring more than pennies back to the bottom line of your store operation. One back-office solution provider consultant recently told me that working with his customer and the system
cstoredecisions.com
50-53_Cash Managment.indd 53
brought to light and resolved a long-standing problem. Their previous method of reconciling money orders left a hole allowing the store manager to manipulate sales and receipts figures to make a day seem in balance, when in fact it was not. Analyzing back-office and auto-imported POS data that auto-calculates the over-shorts accordingly made it quick and easy to see the discrepancies. Clark utilizes the c-store analytics module of her backoffice solution and reports that cashier performance has improved at her 62 stores. She said, “Using a cashier heat map enables monitoring of incidents by cashier by store allowing us to address training or shrink issues.” Her back-office system collects transaction data from the POS and with its heat map capabilities report using “different colors to quickly show us when a store/cashier’s average has shot up. It’s a quick and easy way to spot a problem.” Inventory and cash controls within a closed-loop system are necessary in successful operations. With strong processes supported by technology, managers can close the gaps in the supply chain cycle and let the pennies add up quickly to significant dollar savings. CSD
January 2018 Convenience Store Decisions 53
12/27/17 12:25 PM
/
Operations
Alternative Payments
Plugging Into Alternative Payments A Fast Facts: » More and more, pay-
ment-savvy customers will seek out paymentsavvy retailers. » In 2016, about
117,591 of the nation’s 154,535 total convenience stores participated in the federal SNAP program. » More alternative pay-
ment systems are offering EMV upgrades that enable retailers to better safeguard customer transactions. 54 Convenience Store Decisions January 2018
54-56_Oper_Alt Payments.indd 54
n increasing number of c-store operators—especially those trying to better accommodate customers who prefer to pay through mobile means, or who rely on merchants to use tools like SNAP, Google Wallet, store apps and uploading Amazon Cash cards—are realizing the importance of providing customers with more payment options. “A lot of people are using ‘nontraditional’ ways of payment today,” said Connor Blakely, founder of YouthLogic, a marketing consultancy. “Previously, PayPal was really the only way to transfer money, but now you can send money through text messages, the Supplemental Nutrition Assistance Program, or SNAP, Apple Wallet and Venmo. Especially with Gen Z, a lot of us are using mobile means of payment and don’t carry cash. This is especially important for people who largely rely on tips or companies that only accept cash.” More and more, payment-savvy customers are seeking out paymentsavvy retailers. “For most customers, retailers who embrace alternative payment technologies will be the preferred choice,” said Matthew Hudson, a retail consultant based in Fort Worth, Texas. “We
Modern payment means can increase a merchant’s reach, provide customers with more choices and help to simplify checkout at the register and at the pump. By Howard Riell, Associate Editor
have already seen customer behavior to support this premise. Customers have been changing their normal place to shop to new locations that use alternative payment options. Since the items they are shopping for in the c-store world are so (diverse), it’s easy for them to change locations.”
SNAP JUDGEMENT According to U.S. Department of Agriculture 2016 data, approximately 117,591 of the nation’s 154,535 total convenience stores participate in SNAP and about $3.7 billion in SNAP benefits are redeemed at convenience stores, which amounts to 5.63% of all total benefits used. The USDA’s Food and Nutrition Service administers the SNAP program. Eva Rigamonti, an associate at the international law firm Steptoe & Johnson LLP, said c-stores have been involved with the program for more than a decade. “SNAP is an anti-hunger program, and was created to provide lowincome Americans with access to food,” said Rigamonti. “Most often, c-stores want to participate because participating allows them to serve all of the people in the communities where they operate.” That said, the requirements to cstoredecisions.com
12/27/17 12:26 PM
ADD
Critical Insight Into Your Store Data Turn your data into actionable information with ADD eStore® and Atlas Reporting®. ADD Systems® offers the best back office software solution, with Business Intelligence tools for tracking, analyzing and managing sales, purchases, inventory and more to help you maximize your profitability. 1010101010101010101010101010101010101 1010101010101010101010101010101010101 1010101010101010101010101010101010101 1010101010101010101010101010101010101 1010101010101010101010101010101010101 1010101010101010101010101010101010101 1010101010101010101010101010101010101 1010101010101010101010101010101010101 1010101010101010101010101010101010101 1010101010101010101010101010101010101 1010101010101010101010101010101010101 1010101010101010101010101010101010101 1010101010101010101010101010101010101
To ADD more to your Convenience Store business, contact us at 800.922.0972 www.addsys.com
ADD8427-4_C-Store_ConvenienceStoreDecisions.indd 1 CSD_Ad_Template.indd 1
6/28/16 9:58 AM 12/21/17 9:04 AM
/
Operations
Alternative Payments
participate in the program can be cumbersome for c-stores, which are much smaller than grocery stores, have limited shelf space and only receive food delivery one or two times a week. Thus, a c-store may decide it is too difficult or burdensome to participate, particularly because of stringent requirements. After protests from convenience retailers and input from the National Association of Convenience Stores, the FNS did lessen eligibility requirements in the form of a final rule released Oct. 16, 2017. Among some of the changes, the rule now requires SNAP-authorized retailers to stock at least seven (up from three in years past) varieties of items in each of the USDA’s four staple food categories— meat, poultry or fish; bread or cereals;
requirements, particularly in light of delivery constraints and shelf space for perishables. “In addition, a store will have to think about how much it will cost to stock the necessary items, some of which may not be big sellers and may spoil,” Rigamonti said. “Then, a store should balance those costs against the benefits of participating in the program and the ability to service all of the customers that live nearby and shop at the store.” Of course, not every alternative payment system is as controlled as SNAP. In fact, as payment systems become more popular, they are finding a wider market. One example is Gulf Pay, which was rolled out in the middle of last year to retail partners of Gulf Oil.
Most often, c-stores want to participate (in “SNAP) because participating allows them to serve all of the people in the communities where they operate. ” - Eva Rigamonti, an associate, Steptoe & Johnson LLP
vegetables or fruits; and dairy products—to include one perishable item in three of those categories. The new SNAP stocking policy states that in order for retailers to be eligible to participate in SNAP, they must offer fewer than seven different varieties of food items in each of the four staple food categories with a minimum depth of stock of three stocking units for each staple variety, Rigamonti explained. This means that, on any given day of operations, a retailer should offer a total of 84 units for sale (three stocking units, seven staple varieties, four staple food categories, equaling 84 units). The convenience store operator considering applying for a SNAP license should think about how he or she will be able to meet the stocking
NAVIGATING THE GULF
56 Convenience Store Decisions January 2018
54-56_Oper_Alt Payments.indd 56
The Gulf Pay app launched in both the Apple app and Google Play stores last June, and is accepted at participating Gulf retail locations throughout select New England and New York markets. “Gulf Pay enables Gulf customers to navigate to the nearest Gulf gas station, pay for fuel at the pump, and purchase products inside the convenience store utilizing fast, simple and secure mobile payment technology,” said Nikki Fales, director of marketing for Gulf Oil in Wellesley Hills, Mass. The app also promises convenient, secure and seamless shopping experiences for customers by allowing payment authorization directly from the comfort of their vehicle. Users can also use the app to locate the closest Gulf
station, access live pricing and reliable directions and view station offerings. “With this innovative technology, Gulf is ahead of the competition and current and prospective customers are approaching us to learn how they can participate in this exciting program,” Fales said. “The station implementation is simple, as the retailer only needs to be EMV compliant and have a technician make a quick visit to configure the point-of-sale system to ensure appropriate communication between both our app developer and the station pumps. There is no additional hardware necessary at the pumps to accept Gulf Pay, and the EMV upgrade now enables our stations to provide better service and savings to our drivers.” Pat O’Connell, executive vice president of Energy North Group in Tewksbury, Mass., which operates 35 Haffner’s locations in Massachusetts and Maine, said his company has been actively rolling out the Gulf Pay app at all of its Gulf Oil-branded sites. “The petroleum industry is constantly changing, and one trend we are seeing with all brands is that mobile payment is the future,” said O’Connell. “It’s important to separate yourself from your competition, and we believe that Gulf Pay is another tool that will help us bring in more loyal Gulf customers.” Energy North has also successfully rolled out ExxonMobil’s Speedpass+ at the majority of its ExxonMobil sites. As with Gulf Pay, he wants to provide customers with what he called the latest and greatest technology to support any and all types of customers and their preferred methods of payment. “One of the major benefits that consumers are telling us is how fast and easy the app is to use,” said O’Connell. “Authorizing a pump through the app is quick and painless, and many customers are shocked by how easy it is to use. The last benefit that we see is how secure mobile payment is through the app.” CSD
cstoredecisions.com
12/27/17 12:26 PM
The convenience store industry’s young executives and next-generation leaders face unique challenges as they grow their businesses in the fast-paced, competitive convenience store market. The National Advisory Group’s (NAG) Young Executives Organization (YEO) was formed specifically to addresses these challenges and help the industry’s leaders of tomorrow identify solutions with others in their age group. YEO exists to serve as an effective conduit for getting young professionals more involved and prepared for leadership positions both in their companies and in the broader convenience store industry. Convenience store companies must identify their next-generation leaders and groom them for management positions. But leadership is a dynamic and demanding task. Many people believe they have what it takes to be an effective leader, but quite often they discover that the demands far exceeded their expectations. Successful leaders are prepared for the challenges ahead and have a vast support network to see them through the tough times. This is where YEO can help. YEO membership offers next-generation leaders a network of other young leaders in similar positions. The group meets twice annually at an annual roundtable in the spring and the NAG Conference in September.
For information on joining YEO or NAG, contact NAG Executive Director John Lofstock at jlofstock@csdecisions.com.
YEO_NAG_2017.indd 1
11/21/17 3:59 PM
/
Operations
Labor & Wages
Wages
STATE OF THE UNION
Are All the
Rage T
his year—like last year—one of the most significant operational costs to c-store operators will be employee wages. This year, many local and state legislators will be pushing more wage initiatives.
New York legislators in 2016 voted to raise the state’s minimum wage to $15 an hour under different schedules, to include 2018, within three regions: 1) New York City; 2) “downstate,” which includes Nassau, Suffolk and Westchester counties; and 3) the remainder of New York State (“upstate”). The legislation also sets a different schedule of increases for New York City businesses with 10 or fewer employees. The designated rates will increase yearly until hitting $15 at the end of 2018 in New York City and in the middle of 2021 for the rest of the Empire State.
ST. LOUIS BLUES Not every wage scale in the U.S. is on the rise. In 2017, Missouri Gov. Eric Greitens backed a bill that bans local minimum wages and requires all Missouri cities to stick to the statewide standard. Workers in St. Louis were making $10 an hour after winning a two-year fight against businesses that challenged a 2015 city ordinance authorizing an increase. The wage was set to rise again in Jan. 1, 2018 to $11 an hour. The governor argued that the wage hike would have been economically detrimental.
The federal minimum wage of $7.25 per hour has not increased since 2009. However, in the last nine years, many states have implemented their own minimum wage hikes, far exceeding the federal wage mark. Jan. 1, 2018 marks minimum wage increases that will take place in the following 15 states: Washington: $11.50 California: $11.00 Arizona: $10.50 Vermont: $10.50 New York: $10.40 Colorado: $10.20 Hawaii: $10.10 Rhode Island: $10.10 Maine: $10.00 Minnesota: $9.65 Michigan: $9.25 South Dakota: $8.85 New Jersey: $8.60 Montana: $8.30 Ohio: $8.30 Source: National Conference of State Legislatures.
Pays the Way
In an attempt to ease some of its employees’ financial concerns, Walmart announced recently it is providing a company app that allows workers to receive wages before their next payday.
According to the New York Times, Walmart’s more than 1.4 million workers can now use an app to access a portion of wages for the hours they have already worked. The goal, according to the retailer, is to help staff avoid costly payday loans and other high-interest options. This should be viewed as a competitive advantage in the fight to recruit good frontline employees. “We believe this is the right thing to do, and we are happy to champion it,” said Judith McKenna, Walmart’s chief operating officer in the article. She added that workers who are less worried about cash issues “feel more confident and more settled at work.” The Times reported the minimum starting wage at Walmart is $9 an hour, which is $1.75 higher than the federal minimum wage, but lower than the starting wage at Costco, which pays $13 an hour, and Target, which raised its entry-level wage to $11 an hour. Source: www.360hr.com
Source: www.nextcity.org
58 Convenience Store Decisions January 2018
58_Oper_Wages.indd 58
cstoredecisions.com
12/27/17 12:42 PM
CStoreDecisions ecisions .com
CStoreDecisions.com is geared toward C-Store retailers, convenience store suppliers, and distributors looking to stay abreast of industry trends, new product offerings and category management best practices.
Thank you to our Key Partners:
We use the latest media technology, delivering content the way you want it: print issues, digital issues, enewsletters, and videos. Use CStoreDecisions.com to help you strengthen your peer network with social engagement through Twitter, LinkedIn, Facebook, YouTube, Pinterest, and Google+. Browse, bookmark, share and interact with the most relevant industry content and people in the market.
2017 Web Ad.indd 1
12/28/17 1:27 PM
PRODUCTShowcase Mint Chocolate Snack
Premium Pocket Lighters Scripto Ultima is the newest premium pocket lighter line on the market offering a lighter for every style. Built to be the “Ultimate” lighter, the Scripto Ultima features up to 3,000 lights*, visible fuel supply, adjustable flame and unique designs. A variety of designer wraps are available with an option for customization. No need for the same lighter design day in and day out. Mix it up with lighter designs that appeal to your consumer demographics. Introducing new lighter designs to your pocket lighter mix can stimulate sales in the category and add a powerful punch of fun to your front-end. Scripto is one of the most trusted and popular brands of lighters and has been a household name for over 80 years.
General Mills Convenience has added another irresistible flavor to its line up of Chex Mix Muddy Buddies. Mint Chocolate Muddy Buddies feature crispy Corn Chex pieces in a chocolate mint coating with a delightful powdery smooth finish. The latest flavor joins other varieties of Muddy Buddies available in convenience stores including: Chocolate, Cookies & Cream and Brownie Supreme. Mint Chocolate is a fast growing flavor in convenience yet is underrepresented in the warehouse salty category. The new flavor of Muddy Buddies helps retailers satisfy their shoppers’ sweet tooth with a delicious, on-trend flavor combination. Mint Chocolate Muddy Buddies come in a 4.5-ounce size bag with a suggested retail price of $2.59.
Company: General Mills Convenience
(800) 767-5404
www.generalmillscf.com
New Snickers Flavors In 2018, SNICKERS is debuting three new flavors for a limited time as part of the Hunger Bars promotion. When you’re hungry, you lose your flavor—what makes you, you. Get your flavor back by trying a new SNICKERS Espresso, Fiery, or Salty & Sweet. Each flavor has a hunger symptom on the outside of the packaging that relates to the flavor of the bar - Espresso: Irritable, Salty & Sweet: Indecisive, Fiery: Wimpy.
Company: Mars Wrigley Confectionery www.snickers.com
Company: Scripto
(877) 367-7325
60 Convenience Store Decisions January 2018
_ProductShowcase.indd 60
Limited-Edition Soup The new labels of Campbell’s Limited-Edition Star Wars soups feature characters from Star Wars: The Last Jedi on a metalized paper label, and includes Rey, Finn, BB-8, Captain Phasma and the Praetorian Guard. Inside the can, the special Healthy Kid Fun Shaped Pasta with Chicken Soup includes intricate, die-cut Star Wars pasta shapes, with no added MSG, artificial flavors or artificial colors.
Company: Campbell’s www.campbells.com
cstoredecisions.com
12/22/17 2:36 PM
PRODUCTShowcase Cold Brew Coffee Red Diamond Coffee & Tea has launched Fitz Cold Brew Coffee. Fitz Cold Brew Coffee boasts the same full-bodied coffee that guests have adored before, now with a new look and feel. The 100% Arabica blend offers a fullbodied, rich, sweet taste, with a hint of nutty flavor. Red Diamond cold brew is specially blended for the cold brew process and brings out the distinctive characteristics of the bean. Every cup highlights the unique characteristics of the beans for a flavor even the most discerning connoisseurs love.
Company: Red Diamond www.reddiamondbevservice.com
Easy Chicken Nuggets Tyson Single-Serve Chicken Nuggets are packages of chicken nuggets from America’s top frozen cooked chicken brand (IRI, Total US Multi-Outlet, 52 Weeks ending June 4, 2017) with 100% all-natural ingredients and no preservatives or fillers. With six 3.7-ounce units per case for easier frozen merchandising, these convenient, single-serve portions feature special microwaveable packages to help crisp the product and allow for easy heating instore or at home in only minutes. Two popular flavor varieties include: Chicken Nuggets and Spicy Chicken Nuggets.
Company: Tyson Convenience www.tysonconvenience.com
ChiliLime Tortilla Chips Truco Enterprises, maker of On The Border retail products, has formed a strategic partnership with TAJÍN, creator of the leading seasoning in produce across the U.S. and Mexico, to launch a new line of flavored tortilla chips. On The Border’s Taste of Tajín will hit retailer shelves in early 2018. The chili lime flavored chip segment is growing at approximately thirty percent with sales topping $259 million, according to IRI data for multi-outlet retail for the 52-week period ending on Aug. 6, 2017. TAJÍN’s proprietary seasoning is made using a blend of mild chili peppers, sea salt and dehydrated lime juice. While this is the first collaboration between the brands, there are plans for further innovation as Truco continues to expand its product line in the flavored tortilla chip category.
Company: Truco Enterprises www.ontheborderproducts.com cstoredecisions.com
_ProductShowcase.indd 61
Fresh Fried Chicken BirdShack is a new fresh fried chicken concept that helps owner-operators seeking flexible ways to deliver an irresistible fried chicken experience. BirdShack recently formed a relationship with Core-Mark to capture chains and independents seeking entrepreneurial ways to deliver an easy-to-prepare fried chicken experience. In just one month of partnership, BirdShack is now in more than 50 stores nationwide. For retailers who may be already frying chicken in their stores, the costs to open a BirdShack would be limited to purchasing store marketing materials. For a retailer needing equipment, equipment can be purchased from BirdShack or from a dealer. There are also no franchise fees or royalties. BirdShack products are high quality, specially formulated for a successful foodservice program. Custom branded counters, menu boards, signage, uniforms, packaging, and product are available to each operator. Convenience store operators are trained to make double breaded fresh fried chicken, potato wedges, biscuits and Southern sides.
Company: BirdShack
(877) 367-7325
www.birdshackchicken.com
January 2018 Convenience Store Decisions 61
12/22/17 2:36 PM
PRODUCTShowcase Roller Grill Egg Rolls Schwan’s Food Service is expanding its egg roll varieties for the roller grill. The company identified through proprietary research that approximately 20% of Millennials purchase egg rolls from a convenience store up to three times a week. This fall, Schwan’s Food Service has launched three new Minh egg roll varietHOSHIZAKI announces its newest reies: Bacon, Egg & Cheese; Sausage, Egg frigeration product line, glass door mer& Cheese; and Teriyaki Chicken. These chandisers. The stylish silver aluminum varieties will be added to current channel cabinets with energy-efficient glass doors, offerings of Pork & Vegetable and Chickfeature bright LED lights that enhance any en & Vegetable egg rolls. The egg-based packaged food and beverage retail disNow Cheez-It and Pring- egg rolls, unique in the marketplace, add play. Available in four different sizes. The les brands team up in one a fun new hot-food option for customers 55.5-inches tall, RM-10, includes three shipper display designed to who traditionally purchase bakery goods epoxy-coated shelves, a recessed door draw your hungry, on-the-go at their favorite convenience stores in the handle, and stores up to 288 canned bevsnackers to these two high- mornings. erages. The swing door models, RM-26 & impact brands. The opporRM-49, include five epoxy-coated shelves Company: Schwan’s Food Service tunity to spur impulse purper section, aluminum door handle(s), and www.schwansfoodservice.com chases and increase basket heavy-duty hinges with self-closing mechrings is considerable. Cheezanism. The sliding door two section, RMit, a $120 million brand, has 45-SD, includes 10 epoxy-coated shelves. shown 12.9% growth within The sliding doors, with stay open feature the past year, and Pringles is and spring assisted self-close, will keep the No. 1 warehouse delivyour products cool and save electricity. All ered salty snack brand . Both merchandisers are backed by a three-year brands offer a wide assortparts and labor and a five-year compressor ment of powerfully satisfying warranty. flavors. This shipper display Company: Hoshizaki America puts five varieties of these www.hoshizakiamerica.com top, grab-and-go performers at shoppers’ fingertips, including: Cheez-It Grab n’ Go Original three-ounce crackers (24 bags); Cheez-It Grab n’ Go White Cheddar three-ounce crackers (24 Pepperidge Farm is introducing its newest Milano flavor, Dark bags); Pringles Large Grab & Chocolate Sea Salt. The new cookie rolled out initially at Target Go Original potato crisps (24 on Nov. 5, at a suggested retail price of $3.69, but will be availcans); Pringles Large Grab able nationally starting in February 2018. Dark Chocolate Sea Salt & Go Sour Cream & Onion Milano combines both a sweet and salty twist. The decadence of potato crisps (12 cans); and the chocolate paired with the savory taste of the salt creates an Pringles Large Grab & Go irresistible gourmet flavor. Cheddar Cheese potato Company: Pepperidge Farm crisps (12 cans).
Glass Door Merchandisers
EyeCatching Display
Salty Sweet Cookies
Company: Kelloggs www.kelloggsspecialtychannels.com
www.pepperidgefarm.com
62 Convenience Store Decisions January 2018
_ProductShowcase.indd 62
cstoredecisions.com
12/22/17 2:36 PM
PRODUCTShowcase Premium Sugar Toppings Twang, a family-owned and operated manufacturer of premium flavored salts, sugars and seasonings, has introduced Café ZUCA Premium Sugars, designed to add a personal touch to coffee. The product is available for c-stores foodservice in flavors including cinnamon, caramel, vanilla, chocolate and hazelnut—each in six-ounce jars. Twang has national broad line distribution with partners such as Core-Mark International as well as regional distribution with companies such as Alpine, Grocery Supply Co., CD Hartnett Co. & CashWa. Of course, Café ZUCA is not complete without its #1 Mini-Mallows 2.6-ounce jar. One of Café ZUCA’s largest retailers, Circle K / Corner Store was the first to launch Café ZUCA in April 2016 making it available in 1,100 locations in Texas, New Mexico, Arizona, Colorado, Wyoming, Oklahoma, Arkansas and Louisiana. Other retailers such as EZ Go soon spread Café ZUCA through the U.S. Plains. In addition to HEB Grocery carrying the retail line of Café ZUCA, HEB Fuel Stores has Café ZUCA available in its hot dispensed beverage area to help bring awareness to the retail items in their grocery counterpart next door. Today Café ZUCA is available throughout the U.S.
Company: Twang www.twang.com
Crispy Cookie Options Rich’s Foodservice introduces Jacqueline’s Crispy Cookies, made just like grandma baked them, with real butter and gourmet chocolate. Available in four flavors – chocolate chip, almond, brownie and salted caramel, these one-ounce gourmet cookies arrive ready to pop into the oven. They make a terrific grab-andgo item, using the included merchandising bags and stickers. These cookies have a 21-day ambient shelf life and an SRP range of two for 99 cents to $1.29.
Company: Rich’s Foodservice www.RichsFoodservice.com
New Flavor Sensation Introducing Hershey’s fourth flavor sensation: Hershey’s Gold Caramelized Creme Peanuts & Pretzels . First there was milk, then dark, followed by white and now there is . . . gold. New Hershey’s Gold bars feature a rich creme that delivers a buttery, sweet flavor that is a distinctively new Hershey’s experience. It includes a combination of salty, crunchy bits of peanuts and pretzels that delivers a creamy, crunchy satisfaction. Hershey’s Gold Caramelized Creme with Peanuts and Pretzels were made available in December 2017 in a 1.4-ounce standard bar (SRP 99 cents) and a 2.5-ounce king-size bar (SRP $1.69). Company: The Hershey Co.
www.hersheys.com/cstore
cstoredecisions.com
_ProductShowcase.indd 63
NaturalFlavored Cola Coca-Cola Georgia Peach and Coca-Cola California Raspberry are delicious, specially crafted Coca-Cola beverages made with cane sugar. Both Coca-Cola Georgia Peach and California Raspberry are a delicious twist on a true original, each combining the timeless taste of Coca-Cola with a unique local flavor. Consumer concept and taste testing of these new flavors have resulted in exceptionally high purchase intent scores. More than 75% of the general population who tasted it are likely to try either flavor, and two-thirds would try both flavors. The specialty soda segment is one of the primary drivers of sparkling growth – the category grew 8% in 2016. Specialty sodas are particularly appealing to Millennials. Coca-Cola Georgia Peach and California Raspberry will launch in March 2018. They will be available in 12-fluid-ounce glass bottles.
Company: Coca-Cola www.coca-cola.com
January 2018 Convenience Store Decisions 63
12/22/17 2:36 PM
REDUCE YOUR CREDIT CARD PROCESSING FEES
.05
WHOLESALE RATES
%
INTERCHANGE % RATES AS LOW AS
PAY AT THE PUMP COMPATIBLE NEXT DAY FUNDING AVAILABLE BECOME EMV READY ACCEPT EBT / SNAP FOOD STAMPS
• FREE Placement, Credit Card Terminal Wireless / Land Line / High Speed / Dial-Up • Easy Setup - Quick Approval
• Integrate with your current POS • Free Paper** • No set-up fee • Check Services Available • $295** if you have an early termination fee with your current processor ★ Compatible with Gas Cards Wright Express | Fleet Cards | Voyager and More...
*
Be ready to accept
Apple Pay. NFC & EMV ENABLED
FREE TERMINAL & PIN PAD or WIRELESS TERMINAL
WIFI TABLET TERMINAL
ENROLL NOW - CALL A SPECIALIST TODAY!
866-481-4604
www.nynab.com
©2017 North American Bancard is a registered ISO of Wells Fargo Bank, N.A., Walnut Creek, CA, and The Bancorp Bank, Philadelphia, PA. American Express may require separate approval. * Durbin regulated Check Card percentage rate. A per transaction fee will also apply. **Some restrictions apply. This advertisement is sponsored by an ISO of North American Bancard. Apple Pay is a trademark of Apple Inc.
CSD_Ad_Template.indd 22
12/21/17 10:17 AM
Classifieds /Ad Index ADD Systems 800.922.0972 / www.addsys.com
55
Blu www.blucigs.com
17
Cash Depot 800.776.8834 / www.cdlatm.com
52
Cenex www.cenex.com/businessopportunities E-Alternative Solutions 800.377.7709 / www.cuevapor.com
47 41
Gulfcoast Software Solutions, Inc. 727.449.2296 / www.gulfcoastsoftware.com
Home Market Foods 800.367.8325 / www.homemarketfoods.com Kretek International www.djarumcigar.com
3 39 13
KT&G www.ktngusa.com
5,7,9
Liggett Vector Brands 877.415.4100
33
Little Debbie 866.483.4664 / www.LittleDebbieCStore.com Loomis www.loomis.us/SafePoint
11
LSI Industries www.lsi-industries.com/vertex
National Retail Solutions 800.215.0931 / www.nrsplus.com
NicoGen Pharma Solutions 516.693.7367 / www.nicogenpharma.com North American Bancard 866.481.4604 / www.nynab.com
Oberto Brands 877.234.7904 / www.cattlemanscut.com Phillip Morris USA Portion Padl 330.608.5928 / www.portionpadl.com R.J. Reynolds www.vusevapor.com
14 53 15 64 37 2 31 67
Subway 203.877.4281 / www.subway.com
Swisher International 800.874.9720 / www.swishersweets.com Texas Pete www.TexasPeteFoodservice.com
35 64 27
51
2018
SAVE THE DATE
Line up for NAG 2018 at the beautiful Ponte Vedra Inn & Club September 9th thru 12th II Ponte Vedra Beach, FL RETAILERS should contact John Lofstock at 201.837.2177 • jlofstock@csdecisions.com SUPPLIERS should contact John Petersen at 440.250.1583 • info@nagconvenience.com cstoredecisions.com
65_Ad index.indd 65
January 2018 Convenience Store Decisions 65
12/27/17 2:23 PM
INDUSTRY
Perspective
Ransom Ware Threatens Marketers Cybercrime knows no bounds, and not paying attention to your computer security can trip up a company plenty.
Possessing more than 35 years of downstream petroleum experience, Mark Radosevich is president of PetroActive Real Estate Services LLC, offering confidential mergers & acquisition representation and financing services exclusively to petroleum wholesalers. He can be reached by email at mark@petroactive.net or at (423) 442-1327. His full professional bio can be found at www.petroactive.net.
By Mark Radosevich
U
p to a short time ago, I had a vague notion of malware and computer hacking, but the problem is much wider than expected and given the amount of customer data and cash that regularly passes through a petroleum wholesale business, unsuspecting oil marketers are increasingly being targeted. In fact, some experts predict ransomware attacks may double by next year. In recent weeks, reports emerged of a variant of ransomware known as “WannaCry” began infecting Windows computers. Similar cases are occurring with marketers. In many WannaCry cases, If the user didn’t pay within three days, the amount was doubled. Another week and files were deleted.
ties involved. Some steps can include restricting the ability of people to add programs to computers, using antivirus program subscription software and backing up files every day, with the central database stored on a device that is isolated and not online.Prohibit employees from using company computers for personal things like, surfing the web, emails or opening emailed attachments. HELD FOR RANSOM Next, dedicate the resources to hire top notch IT speThe president of a Tennessee-based fuel marketer cialists. Employ better employee security protocols using gave me his account of trying to log onto the company’s unique passphrases versus simple passwords, and be computer network on a recent Saturday morning and dedicated about making regular passphrase or password encountering a cryptic note with a skull and crossbones system changes. Remember the parting words of the graphic notifying his company the files had been en- Tennessee marketer I previously referenced: “When you crypted, rendering them unobtainable unless a ransom think you’ve done enough, think again because you can of $50,000 in Bitcoin was paid. The hackers had basically never have enough protection.” shut down the marketer’s operation and encrypted all of their records—receivable, payables, customer lists, ad- TIP OF THE SPEAR Given the real and growing danger of the ransomware dresses and contact names. To add insult to injury, he now had to figure out how problem, I propose that cybercrime prevention be forto obtain Bitcoin, which is not a small feat for the uniniti- mally adopted as a third area of primary emphasis on the ated on a Saturday. In the end, the virtual currency was state level and nationally through organizations such as secured through various Bitcoin brokers, the ransom paid the Petroleum Marketers Association of America (PMAA). This can include creating a stable of approved IT conand the files recovered after several days of operating blind. This was followed by a comprehensive reassess- sultants to conduct training seminars and individual site assessments at association member businesses to highment of internal controls and security processes. Other marketers I’ve interviewed confirmed that they light potential security weaknesses. Rather than keeping had been hacked and either refused to pay the ransom, incidences of hacking a dark and embarrassing secret, I and subsequently reconstructed their data or they refused propose bringing the problem into the light by the formato pay and suffered little harm due to their security and tion of a new association committee entitled “IT Security.” This committee will be tasked with facilitating training, data backup protocols. Ransomware attacks couldn’t be nearly as successful if coordinating IT vendor participation and as an official it wasn’t for the existence of Bitcoin as traditional bank- platform to share successes and potential threats encouning intermediaries are not involved. Payment is through tered by member companies. If promoted properly, this a simple file transfer between two people or companies. new committee should also provide state associations Bitcoin transactions are documented on a virtual open with a new and valuable benefit to motivate non-member ledger but names don’t have to be attached to the par- companies to join and become involved.
66 Convenience Store Decisions January 2018
66_Industry Perspective.indd 66
cstoredecisions.com
12/28/17 1:32 PM
the future of vapor is clear and so is the profit potential the e-cig with a clear flavor cartridge
mint nectar menthol melon original
v–liquid
0.9ml
nicotine %
1.5
battery
260 mAh vusevapor.com†
Vuse contains nicotine extracted from the tobacco plant. Nicotine is addictive and no tobacco product has been shown to be safe. Underage sale prohibited. † WEBSITE AND OFFERS RESTRICTED TO AGE 21+ TOBACCO CONSUMERS. © 2018 RJRVC (Q1)
CSD_Ad_Template.indd 18
12/27/17 12:31 PM
The perfect bold, yet sweet blend of banana and strawberry is back. Banana Smash delivers the taste your customers want and now you can stock it all the time. Available in "2 for 99¢", "Save on 2", and "2 for $1.49" price points. Order today and make Banana Smash a part of your everyday selection. swishersweets.com 800.874.9720
CSD_Ad_Template.indd 19
12/21/17 9:30 AM