Volume 29 • Number 5 • MAY 2018 Business Solutions for Retail Decision Makers
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H A R B O R COMMUNICATIONS
P U B L I C AT I O N
Delivering the Goods C-store innovators like Chicago’s Foxtrot Market are integrating e-commerce to craft a new customer experience.
INSIDE:
Revamping the Candy Category Sandwiches Stand the Heat Forecourt of the Future
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30 42 62
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your business LEGISLATION / REGULATIONS SALES STRATEGIES
COMPREHENSIVE RESOURCES
CONSUMER INSIGHTS
MERCHANDISING SOLUTIONS
SALES & PROFITS
COLLABORATION
LEADERSHIP BRANDS
At AGDC one of our goals is to help drive our customers’ success. We represent the Altria Operating Companies’ vast portfolio of industry-leading brands. We aim to develop sales strategies that align with current consumer insights and your operational goals. Work with us and take advantage of our comprehensive resources to evolve and elevate your business.
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May 2018
Vol. 29 • No. 5
CONTENTS 22 COVER STORY
Delivering the Goods
C-store innovators like Chicago’s Foxtrot Market are integrating e-commerce to craft a new customer experience.
EDITOR'S MEMO
OPERATIONS
8 Join Us in Florida for the 2018 NAG Conference
56 Illuminating Interiors & Exteriors
FRONT END 10 On Location: Pops Shines On Route 66 14 CSD’s Quick Bites 16 Industry News
18 YEO Names Bart Stransky Board Chairman 20 Pilot Launching Clinics for Truckers
21 Convenience Store Solutions: Maxing Out Summer
Business
CATEGORY MANAGEMENT
60 Column: Reaching New Age Consumers 62 Forecourt of the Future
BACK END 64 Product Showcase 68 Quick Stop 69 Ad Index
70 Industry Perspective: Local Tobacco Regs Take a Toll
36
42
30 Revamping the Candy Category 34 Tobacco Accessories Heat Up
36 Propelling Gum & Mints Forward 38 Salty Snacks Show Growth
FOODSERVICE 42 Sandwiches Stand the Heat
48 Column: Economics of Food Safety
54
TECHNOLOGY 50 Prepaid Helps Foster Loyalty 52 ATMs: Still Money Machines
54 Column: Cashiering Enters the Mobile Age
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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
Contributing Editors Anne Baye Ericksen Brad Perkins Lisa White
Senior Editor/News & Online Erin Del Conte edelconte@csdecisions.com
Columnists Jim Callahan Ed Collupy Steve Sandman Scott Simon Francine Shaw
Associate Editor Howard Riell hriell@csdecisions.com
Production Manager Barbra Martin bmartin@csdecisions.com
Associate Editor Marilyn Odesser-Torpey mot@csdecisions.com
Webmaster Dave Miyares dmiyares@csdecisions.com
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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
Creative Director Erin Canetta ecanetta@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. Brad Call, President Colour Du Jour • Salt Lake City Bill Kent, President and CEO The Kent Cos. Inc. • Midland, Texas Greg Lorance, Dispensed Category Manager Cumberland Farms • Framingham, Mass. Billy Milam, President RaceTrac Petroleum Inc. • Atlanta Patrick J. Lewis, Managing Partner Oasis Stop 'N Go • Twin Falls, Idaho Scott Zaremba, President and CEO Zarco 66 • Lawrence, Kan.
OFFICE LOCATIONS
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 May 2018
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NATIONAL ADVISORY GROUP BOARD
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.
SUBSCRIPTION INQUIRIES
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
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.
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EDITOR’S
Memo
Join Us in Florida for the 2018 NAG Conference
For any questions about this issue or suggestions for future issues, please contact me at jlofstock@ csdecisions.com.
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HE CONVENIENCE STORE INDUSTRY CONTINUES to grow sales at record numbers, but the stakes have never been higher as convenience store owners face competition from multiple retail channels. As competition increases across the board, savvy retailers are learning to take costs out of their operations to run lean, efficient top-quartile businesses. The National Advisory Group (NAG) provides the convenience store industry one of the most exclusive environments for small, mid-sized and family-owned retailers to interact with each other and share ideas for reducing operating costs and increasing sales. The proof can be found in our world-class educational lineup for the 2018 NAG Conference.
vice president, operations support, Kwik Trip Inc.; Stephanie Mahoney, food services development manager, MFA Oil Co.; John Zikias, chief operating officer, Holmes Oil Co.; Keith Boston, vice president of foodservice, Cumberland Farms; Carlos Acevedo, culinary innovation and research chef, Yesway. Other speakers include Bill Martin, founder and president, Metro Express Car Wash; Michael Meyer, facility operations officer, Meyer Oil Co.; Danielle Mattiussi, vice president of retail operations, Maverik Inc.; Jacque Hager, director of operations, Big 10 Marts; Spencer Thomas, chief operating officer of Southwest Georgia Oil; Bob O’Connor, president and CEO, Jetz ConveThis is a powerful agenda aimed at nience Centers; Peter Tamburro, general manager, Cliff’s helping make you a better convenience Local Markets; John Schaninger, president, The Schanstore retailer. inger Group; and Jerry Weiner, president, Weiner Consulting Co. This year’s conference again includes several events for This year’s conference will be held at the Ponte Vedra Inn and Club Sept. 9-12 in Ponte Vedra Beach, Fla. The the convenience store industry’s next-generation execuconference includes seven can’t-miss educational sessions tives. The mission of NAG’s Young Executives Organizafeaturing more than a dozen of the convenience store in- tion (YEO) is to cultivate young talent in the convenience store and petroleum industry through implementation dustry’s leading chains. Educational sessions include: • Family Business Planning. How to build an outstanding of education and networking. The YEO breakout track will be led by Linda McKenna, a principal with Employee corporate culture from the top down. • Foodservice: Doing More with Less. Foodservice remains a Performance Strategies. In addition to NAG’s Information Exchanges, this high-growth category for convenience store owners. • The Machine Revolution: Are Robotics Right for Convenience year’s NAG Conference will feature category-specific breakout sessions, which are designed to mirror intimate Stores? study group sessions. • Foodservice: Reigniting the Dinner Daypart. This is a powerful agenda aimed at helping make • Building a Better Car Wash: Cleaning Up in the Forecourt. • Store Design and Layout: Identifying the Best Concepts Your you a better convenience store retailer. NAG’s goal is to help retailers return home with actionable ideas to boost Customers Will Find Appealing. • Young Executives Organization (YEO) Breakout Session: sales and cut costs, and we have a lot of fun doing it. To register for this can’t-miss conference or learn Leading the Next Generation: How to manage effectively more about NAG, visit www.nagconvenience.com. I look and with authority. Industry experts will address some of the timeliest forward to seeing you in Florida. issues affecting convenience store owners. The NAG retailer board, made up of your peers, helped put this agenda together. Speakers at this year’s conference include: Bill Douglass, president and CEO, Douglass Distributing; Charley Jones, president and CEO, Stinker Stations; Steve Loehr,
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FRONTEND
Profile
Pops Shines on Route 66 From craft soda to candy, Pops offers nostalgia and novelty alongside food and gas. By Erin Del Conte, Senior Editor
Pops Founder Aubrey McClendon hired acclaimed architect Rand Elliott, the same architect that worked on the Route 66 Museum, to design and expand an old c-store into a 5,000-square-foot soda ranch, known as Pops.
R
OAD TRIPPERS DRIVING THROUGH ARCADIA, Okla. on the iconic route 66, can’t miss the giant 66-foot LED pop bottle that lights the way and signals the location of Pops, a 5,000-squarefoot restaurant, convenience store and soda ranch. Once customers finish posing for pictures by the giant pop bottle and admiring the store’s state-of-the-art architecture, they can choose from more than 700 flavors of soda from all around the world.
ROUTE 66 Pops got its start in Arcadia, Okla. in 2007. “Basically there was a small gas station that sat here for years and years; just your standard little rural gas station. The owners retired and sold the property. Pops Founder Aubrey McClendon bought the property and seeing as it was on the historic highway felt the store should capture some Route 66 nostalgia. For McClendon, that 10 Convenience Store Decisions May 2018
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nostalgia included memories of road tripping as a kid and the different types of soda he could get as a kid in different parts of the country,” said Marty Doepke, vice president of the company. McClendon hired acclaimed architect Rand Elliott, the same architect that worked on the Route 66 Museum—located a couple hours from the c-store—to design and expand the
A giant 66-foot LED pop bottle signals the location of Pops, a 5,000-square-foot restaurant, convenience store and soda ranch.
old c-store into a 5,000-square-foot soda ranch. Elliott created an ultramodern design with a 1950s-style soda counter and all glass shelving to hold the glass soda bottles. “People show up just to take a look at the architecture,” Doepke said. The giant LED pop bottle brings a large amount of exposure for the business, including as a backdrop for Oklahoma travel and local news stations doing weather reports. “That bottle has been a huge key to our success,” he said. McClendon passed away in 2016. Today, Doepke helms day-to-day operations at Pops L.P. Doepke has been involved in the Pops business since before it opened. “I came up here and actually opened the Arcadia location.” Doepke met McClendon, who was the co-founder, chairman and CEO of Chesapeake Energy, when Doepke was working for Aramark Corp. “I knew quite a bit about him and what type of person he was, and I wanted to work for him, so that’s
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FRONTEND
Profile
Renowned architect Rand Elliott created an ultramodern design for the Pops convenience store and soda ranch with a 1950s-style soda counter and all glass shelving to hold the glass soda bottles that hold hundreds of soda varieties.
what prompted me to join Pops.” McClendon called his father ‘Pops.’ “His father Joe was a soda jerk when he was a kid and Aubrey called his dad, Pops, and that really contributed to the name,” Doepke said. That and the plethora of soda pop options. “When we opened the doors we had 400 different types of bottled pop, all packaged in glass bottles from all over the U.S. and around the world. We quickly saw the popularity of what we had to offer and went from 400 to 500 types of pop very quickly,” he said. Today, Pops’ Arcadia location offers six gas islands with 12 gas pumps, and 700 types of soda in all colors of the rainbow that are housed on glass shelves. Pops also offers the standard convenience store fare including snacks, grab-and-go items, health and automotive products. In addition, Pops features a fullservice, made-to-order-style restaurant. The menu features burgers, fries, salads, sandwiches, chicken, breaded steaks and desserts. “Everything goes well with the pop and it’s been a huge draw for families and kids,” Doepke said. “The pop is why we’re here, but it works together with the restaurant, the architecture, the fuel—just the overall package. That’s really what makes us what we are. When we opened the store it was a gas station that had a restaurant and a little bit of retail, and we’ve since turned into a soda store with a restaurant that also offers fuel,” he added. Families with young children are the main target demographic. “We’ll 12 Convenience Store Decisions May 2018
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see an incredible amount of tourism throughout the year,” Doepke said. “We’ve got a wide range when it comes to our customers and our guests, but we are really driven by families and kids. The general rule for us is when school is out we’re busy.” EXPANDING OUT In 2016, Pops opened a second location in Nichols Hills, Okla. that doesn’t offer fuel. It does feature the restaurant and a small amount of retail such as pop, candy and Popsbranded merchandise. “Candy has also become a big segment for us. It goes together with what our draw is with our demographic being families and children and offering the pop. We’ve seen a huge surge in our nostalgia candy section. That has been probably the biggest growth department for us since we’ve opened the door,” Doepke said. The nostalgia candy section includes long-time favorites such as Red Vine, Slow Poke and Clark Bars, just to name a few. “They’ve been a huge hit. We’ve seen that grow from a very small section within our standard candy offerings to growing into its own section,” he said. FIZZ BIZ The top two best selling pop flavors haven’t changed since Pops first opened its doors. Sugar-cane-based Dr Pepper, which comes in an eightounce glass bottle, has been the best selling soda flavor since day one. The No. 2 best selling pop flavor has al
ways been Round Barn Root Beer, which is bottled locally. “It gives a nod to another Route 66 icon, which happens to be about a quarter mile across the street from us. The Round Barn is in Arcadia itself,” Doepke said. It’s no secret that carbonated soft drink sales have declined at convenience stores as customers seek more health-conscious alternatives. Many beverage manufacturers and c-stores have responded with craft sodas featuring more natural ingredients. The effervescent retailer has seen a similar trend. “Most of our soda does feature cane sugar instead of high fructose corn syrup. The stigma of the high fructose corn syrup has been a negative on soda sales over the years,” Doepke said. “As a result, we’ve seen the mass-produced brands suffer in sales over the last few years. Meanwhile, we’ve seen a surge in craft soda sales. It’s amazing to see how many brands are out there and most of them do include cane sugar as the sugar substitute, or Stevia in some of the more natural brands.” KEEPING PACE In mid-February, the c-store rolled out a new app complete with mobile ordering for pickup from the restaurant and is exploring ideas for mobile ordering on the c-store side of the business too. Pops decided to introduce an app and mobile ordering to keep pace with market trends and other local restaurants. “You’ve got to stay fresh and keep up,” said Doepke.
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QuickBites TOP 5 MERCHANDISE CATEGORIES IN CONVENIENCE STORES (Categories/Sales $ Per Store/Per Month) Cigarettes—$46,555
Men Take on Shopping Load
Packaged Beverage—$25,544
In the grocery channel men make more trips than women. The number of grocery trips by men have increased by two points since last year.
Beer—$16,901 Other Tobacco Products—$8,575
• 51% of grocery store trips are made by men
Salty Snacks—$7,040
• 49% of grocery store trips are made by women
Source: National Association of Convenience Stores (NACS) State of the Industry Summit data, current as of April 11, 2018. Final data will be published in the NACS State of the Industry Report of 2017 Data, available in June.
Source: VideoMining Grocery ShopperImpact (GSI) MegaStudy, 2018.
Best Rated Chains for Customer Service By Size in Q1
More than 1,000 stores
250-999 stores
50-249 stores
Source: GasBuddy Fuel & Convenience Store Report Card, Q1 2018.
Freshness,
Better for You Trends
DELIVERY DEMAND
Over the last five years: • 20% increase in foodservice delivery sales • 10% increase in foodservice delivery visits • More than 50% of delivery visits are ordered digitally • 49% use the phone to order delivery Source: NPD Group’s new study, Future of Foodservice Snapshot: Restaurant Delivery.
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Dominate
85% of retailers have been affected by
consumer demand for fresh foods and beverages.
2 out of 3 retailers indicated they are stocking more fresh and refrigerated products.
Half of North Americans prefer foods without added colors, flavoring or preservatives.
Source: “Why is HPP Essential to Retailers,” a 2017 Survey by Universal Pure.
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INDUSTRY
News
Casey’s Celebrates 50th Anniversary Casey’s General Stores Inc. based in Ankeny, Iowa is celebrating its 50th year of business in 2018. Casey’s will feature daily and monthly specials May through August to help celebrate this milestone. Customers will also have a chance to win prizes in the 50th Anniversary Sweepstakes during July and August. Founded in 1968 by Donald Lamberti, with the original store opening in Boone, Iowa, the company has grown to over 2,000 stores in 16 states. “In this, our Golden Anniversary year, we are focused on celebrating our history while also looking forward to the next 50 years. We are grateful for our customers and employees who have made Casey’s a part of their lives. We would not be celebrating this achievement without them,” said Terry Handley, president and CEO of Casey’s General Stores Inc.
Enmarket Begins Running E-Z Shop C-Stores Enmarket has assumed operations of 34 E-Z Shop convenience stores located throughout South Carolina. The Savannah, Ga.-based company recently bought the stores from Brabham Oil Co. Inc., based in Bamberg, S.C. The purchase includes Brabham Oil’s wholesale fuel distribution company as well as 11 Subway franchises. Enmarket assumed ownership and operations
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of the stores on April 19. Rebranding of the locations from EZ-Shop to Enmarket will begin later this year and is expected to conclude in 2019. The purchase brings Enmarket’s store count to 122 convenience stores and 14 quick-service restaurants.
Inline Plastics Also Recognizes 50th Inline Plastics celebrated its 50th anniversary in style on April 17, with an event at its corporate headquarters on Canal Street in downtown Shelton, Conn. Inline Plastics is a manufacturer of innovative, highquality, crystal-clear food packaging containers.
GPM Takes Over E-Z Mart Stores A subsidiary of GPM Investments LLC has taken ownership of 273 convenience stores in Texas, Oklahoma, Louisiana and Arkansas from E-Z Mart Stores Inc. The growth into the Southwest portion of the country marks new territory for GPM’s existing portfolio. Getty Realty Corp. funded the transaction through funds available under its revolving credit facility and expects the transaction to be immediately accretive to net earnings. Getty in turn acquired the fee interest of 30 convenience store and gas station properties from E-Z Mart for about $52 million. Upon closing the acquisition, Getty leased the sites to a subsidiary of GPM Investments LLC as part of its deal for the 273-store E-Z Mart chain. GPM reached an agreement to acquire the c-stores from E-Z Mart in late December of last year. Jim Yates, founder and president of E-Z Mart launched its first store in 1970. After Yates died tragically in a
plane crash in 1998, daughters Sonja Yates Hubbard, CEO, and Stacy Yates, chief financial officer, grew the family-owned chain until they opted to sell the business in 2017.
Speedway Acquiring 78 Express Mart Sites Speedway LLC, a wholly-owned subsidiary of Marathon Petroleum Corp., is acquiring 78 convenience stores held by Petr-All Petroleum Consulting Corp., primarily in the Syracuse, Rochester and Buffalo markets in New York and operating under the Express Mart brand. Following the acquisition, the convenience stores will be rebranded to Speedway. The transaction is anticipated to close by the end of the third quarter of 2018. “This acquisition is a great strategic fit for Speedway, and consistent with our growth plan,” said Speedway President Tony Kenney. “These stores will enhance our existing network and expand our brand presence in a key growth market for Speedway.” Speedway, headquartered in Enon, Ohio, has approximately 2,740 stores located in 21 states.
Wawa Finally Scales Sandwich Heights Market Force Information recently picked Wawa as the best sandwich producer in its annual quick-service restaurant survey, Food & Wine reports. The survey found that Wawa moved up four slots to claim the top spot in the sandwich category. Wawa beat out Firehouse Subs (last year’s No. 1 chain), Jersey Mike’s, Jimmy John’s, Jason’s Deli and McAlister’s Deli, all in the top six.
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FRONTEND
YEO News
YEO Names Bart Stransky
Board Chairman
RaceTrac’s executive director of merchandise and supply chain succeeds Jared Sturtevant of Alimentation-Couche Tard, as head of the convenience store industry’s exclusive group for next-generation leaders. By CSD Staff
T
he National Advisory Group’s a group that is solely focused on ex- I am grateful for my time on the board (NAG) Young Executives Or- changing personal experiences with and wish the group continued success,” Sturtevant said. ganization (YEO) is pleased to peers in their age group. As chairman, Stransky will help announce that Bart Stransky, the executive director of merchandise and lead the educational component for DEVELOPING LEADERS YEO members are industry leaders supply chain for RaceTrac Petroleum, YEO members as well as help recruit Inc. in Atlanta, has been named the and integrate new members into the who are 40 years of age or younger. Members are entrepreneurs leading chairman of the National Advisory YEO network. top businesses and actively pursuing Group’s YEO board. a higher level of professionalism in He follows Jared Sturtevant, the MISSION OF YEO “I have had the opportunity to work the convenience store and petroleum supervisor of digital marketing for Alimentation Couche-Tard, who has with Bart on several projects over marketing industry. served on the Board since 2013 and the past few years and not only am has aged out of the group following I impressed by his knowledge of the The YEO Seven-Member Board Of Directors Includes: industry, but his superior leadership his 40th birthday. Stransky, who has been with Race- skills. YEO is in great hands under his • Chairman: Bart Stransky, RaceTrac PetroTrac for 10 years, has served on the direction,” said John Lofstock, execuleum, Inc. Executive Director of MerchanYEO Board since 2016. He will serve a tive director of the National Advisory dise and Supply Chain Group. “While we welcome Bart as one-year term as board chairman. • Alex Olympidis, Director of Operations for During his time with RaceTrac, chairman, I would also like to thank Family Express Corp. Stransky has taken part in many of Jared Sturtevant for his many years • Alli Bixler, Director of Special Projects, the chain’s newest concepts and pro- of service to YEO. He brought leadThe Kent Cos. Inc. grams. He is currently focused on le- ership to the board and represented • Sharif Jamal, Corporate Training Manager, veraging technology and supply chain the true spirit of John MacDougall, Chestnut Petroleum programs to help streamline store- the founder of Nice N Easy, who rec• Lindsay Lyden, Vice President of Adminislevel processes, allowing front line as- ommended Jared for the board. It has tration & Development, Truenorth Energy been a pleasure to work with him.” sociates to better serve their guests. • Dana Moloney, Strategic Workforce Partner, YEO’s mission is to cultivate young “The convenience industry is one Warrenton Oil Co. of the most dynamic and diverse in talent in the convenience store and • Jeremie Myhren, Vice President of Inforthe retail landscape,” Stransky said. petroleum industry by implementing mation Technology, Road Ranger “Our ability to learn from each other education and networking. YEO acand adapt that knowledge to our own complishes this mission by leveraging The YEO Conference will take place unique organizations is second to the experience of NAG members to May 16-17 at Cumberland Farms in none. I am excited to support and help foster leadership skills. Westborough, Mass. To register for “NAG’s YEO is extremely focused the NAG Conference, visit www.naggrow the impact of YEO to these fuon bringing great young talent to- convenience.com. ture leaders of our industry.” As the convenience store and pe- gether from across the country and For information on YEO, NAG troleum industry continues to evolve, giving them a platform to discuss suc- membership or further details on the training the next generation leaders cess and struggles facing next-gener- YEO Conference or the 2018 NAG of tomorrow is more important than ation leaders throughout the conve- Conference, contact NAG Executive ever before. NAG relaunched YEO in nience store and petroleum industry. Director John Lofstock at jlofstock@ 2012 to help young executives have It is a valuable networking experience. csdecisions.com. 18 Convenience Store Decisions May 2018
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FRONTEND
News
Pilot Launching Clinics for Truckers There are seven UrgentCareTravel clinics that are currently open in Texas, Tennessee, Oklahoma, Georgia, Virginia and California. Stakeholders expect to open nine new sites in eight states where Pilot operates by the end of 2018. By David Bennett, Senior Editor
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he first quarter in 2018 has al- ductivity as drivers seek out or wait for tors that lead to poor physical health can be damaging. ready been a busy one for Pilot health service. “Long hours, a sedentary lifestyle “UrgentCareTravel is deploying Flying J. So far, the Knoxville, Tenn.-based medical clinics at Pilot and Flying J and rigors of the job lead to a higher company, which includes a combined Travel Centers, where Pilot Flying J’s incidence of chronic health problems network of more than 750 Pilot and national footprint and proximity along among truckers. Some 50% of the Flying J Travel Centers across North major interstate highways enables drivers have a pre-existing health conAmerica, has opened six new travel UrgentCareTravel to offer conve- dition (hypertension, diabetes, high center locations in the U.S. and Can- nient, low-cost health care plans and cholesterol) requiring regular clinic ada; expansion into five states across medical services for fleets, profes- visits and resulting in drivers receivthe U.S.; launched 150 roadside as- sional drivers and their families, local ing a license of only one year or less,” sistance trucks in 36 states; and es- companies and communities,” said Klepper said. “Left untreated, their tablished the Pilot Flying J Truck Strobin. “The benefit to the trucking conditions will worsen and result in Care program, which includes mobile industry is enormous—$1 billion per drivers losing their license to drive.” Each clinic is 900 square feet with year can be saved in the industry by emergency roadside assistance. However, what may prove to be improved productivity and improved three exam rooms and with a nurse practitioner and a medical assistant. the company’s crowning achievement retention rates.” UrgentCareTravel, also based in The services that clinics provide are in 2018 is a unique healthcare program, which isn’t geared toward com- Knoxville, states it’s an organization far ranging, including: pany employees, but rather targets dedicated to improving the health of Personalized Care Plans: truck drivers. truck drivers traveling U.S. roads. • Hypertension There are seven UrgentCareTravel CLINICAL TRIAL • Diabetes clinics that are currently open in Texas, • High Cholesterol Pilot Flying J earlier this year part- Tennessee, Oklahoma, Georgia, Vir• Obesity nered with UrgentCareTravel to pro- ginia and California. UrgentCareTravWork-Related Injury Services: vide clinical services that patrons can el expects to open nine new clinics in • Muscle Pain / Strain access while at specific Pilot locations. eight states where Pilot operates by • Laceration Repair Medical clinics erected at Pilot and Fly- the end of 2018. The states being tar• Wound Care ing J Travel Centers now offer drivers geted are: Arizona, Arkansas, Illinois, • Urine / Hair Drug Screenings access to comprehensive medical ser- Indiana, Missouri, Ohio, Pennsylvania vices—from primary and urgent care and Texas. Strobin explained while treatments Though professional drivers are visits, to chronic disease management, to lab services and U.S. Department of the primary market focus, business aren’t free, UrgentCareTravel’s Health Transportation physical exams—with- travelers, RVers and local community Network is an affordable healthcare residents are also welcome to visit the plan that includes all of the services out ever leaving the highway. listed above, with all in-clinic services Mitch Strobin, vice president of new clinics. Scott Klepper, senior manager of being no co-pay / no deductible, and service management at UrgentCareTravel, said the singular healthcare facility revenue for Pilot Flying J, ex- with no pre-existing condition or age program is in response to the tower- plained that because these individu- restrictions. In addition, telemedicine ing healthcare costs the trucking in- als spend many hours behind the with around-the-clock access to medidustry incurs every year. It costs the wheel, without the ability to move cal providers is also included in the industry millions of dollars in lost pro- around or exercise regularly, the fac- Health Network program. 20 Convenience Store Decisions May 2018
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CONVENIENCE STORE SOLUTIONS
Maxing out Holiday Business
May means the end of spring and the beginning of a highly profitable season. By Jim Callahan, Contributing Editor
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OW, HERE IT IS MAY already—the month that ushers in summer. It’s the super critical period when motorists hit the road and children are on the fly because school is about to end. Believe it or not, this critical time can make or break a c-store’s whole fiscal year. However, effective promotions and good planning can make for a fruitful summer that’s both profitable and fun. Of course, how much of that “drive time” traffic a retailer earns is dependent on the level of preparedness. In the spirit of summer, I’ve chosen preparation as the theme of this month’s column. By now, both the planning and sprucing up of your stores should be done but, if not, you have a very short time left to get ready. Allow me to mention some fairly obvious items to address, all in hopes of being of some assistance. First, if you plan on any promotions for Memorial Day weekend and, why wouldn’t you, consider that the products most in demand will be beer, CSDs, water, energy drinks, ice, salty snacks, sweet snacks, foodservice and tobacco. In summer, almost every category is fair game, so why not promote the heck out of them? START ASAP If you haven’t, start on these efforts ASAP. You don’t have to spend a lot of money on signage as you can use your own printer; use color if you have it and print your own signs. As a treat, throw in a few Red, White & Blue stars to recognize our courageous service veterans and you’re in business for Memorial Day. Place signage on clean, uncluttered store doors and throughout the store. I recommend putting the signage up on May 24 and taking it down on May 29. Also, utilize any road-side reader boards that you might have available and program any scrolling device that your petroleum dispensers offer. Get with your key vendors and work those deals–inquire about items from their “goody box” for a customer raffle. Customers do appreciate FREE. Though some of these suggestions seem dated and familiar in an industry that becomes more automatic and impersonal by the day, you’ll find that your customers
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like personal. They appreciate a novelty promotion every so often. Cater to them. Provide your customers something they can’t get anywhere else.
Jim Callahan has more than 40 years of experience as a convenience store and petroleum marketer. His Convenience Store Solutions blog appears regularly on CStoreDecisions.com. He can be reached at (678) 485-4773 or via email at jfcallahan1160@ gmail.com.
CLEAN MACHINE Among the many critical tasks to accomplish during the time leading up to the holiday is to make sure that you have clean, soapy water and a working squeegee along with paper towels at each fueling island. I see a tremendous number of smaller operations with empty water buckets, no soap, no paper towels and cheap squeegees, with hard plastic blades that don’t begin to handle the excess use from motorists. You may be able to fool your fuel suppliers, but you can’t satisfy a passing motorist who is trying to wipe bugs off the windshield with a hard piece of plastic. Sure squeegees sometimes get stolen, but you can figure it this way: squeegees are the cost of doing business. Have meaningful conversations with all your employees and stress the importance of greeting and thanking each customer for their business, in a sincere manner— make them want to come back. Assign cleaning duties inside and out. Mandate that the entire store be dazzling. Make sure the restrooms are extra clean, smell good and are well-equipped. Restrooms should simply pass the “Mom” test at all times. Lastly, make sure the grass and shrub area look fresh— invest in pine chips/bark (The bark/chips will still look good for the Fourth of July festivities). Pressure wash the lot and sidewalks. Remove all old signage. Nothing says: “I don’t really care” like out-of-date, worn-out or excess signs and decals. When this occurs, customers ignore all of your signs and form a poor opinion of your operation. Don’t forget to check outside equipment for repairs and clean exterior lights. There is more but the highlights have been mentioned, and I wish you well in your efforts for a great season of growth and profits. Remember, summer always brings a sense of promise, and motorists. May 2018 Convenience Store Decisions 21
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Convenience Technology
Delivering
the Goods C-store innovators like Chicago’s Foxtrot Market are integrating e-commerce to craft a new customer experience. By David Bennett, Senior Editor
A
ccording to a January 2018 survey from orderTalk, an online ordering software provider, at least 45% of U.S. adults believe within the next 12 months, they will increase their use of online ordering, with nearly twothirds of Americans already in the habit of ordering digitally via an app or website. Today retail channels are banking that convenient delivery is needed to match consumers’ increasingly mobile lifestyles. The same orderTalk survey indicates that consumers would be happy to pay some kind of premium for a more convenient delivery option that is the result of an online transaction. Change in convenience retail is led primarily by a growing proportion of the population living in urban areas, the rise of smaller households and aging populations. Furthermore, hyper-connected consumers increasingly are placing their trust in online ordering—especially in retailers
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Foxtrot Market currently operates four stores in Chicago. Its business model blends e-commerce, on-demand delivery and a striking brick-and-mortar experience to meet consumers’ shopping needs for quality food and merchandise.
in retailers who provide seamless of house-made sandwiches, salads year after raising $6 million in fresh financing. Foxtrot Market plans on and other foods. convenience solutions. At the heart of its operation, Foxtrot opening at least four more locations Moreover, there are new convenience stores committed to bending Market boasts enough Chi-town in 2018, including a store outside of the old rules, using technology as vibe to engage existing patrons and Illinois. Still, the c-store and the city where a cornerstone to compete with big- enough technological muscle to pull it operates remain closely linked. ger chains and prodding convenience in new ones. “I started the company while I was in For the delivery side of the business, business models that aren’t as convethe company has both an app and business school here in Chicago. Our nient as they claim to be. If such stores might be considered website (foxtrotco.com) where custom- market thrives on being urban, with a up and comers, then Foxtrot Market is ers can shop its entire selection. Foxtrot lot of density, with a lot of walk-by trafa new-age pack leader. Launched four Market offers the same products online fic,” said LaVitola. “Chicago is great years ago, Foxtrot Market currently as it does in-store. Everything is avail- because of all the neighborhoods operates four stores in Chicago. Its able for on-demand delivery within an the concept works in. The denser the business model blends e-commerce, hour. Inventory is held at its retail loca- parts of town, the better for our delivon-demand delivery and a striking tions so once an order is placed, it’s ery business.” Though Foxtrot Market began as a brick-and-mortar experience to meet packed by store employees and then consumers’ shopping needs for quick, sent off with a member of the compa- corner online enterprise, the retail side of the business came on about two ny’s courier team. quality items and foodservice. Foxtrot Market co-founders, CEO years later. That’s when the entrepreFoxtrot Market features local ingredients on its menu, artisanal items Michael LaVitola and Taylor Bloom, neurs began targeting brick-and-mortar such as fresh pastries from neigh- the company’s chief technology officer, space for expanding retail offerings. borhood bakeries, a bevy of wines, originally crafted their business plan Now, company sales are split 50-50, microbrewed beers, healthy waters to function—and thrive—in an urban both in-person and online, across all of its locations. LaVitola said the c-store and other convenience category mer- setting. The burgeoning retailer now is chain is honing its capabilities to deliver chandise, and locally brewed coffee. The small chain also offers a selection ready to expand to more locations this more on customer expectations. cstoredecisions.com
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“From the perspective of leverag- convenience store offerings. This focus ing the square footage we have, the on foodservice operations and bulk brand we have and the inventory we deli propelled its gross profit percenthave, online orders have been crucial age significantly higher than industry for us,” said LaVitola. “What we have averages. Delivery was also part of its operadone is try to figure out the items peotion, albeit with limited success. ple want delivered on demand.” “While I was at White Hen—nearly To that end, the store focuses on stocking local versions of c-store sta- 15 years ago—we had a number of ples: beer, ice cream, chips coffee delivery companies reach out to us and other items. The items can be and ask if they could deliver our food,” purchased in person or online—then Matthews said. “Because of logistical challenges and cost, none of them delivered to the customer’s location. Increasingly, it’s the concept of could pull it off.” Regarding Foxtrot Market’s model, delivery that retailers as small as Foxtrot Market or as large as Amazon Matthews said “a niche marketer may be able to manage Lincoln Park, Ill., are trying to implement successfully. but hard to expand.” While the retail landscape has DELIVERING SOLUTIONS John Matthews, president and CEO changed a great deal since White of Gray Cat Enterprises, a planning Hen ruled the roost, Bloom is confiand marketing services firm, was once dent what is working in Chicago can vice president of marketing for White succeed in many metropolitan areas Hen Pantry during its heyday before such as Austin, Denver or Pittsburgh. it was sold to 7-Eleven in 2006. A One advantage Bloom said is Foxtrot Chicago-based operation that eventu- Market handles all deliveries in-house ally expanded to 300 stores, it gained with a courier segment the company many loyal customers more for its fresh controls. There are no third-party food and deli operations than typical delivery partners.
“What we really hit on with Foxtrot, the same people who want their groceries delivered or their meals delivered, want their convenience items delivered. They want that convenience factor,” said Bloom, who was 23 when he met LaVitola at the University of Texas in Austin when he was studying for his Master’s in computer science. In the early days, customers were forgiving of mistakes, Bloom said. They were just happy to use an app and have a bottle of wine arrive at their door. Today, customer expectations have grown, so Foxtrot Market has had to become faster and more efficient. The result is the c-store is more advanced in its online ordering solutions than many of its competitors. The goal is still to become even better in both service and customercentric strategies that have been developed in-house. “We have a ton of tools around the order-fulfillment and delivery side,” Bloom said. “So, we have an inventory management system that we’ve written internally. When an order comes in,
DELIVERY OPTIONS Convenience operators seeking to add online delivery have three primary options: Direct Delivery, Hybrid Delivery or 3rd Party Delivery. Each option has its pros and cons:
CONVENIENCE STORES Delivery Direct
Hybrid Delivery
3rd Party Delivery
Pros
Cons
Pros
Cons
Pros
Cons
‘Own’ the customer
Incremental costs
Control quality
Unpredictable fee to customer
Low financial investment
High fees to the restaurant
Uniform pricing across system
Complex execution
Lower fee than 3rd party only
Lack of control
Little marketing spend needed
Potential cannibalization
Harmonized brand management
Marketing spend needed
Consistent brand management
Difficult execution
Easy to roll out and scale
No customer data
Source: The New England Consulting Group, April 2018
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“
Amazon Prime Now addresses both immediacy and broad assortment, which calls into question the value of c-store digital offerings. Better for a c-store to partner with a digital player like Amazon and Walmart and determine how to work in partnership rather than compete against these types of players.
”
–Matt Sargent, senior vice president of retail, Frank N. Magid Associates Inc.
it’s routed to one of four stores, based that we think is smart is using their wich shop in the U.S. in Market Force on geography. Within 30 seconds of own delivery. Most of the c-stores in Information’s annual survey, has yet to the order coming in, they have already their tests are using third-party deliv- announce a major rollout of the delivery. Third-party delivery is yesterday ery program. started working on it.” Another convenience retailer that Bloom has developed technolog- because it’s expensive, it takes more ical tools to ensure that orders are time. That’s the reason Domino’s works is joining with Grubhub is Pittsburghbetter than Pizza Hut.” b a s e d G e t G o . G i a n t E a g l e ’s correct and get out on time. convenience store chain has started To handle mobile payments, Foxtrot a pilot program with Grubhub to offer Market relies on Braintree, a division of TESTING ONE, TWO, THREE PayPal, a company based in Chicago A small fraction of large c-store delivery of its meal options in a handful that specializes in mobile and web chains are testing delivery—and all are of Pittsburgh locations, the Pittsburgh Post-Gazette reported. GetGo will also payment systems for e-commerce using third-party delivery companies. companies. Wawa in January 2018 expanded trial UberEats at a Columbus, Ohio, On the delivery side, the company its delivery service partnership with location. For either service, a $3 fee is found that third-party vendors couldn’t Grubhub to select locations in New tacked on for delivery. Earlier this year QuikTrip Corp. grab products and deliver them in a Jersey. The service is available in parts timely manner. Also, there was less of Pennsylvania. Wawa, which this past began testing delivery through Uber control over quality and how the deliv- April became the first convenience Eats at a few of its Oklahoma locations. Late last year, 7-Eleven Inc. began ery person interacted with customers. store to be voted the best sandtesting on-demand ordering for delivIt was two years ago that Foxtrot ery or in-store pickup at select Dallas Market developed its own delivery stores with its new 7-ElevenNow platform. Since then, customer satissmartphone app. The company chose faction levels have spiked. to partner with on-demand delivery Gary Stibel, founder & CEO of the provider DoorDash to allow consumNew England Consulting Group, is ers in a few major markets including familiar with Foxtrot Market’s operaChicago, New York City and Los tion and said the small retailer is doing Angeles to order goods directly from many things right in terms of “new their smartphones. As the industry’s convenience.” He said online ordering largest c-store retailer beefs up its and delivery should be a critical cononline ordering presence, 7-Eleven sideration of the entire c-store channel, seemingly is searching for different especially since few convenience avenues to stay ahead of the converetailers today have the capability to nience curve. do it effectively. In the March 2018 edition of “All the smart money is testing C o n v e n i e n c e S t o re D e c i s i o n s , something,” said Stibel. “They should Pushing forward, 7-Eleven is expanding its Gurmeet Singh, 7-Eleven’s chief digihave been testing something five or delivery via its 7-ElevenNOW app. tal officer and chief information officer, 10 years ago. What Foxtrot is doing 26 Convenience Store Decisions May 2018
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At Foxtrot market, dollar sales are split 50-50, both in-person and online, across all of its locations. Because of its success, the c-store chain is now looking at expanding outside of Illinois.
explained how the Irving, Texas-based company is preparing to roll out the delivery platform to other U.S. locations this year. “That’s why at 7-Eleven, we want to redefine convenience through software,” Singh said at that time. “We strive to be in the ecosystem of our customers in order to serve their needs in an effortless way. With the 7-ElevenNOW app, customers in the
Dallas area can expect a real-time view into available inventory, deliver beer to their door or have wine prepped for pick-up, and even earn 7-Eleven reward points. The new app allows us to reach our customers in a seamless, effortless and delightful way.”
in 2017, and now grabs 1.9 billion foodservice visits, according to the NPD Group. To prepare for such as trend, Panera Bread Co., which in the last few years has spent about $150 million on technology that underpins delivery and other services, has built its own U.S. delivery service. It hired 10,000 drivers in 2017 and announced it’s on track to do the same in 2018. Panera is just one example of a retailer that is developing different delivery systems. Walmart announced it is installing 500 additional pick-up towers, giving access to about 40% of all Americans to the retailer’s offerings. On a smaller scale, at least one company is looking at a new revenue stream as part of what experts term rideshare commerce. CocaCola has started sampling its Glaceau
MEANS TO AN END Mobile app usage and online ordering for meals jumped 18%
Mobile app usage and online ordering for meals jumped
18% in 2017.
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Smartwater through Cargo, an in-car ally filled the gap when immediacy of c-store digital offerings. Better commerce platform, according to a trumped the need for broad assort- for a convenience store to partner recent Market Daily report. The sam- ment and value,” said Sargent. with a digital player like Amazon and pling will happen in Lyft and Uber “Amazon Prime Now addresses both Walmart and determine how to work cars in Atlanta. Currently, Cargo is in immediacy and broad assortment, in partnership rather than compete Boston, Chicago, Minneapolis, New which calls into question the value against these types of players.” CSD York and Washington, D.C. Of course pick-up towers and Coke products in the console of an Uber ride are one thing. Retailers that pride themselves as being on the cutting edge of disruption are taking the traditional concept of delivery to a different level. At a time when foodservice providers will deliver food, drinks and other items to a residence, Domino’s Pizza is ensuring consumers don’t even have to be home. The pizza company Top-Performing LED Canopy Fixture this past April announced it is adding online ordering for more than 150,000 Multiple Distributions using new delivery “hotspots,” which Precision Silicone Optics include U.S. parks, public beaches and Low Profile Design other locations that don’t have traditional addresses. So, if you want a Simple pepperoni pie during a break from jet Installation skiing, it’s just a phone call away. Amazon hasn’t hit the beach Many Lumen yet, but it’s waging a delivery war Packages on the other retail channels in new and unique ways. Its newest initiative allows Prime patrons in dozens of U.S. cities to get their Amazon orders delivered to a parked vehicle, provided their vehicle has the proper Photocell and technology. With a few taps on a Motion Sensors smartphone screen, the courier can Advanced Wireless Controls unlock the car and drop the parcel inside the trunk or on the back seat. LSI Support Team of Lighting Placement Experts While these new delivery systems are grabbing headlines, Matt Sargent, Manufactured in U.S.A. senior vice president of retail at Frank N. Magid Associates Inc., a researchbased strategic consulting company based in Minneapolis, said c-stores still deliver convenience, which is proven Learn more about the Scottsdale® VertexTM online every time a customer goes into a store to grab a sandwich or tobacco or by contacting your LSI representative today! product. It’s the digital age of delivery that c-stores must plan for. “Digital-(driven) delivery for convenience stores is a challenge. Convenience stores have tradition-
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Category Management
Chocolate
Revamping the Candy Category A top indulgent impulse purchase, chocolate continues to sweeten basket sales for c-stores. By Anne Baye Ericksen, Contributing Editor
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Analysts point to the expanding trend of consumers prehe first quarter of 2018 ended on a sweet note for chocolate candy in convenience stores and other ferring better-for-you (BFY) snacks and treats, and leaning away from sugar as a major contributing factor. Chocolate retail channels. The period started on the heels of the holiday manufacturers are capturing the interest of chocolate lovers season, carrying that celebratory momentum into Super who desire BFY options with a variety of premium products. Bowl snacking, accentuated with a commercial featuring Brookside, now owned by Hershey, was one of the first to legendary comedian Danny DeVito dressed as an M&M. profit from the BFY attitude by coating fruit in dark chocoThat spirit then bounced right into Valentine’s Day, and the late. Other suppliers have jumped on the bandwagon. “Non-chocolate manufacturers figured out the quarter closed out with an Easter bump. In fact, Easter, not Halloween, is the No. 1 holiday season for chocolate sales. Millennials before the chocolate manufacturers did, but “For Easter and Valentine’s Day, there was a 200% they’re making strides now,” said Hill. “We just rolled out increase in Lindt [chocolate sales]. We never did Valentine’s Tru Fru, a freeze-dried fruit dipped in chocolate. It has a Day promotions in convenience stores before, but now with more intense flavor.” Tru Fru flavors include raspberries, cherries, strawberries, Lindt, we did and it was good for us,” said Larry Hill, category sales manager for Holiday Stationstores Inc., Circle K bananas and cranberries. Northern Tier Division. Based in Bloomington, Minn., the c-store chain and fuel retailer with more than 500 sites was acquired last year by Couche-Tard. Seasonal sales, including Halloween, only represent 24% of the $22 billion U.S. chocolate candy market. The majority of purchases are spread throughout the year, which is » Convenience stores contribute 12% of all why c-store owners and operators traditionally focus more chocolate sales in the U.S. on persuading consumers to indulge year-round rather than bank too heavily on limited promotions. » Premium chocolate marked the fourth As an impulse item, chocolate doesn’t typically generate the consecutive year of double-digit gains. same level of profits as fuel, foodservice and tobacco, which remain the three biggest revenue drivers for c-stores per the preliminary numbers from this year’s National Association of » 2018 Sweets & Snacks Expo to takes Convenience Stores’ State of the Industry report. According place May 22-24 in Chicago. to Packaged Facts, convenience stores contribute 12% of all chocolate sales, equaling $2.6 billion in 2017.
Fast Facts:
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Other companies are pairing chocolate with herbs and spices, such as chile and cinnamon, or enhancing it with umami flavors such as smoke and ash. Snickers, for example, is infusing its iconic nougat with a spicy hot pepper flavor as part of its “hunger bar” promotion slated to begin next month. The Fiery bar will be joined by Espresso and Salty and Sweet versions, also featuring enhanced nougat flavors. The strategy appears to be paying off. Earlier this year, Information Resources Inc. (IRI) reported sales of premium chocolate were up 10% from the previous 52 weeks, marking the fourth consecutive year of double-digit gains for this sub-segment.
NEW ON THE MENU Exploring different textures is another notable trend in chocolate. Paul Kissin reported for the Sweets & Snacks Expo that chocolate with peanuts recently noted 2.4% growth in dollar sales and 4.5% in unit gains. But texture highlights aren’t limited to nuts. This month, Reese’s Outrageous will debut, a concoction of creamy peanut butter center, coated with caramel and Reese’s Pieces, dipped in chocolate. Mars also is experimenting with textures. Last month it launched a new Flavor Vote campaign asking customers to choose between Crunchy Espresso, Crunchy Raspberry and Crunchy Mint M&M’s. Voting ends May 25 with the winning flavor announced in August. “Our top-selling bars are still the classics we all know, but I do think customers are willing to try new innovations, especially if it still has a classic brand name on the package,” said David Hendrix Jr., merchandising manager for Summerwood Partners LLC. The company, headquartered in Bryant, Ark, owns and operates 36 Big Red Stores. “Hershey has really made a push adding a cookie-crunch texture to several of their items, including the Hershey Cookie Layer Crunch bars and the Reese’s Crunchy Cookie Cup,” he added. “Another trend appears to be a move to get more involved in the salty snack category. Mars is looking to enter the category with M&M Snack Mixes and Dove Chocolate Covered Dusted Nuts.” Other new items expected to hit shelves this year are the Milky Way Fudge bar and king-sized dark chocolate Kit Kat. One of the biggest developments to hit the category in recent months doesn’t even contain chocolate. Hershey’s Gold was introduced last December, and is the first brandnew recipe from the legendary candy maker in more than 20 years. The caramelized crème with salty peanuts and pretzel bits has received a positive welcome, thanks in part to an advertising campaign tied to the Winter Olympics. Of course, smaller confectioners are coming up with creative and unexpected chocolate formulations, including spicy options. Many of these will be on display at the 2018 Sweets & Snacks Expo, held May 22–24 in Chicago. A sam32 Convenience Store Decisions May 2018
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SHARE AND SHARE ALIKE
Hershey and Mars maintain their stronghold when it comes to U.S. chocolate candy market share. Market Share % Hershey
42%
Mars
27%
Lindt & Sprüngli
12%
Nestlé (sold to Ferrero SpA earlier this year)
5%
Private label
2%
Other
12%
Source: “U.S. Food Market Outlook 2018,” Packaged Facts, February 2018
pling of new products for this year’s event include Alli & Rose Coconut Rolls with Milk Chocolate, Divine Chocolate’s Dark Chocolate with Chili & Toffee Pieces Topped Bar, Bixby & Co. Dark Chocolate Maine Sea Salt Caramels, and Natierra Chocolate Covered Freeze-Dried Fruit Slices. “I want to see what the ma-and-pop people are doing and how we can get their products in our stores,” Hill said. “Sometimes the smaller producers just want to get into Target or Walmart, but I want to get them to believe that working in convenience stores is a viable channel.”
MARKET CAMPAIGN While consumers and retailers may appreciate fresh flavor and texture profiles, highlighting them on already crowded candy shelves and displays can be challenging. Hendrix kicks off new product promotions by positioning them in high-profile real estate, such as check stands, and calling out discounted prices with vibrant signage. Additionally, he’s dedicated a section on the top shelf of candy sets to premium and uniquely flavored products. “This helps in two ways: it gives customers a chance to notice new offerings and allows us flexibility to put these items into the sets as they are launched throughout the year,” said Hendrix. He also enrolls in manufacturers’ promotional campaigns. “We like to be on programs like Hershey’s ‘First to Street’ and Mars’ ‘Speed to Market’ plans in order to be one of the first chains in our market with the latest innovations,” he stated. Hill also leans on the resources vendors offer, oftentimes working with them to create targeted efforts. “Our marketing groups work together to produce radio ads and signage. Right now, we are working with Reese’s. It’s their 90th anniversary and Holiday’s 90th anniversary, so we’re working in conjunction to put out a strong promotion behind Reese’s,” he said. “It’s the most fun I have at work.” CSD
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Register today to attend the 5th Annual YEO Conference, which will be held at Cumberland Farms May 16-17 in Westborough, Mass. To register visit: www.nagconvenience.com/2018-yeo-conference This premier industry event is open to next-generation leaders 40 and under and is free for members of the National Advisory Group (NAG). YEO is the convenience store industry’s exclusive organization for next-generation leaders and up-and-coming decision makers.
Registration for the 5th Annual YEO Conference is open! Visit www.nagconvenience.com/2018-yeo-conference for details.
“NAG’s YEO is extremely focused on bringing great young talent together from across the country and giving them a platform to discuss the successes and struggles facing next-generation leaders throughout the convenience store and petroleum industry,” said Jared Sturtevant, YEO board chairman and supervisor of digital marketing for Couche-Tard Inc.
For information on NAG membership or NAG’s Young Executives Organization (YEO) contact NAG Executive Director John Lofstock 201.837.2177 • jlofstock@csdecisions.com
Thank you to our sponsors:
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Category Management
Tobacco Accessories
Tobacco Accessories
Heat Up
While lighters and cigarette papers have been the traditional backbone of the accessories category, the vaping segment offers new opportunities to grow sales. By John Lofstock, Editor
T
he tobacco accessories category continues evolving thanks to new products and a renewed willingness by convenience store owners to carry these new products, specifically items associated with vaping. The growth potential within the vaping category is projected to remain strong for years to come, according to Lou Maiellano, president of TAZ Marketing and Consulting Group. “Retailers embracing vaping products and doing it responsibly will attract a new loyal base of consumers,” Maiellano said. The importance of these customers extends well beyond the vape juice, the fluid used in vaporizers to create vapor. Accessories such as batteries, atomizers and carrying cases are important components for vape customers. They attract customers and bring higher rings, Maiellano said. When it comes to tobacco accessories, the 2018 National Association of Convenience Stores ( NACS) State of the Industry Report (SOI), released in April, pointed out that vaping is the “fastest growing” other tobacco (OTP) subcategory, presenting new opportunities to carry and sell vaping equipment. According to NACS, three key points will affect vaping’s future: • Vaping benefits from evolving tobacco consumers, who are willing to trade up to higher price points to try new products and new flavors. • Growth in the c-store segment is expected to come from closed system, pod-based vaping devices. • The vaping industry and retailers await key decisions from the U.S. Food and Drug Administration (FDA), and focus on growth in the short term. At presstime, the FDA made its first move when the administration revealed a four-stage enforcement and inquiry effort to better understand the growing use of electronic cigarettes by underage teenagers. 34 Convenience Store Decisions May 2018
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Responsible c-store operators have little to worry about as many insiders fear underage teens are illegally purchasing these products online at sites such as Ebay, where safeguards to accurately identify the consumer and their age are often ignored. “This is a problem that hurts all the responsible retailers,” Maiellano said. “No one wants minors to have access to these products, but when people don’t do their jobs properly, it affects all the hard-working companies that sell these products responsibly.” Given the current market for tobacco accessories, lighters, rolling papers and other product lines produce an excellent margin for c-stores—between 40-50% in some cases.
LIGHTING THE WAY Though vape represents new OTP opportunities, traditional tobacco accessories continue to yield solid results for convenience retailers. Standard disposable lighters remain a top seller, and BIC USA Inc. maintains a stronghold. According to scan data by Information Resources Inc. (IRI), a Chicago-based market research firm, the company commanded nearly 90% of the dollar share among U.S. convenience stores for the 52 weeks ending Dec. 31, 2017. The remaining listing was divided up among the following: Halpern Import Co., 3.30%; Calico Brands Inc., 0.89%; MK Lighters, 0.70%; and Wing Sale, 0.66%. In terms of dollar figures, BIC USA recorded more than $555 million for the same period, which is up from the $534 million earned in 2015. Halpern Import’s 2017 earnings reached more than $20 million, and competing lighter brands posted less than $6 million each. “When it comes to lighters, the best practices apply,” Maiellano said. “Give them space and offer a good variety on an ongoing basis. Don’t bury them on the back bar where your customers can’t see them.” CSD cstoredecisions.com
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Category Management
Gum & Mints
Propelling
Gum & Mints
Forward
Innovative flavors, formats and packaging have increased trial and impulse sales for the c-store gum and mint category. By Lisa White, Contributing Editor
F Fast Facts: » Hybrid mint flavors are becoming increasingly popular. » Gum sales in the convenience channel totaled $1.04 billion in the 52 weeks ending Feb. 25, 2018. » Between 2012 and 2017, retail volume sales of gum fell by 13%.
rom new flavors to different formats, unique textures and creative packaging and even functional varieties such as products geared toward increasing energy or enhancing nutrition, the gum and mints category is changing quickly. Chicago-based market research firm Information Resources Inc. (IRI) reported that gum sales in the convenience channel totaled $1.04 billion, with sugarless gum totaling $846 million, in the 52 weeks ending Feb. 25, 2018. Plain mint sales during this period totaled almost $82 million, while breath fresheners in c-stores totaled $243 million. “There’s always something new, with all the gum and mint manufacturers launching items annually and throughout the year,” said Ray Kostrzycki, director of marketing at CoGo’s, a 47-store chain based in Pittsburgh. “What I’m primarily seeing is gum has been declining and so have mints in the last two years. Like with candy, king and peg are driving the category.” Between 2012 and 2017, retail volume sales of gum fell by 13%, while sales of mints grew by 14%, according to Euromonitor International. In this intensely competitive environment, brand manufacturers in both segments launched new products last year. In December 2017, for instance, Mars Wrigley Confectionery launched Extra Chewy Mints to positive reviews. Joseph Bortner, category supervisor of York, Pa.-based Rutter’s, a chain of 69 stores, agreed that consumers are seeing a larger value in trading up pack sizes. “Single packs have remained stagnant while bottle packs are continuing to drive growth,” said Bortner. “Over the last year, we’ve seen more brand assortment entering into bottle packs.”
STICKY SALES Offering consumers more choice is manufacturers’ answer to dipping gum sales. According to market research firm Nielsen, convenience store gum sales were down more than 5% in the 52 weeks ending July 1, 2017, with sales tipping $920 million, compared to $970 million the previous year. “From a trends perspective, gum, and to a lesser extent mint, sales are not going strongly enough in the right direction,” said Daniel Levine, director of the Avant-Guide Institute, a global trend consultancy based in New York.
36 Convenience Store Decisions May 2018
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cstoredecisions.com
4/25/18 11:18 AM
9 TH - 12 T H BER TEM
at the beautiful Ponte Vedra Inn & Club Ponte Vedra Beach, Fla.
REG
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PEN
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SEP
NAG 2018
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Committed to building profits and relationships! The National Advisory Group (NAG) is an association of small, mid-sized and family-owned c-store chains and the executives that run them. This exclusive, member-driven group convenes annually 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!
FOR MORE INFORMATION:
RETAILERS should contact John Lofstock 201.837.2177 • jlofstock@csdecisions.com SUPPLIERS should contact John Petersen 440.250.1583 • info@nagconvenience.com
4/26/18 11:43 AM
SUNDAY, SEPTEMBER 9 1 pm – 7:30 pm: Registration 1 pm - 4 pm: Hospitality Suite
4 pm – 5 pm: NAG/YEO Board Meeting 6 pm – 7 pm: Opening Reception 7 pm – 10 pm: NAG Opening Night Dinner at Ponte
Vedra Inn
9 pm – 12 am: Hospitality Suite
MONDAY, SEPTEMBER 10
7 am – 8 am: Breakfast 8 am - 8:15 am: Welcome/Conference Overview 8:15 am - 9:15 am:
Burning Issue 1: Family Business Planning. How to build
an outstanding corporate culture from the top down. Family businesses are the backbone of the convenience store industry. Having a winning culture is often the crucial difference in attracting great employees and gaining a competitive advantage over other retail chains. Family business owners are generally driven by a sense of responsibility for the stewardship of the business. They seek to manage not only the assets and performance of the business, but also the family’s most important heritage—the values that are passed on from generation to generation. Values that underpin the sustainability of the family business, and its culture. In this session, hear from three leading convenience store retailers that will highlight the importance of family leadership in the c-store industry.” SPEAKERS: • Bill Douglass, President and CEO, Douglass Distributing • Charley Jones, President and CEO, Stinker Stations • Steve Loehr, Vice President, Operations Support, Kwik Trip Inc. Moderator: John Lofstock, Executive Director, The National Advisory Group 9:15 am - 9:30 am: Networking Break 9:30 am-10:30 am:
Burning Issue 2: The Machine Revolution: Are Robotics Right for Convenience Stores? From robots in the aisle
to customer service bots, this session will deal with emerging robotic technology and how this technology will change retail in the future. Already, leading U.S. retailers such as Amazon, Lowe’s, Stop & Shop and McDonald’s are using robotics as a way to manage wage increases and rising training costs. Learn what the technological future holds for convenience stores. SPEAKERS: • Paul Martin, UK Head of Retail Operations, KPMG • Kyle Nel, Executive Director of Lowe’s Innovation Labs Moderator: Bob O’Connor, President and CEO, Jetz Convenience Centers 10:45 pm – 12:15 pm:
Information Exchanges Part 1
The Information Exchanges are the heart and soul of what makes NAG so unique. Attendees will be formed into small groups of non-competing chains to discuss relevant business issues. We all want uninterrupted time with people who “do what we do,” but rarely do our busy lives allow us the luxury of benchmarking what we do and how we do it with other professionals. As you listen, learn and share with your small group of retailers, you will find that what you are doing right will be validated, what you might be doing wrong will be challenged, and how you might do things
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better will be encouraged. The relationships formed in this intimate setting will last a lifetime and be firmly measured in increased profitability and decreased legal liability. 12:15 pm - 1:15 pm: Lunch 1 pm - 5 pm: NAG Golf Outing, Ponte Vedra Ocean Course. (Boxed lunch will be served.) 1:30 pm: NAG Retail Store Tours: The Best of Jacksonville 5 pm - 6: 30 pm: Networking Reception 6:30 pm - 9 pm: Dinner On Your Own to Explore Pontre
Vedra Beach
9 pm – 12 am: Hospitality Suite
TUESDAY, SEPTEMBER 11 7 am - 8 am: Breakfast 8:10 am - 9:10 am:
Burning Issue 3: Foodservice: Reigniting the Dinner Daypart. Daypart sales are growing, but this has been a
tough mealtime to crack for convenience stores. This session will deal with getting a better understanding of what customers want at this important daypart, where they are shopping and what it will take to get them in your stores. The panel will also discuss the components of building strong take-home menus that satisfy busy customer lifestyles. SPEAKERS: • Keith Boston, Vice President of Foodservice, Cumberland Farms • Carlos Acevedo, Culinary Innovation and Research Chef, Yesway Moderator: Jerry Weiner, President, Weiner Consulting Co. 9:15 am - 10:15 am:
Burning Issue 4: Store Design and Layout: Identifying the Best Concepts Your Customers Will Find Appealing.
A good retail store layout starts on paper, where details such as building specs, customer traffic flow and product placement come together. Every design step requires thoughtful planning and some trial and error, but when the doors are open, a stellar store layout will encourage customers to browse and buy. Hear from leading retailers on how their design successes are helping drive sales. SPEAKERS: • Danielle Mattiussi, Vice President of Retail Operations, Maverik Inc. • Jacque Hager, Director of Operations, Big 10 Marts • Spencer Thomas, Chief Operating Officer of Southwest Georgia Oil Moderator: John Schaninger, President, The Schaninger Group
4/26/18 11:43 AM
10:30 am - 12 pm:
INFORMATION EXCHANGES BREAKOUT SESSIONS • Benefiting from the Supplemental Nutrition Assistance Program (SNAP). Learn how the new rules affect the c-store industry. • EMV Compliance. How it affects c-stores and what you
can do to save money.
Moderator: Jeremie Myhern, Vice President, Information Technology, Road Ranger • Storm and Disaster Preparedness. Whether it’s a hurricane, an ice storm or a human emergency, c-stores and gas stations should plan on how to respond effectively. • Private Label Product Branding. Environmentallyfriendly packaging, bulk offerings, new coffee opportunities, how to maintain freshness. • Human Resources: Embracing Technology. How tech-
nology and Web-based apps are helping staffing, scheduling and training employees.
Moderator: Chris McKinney, Director of Human Resources, Sprint Mart 12 pm - 1 pm Lunch 1:15 pm - 2:30 pm
Burning Issue 5: Foodservice: Doing More with Less.
Foodservice remains a high growth category for convenience store owners. Given the category’s enormous profit potential, operators must embrace foodservice to attract a steady stream of customers. In this session, convenience store retailers will offer fresh ideas for maximizing the foodservice menu in small spaces. Combi-ovens, ventless fryers and other modern equipment can perform multiple functions, boosting food quality that enables growing sales and optimizing profits. SPEAKERS: • Steve Magestro, President, Mad Max Convenience Stores • S tephanie Mahoney, Food Services Development Manager, MFA Oil Co. Moderator: John Zikias, Chief Operating Officer, Holmes Oil Co. 2:45 pm - 4 pm:
Y O U N G E X E C U T I V E S O R G A N I Z AT I O N ( Y E O ) BREAKOUT SESSION. Leading the Next Generation:
How to manage effectively and with authority.
When it comes to successful leadership, attributes like vision, communication and integrity never go out of style. But today’s business environment is constantly evolving and executives face new pressures every day. Executives must be able to build strong teams in the face of recruiting and retention challenges, keep up with the latest technology and demonstrate strong business acumen. As young leaders take charge of a growing workforce, they are also faced with complex issues such
as sexual harassment in the workplace and the growing use of social media. In this YEO breakout session, learn how you can stay out in front of these issues and effectively manage a crisis situation when one arises. (Open to Retailers and Suppliers) SPEAKER: • L inda McKenna, Principal, Employee Performance Strategies Inc. 5:30 pm - 6:30 pm: NAG Reception 6:30 pm - 9 pm: NAG Conference Dinner and
Awards Ceremony
9 pm – 12 pm: Hospitality Suite
WEDNESDAY, SEPTEMBER 12 8 am - 9 am: Breakfast 9 am - 10:15 am:
Burning Issue 6: Building a Better Car Wash: Cleaning Up in the Forecourt. Car wash usage is surging in the U.S. and convenience stores are in a prime position to capitalize on this growing trend. But not all car wash operations are equal. Due diligence is needed when selecting the right location, deciding how much money to invest, what type of equipment is best and which cleaning chemicals are right for your market. Learn from successful car wash operators what it takes to make such a business shine and how to generate consumer interest. SPEAKERS: • Bill Martin, Founder and President, Metro Express Car Wash • Michael Meyer, Facility Operations Officer, Meyer Oil Co. Moderator: P eter Tamburro, General Manager of, Convenience Operations, Cliff’s Local Markets
10:15 am - 10:30 am: Break 10:30 am - 11:30 am: Ideas Boot Camp: Game-changing ideas retailers can take home with them that are guaranteed to boost retail profitability. Foodservice expert Dr. Nancy Caldarola and NAG Executive Director John Lofstock identify best practices and opportunities from top convenience store operators around the country. SPEAKERS: John Lofstock, NAG Executive Director Dr. Nancy Caldarola, The Food Training Group 11:45 am: Conference Wrap Up and Takeaways 12 pm: Depart
Thank you to our sponsors:
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As the convenience store and petroleum industry continues to evolve, training the leaders of tomorrow is more important than ever before. To help young executives have a group that is solely focused on exchanging personal experiences with peers in their age group, the National Advisory Group (NAG) is proud to announce that it has relaunched the Young Executives Organization (YEO). YEO’s mission is to cultivate young talent in the convenience store and petroleum industry through implementation of education and networking. YEO accomplishes this mission by leveraging the experience of NAG members to help foster superior leadership skills. YEO members are industry leaders who are approximately 40 years of age or younger. Members are entrepreneurs, leading top businesses and actively pursuing a higher level of professionalism in the convenience store and petroleum marketing industry. Membership in YEO provides young convenience store and petroleum industry executives with an opportunity to network with other NAG members and influential industry leaders. It also gives young executives a platform to express their ideas, leadership abilities and vision for the future of convenience retailing. Membership in YEO is open to all NAG-member company employees at no cost. If you are not a NAG Member, join now at www.nagconvenience.com. If you are a young executive or if your chain has a young up-and-coming executive please join us in Florida!
A Florida landmark since opening in 1928, this 300 acre Florida beach resort is located in fashionable Ponte Vedra Beach. Celebrated as one of the great Florida resorts, it is easy to see why so many choose Ponte Vedra for their Florida vacation. HOW TO REGISTER Go to: www.nagconvenience.com. NAG will confirm your hotel room and your meeting registration. A credit card number must accompany your registration.
HOTEL PRICING A block of rooms has been reserved for the NAG Conference at these special rates: Golfview rooms at $209/night Oceanview rooms at $229/night
Golf rate is $130 for golf and $40 for club rentals
Your hotel costs are NOT included in the cost of the conference and should be booked through the NAG registration site. Please make your room reservation by 8/13/18. It is NOT necessary to call the hotel. Please contact the NAG Event Coordinator for suite pricing and availability at NAGRegistration@mocandco.com. CONFERENCE REGISTRATION RATES
Member April 15th - July 20th: Super Saver Price, $579 July 20th - August 12th: Early Bird Price, $629 August 13th onward: $779 Non-Member April 2nd - July 20th: Super Saver Price, $679 July 20th - August 12th: Early Bird Price, $829 August 13th onward: $879 Spouse/Guest $399
For additional information, contact John Lofstock at jlofstock@csdecisions.com or YEO Board ChairmanBart Stransky at bstransky@racetrac.com.
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“The billion dollar question, of course, is why,” he added. Some observers reason gum chewing among U.S. consumers isn’t as trendy as it used to be. As popularity in the gum segment has waned, efforts to capture that spark again have grown, especially in terms of functional offerings. “From my perspective, there may be growth potential for other types of functional gum, ones that mimic the spectacular growth of functional beverages for energy and stimulation, health and wellness, and weight management,” said Levine. “The challenge for functional gum in the past is that it is often packaged to look like medicine. The opportunity lies in packaging it like VitaminWater or Red Bull, and these are the brands that c-store owners and managers should be looking at.”
C-STORE FOCUS
TOP 10 SUGARLESS GUMS C-STORE $ SALES
% CHANGE YEAR AGO
$ SHARE OF TYPE
Category Total
$846 M
-2.76%
100
Trident
$146 M
-12.46%
17.23
Orbit
$120 M
-7.88%
14.16
Wrigley’s Extra
$116 M
4.83%
13.67
Ice Breakers Ice Cubes
$55 M
72.82%
6.5
Dentyne Ice
$49 M
-12.89%
5.81
Wrigley’s 5 Rain
$41 M
-6.02%
4.89
Wrigley’s 5 Cobalt
$41 M
-6.16%
4.83
SUGARLESS BRANDS
Wrigley’s Eclipse $39 M -6.94% 4.63 To best capitalize on this segment, CoGo’s is resetting its categories based on the popularity of gum and mint lines. Trident White $39 M -3.45% 4.56 “We’re resetting our categories based on that informaMentos Pure Fresh $38 M 20.85% 4.52 tion,” said Kostrzycki. “We just went through a reset with our distributor and made adjustments to planograms Source: Information Resources Inc. (IRI) Convenience Store All Scan data for the 52 weeks ending Feb. 25, 2018 to accommodate best sellers and trends. Trident, 5 and Orbit are all top items in our stores, but flavor trends are Mints are projected to post a positive value compound less obvious.” At Team Oil Travel Center’s Spring Valley, Wis. store, it’s annual growth rate (CAGR) of 3% at constant 2017 prices. “While breath fresheners are still king, Millennials will always the same brands and flavors that are strong sellers, including Extra and 5 spearmint flavors, Wrigley’s continue to drive a shift towards bold flavors as their demographic grows,” said Rutter’s Bortner. “I believe mints will Doublemint and Sugar Free Ice Breaker mints. “New gum and mint varieties are constantly introduced, experience some growth in 2018 and could see similar chalbut never do as well as the traditional lines,” said Jesse lenges as gum in 2019. I wouldn’t be shocked if there’s a Streator, grocery manager. “The new 35-stick packs came move to a bottle/bulk pack mint that comes out later this out, but aren’t getting much attention from customers. And year or 2019.” the big plastic box isn’t as portable, although packaging is always being updated in this category.” INNOVATIVE INTROS Team Oil sells its gum and mints at the front counter, Mars Wrigley’s commitment to innovation helped it since these items are an impulse sale for some and des- maintain its dominant position in gum over the last year, tination item for others. The store doesn’t have special according to Euromonitor. In 2017, for instance, the compromotions due to the low price points of under $2 for gum pany launched a soft chew format of its Orbit White brand, and under $3 for mints. mirroring the popular format of Hershey’s Ice Breakers “These items sell pretty steadily,” said Streator. brand and catering to strong demand for chewy textures. The company also introduced Doublemint Perfectly Sweet with real sugar and no artificial sweeteners, flavors or colors. MINT RETURNS “Innovation seems to be coming from traditional cateThe Pride Stores Inc., a 12-store chain based in Warrenville, gory brands playing in new arenas,” said Bortner at Rutter’s. Ill., has stronger gum sales compared with mints. “However, mints are bringing more innovation to this “This includes Wrigley Extra releasing Extra Chewy Mints or category,” said Nicolette Jaeger, loyalty and food service Ferrero launching Tic Tac gums. If these prove successful, manager. “Hybrid flavors are becoming increasingly popu- more brands may look to do more crossovers in the future.” Most recently, The Hershey Co. released its glittered Ice lar as well as an influx of mints that are soft and chewable.” The stores’ top-selling items are slim packs of Wrigley’s Breakers gum line this spring in a limited time offer promotion, as an attempt to capitalize on the glitter trend that has Doublemint and 5 Rain Spearmint gum lines. Recent additions to its offerings include Tic Tac Coconut marked 2018. Also, Project 7 has expanded its Front Porch Lemonade Pineapple and Trident Dragon Fruit Lychee and Passion and Wedding Cake gum lines with Super Strong Gum, Fruit Twist flavors. “We added these new and exciting flavors to appeal to which boasts bold, innovative flavors as well as guarana and vitamins B6 and B12 for energy. CSD the younger demographic,” said Jaeger. cstoredecisions.com
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Category Management
Salty Snacks
Salty Snacks
Show Growth Changing demand for snacks is reflected in c-store offerings. By Howard Riell, Associate Editor
Fast Facts: » Growth in sales of salty snacks in the U.S. has been surprisingly steady over the last five years, with year-over-year growth each year always in the small range between 3.1% and 4.4%. » IRI’s convenience store channel statistics for the 52 weeks ending Feb. 25, 2018, show salty snacks up a healthy 7.43%, to nearly $5.4 billion. » Pretzels notched just under $239 million in sales, a modest 2.61% increase.
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A
mericans love chips and other salty snacks, but purchasing preferences seem to be changing at a quicker pace than in the past. Convenience stores should factor in changing tastes when planning store sets. The growth in sales of salty snacks in the U.S. has been steady over the last five years, with year-over-year growth each year always in the small range “between 3.1% and 4.4%,” Packaged Facts recently reported. The research firm forecasts sales of salty snacks will maintain the same moderate growth they have experienced in the last couple of years through the forecast period to 2020. “Sales growth per year will remain around the same through the forecast period to 2020, with sales in 2020 reaching $27.0 billion.” Salty snacks rose a healthy 7.43%, to nearly $5.4 billion, according to Information Resources Inc. (IRI)’s convenience store scanning data for the 52 weeks ending Feb. 25, 2018. Potato chips account for $1.7 billion, rising by 7.41% during the period. Leading brands include Frito-Lay, Kellogg, Herr’s, Utz and private label. Pretzels notched just under $239 million in sales, a 2.61% increase. Ready-to-eat popcorn/caramel corn saw sales rose by 6.08% to $231 million. Pork rind sales jumped 5.13%, to slightly more than $204 million.
SELLING POINTS “There are three key elements to selling more chips and salty snacks,” said Steven Montgomery, president of b2b Solutions LLC in Lake Forest, Ill. “The first is location. To determine the best location, retailers must know their customers’ purchase paths. The thirst occasion is what drives most customers to shop a c-store. Stopping a customer on their way to their initial destination inside a store is very difficult. It is far easier to stop them once they have made that purchase.” Montgomery explained c-stores have two principle areas for satisfying the thirst occasion: the walk-in cooler and the fountain area, which are two areas for cstoredecisions.com
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realizing more snack sales. “Retailers need to determine the best location to interrupt the consumer from these back to the register for that add-on purchase. It may not be possible to do both with a single salty snack location. This can be addressed by the use of endcaps or free-standing displays.” Product selection is the second driving force, said Montgomery. Retailers should carefully evaluate their SKUs to determine what is selling and what isn’t. “While there are items that sell in every c-store, there are also many that do not. By first looking at what the customer is currently buying the retailer can determine what potential items they should add to the mix,” said Montgomery. “This may help them determine what items are more likely to sell to their fountain versus bottle and can buyers. Research has also shown the free-standing displays can increase the sales of salty snacks. These are often temporary displays featuring a promotional item.”
TRACKING DAYPARTS Which snacks consumers pluck from shelves can have as much to do with the time of day as the merits of the products themselves. Blaine Becker, senior director of marketing for The Hartman Group, Inc. in Bellevue, Wash., said his firm has identified the times of day in
which consumers are reaching for salty snacks. For example, during the afternoon, 13% of consumers who snack choose salty snacks like chips and popcorn; 11% choose crackers. After dinner and during evening snacking occasions, 12% consume salty snacks. Hartman Group research has also found that snacking tends to increase
HEALTHY RETURNS Americans increasingly want healthy everything, including salty snacks. That trend is taking shape in the convenience channel. “I feel like traditional salty snacks are coming down, mainly because most people are starting to watch their health now,” said Kumar Assandas, a 7-Eleven Inc. franchisee in Henderson, Nev. “Everybody is being more fitness-conscious and active, so things like snap peas and other alternatives are starting to pick up a little more.” That said, Assandas has experienced sales of healthier chip and salty snack alternatives begin to rise at his stores. “They are doing better than the traditional type.” Indeed, for the long term, Assandas said he sees traditional chips continuing to lose favor. Given that view, his advice to colleagues is logical. “Expand your assortment and bring in as many healthy products, as many SKUs that are directed toward fitness, as possible in that salt section.” cstoredecisions.com
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May 2018 Convenience Store Decisions 39
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OUR #1 SELLING SNACK ITEM
Snacks Grow Diverse According to McLane, 62% of customers eat salty snacks as a stress reliever, compared to 16% a year ago, and a third of customers eat salty snacks away from home, with 26% eating them at work. Ninety-four percent of Americans purchase salty snacks, and 13% replace meals with them. Four of five U.S. consumers agree that salty snacks can be healthy and tasty. Brands should identify with the “better for you” interests of consumers and remain transparent in the ingredients they are adding and removing from snacks. Potato chips are the leader with 32% of category sales, followed by tortilla chips and other salted snacks. Product innovation is helping drive the momentum in the salty snack category in convenience. According to Nielsen research, customers are looking for familiar flavors with new twists, and nontraditional ingredients are growing in appeal. New chip flavors now being introduced in the market combine traditional salty tastes with flavors of different dining experiences, including creamy garlic Caesar, milk chocolate, crushed red pepper, ketchup, wasabi ginger, biscuits and gravy, cinnamon with sugar and chicken with waffles.
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Retailers must remain vigilant for clues that can help them boost salty snack sales. John Lutz, senior category manager for Pilot Travel Centers LLC, in Knoxville, Tenn., said that larger pack sizes and retail sizes continue to be a strong trend. “Convenience stores are moving into pack types that would normally only be in other channels such as grocery and drug. Regional offerings are important to have from chips to meat snacks.” Limited-time offers help to keep the category interesting, including seasonal flavors, Lutz suggested. “A diverse product portfolio that delivers choice is important to satisfy the needs of the guest.” According to Chicago-based retail consultant Nicole Leinbach Reyhle, c-store operators should merchandise these impulse buys near their cash wrap, as well as crossmerchandise them throughout their stores to increase the opportunity for sell through. CSD cstoredecisions.com
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Technology Solutions for C-Stores! Convenience Store Decisions introduces it’s newest offering—the CS/TEK technology platform for C-Store Retailers and Decision Makers—jointly developed with our partners at ConnectMii Communications. CS/TEK is part solution provider directory and part insights—a “one stop shop” for C-store Technology and Operations influencers to go and learn about trends and suppliers they can partner with to stay ahead of the game. The platform includes relevant articles, insights and interviews. CS/TEK directory listings include a unique “book a meeting” feature that allows you to schedule and meet by desktop video with solution providers.
Register now to attend our upcoming videocast:
How C-Stores Can Thrive in the Age of Instant Gratification
ARCHIVED VIDEOCAST EVENTS:
May 15, 2018 • 1 PM EST
C-stores have new opportunities to satisfy consumer preferences as society shifts toward an on-demand economy. With Amazon providing 2-hour home delivery and online ordering/direct delivery from Uber Eats and Grub Hub, convenience stores should consider new services to satisfy the immediate needs of customers. Today, mobile apps provide the ideal platform to deliver targeted digital marketing programs and curbside delivery to deliver new experiences and accelerate sales growth.
Brighter Strategies Through Signage
sponsored by Lexmark http://www.cstek.us/archived-events.html
What You Will Learn:
• Who your consumers are • What your c-store can do to provide a superior customer experience • How to reach your consumers digitally • Why digital offers over coupons • Strategies to connect with CPG marketers and access funding for digital marketing programs Who Are These Insights For:
Convenience operators, retail brands, managers, and decision makers http://cstek.us/event/age-of-instant-gratification.html Moderator
David Bennett Senior Editor Convenience Store Decisions
Presenter
Donald Frieden President and CEO P97 Networks Inc.
Technology suppliers, we have a schedule of upcoming videocasts on Controlling Costs with IOT, Payment Systems, POS and more! We would enjoy partnering with you to develop a videocast topic that showcases your capabilities. To schedule a demo of the CS/TEK platform or to learn more please contact John Petersen at (216) 346-8790 or jpetersen@csdecisions.com
WWW.CSTEK.US
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4/25/18 12:14 PM
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Foodservice
Sandwiches
Sandwiches
Stand the Heat Middle Eastern flavors, plant-based proteins and made-to-order options are trending, but consistent, fresh quality should be the top consideration of any c-store sandwich program. By Erin Del Conte, Senior Editor
Fast Facts: » Many meat-loving customers want vegan options on occasion as they look to eat healthier. » Middle Eastern cuisine is the latest ethnic flavor trend. » Mastering consistent quality on a daily basis should be the foremost goal of any c-store sandwich program. 42 Convenience Store Decisions May 2018
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B
ull City Burger and Brewery in Durham, N.C. recently made headlines after it introduced a 100% North Carolina pasture-raised beef burger with gruyere cheese, spicy chili sauce and—wait for it—an oven-roasted tarantula on top. The roasted-spider sandwich debuted as part of an ‘Exotic Meat Month’ promotion. Of course, the hairy option was a limited offering. While today’s customers seek new and interesting food options, c-stores thankfully don’t need to go to such extremes to entice new business. Mark DiDomenico, director, client solutions, Datassential Inc., noted in a recent speech at the NACS (National Association of Convenience Stores) State of the Industry Summit, now that Latin and Asian food trends have become mainstream, the next big food trend is Middle Eastern fare, including dishes from Iran, Israel, Lebanon and Turkey, among other countries. For example, DiDomenico pointed out that over the past four years falafel has grown 45% on menus, the presence of shawarma grew 45%, zaatar is up 301%, tahini rose 44% and Aleppo pepper is becoming a substitute for chilis rising up on menus 179%—to name a few ingredients. What’s more, instead of identifying foods around ethnic origins, as in “Middle Eastern foods” or “Asian Foods,” food trucks have spurred customers to think of foods in terms of specific ingredients like samosas, arepas or piadinas. When experimenting with unfamiliar foods, use menu names that keep the experience familiar. “Before sriracha was sriracha people called it Thai Chili sauce,” DiDomenico said. In the same vein, a Bahn Mi sandwich sells better when called Saigon Chicken, because the name is more familiar to customers. cstoredecisions.com
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Foodservice
Sandwiches
LAST OCCASION FOOD PURCHASED COLD SANDWICHES • On their last occasion, 19% of consumers purchased cold sandwiches. The most common sandwich type purchased was cold-deli style, followed by wraps. • The grab-and-go section is largely the service areas used when purchasing cold sandwiches, but made to order is growing in popularity. TYPE
BASE SIZE
% PURCHASING
GRAB AND GO
IN-STORE RESTAURANT
MADE-TOORDER
Cold Deli
145
15%
71%
16%
32%
68
7%
65%
26%
28%
Wraps
Source: Q1 Consulting Services 2017
HANDCRAFTED CUISINE
HOLD THE MEAT Plant-based foods are surging in popularity in 2018. With more customers concerned about healthy eating, many customers who enjoy meat are now opting to eat meat-free meals on occasion as part of a balanced diet. “Vegan foods aren’t just for vegans anymore,” DiDomenico said. In fact, Datassential found 23% of customers are favorable to eating a vegan meal on occasion, 57% are trying to eat more plant-based protein and 45% believe consuming animal protein is a health concern. The bottom line, DiDomenico said, is that while consumers love meat, they also want to be healthy and so they are including meatless meals in their diets. However, it’s important for food operators to note that plantbased foods only succeed on menus when they’re crave-worthy. Today, quick-service restaurants (QSRs) are already catering to that demand for crave-worthy vegan and vegetarian items. QSR White Castle, for example, recently introduced the “Impossible Slider” in 140 locations throughout New York, New Jersey and Chicagoland. The plant-based burger that “bleeds” beet juice, made by Impossible Foods, is topped with smoked cheddar cheese, pickles, onions and served on a signature bun for $1.99, or can be part of a 44 Convenience Store Decisions May 2018
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customers can choose from a range of meaty sandwich options, including smoked beef, baloney, chicken salad, ham and cheese, turkey and cheese, brisket, pulled pork and more. The Stanley James Smokehouse is located inside the convenience store. When customers walk in, the restaurant is to the left and all convenience items are to the right. The kitchen and meat smoker are co-located on site, so all meats are cooked and prepared right at the c-store. The restaurant has been open about two months.
combo meal. The Impossible Burger was first introduced in 2016 at Chef David Chang’s Momofuku Nishi in Manhattan. It’s the only plant-based burger to win a 2017 Tasty Award and a 2018 Fabi Award from the National Restaurant Association. This goes to show that to succeed, vegan sandwiches need to be more enticing and higher quality than the meat-based products on your menu. Zarco USA, which just launched a new barbeque restaurant concept in one of its c-stores in Kansas, sees the value of offering a vegetarian option within its meat-centric menu. “We’re doing a Portobello mushroom steak sandwich to meet the needs of those customers that want something different and better-foryou, said Scott Zaremba, owner of Zarco USA, which has two locations in Kansas. “If we can offer a menu item better than the competition and provide those additional choices, we want to do that. We’re a full meat house, but vegetarians (or those seeking a meatless option) can still eat here.” Zarco USA’s new proprietary Stanley James Smokehouse restaurant features a wide range of barbeque options, including fresh barbeque sandwiches— all made-to-order in house. The store also sells grab-and-go Stanley James Smokehouse sandwiches. In addition to the Portobello “steak,”
Zaremba has been working on the barbeque concept for two years. “Two years ago I decided that we had to differentiate ourselves again,” Zaremba said. In the past, Zarco USA had featured a sub business, as well as pizza and chicken options, all of which matched what the industry as a whole was offering. “The major c-store chains all have those offerings also. They have sub sandwiches and commissaries where they make the sandwiches and then ship them to their stores,” he said. Zaremba partnered with a friend from high school who is now in the grocery business to create the Stanley James Smokehouse proprietary concept. Zaremba said it resonates with customers that the meats are cooked on site and the sandwiches are assembled fresh in the store, rather than shipped pre-made from a commissary in large batches. Customers can also order handmade French fries and handmade desserts including apple and peach cobblers. Zaremba is seeing a big demand for spicy fare. To meet changing trends and keep excitement fresh, the restaurant offers specials every week. In the cold grab-and-go section, sandwiches are packaged using clear cellophane, labeled with the Stanley James Smokehouse brand and sold by the pound.
cstoredecisions.com
4/26/18 2:33 PM
WE KNOW YOUR MISSION IS TO PROVIDE FRESH, SAFE PRODUCTS TO YOUR CUSTOMERS. SO IS OURS. As a convenience store operator, nothing is more important than ensuring fresh, safe products for your customers. That’s why we’ve invested over $1 billion in an end-to-end cold chain solution with a multi-step monitoring process that constantly validates product temperatures from the time they arrive at our distribution centers until they’re delivered to our retailers. It’s why we’re a member of IFDA and GS1— organizations dedicated to foodservice supply chain integrity and traceability. And, it’s why all of our facilities undergo independent audits by Mérieux NutriSciences, a leading certification body and auditing provider for the global supply chain. To learn more about our custom cold chain solution, visit mclaneco.com/coldchain
© 2018 McLane Company, Inc. All rights reserved.
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Unwrap the power of
premium!
PREMIUM BREAKFAST SANDWICH COLLECTION Breakfast and all-day breakfast are at prime popularity, with sandwiches driving growth. Count on America’s #1 Sausage brand* to deliver the most premium sandwiches in the c-store market. • Good ingredients like real eggs, real cheeses and roasted vegetables mean restaurant-quality flavor • Unique, on-trend bread carriers such as grilled sourdough and chile-tomato tortillas work well in a microwave • Top flavors and formats of high quality Johnsonville sausage - packed with protein • Available individually wrapped for flexible selling that boosts your grab-and-go profits any time of day Tap into the power of premium with the Premium Breakfast Sandwich Collection customers will rush to get their hands on. Call us TODAY at 800.837.5391 or visit cstore.johnsonville.com *A.C. Nielsen 10/28/17
©2018 Johnsonville, LLC
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The Stanley James Smokehouse handcrafted sandwiches are made fresh in the c-store, packaged in clear cellophane and priced by the pound.
“It’s easier to manufacture that way because you’re not pre-weighing the product and trying to make everything identical. Being handcrafted, the sandwiches are always different. So you can get a sandwich for $2.50, or $4.90 or whatever it happens to be because some have more meat on them,” Zaremba said. Currently, Zaremba is testing a signature breakfast-sandwich menu. The breakfast sandwiches are made on either biscuits or toast, and include bacon and ham smoked in-store. The restaurant also features its own breakfast potato recipe. “Some of the breakfast sandwiches are made to order and a lot are grab and go in the hot case. We’re making sure that we have quality in the hot case— not just a hot sandwich, but a quality hot sandwich,” Zaremba said.
CONSISTENT EXECUTION Quality is the key to a successful c-store sandwich program, agreed Tim Powell, vice president and senior analyst for Q1 Consulting LLC. Before considering the latest ingredient trends, c-stores should first focus on mastering consistent execution of their sandwich program on a daily basis, he advised. That includes ensuring each sandwich is fresh, appealing, packaged in attractive, transparent packaging and clearly labeled. One of the most important hurdles to mas-
ter is ensuring sandwiches that don’t sell are being discarded in a timely manner. C-stores should adhere to a 5-11% waste tolerance. Sandwiches must look fresh— something many c-stores still struggle to perfect. “A lot of times there’s only one turkey sandwich left and it looks like it has been sitting there a long time,” Powell said. Q1data indicates c-store shoppers want immediate consumption options that offer quality, variety and the type of limited time offers they might see at a local sandwich shop. The quality and efficiency of a c-store chain’s central kitchen is an important consideration. As demand for grab-and-go sandwiches rises, central kitchens must be able to maintain a consistent product between locations, Powell said. “Made to order is also a very big trend right now in convenience stores. Gen Z and Millennials want made-toorder products,” Powell said. “They’re associating freshness and quality with the sandwich when it’s being made in front of them, or there are clear cues like the way it looks or a best-used-by date on the packaging.” In light of the made-to-order trend, “in-store restaurants are becoming increasingly popular in more of the retail realm as a whole, including at grocery stores,” Powell said. Many supermarkets today offer various stations where customers can get any fare they desire customized, and c-stores need to be watching and adapting to that demand before other channels take the lead. Even with a strong made-to-order program, c-stores must still maintain a high-quality grab-and-go section, as most c-store customers are choosing c-stores for speed of service. The ultimate goal should be to make your c-store a top-of-mind sandwich destination for customers, said Powell, by meeting customer demands, while providing a multitude of hot and cold beverages and a level of quality that makes your food offering competitive against other channels. CSD
In Demand ALL DAY!
72%
of consumers want operators to serve breakfast all day.†
51%
of c-store breakfast consumers purchase breakfast sandwiches.‡ Flavor spins are important:
67%
of consumers are looking for c-stores to offer more unique flavors for breakfast items.‡
Sources: †National Restaurant Association Restaurant Industry Forecast ‡Technomic C-Store MarketBrief June 2017
For more information call us TODAY at 800.837.5391 or visit cstore.johnsonville.com ©2018 Johnsonville, LLC
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4/25/18 11:20 AM
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Foodservice
Column
Economics of Food Safety
Francine Shaw is president of Savvy Food Safety Inc., and has been featured as a food safety expert in numerous media outlets, including the Dr. Oz Show, the Huffington Post, iHeartRadio, Food Safety News and Food Management Magazine.
The consequences of ignoring food safety protocols are expensive. Technology can help c-stores avoid food safety missteps. By Francine Shaw
A
merica’s food industry has a $55.5 billion safety problem annually, as recently reported by Fortune Magazine. This includes foodborne illnesses at convenience stores and restaurants, food recalls and other food safety issues. The price can be steep. A 2015 study by Robert Scharff, an associate professor at Ohio State University, estimated that foodborne illnesses cost that $55.5 billion per year in medical treatment, lost productivity and illness in the U.S. Each year 48 million Americans become sick from foodborne illness, according to the Centers for Disease Control (CDC). Therefore, investing in food safety is one of the smartest things c-stores can do. The expense, time and energy necessary to implement— or elevate—your food safety protocols won’t be overwhelming, and it’s crucial to your business success. Last May, nacho cheese sold at a California convenience store was linked to a botulism outbreak that sickened 10 people and killed one. The convenience store temporarily lost its food and drink permit—resulting in lost revenue— amid the ensuing investigation. Earlier this year, approximately 2,000 7-Eleven customers in West Jordan, Utah were exposed to hepatitis A, due to an infected 7-Eleven employee who had gone to work and handled the c-store’s food while sick. Having a foodborne illness incident or outbreak can result in decreased revenues, hefty legal fees, potential lawsuits, diminished sales (and loyalty) from guests afraid to visit the (possibly contaminated) store, and a damaged reputation that could permanently shut your doors. Food safety should be part of your company’s culture. Everyone—on every shift— should be trained in proper food safety protocols.
TECHNOLOGY CAN HELP New technological solutions can now enhance food safety protocols and make it faster, more accurate and more efficient to conduct inventory, auditing and training. Sensors ensure foods are being held at proper temperatures. Centralized, continuous refrigeration monitoring 48 Convenience Store Decisions May 2018
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systems signal when temperatures in the store’s coolers or freezers rise above safe holding temperatures, eliminating the need to throw away entire coolers or freezers of food due to improperly working units. Innovative digital tools can now be used for c-stores’ internal auditing systems, which is a more efficient, costeffective and accurate solution versus the pen and paper methods often used in the foodservice industry. Many companies now provide downloadable apps that enhance the way foodservice employees conduct inspections, keep temperature logs, conduct training, manage QA forms, access food code information and more. Now, critical food safety data can be at employees’ fingertips. Operational efficiencies have been proven to improve stores’ bottom line. Eliminating pen and paper line checks can save $250-$600 per year per store, smart sensors that prevent food spoilage can save $1,100 per episode, and reducing food and labor costs can save $4,700 per year per store, according to a recent CoInspect survey. Further, CoInspect experts said the ROI on in-store technical solutions can be as high as $10,000-$15,000 per year for cstores with foodservice capabilities. Digital tools can help with brand protection and quality assurance concerns by optimizing and improving line checks, shift logs, inspections, auditing and other reporting. CHEATING HISTORY There’s a widespread “pencil whipping” problem in the foodservice industry, where employees using paper record systems falsify records or “cheat” on their processes, which digital tools eliminate through real-time data collection, and visual records using photos and videos. Technology that can help minimize labor, reduce (or eliminate) foodborne illness risks and minimize food waste is not an expense, it’s an important investment. Often, c-store owner/operators will tell me, “I can’t afford to make the investment.” My response is always, “You can’t afford not to.”
cstoredecisions.com
4/26/18 8:22 AM
JOIN CDA TODAY
Serving convenience products wholesale distributors through connections, networking, advocacy, news and education.
CONNECTIONS CDA connects wholesale distributors with key trading partners and suppliers at the only national events for the convenience distribution industry: the Convenience Distribution Marketplace, February 11–13, 2019 in San Antonio, and the Convenience Distribution Business Exchange (CDBX), September 23–26, 2018 in Chicago.
ADVOCACY CDA represents our members’ interests in the legislative and regulatory sectors in Washington, DC, and hosts a Day on the Hill event each May in Washington for distributor members.
INFORMATION CDA communicates the latest industry news through Convenience Distribution News, the weekly e-newsletter, Convenience Distribution™ magazine and cdaweb.net.
INSIGHTS CDA educates through programming, research and scholarships to promote all aspects of distributors’ business and improve efficiency and profitability.
The Convenience Distribution Association is the trade organization working on behalf of convenience products distributors in the United States.
www.cdaweb.net
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3/28/18 2:55 PM 4/25/18 11:46 AM
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Technology
Prepaid
Prepaid
Helps Foster
Loyalty
The prepaid category is evolving at a fast clip, allowing convenience retailers more options to engage customers, whether it’s through more card sales or more loyalty participation. By David Bennett, Senior Editor
T Fast Facts: » Convenience retailers should examine how prepaid offerings fit into their loyalty programs. » A majority of self-use gift card consumers (72%) think gift cards are as personal and thoughtful as other types of gifts. » Fifty-five percent of selfuse gift card buyers are married.
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h i s M o t h e r ’s D a y, U . S . ered rewards in terms of convenience, spending is expected to hit the opportunity to integrate prepaid a near-record high, second offerings into loyalty programs seems only to last year’s $23.6 billion. to be growing. That’s a lot of roses and bathrobes. Not surprisingly, you can count REWARDING MODEL gift cards in that huge holiday spend. Emily Collins is an analyst with Anymore, gift cards have become a Forrester Research who specialsmart shopping solution that saves izes in customer loyalty programs, consumers time and rings up sales with an emphasis on trends, techfor retailers. Drilling deeper, prepaid nologies, services and analytics. She cards are also a viable means for con- explained retailers can use prepaid venience stores to generate more reward programs to gain a competithan just holiday sales. tive advantage. The prepaid category is evolving “From my perspective, loyalty benat a fast clip, allowing convenience efits are the reason companies give retailers more options to engage cus- consumers to participate in a prepaid tomers, whether it’s through more card card offering,” said Collins. “For consales or more loyalty participation. sumers, it’s much more cumbersome In a new survey from Dallas-based to purchase and load/reload a preExcentus, a provider of loyalty and paid card than just use a credit card. coalition marketing solutions, includes The primary benefit of prepaid cards the vast extent of influence loyalty goes to the retailers who have faster programs wield over shopper deci- access to those funds,” said Collins. sions. While location is still the number Eventually, such transactions creone reason shoppers go to a specific ate a stronger connection between c-store (44%), findings from Excentus the buyer and the retailer. indicate nearly as many shoppers “For example, I might load $50 (43%) go to a c-store because it offers onto the card but have an average a rewards program. order value of $5,” Collins said. “The While prepaid cards may be consid- retailer simply has to remind me to cstoredecisions.com
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64% of self-use gift card buyers are female. keep coming in to spend down the card rather than convince me to choose them for my $5 purchase each time. Starbucks pioneered this model and many high-frequency/ small purchase amount businesses have copied the model with some success.” The same can be said for the c-store channel, especially as loyalty models become more diverse. “In the convenience space, the companies I talk to are exploring prepaid as well as the traditional loyalty card model. 7Rewards (from 7-Eleven) provides a good model for mobile-based loyalty in the convenience space that has evolved from a ‘buy 5, get 1 free’ type model to a pointsbased program where consumers can choose their rewards.”
CLOSING THE LOOP
MCX is currently developing a loyalty platform for its shopping locations, which includes more than 200 convenience and specialty stores. Driver explained it’s too early to ascertain how prepaid offerings will fit in. However, the military retailer still carries both open and closedlooped cards from a wide array of supplier partners. “Our open-ended Vanilla Visa cards are universally accepted,” said Driver. “We are working with our third-party card supplier to continually identify new and upcoming opportunities in this category.”
VIRTUAL OPTION
As more c-stores are getting into online ordering and InComm, a leading prepaid product and payment tech- mobile transactions, there are similar opportunities tied nology company, in March 2018 released a study entitled to digital prepaid or virtual prepaid cards. Virtual prepaid “The Closed-Loop Self-Use Consumer.” The study indicates cards have the same functions of physical prepaid cards closed-loop gift cards have historically been purchased as except you can only use them for online purchases and for gifts for other people. They are retailer- or brand-specific phone orders. Since they are designed for online purchases and phone gift cards that can only be used for that particular retailer or orders, you can’t use them at retail stations for POS purbrand (in-store or online). The study also found that the majority (72%) of these self- chases. However, these cards facilitate the customer’s use gift card consumers think gift cards are as personal and online shopping experience by making it safer and more thoughtful as other types of gifts. In fact, the average self- convenient for them to make purchases. Industry experts also tout virtual prepaid cards for maruse gift card consumer bought eight physical gift cards and three digital gift cards in the three months prior to the survey. keting campaigns. They make it easy for companies to offer InComm, which recently announced a deal to acquire value-added promotions to customers with little labor and distribution rights of American Express’s prepaid reloadable costs. Because e-commerce is becoming a significant part and gift card products in the U.S., also provides self-use gift of the convenience landscape, and is also growing, any card statistics in the study, including that 64% of self-use type of digital offer for online redemption tends to appeal gift card consumers are female. These consumers are mar- to customers. According to InComm, convenience stores that are solely ried (55%) and own a home (59%) in a suburban area (48%). Moreover, 45% of respondents who identified as self-use focused on door swings and consumers pulling prepaid consumers had at least completed some college or gradu- cards off pegs are missing a large opportunity. Exploring ated from college. Forty-five percent of respondents had a and embracing the digital side of retail creates new opporhousehold income of less than $50,000; 36% had a house- tunities to drive both loyalty and revenue. For example, hold income between $50,000 and $100,000 and 17% stores that allow customers to redeem points in store, on an app or website are continuing to capture their customearned more than $100,000. ers’ attention once they’ve left the store. Additionally, a positive digital experience encourages PREPAID AT MCX While Marines are known for their loyalty, a comprehen- additional in-store experiences. A more robust digital side also enables convenience sive loyalty program hasn’t made it to the Marine Corps Exchange (MCX) yet. But, it’s coming soon, said MCX stores to offer products like experiences or travel opportunities that aren’t, or can’t be, in store, InComm reports. CSD spokesman Bryan Driver. cstoredecisions.com
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Technology
ATM
ATMs:
Still Money
Machines
In a credit/debit card-crazed society, cash remains king in convenience stores. A CSD Staff Report
M
ake no mistake: While plastic is important, cash is, was, and always will be a key component in the profitability of convenience stores. That means ATMs, which allow shoppers instant access to cash, will remain an integral component in any convenience retailer’s business plan. “ATMs are an important element in any convenience store’s business,” said David Tente, executive director for ATMIA, the ATM Industry Association. “Studies show that cash spending goes up considerably when there’s an ATM, and that often goes straight to the bottom line for c-store owners.” Bruce Wayne Renard, executive director at the National ATM Council Inc., agreed. “ATMs are a key positive ingredient to every convenience store’s business model,” said Renard. “ATMs provide c-stores with a meaningful monthly revenue source and a way for their customers to get cash to spend in the store.” Having an ATM on site—and prominently promoting it with window signage and at the pumps—will help generate more foot traffic to the store. “ATMs are also now capable of supporting instore product advertising to help promote sales,” Renard continued. “And ATMs will be introducing new value-added services—such as expanded 52 Convenience Store Decisions May 2018
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banking services, virtual gift cards and much more. No convenience store should be without an ATM.”
TWO CAMPS The ATM universe can be divided into two categories: Those operated by financial institutions, and those operated independently. Robin Gabriel, proprietor at Shell Food Mart in Hinsdale, Ill., has an independent ATM at her store. “Our ATM is very important to our business,” said Gabriel. “We like to provide convenience in any way we can to our customers, so any reason to stop here and possibly make an additional purchase is huge. In addition, it brings in extra revenue to the business in per-transaction fees that requires very little effort or manpower.” Sheetz, a family-owned c-store chain based in Altoona, Pa. with about 570 stores in Pennsylvania, Maryland, Virginia, West Virginia, Ohio and North Carolina offers surcharge-free ATMs to customers. “All ATMs in our stores are surcharge free,” said Nicole Auman, consumer engagement manager for Sheetz. “If a customer is charged a transaction fee it comes from their financial institution that may not be set up in in our PNC ATM network.” Auman added that Sheetz is working to add as many financial institutions as possible to the network to limit usage surcharges to their shoppers. “As cash cstoredecisions.com
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continues to be a need for consumers, having surchargefree ATMs in our stores is an added convenience for our customers.” But without a surcharge, how does the c-store profit from having an ATM in house? “It drives traffic in to our stores and contributes to insidespend,” said Auman. “This is a very important part of our business to have this convenience for our customers.” Indeed, a surcharge could have a deleterious effect on a store’s business—especially if a nearby competitor offers ATM cash with no strings (or fees) attached. “I know from experience that fees to push people away,” explained Ed Burcher, vice president, foodservice, at Fremont, Ohio-based FriendShip Food Stores. “In stores where we switched from fees to no fees and made that a piece of the core offer, our transaction counts were about five times higher without fees. And the same thing would happen when we switched from no-fee to fees. Transactions declined by about 75%.”
EVOLVING FUNCTIONALITY Until recently, the sole function of most independent instore ATMs was to dispense cash in the form of $20 bills. But that’s all changing. “Today we’re getting a lot of different capabilities for the retail ATMs,” explained Tente, noting applications that allow customers to send and receive money, whether they are banked or unbanked.” While the ATM at Hinsdale Shell does include a surcharge, Gabriel has added features to the process to lessen the financial blow to her customers. “We attach a coupon to the ATM receipt for an additional purchase made in-store,” she said. “Should that give the customer an incentive to make any sort of additional purchase, it would not only provide us with an additional sale; it would provide a service to offset the ATM fee.” Gabriel would like to see additional features available in her ATM. “Perhaps alerting customers to upcoming events in the area or at that location might be nice,” she said. “Being able to purchase show tickets or event tickets at the ATM would be a nice idea.”
SECURITY MATTERS Since we live in an age of widespread fraud, the security of an in-store ATM is of extreme importance. PNC Bank provides ATMs for Sheetz. “We employ the latest security technology to detect and avoid fraud,” said Sheetz payment products manager Linda Smith. “Our security team continues to work with PNC to keep up to date with current trends, and continuously learn and develop ways to improve security. Our most successful line of defense has been the vigilance of the store employees periodically checking and reporting suspicious activity.” cstoredecisions.com
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Many of Sheetz’s ATMs include pin-pad shields to block the view of a customer entering the PIN number from the site of a pin-hole camera that an identity-theft criminal may have installed. In addition, there is ASD (anti-skimming detection) technology in the reader, which alerts the ATM and operations if a foreign object is detected on the reader. “When the ASD is tripped, the ATM will go out of service to protect the customers,” continued Smith. “Our ATM provider immediately dispatches service to survey the ATM and run tests to make sure there is no evidence of tampering. If it is confirmed there is not a risk at hand, the fault is cleared, and the ATM terminal is brought to active again.” In addition, all Sheetz ATMs have » In addition to dispensing a CPP (card procash, ATMs will be introtection plate) in ducing new value-added the reader that services—such as expandis intended to ed banking services and prevent deep virtual gift cards. insertion of the internal skimmers. » Bank ATMs (as opposed “ P N C i s c u rrently testing an to retail ATMs) are the preADK (active dip ferred targets for identity kit),” said Smith. theft criminals. “This would emit an electromag» Cash spending goes up netic field that considerably when there’s interferes with the an ATM readily available. skimming device. There is no timeframe for this technology yet. PNC is also rolling out a ‘wedge’ to the dip readers in the coming months that will make the installation of the insertion skimmers more challenging.” Overall, the security of in-store ATMs earns high marks. Renard explained that the National ATM Council has joined with Conexxus on a project to develop anti-skimming guidelines, which are helpful to c-store owners in protecting their customers’ card information from electronic theft. But nothing can top having well-trained and attentive store personnel on the list of security protections, as is a well-placed functioning video surveillance system. “All ATM transactions in the U.S. require online PIN verification. Along with the implementation of EMV chip technology, this provides a good baseplate in most cases,” said Renard. “However, the introduction of biometric authentication at ATMs is on the way and will take security to a whole new level.” CSD
Fast Facts:
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4/26/18 11:48 AM
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Technology
Column
Cashiering Enters the Mobile Age
Ed Collupy, executive consultant at W. Capra Consulting Group can be reached at ecollupy@ wcapra.com and be sure to 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.
Hand-held devices aren’t just convenient; they are the secured cash registers of the future. By Ed Collupy
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ooking back, I always wanted the opportunity to this year that they had established checkout a customer using a brass cash register, a new security standard having to do with PINs. Specifically, softwarewhich I admired like a work of art. My cashiering days started on an NCR Class 5 based PIN entry with off-the-shelf mechanical cash register with an odd looking ‘key’ that was devices, including the merchant’s consumer mobile devices the register’s security control. And my first full-time retail- including smartphones and tablets is thought to be more ing job was to support ECR’s (electronic cash registers) that secure in some retail circles. Significant to this announcement is the council’s shift eventually would be upgraded with early versions of barcode scanners and then became known as point of sale from security reliant on a physical hardware device to “a new standard that allows for an alternative approach to (POS) systems with a weakly secured dial-up connection. Fast forward to today, and art has taken a back seat to secure PIN entry by isolating the PIN from other data and the science of the “cash register” so much so that technol- using a new robust set of security controls,” according to ogy is being implemented and refined where I can become Troy Leach, PCI SSC chief technology officer. Data security doesn’t come easy; it is challenging and a cashier again. Except this time there will be no cash or a register—instead as a customer/cashier I’ll be using my requires hard work to stay ahead of threats. Mandates, like secured mobile device with my payment card of choice EMV, and certifications, like the PCI Data Security Standards, help in achieving some level of security but it doesn’t mean inside a retailer’s app or my mobile wallet to check out. POS now represents unified platforms with mobile and you are secure—certifications and security are a false equivother behind-the-scenes functionality. Continued integra- alent. Approaching the implementation of mandates and tion efforts allow new ways to checkout, often bypassing certifications with a view that it is a starting point rather than endpoint in security will help to ensure a more suclegacy infrastructure and weaker forms of data security. cessful program.
SECURITY MEASURES
What’s more, EuroPay MasterCard and Visa (EMV) are pushing the decoupling of payments from the POS by separating the PINPad from the in-store POS system and forecourt dispensers. With this more open architecture it will enable further, simpler and more secured integration of mobile capabilities over the historically closed-loop POS systems the petro/convenience industry has been using. The Payment Card Industry (PCI) Security Standards Council (SSC) has been attentive to the migration to checkout payments on mobile devices. They announced earlier 54 Convenience Store Decisions May 2018
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BEYOND TRADITIONAL POS Beyond traditional POS functionality, mobile customer experiences that can help reinforce the retailer’s brand include pre-ordering food for pickup or delivery, coupon notification and payment using near field communications. Mobile can also help with everything from evaluating merchandise and planogram setup to gaining customer feedback. My colleague at W. Capra, Tim Radway, recently posted to www.capraplus.com, that current programs and cus-
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POS now represents unified platforms with mobile and other behind-the-scenes functionality. Continued integration efforts allow new ways to check out, often bypassing legacy infrastructure and weaker forms of data security.
tomer experiences need to be better than they are for mobile customers. He writes, “Your mobile program is NOT a standalone project, and as such, it needs to have a cohesive plan to match that of your current organization…. Your payment methodologies and security in place need to match your current consumer expectations.” Spinx, an early mobile adopter based in Greenville, S.C. with over 80 stores, provides customers with an (Automated Clearing House) ACH-based mobile payment with an inapp choice to email a receipt, according to Luis Ackerman, vice president technology. With the increasing movement toward an electronic, interconnected and mobile infrastructure, it’s critical that electronic payments work safely and efficiently for all users. According to the Electronic Payments Association, the ACH network currently enables a huge volume of payments to be handled in the U.S. By using batch processing and a store-and-forward system, this network moves an astounding $43 trillion and 25 billion electronic financial transactions each year. Ackerman imagines that the future of mobile platforms in the c-store industry will include capabilities that go beyond POS systems, such as geofencing that captures customer
“
Mandates, like EMV, and certifications, like the PCI Data Security Standards, help in achieving some level of security but it doesn’t mean you are secure—certifications and security are a false equivalent.
”
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traffic patterns, interactive gamification, in-app wallets to support all types of payments and further integration with the POS. Based in California’s Silicon Valley, the Rotten Robbie convenience chain offers many digital experiences on its mobile platform that are not easily delivered on c-store POS systems, such as digital coupon offers, social media interaction, integration with tobacco company offers and mobile payment at the pump. Kim Kauer, digital marketing manager for the 34-store chain, said mobile is “changing quickly,” and there is still room for a more frictionless mobile transaction. Kauer envisions biometrics—thumbprint or facial recognition available on mobile devices today—replacing PIN entry for data security on a payment transaction and POS/mobile integration to support further marketing offers she has planned. Mobile implementations are not without POS and other technology investments. Spinx decided early on to invest in WiFi connectivity at its sites as a step to drive mobile adoption. Rotten Robbie is investing in new barcode scanners to ensure readability of codes presented on mobile devices. Others are ensuring mobile project budgets allocate monies and resources to propagate security including developing and executing a sound strategy that ensures mobile and security are approached as a unified initiative. As touchscreen POS systems have made things easier for cashiers to learn, Ackerman and Kauer indicated their cashier training has expanded beyond the POS system to their mobile apps. With mobile technology breakthroughs and its simplicity that allow me to be a cashier again, perhaps there will be a checkout app that integrates the art of a brass cash register. May 2018 Convenience Store Decisions 55
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Operations
Lighting
Illuminating
Interiors & Exteriors
Retailers are investing in LED lighting and facility control technologies to achieve immediate and long-term utility savings and make their stores—and the products in them—more appealing to customers. By Marilyn Odesser-Torpey, Associate Editor
Fast Facts: » Cost of upgrading to LED lighting keeps dropping. » LED requires fewer fixtures than traditional lighting. » Facility control systems allow all-in-one remote monitoring of lighting and equipment.
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ntil recently, upgrading to LED lighting was considered by many retailers to be too expensive a project to undertake. But, according to Frank Sharp, senior technical leader energy utilization for the Electric Power Research Institute (EPRI), those costs are constantly dropping, for most applications signifi significantly, and are even less than they were just one year ago. In addition, subsidies are still available from sources such as states, local utility companies and fuel providers. Sharp suggested that retailers begin their search by checking the Database of State Initiatives for Renewables and Efficiency (dsireusa.org). Combine lower initial costs with a potentially substantial reduction in lighting bills— 50% savings in some cases—plus a longer life span than fluorescent and metal halide lighting and it makes more economic sense to switch than ever before, Sharp said.
CASH-SAVING VENTURE Instead of being an expense, upgrading to LED lighting has been a cash-positive situation for NOCO Express stores in western New York since it began its rollout with the parking lots, gas canopies and wall packs in 2012, according to Scott Robinson, director of real estate for the 39-store chain. Cooler and freezer lights have also been switched out and since last year 10% of the stores have also swapped out their ceiling lights for LED.
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Operations
Lighting
Fixtures with dimmable drives cost only a few dollars more than those without them and it’s easier and cheaper to have the driver in place than to go out and buy another fixture. For the exterior and cooler and freezer upgrades, NOCO partnered with a local utility, which covered 70% of the cost. The remaining 30% was financed by the utility over 24 months. Robinson estimated that the LED lighting uses roughly 50% of the energy consumption of fluorescents and halides. Since LED lighting is brighter than other sources, fewer fix- AESTHETIC ADVANTAGES tures are needed to illuminate any given area. Justin Alford, an owner of Louisiana’s B-Quik con“For our canopies we reduced the number by 20% to venience stores and Benny’s Car Wash, learned the 25%,” Robinson said. importance of parts and labor warranties on lighting the Even with fewer fixtures, he pointed out, the LED light- hard way when the drivers on all the LED fixtures newly ing “is significantly brighter and crisper,” illuminating the installed at one of the stores failed within a few months and entire exterior right to the property line without bleeding had to be replaced. He also hasn’t seen much savings on onto the neighboring properties as light pollution. his utility bills since his three convenience stores and gas “The brighter lighting is much more inviting to customers stations changed out their canopy and interior lights to LED at night,” said Robinson. “And inside the coolers and freez- last April. ers it really shows off the products.” But, he said, the company is continuing to add LED lightMost of the interior lighting at NOCO Express is also ing in the stores’ coolers and is also tackling the lighting at dimmable. Lighting in the stores’ back rooms is wired to con- the seven tunnel car washes. One reason is the aesthetic trollers, which keep it at 50% brightness most of the time and advantage of brighter yet not blinding light produced by instantly adjusts to full brightness when someone enters. LED without the distorting twinkle effect of halide bulbs. While the cost of the hardware and software required by dimWhat he is really counting on, though, is a reduction in mable lights may be too high for some retailers right now, Sharp maintenance. of the EPRI recommended retailers purchase fixtures that have “We had a lot of ballast going out with halides, and the dimmable drives to prepare for when those prices go down. fluorescent bulbs were costing us a lot of money,” Alford “Fixtures with dimmable drives cost only a few dollars said. “Both types of bulbs also deteriorate and produce more than those without them,” Sharp said. “And it’s easier less light over time.” and cheaper to have the driver in place than to go out and Alford hopes to get seven to 10 years of consistent light buy another fixture.” without changing the LED bulbs. Dimmable fixtures can also have the capability of trackTo turn the lights in the stores and the car washes on and ing which lights are activated most often and using data off at remotely scheduled times, the company uses a PLC analytics to identify for retailers what paths customers are (programmable logic controller). The same system is used taking in their stores. That more advanced technology costs to control the speed of the brush motors in the car washes more, but can yield some valuable information, Sharp said. and Alford has been studying the benefits of adding conSince changing LED lighting is more expensive than sim- trol of the refrigeration to the system. ply putting in new fluorescent tubes, NOCO’s Robinson was “We heard that we can really save some big money by careful to choose lighting that came with a solid warranty. doing that,” he said. “For the store exteriors we have 10-year warranties, for the interiors five-year,” said Robinson. “That savings in SUBSIDIES & REBATES maintenance factors into the overall cost savings we expect At 108-store, Beaverton, Ore.-based Plaid Pantry, 100% from the LED lighting.” of the stores’ retail floor lighting has been converted to LED 58 Convenience Store Decisions May 2018
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and 95% of the coolers and freezers with the remaining 5% soon to be replaced, said Jonathan Polonsky, company president. Because some of the stores are leased in shopping centers and not all landlords are on board with LED, the company has been able to upgrade the exterior lighting at about half of its locations. Upgrading was a priority not only because the utility company was offering a subsidy of dollars off per linear foot, but even more importantly because “fluorescents were not doing a good job showcasing our products.” “The subsidy may have encouraged us to move at a faster pace, but making our products look their best was our main motivation,” he said. Because Plaid Pantry stores are open 24 hours, consistently bright lighting is particularly important to make the stores stand out and look more attractive and safe to visit at night. “We got immediate positive feedback from our customers and vendors and that tends to make me believe it was a good investment,” Polonsky said. “It also doesn’t hurt that we got a 100% ROI in energy savings in two to three years.”
About six years ago, Holt Oil Co. started to change over the lamps on the exterior canopies of its Holt C-Store locations to LED. Now all the exterior lighting and three of the interiors for 10 of its company-operated locations in North Carolina have been upgraded. “We got tired of changing light bulbs,” said Louis Cox, president of Holt Oil. With some rebate money from the utility company and co-op money from Exxon Mobil, he found the cost of upgrading to be “pretty reasonable.” Like NOCO’s Robinson, he found that he needed fewer bulbs to get the quality of light he wanted. Most importantly, Cox said, the brightness of LED draws more attention to the stores and offers customers a warmer welcome and sense of safety than the yellowish glow produced by fluorescent fixtures. But, Cox said, there is still a place for some fluorescent lighting at his stores. Because LED lighting focuses in one direction, the gap space between the canopies and the stores’ front doors was darker than the company wanted. The addition of a few fluorescent fixtures quickly solved the problem. CSD
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Operations
Column
Reaching
New Age Consumers
Scott Simon is president and CEO of Swiss Farms, which operates 13 drivethrough market locations in Pennsylvania.
Engaging next-generation customers requires new-generation thinking. By Scott Simon
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wiss Farms is celebrating 50 years of operating drive-through convenience stores in Delaware County, Pa. Importantly, through our hands-on approach, Swiss Farms has its finger on the pulse of customers, no matter their age. The company’s legacy includes traditional staples: bread, dairy, fresh and frozen items, drinks, and now a full line of fresh food. In addition, each store offers more than 1,000 different items daily. To better communicate its offerings to customers, Swiss Farms has made a significant investment in the company’s mobile app, which includes an order ahead/pay ahead program geared towards retaining its current customers, while at the same time speaking to younger consumers. In fact, Swiss Farms markets itself in many different platforms including traditional and non-traditional grassroots efforts. Swiss Farms, along with every other business out there, is constantly asking the same question: “How do we continue to attract new customers?” Never has there been such a wide contrast of potential shoppers as there is today. From baby boomers and Gen Xers to Generation Z and the much-publicized Millennial consumer, there has never been more of a disparate in how businesses must speak to each potential customer base than there is today. TIER APPROACH It’s important that businesses speak to multiple generations. Swiss Farms utilizes several different multi-tier approaches when targeting its customers. You have to reach everyone, from the loyal grandmother, who has been visiting us for 50 years, to her 18-year-old grandson just getting his license. It also includes the 30-year-old mom, who has never heard of Swiss Farms. Our company employs a variety of different marketing techniques designed to engage this younger generation and help gain new customers. From our new updated mobile app, including the order ahead/pay ahead functionality, Swiss Farms is even partnering with UberEats to deliver convenient service to new, youthful and tech-savvy customers. 60 Convenience Store Decisions May 2018
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Mobile payments can be enabled via the Swiss Farms app. There is loyalty attached, allowing Swiss Farms to offer additional incentives right in the app as well as promo codes for the app and website. The possibilities are endless. The ease of ordering through the app and the website is also huge for new customers. If you type in milk, you can pick your milk; type in bread, up pop all of the bread options. The technology allows the individual to see everything our stores sell on his or her phone. Social Media is another big one. An effective social media campaign is all about consistency and frequency. Facebook, Twitter and Instagram are all different platforms that require different messaging. Making one post and blasting it across of your social media can make sense at times, but generally, each platform requires focused messaging, both unique and personal. People want to see behind the scenes. They want to see you bring your dog to work for a day—or your cat. They want to see your staff using and enjoying your products. VIBRANT VIBE A business also needs to avoid being seen as tired and run down. Rustic can be trendy, but rusty never impresses. It’s important that your locations look new, clean and maintained. Customers don’t want to visit the old run-down corner store anymore. They want a shiny building that provides the services and products that new-generation consumers have come to expect. To that end, Swiss Farms has begun rehabbing and renovating some of its legacy locations. Of course, it’s not all about surface impressions. We consistently engage our guests—not only to track the latest trends, but to keep vital relationships with shoppers. We need to carry the products they want to buy. It’s important that we listen to our guests in person and online. We should go the extra step to adhere to trends and find products customers demand, or eventually they will go somewhere else. At Swiss Farms, we strive to be flexible and exceed our customers’ expectations. That’s the reason I’m certain Swiss Farms will be around for another 50 years.
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2018
REGISTRATION OPEN
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!
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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
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Operations
Forecourt Marketing
Forecourt of the Future
Integrating mobile into your forecourt operation can help personalize the experience for customers. By Brad Perkins, Contributing Editor
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he day that customers pull up to a gas lish a relationship,” Rogers said. “The exterior of a pump and say to their car, their phone or the building gives consumers their first impression, so a pump itself, ‘fill up 15 gallons, give me direc- forecourt needs to promise the experience they are tions to Highway 47 and purchase coffee and looking for. Our guests are looking for a clean, safe a donut,’ is not here yet, but may be not too far off. place to stop and we want to provide them with a “As technology and the mobile-first approach well-lit and inviting experience that is equivalent to continues to transform our business, personal- the quality inside the store. While the forecourt began as a place to hold gas ization via interface with the consumer through app and beacon technology will have a large pumps, even without advertising, it became the influence on forecourt marketing,” said Mike enticement for a driver to stop or a deal-breaker Rogers, senior vice president and chief strat- that made them keep going. “Quite a long time ago, I gave talks at fuel conferegy and information officer at Pilot Flying J. “We expect to see auto-start pumps activated by the ences and I talked about speed of the pumps,” said car playing a role. Connected vehicles with apps Daniel Burrus, CEO of Burrus Research Associates, built into the dash from the factory, personalizing which monitors global advancements in technology. the messages at the pump with relevant ads and “I said, ‘there’s nothing worse than a slow pump. If I find a slow pump, I probably won’t be back because content will help.” Getting there won’t be hard or costly, but the key I don’t want to stand around and have it dribble in.’ And, convenience store chains made sure they had is to start with a forecourt that is welcoming. “The forecourt is your first opportunity to estab- fast pumps.”
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They also made sure they took advantage of drivers’ they need, unless you attention, and the forecourt evolved into signs, lights and get facial recognition. video. Now many are seeing the advantage of using it to It’s very inexpensive, high-definition and promote store items. “As a distributor of Sunoco, we arranged to use the very small. You don’t Applause system at our sites,” said Ray McIntosh, presi- even know there’s a » Building the customer dent of McIntosh Energy, which operates four Mac Food camera. Technology experience in the foreStores in Fort Wayne, Ind. “It provided us the chance is getting so good to upgrade our dispensers with video technology. It is at facial recognition, court involves both impressive to turn on the pump and have weather and with which a frequent technology and infranews presented at the pump. We do not currently mar- shopper can be recstructure. ket our stores at the pump with the video, but I am going ognized over time, to investigate open slots that we can use for our specific and once you know » Personalize the experiit’s a frequent buyer stores and specials.” ence for customers. you already know what their shopping PUSHING CONVENIENCE » Mobile aids in making Building the customer experience in the forecourt history is, so you can offers more personal. involves both technology and infrastructure because increasingly put up your customers can’t see a video or use their app if they better offers. But with an app don’t stop. One key is lighting. “The 2017 GasBuddy Foot Traffic” and a phone, the report said that “stations near interstates with above-aver- possibilities become age outdoor lighting ratings on GasBuddy saw a 50% nearly unlimited. “Loyalty cards are not intelligent,” Burrus said. “You have increase in foot traffic” between 9 p.m. and 5 a.m. Lighting and equipment also provide space and visibility for technol- to remember to bring it. If I have my app and my phone, I can say to my phone, I want a cup of coffee and doughnut, ogy that improves the appeal. “We have transformed our forecourt by installing and and because of GPS, it will know how far away I am, so it’ll upgrading modernized canopies and fuel dispensers to have it ready when you’re there. And as I go to this store include large and engaging HD (high definition) video more often, it gets to know what I like or need, and it can screens, as well as guaranteeing the safety and security of start to anticipate some of my customer needs.” Once drivers trust the app on their devices to provide customer payment types with secure payment transaction quality offers, they’ll also trust it to make payments. technology,” Rogers said. “Unlike professional drivers who visit our locations, the With technology advancing and mobile and wireless payments becoming easier, payments and personalized— four-wheel guest may never intend to enter the store, so not just customized—advertisements at the pump will it is important to look at all types of interactive technology to engage with our customers,” Rogers said. “As become the norm. With pumps becoming aware of who is using them, the cash becomes less prevalent and customers become accustomed to enhanced payment technologies, it is offers become more personal. “You don’t want to just customize the experience for important for guests to have access to a great digital walyour customers, you want to personalize it,” Burrus said. let, such as with the myPilot app and our touchless payment “Personalization is difficult unless you have these technolo- technology.” And as technology becomes smaller, cheaper and easier gies. As a store owner or an employee, you can’t keep track of all these customers, but AI (artifical intelligence) can. It’s to use, the day may soon come where convenience stores going to be connected to you—your app—and it’s going know their customers and are able to let customers know to be connected to that Amazon-like voice that’s out by the what’s available, suggest new items or even have them pumps and that screen that’s out there that can serve up waiting or available for delivery to the next destination. All it takes is getting in on new technology and providing offerwhat you want, not what someone else wants.” The first step in this is to tie in the mobile app, because ings that customers expect from other industries. “What it’s going to take is the convenience store to have video is not personal enough. “The problem with ads at the pump with a video screen signage in some way letting them know that we can get you is they’re only good if you have something relevant that whatever you want in the day, and that we’ve taken conveyou need up there,” Burrus said. “You don’t know what nience to a whole new level,” Burrus said. CSD
Fast Facts:
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4/25/18 11:24 AM
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cstoredecisions.com
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PRODUCTShowcase Master Brew Kombucha KeVita, a manufacturer of fermented probiotic and kombucha beverages, has introduced two new flavors to its Master Brew Kombucha line: Blueberry Basil and Roots Beer. Taking cues from today’s food trends and interest in innovative pairings, Blueberry Basil and Roots Beer bring two unique flavor profiles to the kombucha market while providing all the benefits of a traditional kombucha brew. Blueberry Basil combines two delicious flavors to create a fun spin on classic kombucha, with the slightly floral blueberry offset by a peppery basil kick. The refreshingly brisk Roots Beer boasts a blend of earthy roots, along with cinnamon and vanilla for a modern alternative to root beer soda. Each bottle contains live probiotics, active cultures, organic acids, organic caffeine and just 35 calories per eight-ounce serving. It is also the only verified non-alcoholic kombucha on the market. The two new flavors join the KeVita Master Brew Kombucha family of 11 flavors, including Ginger, Pineapple Peach, Tart Cherry, Dragonfruit Lemongrass, Citrus and Raspberry Lemon.
Company: KeVita www.KeVita.com
Relaxation Shots
New Sparkling Flavors DASANI Sparkling is adding three new flavors to its lineup: Pomegranate Blueberry, Pear Kiwi and Original. Pomegranate Blueberry and Pear Kiwi provide notes of fresh fruit flavor and Original offers the clean, crisp taste sparkling water fans look for. The new flavors are launching with a soft rollout in March and will be available nationwide by mid-April. Existing flavors in the DASANI Sparkling family include Berry, Black Cherry, Meyer Lemon, Lime, Raspberry Lemonade, Tropical Pineapple, Watermelon, White Peach, Strawberry Guava, Blood Orange and Pink Grapefruit.
Company: Coca-Cola www.coca-colacompany.com cstoredecisions.com
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Finding time and energy in the day to day can be challenging, especially for those trying to take care of everyone and everything in addition to themselves. K-Chill 2oz relaxation shots have been carefully designed to give customers a little relief during this inevitable grind. All K-Chill 2oz shots have been specifically formulated to help lift mood and help manage stress for overloaded people. Manufactured and distributed by DBZ Enterprises LLC.
Company: DBZ Enterprises LLC www.k-chill.com
Yerba Mate Cold Brew DanoneWave’s STōK is elevating its brews with Protein Cold Brew Coffee and moving beyond the bean with Yerba Mate Cold Brew Tea in Slightly Sweet and Peach flavors. With as much protein as two large eggs and a slice of bacon per serving (16 grams) and an excellent source of calcium, Protein Cold Brew Coffee delivers an ultra-smooth, never chalky flavor. STōK steeps its responsibly sourced cold brew for 10 slow hours, then adds a shot of espresso to round it out. In Slightly Sweet and Peach varieties, STōK Yerba Mate Cold Brew Tea delivers 75% more caffeine than standard ready-to-drink iced teas. Yerba mate is the perfect partner for STōK’s cold brew black tea, delivering a unique taste that’s not too sweet. Whether it’s coffee or tea, STōK is brewed low and slow, with time and patience, not extra heat. STōK offers a variety of cold brew coffees and teas in multi-serve and single serve formats.
Company: DanoneWave www.STōKBrew.com May 2018 Convenience Store Decisions 65
4/25/18 11:25 AM
PRODUCTShowcase Signature Wrap Collection
Caffeinated Gummies New Canada Dry Canada Dry is launching a new flavor combination— Ginger Ale and Lemonade —and is celebrating with an all new digital and television campaign. Made by the No. 1 brand of ginger ale, the latest addition to the Canada Dry portfolio combines real ginger flavor and a splash of lemonade made with real juice, for the ultimate crisp and refreshing taste. The new campaign, which went live on April 1, features an all new character. “Ginger Man,” played by Cullen Moss, will give consumers guidance on how to taste nirvana and embrace relaxation, furthering the brand’s ongoing commitment to helping fans reach peak relaxation. The Ginger Man character will accompany the integrated campaign consisting of national television commercials, audio streaming program advertisements, and an extension across social, digital and media channels.
Company: Canada Dry www.canadadry.com
HVMN is a Silicon Valley-based company who manufactures the world’s first chewable coffee product, GO CUBES: Portable, delicious energy on the go! HVMN’s GO CUBES have been a huge hit, being featured on Shark Tank and various media outlets. GO CUBES are caffeinated gummies that will add true innovation to your energy set. They are a great way to build incremental revenue through strong turn rates. GO CUBES combine the kick of coffee with the relaxation of green tea, and they are spill-proof. Order today!
Company: Subway Restaurants www.subway.com
Company: HVMN
(855) 486-6748 sales@hvmn.com
Turkey Jerky & Bars Country Archer Jerky Co. recently launched its new line of meat bars and Honey Chipotle Turkey Jerky at Natural Products Expo West 2018. Available in Cayenne Beef, Sweet BBQ Bacon and Herb Citrus Turkey, the new line takes protein bars back to their primal state by using 100% grass-fed beef, uncured bacon and cage-free turkey, along with real ingredients such as collagen, dates and spices. Crafted in small batches, the meat bars are a new and improved version of the brand’s former Frontier Bars, but are made with the same gourmet cuts of extra-lean, USDA-inspected beef, bacon or tender turkey fans love, all raised without antibiotics or hormones. Each bar contains a complex amino acid profile made of collagen peptides, and is packed with 15 grams of protein, only three grams of sugar from dates and 120-140 calories per bar. The bars are also free of MSG, gluten and soy, making them in line with diets like Paleo, Ketogenic and Whole30. SRP: $2.99 per 1.5-ounce bar. The Honey Chipotle Turkey Jerky has a whopping 29 grams of protein and only 200 calories per bag, and is free of nitrites/nitrates, MSG, gluten, soy, antibiotics and added hormones. SRP: for $6.99 per 2.75-ounce bag.
Company: Country Archer www.countryarcher.com
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Subway has launched a new Signature Wraps Collection in the U.S. The craveworthy, protein-packed wraps come in bold, flavorful choices—all featuring double the meat of an average six-inch sub, plus a unique combination of veggies, cheese and sauces. To be clear—these wraps are a meal, not a tiny snack. Initially introduced in Maine, and tested in key markets across the U.S., the three wraps are now available nationwide. They are: Chipotle Southwest Steak & Cheese; Turkey, Bacon & Guacamole; and Savory Rotisserie-Style Chicken Caesar. In coming months, Subway will be adding new Signature Wraps to catering platters and in Subway To Go! Box Meals.
cstoredecisions.com
4/25/18 11:25 AM
PRODUCTShowcase Spiked Sparkling Water Truly Spiked & Sparkling is introducing its newest style: Truly Wild Berry, a clean spiked sparkling water with only 100 calories, one gram of sugars, 5% Alc./Vol. and naturally gluten free. Delicious, crisp and refreshing with a hint of natural juiciness and sweetness from California strawberries, raspberries and Marion blackberries, Truly Wild Berry is poised to be the drink of the summer. Truly Wild Berry will be sold in six-packs and featured in a new Berry Variety Pack with two other exclusive flavors: Blueberry & Acai, Raspberry & Lime and Pomegranate. In Blueberry & Acai, exotic rich berry flavors from Brazilian acai and berry tartness from blueberries come together perfectly in every sip. Meanwhile, California raspberries contribute a ripe sweetness while limes offer a tangy twist of citrus in Raspberry & Lime for the perfect blend. Truly Spiked & Sparkling Wild Berry is now available nationwide in sixpack slim cans for a SRP of $7.99-$9.99. Truly Berry Variety 12-Packs (which includes Wild Berry, Pomegranate, Blueberry & Acai and Raspberry & Lime) are also available nationwide for a SRP of $14.99-$16.99.
Company: Truly Spiked & Sparkling www.trulyspikedsparkling.com
Spicy Chicken Offering Broaster Co. has introduced its newest addition: Genuine Broaster Chicken Spicy. Genuine Broaster Chicken Spicy is made with a palate-pleasing blend of premium peppers and spices, and it’s sure to please ontrend chicken lovers. The chicken offers a flavor combination of Hatch Chili, Habanero Peppers and Chipotle Chili, plus Broaster’s success-proven marinade and coating. Alongside classic Genuine Broaster Chicken on your menu, Genuine Broaster Chicken Spicy will offer an unbeatable one-two punch of profit potential.
Company: Broaster
(800) 365-8278
www.broaster.com
cstoredecisions.com
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Premium Beef Jerky KMB Foods is introducing Jim Beam beef jerky. KMB Foods has been producing premium-quality meat snacks since 1998. The family-owned and -operated company is committed to creating handcrafted, artisan meat snacks using the highest quality, freshest U.S. beef. Because the beef is sourced locally in the central valley of Southern California, the company does not use chemicals that other massproduced manufacturers have to use with imported, frozen beef. Jim Beam Jerky is now stocked and available through McLane, Core-Mark and Eby-Brown. Flavors of Jim Beam beef jerky include Original Bourbon, Honey Bourbon, Smoky Barrel and Maple Bourbon.
Lemonade Cigarillos Swedish Match North America’s White Owl brand is expanding upon the award-winning Limited Edition FoilFresh franchise to include White Owl Spiked Lemonade. Ready for a smoke with a refreshing taste—and just a little bit of something extra? Reach for White Owl’s new Spike Lemonade Limited Edition. It’s a little bit sweet, a little bit tart and a whole lot of delicious always perfectly rolled and ready to please. Squeeze The Day with White Owl Spiked Lemonade. On March 14, this new Limited Edition offering began shipping. White Owl Spiked Lemonade is available in two for 99 cents, “two for $1.49,” and “Save on 2” formats.
Company: Swedish
Match North America
(800) 367-3677
customer.service@smna.com
Company: KMB Foods www.kmbfoods.com
May 2018 Convenience Store Decisions 67
4/25/18 11:26 AM
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Classifieds /Ad Index Apter Industries
800.441.7146 / www.apterindustries.com
11
800.776.8834 / www.cdlatm.com
59
877.210.2575 / www.chefscutrealjerky.com
39
703.208.1649 / www.cdaweb.net
49
312.483.9452 / www.cuevapor.com
35
Cash Depot
Chef’s Cut Real Jerky
Convenience Distribution E-Alternative Solutions
Gulfcoast Software Solutions, Inc.
3
727.449.2296 / www.gulfcoastsoftware.com
Hershey Company
www.thehersheycompany.com
13
800.367.8325 / www.HomeMarketFoods.com
19
Home Market Foods Johnsonville
800.837.5391 / www.cstore.johnsonville.com
46-47
www.ktngusa.com
5,7,9
KT&G
Little Debbie
800.315.6208 / www.LittleDebbieCStore.com
25
www.lsi-industries.com/vertex
29
LSI Industries
2018
REGISTRATION OPEN
Mars Wrigley Confectionary www.mars.com
31
www.mclaneco.com/coldchain
45
516.693.7367 / www.RogueNicotine.com
15
866.481.4604 / www.nynab.com
68
www.nrfprotect.com/CSD
69
800.338.5122 / www.pcbakery.com
40
www.EngageTradePartners.com
71
800.367.3677 / www.GAMECIGARS.com
17
800.874.9720 / www.swishersweets.com
72
www.TexasPeteFoodservice.com/Dust
27
www.tysonconvenience.com
43
McLane Company
NicoGen Pharma Solutions North American Bancard NRF Protect
Prairie City Bakery R.J. Reynolds
Swedish Match
Swisher International Texas Pete
Tyson Convenience
U.S. Smokeless Tobacco Company
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May 2018 Convenience Store Decisions 69
4/26/18 11:37 AM
INDUSTRY
Perspective
Local Tobacco Regs
Take a Toll
Steve Sandman has worked in the tobacco industry for more than 30 years, most recently as president of Republic Tobacco. His extensive experience includes product management. He can be reached at (812) 569-1388.
By Steve Sandman
N
o matter how many articles we read about makers plays an important role, Foodservice, Technology, Beverages or Candy, both with politicians and the the No. 1 profit-generating category in the c- tobacco community. It’s imstore universe remains tobacco. Like it or not, it will re- portant to attend fundraisers and dinners, and to also learn main so for many decades to come. The category turns faster than any other category in- who else in your community side the c-store, generates the most profit dollars, and is a stakeholder in your tobacco business, such as your takes up the least amount of space resulting in the most wholesale distributor, landlord or your vendor partners. As soon as you become aware of a threatening issue efficient lineup of products a c-store retailer can sell. The tobacco department has proven time and again such as raising the age to buy tobacco to 21, contact to be the most resilient category as well, withstanding your vendor partners and let them know the concern. the “end of the world” threats we’ve perceived including A variety of companies are willing to assist in helping TV advertising bans, The Master Settlement Agreement, you organize opposition to a proposed ordinance, and SCHIP tax hikes, major manufacturer mergers, health often will provide the resources and expertise to give warnings and the ominous U.S. Food and Drug Adminis- you the best opportunity to succeed in beating back tration (FDA) regulations that have been enacted, along the detrimental proposal that can take a major toll on with the ones still looming around the corner. So why your business. Many tobacco regulations are copycat laws, so if the worry about tobacco? We’ve recently seen a multitude of local taxes and reg- city of Oakland, which has discussed banning menthol ulations that are about as damaging to your business as passes a law to the effect, how long do we think it will one might imagine if you find yourself in an affected juris- take until the same law occurs in San Francisco and San diction. Minneapolis made big headlines for the banning Jose? While some folks might think a rise in the minimum of menthol products beginning this summer, but many age to buy tobacco to 21 makes sense, consider the fact don’t know flavored tobacco products have been banned many of these young adults that are shut out of your stores will simply purchase their vaping products online in the city previously. generating zero sales for you and zero tax for the state or STATE OF REGULATION city that imposed the age increase. Many entities offer free electronic communications New Jersey is considering a state-wide ban on menthol, but without a ban on automobiles, consumers will from your city council, state government or other organiflock to Pennsylvania, Delaware and New York if those zation involved in taxes or regulations. Local news sourcproducts are still sold there legally. New York is looking es, anti-tax groups and industry organizations also often to tax e-liquid at 40 cents a milliliter, but the tax doesn’t provide free notifications on the latest developments in your community. Before you can fight a big tax increase affect the post office, so consumers will buy on line. What about the proposed ban of vape juice, menthol or business-killing regulation, you need to put yourself cigarettes, flavored cigars and chewing tobacco in Oro- in a position where you know about it from its inception. We’ve all heard the expression,“If you don’t vote, ville, Calif.? Retailers there will notice when consumers start heading to the nearest town that offers those legal don’t complain.” Fighting taxation and regulation holds products. If you’re the retailer on the wrong side of the true to that old axiom. It’s better to spend a dime today street, how can you stop these business killers before than a dollar tomorrow. And if you happen to be in Minneapolis or Oroville, you might not have a dollar to spend they happen? While awareness and donations are critical, being if your convenience business gets killed off by something visible and establishing a relationship with the decision you never saw coming. 70 Convenience Store Decisions May 2018
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cstoredecisions.com
4/26/18 1:06 PM
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