Convenience Store Decisions October 2017 by WTWH Media LLC

Volume Volume 28 • Number 10 • OCTOBER 2017 19 • Number 6 • JUNE 2008

Business Solutions for Retail Decision Makers

® A

HARBOR COMMUNICATIONS

P U B L I C AT I O N

What is Your Processing IQ? C-Stores can take a swipe at interchange fees with savvy service solutions.

Food Offerings Cross the Border Rutter’s: Creating a Menu Medley Cigarettes Face Local Legislators

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DEPARTMENTS 8 Editor’s Memo: NAG Wraps Up in Nashville 10 On Location: Staying in the Loop 16 Front End: CSD's Quick Bites 18 Front End: Industry News 20 Front End: C-Stores Bring Hurricane Relief 22 Front End: Yesway Acquiring Mad Max Convenience Stores 24 Convenience Store Solutions: Perfectly Poised to Pounce 40 Category Manager's Notebook: Renewed Hope for E-Tobacco 46 NATO Column: 2017 Tobacco Legislative Roundup 50 Category Manager's Notebook: Engaging Candy Sales 56 Category Manager's Notebook: BFY Ice Cream Sales Rise 58 Category Manager's Notebook: Profiting With General Merchandise

OCTOBER 2017 • Volume 28 • Issue 10

InsidethisIssue 28 What is Your Processing IQ? C-stores can take a swipe at interchange fees with savvy service solutions. 36 Cigarettes Face Local Legislators The cigarette category remains important to total convenience store sales—and still too conspicuous for regulators to ignore. 64 Food Offerings Cross the Border Burritos, tacos and other Hispanic dishes are becoming fast favorites in a growing number of convenience stores.

70 Foodservice Column: Cultivating Hispanic Foodservice 74 Foodservice: Rutter’s: Creating a Menu Medley 80 Foodservice: Need for Food Packaging is Clear 86 Technology: Big Data Decisions 90 Technology Column: C-Stores Face Delivery Crunch Time 91 Technology: Latest in ATM Technology 94 Technology Column: Unlocking Security Issues 98 Technology: Taking Loyalty Forward 102 Technology: Prepaid Card Potential 104 Human Resources Column: Recruiting and Retaining Quality Applicants 106 Operations: Demand and Supply 108 Operations: Financing Acquisitions and Upgrades 110 Operations: Amazon Shaking Up Retail 112 Operations Column: A Better Path to Inventorying 114 Operations Column: Building Brand Equity as a Team 116 Operations: Debunking the Myths of Hiring 118 Operations Column: Streaming Car Wash Profits 120 Convenience Directions InfoMarketing 130 138 141 142

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Convenience Store Decisions

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 .

EDITORIAL

CONTRIBUTING EDITORS

Vice President, Editor-in-Chief John Lofstock jlofstock@csdecisions.com Senior Editor David Bennett dbennett@csdecisions.com Senior Editor/News & Online Erin Rigik Del Conte edelconte@csdecisions.com Associate Editor Howard Riell hriell@csdecisions.com Associate Editor Marilyn Odesser-Torpey mot@csdecisions.com

PRODUCTION Production Manager Barbra Martin bmartin@csdecisions.com Webmaster Dave Miyares dmiyares@csdecisions.com

Mark Battersby Anne Baye Ericksen Pat Pape Brad Perkins Jeffrey Steele Lisa White

COLUMNISTS Andrew Alvarez Tom Briant Caroline Brown Jim Callahan Ed Collupy Mel Kleiman Sylvia Klinger Mark Radosevich Bill Scott

NATIONAL ADVISORY GROUP BOARD Peter Tamburro, Board Chairman Clifford Fuel Co. • Utica, N.Y.

Jim Callahan, Director of Marketing (Retired) Geo. H. Green Oil Inc. • Fairburn, Ga.

Mary Banmiller, Director of Retail Operations Warrenton Oil Inc. • Truesdale, Mo.

Brad Call, President Colour Du Jour • Salt Lake City

Greg Ehrlich, Chief Operating Officer Beck Suppliers Inc. • Freemont, Ohio

Greg Lorance, Dispensed Category Manager Cumberland Farms • Framingham, Mass.

Doug Galli, Vice President, General Manager Reid Stores Inc./Crosby's • Brockport, N.Y.

Kyle McKeen, President and CEO Alon Brands • Dallas

Joe Hamza, Chief Operating Officer Nouria Energy Corp • Worcester, Mass.

Billy Milam, President RaceTrac Petroleum Inc. • Atlanta

Brent Mouton, President and CEO Hit-n-Run Food Stores • Lafayette, La.

Patrick J. Lewis, Managing Partner Oasis Stop 'N Go • Twin Falls, Idaho

Robert O’Connor, President and CEO O’Connor Petroleum Co. • Hales Corners, Wis.

Scott Zaremba, President and CEO Zarco 66 • Lawrence, Kan.

Vernon Young, President and CEO Young Oil Co. • Piedmont, Ala.

Press’s highest recognition of

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 2017, Harbor Communications, LLC 6 Convenience Store Decisions

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Publisher John Petersen jpetersen@csdecisions.com (440) 250-1583 Vice President, Sales Tony Bolla tbolla@csdecisions.com (773) 267-1897

ART

Robert Buhler, President and CEO Open Pantry Food Marts • Pleasant Prairie, Wis.

editorial excellence.

Group Publisher Tom McIntyre tmcintyre@csdecisions.com (440) 250-1583

Creative Director Erin Canetta ecanetta@csdecisions.com

EDITORIAL ADVISORY BOARD

Convenience Store Decisions is a three-time winner of the Neal Award, the American Business

ADVERTISING President, Harbor Communications Dan Ramella dramella@csdecisions.com (440) 250-1583

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.

OFFICE LOCATIONS

Headquarters

19111 Detroit Rd., Ste 201 Rocky River, OH 44116 (440) 250-1583 (440) 333-1892 (fax)

Editorial and NAG

1420 Queen Anne Rd., Suite 4 Teaneck, NJ 07666 (201) 837-2177 http://twitter.com/CStoreDecisions www.facebook.com/CStoreDecisions

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.

www.linkedin.com/CStoreDecisions

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P E R F E C T PAI R INGS FOR C-STORE PROFITS

Grab-and-go and foodservice in convenience retail are expected to grow 36% by 2020*. Take advantage by partnering with Coca-Cola preferred brands. To learn more, talk to your Coca-Cola representative or visit CokeSolutions.com/retail.

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*Foodservice in convenience retail is expected to grow 36% from 2015-2020. Mintel. ÂŠ 2017 The Coca-Cola Company

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EDITOR'SMEMO

NAG Wraps Up in Nashville

JOHN LOFSTOCK Vice President/ Editor-in-Chief (201) 837-2177 jlofstock@ csdecisions.com Follow me on Twitter @CSDEditor

EARLY 11 MONTHS OF p l a n n i n g culminated last month with the successful completion of another National Advisory Group (NAG) Conference in Nashville, which yielded record attendance and an outstanding lineup of educational sessions. NAG is a special group in the competitive convenience store industry focused on small, mid-sized and family-owned chains, and the unique challenges facing their businesses. It never fails to amaze me how these retailers come together to identify opportunities to cut costs and grow sales. The level of interaction and sharing is inspiring. What makes NAG special is that it is truly the retailers' association. The educational sessions for NAG 2017 were selected directly by the board of directors, as were many of the speakers. This year's conference featured speakers from more than 15 leading convenience store chains, in addition to experts from Nielsen, Vanderbilt University and The NPD Group. I always leave this conference on a high, satisfied with the work our group has completed, and I believe it’s beginning to show around the industry. We had nearly two dozen new retailers at this year’s conference and more than 25 next-generation executives participated in our Young Executives Organization (YEO) breakout session led by Pat Lewis, a partner in Oasis Stop N Go in Idaho.

LEARN FROM THE BEST As you would expect from NAG, the sessions featured some of the most respectable operators from across the convenience store industry. In the session on family business leadership, which I had the pleasure of moderating, Allison Moran delivered a heartfelt presentation about her changing role at RaceTrac. Joe Sheetz and Jeff Miller deftly discussed the challenges of navigating multiple generations of family ownership. The real estate panel featured Jack Kofdarali, of J&T Management; Robert Buhler, of Open Pantry; and Charlton Bell, of Tri Star/Daily's. This session offered numerous takeaways on how to evaluate your real estate investments and what to look for when developing new sites.This 8 Convenience Store Decisions

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was capped off by Buhler's reminder that while attendees operate c-stores, they are first and foremost in the real estate business. Vanderbilt University professor Cherrie Clay Clark, outlined how Millennials are different from prior generations and what motivates them in the workplace. The session was moderated by Jonathan Ketchum, vice president of retail for Energy North Group. The foodservice discussion centered on being unique and competing on fresh foods. Moderator Matt Lally, of Nielsen, outlined the numerous opportunities for c-stores, including how to go head-to-head with the likes of Whole Foods. Mario Spina, president of The Pride Stores; and William Baine, president of Git' N Go Markets, highlighted their approach for driving foodservice sales, which consists of great food, state-of-the-art store designs and outstanding presentations. While we had outstanding educational sessions, it’s the networking and relationships that make this conference so rewarding. Lifelong friendships have been formed at NAG through the years and it’s been a pleasure watching some of these new relationships take root. So much of tomorrow's success depends on our ability to groom the next-generation of retail leaders. The sole mission of NAG's YEO is to cultivate young talent in the convenience store and petroleum industry. In May, we had more than 55 young executives attend the YEO Roundtable at Maverik in Salt Lake City. It was particularly rewarding for me to see so many of those attendees in Nashville. We will continue YEO's march forward with a host of networking events in 2018. If you have a leader under 40 at your company, please consider having them look into the benefits YEO offers. I expect to announce the date and location for 2018 YEO Roundtable in the coming weeks. Thank you to all those who joined us in Nashville and please save the date for NAG 2018 in Jacksonville, Fla., Sept. 9-12.

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FRONTEND PROFILE

Staying in the Loop As it bolsters its brand, the Loop Neighborhood convenience stores chain is leading other competitors in its quest for freshness. By David Bennett, Senior Editor

ITH THE EXPLOSION OF fresher food and beverages in the convenience store channel, such offerings are becoming more accessible. Then again, some c-stores are worth a trip just for the experience. With a growing following in northern California’s Bay area, AU Energy LLC’s Loop Neighborhood convenience stores fit both criteria as the 24-store chain, known simply as the Loop, has earned a reputation for being as crisp and inventive as the offerings found inside its locations. “Loop was created out of our desire to rede- In 2013, AU Energy introduced a new retail brand, Loop Neighborhood, in California’s Bay area. Since then, Loop markets have captured patrons’ attenfine convenience stores. We looked at the tion because they have their choice of frozen yogurt, sushi, smoothies, organic landscape of convenience stores at the time fruits and veggies, gluten-free snacks and soups made on site. and determined what was missing,” said Varish Goyal, president. “Most stores were really only offering products that targeted the male audience, so Loop was created with females and Millennial selections that are a departure from regular c-store offerings. customers in mind.” But it’s the chain’s commitment to value-added programs that is the big draw. A FRESHER FRONT “We have partnered with the same suppliers and venA family business, AU Energy operates a total of 130 c-store sites and also boasts a wholesale division that dors from some of the leading grocery stores to ensure delivers fuel to about 80 dealer locations. It was in 2013, fresh, high-quality products every day,” Goyal said. “Loop that the concept for a new c-store concept was launched. strives to take the convenience stores we are used to and Most of the retail locations have been branded by the take them one step further. So while we still offer the usual fuel name, either Shell or Chevron, but in 2013, the com- snacks, drinks and beer, we put in the extra effort to make pany introduced the new brand, based partially on food it even better. For example, instead of just donuts, we have and beverage programs contrived around freshness and fresh pastries delivered each day.” Loop patrons also have their choice of frozen yogurt, more natural ingredients. Today, Loop boasts higher quality products such as a sushi, smoothies, organic fruits and veggies, gluten-free fresh salad bar and deli offerings. Some Loop stores fea- snacks and soups made on site. Goyal said Loop is breaking through the convenience ture a full salad bar, priced by weight. “We have soups that are freshly prepared and delivered. store stigma by being one of the first to offer fresh, high quality products, including cold brew coffee and an All sandwiches are freshly prepared,” Goyal said. Most sites in the Loop chain boast well-lit, spacious expanding selection of finer wines, not to mention new locations accented with bold interior colors—retail kalei- pizza offerings and better produce sets. “We knew that we needed to change the stores from doscopes where patrons can choose food and beverage

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the inside out in order to distinguish our brand over all the others. After recognizing that the current market wasn’t offering these kinds of products and was ignoring the female and Gen-Y audience, we determined what products we needed to offer and built from there.” The company’s rational was that just because patrons were in a convenience setting, they shouldn’t have to settle on skimpy foodservice offerings. The approach soon showed patrons Loop was more than just the corner c-store, said Goyal. “The best thing about Loop is that there is truly something for everyone; it’s no longer just focused on the male consumer anymore,” said Goyal. “It’s a whole experience for our customers from the moment they walk through the door to the moment they leave. We have noticed that people are taking their time wandering the aisle and enjoying the experience of the store rather than heading straight to the aisle they know they need and leaving.” In 2015, Loop executives announced they had made a commitment to Partnership for a Healthier America, an organization devoted to working with the private sector to ensure the health of the nation’s youth by solving childhood obesity. GROWING OPPORTUNITY Part of Fremont, Calif.-based AU Energy, Vintners Distributors was founded in 1978. It was during the following two decades that the family business began developing a strategy for offering area residents more— in the form of its Loop retail concept. The company also develops real estate. Since the first Loop location opened in Santa Clara, Calif., the idea of healthier choices has paid off in more in-store sales. CStoreDecisions ecisions .com

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FRONTEND PROFILE “You can view different locations and prices, explore The company is currently looking at a few locations suitable for new store building projects—albeit for Loop job openings and find deals happening at your smaller spaces. “We are working on a smaller store foot- nearest Loop store,” said Goyal. “A huge part of the Loop Neighborhood app is the rewards program. After downprint, which we plan to roll out in 2019,” Goyal said. This includes a new store design that would encom- loading and enrolling, customers can begin to earn pass 1,200-1,500 square feet, targeting neighborhood points for their purchases. For every one dollar spent communities where commercial-zoned lots are often inside the store, the member will earn four points. For smaller. Though the operational sites might be smaller, it every gallon filled, the member will earn two points. These provides the company the opportunity to grow the retail points are easy to redeem inside the Loop store or on the brand. A normal Loop site is more than 2,500 square feet. mobile app.” As the chain continues to spread the word of what the And Loop continues to gain traction, especially as AU Energy has integrated new technological strategies to Loop has to offer, the fact that it is growing as a familyowned and -operated enterprise is extra special for Goyal. entice new customers. The convenience retailer’s approach for continuing Family businesses are the backbone of the National to build its brand now involves initiatives incorporating Advisory Group (NAG) convenience store association. “It’s a great opportunity to work in a family business. social media and customer loyalty, which include its emergent Loop Loyalty Program. Customers have the The management team is always available, decisions option to enroll in the loyalty program to earn points for are made quickly and ideas can be implemented and everyday purchases. These points can be redeemed at tested faster than most large companies,” said Goyal. any Loop in-store kiosk or customers can choose a cou- “This allows for some really fulfilling work to be done for the pon from the app. Rolled out earlier this year, the c-store betterment of the industry, our employees, our customers and the community.” app is multi-functional and user friendly.

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FRONTEND

CSD’S QUICK BITES Associates Make A Difference 63% of all shoppers see store associates as extremely important to retailers.

43% of shoppers would not shop at a store if bots replaced human workers.

66% of tech-savvy MillennialsSource: place the Nielsen June 2017 highest value on store associates.

On-Demand Training 58% of retailers offer any targeted, ondemand training or education to associates.

50% of them state that these programs require improvement.

Source: Boston Retail Partners (BRP) Customer Experience/Unified Commerce Survey, Sept. 2017

Source: ChargeItSpot,“Store Associate Report” polled over 600 shoppers via ChargeItSpot kiosks across the country.

Top Consumer Reasons for Delivery

Channel Blur on Fresh Purchases

28%

I don’t have to go out in bad 50% weather I don’t have to leave home

Share of shoppers purchasing fresh by channel:

25% Convenience stores 78% Mass & Supercenter

28%

It’s quicker than cooking

25% Dollar stores 47% Club

They are quick to deliver

28%

14% Drug stores

99% Grocery

38%

It’s easier than cooking

Source: The NPD Group/Delivery Custom Survey, June 2016

Source: Nielsen Homescan Panel, 52 Weeks Dec. 31, 2016

Top Millennial Concerns 56% - War, terrorism, political tension 48% - Hunger, healthcare and income inequality Deloitte Millennial Survey, 2017

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Graphic by Mintel

October 2017

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INDUSTRYNEWS

Fastrac Markets Opens 50th Store Fa s t ra c M a r ke t s h a s introduced its new Fastrac Cafe, at 1064 Scottsville Road in the Town of Chili, featuring expanded products and services now available in the greater Rochester, N.Y. area. Innovations include freshly-prepared food such as pizza, a variety of sandwiches, made-to-order and grab-n-go, fresh-made breakfast sandwiches, egg casseroles, fried chicken and much more. The store features options for online and in-store ordering; a drive-through window for picking up orders or other store products; and a bistrostyle seating area where customers can enjoy food.

Empire Closes on 70 Corner Locations Empire Petroleum Partners LLC has successfully closed on its purchase of 70 Corner Store convenience store properties in Arizona, Colorado, Florida, Georgia, Louisiana, New Mexico and Texas. While Empire’s focus has been on developing a national wholesale distribution network, this acquisition springboards Empire into a multi-regional retail operator.

Shell Begins Expansion in Mexico

Andeavor Expands ARCO-Brand in Mexico Andeavor has officially begun operating in Mexico and has successfully opened the first ARCO station in Tijuana, Baja California, Mexico. As announced in July, Andeavor and Profesional Fuels Solutions, S.A. de C.V. (ProFuels) have an established wholesale marketing agreement and have outlined plans to expand the ARCO brand to achieve a leading market position in the Mexican states of Sonora and Baja California.

7-Eleven Adds Heat-and-Eat Meals Now that more Americans are looking to at-home recipe kits and restaurants’ prepared foods to go, 7-Eleven Inc. has introduced a prepared-food program with 15 new “locally-made, chef-inspired,” heat-and-eat meals. The c-store behemoth said the meal solutions were created with inspiration from Italian, homestyle, Asian and Mexican selections.

Dollar General Opens 14,000th Store Dollar store chain Dollar General has opened its 14,000th retail store at the end of August. The new store is located in Dauphin, Pa. Dollar General employs approximately 5,700 people in Pennsylvania through approximately 625 stores and its distribution center in Bethel (Berks County).

Shell has set its sights on growing its fleet of stores in Mexico. On Sept. 5, Shell opened its first service station in Mexico, with more sites planned to start providing Mexican motorists with high-quality Shell fuels and retail Bill Kent Receives NAG services over the next few months. Over the next 10 years, if market conditions continue to develop at their current Lifetime Award rates, Shell plans to invest around $1 billion in Mexico. These investments will be channeled The National Advisory Group (NAG) into expanding and improving recognized Bill Kent, president and CEO of The Kent Cos., in the retail network, improving Midland,Texas, with the NAG Lifetime Award for Convenience fuel logistics infrastructure and Retailing. Kent is the third retailer to receive the award, which developing partnerships to was presented during a dinner on Sept. 12 in Nashville,Tenn. deliver world-class products “Like the first two winners of this honor, David Johnson and Bill and services to Mexican con- Weigel, Bill Kent is as extraordinary a man as he is a retailer sumers and businesses. and a leader in his community,” said John Lofstock, executive director of NAG, who presented the award.

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FRONTEND News

C-Stores Bring Hurricane Relief After Hurricane Harvey battered Houston at the end of August, Hurricane Irma came raging over the Florida Peninsula in early September, impacting residents in Alabama, Georgia, Tennessee and South Carolina. By Erin Rigik Del Conte, Senior Editor

Source: National Association of Convenience Stores

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After Harvey, approximately 25% of the country’s refining capacity was temporarily offline. A waiver from the U.S. Environmental Protection Agency (EPA) was issued for 38 states and Washington, D.C., to minimize or prevent the disruption of an adequate supply of gasoline.

rid

FUEL FOCUS

C-STORES IMPACTED

colleagues and CoucheTard is donating $150,000 to help employees. There 15,600 c-stores in • York, Pa.-based Rutter’s Texas, including 2,700 in Farm Stores through Oct. Harris County, Texas (which Texas 1, is donating 10-cents covers Houston). Of those per cup of all coffee sold sites, 10,522 sell fuel. About 8.5% of all fuel sites in stores, up to $10,000, to in the state were impacted the American Red Cross, by the hurricanes. and is also collecting coin canister donations for the American Red Cross. 5,331 Rutter’s also teamed with stores UNFI & Mar tin’s Potato Georgia 6,639 stores selling Chips to fill trucks with bevsell fuel, fuel 5.4% were erages, chips, personal (4.3%) offline. care products and other essential items for survivors of Hurricane Harvey. 2,929 stores sell fuel • Among other actions, (2.4%) after Harvey, Stripes and Laredo Taco Co. provided Tennessee Alabama free tacos at the Corpus 2,961 stores sell Christi, Texas Emergency fuel, 2.4% were Response Center, working impacted. with The Salvation Army to Source: National Association of Convenience Stores provide hot food to local officials, first responders, dispatchers, electric providers and Cross, and customers can add $1, $3 or $5 to their Wawa purchase at technicians. • After Irma, Wawa and The checkout to help hurricane surviWa w a F o u n d a t i o n d o n a t e d vors. Wawa ran a similar campaign $250,000 to the American Red after Harvey.

Flo

HE C-STORE INDUSTRY, AS it always does, rallied to help its communities in need. Here are just a few examples of how the c-store community has stepped up in the face of back-to-back hurricanes. • 7-Eleven pledged $150,000 to the American Red Cross for Hurricane Irma disaster relief effor ts and donated 4,800 cases of 7-Select purified water for free distribution. 7-Eleven customers can also add $1 to in-store purchase to help hurricane survivors. • Sheetz matched in-store donations to Hurricane Harvey disaster relief efforts, up to $50,000, through Sept. 30. • Love’s Travel Stops donated $1 million to assist with the Hurricane Harvey relief effort. • Casey’s General Stores accepted customer donations at the register to help Hurricane Harvey survivors, and matched donations received from Sept. 1-15, up to $100,000. • Over 120 of Couche-Tard’s 700 Texas c-stores were closed due to storm damage. Couche-Tard donated $100,000 to the Red Cross and its North American stores are also raising money. It began an internal fundraising campaign for employees to help Texas

Hurricane Irma brought fuel shortages in Florida as residents raced to evacuate.

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FRONTEND News

Yesway Acquiring Mad Max Convenience Stores Acquisition expected to close in October as the Iowa convenience retailer scouts growth opportunities in the Midwest. By Erin Rigik Del Conte, Senior Editor

S teve M a x we l l a d d e d t h a t HE WEST BEND, WIS.-BASED Mad Max Convenience Stores has the other two companies who been sold to Beverly, Mass.- approached Mad Max in the last 18 based Brookwood Financial months were also national chains. Partners LLC, parent company of “When Yesway came to us there was another national player that we were Yesway Convenience Stores. M a d M a x O w n e r J a n i e c e talking with as well. We had no intenMaxwell recently publicized the tion to sell. We were actually growing. news of the acquisition via the We have a lot of people that have Washington Country Insider, noting, been with us for many years... We “We weren’t looking to sell. But there really have great teams, great retenare national companies looking to tion and great people.” come to Wisconsin.” Yesway is based in Des Moines, Iowa. Maxell said Mad Max had been approached by three different companies that were all seeking to acquire the chain of 11 sites. Yesway approached it last January and is now purchasing nine of the chain’s 11 locations, including four Mad Max outlets in the Wisconsin cities of West Bend and Barton. MOVING ON Steve Maxwell, co-owner and president of Mad Max, told CSD that of the two remaining stores, one is in the process of being sold to a developer and the other location is being sold to an independent. “Janiece Maxell and I will be leaving the c-store business with the sales of these locations as owners and operators of c-stores,” he said. “Not sure if we will leave the industry. I love this industry.” Janiece and Steve Maxwell built their first Mad Max store in Sheboygan, Wis. in October 2006. The sale of Mad Max to Yesway, which operates more than 30 stores, is expected to close on Oct. 20, 2017. 22 Convenience Store Decisions

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M a x w e l l s a i d t h e y e ve n t u ally decided to sell to Yesway because they felt it would be best for their employees, and allow their employees major career growth opportunities. “Janiece and I have always had the mindset of what is best for the team, not what is best for the one...It will be great for our people. (Yesway) seems to be a first class company. Everyone we have come in contact

with seems to truly care about the people,” he said, adding, “I was able to spend some time with their acquisitions and operations leaders this week and I know that our people will be well taken care of.” “There will be a ton of opportunities for our people to grow with a company that is growing by leaps and bounds. I get excited thinking about it. Our people are in good hands,” he added. Maxwell noted that deals that take care of everyone’s needs do not come around often, and that while it was hard to sell the company, knowing the move is good for everyone involved, helped seal the deal. “I wish all our people a big thank you,” Maxwell said. “Without them, Mad Max would not have grown at the rate it did. I know they will do as good or better for Yesway as they have for us. Like I said, we have great people. I will miss them all. I wish our people and Yesway all the best and am looking forward to seeing Yesway move towards the top of the 100 list. I believe they can do it.” Thomas Trkla, chairman and CEO of Yesway told CSD this past June that it planned to grow the convenience chain to 100 stores by the end of the summer. The company expects that growth to stretch into the Midwest region, and was “reviewing hundreds of potential locations across a swath that includes Missouri, Arkansas, Wisconsin and several other budding markets in the Midwest.” Yesway also expressed plans to acquire approximately 500 locations within the next five years, making it one of the larger c-store retailers in the Midwest. CStoreDecisions ecisions .com

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Convenience Store Solutions

Perfectly Poised to Pounce Poor customer service can strike down even the biggest and brightest commercial retailer. By Jim Callahan

ECENTLY, I ARRIVED AT my bank on a Saturday morning as they opened the doors—and I hoped—the vault. Little did I know it would be another day of big business in Corporate America, in the greater Atlanta area where I live. I did a fast burn as I waited impatiently in a line of 21 other customers, while two tellers did their best to speed along the mass of consumers. In close proximity, a bank executive merely stood immobile, but not so statue-like to utter the comment that was overheard: “It’s not my job,” he said, referring to the activity at the teller stations. He continued with: “Besides by this time next year there will be no more tellers. It will all be digital.” This particular branch had previously closed their drivethrough lanes with the objective of providing customers more personalized service. Can you say, ‘insult to injury?’

CUSTOMERS MATTER Waiting, I thought of how big business has lost sight of the core meaning of customer service, whether it’s banking, big box, fast food or numerous other retail enterprises. It makes one marvel at the stellar job that Atlanta-based Chick-fil-A does, proving you can run a clean, fast food chain with quality food and excellent service and still be profitable. Then I thought that considering that various industries fall further down when it comes to generating goodwill among American consumers, c-stores are perfectly poised to pounce when it comes to grabbing more market share. As the annual conference of the National Association of Convenience Stores approaches, the reputation that the convenience store industry continues to earn for stellar customer service and image is reaching an all-time high. That image is buoyed greatly by major convenience providers such 7-Eleven, Sheetz, QuikTrip, Rutter’s, Wawa and Stewart’s Shops, along with many more c-store chains. New store openings by diverse chain operators are offering more fuel dispensing capabilities and state-of-the-art buildings. Still, there are mountains to climb, and we can refer to the great examples that these top-quartile operators set—especially when it comes to a dedication to good customer service, which each chain includes in its daily repertoire. 24 Convenience Store Decisions

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SQUARE WHEELS Now is the perfect time to take advantage of the everimproving image that hard work has earned by raising the bar even higher. Nothing succeeds like success. Of course, success can go to your head. Sometimes too much success can cause you to trip, taking you off the path that established you in the first place. Think of Walmart and McDonald’s, for example. Both corporations seem to have forgotten the very principles that allowed them to grow into the huge behemoths they have become today. If I have learned one thing in my 49-year romance with c-stores and truck stops, it’s that your customers are mostly willing to grant second chances, but over time, will adjust their buying habits to how they are treated. Walmart, which has an effective self-service program in place, fails at times by only operating two of 17 available cashier lanes, which I observed during a recent shopping trip. Even more, the art of taking care of wheel repairs on their shopping carts seemingly has disappeared. Have you ever tried to get down a store aisle with a cart with flattened or misshaped, square wheels? You can’t do it and stay congenial. A company that continually sacrifices customer service to squeeze out extra quarterly profits is in for a rude awakening. In Walmart’s case, it’s their high number of product out-of-stocks often on display. Conversely, McDonald’s cleanliness and product quality has fallen quite drastically and this giant, which prided itself on being able to move drive-through lane customers happily on their way faster than a speeding bullet, now routinely takes 10-25 minutes to deliver food, especially after the introduction of the all-day breakfast menu. The restaurant doesn’t seem to have enough cooking space and capable employees to meet the demand they have created. It doesn’t take long for flat business execution to lose face with customers. It also doesn’t take long for these square wheels to get passed by. As it often is, the c-store channel is perfectly poised to pounce. Industry veteran 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 e-mail at jfcallahan1160@gmail.com. CStoreDecisions ecisions .com

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COVER STORY

What is your Processing IQ? C-stores can take a swipe at interchange fees with savvy service solutions. By David Bennett, Senior Editor

N THE CONVENIENCE STORE industry, distinguishing the depending on what the interchange fees are at the time. Before 2017, the company didn’t have much say about ‘big guys’ from the ‘little guys’ can be straightforward. You can pick out a 500-store chain over a five-store the processing fee structure because of its branded status. “We’re associated with two major brands: Mobil and operator pretty quickly. Some retailers get by with four Gulf. They have their own interchange system that we are fuel dispensers. Some c-store operations have 40 pumps. In one way Leo Vercollone, co-owner, CEO and pres- required to use.” Conversely, VERC also operates two independent car ident of VERC Enterprises Inc. considers himself a little guy in terms of the size of his retail chain, which comprises washes, and both have no tie to the processing platform 27 stores. He also considers himself a realist as well as a associated with ExxonMobil Corp. and Gulf Oil Corp. “The swipe fees we pay with major oil are almost twice good business man, who has built a loyal customer base in Massachusetts and southern New Hampshire over the last the rate that I can get for my individual car washes—understanding that we take more risk at the independent car 30-plus years. However, the Duxbury, Mass.-based company’s opera- washes; so any type of fraud issue or chargebacks, the oil tional costs are big. For example, the chain pays nearly $2 companies have a better process, but it is much more expenmillion in charge card fees per year. That goes up or down sive,” said Vercollone. 28 Convenience Store Decisions

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COVER STORY

In the end, the payment processing fees, or interchange fees, that the c-store lays out every time a customer uses a debit card or credit card, Vercollone chalks up to “the cost of doing business.” COST OF DOING BUSINESS Perhaps no topic unites c-store retailers of every size as do interchange fees, better known as “swipe fees,” which are easy to define and almost impossible to escape. Basically, the term interchange refers to fees paid by the merchant’s bank to the issuing bank for this service. Interchange covers the cost to convert a charge on an account holder’s card to a cash deposit at the merchant’s bank account, including billing services, credit risk and fraud risk. For small purchases, swipe fees can add up to a percentage of a purchase, eating into retailers’ margins. How much? The Durbin Amendment limits debit card interchange fees to 21 cents plus 0.05% of the payment. An additional one-cent fraud-prevention charge is also allowed in some cases. Those rules only apply to “covered transactions,” which include cards issued by some of the largest card issuers. However, other card issuers can charge more. For example, those rules only apply to banks and credit unions with $10 billion or more in assets. In 2015, the Federal Reserve reported that debit card transaction fees are typically around 24 cents per payment. The Durbin Amendment is part of the 2010 DoddFrank law, which sharply lowered debit card interchange fees. Supporters said the measure, sponsored by Sen. Dick Durbin, D-Ill., for whom it was named, would lower prices for consumers by cutting retailers’ costs. So how do convenience retailers lessen the operational impact of interchange fees? Experts agree that the more knowledge retailers have, the better they can fortify their payment processing position. The first question should probably be: What is your processing IQ? Anand Goel is the CEO and founder of Atlanta-based Optimized Payments Consulting, which advises merchants on how to streamline their payment operations and reduce the cost of card payments. Goel explained that most retailers don’t actively manage their payment processing relationship with their processing vendors, but they should—regularly. “Retailers typically contact their processor when there is an issue. Instead, retailers should actively manage their processor relationship with quarterly or semi-annual meetings and reviews,” said Goel. These meetings can be used to: • Review opportunities to streamline payment operations, costs. • Explore interchange qualification and chargeback trends and opportunities. CStoreDecisions .com

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• Review card network changes and their impacts on the retailer. • Discuss new or upcoming solutions relevant to the retailer. • Upcoming changes to retailer’s payments environment. • The importance of retailer acquisitions and/or divestments. “Credit card processing fees are unavoidable, but they can be negotiated and reduced with the right strategy and execution,” said Goel. WAY OF THE DINOSAUR Like other c-store chains, Boise, Idaho-based Stinker Stores Inc. has learned to adapt to payment processing fees. Four years ago it partnered in a program that helped trim those fees and provided customers purchase rewards. At all participating Stinker Stores in Idaho, customers receive a 10-cents-per-gallon discount price when they use the Stinker Advantage Card inside or pay at the pump. Also, there are no authorization holds placed on their checking account, which can sometimes happen with a regular, bankissued debit card. Stinker also issues the Sinclair Green Card, which provides customers gas rewards, and has lower processing fees for the Idaho retailer as well. “It’s a win-win between Sinclair partnership and the discount we are able to extend to our customers,” said Steve Watts, Stinker’s chief operating officer. The partnership with Sinclair will also benefit Stinker’s plans for expansion. The chain in February 2017 acquired Bradley Petroleum Inc. and Sav-O-Mat Inc. in a deal that includes 40 c-stores in Colorado and one in Wyoming, pushing Stinker’s portfolio to 106 store locations. Based in Denver, Bradley Petroleum operates in the Colorado market, especially in the Denver metropolitan

The Sinclair Oil Green Card, which was launched about four years ago, has allowed partnering retailers such as Stinker Stores Inc. to better control their interchange fees while providing additional customer perks. October 2017 l Convenience Store Decisions 29

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COVER STORY LOOKING FOR A PROCESSING PARTNER? THERE ARE SEVERAL PROMINENT merchant acquirers that network partners to evaluate the value of enabling payment functionality, interchange fee data and a host of other service considerations. Choosing the right one to best fit a retailer’s needs requires gathering as much information as possible. Here are just a few of the bigger companies in the marketplace: First Data: First Data facilitates small business payments with its Clover suite of products, including a mini reader that works without Wi-Fi and a mobile reader that attaches to other devices in order to process payments on the go. • TSYS: Short for Total System Services, TSYS supports millions of buyers and sellers around the world through four major branches: issuing services, acquiring services, prepaid solutions and merchant solutions. • Global Payments: Global Payments focuses on ensuring businesses accept all major forms of payments. To that end, its services include credit/debit/purchasing cards, electronic check conversion, money transfer, verification and recovery services, gift/loyalty cards, check guarantee, ACH checks and point-of-sale (POS) equipment. • Moneris: Moneris is the largest credit and debit card processor and acquirer in Canada. It processes more than three billion transactions each year for more than 350,000 merchants. • Adyen: Adyen provides e-commerce companies with a payment platform that includes gateway, risk management, and front-end processing services. Adyen is a full-stack gateway and includes merchant clients such as Facebook and Spotify. • Heartland Payment Systems: Heartland helps businesses move beyond accepting major credit cards. The company facilitates payment processing in-store, online, and offsite through multiple methods, such as EMV, Apple Pay, Samsung Pay, Android Pay and gift cards. It also offers next-day funding, real-time reporting and around-the-clock customer service in the U.S. • Elavon: Formerly known as NOVA, this company is a subsidiary of U.S. Bancorp. Elavon processes payments in more than 30 countries for more than one million merchants.

region—bringing a new urban segment to Stinker’s customer base. When it launched its card program, Sinclair enlisted the expertise of P97 Networks Inc., developer of PetroZone, a cloud-based mobile commerce and behavioral marketing platform for the convenience and fuel retailing industry. The program also enables consumers to increase their mobile shopping experiences, options for lower fuel prices and optin personalized digital offers for in-store purchases. Houston-based P97 is involved with other cutting edge payment processing networks including the new Gulf Pay 30 Convenience Store Decisions

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“RETAILERS TYPICALLY CONTACT THEIR PROCESSOR WHEN THERE IS AN ISSUE. INSTEAD, RETAILERS SHOULD ACTIVELY MANAGE THEIR PROCESSOR RELATIONSHIP WITH QUARTERLY OR SEMI-ANNUAL MEETINGS AND REVIEWS.” - ANAND GOEL, CEO AND FOUNDER, OPTIMIZED PAYMENTS CONSULTING

program from Gulf Oil, and is also a partner with Visa. Don Frieden, president, CEO and chairman of P97 Networks has seen the payment processing landscape change in several ways to include heightened level of fraud prevention and multi-factor authentication, which ultimately provides longer-term benefits for all merchants in the form of lower interchange fees. “We’re seeing new innovative programs like Chase Pay’s 0,0,0 program (zero acquiring fees, zero network fees, and zero fraud liability shift) forcing other networks to re-evaluate 15 year old programs like ‘card not present’ interchange for mobile transactions in favor of lower interchange rates,” said Frieden. By partnering with Visa to license its own transaction processing network called ChaseNet, Chase Pay can charge retailers a fixed price, with zero network, fraud liability or processing fees. Of the digital wallets covered, Chase Pay is touted as the only system that can affect transaction processing, essentially acting as the acquirer, the card network and the card issuer—and therefore providing ultimate control over transaction fees. According to Frieden, when convenience store operators are weighing these new solutions, there are also systematic requirements they should be assessing, for today and the future. “Look for mobile payment platforms built by solutions providers, which are based on industry standards and insures seamless integration with (point-of-sale) POS systems, digital marketing and sales automation tools, and loyalty and payment networks—enabling speed to market and the most cost effective mobile payment solutions,” said Frieden. “Essentially, we’ve spent years building integrations with industry partner platforms (e.g. POS, loyalty, payments, etc.) so customers can plug and play with best of breed systems providers.” GULF PAY Another unique payment processing solution P97 has CStoreDecisions .com

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COVER STORY Gulf Oil’s new Gulf Pay, which is being rolled out in the New England and New York markets, is a mobile payment service that enables drivers to navigate to the nearest station, pay for fuel at the pump, receive exclusive offers and purchase products inside the convenience store.

off (discussing the network) until we have been up and running for more than a few months,” said Nikki Fales, director of marketing for Gulf Oil. Gulf plans to expand the Gulf Pay app by teaming up with leading mobile wallets and technologies. Gulf has signed an agreement to partner with Mastercard and will accept Masterpass through the app. VERC Enterprises has already joined the group of retailers in New England. Vercollone explained that the Gulf Pay platform is the next stage in the development of the c-store chain, not only because it promises to lower the company’s interchange fees, but will provide a mobile payment platform that will accommodate future customer’ needs. “We’ll see how it goes,” Vercollone said, when the Gulf Pay results start coming in. THE UNBRANDED There are more than a 154,000 c-stores in the U.S., and more than 124,000 of these retail outlets sell motor fuels. According to the 2016 National Association of contributed to is Gulf Pay. Currently, customers at select Gulf Oil fuel stations in the New England and New York Convenience Stores (NACS) Fuel Report, approximately 50% markets have access to a mobile payment service that of the fueling outlets in the country have a major oil company enables drivers to navigate to the nearest station, pay for brand or carry the brand of another refining company. The fuel at the pump, receive exclusive offers and purchase remaining 50% sell “unbranded” fuel.” These stations often are owned by companies that have established their own products inside the convenience store. Gulf Pay is powered by the PetroZone mobile commerce fuel brand such as QuikTrip and 7-Eleven and purchase fuels platform, and will provide special deals on both fuel and either on the open market or via unbranded contracts with a in-store products, while allowing customers to tailor in-app refiner/distributor. So far, the spotlight has been on branded retailers that are preferences. Among its highlights, the program also allows consum- implementing processing programs to better control fees ers to securely store and manage their preferred payment along with providing customer and technological upgrades. For unbranded retailers that have to rely on third party methods, so no swiping is required; also it includes a stateof-the-art token-encrypted data component that safeguards vendors for their payment processing needs, there are important factors they should look at when doing their customers’ account information. Like other proprietary processing payment solutions, homework, said Goel. Some questions that retailers should Gulf Pay offers partnering merchants a reduced interchange explore when evaluating merchant acquirers in the marketplace should include: fee structure. The program is still a pilot program. a. POS compatibility. Is the payment processor certified “At this time, Gulf Pay is still in the initial launch phases. Even though the program has been extremely successful in to my POS software and/or payment switch? b. Chargeback management. What percentage of chargethis short amount of time, we feel it would be best to hold 32 Convenience Store Decisions

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COVER STORY HIGH COURT SIDES WITH RETAILERS THE U.S. SUPREME COURT earlier this year denied a petition to review a landmark billion dollar antitrust settlement between Visa and Mastercard and thousands of retailers that for years had accused the credit card networks of improperly fixing interchange fees. Supporters of the settlement—including Visa Inc. and Mastercard Inc. and a number of large U.S. banks—had filed the petition with the high court, arguing that the majority of plaintiffs had agreed to the settlement and that there was no guarantee that the objecting retail parties would get a better result if settlement negotiations resumed. The value of the settlement, initially worth as much as $7.25 billion, fell to about $5.7 billion after approximately 8,000 merchants opted out, including retail giants Walmart and Home Depot. The decision leaves intact a Second Circuit ruling overturning the settlement, sending both parties back to the bargaining table. The decision also concludes a historic chapter involving the National Association of Convenience (NACS), which was especially active on Capitol Hill during the time when the attempt to repeal the Durbin Amendment was in full force.

“NACS was instrumental in beating back efforts to repeal the Durbin Amendment on debit card swipe fee reform this summer,” said Lyle Beckwith, senior vice president of government relations for NACS. “We are maintaining vigilance in watching out for future efforts.“ The Second Circuit had nixed the settlement in the longrunning multidistrict litigation in June, after concluding that the class counsel and representatives didn’t adequately stand for merchants who would accept Visa and Mastercard credit cards going forward. But in their petition, the retailers said that there was no guarantee the objectors could get a better deal. The class action lawsuit was originally filed in October 2005 by 19 retailers and trade associations against Visa, Mastercard and several large banks claiming that the credit card companies unlawfully conspired with major banks to artificially inflate interchange fees. In December 2013, the District Court for the Eastern District of New York approved a settlement granting both monetary relief and injunctive protection—over the objections of thousands of merchants, banks and healthcare providers.

type of reporting do you have for managing downgrades? e. Cost Management Solutions. What type of reporting/ solutions do you have to help me reduce my overall cost of processing cards? Do you offer least cost routing for debit cards, PINless debit processing, and interchange management solutions? f. Customer Service. Do I have a dedicated relationship manager? What is his/her experience in supporting retailers like me? Even if a c-store operation is satisfied with its payment processing program, it doesn’t hurt to be on the hunt for a better mouse trap. “Retailers should do a formal merchant services RFP (request for proposal) every four or five years to understand the latest solutions in the marketplace and their application to the merchant’s needs/environment,” said Goel. “The RFP process will percolate new and relevant solutions to the surface.” Lastly, retailers should have legal counsel with previous backs are represented by the acquirer without merchant involvement (e.g. retrieval requests, invalid chargeback experience review merchant acquiring contracts, said Goel. If such a person doesn’t exist internally, they should seek codes)? c. Encryption solution. Every retailer should have an external counsel. “We had a large client that used a lawyer with no expeencryption solution that encrypts a card number from swipe/dip to the payment processor. What type of encryp- rience with merchant contracts,” Goel said. “This lawyer tion solution does the acquirer offer and what is the total spent six months trying to negotiate terms that were fixed and dictated by the card networks. Ultimately, an expericost? d. Reporting. What type of online reporting do you offer enced lawyer was able to negotiate the contract within a few to help with daily, weekly or monthly reconciliation? What weeks.” CSD 34 Convenience Store Decisions

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CATEGORYMANAGER’S NOTEBOOK

Cigarettes Face Local Legislators The cigarette category remains important to total convenience store sales—and still too conspicuous for regulators to ignore. By Howard Riell, Associate Editor

IGARETTES CONTINUE TO BE a c-store staple, despite the proliferation of local ordinances aimed at restricting the category. According to Information Resources Inc. (IRI), for the 52-week period ending Aug. 13, 2017, the convenience store channel saw sales of $56.2 billion, down .08% from last year. If sales are declining, however, the amount of legislation impacting cigarettes is increasing. For example, as of June 1, 2018, the price of a pack of cigarettes will jump to at least $13 in New York City, the highest price in the nation. The new minimum price for cigarettes and little cigars is one of several new anti-tobacco laws Mayor Bill de Blasio signed this summer. New York is part of a growing number of local government bodies passing stricter cigarette enforcement laws. Other regulatory steps in communities in the Empire State have included limiting tobacco retail licenses to reduce the number of stores selling cigarettes, creating a license for selling e-cigarettes, increasing the cigarette license fee, and prohibiting pharmacies and drug stores from selling tobacco products. Jim Calvin, president of the New York Association of Convenience Stores, said in a statement that these measures will destroy the business investment of retailers who have been leading the effort to prevent youth access to tobacco products. “The result will be lost revenue, lost jobs and an increasing number of sales in unregulated and illegal settings,” said Calvin. 36 Convenience Store Decisions

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BUDGET AND PREMIUM That said, smokers continue to indulge though their preferences are often based on price. “We are seeing a lot of people switching to budget brands, like Eagle,” said Jesse Dix, tobacco category manager for Dandy Mini Marts Inc. in Athens, Pa., which operates 65 large-scale convenience stores in New York and Pennsylvania. Indeed, he noted, consumers have reacted aggressively to the rising price of cigarettes. “Millennials in particular seem to be concerned only with price. Eagle is flying for us.” As a result, Dandy Mini Marts’ management has increased facings of the Eagle brand. “At $5.14 per pack it’s the lowest-price cigarette in our store so that always helps,” said Dix. Sales for the remainder of his SKUs are basically holding steady. “At the same time, we realize that cigarettes in general are down.” In other markets, price remains a variable. “Although packs sales decline year after year, I am seeing an increase in premium,” said Anna Bettencourt, category specialist for VERC Enterprises Inc., the family-owned convenience store, gasoline and car wash group operating 27 stores in Massachusetts and southern New Hampshire. Innovation is lacking, she added. “There is nothing new in cigarettes; all innovation is coming from vape.” Bettencourt said she expects cigarette sales to continue to decrease while black-market sales rise in more or less direction proportion to the number of restrictions and taxes imposed, all of which can only serve to harm businesses that obey the laws. Maintaining sales as much as possible, CStoreDecisions ecisions .com

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Tobacco Products, said at the recent National Association of Tobacco Outlets Regional Education Seminar in Denver. Bonnie Herzog, managing director of equity research, beverage, household & personal care, tobacco & c-stores for LEGISLATIVE MATTERS Though mounting legislation has failed to dissuade most Wells Fargo Securities in New York, said an outright ban on smokers, it is having an effect. Steven Montgomery, presi- menthol is highly unlikely, especially given the science and dent of b2b Solutions LLC, a consultancy that specializes the unintended consequences. “We’ve long believed a realin working with retailers and suppliers in the convenience istic worst-case scenario is if the FDA recommends the level retail / petroleum marketing industry, pointed out that of menthol be reduced over a number of years.” C-store owners in Minneapolis, this past August, for there are a number of legislative changes the have been passed by cities, towns and states that impact cigarette example, protested the proposed ordinance to ban menthol sales. Two of them that promise the most impact involve cigarettes from store shelves. The city council had already raising the purchase age to 21 and legislation banning men- proposed only allowing the sale of menthol tobacco products in adult smoke shops. Banning menthol cigarettes thol cigarettes. “There are now many states such as Massachusetts, from their shelves would mean a loss of $226,000 per store, according to the Coalition of Illinois, Missouri, Kansas, Neighborhood Retailers. New Jersey, Hawaii and California where many cities “THERE ARE NOW MANY STATES RAISING QUESTIONS have enacted regulations raisSUCH AS MASSACHUSETTS, ILLINOIS, Montgomery predicted that ing the legal age to purchase MISSOURI, KANSAS, NEW JERSEY, traditional cigarette consumptobacco,” said Montgomery. tion will continue to decline “This places increased presHAWAII AND CALIFORNIA WHERE in 2018, even as nicotine delivsure on retailers to ensure MANY CITIES HAVE ENACTED ery systems continue to evolve. the purchaser is of legal age. The major tobacco companies Sting operations now have a REGULATIONS RAISING THE LEGAL and others have continued to wider range of young adults AGE TO PURCHASE TOBACCO.” roll out alternatives. “The next they can employ in an effort evolution is heat-not-burn to ensure the purchaser is of - STEVEN MONTGOMERY, PRESIDENT, devices. The real questions for legal age.” B2B SOLUTIONS them are if the FDA will state Menthol bans are following that they are a safer alternative the same path, Montgomery to smoking.” continued. “Oakland banned Cigarette smokers are fiercely loyal to their brand, howthe sale of menthol cigarettes in July 2017. San Francisco is considering doing the same, as are other cities. There is con- ever, Montgomery said. “Being in stock at all times isn’t a nice to have, but a must sideration at the federal level.” Despite a federal ban on flavored cigarettes, menthol have. With the increased taxes making smoking more and cigarettes remain legal in the U.S., accounting for 27% of more expensive, c-store retailers have to be very aware of overall volume sales in 2016, according to Euromonitor their prices versus those of their competitors.” Cigarette sales will continue to rise slightly in key user International. This past July, the U.S. Food and Drug Administration groups, and decline in the overall adult population. A good (FDA) announced a new plan for tobacco and nicotine deal depends on what happens with healthcare insurance regulation that places nicotine and addiction at the cen- in 2018, with many predicting a near future in which smokter of its tobacco regulation efforts. The goal is to ensure ers are forced to pay significantly higher premiums and that the agency has the scientific and regulatory founda- deductibles, if they can get insured at all. “Over the very long term, a significant number of new tion to implement the Family Smoking Prevention and Tobacco Control Act, and make certain that it is striking an users, middle and high school students and young adults, appropriate balance between regulation and encouraging will drop the habit once they hit their late 20s or early 30s,” innovative tobacco products that may be less dangerous said Ryan Mathews, the principal of Black Monk Consulting in Royal Oak, Mich. “As taxes increase, and they will, a tier than cigarettes. Any potential regulation relating to menthol needs to be of lower income smokers—those below the poverty line based on science, and within the parameters of the Tobacco and/or on fixed incomes—will simply not be able to afford Control Act, Mitch Zeller, director of the FDA’s Center for to smoke.” CSD she added, means sticking to retail basics: staying in stock and carrying the right brands.

38 Convenience Store Decisions

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CATEGORYMANAGER’S NOTEBOOK

Renewed

Hope for E-Tobacco How will the FDA’s new deadlines affect the e-tobacco industry, and subsequently, profit margins for retailers? By Anne Baye Ericksen, Contributing Editor

“We’re up substantially from last year. I stay away from VER SINCE WORD EMERGED that the Food and Drug Administration (FDA) was to assume regulatory some of the smaller folks because I worry about them authority over e-cigarettes, manufacturers, distrib- not taking returns. I also have a fear they don’t have the utors and retailers have been operating on pins and money for PMTAs going forward,” said Anna Bettencourt, a category specialist for VERC Enterprises. The familyneedles, waiting for the final word and resulting impact. Finally, after many delays, the FDA formally announced owned company operates 27 convenience stores, fuel in May 2016 that it deemed electronic nicotine delivery retailers and car washes in Massachusetts and southern systems (ENDS) as tobacco products, thereby subjecting New Hampshire. “We’re on our second consecutive year of significant them to the same level of regulations and oversight as growth. We made the shift in fall of last year away from combustible cigarettes. Manufacturers had until August of that year to register combustible cigarettes to e-cigarettes,” said Peter Tamburro, their existing ENDS. If companies wished to continue to general manager for Utica, N.Y.-based Clifford Fuel Inc., sell their products in U.S. retailers, including convenience which owns and operates Cliff’s Local Market stores. “In the Northeast, there’s been a decline in cigarette stores, they were required to file a Premarket Tobacco Application (PMTA) or a Modified Risk Tobacco Product volume and the profit margin the e-cigarette category pro(MRTP) application with the FDA. In the interim, c-stores vides is a nice bump,” Tamburro added. “It’s important as and retailers continued to sell e-cigarettes, vaping devices a retailer to have viable e-cigarettes that can help grow the category. I hope it will get more attention as time goes on.” and e-liquids. Both Bettencourt and Tamburro have highlighted e-cigAt the time, analysts weren’t sure how the market would respond to the news. Some smaller manufacturers arettes with product-specific displays in their stores. “I’ve dedicated space for e-cigarettes in most of our dumped their inventories because the hill to climb toward authorization was just too steep and costly. On the flip locations where I can call them out, and they’re not just on side, e-cig brands from Big Tobacco held firm, with some a cigarette rack or below the moist snuff,” said Bettencourt. “We converted to a two-foot floor rack behind the experiencing impressive sales growth. 40 Convenience Store Decisions

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CATEGORYMANAGER’S NOTEBOOK

counter and planogram with the top-moving products,” said Tamburro. If one were to solely look at sales figures, you could conclude the e-cigarette category has bounced back from any blip the deeming may have instigated. Per figures collected by Information Resources Inc. (IRI), a market research firm, dollar sales for electronic smoking devices in U.S. c-stores posted a 36.64% gain for the four weeks ending Aug. 13 compared with the same four weeks last year. However, healthy sales do not erase the lingering ambiguity about which products will eventually gain FDA approval. “Last year the industry was in an enormous amount of uncertainty because the deeming was just taking effect and the countdown to PMTA had begun. There were questions in what needed to be done and how the regulation would be enforced,” said Tony Abboud, executive director for the Vapor Technology Association. CHANGES AHEAD Fast forward to this summer when FDA Commissioner Scott Gottlieb M.D. revealed the agency has identified lowering nicotine in tobacco products to below addiction levels as a major goal. He also explained that, in order to reach this objective, the agency is still reviewing its position of ENDS products. “For a long time, the FDA has taken a parochial view of e-cigarette products and the science associated with them. There’s excitement now that it acknowledges the possibility of the public health benefit e-cigarettes could provide. It’s also coming up with a new process by which to evaluate how products come to market. That gives companies hope that regulations will ultimately be in place that will allow them to innovate because a lack of innovation right now is still a problem in the industry,” said Abboud.

The FDA also announced a postponement for PMTA and MRTP applications. Initially, ENDS manufacturers were given until Aug. 8, 2018 to have their applications completed and submitted for products in the marketplace, as of Aug. 8, 2016. Thanks to the new extension, manufacturers have until Aug. 8, 2022 to submit an application. “However, the FDA did not change the Aug. 8, 2016, date, which means no new products can come to market in the U.S. without prior market authorization from the FDA and going through its PMTA process,” said Abboud. Nor does the new time frame alter other elements of the deeming determination. According to the FDA statement, “the new enforcement policy does not affect current requirements from the deeming rule that have already passed. For example, mandatory age and photo-ID checks to prevent illegal sales to minors remain in effect and subject to enforcement by the FDA.” The agency hasn’t released specifics about how it expects tobacco product manufacturers to lower nicotine levels other than it will begin with soliciting public feedback. That said, analysts view the development as a potential boost to the ENDS market. “Any level of nicotine reduction would likely negatively impact combustible volumes, offset however, by stronger consumption of reduced-risk products (RRPs)/vapor, in our opinion, as we expect the FDA’s new regulation will encourage consumers to shift more rapidly to RRPs/vapor, which are not subject to lower nicotine mandates and are on the end of the continuum of risk that is favored by the FDA,” said Bonnie Herzog, senior analyst for Wells Fargo Securities. RESEARCH RE-EVALUATION There’s been other good news for the e-cigarette category, too. In June, Penn State College of Medicine released a study that concluded e-cigarettes are less addictive than

ELECTRONIC NICOTINE DELIVERY SYSTEMS MAKE FURTHER GAINS ENDS

$ Sales

% Change From 2016

Unit Sales

% Change From 2016

Last 4 weeks ending 8/13/17

$85.5 M

36.64%

$8.7 M

11.39%

Last 12 weeks ending 8/13/17

$245.7 M

32.80%

$25.7 M

13.19%

Last 52 weeks ending 8/13/17

$929.1 M

26.60%

$105.9 M

19.28%

Source: IRI, a Chicago-based market research firm, based on convenience store scan data, Aug. 29, 2017

42 Convenience Store Decisions

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The FDA has postponed the application deadlines for electronic nicotine delivery systems (ENDS). Initially, ENDS manufacturers were given until Aug. 8, 2018 to have their applications completed and submitted as of Aug. 8, 2016. Manufacturers now have until Aug. 8, 2022 for application submission.

traditional combustible cigarettes in most part because the devices contain less nicotine. Plus, ENDS are devoid of tar and other harmful ingredients in cigarettes. Researchers reviewed data from the Population Assessment of Tobacco and Health (PATH) survey of more than 30,000 people compiled by the FDA and the National Institutes of Health. One of the interesting elements of this research is that officials plan to track participants with follow-up surveys with the intent of examining e-cigarette use over the long term. Researchers at the University of California at San Diego also reviewed data from surveys of smokers and observed potential relationships between e-cigarette use and smoking cessation. First, they confirmed the number of smokers kicking the habit continues to rise. Between 2014 and 2015, that figure jumped to 5.6%, approximately 350,000 new ex-smokers, which is up from 4.5%, where the rate stalled for years. Another study from Georgetown University’s Lombardi Comprehensive Cancer Center found that smoking cessation improves with regular e-cigarette use. The professor leading the research determined that the odds of quitting increase by at least 10% with each additional day of e-cigarette use as a replacement for combustible cigarettes. However, there’s some doubt about how impactful these findings will be on consumers. “Under the deeming regulations, retailers cannot talk about these products as safer alternatives to cigarettes. They can’t talk about the possibility of them being a harmreduction product,” said Abboud. “It’s a conundrum for the industry.” CSD 44 Convenience Store Decisions

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CATEGORYMANAGERâ&#x20AC;&#x2122;S NOTEBOOK

2017 Tobacco Legislative Roundup

Tom Briant

Among various regulatory activity thus far in 2017, 41 local cities have enacted above 18 legal minimum age requirement-to-purchase ordinances. By CSD Staff

TRICTER TOBACCO REGULATIONS ARE becom-

ing more prevalent. As convenience store chains become familiar with a new local policy, another seems to pop up immediately after, in another community. Now that almost all of the state legislatures have concluded their 2017 legislative sessions, Thomas Briant, executive director of the National Association of Tobacco Outlets, or NATO, recently sat down with Convenience Store Decisions (CSD) to recap the outcome of state tobacco legislation across the country as well as local jurisdiction activity as many sessions start coming to an end for the year.

tax changes including Delaware (50-cent-per-pack cigarette tax increase, 15% increase on other tobacco products or OTP, and a 38-cent tax increase on moist snuff), New York (modified the tax on large cigars from 75% of wholesale to 45 cents per cigar), and Rhode Island, (increased tax rate on cigarettes by 50 cents). We also saw one state legislature pass a measure and sign into law a decrease on uncompetitive taxes levied on retailers and consumers of tobacco products. Minnesota removed the automatic inflator on the excise tax per pack of cigarettes and froze the rate per pack at $3.04. Additionally, Minnesota reduced the tax cap on premium cigars from $3.50 to 50 cents per cigar. Finally, California voters approved a ballot question last November that raised the stateâ&#x20AC;&#x2122;s cigarette tax by $2 per pack and also increased the OTP tax to 65.08%. These tax increases went into effect on July 1, 2017.

Convenience Store Decisions (CSD): In the past couple of years, bills were introduced in approximately one-half of the state legislatures seeking to increase either cigarette or tobacco product excise taxes, but only one or two states actually enacted higher tax rates. Did that trend hold true CSD: We have also seen an increasing number of states for 2017? Thomas Briant (TB): 2017 produced an increase in state leg- introduce legislation to assess a new tax on e-cigarettes and islatures considering new taxes on cigarettes and tobacco vapor products. Did that trend hold true again this year? products. This year, 28 states have considered bills to raise TB: This year, 15 states considered bills to enact a new tax: cigarette and/or tobacco product tax rates in some form. Arizona, Delaware, Hawaii, Indiana, Kansas, Massachusetts, These states include Delaware, Florida, Hawaii, Indiana, Michigan, Montana, New Mexico, New York, North Kansas, Louisiana, Maine, Massachusetts, Michigan, Carolina, Ohio, Oregon, Washington and West Virginia. Of the bills introduced in these states, only two were Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New York, North Carolina, Ohio, Oklahoma, enacted into law. Delaware passed a new tax on vapor Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, products at five cents per fluid milliliter on nicotine solution and New York passed a tax modification on vapor products Utah, Virginia, West Virginia and Wyoming. However, only three of these states passed and enacted to 40 cents per fluid milliliter. 46 Convenience Store Decisions

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So far, 2017 produced an increase in state legislatures considering new taxes on cigarettes and other tobacco products.This year, 28 states have considered bills to raise cigarette and/or tobacco product tax rates in some form.

Further, the Kansas legislature decreased the excise tax on vapor products from 20 cents per milliliter of e-liquid to five cents. CSD: Have state legislatures continued to consider bills to raise the legal age to purchase tobacco products? TB: Yes, at the time this article was completed, 28 state legislatures had bills introduced to raise the legal age to purchase tobacco products to either age 19 or age 21. So far, the states of Oregon, New Jersey and Maine have enacted a statewide law to increase the legal minimum age to purchase to 21 years old. These states join California and Hawaii from last year to increase the total count across the country to five states that now set the minimum legal age to purchase at 21. Bills introduced to raise the legal age to 21 that didn’t pass were considered by lawmakers in Arizona, Arkansas, Connecticut, Florida, Idaho, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, New Mexico, New York, North Carolina, Oklahoma, Rhode Island, Texas, Utah, Vermont and Washington. Also, a bill in North Dakota that would have raised the legal age to 19 years old failed. CSD: We have heard that local tobacco ordinances continue to be the most important threat for tobacco retailers. Can you elaborate on this? TB: For the past few years, NATO has been tracking and opposing a growing number of local tobacco ordinances in cities across the country. The proliferation of local ordinances is the real battleground on tobacco restrictions for retailers with 480 local ordinances proposed in 2015, 675 in 2016, and 48 Convenience Store Decisions

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over 700 so far in 2017. The three primary types of regulations at the local level are flavor bans of tobacco products, increases to the minimum age to purchase and minimum cigar package/pricing requirements. One of the most prevalent local regulatory trends is a ban on the sale of flavored tobacco products. In 2016, approximately 80 cities adopted flavor bans across the country. In 2017, 28 cities—most located in the four states of Rhode Island, Minnesota, California and Massachusetts—have adopted similar bans. Additionally, 2017 has ushered in the first ordinances that regulate or ban the sale of menthol cigarettes, and mint and wintergreen flavored tobacco products in local jurisdictions. This year the following cities have adopted either a limited or complete ban on the sale of menthol, mint and wintergreen tobacco products: San Francisco, Berkley, Contra Costa County, Los Gatos, Santa Clara and Yolo County (all in California), Minneapolis and Chicago. The ban of menthol, mint and wintergreen flavored tobacco products, coming on the heels of previously passed flavor bans, represents a real threat to the viability of many tobacco related retailers. On the minimum legal age issue, 128 cities in 2016 passed new regulations to increase the legal age to buy tobacco products. While we saw continued growth of this regulation in 2017, the rate of that growth has slowed. Thus far in 2017, 41 local cities have enacted above 18 legal minimum age requirement-to-purchase ordinances. Cigar minimum pricing and packaging mandates continue to be a common form of local regulation as well. In 2017, some 16 cities across Minnesota, Massachusetts and California that have passed or enacted a cigar minimum price or packaging regulation. CSD CStoreDecisions ecisions .com

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Engaging Candy Sales

Although sales of chocolate, gum and mints are flat, down or, at best, just slightly up, research shows that one bright spot in the overall confections category is non-chocolate candy, which has achieved healthy increases in both dollar and unit sales over the last year. By Marilyn Odesser-Torpey, Associate Editor

ON-CHOCOLATE CATEGORY SALES IN c-stores rose to $2.2 billion for the 52 weeks ending July 9, 2017, an increase of 1.39%, according to Information Resources Inc. (IRI), a Chicago-based market research firm. At Go-Mart convenience stores, with 123 locations in Ohio, West Virginia and Virginia, category manager Ian Stewart reported that non-chocolate candy sales are consistently growing due to the constant influx of new products and players in the category. “There is a lot of new entrance into the segment—manufacturer innovation and creativity in expanding portfolios and new emerging brands,” said Stewart. “Such a wide range of products speaks to a broader group of consumers of all ages.” Within the category, gummy candy in peg bags and bigger bags does particularly well as do sour-flavored varieties. He added that seasonal non-chocolate candy, especially for holidays such as Valentine’s Day, Halloween and Christmas, gives manufacturers and retailers the ability to build incremental sales. 50 Convenience Store Decisions

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Perfetti Van Melle USA AirHead Bites, the expanded Ferrara Trolli line and Starburst (since the manufacturing issues have been fixed) are bringing in exceptionally good numbers, Stewart pointed out. INNOVATION RELATION The July 2016 “Sugar Confectionery in the U.S.” report from market research provider, Euromonitor International confirmed that the growth in the non-chocolate candy category “was driven by innovative new products, marketing campaigns [and] sour flavors.” It also mentions “the growing consumer preferences for chewy candy” as a factor. Go-Mart allots four feet of inline display space to nonchocolate candy. Shippers at the front of the stores showcase new and special promotion items. Two items are selected for promotion every day. IRI reported that chocolate candy dollar sales in c-stores rose to $2.8 billion, an increase of 1.39%. Unit sales dipped slightly to 1.7 billion. Chocolate candy sales at Go-Mart have been relatively flat, Stewart noted. King-size bars remain the best sellers by far. One new CStoreDecisions ecisions .com

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CATEGORYMANAGER’S NOTEBOOK GUM DECLINES BUT NON-CHOCOLATE CLIMBS $ Sales

$ Sales % Chg YAgo

Unit Sales

Unit Sales % Chg YAgo

Category - Gum

$1.05 B

-3.77%

730 M

-6.29%

Regular Gum (no sugarless)

$195 M

-3.32%

217 M

-5.14%

Sugarless Gum

$856 M

-3.86%

514 M

-6.77%

Category - Total Chocolate Candy

$2.8 B

1.39%

1.7 B

-0.79%

CCategory - Total Non-Chocolate Candy

$2.2 B

5.13%

1.5 B

3.78%

GUM AND CANDY

Source: IRI Total All Scan c-store data for the 52 weeks ending July 9, 2017

item that is selling exceptionally well is the king-size Milka Oreo Bar. For now through 2018 he sees dark chocolate versions of traditional favorites such as Kit Kat and Butterfinger as being an up and coming trend. Chocolate candies are given an eight-foot inline display at Go-Mart stores as well as shippers up front and an end cap for Hershey’s chocolate products. In its July 2016 “Chocolate Confectionery in the U.S.” report, Euromonitor pointed out that “whilst consumers are still looking to indulge, they are also increasingly concerned with eating better.” “[As a result,] health-focused shoppers have increasingly turned to snack bars over candy bars, as brands like KIND have innovated with sweet and salty flavors that satisfy sugar cravings (and even use chocolate) but enjoy a healthier positioning,” the Euromonitor report states. Stewart noted that some large candy manufacturers are resting on their laurels, not assertively advertising or promoting their products. “Even the introduction of a very hot new product can sustain excitement for only so long,” said Stewart. “One new product, no matter how much promotion is behind it, is not enough to keep the momentum for the brand going for a long period of time.” Jon Fleck, merchandising manager for Cenex Zip Trip, a 69-store chain based in Billings, Mont., has had just the opposite experience with candy in locations in Washington, Idaho, Montana, Wyoming, North and South Dakota and Minnesota. After soft first and second quarters “due to weather,” sales of chocolate candy, particularly king-size bars, are up in the stores in the third quarter, a trend he attributes to vendor promotions with Mars and Hershey. One new item that has really taken off is the M&M Caramel share size when it was recently offered on introductory shippers, he said. Due to the promotional emphasis on chocolate, Cenex Zip Trip’s non-chocolate candy sales overall are flat with the exception of some promoted products such as Pearson Nut Rolls, sold two-for-$1 regular size and two-for-$2 king size on shippers. Mamba Fruit Chews are also doing well. Sales of some previously popular sour and sweet/sour candies are slipping. 52 Convenience Store Decisions

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Offering innovative products at lower prices in eyecatching shippers is one of the best ways that suppliers can support candy sales in convenience stores, Fleck said. He also noted that back-up with a lot of advertising gives new products the best chance of succeeding. “They are not all home runs, but suppliers generally do a good job at marketing their new products,” Fleck said. Zip Trip stores allot around 75% of their non-gum and mint inline space to chocolate candy and the remaining 25% to non-chocolate. The only secondary location for both kinds of candy is on special promotional shippers near the register area. GUM, MINTS DIP Gum category sales in c-stores declined to $1.05 billion, a 3.77% decline in the 52 weeks ending July 9. Unit sales fell 6.3% to 730 million units during the same period, according to IRI. Sugarless gum sales—the category’s mainstay— dipped 3.87% to $856 million during the period, while unit sales fell to 1.7 billion, a 6.78% decline. Breath freshener dollar sales decreased 4.15% during the same 52-week period. Plain mints, which IRI designates as a subcategory of non-chocolate candy, notched a 3.57% increase in dollar sales. Unit sales were flat. Gum sales at Go-Mart stores reflect the category’s sagging sales, while mints are flat or slightly up, Stewart said, noting “bumps” in gum sales when new varieties are introduced, specifically fruity flavors with bright packaging geared to kids. “Unfortunately, these bumps are usually short-lived,” said Stewart. “And for every one or two successful launches, there will be many more that won’t go anywhere.” Go-Mart highlights new items in small temporary displays at the front counter. Items that do well there are planogrammed into the stores’ four-foot inline product set space. Stewart said that, while new product innovation is crucial to maintaining consumer interest in the gum and mint categories, he would like to see suppliers more actively promoting their core SKUs. “We want to be able to upsell items customers are already purchasing by offering a two-for price and promotions of that nature,” Stewart said. CStoreDecisions ecisions .com

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4 CANDY CONSIDERATIONS • New products and players create excitement. • Promotional pricing boosts sales. • Gum sales continue to sag. • Suppliers should support existing SKUs.

Despite the disappointing performance of gum and mints, however, customers haven’t slowed down their confectionery purchases at Go-Mart. Instead, Stewart said, customers seem to be buying more items from the rest of the non-chocolate candy category—particularly AirHeads, Starburst and Skittles—instead. Cenex Zip Trip and North Carolina-based Holt Convenience Stores, are planning to shrink their inline gum and mints displays due to slow sales and give the space over to candy. Currently, Zip Trip allots over 15% of inline space to gum and 5% to mints to accommodate the everincreasing product variety. However together they account for only 14% of total

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sales, Fleck said. “All of the manufacturers are trying to find the next big thing, but I feel that there are too many options and flavors,” he said. That’s not to say Cenex Zip Trip will be giving new items short shrift. “As new items come out, we will continue to display them near the check stand and if they do well we try to fit them into the inline set,” Fleck said. “So far, none have really set the world on fire.” Hannah Holt, co-owner and marketing and operations director at Holt Convenience Stores, which has 10 locations in eastern North Carolina, is planning to streamline its gum and mint displays by focusing primarily on the top sellers. In addition to sharing 12-16 feet of inline space with candy, some of the stores also have gum and mints at the coffee bar and checkout area. Although new items keep the category fresh for consumers, she wishes suppliers would provide more promotional support, especially when it comes to bundle pricing. Euromonitor explained that mints are stealing share from gum via new innovations such as Ice Breakers Cool Blast Chews, which are accelerating popularity. CSD

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CATEGORYMANAGER’S NOTEBOOK

BFY Ice Cream

Sales Rise

Even c-store’s most indulgent category isn’t immune to consumer’s preference for healthier snacking options. By David Bennett, Senior Editor

But it really depends on how you define BFY, he said. HE OLD SAYING ABOUT having your cake and eating it “We really have not seen a move toward lower-calorie, too can be applied to a bevy of things. More and more, the same can be said for ice cream lower-fat ice cream products. Indulgence seems as alive and other frozen treats touted as better for you (BFY). as ever,” said Cote. “That said, if you define BFY as short More and more, U.S. consumers are opting for ice cream cups, ingredient lists, organic, GMO-free, hormone free and betcones and sandwiches as well as a variety of frozen novelty ter for the environment, then yes, we have seen this trend.” Plaid Pantry operates 110 c-stores in Oregon and treats including pops, cones, popsicles, juice bars and gelato Washington State. sporting cleaner labels and less-processed ingredients. Across all retail channels, including convenience stores, ice cream sales are on the rise, growing 3.4% for the 52 STRIKING A BALANCE Retailers that promote ice cream and other offerings that weeks ending May 27, 2017, according to Nielsen research data. Convenience stores are highly relevant to consumers’ taste good and make customers feel good is a perfect balon-the-go lifestyles and are well-equipped to deliver prod- ance for stronger in-store sales. “Consumers demand items with these attributes,” Cote ucts that meet their immediate needs, and that thinking said. “It may not help the customer control his or her waist applies to BFY ice cream varieties as well. line, but the idea that the product will help him or her live Ice cream that qualified as clean label grew 96%. a cleaner lifestyle that impacts the environment, and others less negatively, is important.” CLEAN DATA The demand for better-for-you options is only going “The channel lines are blurring, and shoppers are expecting to find products that meet their health and wellness to increase as consumers continue to research the ingreneeds outside of just traditional grocery,” said Andrew dients going into their food. According to the Nielsen Global Health and Ingredient-Sentiment Survey published Mandzy, director of strategic insights for Nielsen. At the core, consumers who are shopping for healthier in August 2016, consumers pay close attention to product varieties of ice cream, such as clean label, tend to be shop- details. In fact, 73% of respondents said they feel positively pers under the age of 44, those with children under age 18, about companies that are transparent about their product those that live in urban cities and have a household income sourcing. Also, 68% are willing to pay more for food and of more than $100,000. C-stores have an opportunity to beverages that don’t contain undesirable ingredients; and gain these shoppers’ dollars with the right mix of ice cream 64% of consumers’ diets prohibit certain ingredients. “Small manufacturers, many of which are popping up products, emphasizing the better-for-you assortment conin the ice cream category, are leading both dollar sales and sumers are after. As industry data indicates, Americans’ preference for growth,” Mandzy said. “We expect to continue seeing this something sweet without the guilt of processed ingredients shift to better-for-you products across all U.S. retail chanis trending upward, including the c-store channel. Tim Cote, nels, including convenience.” Charlotte Havely, director of marketing for Weigel’s vice president of marketing at Beaverton, Ore.-based Plaid Pantry, said a shift to healthier frozen offerings has taken Farm Stores in Powell, Tenn., can attest to the power of ice cream at the 65-store chain. hold, but not at the expense of richer options. “I personally believe that while consumers are more health-conscious or calorie and sugar conscious… we still of respondents feel positive about all like having a treat,” said Havely. “And, what’s the most companies that are transparent decadent and satisfying of treats for this time of year? Ice about their product sourcing. cream of course.” CSD

73%

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CATEGORYMANAGER’S NOTEBOOK

Profiting with

General

Merchandise One customer’s purchase of a miscellaneous object is a retailer’s high-margin sale. By Pat Pape, Contributing Editor

QUEST FOR QUALITY Like consumers everywhere, convenience store shoppers egories of tobacco, fuel and foodservice are often dismissed as nice-to-have income, but for many con- appreciate high-quality merchandise. Among the 18 Busy venience store and travel center operators, the general Bee convenience stores with headquarters in Madison, Fla., five serve as gift shops that attract travelers and locals alike. merchandise category is a big boost to their bottom line. “These stores are chosen based on their locations,” said Just ask Mark Russell, director of operations for Russell’s Truck and Travel Centers in New Mexico, which operates a Megan Forcey, director of advertising and e-commerce for handful of locations that devote about 20% of their interior Busy Bee. “Not all our gift locations are highway based. We footprint to three auxiliary areas: merchandise for truckers, analyze the area where each store is located to find the best gift items and general merchandise, such as sunglasses and fit possible.” Busy Bee shoppers may choose from branded jars ice chests. “Truckers come in for oil, additives, CB (radio)-type of gourmet pickles, candied jalapeños, pie fillings, jams stuff and parts,” said Russell. “Travelers come in to buy and hot sauces. The woman’s jewelry collection includes $7 bracelets and $160 sterling silver initial necklaces. stuff they need and pick up gifts and souvenirs.” One of the company’s large travel centers sits in east- Household goods include everything from monogrammed ern New Mexico, on the original Route 66, an iconic wooden serving trays and personalized glassware to American highway that once extended almost 2,500 miles scented candles and Busy Bee-branded beach towels. Gifts from Chicago to Los Angeles. The Route 66 cachet makes items do double-duty as e-commerce offerings and can be Russell’s an ideal place to find unique postcards and auto ordered online from the Busy Bee website. memorabilia. Locations also offer clothing, women’s accesWESTERN WEAR sories, plush items, hats, games and toys. In Sherman, Texas, the Douglass Distributing Co. operOne of the greatest benefits for convenience retailers that commit to extra space for general merchandise is that it ates 22 North Texas convenience stores and sells fuel to 170 provides retailers with higher-than-average margins, some- more. It also does a healthy business in general merchandise. “The biggest seller is cowboy hats, and girls buy as times as much as 50% on certain items. “If customers are buying general merchandise, it’s an many as the guys,” said Bill Douglass, CEO of Douglass extra sale,” said Russell. “A big portion of these people we Distributing. “It’s a popular look nowadays whether you aren’t going to see again. It’s not like we’re in town where live in California or Las Vegas or Texas.” High-quality products are showcased on his stores’ two you’re going to get the same people coming in every week. We do have local customers who need dog food or what- general merchandise gondolas. Shoppers can pick up an ever. But for the most part, we’re looking at travelers as $80 blanket or a $60 purse at the same time they pump a tank of fuel. our customers.” RODUCTS THAT FALL OUTSIDE of the cash-cow cat-

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CATEGORYMANAGER’S NOTEBOOK Last year, the annual Trucker Path app survey chose the Busy Bee in Live Oak, Fla. as the best truck stop in the country. Part of the draw for the Madison, Fla.-based company’s chain of 18 Busy Bee c-stores is a wide array of general merchandise.

“Some of these things are beautiful and not cheap,” he said. “And then you can sell $2 widgets, like fidget spinners, because Barnum was right.” HOT AND NEW Ranglers convenience stores in central Texas have offered a wide range of gift items for the past 20 years. “A lady suggested that we offer gifts, and she started [the program] in one of our smaller stores,” said Bradley Haile, vice president of the four-store chain. “Then, we figured out it worked and took it to our bigger stores. That was about the time that some of the convenience stores were getting souvenir stuff, but this is better than souvenirs. “ Depending on the store’s size, Ranglers dedicates from 500 to 2,000 square feet of space to general merchandise, including purses, belts and women’s accessories. “Anything that’s hot and new,” said Haile. “If something is not working, we try something else. Cowboy hats have worked for 10 years, and we keep them at a reasonable price.” Merchandise seems to sell best between spring and fall when families are on the go. Although the stores offer toys and activity books to keep kids entertained on long car trips, “stuffed animals is probably 50% of our gift sales,” he said. “We have a large display of stuffed animals in each of our two biggest stores,” said Haile. “They’re located close to the bathrooms, and people have to walk past them to get there. Right now, we’re adding 3,000 square feet to our store in Hico [Texas] to make our restrooms larger, and 1,500 square feet of that space will be for gifts.” GETTING STARTED When first adding general merchandise to a store’s product mix, the chore of selecting gifts and accessories can be mind-boggling. “If a store operator is starting out brand new, I would tell them to go through a brokerage or the company they’re getting stuff from now,” said Russell. “Those people already have contacts with vendors. A lot of companies that had salespeople now realize they can get more done if they go through a broker. Going to the trade shows is where you are going to pick up connections if you 60 Convenience Store Decisions

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want to do it individually,” he added. Successful general merchandise sales depend heavily on a retailer’s ability to read its customer base. “You really need to know the area you’re in and your primary demographic,” said Forcey. “When deciding how to expand, we do extensive research in our customer base and the surrounding area and then tailor the products to that location.” Offerings should be driven by the local market, agreed Douglass. “In South Carolina, you might be selling honey, and in Florida, it would all be beach items,” he said. “It’s very different according to the local culture.” Of course, demographic indicators are important. “It really varies from location to location,” said Forcey. “We have some stores that are more Millennial-based, and they’ll need different products than stores that see more female baby boomers. Our team has a strong product awareness, and each department works hard so that we are on top of changes or trends.” Many retailers travel to the gift markets in Dallas, Atlanta, Las Vegas and Denver or go to regional trade shows to source merchandise that meets the needs of customers. A few work directly with vendors who basically sell goods to the store and guarantee that they will buy back anything that does not sell. At Rutter’s Farm Stores, based in York, Pa., almost all of its 68 locations feature a display fixture showcasing electronics and sunglasses. The display takes up about six square feet of space and comes from a single vendor who agrees to take back unsold items. “Those vendors are getting harder and harder to find,” said Robert Perkins, vice president of marketing for Rutter’s. “General merchandise takes a lot of attention and needs to turn over fairly quickly or the product become stale. If a retailer doesn’t have the time and space to commit to it, I wouldn’t recommend it.” For Russell’s Travel Centers, that’s not a problem. “For us, general merchandise is an extra sale,” said Russell. “Anytime I can sell a customer an ice chest or an iPhone charger, it’s a definite plus. We want to capture every dollar we can get.” CSD CStoreDecisions ecisions .com

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FOODSERVICE

Food Offerings Cross the Border Burritos, tacos and other Hispanic dishes are becoming fast favorites in a growing number of convenience stores. By Jeffrey Steele, Contributing Editor

HEN RAHIM BUDHWANI, CEO

at Hoover, Ala.-based 6040 LLC c- store chain, first introduced foodservice with a pizza program, it proved an instant flop with its customers, who are made up of construction workers and other patrons, who are Hispanic and Latino American. Of course Budhwani, who is also the 2016-2017 chairman of National Association of Convenience Stores (NACS), didn’t rise to his current position by ignoring the preferences of his customers. He responded to customer feedback by changing course. He built a 325-foot 64 Convenience Store Decisions

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in such big markets as California, Florida and Texas. Because the laborers needed both breakfast and lunch, they often bought both meals each morning at the stores, along with beverages for the day and a treat for day’s end, said Jeff Lenard, vice president of strategic industry initiatives for NACS. ON TO SOMETHING GOOD The move to ethnic foods meant Of course, Budhwani isn’t the only convenience retailer to alter his menu much more to Budhwani than just to cater to a growing segment of con- additional sales of tamales and tacos. sumers who hunger for more ethnic “It was the added market basket of dishes. For consumers of Hispanic other items and a customer who othfood offerings, such foodservice erwise wouldn’t be there, but was, day trends are growing more, especially after day,” Lenard said.

kitchen, and had his staff make tamales, followed by tacos, tortas and chilaquiles. Then he instituted fusion foods, combining Latino and Indian cooking. In short order, his chicken curry tacos and maharaja tacos had captured an enthusiastic following.

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This kind of tale has increasing numbers of convenience store operators looking to add burritos and other ethnic foods to their prepared food selection. By crossing the traditional foodservice border to spice up menus with ethnic foods, they’re helping ensure greater sales and profits. According to Lenard, the growing popularity of ethnic foods is based on the greater numbers of Hispanic Americans in the U.S., the increasing appetite for exotic flavors and spices and the sandwich-replacing portability of burritos and other ethnic foods. “There are definitely demographic changes in which some areas of the country are seeing significant Hispanic populations,” Lenard said. ”They may be a strong minority or even a majority of the population. And they are much more comfortable buying a food item they know than hot dogs or something they don’t.” As well, ethnic foods have spread far beyond the narrow confines once defining them. There was a time when pizza and chop suey represented the limits of ethnic cuisine for Americans. “It’s much more than that now,” Lenard said. “Ethnic- and Hispanic-themed fare can offer a nice supplement to other food programs, such as sandwiches,” he said. “They’re very portable, it’s essentially hand food and very easy for people to take back to work, or eat in the car.” ENTICING BUSINESS Burritos and other ethnic foods aren’t confined to geographic pockets of the U.S., said Lenard. You will find them throughout the country. A great example is the “Ahh Burrito!” program at Anderson, Ind.-based Ricker’s throughout the Hoosier State. “When Stripes was bought by Sunoco, which in turn was bought by 7-Eleven, there was speculation the acquisition was more about the burritos than the fuel,” he said. No chain apparently has a bigger hold on the ethnic appetites of its consumers than Fuel City, which operates

Ethnic- and Hispanic-themed food offers a nice supplement to other food programs, such as sandwiches. More retailers are finding out that such offerings can be a focal point for a lunch menu, or complement a hearty breakfast program.

three locations in greater Dallas area. The stations are legitimate 24-hour taquerias, and the food is very tasty. “They have such a crowd around their stations on weekends they have to have people directing traffic,” Lenard said. “You have this long line of people in cars queuing up around the gas pumps to have delicious tacos.” Effectively promoting a burrito and ethnic food program is all about making customers aware you’re offering these foods. And that’s done through taste and aroma, Lenard said. Sampling programs can let your customers know just how flavorful your offerings are. When customers walk inside your establishment, they should also encounter a whiff of tempting aromas from the sizzling burrito and taco fixings. “They may not have thought about buying your food,” said Lenard. “But that aroma puts in their minds that, ‘Next time I’m hungry, I’m adding this to my list of places to consider.’ ” There are two big reasons a convenience store can pull off a burrito-taco-ethnic foods program more effectively than many restaurants, Lenard said. “It’s much easier CStoreDecisions ecisions .com

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FOODSERVICE

Recognized by Zagat, among other restaurant reviewers, for its specialized foodservice concept, Fuel City in Texas offers tacos and other dishes 24 hours a day. The retailer also boasts walk-up windows that allow patrons to order and pay for their food when they’re in a hurry.

to innovate in a small format and have we put in nacho cheese Doritos and our other revenue streams to support you lettuce and tomatoes and meat above that. It works really good for me.” if it doesn’t immediately take off.” Two burrito versions grace the break“That’s very different from a restaurant. Gas sales help the program along fast menu, one a bacon, egg and cheese until it’s embraced. The other thing is and the other a sausage egg and cheese, you can really experiment in a small with picante or salsa on a flour tortiformat. Even if you don’t have that lla. “I got a big flat-top grill in the back,” killer recipe, you may be able to talk to Carter said. “We make those burritos the night before, they’re all wrapped up. that local food truck about his.” Take them out of the refrigerated case, microwave and they’re gone. They’re in WALKING TACOS At Shout & Sack, a four-decade-old and out of here in a minute; that’s what convenience retail operation on Route it’s all about.” That process has spurred a spike in 66 in Vinita, Okla., Chris Carter, the owner, appeals to appetites for ethnic food sales for the company. By contrast, the walking taco and edibles with homemade fried burritos, a walking taco and a taco salad, as well taco salad are made to order, and are ready in four to five minutes, said as a breakfast burrito. The burritos are a bit spicy and are Carter. “If people eat one, they always come therefore nicknamed “Gut Bombs,” Carter said. The walking taco and taco back again. They’re spicy so you can’t salad are particularly popular with eat them every day, but they’re good for lunchtime customers, who savor the two or three days a week,” he added. As for promotions, Carter offers homemade taste of the shell and bowl specials on the ethnic specialties, teamrespectively. “On our taco, we season our own ing them with a drink and cookie. “When they get one of those walktaco meat, and of course put in our lettuce, tomato, peppers, onions and salsa ing tacos or taco salads, I usually give in a beautiful bowl,” said Carter. “On them a cookie, usually chocolate chip the walking taco, it’s strictly beef here in cookies because they’re by far our bigbeef country. And that’s the one where gest seller,” he said. 68 Convenience Store Decisions

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HOMEMADE COOKING At two Zarco USA stores in Lawrence, Kan., CEO Scott Zaremba is looking at establishing more of an ethnic menu based on the success of his stores’ breakfast burritos. “The breakfast burrito items are a variety of all breakfast items you can think of to put in there,” Zaremba said. “That includes scrambled egg, fried egg, fresh vegetables, jalapeños and some of the peppers. We have our kitchen staff make it up for them.” Zaremba expects to soon transition from a pre-made tortilla to tortillas freshly made on site. “We want to give customers flavor, texture and something that’s more unique and hopefully a better product . . . We’re trying to differentiate.” He wants to offer burritos at both lunch and dinner, but will not roll out that concept until his homemade tortillas are perfected. “We have a proprietary bread made for the submarine sandwiches; we’re looking at doing the same thing with tortillas for burritos.” The same proteins used now in the sandwich menu will be incorporated in the burrito program. “People want a lot more spice,” Zaremba asserted. “They’re asking for some spice and variety. They want a lot more of a flavor profile than the standard items out there. The demand is for both taste and healthier items. The tortilla if done right can give you a healthier profile. Spices are part of the flavor profile we’re working on.” The final word on the wisdom of adding burritos and/or ethnic foods goes to Budhwani, the Alabama store owner who’s reaped gains with tacos and tamales—a small sampling of his entrepreneurial style. “That’s me, trying new ideas. After all our industry must continue to innovate,” Budhwani said earlier this year during a NACS event. “We face competition everywhere. And I want to stay ahead of the curve.” CSD CStoreDecisions ecisions .com

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COLUMN FOODSERVICE

Cultivating Hispanic Foodservice C-stores can provide a fresh look at navigating the factors of health while at the same time connecting better to Hispanic communities. By Sylvia Klinger

S WE FACE A significant amount of change in the retail industry as a population as a whole in the U.S., Hispanics aren’t exempt from these changes. More than ever, convenience stores must step up their game and not only deliver on quick food items, but must cater to the specific health needs of Hispanics, especially when it comes to the care of the Hispanic decision makers and nutrition gatekeepers—the Hispanic female. The Latino population in the U.S. has reached nearly 58 million in 2016 and has been the principal driver of U.S. demographic growth, accounting for half of national population growth since 2000. A new Pew Research Center analysis of U.S. Census Bureau data finds that the growth and dispersion of the U.S. Latino population has slowed since 2007, when the Great Recession started. Immigration from Latin America has cooled. That’s not to say that the Hispanic population is less influential when it comes to buying power. As younger Hispanic consumers come of age, the opportunity for con70 Convenience Store Decisions

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venience retailers to serve this important consumer group looms large—especially when it comes to foodservice. COMING OF AGE The Hispanic population is still young. According to the latest Mintel 2017 report, there are as many Hispanic Millennials as Generation X and baby boomers combined. Spanish still reins in most Hispanic homes. The majority of Hispanics are still bilingual. About 70% speak Spanish or a combination of Spanish and English at home. Biculturalism is what Hispanics do best; Hispanics are gravitating toward a bicultural environment more than ever. For example, it’s interesting to note that while Hispanics are still rooted in their culture and celebrating traditional Hispanics holidays, they are also assimilating a number of American traditions like the Fourth of July barbecue at home. Likewise, Hispanic mothers play a significant role in their homes. For example, 77% of Hispanic moms consider their own mother as the most valuable source of informaCStoreDecisions ecisions .com

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COLUMN FOODSERVICE tion and advice. So their influence in the family is most critical. That’s because matriarchal females are the ones passing their Hispanic culture to the next generations. However, Hispanic women experience several unique health issues throughout the various life stages, and some of CERTAIN U.S. STATES CONTINUE to count the majority the most chronic diseases that affect both genders can affect of the Hispanic population in the U.S: women differently—an important point to keep in mind as • The five states with the largest Hispanic populations are you stock your shelves for your costumers We know that California (15 million), Texas (10.4 million), Florida (4.8 milsome of these chronic diseases disparately affect Hispanics. lion), New York (3.7 million) and Illinois (2.2 million). Together, these states count 65% of all Hispanics in the U.S. Looking further at the Hispanic population: • But New Mexico leads the states for the share of the state • Hispanics suffer a 50% higher death rate from diabetes. population that is Hispanic (48%), followed by California and • In addition, 24% of Hispanics suffer high blood presTexas (39% each). Arizona and Nevada round out the top five sure that’s more poorly controlled than non-Hispanic states for the share of the population that is Hispanic with whites. Conversely, Hispanic women with high blood pres31% and 28%, respectively. sure are twice as likely as men to get it under control. • In most states, U.S.-born Hispanics outnumber foreign• There are 23% more obesity cases linked to Hispanics born Hispanics. However, there are two exceptions: In the than non-Hispanic whites. District of Columbia 53% of Hispanics were foreign born in It is important that retailers understand what wellness 2014, and in Maryland half of Hispanics were foreign born. means to women today. Hispanic women are also more conMost of the top 10 states ranked by the foreign-born share cerned with health and wellness than in the past, but they among Hispanics are located in the South. often put the needs of others before their own. Hispanic Source: Pew Research Center September 2016 women play many roles and that can lead them to feeling stressed, overwhelmed and under appreciated. All of which can lead to an unhealthy lifestyle. The quest for health and balance relies on health professionals and the retailers. How can convenience stores be the ally for Hispanic Also, age matters. Women’s motivation to eat better var- women? ies substantially from generation to generation, another key Retailers can offer a more holistic solution by providing thing to think about in stocking the shelves of a c-store. a variety of fresh foods when possible, and also providing individually-portioned options, which stretches a retailer’s BALANCED SOLUTIONS operational budget, but not consumers’ waistlines. Another However, there are many other reasons why they are not nutrition tool that convenience stores can offer are pre-poreating healthy—food pushing, clean plate rules, conflicting tioned, packaged meals—specifically frozen meals that information, friends adopting fad diets, lack of time to pre- promise nutritional benefits. pare balanced meals and trying to please everyone in the Many of these address portion control, and there are now household. a plethora of options that include whole grains, lean proWhat motivates/helps Hispanic women adopt a health- tein and more vegetables, providing essential nutrients and ier lifestyle is moving into a more holistic approach to a variety of culinary-inspired options. One brand in particueating. There is a movement towards eating more fruits and lar that does a great job of this and caters to the busy woman vegetables, making small, positive changes to their diets, is Lean Cuisine. drinking more water, cutting back on added sugars, eating Of course, more and more c-stores are providing fresh more whole grains and reducing portion sizes. foodservice alternatives in a timely manner. This conveAll of these products are in abundant supply in neigh- nience factor is important because it resonates with the borhood c-stores. female Hispanic population. Although all these holistic changes sound promising, Their pre-portioned meals can help Hispanic women they are still looking for more sizzle and adventure in their (and others) with portion control and also can reduce the foods. Therefore it is a key reminder that food offerings complexity of meal planning, decision making, provide a have the following food and cooking components: fixed-calorie level and help with self-monitoring. They also • Bold new flavors and spices; provide a quick and convenient meal that is budget friendly • Plant-centered meals; and good for you. CSD • Balanced meals featuring – protein + grain + veggie; Sylvia Klinger, a registered dietitian and certified personal • Creative new ways to eat more veggies; trainer, is founder of Hispanic Food Communications in Hin• Ancient grains; sdale, Ill., a food communications and culinary consulting • Ethnically-inspired foods; and company. A Hispanic native, she is a leading expert in cross• Vegan desserts and drinks. cultural Hispanic cuisine as it relates to nutrition and health.

STATES AND HISPANIC POPULATION

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FOODSERVICE

Rutter’s: Creating a Menu Medley Tapping the pulse of customer demands and maintaining a fresh menu is a full-time feat for c-stores, but Rutter’s is up to the challenge. By Erin Rigik Del Conte, Senior Editor

key components should be taken into chicken wings, French fries and beef consideration. Rutter’s has added a short ribs, we’ve added our new seaseafood line, clean label products and food line to include fried shrimp, fried propriety items, to name a few, to meet clams, fried scallops and tavern-batthose demands. Keeping pace with tered cod. To follow suit with the the ever-evolving landscape can be a seafood lineup, Rutter’s also launched challenge, in understanding customer a crab and roasted corn chowder. behaviors; it allows us to focus on specific priorities that will satisfy their CSD: When thinking about menu development, what are some key needs and wants. considerations? Do you focus on conCSD: In January of this year, Rutter’s diments or cross-utilize ingredients Convenience Store Decisions (CSD): introduced hot hold bags in order to to make the menu more diverse? How is Rutter’s upgrading its menu to add more sides from the prepared RK: Certainly condiments can add a fit with the latest consumer demands? food side to the grab-and-go section. unique eating experience for a similar Ryan Krebs (RK): Consumer “demand” Has Rutter’s added any new items item. Rutter’s uses a cross-utilization approach wherever possible, particutoday heavily revolves around cus- since then? tomization, transparency and quality. RK: In addition to 15 items already larly with proteins. This can provide No matter what is on the menu, these offered, including mozzarella sticks, a dozen different options for the cusUTTER’S FARM STORES, WHICH

operates 68 convenience stores in Pennsylvania, continues to fortify its position at the forefront of c-store menu innovation. Convenience Store Decisions sat down with Ryan Krebs, the retailer’s director of food service, to learn its evolving approach to keeping the menu exciting and fresh, while staying up to date with ever-changing consumer demands.

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FOODSERVICE tomer while using a singular SKU. With space and storage at a premium, maximizing each item to its fullest is critical. Rutter’s always takes customer feedback and store employee ideas into consideration, as they are the eyes and ears of the business. We’ve added

customer requests to the menu, as well as used recipes suggested by our team members. CSD: How do you determine when it’s time to add a new item and what to add? Rutter’s has honed its food menu, reflecting a consumer demand that revolves around customization, transparency and quality.

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RK: Some items you just “know” are going to resonate, as Rutter’s did with our funnel cake fries and PA Dutch Chicken Pot Pie. Both were delicious and local; essentially no brainers. Decisions can also be made either based a specific category focus we want to build on or, other times, it may be a singular, on-trend item we want to offer. The relationship with manufacturing partners is critical, which can provide a first-to-market idea or specific customization that fits our specific needs. Rather than just looking at an independent item, I try to look holistically at the food experience. I don’t just want to provide a fish sandwich and say we’re in the seafood business; I want Rutter’s to be a full category destination for our customers. Whether it’s a local focus or an ethic experience, we have the ability to capture dining experiences while others (quick-service restaurants and specialty restaurants) may only have a singular focus. The quality must match the offering, but our diversity can satisfy any need state of any customer if done correctly and with purpose. CSD: How does Rutter’s cross-utilize ingredients to make the menu go further and how is this helpful to menu development? RK: Cross-utilization, in my opinion, is critical. It helps control product on hand, waste and execution. At the same time, it can result in varying eating experiences…a fried chicken that can be a chicken Parmesan sub, a breakfast burrito, a kid’s meal, an CStoreDecisions ecisions .com

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FOODSERVICE independent side or a pizza topping. It expands the menu to meet the customization demand. There are circumstances, of course, where crossutilization may not be possible, such as funnel cake fries. But if the success of a singular item is strong, it can stand alone in its offering.

Ryan Krebs, director of food service, says Rutter’s adopted black chef coats because they connote food offerings that focus on restaurant quality and good customer service.

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CSD: Rutter’s recently added new black chef coats this past February. Why did Rutter’s make this change? CSD: How does the company’s chef RK: Loaded question, but you did ask. So here goes. I remember standing on coat, with the company and my name coat program influence customer a chair next to my grandma watching stitched on the chest, handed it to me perception? her cook, so my love of food began at an and said, “Now go make me proud.” I RK: Customers love the chef coats. It early age. When deciding to attend culi- knew by that gesture what the chef coat sends the visual message that we are nary school, I was blessed with working meant to him and what he was telling a top-tier organization, providing firstat a prestigious hotel under a chef who me. I remember that moment every class service and quality to our guests. It makes the management easily idenbecame my first true mentor. I started time I put one on. When I started this position, I knew tifiable and lets the customers know by wearing a regular employee cook shirt. I’ll never forget the day the chef without a doubt that Rutter’s restau- that we have the best, most talented walked up to me with a brand new chef rant quality, customer service and our food people in the industry. CSD

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FOODSERVICE

Need for Food Packaging Is Clear Packaging plays a major role in foodservice, from presentation to the customer’s perception of quality. By Brad Perkins, Contributing Editor

And he’s not alone. As more consumers want to know N RESTAURANTS, HOW FOOD looks is a key part of how much customers enjoy their meals. Why should it be what’s inside a container and pick up a package to see different in convenience stores? While it may not be on what’s inside and read the label, packaging and food buya plate, food presentation is an important part of sales. ers need to be aware of how to address consumer needs. “We experienced a lift in sales upon introducing updated If the food doesn’t look appetizing, fresh or identifiable, cuspackaging in our stores,” said Amy LaHue, senior category tomers may look elsewhere. “We shop with our eyes first, so packaging design and manager at Atlanta-based RaceTrac Petroleum Inc. “Unique appealing food presentation is most important,” said Anne packaging helps showcase the fresh ingredients and the Garland, director of foodservice at Sprint Food Stores Inc. integrity of the brand and helps our guests understand exactly what they are getting, from crisp lettuce to colorful in Wrens, Ga. And that begins with how the food looks in cases and in toppings to spongy bread.” preparation. “One thing we’ve always ensured on our hot and cold CLARITY, PORTABILITY It used to be that food storage involved moving food cases is that there is a strong visual for customers to see the product,” said Ryan Krebs, director of food service at Rutter’s from the rollers, prepared food cases or deli counter into Farm Stores, a 68-store chain based in York, Pa. “We don’t use generic packaging. And in some areas, it still works. “Expanded polystyrene is one of the more stigmatized solid foil wrap so people are guessing what they’re getting. packaging materials. But you still see it used, a lot, because People can clearly see the quality of the product.” Rutter’s uses clear tops on sandwiches, wraps and subs and it works well for egg cartons and other protective prodis beginning to upgrade its packaging to reflect the industry ucts, it’s pretty inexpensive and it’s versatile,” said Mike trend of moving away from Styrofoam and generic packaging. Richardson, a researcher with the market research firm “Right now we use some Styrofoam products that I’m in Freedonia Group. But with a desire for freshness, awareness of the amount the process of revamping,” Krebs said. “I have beef short ribs that go in Styrofoam and that doesn’t go well with me. of waste produced and health consciousness, comes That white Styrofoam doesn’t align with the quality of the change. “Gone are the days of the plastic wedge,” Garland said. food program I have.” 80 Convenience Store Decisions

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FOODSERVICE “Nothing screams ‘made on a production line months ago and frozen’ to a consumer like the plastic wedge.” From eco-friendly packaging to clear labeling, package designers are addressing customers who want transparency and truthfulness in packaging and labeling. “Design is what first catches the eye, but since people want transparency, smartly-designed packaging that helps communicate the ingredients is a double win,” said Erin Boyd Kappelhof, managing partner of Eat Well Globally, a nutrition communication company in Brooklyn, N.Y. “Packaging can convey the notion that something was freshly picked, handmade in small batches, coming directly from nature or simply unadulterated. For example, if a producer wants to convey the inherent nutritional goodness of a 100% fruit or vegetable juice, they should let the consumer see it for themselves through a clear bottle.” Along with clarity, portability and portion size have prompted more interactive packaging, especially in hot and cold food cases. “The majority of our hot food is made to order, so visibility to the contents is not as important as the grab-and-go concept,” said Garland. “For cold grab-and-go, I prefer the craft bag with clear window, or butcher paper style with clear window.”

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And while cost can be a factor in choosing whether to go with stronger, more transparent or better looking packaging, the benefits generally offset a slight uptick in material cost. “In an attempt to keep packaging costs as low as possible, I purchase containers, wraps, etc. that will work for multiple items,” Garland said. “I prefer to have a small, inexpensive label printer so that I can have a custom label with our logo to list ingredients, barcode and retail for my grab-n-go options.” RaceTrac’s LaHue agreed that needs differ among hot and cold foods and even snacks. “Some packaging helps temperatures, but not quality,” said LaHue. “It’s important that the packaging is able to maintain both temperatures and quality. A package that keeps the product at a hot temperature will most likely not keep a cold product cold.” LaHue cited functionality, visibility, portability and the ability to prevent leaks or spills, especially when sitting in the car cup holder, as key to packaging. And while strong packaging is important, many point to portability as the key to better packaging. “Single-serve packaging for snacks and treats is incredibly helpful for people who struggle with portion control,”

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FOODSERVICE an item if we cannot get packaging that meets our requirements and expectations.” Of course the marketplace is the ultimate testing ground. “In terms of packaging performance, a good measurement for success is seeing how long a packaging format goes from being a clever innovation to being the standard format,” Richardson said. “In other cases, it’s a packaging innovation that makes a difference. And distinctive packaging often serves well for brand differentiation. For example, STICKING WITH BASICS In some respects, labels are just as important as packag- Califia Farms plant milks and coffee drinks, with their ing. Rutter’s promotes its eco-friendly packaging and fresh bowling pin-shaped packaging, stand out in the refrigeringredients on labels and kiosks across the stores. RaceTrac ated dairy and dairy alternative case against all the gabled prefers labels that include ingredients and calorie counts. cartons and gallon jugs.” So where does a convenience store start? Krebs explained And all agree that key words resonate with customers lookpacking should be holistic and retailers should ask theming for high quality foods. “Descriptors like juicy, whole, natural—they resonate selves what is their real foodservice message. “Look at whether your packaging aligns with what you with consumers because they imply goodness,” Kappelhof said, while Garland mentioned descriptors such as “fresh”, want with your program to be,” said Krebs. “The quality of my food is just as important as what it’s getting packaged in, “local” and “prepared to order” resonate with customers. Whether its labeling, closing or transparency, updated even if the package is being disposed of five minutes later. A lot of people say: Why would I pay extra for a container that packaging is key to stocking quality products. “Packaging is important in purchasing and placement will be thrown away?’ But, I feel that the packaging aligns decisions,” LaHue said. “We will not roll out or even test with what you’re saying with your program.” CSD Kappelhof said. “It also makes good sense to not annoy consumers by having something that can easily spill, is cumbersome to open, has unnecessary packaging or needs to be repackaged if not finished in a single sitting. These things are also increasingly important as people start to pay more attention to food waste, packaging waste and sustainability in general.”

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TECHNOLOGY

Big Data Decisions Retailers are discovering the power of data to bolster their capacity to personalize the customer experience, increase sales and drive brand loyalty. By Anne Baye Ericksen, Contributing Editor

O LONGER IS EACH convenience store transaction

a simple exchange of goods for cash. Technology empowers businesses to turn each purchase into an opportunity to mine information about customers’ shopping habits that then can become the basis to design highly-personalized marketing strategies. “As an industry, we have seen a considerable change recently in our business. Highly-informed customers, [product] selection and pricing are challenging us to be more sophisticated in how we analyze data, answer difficult questions and execute efficiently. The margin for error has gotten much smaller,” said Joe Hamza, chief operating officer for Nouria Energy Corp. Headquartered in Worcester, Mass., the company owns and operates 116 convenience stores, including the brand Lil’ Mart, and 49 car washes in Massachusetts, Connecticut, Maine, New Hampshire and Rhode Island. Since the introduction of scan data collection in c-stores, the primary function has centered on inventory control. Tracking sales enables category and store managers to more accurately calculate stock availability, and therefore more precisely gauge reordering so stores aren’t left shortchanged on products, or overstocked. “Sales analyses help improve a stable supply of products on shelves. Store operators can use historical sales data to forecast demand for the coming weeks based on seasonal trends. That application is very instrumental, and stores have been moving in this direction for quite some time,” said David Bishop, managing partner at Balvor LLC, a sales and marketing practice based in Barrington, Ill. “We run sales reports on cooler and foodservice items to make sure we have supplies. For cigarettes, we do weekly reports,” said Lisa Dell’Alba, president and CEO of Square One Markets Inc., located in Bethlehem, Pa. “We’re a heav86 Convenience Store Decisions

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ily cigarette-based chain, so we make sure we always have the brands our customers want us to have.” Like many smaller c-store businesses, Dell’Alba doesn’t see the return-on-investment value of running frequent reports across all product categories. With nine Square One Market sites, she isn’t convinced analytics provide her anymore insight into her customer base or the marketability of products than she’s already deriving from basic inventory assessments and managers’ observations. “Data can be cumbersome for a small company to sort out what is important and what’s not,” she said. “You have to sort out the noise and figure out what to focus on. There are opportunities to collect data with technology, but for us, that would mean less customer interaction.” That said, Dell’Alba does use data analyses as an internal incentive. “We run reports to create competitions between stores based on the number of items sold. We have competitive managers and they are very enthusiastic to beat each other,” she commented. ANALYZING THE FIGURES For larger regional, multi-state and national c-store chains, the empirical evaluations scan data analyses provide have become a necessary business tool. According to the Retail Vision Study by Zebra Technologies, and reported by SupplyChain247.com, nearly three-fourths of retailers agree that managing big data is a business-critical function. What’s more, approximately twothirds of respondents stated they are prepared to invest in automated technology for better inventory management over the next few years. In fact, 70% of retail decisionmakers said they’re ready to add Internet of Things (IoT) CStoreDecisions ecisions .com

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TECHNOLOGY DATA TOPS COMMERCIAL CAMPAIGNS

SPECIFIC APPLICATIONS Of course, line-item analysis remains THE CMO COUNCIL, A network of executives specifically dedicated to highthe predominant purpose behind scan level knowledge exchange, in 2016 asked members how business development data programs in c-stores, but there’s is shaped by long-term vision and engagement objectives. The top objectives a growing curiosity about what other identified were: value can be mined from the input, especially if it can be used to identify new % Utilize data for effective campaign spend. marketing channels. The current push is Embrace new digital advertising and toward providing individuals with more % engagement technologies. personalized attention by highlighting preferences. Perhaps one of the more brand value through intrusive and % Increase apparent examples of this application is creative ads. online advertising. % Rethink and innovate go-to-market strategies. Websites and internet service providers watch where you click and how long More cost effective lead generation. you linger on a page. This observation % then serves to target future ads featurSource:“The CMO Shift to Gaining Business Lift Report.” CMO COUNCIL, May 27, 2016 ing products you’ve expressed interest 04 03 02 01 0 in, or items similar to products you’ve expressed interest in. These aren’t random ad placements. They’re based on features to scan data programs, such as installing shelf your click history. Now, brick-and-mortar retailers want sensors that detect when products are removed and auto- scan data to help them to attract more customers based on personalized messages created from purchase histories. matically adjust inventory numbers. “Capturing more robust data allows stores to do transac“As you grow the store base, you as an operator become disconnected from the physical shopper. There are more tional analysis that helps identify customers’ affinities, said points of distribution and more outlets. You can’t just rely Bishop. “Having that insight allows retailers to make adjustments to merchandising, and evaluate if it makes sense to on intuition and personal experience,” said Bishop. Depending on the area of the business, Nouria can run relocate a product so it’s adjacent to a complementary product. For example, if the analysis shows correlations with reports daily, weekly, monthly, quarterly or annually. “We use a multidimensional approach when analyzing gum purchases and hot coffee, a retailer may want to merthe performance of a particular metric, category, product or chandise some gum near the hot coffee to entice those coffee overall sales,” said Hamza. “For example, when analyzing customers by offering a special deal. That could increase the a particular category, we conduct the following process: likelihood of cross-sales possibilities.” The analysis doesn’t end there. Retailers can use the review current six-week trends and current period performance versus the same period the prior year; measure details to further target promotional efforts. Data obtained its impact on other complementary categories and overall through loyalty programs not only indicate shopper prefsales; conduct internal benchmarking using average chain erences, but also how often they frequent a store and visit performance versus each individual division; and review patterns, such as which days of the week as well as what its relative performance versus the market using market time of day they shop. This knowledge can enable busidata. The insights from the analysis are then used to guide nesses to send specific promotional messages to entice loyalty members to visit during a different time of day or our decisions and actions.” Even though Dell’Alba’s use of data is limited, she does increase their number of visits. “Loyalty customers can be divided into frequent, infreconduct comparisons when introducing new products or when vendors switch promotional strategies so she can quent or lapsed shoppers. You can try to reengage the lapsed customer by sending communications with offers to try to measure performance reactions. “For example, Pepsi recently changed its sales format. It increase their frequency of visiting,” said Bishop. “That’s a used to be buy two 20-ounce drinks for $3, and now it’s buy much more precision or objective approach. There’s a sayone, get one free. I wasn’t sure it would do as well as the ing that 20% of customers drive 80% of sales. The mission $3 program so I created reports to evaluate both programs,” critical is to serve that 20% and grow them in various ways she said. “We also do that when we bring in new products. such as increasing visit frequency or amount of spending per trip.” CSD We did it when VUSE and VUSE Vibe came out.”

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COLUMN TECHNOLOGY

C-Stores Face Delivery Crunch Time As more channels move into delivery, c-stores need to get in the game or get left behind. By Erin Rigik Del Conte, Senior Editor

ANDWICHED BETWEEN GEN X and Millennials,

I’m what Dan Woodman, associate professor of Sociology at the University of Melbourne, has coined an ‘Xennial’—those born between 1977 and 1983, and the last generation to grow up without social media and smartphones, but who share the unique experience of coming of age in the midst of the technology boom. Like other Xennials and Millennials, most of what I purchase is bought via an app and arrives at my front door—including 99% of non-perishable groceries, and most other products, from pet food to clothes and gifts— thanks to Amazon Prime’s subscription service or various online businesses. Just five years ago, I used to walk to the convenience store around the corner for fill-in trips. Now, I use Amazon Prime’s next-day or two-day delivery option. Soon, I won’t even have to wait a day. Amazon already launched its Prime Now one-hour and two-hour delivery in various cities. While I still drive to the grocery store for perishable items, Grubhub, EatStreet and other meal delivery services help me fill the gap between trips. The data shows I’m not alone. Delivery now represents 1.7 billion foodservice visits annually, according to The NPD Group, a global information company. NPD recently found one-fourth of all U.S. consumers claim to have ordered a meal via delivery in the past three months. Young adults represent 56% of food delivery orders. Some 29% of Millennials ordered restaurant foods/beverages via delivery in the last week while nearly 50% of boomers and older use delivery less than once a month. Grocery stores are getting into the delivery game. Stop & Shop Supermarket Co. recently partnered with Instacart to bring same-day delivery to Stop & Shop customers in Boston. Grocery chain Aldi is launching a pilot with Instacart to deliver groceries in Los Angeles, Atlanta and Dallas with the potential of expanding to more cities in the future. Grocery chain Giant recently added delivery via Instacart in the Philadelphia area—customers can use the Instacart app to fill a virtual cart and select a delivery time anywhere from within an hour to seven days in advance. And that’s just to name a few. NPD Group’s June 2017, “The Virtual Grocery Store” found online grocery shopping development still lags behind other e-commerce industries—just 7% of customers 90 Convenience Store Decisions

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reported shopping for groceries online in the past month— but that number is expected to grow rapidly because of demand from young adults and men. Some 60% of online grocery shoppers are men and most of those men are either Millennials or Gen X, NPD reported. Meal kit services, such as Blue Apron, are also seeing a surge in popularity, but adoption is slow. NPD estimated 5% of households use meal services, but that number is also expected to continue to grow, led by the Millennial generation. ON BOARD THE DELIVERY TRAIN Young adults are changing the meaning of “convenience.” 7-Eleven has been testing various platforms for the last couple of years, including working with Postmates and DoorDash in various markets to offer on-demand delivery, as well as mobile delivery service app Tapingo to deliver food on various college campuses. Even Dollar Tree and Dollar General offer online ordering and delivery—with Dollar General including the option of 1-2 day delivery. Target recently acquired transportation technology company Grand Junction and has plans to move into the business of same-day delivery. Walmart has been using ride-sharing companies Uber and Lyft to help it achieve same-day grocery delivery in Denver and Phoenix and is set to expand the service to new cities. If c-stores are known for quick and easy ‘immediate gratification’ trips, what happens when grocery stores, big box stores, food delivery services, Amazon and others all start to fill that need better? If convenience stores are no longer the most convenient option, what are they? Delivery isn’t just coming—it’s here—and technology continues to evolve to make it faster, easier, cheaper, better. Savvy c-stores are looking for viable partnerships and considering ways they can bring their goods to customers’ doorsteps. Delivery technology isn’t going away. The upcoming generation demands it. Just ask the likes of brick-and-mortar department stores like Macy’s and J.C. Penny’s that find themselves struggling amid the changing shopping preferences of younger consumers. Flexibility and a willingness to change and adapt are keys to thriving in a technologically forwardthinking world. C-stores must join the delivery market before competitors become more “convenient” than the convenience industry. CSD CStoreDecisions ecisions .com

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TECHNOLOGY

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ATM Technology From incorporating wireless technology to remote monitoring, today’s ATM technology offers more benefits for c-stores. By Lisa White, Contributing Editor

EAM OIL TRAVEL CENTER’S ATM is one of the Spring Valley, Wis. Store’s best profit margin items per square foot. This wasn’t the case back in 2005, when the c-store’s ATM was contracted out. “We realized we weren’t making any money on it, so we decided to buy it,” said Tony Huppert, Team Oil CEO. “Ever since then, it has been a magnet to bring people into the store.” Although the retailer is responsible for keeping it stocked and serviced, the unit has proved its worth, despite the extra time and effort in monitoring. “The key is to make sure it’s always stocked and running, since it only takes one unsuccessful visit for a store’s ATM to get a bad reputation,” said Huppert. With 60 c-store locations blanketing the Mississippi Delta, Double Quick Inc. found that it was easier to contract out its ATMs rather than operate and service the machines in-house. “We owned our own for a long time,” said Howard Hyche, vice president of information technology for Double Quick. “About a year and a half ago, we brought in PAI (Payment Alliant International), which owns and manages our units. We have very high ATM volumes, so now we don’t have to load them or deal with the stress of keeping large sums of cash on hand.” As part of the deal, Double Quick shares revenue with Louisville, Ky.-based PAI. CStoreDecisions ecisions .com

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ADDED VALUE While ATMs are often thought of as providing money for customers and extra income for retailers, modern functions being built into ATMs means the future of technology promises to entice even more patrons into c-stores, where additional sales are just around the corner. According to the ATM Industry Association (ATMIA), an independent, non-profit trade association based in Orlando, Fla., between 55-60% of ATMs are managed by independent operators. “It’s an exciting time to be in the ATM business,” said David Tente, ATMIA’s executive director-USA. “We’re seeing a lot of functionality come to ordinary ATMs as far as connectivity. Everything is Windows-based, and we’re getting away from dial-ups and into internet connectivity.” Also, wireless technology has helped expand ATMs into more rural areas where Wi-Fi or internet service tends to be spottier. Some providers predict this type of hookup will eventually be the norm for faster, more dependable service. Wireless technology has been implemented in other ways with ATMs, as well. As one of the largest independent ATM deployers in the country, PAI has partnered with Sionic Mobile, a cloud-based mobile commerce firm, to implement beacon technology. The solution enhances the PAI ATM network with iBeacons across the 74,000 terminals in the U.S. This allows advertisers to engage and connect with millions of mobile app users by enabling proximity-based mobile ads and cardless cash redemption of earned mobile October 2017

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TECHNOLOGY loyalty rewards. Users are sent a welcome message through mobile ads and offers, then invited to redeem a reward for cash at a nearby ATM. They also can opt for cardless transaction by tapping the mobile rewards app button or three-digit code to withdraw cash from a participating ATM. This type of technology may not be feasible for c-stores with less than 100 ATMs, said Tente. “It probably isn’t worth the expense, but the sweet spot is about 500 terminals for independent ATM deployers.” With most ATMs not being phased out until 2023, it could be five to six years before upgraded functionality is implemented, Tente added. TECHNOLOGICAL ADVANCES Prineta, an Overland Park, Kan.-based ATM vendor that provides full-service ATM placement and service in the U.S. and Canada, also offers merchant services in addition to sales, processing and cash loading. Using Near Field Communication (NFC) technology, customers can use their smartphone instead of a debit card at the ATM. It’s not widespread yet, but may be a good option for high-traffic locations in the future, according to Conner Morton, Prineta’s director of marketing. Prineta offers remote ATM monitoring. With this technology, retailers can download an app to see cash levels, transactions and error reports in real time. C-stores are not typically taking advantage of the new technology, although Team Oil’s Huppert likes the idea of monitoring money amounts remotely. “We haven’t implemented anything new in terms of technology,” said Double Quick’s Hyche. “Some of the newer features, like bill pay, are where we see ATMs headed, but we haven’t added any features like this yet.” C-STORE PRESENCE According to Shrewsbury, Mass.-based Mercator Advisory Group’s 2016 ATM Market Benchmark Report, less than one-quarter of ATMs in the U.S. are owned and operated by leading financial institutions, which means there is plenty of opportunity for progressive independent deployers—including convenience stores—to create income by offering ATM access. Houston-based Cardtronics Inc. deploys and operates ATM terminals under two arrangements with its retail partners. The first is the turnkey arrangement, in which the company handles ATM placement and management. Cardtronics is responsible for all aspects of the ATM’s operation, including ownership, transactions, cash management, supplies and maintenance. In this case, the company and client share in the ATM revenue. 92 Convenience Store Decisions

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Its other service is tailored to merchants that prefer to own the ATM gear. In this arrangement, typically more popular with single-store owners and small chains, the merchant ATM owner is usually responsible for providing cash and performing simple maintenance. The primary considerations for c-store owners are to decide on how much income they expect from the ATM, and how much time they want to spend, or have store staff spend, on managing the machine. With the merchant-owned program, convenience store owners will usually receive more income up front. More ATM providers such as Cardtronics offer ATM units with the technology and services that transform ATM screens (and receipts) into delivery devices for interactive customer communications by financial institutions, as well as advertising space for retailers, third-party advertisers and independent ATM owners. With any ATM program, there are built-in benefits for c-stores. Cardtronics’ 2016 Health of Cash survey found that respondents were twice as likely to have used cash as credit in a convenience store, and 33% were more likely to use cash than a debit card. The survey also showed that 75% of consumers used cash for impulse purchases of items such as candy, gum, snacks and beverages. Then there’s the issue of fraud protection. Cardtronics and the payments industry as a whole have focused on upgrading existing point-of-sale (POS) and ATM terminals for EMV, the chip card technology that enables more secure transactions, and named for Europay, MasterCard and Visa. Morton confirmed that EMV technology has been the biggest industry innovation, yet there are still many ATMs operating without a chip card reader, which increases the risk of fraud. It’s the ATM loader who is at risk and covers the loss if fraud occurs. Lastly, while it’s related to the transformation in how financial services are delivered rather than technology, adoption of the non-bank, surcharge-free ATM network is burgeoning. This can help retailers gain access to consumers who otherwise would have avoided their ATM due to service charges. Tente predicted ATM technology will soon offer additional denominations other than $20 bills and person-to-person payment or transfer of money to another person. This will allow those convenience stores with ATMs that are not affiliated with a bank more opportunities for transactions. CSD CStoreDecisions ecisions .com

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COLUMN TECHNOLOGY

Unlocking Security Issues A multi-faceted approach to store security—from locks and cameras to smart safes and best practices in data security—is necessary to keep c-stores safe from theft in 2017. By Ed Collupy

ROUND-THE-CLOCK BUSINESS LIKE THE retail petro- reporting, color-coded maps based on audit scoring and leum/convenience store industry drives many summarize data to identify operational improvement areas. conversations about site security, but such efforts today go far beyond locking things down and being CHECKOUT CHALLENGES At the checkout, the trials and tribulations with card paypreventative. The reality remains that there’s a need for loss preven- ments continue. In the recent Thales Data Threat Report, tion activities and systems. The National Retail Federation 43% of retailers surveyed had at least one data breach in reported in its 2017 National Retail Security Survey that loss 2016, while 32% reported having more than one incident. continues to have a significant effect across all segments As a result, IT spending on security is rising with investof a retailer’s bottom line; with “an average shrink rate of ments in data encryption and tokenization and many of the 1.44%, this cost the overall U.S. retail economy $48.9 billion POS providers in the retail petroleum/c-store industry are actively developing these features into their solutions. in 2016.” The Payment Card Industry Data Security Standard Business leaders, however, are discovering that systems, including security technologies, can be leveraged beyond remains a challenge for retailers, according to the recently published Verizon 2017 Payment Security Report, where their primary purpose. findings indicate almost half of retailers, after becoming fully compliant, find themselves out of compliance a year STORE SIGHTSEEING There’s nothing like a walk inside and outside a store later. It advocates for continuous monitoring and mainteto discover how spending on security can unlock oppor- nance of controls (e.g. systems, network) and being able to tunities that capitalize on the investment and improve the adjust to changing business priorities. Despite the new payment methods available, cash is still bottom line. As you enter many c-stores just look up and there you a significant portion of the way customers pay; about oneare live on a customer-visible monitor and all around the third, according the National Association of Convenience store are one of the most common security tools: cam- Stores (NACS) data, and the Federal Reserve says greater eras backed up by digital video recorders. Point-of-sale than 50% of transactions under $25 are paid with cash. For c-stores most of this is for merchandise/food pur(POS) and video integration has been around, but by using today’s more advanced technology, operators are storing chases and securing and accessing cash in “smart safes” transaction data on a centralized server where they can use continues to grow. These safes, still in reach of the cashier an iPad while away from the store to search for and review to drop and retrieve money through recyclers, are getting data such as transaction voids at all locations in a specified even smarter. Note readers can verify and authenticate the time range. Some systems even email a daily report with bills and track the drops by employee. Biometric capabilities are being added to unlock the links to the video of suspect transactions. Camera technology is but one of many Internet of Things safe or to open them in conjunction with a combination. (IoT) devices in today’s connected store and can provide Currency management software solutions when integrated insights into everything from customers’ response to mar- into a smart safe and POS system can improve bookkeeping functions and provide alerts and reporting to management. keting campaigns to a look at traffic and buying patterns. Store walks are part of the everyday life of loss prevention and district / regional supervisors. Many retailers now FORECOURT FORENSICS Solutions, in the cloud and as a managed service, that use software, enabled on mobile devices, to manage audits and document incidents such as slip & falls and robberies. monitor data points detecting fuel inventory variances are Some of these solutions provide data needed for compliance being used by fuel-savvy operators to identify and handle 94 Convenience Store Decisions

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COLUMN TECHNOLOGY theft/fraud, tank leakage, dispensers and human errors. A single site version of the app, SkimDefend, can be This past July in New York, according to KrebsOnSecurity, downloaded for free for Apple and Android mobile devices. skimmers using parts from cell phones were installed in pumps and for the first time discovered to be transmitting UNLOCKING DOORS text messages with the capability to send them real time to Security and the technologies that support it have often the thieves anywhere they may be. been about controls, limiting access and preventing bad Dispenser manufacturers continue to make improve- things from happening. Staying safe is something that must ments with security features including tamper detection key remain important to convenience store owners. pads; indicator lights visible to customers and employees to Through collaboration between cross-functional colidentify card reader security status; receipt paper housed in leagues and their solution providers, todayâ&#x20AC;&#x2122;s c-store is both a separate cabinet preventing access to other internal com- secure and opens the door wide, putting asset protection ponents; along with updated door locks/controls. systems to work throughout the store by improving the cusThe best defense continues to be a combination of man- tomer experience along with operational activities and at agement and employee attention to whatâ&#x20AC;&#x2122;s going on out on the enterprise level by providing new insights. the forecourt, supported by security cameras and/or tamper-evident seals on the pumps. In conjunction with the Ed Collupy, executive consultant at W. Capra Consulting Group, NACS / Conexxus We Care initiative, one of the industryâ&#x20AC;&#x2122;s can be reached at ecollupy@wcapra.com and be sure to visit leading software solutions providers recently released a www.capraplus.com for more retail technology and business mobile app to help track, through a registration and verifi- insights. Collupy has IT leadership and business team experience providing strategic, operational and project leadership to cation process, the status of tamper-evident labels that are retailers, emerging businesses and technology companies. placed on key areas of a pump.

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TECHNOLOGY

Taking Loyalty Forward Loyalty programs must advance with the times, but the basics still remain the same. By Erin Rigik Del Conte, Senior Editor

S CUSTOMER NEEDS AND technology continue to evolve loyalty programs also must adapt to stay relevant, a delicate move as major changes can rattle loyal customers. Target, for example, recently ended its Cartwheel pilot program, choosing to roll a version of Cartwheel into its main app—a move that left many of its customers upset. “As retailers learn more about what works and doesn’t work with their loyalty apps, they often make changes or end the app entirely if it gets too expensive,” said Melissa Fruend, LoyaltyOne global solutions partner and author of the 2017 COLLOQUY Loyalty Census. “Any type of change to a rewards program that could be interpreted as ‘detrimental,’ particularly to a retailer’s most engaged customers, needs

Melissa Fruend, LoyaltyOne global solutions partner and author of the 2017 COLLOQUY Loyalty Census. 98 Convenience Store Decisions

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to be handled with kid gloves. That means cost can’t be the only factor driving a decision to make a change,” she said. When testing a new loyalty initiative, c-store retailers should follow four steps, Fruend said: customer research, user experience study, planning and communication. It’s vital to mange that communication step when implementing changes in order to avoid alienating current loyalty customers. After all, Fruend pointed out, the purpose of a loyalty program should be securing and maintaining a loyal following from customers already interested in the brand. INFLUENCING BEHAVIOR According to the latest biennial Colloquy Loyalty Census, overall, U.S. consumers hold 3.8 billion loyalty memberships in retail, financial services, travel and other types of loy-

alty programs. Retail is the largest sector for loyalty programs with 1.6 billion memberships, versus 1.3 billion memberships in 2015. Retail now accounts for 42% of the overall loyalty landscape. The 2017 Census shows that across industries loyalty membership growth continues, but has slowed to 15% compared to the 26% growth rate achieved in 2015 when total memberships were 3.3 billion overall. “The membership growth slowdown in 2017 signals the U.S. loyalty market is maturing and retailers need to up their game on how to attract and retain members within their loyalty programs,” Fruend said. The biggest trend in loyalty today is the influence of experience on customer behavior. The biggest driver for active participation in a retail loyalty program is that the program is easy to understand, according to Colloquy’s research. CStoreDecisions ecisions .com

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TECHNOLOGY “Other top motivators for participation in the retail sector were emotional—a love for the brand as well as being made to feel like a valued member,” Fruend added. DIFFERENTIATING WITH LOYALTY In April 2017, Break Time, a division of MFA Oil Co., headquartered in Columbia, Mo., revamped its loyalty program by rolling out a Paytronixpowered MyTime Rewards program to its 73 locations in Missouri and Arkansas. The rewards platform integrated to NCR’s Radiant point of sale (POS), and replaced a previous paper punch card system. Previously, the company was running a punch card ‘club program’ for specific items in the store, includ-

ing fountain drinks, coffee and sandwiches, awarding customers a free item for every nine they previously purchased. “This program was antiquated to say the least. To keep pace with the competitive landscape, we felt an upgrade to a comprehensive loyalty/ rewards program was actually long overdue,” said Anita Bichsel, Break Time marketing manager. Break Time chose to partner with Patronix, impressed by Paytronix’s customer portfolio in the fast casual dining industry. It also helped that the software technology was able to integrate with Break Time’s current POS. However, Bichsel said, it was Paytronix’s expertise in loyalty that really solidified Break Time’s decision.

GASBUDDY INTRODUCES A NEW LOYALTY PROGRAM USUALLY, LOYALTY PROGRAMS ARE brand-specific, or include a partnership between brands. GasBuddy is changing the status quo by launching ‘Pay with GasBuddy,’ a new payment service that provides U.S. drivers with a discount off of about every gallon of gas they will ever purchase. Moreover, the program works 95% of gas stations in the U.S. Enrollment is free. Customers can download the free GasBuddy smartphone app and sign up by connecting a valid checking account to Pay with GasBuddy. No credit application required. Customers get a card in the mail, which they activate by setting up a unique Driver ID in the GasBuddy app. The program also provides drivers 15 cents per gallon off their first purchase and a minimum of five cents off every subsequent fuel purchase. 100 Convenience Store Decisions

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“Their experience in the field of loyalty was invaluable as we went through the process of constructing our program,” she said. Through MyTime Rewards, customers can now earn rewards in two ways. 1. They earn points—20 for every $1 spent in store, and 10 points for every gallon of fuel purchased—which can be traded in for merchandise or dollars off merchandise. 2. They also earn free drinks and fuel discounts based on the number of times they visit Break Time per month. “There are four membership levels that can be attained via visits and each level brings its own set of rewards. The more you visit, the more you earn,” she said. Customers have many ways to spend points. For example, customers can spend 1,000 points for a free fountain drink. Points can also be converted into Break Time Bucks and loaded onto the MyTime card to be spent for anything in the store. MyTime rewards members also receive random coupons and rewards just for being part of the program. Break Time is currently in the process of integrating its rewards program into its mobile app. The Paytronix user interface has the capacity to help Break Time optimize its customer data to gain better insights into customer behavior, then use that data to set and achieve its business goals, a part of the program Break Time is just beginning to tap into. “We identify specific products each month that offer the customer double MyTime points if they purchase. We’ve been doing this for the past three months and it seems to drive purchases on those products. But just as important is our stores’ ability to make sure these products are spotlighted accordingly. This is a collaborative promotion with our vendor partners,” Bichsel said. So far, customer feedback has been positive. “For customers who were already frequent visitors, we believe CStoreDecisions ecisions .com

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TECHNOLOGY this has further solidified that brand loyalty with them. We believe brand awareness is at an all-time high,” she said. “At the base of the program is free drinks and fuel discounts, so most of our customers are extremely happy to get both of those. They are engaged in the program too. It’s fun to see them watch their visit count and make sure they qualify for a certain membership level by the end of the month.” MyTime Rewards is also different BP Offers is a new loyalty option for its gasoline customers, which is easy for members to join and use, and tests another channel of communication with BP’s customer base. The from anything the chain’s competitors program offers interactive games and discounts on fuel purchases. offer, helping it stand out. “This gives customers that reason to go out of their way to visit Break Time versus other c-stores available to them. another channel with which to com- the program you have now to the next Once we get a little larger sample size, municate. We already communicate level can be as simple as executing we are expecting to see other benefits with BP Driver Rewards members flawlessly on the basics and keeping in the areas of visit frequency and sales through email, so this is something to on the pulse of current trends. Word of mouth marketing and see if texting is a better way or another dollars,” Bichsel said. Since the program launched, Break way we can add to our channels of social continue to be strong trends, particularly with many Gen Z and Time has given out more than 100,000 communications,” Brecknock said. The app features games, such as Millennial customers. MyTime cards, and 42% of those are “Brands should continue to incen‘Spin to Win’ where customers spin registered users. the wheel on their phone and get a dis- tivize product reviews and sharing as count code for so many cents off per much as possible. For those channels TESTING NEW CHANNELS BP introduced a new text-messag- gallon of gas depending on where they that don’t allow a reward for sharing program across all BP marketing land. Other games include having cus- ing, such as Facebook and SnapChat, regions on Aug. 1, called BP Offers. To tomers send MyBPstation.com for a just a suggestion of sharing the expejoin, customers just text the keyword keyword, which could win them a lim- rience is motivation enough for many to engage,” LoyaltyOne’s Fruend said. MOBILE to 38831. Once they opt in, ited-time gas discount. Fruend outlined the top three basic “We want to reward our most frecustomers receive personalized messages, interactive games and discount quent shoppers, our high-value factors c-store retailers must get right codes for BP gasoline. As Fruend rec- consumers, and if we have maybe with a loyalty program: •Maximize the experience. “Remove ommended above, the program is someone we find frequents BP a bit less then we might try to get those back the friction from your customer expeextremely easy to join and use. rience, make it more personalized, and “We’re always looking for new in with an offer,” she said. The app includes geolocation capa- watch your sales grow,” Fruend said. ways to communicate with our con•Send only relevant communicasumers,” said Jo Brecknock, director bilities as well. “The question is can you engage tions. “Customers share information of brand and communications for BP Fuels North America. Brecknock noted with customers when you’re not just and expect retailers to use it to provide many brands communicate through offering fuel discounts,” Brecknock targeted offers and content,” Fruend text with customers already, so it was a said. “That’s going to be a question said. Be relevant in image and offers. logical communication platform to test. we’ll focus on here and we’ll get quite Don’t continually blast the same offer BP is targeting all demographics a lot of (information) back because to everyone. • Recognize best customers. with the move. “I think it can reach we have different ways to segment every generation, smartphone is consumers based on how they have “Customers want to be recognized for their loyalty,” Fruend said. “Surprise ubiquitous, everyone is well used to interacted with the programs.” and delights are lovely, but a follow up texting,” she said. thank you for the purchase is a simple The program doesn’t replace BP OTHER BEST PRACTICES Even if you’re not looking to and effective way to recognize loyalty Driver Rewards. “BP Offers is a continuation of all our loyalty efforts. It is revamp your loyalty program, taking to your brand.” CSD CStoreDecisions ecisions .com

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TECHNOLOGY

Prepaid Card Potential Although retailers report prepaid cards are targeted to a specific customer segment in the convenience channel, there is potential for growth with these money makers. By Lisa White, Contributing Editor

ITH CREDIT CARD AND identity theft on the rise, prepaid

cards have become a safer alternative for those seeking more disposable, anonymous payment options. Unlike big box and drug stores, convenience retailers have been struggling to gain a foothold in this segment. However, the opportunities are evident. Prepaid cards include retailer, debit, long distance phone and cellular minute reloads. Merchant revenue is dependent on average monthly sales, with commissions averaging about 8%, according to merchant services company Prineta, based in Overland Park, Kan. Convenience stores are the fastest growing retail outlet for this segment, according to the company. According to Los Angeles-based IBISWorld, prepaid card revenues experienced almost 22% annual growth between 2011 and 2016. While the slow recovery following the recession hampered many other industries, the weak economy played to the strength of these products. Fewer consumers qualified for credit and bank accounts and instead opted for prepaid cards. A growing need for electronic payment forms and rising fees in traditional banking institutions made prepaid cards attractive. In the next five years, industry revenue is expected to continue its strong performance.

INDUSTRY SNAPSHOT Prepaid cards are categorized as either gift cards or closed loop retailer cards. Open loop cards like Visa, Master Card and American Express offerings can be used anywhere those brand credit cards are accepted. These are typically one-time use with a designated amount or reloadable to add cash onto the card. “Prepaid continues to grow in popularity in the U.S. specifically, but not at the rate expected due to regulatory and compliance challenges,” said Kevin Morrison, senior analyst at Aité Group, a Boston-based research and consultancy company. “There are certain legislative pieces going through right now from the CFPB (Consumer Financial Protection Bureau) and other regulatory agencies that are ensuring consumers are not hurt by these cards.” When prepaid cards first came on the market, this regulatory scrutiny didn’t exist. It has been in about the last five years that more attention has been given to this segment, thus resulting in the CFPB’s 1,689-page rule focusing on full disclosure with their use (see sidebar on p. 103). According to the CFPB, the amount consumers put on “general purpose reloadable” prepaid cards grew from less than 102 Convenience Store Decisions

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TECHNOLOGY $1 billion in 2003 to nearly $65 billion in 2012. The total dollar value loaded onto these prepaid cards is expected to nearly double to $112 billion by 2018. “There’s a segment of the population that uses prepaid cards to load funds for government subsidies like unemployment and child support payments, for example,” said Morrison. “It’s more economical and efficient to electronically transfer funds to a card, rather than issuing and sending a paper check.” According to a recent Forbes article, prepaid cards provide a safe, cheap and important banking alternative to low-income unbanked households. A study by Pew Research Center in Washington, D.C. revealed that 41% of prepaid card users do not have a checking account. These users tend to be young, and many are single mothers or disabled with annual incomes below $50,000. RETAILER REVIEWS Warrenville, Ill.-based The Pride Stores Inc., which has 12 locations in the state, has a strong prepaid card business. Its main movers are the Visa and Amazon gift cards. “We typically have a floor display spinner rack with different prepaid cards, including phone cards,” said Mario Spina, Pride CEO. “Then we have a small eight-card countertop display we keep next to the register where we sell the VISA card, Amazon gift card, fuel gift cards (either BP or Mobil depending on the brand of fuel we sell at the site), then a few other miscellaneous cards, depending on what sells at each store.” Spina still sees the profitable potential of prepaid cards, but has been faced with some challenges. “We would be able to sell a great deal more prepaid cards if we could offer more of the premier retail and restaurant cards at our locations,” said Spina. “But we have not been successful in obtaining a vendor to provide those cards.” Busy Bee Stores Corp., which operates 18 stores and travel centers in Florida and Georgia, is in the process of changing to another prepaid card program. The company currently offers in-house gift cards, Burger King and Dunkin’ Donuts cards for the dining sites located inside many of its stores. “We’re not happy with where we’re at, as it’s not to our standards or where we want to be,” said Marshall Beck, director of marketing for Busy Bee. Megan Forcey, Busy Bee’s director of advertising and e-commerce, said Busy Bee wants to grow this business, but needs to find the right angle to do so. Currently, the stores’ collection of prepaid cards are displayed by the register, but with the change will be moved to floor racks. “We’re still not sure how big this business will be with CVS, Walgreens and Walmart, in addition to so many other retail channels and organizations that offer these cards,” said Forcey. “The best month we’ve had was during the picking season with seasonal farm workers purchasing phone cards to call home.” CStoreDecisions ecisions .com

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CONSUMER PROTECTION FOR PREPAID CARDS ON JUNE 15, 2017, the Consumer Financial Protection Bureau (CFPB) announced that it is seeking comment on proposed updates to its prepaid rule. The CFPB issued the prepaid rule in 2016, requiring financial institutions to limit consumers’ losses when funds are stolen or cards are lost, investigate and resolve errors, give consumers free and easy access to account information, and provide protections if credit is offered. The proposal would adjust requirements for resolving errors on unregistered accounts and provide greater flexibility for credit cards linked to digital wallets. The rule also requires companies to give prepaid consumers new “Know Before You Owe” disclosures with clear, upfront information about fees and other key details. In April 2017, the CFPB delayed the general effective date of the prepaid rule by six months, to April 1, 2018. In this proposal, the CFPB is requesting comment on whether a further delay would be necessary and whether an express provision addressing early compliance is needed. Prepaid cards are a very small segment at Las Vegas chain Green Valley Grocery’s 53 stores, which utilizes InComm as its primary provider. “From what I understand, our sales in this category are down a lot due to online card sales,” said David Crawford, vice president of operations. “The gift cards specific to fuel brands sell best.” He added that this is a necessary category for open loop cards, but it is still evolving. “We’ve looked at a few options to revamp our program,” said Crawford, who added Green Valley Grocery’s prepaid cards are displayed on a counter rack and in a floor display. “There’s a seasonal aspect to this segment, so we tend to do better with these cards around the holidays.” IN NORTH CAROLINA Campbell Oil Co., which runs Minuteman Food Mart, an Elizabethtown, N.C.-based operation with 23 stores, also does not do a lot with prepaid cards. “The third party prepaid gift cards, such as Lowes, Starbucks, etc., don’t seem to do well in our markets,” said Wesley Campbell, co-owner and vice president of retail operations for Campbell Oil. “The prepaid phone cards, such as Verizon, Boost, etc., which used to be a big part of our business, have slowly died due to the government subsidy cell phones now passed out and the deal that Walmart offers on the ‘Straight Talk’ phones.” It’s possible the segment could be rejuvenated for some convenience store retailers with some of the more recent transit cards, such as Uber. Also, with the latest technology, consumers can reload their cards from smartphones with a bar code quickly and easily. CSD October 2017

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COLUMN HUMAN RESOURCES

Recruiting and Retaining Quality Applicants Savvy retailers know how to find, attract, onboard and retain high quality employees. However, with some due diligence and persistence, you can do the same. By Mel Kleiman

ONVENIENCE STORES HAVE LONG struggled with

high turnover, but a few simple tips can help you hire well and improve your retention numbers. First, c-stores should always be taking applications, even when they have a full staff. Secondly, even if fully staffed, they should not only take applications, but each week every manager should interview at least two of these applicants. If you have options at your fingertips, you’ll be able to hire smarter and faster when you lose an employee. With unemployment at record lows, making your jobs easy to apply for has never been more important. When job seekers have their choice of employers, most will take the path of least resistance. If you don’t have all of the “doors” that could gain entrance to your hiring system open, you’re sure to lose applicants to the competition. Here are some questions you should be asking: • If you have a real door they can walk through, what hours is the door open and what will happen when a job seeker enters? • Can they walk through your website’s door? How easy is it to find that door? Is the online application process simple and quick or complicated and lengthy? • Can they walk through the social media doors? • Can they open a door with a text message? • Can they enter through your phone system? Whichever door they choose, you’ll want to have a procedure in place to ensure whatever happens next in your hiring process makes applicants feel appreciated and gets each person fully engaged in your hiring process. NEED MORE APPLICANTS? When it comes to bringing in applicants, employee referrals are a key consideration. Consider giving an incentive to employees if they bring in a successful hire. When applicants come in for the interview, in addi104 Convenience Store Decisions

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tion to past employer referrals, ask all job applicants for the phone numbers of three people they have worked with who can provide references on the candidate’s work ethic. This not only gives you good reference information but, more importantly, an opportunity to connect with three more employed people you can ask about your candidate as well as whether they may be interested in exploring employment with your organization. If you are posting job openings online, consider the timing of your posts. Indeed.com recently published an informative study entitled: “Timing Matters in the Job Search” that has some interesting applications for employers as well. The short version for those who hire frontline, hourly employees is: “Those without a fouryear degree do most of their searching midday and are comparatively less active weekday evenings. The Sunday evening peak is there, but it’s not as pronounced as with employed and better-educated job seekers.” THE INTERVIEW There are few things more frustrating than taking time out of a busy schedule for an interview and having the interviewee no-show. The main reason most

MORE HIRING/RETENTION TIPS • Always take applications and conduct interviews. Even when you don’t have a job opening. • Make sure all “doors” are open for applicants to apply. • Add a job sales pitch to the phone interview to entice applicants. • Reward interviewees who are prompt and well dressed. • Set expectations by giving interviewees who are not prompt and well-dressed a chance to correct it. • Recognize employee successes.

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COLUMN HUMAN RESOURCES

“WHEN CANDIDATES ARE LATE FOR AN INTERVIEW AND/OR DRESSED INAPPROPRIATELY, RATHER THAN SEND THEM AWAY, EXPLAIN THAT PUNCTUALITY AND APPROPRIATE DRESS ARE EXTREMELY IMPORTANT TO YOUR ORGANIZATION AND YOU WOULD BE HAPPY TO RESCHEDULE THE APPOINTMENT IF THEY ARE STILL INTERESTED.”

KEEP YOUR EMPLOYEES EFFECTIVELY ENGAGED WANT TO KEEP YOUR top talent happily engaged and on board for the long term? Want to inspire your other employees to reach their full potential? It’s easy, according to Mel Kleiman, the founder and president of Humetrics. All you have to do is show that you care. Here are a few simple questions you can ask several of your employees this month. You’ll garner valuable information and employees will feel respected and valued: 1. Does everyone seem to be on the same page when it comes to the quality that’s expected in everything we do? 2. What are you most proud of accomplishing during your time here? 3. What is the best part of your job here and why? 4. Do you think your job description has changed since you were hired and, if so, how? 5. What circumstances might prompt you to look for another job? 6. Are there any company policies you find difficult to understand? How could we make them clearer? If you want more employee questions sign up for his blog at www.humetrics.com/blog.

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applicants make the appointment but end up being noshows is because they leave the door open in case they don’t find a better job offer in the meantime. Surely you don’t think that once they agree to your interview, they quit looking for a job. To minimize this frustration, during the phone interview, ask them what other jobs they are considering and add a brief sales pitch for the job and the company to your question set. When a job applicant shows up both on time and neatly dressed, at the start of the interview, give that candidate a $5 or $10 gas or gift card as thank you for being on time and appropriately dressed. This gesture will set you well apart from competing employers as well as reinforce the value your organization places on timeliness and appearance. When candidates are late for an interview and/or dressed inappropriately, rather than send them away, explain that punctuality and appropriate dress are extremely important to your organization and you would be happy to reschedule the appointment if they are still interested. If they don’t reschedule, you just saved yourself a lot of wasted time, but, if they do return on time, appropriately dressed, you’ll know you have yourself a highly promising candidate for employment. AN EMPLOYEE RETENTION TIP Add an “Employee Data Sheet” form to the paperwork a new hire completes and use it to find out the person’s favorite candy bar, restaurant, charity, sports team, etc. Then, when you’d like to recognize them for an achievement, you can give them something you know they’ll appreciate. If you would like a copy email info@ humetrics.com with the subject line: employee data sheet. Mel Kleiman is an international authority, writer, speaker, trainer, pragmatic business owner and consultant whose expertise is hourly, frontline employee recruiting, selection, and retention best practices. He is the founder and president of Humetrics. October 2017

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OPERATIONS

Demand and Supply Aside from all of the technological advancements that can be counted in the c-store-supplier relationship, clear, interpersonal communication tends to remedy most situations when a kink appears in the supply chain. By David Bennett, Senior Editor

items we do request. businesses to better meet consumer demand while growing margins and increasing productivity. In CSD: What are the benefits of this closely-watched industry, convenience retailers having a dependable (direct store delivery) DSD partner? continue to push the envelope in new ways. As in years past, successful collaborations between retail- SH: It gives us peace of mind knowing Core-Mark looks out ers and suppliers are increasingly essential. Suppliers and retailers are increasingly turning to tech- for our best interest, which is nological solutions for many of these issues. Evolving beneficial for them as well. They scanning capabilities, inventory software and progressing are dependable, have great serpoint-of sale systems are built to make retailers’ lives easier. vice and we are able to get a Often, however, those advancements aren’t a substitute for majority of what we need outSteve Haase side of our cooler, via one source. a solid supplier relationship. Reliable means of communication between the supplier and the retailer is as paramount as ever. Not only can CSD: Does the company’s DSD model ensure greater cona c-store rapidly address or even prevent any sort of stock trol over retail shelf space at Cenex Zip Trip locations? issues, delivery mishaps and purchase order mistakes, but How so? good lines of communication with a supplier also ensure all SH: Absolutely. As we both have a vested interest in our shelf space—with a mutual goal of merchandising the bestagreements are being followed through on. selling items available. It does neither of us any good to have slow movers on our shelves and they are helpful at CENEX ZIP TRIP Convenience Store Decisions asked Steve Haase, general suggesting different items to replace these slow-moving manager of Cenex Zip Trip in Spokane, Wash., to explain items. some points regarding the delivery platform for the 69-store chain as well as what goes into its supplier relationship to CSD: Have you found that direct store delivery greatly maintain productivity. Those stores—the retail arm of CHS reduces the time and manpower spent merchandising? Inc.—are located in six states including Idaho, Minnesota, SH: We use Core-Mark’s SmartStock program, which allows us to utilize the company’s experience and manpower to Montana, North Dakota, South Dakota and Washington. help us order certain areas of the store for our deliveries Convenience Store Decisions (CSD): There are some instances each week. They then come back the next day to supply in which exploring alternative delivery models can have those SmartStock items. While doing this, they make sure a great impact on a business. Considering that Cenex Zip tags are up and visible, product is ordered and coded merTrip boasts a broad geographic footprint, how did the chandise returned, or bad merchandised out. This allows our employees more time to help customers and carry out company settle on its current delivery model? Steve Haase: We have had a long-term relationship with other daily responsibilities. Core-Mark International for 15 years and it has been great for us. They have three warehouses that take care of our CSD: What has the effect been on shelf inventory managestores, which are spread between Washington State and ment at Cenex Zip Trip locations? Minnesota. Core-Mark does an excellent job of servicing our SH: It helps tremendously because Core-Mark is the one stores—most often twice a week. Their delivery window is focused on ordering, facing and tagging. Instead, if our peoa good fit and their fresh program works perfectly for our ple were doing it all, they would be running back and forth layout (no kitchens). They suggest new items and get us the between helping customers while trying to order. It doesn’t TECHNOLOGY-FIRST APPROACH OFTEN ENABLES

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OPERATIONS Cenex Zip Trip, in Spokane, Wash., has had a long-term relationship with its DSD partner Core-Mark International for 15 years, and the partnership allows Zip Trip to get a majority of what it needs outside of the cooler, via one source.

always work. This also minimizes over-ordering. Also, it’s a great opportunity to pull slow movers. CSD: How has this arrangement influenced Cenex’s capacity for negotiating supply contract? SH: Again, with our long-term relationship with our supplier, they understand that in one way, we are their biggest fish in what might be considered a small pond—when you look at our rural, geographic footprint. We understand Core-Mark’s strengths, and based on our needs, choose to do business with them over other distributors.

are other options for suppliers, which we know will keep them honest. While I like the relationship we have with our supplier, they know that alone won’t keep us from looking for a better deal from one of their competitors. The bottom line is to look at all offers from all suppliers to ensure the most advantageous arrangement for your company.

CSD: If you could provide one tip for effectively negotiatCSD: How has the company’s delivery model impacted ing a supply contract, what would it be? SH: Whether you have a long- or a short-term relationship retail profit margins over the last few years? with your supplier, you must ensure that you are doing your SH: Based upon our supplier agreement, it has had a huge due diligence to ensure the best deal for your company. There positive impact on our bottom line. CSD

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OPERATIONS

Acquistions

Mergers

Financing Acquisitions and Upgrades Some financial-related terms involving property acquisitions are often spelled out, while others aren’t as clear. By Mark Battersby, Contributing Editor

Acquisition: In a simple acquisition, the acquiring convenience store business buys or obtains a majority stake in convenience store or business? Mergers and acquisitions (M&As) can help a busi- the acquired firm, which does not change its name or legal ness expand, acquire new knowledge, move into a new structure. Consolidation: A consolidation creates a new entity. area or improve buying power with one simple transaction. However, along with these benefits and opportunities often Shareholders of both business receive equity shares in the new consolidated business. comes great expense for both parties. Asset Acquisitions: In a purchase of assets, one business Sure M&As are expensive, and without large amounts of spare cash on hand, convenience store operators, execu- acquires the assets of another business. The business whose tives and owners will have to seek out alternative financing assets are being acquired must obtain shareholder approval. options. Fortunately, there are a number of different methods Most commonly employed during a bankruptcy where for financing M&As, with the method chosen depending not businesses bid for the various assets of the bankrupt operaonly on the state of the business, but also on overall activity tion and the bankrupt business is liquidated after the final transfer of assets to the acquiring business(es). in M&A and financing at the time of the transaction. HINKING ABOUT MERGING WITH or acquiring another

MERGERS AND ACQUISITIONS The term “mergers and acquisitions” (M&As) includes a number of different transactions such as: Merger: In a merger, two businesses merge together with the acquired business ceasing to exist, becoming part of the acquiring business. 108 Convenience Store Decisions

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LET THE SELLER PAY In many ways, seller financing is the easiest form of financing the purchase of a business. The buyer makes a cash down payment and the seller, acting like a bank, finances the remainder of the purchase, with payments made to the seller over time. CStoreDecisions ecisions .com

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OPERATIONS The amount remaining to be paid to the seller can be in the form of a promissory note with equal payments for a set period, or a so-called “earn-out” where payments are tied to performance of the business going forward. Either way, the buyer benefits because the seller has a strong interest in the business’s success under the new ownership. Seller financing is a flexible option, because terms are fully negotiable and is often the faster route to a closing.

TIPS THAT SBA LOAN APPLICANTS SHOULD KNOW WHAT ARE SMALL BUSINESS Administration (SBA) loan officers looking for when approached about a loan? Here are some basic “must-haves” that the ideal candidate might be expected to provide: •That you have sufficient assets, financial reserves and personal collateral to endure business fluctuations (and still pay off your loan). •As an existing business owner, you’ll need to show that you have solid cash flow, sufficient to repay the loan. •New businesses need to show they have a track record of profitability and success in a similar business endeavor.

CASH FROM MANY SOURCES Paying cash in a M&A deal is an obvious alternative for an exchange of stock. Cash transactions are, after all, instant and mess-free. Plus, cash does not require the same kind of complicated management as stock would. Unfortunately, while cash payments are often the preferred method, the high cost of M&A transactions may be too rich for the pocketbook of the convenience store business. But, there are ways of obtaining the needed cash from OTHER OPTIONS Business acquisition loans are defined as any loan others ahead of an upcoming M&A transaction: Loans: If the targeted business has a lot of assets, posi- acquired for the sole purpose of purchasing a business— tive cash flow and a strong profit margin, a buyer should and are notoriously difficult to obtain. Although there is no be able to find bank financing. In situations where the type of loan exclusively for business acquisitions, the small value of assets is close to the purchase price, conventional business products already outlined are more than suitable bank loans and equipment financing can be viable options. for business purchases. Due to a high rate of rejections, many convenience store In this case, a buyer borrows money from the bank with operators turn to the SBA. Serving a role similar to a broker, the assets as collateral. The buyer then pays the money to the seller. Quality of the SBA does not actually lend money but, rather, serves as cash flow, debt load and insufficient collateral are often a third party working with established lenders to guarantee all or part of smaller business loans. cited as primary reasons for rejections. Among the advantages of SBA loans are the exceedingly Asset-Based Funding: The primary difference between asset-based lending and traditional lending is what the long repayment periods. If real estate is involved, a 25-year lender looks for when underwriting a loan. A traditional repayment period is not unheard of. The usual 7(a) loan— lender will look first to the cash flow and then to collateral. when other assets aren’t involved—generally has a 10-year An asset-based lender looks to collateral first, debt loan payoff unlike a traditional bank loans, which are usually for and quality of earnings. The main drawback to asset-based only 5-10 years. A convenience store business with strong finances can loans is the expense—with interest rates usually far above often obtain 100% financing. In addition, SBA loans are typthat for conventional financing. Crowdfunding: Today, crowdfunding, in all its guises, is ically used to finance a collateral shortfall, an invaluable increasingly used for traditional business purchases. While perk for businesses without a lot of hard assets. Naturally, there are some drawbacks to working with raising enough capital for a purchase, crowdfunding may generate the cash flow required to secure a larger con- SBA loans. The SBA lending process can be difficult, even ventional loan. And, don’t forget the latest crowdfunding Byzantine, at times as well as relatively slow with an almost overwhelming amount of paperwork. While there is also a wrinkle—the ability to both borrow from and sell stock. Mezzanine Financing: Mezzanine financing is a hybrid requirement that anyone owning 20% or more of the conveof debt and equity financing and, not too surprisingly, it is nience store business must personally guarantee the loan, often sponsored by the U.S. Small Business Administration since the SBA has eliminated its personal resource limita(SBA). A mezzanine deal involves a number of technical tions, borrowers and investor groups with high net worth terms: senior and subordinated debt, private-placement and liquidity are now usually eligible. The Small Business Jobs Act of 2010 changed the lendtransactions and equity investment. Senior debt refers to loans from sources such as banks and secured by liens on ing limits for SBA loans. The limit for the SBA 7(a) program specific corporate assets, for example, property or equip- increased to $5 million making the program a viable option ment. Equity is usually in the form of preferred stock. As a for many convenience store operations and businesses. buyer, the convenience store operator won’t have to give up Plus, there is the SBA’s Preferred Lender program, often as much control; frequently it appears to be footing the bill with working capital loans and lines of credit, for potential financing packages in excess of $5 million. CSD for 20% of the price of the target company. CStoreDecisions ecisions .com

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OPERATIONS News

Amazon Shaking Up Retail

Amazon combines e-commerce with brick-and-mortar business, playing off the strengths of each. By Ed Collupy

N AUG. 28,AMAZON became recently said, “We can’t wait to start the new owner of Whole showing customers what’s possiFo o d s M a r ke t , a n d a s ble when Whole Foods Market and quickly as the $13.7 billion Amazon innovate together.” It is now clear that tech teams at deal closed (just over two months); they’ve announced several initia- both companies are beginning to tives that they began to execute integrate Amazon Prime into Whole Foods’ point-of-sale system. Expect immediately. Some of the changes happened to see Prime members receiving special savings and in-store benefits to Whole Foods’ price structure. On the same day of the closing, that other customers will not be able the company announced that prices to get. I had predicted that “added on a slew of Whole Foods’ items will consumer insights is a clear outdrop. Grocery products that experi- come of the two coming together;” enced a price cut included bananas, an expanded Amazon Prime will organic avocados, eggs and salmon. provide both business units data to Amazon announced certain Whole know what makes each channel’s Foods’ products will be available customer tick and refining both custhrough Amazon.com, AmazonFresh, tomer experiences even further. I also noted that Whole Foods has Prime Pantry and Prime Now. Just after the June announcement a strong private-label offering that that Amazon was requiring Whole Amazon will leverage. Sure enough, Foods, I reflected in on how I thought 365 Everyday Value products are now the physical and digital worlds available through Amazon.com and of each company would come through other Amazon services like together. My vision closely matches Prime Now where member customers the plans Jeff Wilke, CEO of Amazon get free two-hour delivery in select citWorldwide Consumer, outlined, we’ll ies and zip codes. Amazon needed some brick-andbegin to see. Below is what I predicted com- mortar business to respond to flaws prevalent throughout the e-compared to what has transpired. merce industry. With Amazon Lockers, the online return process should PLAYING ON STRENGTHS “Whole Foods Market will continue improve as Whole Foods customto grow its team and create jobs in ers will be able to complete returns local communities as it opens new during a visit to the store. Similarly, stores and hires new team members,” customers will have additional Amazon has stated. This supports my options for delivery and this will preslong-term belief that the store—brick sure c-store operators even further to find ways to be positioned with and mortar—isn’t dead. I predicted that the transformation online ordering & pickup / delivery of both companies coming together plans. Amazon Go is a technology play will enhance the customer experience. John Mackey, Whole Foods in motion and I expected more to folco-founder, who will remain as CEO low. “The two companies will invent 110 Convenience Store Decisions

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in additional areas over time, including in merchandising and logistics…” Amazon said in a statement recently. In addition, something I missed in my earlier predictions was that Whole Foods reduced prices immediately on “a selection of best-selling staples” and in-store signage promised more to come. On day one of the Amazon / Whole Foods Market grand opening, Echo’s Alexa was there for the ribbon cutting, freshly displayed at a reduced price. The combined companies’ aggressive plans are certainly a voice that there is now a ‘click and mortar’ competitor to be reckoned with for both convenience store and grocery retailers. For c-stores to consider, Amazon may decide to wrap Whole Foods entirely into AmazonFresh for Prime customers. Mark Cohen, a professor at Columbia Business School in New York who studies retail, said Whole Foods could also become “Whole Foods by Amazon,” or another derivative that targets c-store customers. CStoreDecisions ecisions .com

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2018

SAVE THE DATE

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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

8/15/17 4:17 PM

COLUMN OPERATIONS

A Better Path to Inventorying Gaining control over store inventory is a necessary step to boosting your bottom line. By Bill Scott

T SOUNDS SO EASY to find a good business plan for a

inventory in a store where the profit potential is negative successful convenience store. To start off, identify a or marginal at best, 55-60%, (as much as $60,000) is either high traffic area with excellent ingress and egress, build costing you money or its profit performance is ambigua convenience store (or buy or lease one), fill it to the ous. Often, the cost of the item has increased, but the selling brim with tasty goodies and drinks, and then sit back and price has not changed in a year or more. watch the cash flow in. It’s fairly common that the category items convenience Well, don’t assume this scenario is a sure winner in terms retailers have in stock, which were making a reasonable of profitability. Retailers can lose big if they don’t have abso- profit in January, might be selling at a loss by December. lute control over costs. That leaves 30% of the stock ($30,000 at retail) to account Today’s c-stores continue to face increasing operating for all of the profits in the average store. But how many dolcosts and declining margins in some categories. Yet, owners lars did it cost you to get that profitable stock? and operators continue to invest in more product inventory In most cases the clerks have to count cigarettes every than they need. C-stores have become constipated. Their day, because cigarettes are considered “high risk.” That’s shelves are crammed full of items that don’t move. not true. Most cigarettes retailers stock to meet contract Suppliers are no better off, with no alternative than to get agreements are unpopular in some segments of culture; in rid of merchandise through deals and promotions to store some cases even your clerks won’t steal them. owners who have fewer places to cram it. What used to be a c-store problem is now a supplier/convenience store prob- SOLVING THE PROBLEM lem, and most are in an adversarial relationship with each The complete lack of inventory control in convenience other, blaming the other for their problems. stores is responsible for most stores’ problems. If conConsequently, retailers are jumping from one supplier to venience store retailers would start paying attention to another more often than they change their underwear. what items are selling, and stop worrying about how many customers run through their doors, every store has DEAD ITEMS the potential of a 40% sales increase with the right conOur research tells us that 10-15% of the items in cate- trol measures. gories are dead. Not just dead. They are dead-dead. The By eliminating the dead items, fixing or removing the chance of breathing life back into these losers is like waiting questionable items and eliminating the over-stock of even for angels to fly out of the sky. the most profitable items, it should be easy to double the Heaven forbid, if you go into any c-store in America, you profits in every store with only a minimal increase in cost… will likely find products on display that the operator has mainly, a small investment in tools needed to allow retailfailed to assess in terms of both popularity and profitability. ers to track turns of individual items, manage pricing, and Consider that 1.5 of every 10 items on the shelves will not most importantly, stop the flow of unneeded stock coming be sold at any price. Overall, if a retailer has $100,000 dollars- into their stores. worth of inventory (at retail) in his/her stores, as much as Then, increasing profits should come automatically. $15,000 of that stock would be more profitable buried in a hole Retailers should seek out a company to help them behind the store. Why? Because it’s contributing to the clutter integrate with suppliers to solve these problems. Only in your backroom and on your shelves, preventing more prof- automation can turn these stores around. By creating itable items from occupying shelf space that is going to attract seamless integration with their suppliers, both parties will customer interest—and ultimately, more sales. benefit enormously. MARGINAL PROFIT ITEMS If we stay with our $100,000 figure for the amount of 112 Convenience Store Decisions

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Bill Scott is the author of two retail books, a c-store retailing consultant and speaker and the President at StoreReport LLC. CStoreDecisions ecisions .com

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9/19/17 11:08 AM

COLUMN OPERATIONS

Building Brand Equity as a Team The current retail branding environment now entails a higher level of commitment. Oil companies have a tangible expectation of reciprocity on the part of both marketers and dealers to hold up their end of the brand building bargain. By Mark Radosevich

The current retail branding environment now entails ULTI-STATE MASTER LIMITED PARTNERSHIPS (MLP) and other large fuel supply aggregators, a higher level of commitment. Oil companies have a coupled with the expansion of sophisticated tangible expectation of reciprocity on the part of both multi-store chain operators continue to pres- marketers and dealers to hold up their end of the brandsure smaller marketers to maintain fuel volume from a building bargain. No longer are dealer image score failures met with a simple slap on the wrist and a promdiminishing stable of viable dealers. To survive and prosper in this highly-competitive ise to get better. Marketers that fail to properly manage their dealers, environment, marketers must begin to proactively adjust and dealers that fail to contheir dealer relationships, sistently maintain image as the days of brand“THE CURRENT RETAIL BRANDING and service standards run ing up sites and reacting the risk of a de-brand notice, when one fails an image ENVIRONMENT NOW ENTAILS A resulting in expensive mystery shop are ending. money recapture HIGHER LEVEL OF COMMITMENT. incentive and volume commitment PUSH AND PULL This relationship reoriOIL COMPANIES HAVE A TANGIBLE erosion. This lends credence to entation becomes more something that I’ve been essential in light of the EXPECTATION OF RECIPROCITY ON touting over the years; the lucrative supply deals that the major oil compa- THE PART OF BOTH MARKETERS AND creation and implementation of “dealer development nies are offering to build DEALERS TO HOLD UP THEIR END OF programs,” whereby the their respective brands relationship between marin the marketplace. They THE BRAND BUILDING BARGAIN.” keters and dealers moves have strategically placed beyond a simple and somethe well-being of their times confrontational fuel brands in the hands of their marketers, offered lucrative incentives to motivate pricing/delivery model, to a more proactive win-win new and existing dealers to enter into long-term com- business relationship. mitments, and in some cases have been willing to remit DEALER SUPPORT these brand incentives out to the end of the contracts. The first step is for marketers to embrace the need to This is the “push” side of the brand building equation. On the “pull” side, they have stepped up their reorient how they interact and support their dealers, and brand marketing by offering programs designed to then commit the time and manpower to develop a comgarner motorist engagement and loyalty, thereby fur- prehensive program. In the beginning it won’t be easy, ther benefiting the company, their marketer and dealer as dealers are typically an independent and skeptical bunch, generally resistant to change, hard to motivate stakeholders. 114 Convenience Store Decisions

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COLUMN OPERATIONS and used to the status quo. Thus, expectations of shortterm success should be tempered by taking a long-term view and embracing the development program as the new normal for future dealer relations. The next step is to create an internal program developmental team comprising sales management and select sales and operational personnel. Then convene a series of uninterrupted meetings whereby the team takes a pragmatic view of the overall business and discusses strengths, weaknesses and opportunities to foster closer ties with the existing dealer network and ways to proactively enlist new dealers. A free and open dialog should be encouraged, with the imposition of preconceived notions or undo influences avoided. Discussion should focus on inexpensive tools and techniques that can deliver “added value” to the ongoing dealer business relationship. Once defined, these tools are packaged into a program that helps set the business apart from other fuel marketers. Printed presentation materials are created to assist sales teams with the implementation of the program to the respective dealers. Branded product delivery is simply the foundation of the support offered by the company to help promote dealer success. Program tactics may include the coordination of dealer participation with training programs offered by state fuel marketer associations or product vendors. This training can focus on any number of topics, including theft deterrence, store merchandising and fuel management, to name just a few. Have the sales team ask their dealers what type of training would be valuable to them. Pick topics that have a direct application to a single site retail operation. Once the various topics have been decided, create an annual training calendar as part of the overall program presentation materials, to foster program legitimacy and motivate dealer participation. Another potential tactic may include the coordination of financing for needed dealer upgrades using available brand incentive monies. Consider tying-in with an established equipment leasing company to create and incorporate a customized program as an approved tactic within the overall program. Other tactics may include enlisting the services of site survey companies to support new-to-market dealer projects. These are just a few of the many potential support tactics that a fully engaged development team could define and package into a unique marketer-specific program. The overall objective is to focus the new marketer sales process on the added value that a long-term business relationship will deliver to their respective dealers. This will also tangibly demonstrate key stakeholder comCStoreDecisions ecisions .com

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LIABILITY INSURANCE CRUCIAL FOR FUEL DEALERS MAINTAINING RELATIONSHIPS WITH DEPENDABLE fuel dealers is important for any retail operator and there are multiple operational factors to consider—not the least of which is ensuring a dealer has adequate liability insurance. Some liability exposures, however, must be covered by specific insurance coverage as outlined by TrustedChoice.com, an insurance education website specializing in online referrals for independent insurance agencies: • Commercial auto liability insurance: Dealer trucks must be covered by a commercial auto insurance policy. Because fuel trucks are carrying hazardous materials, their coverage will be far more expensive than with other types of commercial auto. Also, an insurance company can refuse coverage if delivery drivers are not specifically licensed to haul flammable materials. • Pollution liability insurance: If an accident occurs while hauling materials, a fuel leak can pollute groundwater or an explosion can result in polluted air, land or groundwater. Pollution liability insurance covers cleanup costs, damages and legal fees related to pollutants. • Umbrella insurance: A dealer’s commercial auto and pollution liability insurance coverage limits may be too low for some catastrophic accidents. Umbrella insurance picks up where the other liability coverage leaves off. mitment to building brand equity, fostering improved dealer loyalty and mutually enhanced business performance, while greatly diminishing the prospect of costly image score failures. Possessing more than 35 years of downstream petroleum experience, Mark Radosevich, president of PetroActive Real Estate Services, offers confidential mergers & acquisition representation and financing services exclusively to petroleum wholesalers. He can be reached by email at mark@petroactive.net or at (423) 442-1327. October 2017

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Debunking the Myths of Hiring Having trouble finding good help? Hiring expert Scott Wintrip said the shortage of skilled workers isn’t to blame. Instead, you may be buying into the many hiring myths circulating in the convenience channel today. By CSD Staff

HERE’S A SHORTAGE OF skilled workers across all industries in the country. You’ve likely experienced this skills shortage impact within your own organization, usually in the form of empty desks and jobs remaining unfulfilled for weeks or months at a time. And if you’re a business owner you’ve no doubt undergone extensive selection processes time and again to find the perfect candidates. You may assume that the skills shortage is to blame for the high number of open jobs, but hiring expert Scott Wintrip said the real problem is that businesses believe a dangerous set of myths around hiring, and that these myths are hurting organizations everywhere. “In both good times and bad, there have never been enough qualified job candidates to go around,” said Scott Wintrip, author of “High Velocity Hiring: How to Hire Top Talent in an Instant,” but this talent shortage hasn’t stopped some companies from filling their jobs quickly and keeping them filled. These businesses aren’t just lucky. Rather, they have rejected the old ideas of hiring that continue to slow down many organizations today.” Wintrip said that the companies that still struggle to fill their jobs need to thoroughly examine their beliefs about hiring. They must make sure they’re not buying into hiring principles that don’t really benefit them. He lists four of the biggest hiring myths and Wintrip’s advice for countering any of them in your organization. Myth #1: The skills shortage is the cause of hiring delays. Hiring delays indicate a problem with your selection process, not a talent flow issue. Since there are never enough qualified candidates to go around, savvy leaders have realized they can’t afford to engage in the old way of hiring that involves keeping a job open until the right person shows up. Instead, these leaders have made fast, accurate hiring a strategic imperative. They require managers to engage in the new way of hiring: actively cultivating top talent and then waiting for the right job to become available. Myth #2: Hiring is exclusively an HR function. 116 Convenience Store Decisions

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While Human Resources (HR) plays a vital role in hiring, the organizations that fill their jobs quickly understand that hiring is a team sport. Instead of treating hiring as an exclusively HR function, the most successful companies view employee selection as a leadership function supported by HR (and the talent acquisition team, if there is one). Everyone has a role, and under this framing, hiring managers communicate thoroughly and make hiring decisions swiftly while HR and the talent acquisition team supply talent and facilitate the process. And everyone, from the top down, generates talent through networking and requesting referrals. Myth #3: You must hire slowly and fire quickly. Wintrip explained that people who are slow to hire operate out of fear of making a bad choice. They have experienced the consequences of poor hiring choices, and in attempts to avoid this mistake again, they slow down the hiring process and come to believe that speed and accuracy are mutually exclusive. “This plodding approach to hiring leads to over-analysis and a protracted timeline,” said Wintrip. As a result, talented candidates move on and open jobs remain open. To counter this myth, progressive leaders have adopted a new mantra: Be fast to hire and quick to inspire. They mandate a hiring process that promotes rapid decision making and the nurturing of employee relationships. Myth #4: This is how it’s always been done, so it must be right. Many organizations keep doing things the same way, even if that way is ineffective. For example, some companies have unwritten rules, such as reviewing a slate of 8-10 candidates before making a hire, even when a highly-qualified candidate is identified among the first few candidates. “The skilled worker shortage will only become more noticeable in the future,” concluded Wintrip. “It’s crucial to immediately disengage from those myths around hiring that prevent you from efficiently finding good employees. Once you counter the myths that are slowing your selection process, you’ll see that good talent really isn’t hard to find after all.” CSD CStoreDecisions ecisions .com

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The National Advisory Group (NAG) is an association of small to mid-size and family-owned convenience store chains and the executives who run them. Members meet 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, retailer information exchanges, opportunities to address the burning issues within your business, a chance to get to know your peers in similar size operations and much more! For information on NAG membership or NAGâ&#x20AC;&#x2122;s Young Executives Organization (YEO) contact NAG Executive Director John Lofstock 201.837.2177 â&#x20AC;˘ jlofstock@csdecisions.com

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Streaming Car Wash Profits Convenience store operators can clean up with a car wash, provided they do their due diligence. By Andrew Alvarez

EMAND FOR CAR WASH services has been rising

over the past decade due to its increased convenience and greater array of budget and luxury options, and with increasing environmental regulations prohibiting residential car washing, the industry’s customer base is expected to grow moving forward. To appeal to consumers, operators in the car wash and auto detailing industry have started offering more products and services, including drying towels, vacuum cleaners, floor mats and air fresheners for self-service customers.

“CONVEYOR CAR WASHES, ALSO KNOWN AS TUNNEL CAR WASHES, ARE THE MOST CONVENTIONAL AND CONSISTENTLY USED FORM OF CAR WASHING PROVIDED BY THE INDUSTRY.”

CAR WASH DETAILING Furthermore, companies with conveyor car washes have DIFFERENT OPTIONS Typically, conveyor washes operate under three differbegun offering Wi-Fi access and nicer waiting rooms for their customers, offering snack stations and beverages beyond tra- ent models; that is, operators can offer full-serve, flex-serve or express conveyor washes to consumers. While full-serve ditional vending machine offerings. Additionally, companies have introduced automated pay- tunnels generally require less space to operate, full-serve ment terminals and greater water-efficiency operations for car washes require more labor to compensate for the services not performed by typical car wash machinery. eco-minded consumers. Flex-serve car washes primarily focus on cleaning the As a result, revenue for the car wash and auto detailing industry is anticipated to have increased at an annualized car’s exterior. However, should a customer want to clean the car’s interior as well, a section of the car wash is usually rate of 2.4% to $10.5 billion over the past five years. This news is bittersweet for operators in other industries allocated for such services. Express tunnel washers provide that also provide automatic car wash services, particularly exterior cleaning only and free access to vacuums after exitoperators within the convenience store industry. While ing the tunnel, and typically have a far shorter wait time demand for car wash services has increased, these industry compared with full-service tunnel washes. Demand for this segment has increased significantly operators have experienced stiff competition on the basis of over the past five years, as rising per capita income levels price, quality and location. Furthermore, because of space limitations, convenience enabled consumers to spend more on non-discretionary store operators typically serve consumers through in-bay services like car washes, while time-poor consumers automatic car washes, while only a portion of these oper- have capitalized on the time-saving benefits of express ators are able to offer express tunnel washers like the car tunnel washers. With in-bay automatic car washes, customers usuwash and auto detailing industry can. Most facilities in the car wash and auto detailing industry include both conveyor ally remain inside their automobile during the wash. The vehicle remains stationery and is washed using a rollover car wash and in-bay automatic car wash options. Conveyor car washes, also known as tunnel car washes, mechanism. These automatic car washes can be touchless or are the most conventional and consistently used form of car friction-based washes, or a combination of both. The fully-automated system costs $7 per wash on averwashing provided by the industry. According to IBISWorld, conveyer car wash sales are expected to account for 49.7% age, and is usually triggered by a vending machine. These types of car washes are a relatively minor segment within of total industry revenue in 2017. 118 Convenience Store Decisions

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OPERATIONS the car wash and auto detailing industry; however, in the margins while other product segments, such as tobacco total car wash market they are more prominent. Players sales, have stagnated. This nascent product segment is in the convenience store industry operate most of the esti- expected to remain lucrative for industry operators over mated 40,000 in-bay, automatic car washes in the U.S. the next five years. Adding a foodservice offering and a car Convenience stores are expected to experience increas- wash program to your c-store can make your location espeing competition from traditional car wash operators over cially appealing. the coming years. However, industry operators will beneSince gas stations typically only offer in-bay automatic fit from the added convenience of providing gasoline sales washes, which do not provide more thorough external and convenience store items at the same location. In order and internal washing, operators can compete by offering to effectively compete with external competition, industry a higher level of customer service and specialty options, operators are expected to increase their food offerings, as which have higher profit margins. well as lean into the industryâ&#x20AC;&#x2122;s advantages, such as longer Many operators have capitalized on this product segoperating hours and better locations. ment by offering discount gasoline and car wash packages, The quick speed of transactions at convenience stores also in which a consumer purchases a car wash and is offered a proved to be valuable to busy consumers, as employment discounted price on gasoline. Demand for this segment is rose over the past five expected to increase years. Positioning an over the five years establishment as a to 2017, as consumone-stop shop for gas ers increasingly use and a car wash, as in-bay automatic well as for extensive car washes as an food offerings, includalternative to fulling food prepared serve car washes. on-site, packaged Perceptions meals and assorted have begun to beverages, is often a change regardmajor deciding facing the efficacy of tor among consumers in-bay automatic seeking convenience car washes thanks and variety. to technologiConsumers have cal advancements become particularly that reduce fricinterested in healthful tion on vehicles food that is available at while cleaning. This Conveyor tunnel and express car washes differ both in operational use and the speed and ease of change significantly potential monthly income. Express tunnel washers provide exterior cleaning other items procured only and free access to vacuums after exiting the tunnel, and typically have contributed to this in a convenience store a far shorter wait time compared with full-service tunnel washes. segmentâ&#x20AC;&#x2122;s increased setting. Industry opermarket share during ators have responded the five-year period. to these trends by diversifying their product mix with vari- Many consumers equate a rough car wash (i.e. aggressive ous all-natural organic offerings and value-added products. friction from brushes that cause a car to sway during the Consequently, the foodservice product segment is one wash) with unwanted wear and tear on their vehicles. of the fastest-growing segments within the c-store indusNew in-bay automatic configurations, such as PDQâ&#x20AC;&#x2122;s try. According to IBISWorld data, nearly a quarter of sales ProTouch system, appeal to consumers who prefer a wash will be derived from foodservice in 2017, up from its share with a softer amount of friction than conventional car of sales in 2012. Again, convenience is a driving factor washes. Consequently, revenue for the c-store industry is behind the popularity of these items, as more consumers expected to increase at an annualized rate of 3% to reach are pressed for time and benefit from speedy service. $397.3 billion in 2022, boosted in part by these gains. DIVERSE OFFERINGS Over the past five years, major players, such as 7-Eleven, have successfully expanded their food offerings to appeal to health-conscious consumers, which has bolstered profit CStoreDecisions ecisions .com

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Andrew Alvarez is a lead analyst specializing in the service and retail sectors at IBISWorld, a business intelligence company specializing in industry market research and procurement and purchasing research reports. Learn more at www.ibisworld.com. October 2017

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SPECIAL REPORT

Getting to Know Convenience Directions Interactive Idea Exchanges with leading suppliers and vendors help identify emerging trends and new opportunities for convenience store owners. Best of all, there is no charge for these exclusive events. By CSD Staff

OW WOULD YOU LIKE to get valuable input on new KEY TAKEAWAYS What Convenience Directions does is very unique to the products, emerging trends and category insights that relate exclusively to your market? How would you marketplace in that we combine the InfoMarketing newslike this all free of charge? If this piques your inter- letter, which is mailed quarterly to over 10,000 c-store est, it’s time to consider partnering with Convenience Directions. executives, with three Idea Exchange meetings annually. Convenience Directions is centered around Idea The newsletters give sponsor companies a forum to commuExchange meetings that are designed to share latest trends, nicate category information, new product introductions and best-in-class standards and retail recommendations to drive best practices to the industry. Retailers get great information on a variety of categories and services in a quick-read bottom-line profits. The unique aspect for the retailer is that they get to have format. Idea Exchange meetings bring together the senior senior management from 20-plus diverse supplier companies bring them their industry experience and make management of a leading retail company with senior manspecific recommendations custom fitted to the needs of agement of supplier companies representing a variety of categories and the chain. Most services to the conmeetings discuss venience store general information, industry. Suppliers which is helpful, that participate are but Convenience guaranteed cateD i re c t i o n s ’ I d e a gory exclusivity. Exchange meetThe suppliers ings are designed to represent many of leave retailers with the key product and bottom line improvservice categories being employed by today’s convenience ing ideas and recommendations. The Idea Exchanges result in sponsor companies getting stores and provide unequaled knowledge about their to know the entire senior management team of a company, respective category. These industry specialists convene, as understanding what their goals and objectives are and a group to meet with the management personnel of leadpresenting category information to the retailer. Ongoing ing convenience store chains…on a proprietary basis, one productive relationships are established in this setting that chain at a time. These two-day sessions are conducted and financed by are difficult to replicate in any other venue. For nearly 20 years, these Idea Exchanges have attracted Convenience Directions. The purpose of these meetings is to the leading convenience store chains in the industry. create the opportunity for positive business development by Convenience Store Decisions, which acquired Convenience providing a forum for the productive exchange of ideas and Directions from Joe Leonardo and Randy Fulkerson information. The open and relaxed surroundings created by in 2013, has conducted meetings for Travelcenters of having all supplier representatives present during the entire America, MFA Oil, Maverik, Timewise, Truenorth, MFA meeting, is not designed as a sales forum, but rather as a Oil, Country Fair, Kent Kwik, Gate Petroleum and many learning opportunity in a “think tank” atmosphere. These meetings have proven to be very productive and others over the past five years. The Convenience Directions program, which is led by well worth the time invested for every retailer who has parJohn Lofstock, Editor of Convenience Store Decisions, and ticipated in the past. Every retail participant has reported Joe Leonardo, capitalizes on the experience of the supplier improved profitability as a direct result of their involvement. If your chain is interested in hosting an Idea Exchange, partners to bring together a tremendous discourse for both contact John Lofstock at jlofstock@csdecisions.com. retailers and suppliers. 120 Convenience Store Decisions

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THIRD QUARTER 2017

InfoMarketing A Convenience Directions® Publication

www.csdecisions.com

Drive Seasonal Impulse Sales With Limited Edition Frosted Pumpkin Pie Pop-Tarts®! Join the seasonal Pumpkin craze and delight your customers with Frosted Pumpkin Pie Pop-Tarts®, available in C-stores for a limited time only. Limited edition flavors have become an “event” with Pop-Tart® fans, and the Pumpkin Pie flavor is their #1 seasonal favorite at retail. In fact, the buzz on this flavor starts on social media at the first sign of fall, and grows stronger by the month! Now that Pop-Tarts® is bringing this wildly popular, limited edition flavor to the convenience channel for the first time, your snackers are going to love it! Think Crazy Good: Heavenly pumpkin pie-flavored filling with cinnamon, nutmeg, ginger and cloves surrounded by a golden crust and topped with sweet, white icing and fall-colored crunchies. Every bite is a holiday experience with an offering that continues to grow in popularity. • Talk about on-trend: 37% of U.S. consumers purchased a pumpkinflavored product last year, Google searches for “pumpkin spice” flavor are about 3-times as high as they were in 2010, and pumpkin sales have increased 34% in the past five years2. • Self-Merchandising: Frosted Pumpkin Pie Pop-Tarts® come in a flexible, easy to merchandise counter display that holds 24 packs. Draw your shoppers’ attention and drive impulse sales by strategically placing the display near the coffee bar and checkout counter. The merchandiser does hold the product in cartons which can be easily moved to a shelf or other permanent fixture when needed. • All-day snack: Pop-Tarts® as a snack has increased 20% with 18 to 24-year olds in the past 5 years. They eat Pop-Tarts® as a snack 50% of the time, and are munching on their grab ‘n’ go favorites throughout the day and between meals1. • Fans can’t wait: Consumers look forward to the annual seasonal offerings from Pop-Tarts®, especially Pumpkin Pie—and respond with excitement and elevated purchases. That’s because Pop-Tarts® fans love indulgent flavors and get revved up when their favorites are brought back.

24 CT. POP-TARTS COUNTER UNIT Each case contains three, 24 CT. Counter units

• Trial Driver: Limited Edition Pop-Tarts® bring attention to the Toaster Pastries Category and give consumers the opportunity to test new flavors—and new flavors are key purchase and trial drivers for… everyone! Don’t miss out on this seasonal winner from Pop-Tarts®, the leader of the toaster pastry category1 — the snack brand with a celebration of fun flavors avid snackers crave2. Bring Frosted Pumpkin Pie Pop- Tarts® instore for the fall and winter holidays, and create enthusiasm and “Crazy Good” sales! Get ready for a spirited fall and winter, and order your Pop-Tarts® Pumpkin Pie Seasonal Counter unit today by calling your Kellogg’s® representative. For more information, please visit www.specialtychannels.com/home/ convenience. Receive exclusive access to trends and more by joining Grow My Store™. With on-the-go breakfasts, portable snacks and wholesome favorites, Kellogg’s® helps you capture the opportunities of now. Now is a good time to partner with Kellogg’s®. Sources:

1 2

Nielsen XAOC Units/$MM ACV L 12 WKS W/E 12/31/16 (Nielsen Data)

Optimo Cigarillos Add Grape to Natural Leaf Lineup Sixth Blend of Optimo Natural Leaf Cigarillos Now Available Optimo Natural Leaf Cigarillos continue a tradition of quality and innovation as Optimo Cigarillos are now available in a grape blend finished in first-class candela leaf wrapper. Optimo Natural Leaf Grape Cigarillos are packaged in two-count, resealable foil pouches. Each Optimo Cigarillo pairs a top-quality natural leaf wrapper with an artful blend of imported tobaccos to deliver a smooth, rich, satisfying taste. The Optimo Natural Leaf Grape Cigarillo is the only cigar with the classic grape filler blend wrapped in green candela leaf. Optimo Cigarillos are available in “2 for 99¢”, “Save on 2”, and “2 for $.149” pouches. For more information or to place an order today, contact your Swisher representative or call (800) 874-9720. About Swisher International Jacksonville, Fla.-based Swisher International has manufactured quality tobacco products since 1861. The company ships over two billion cigars a year to more than 70 countries.

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InfoMarketing

Equipped for Foodservice Success Since 1906, Hussmann has provided innovative products, services and solutions for preserving and merchandising fresh foods. It is recognized throughout the world as a leader in manufacturing, selling, installing, and servicing display equipment and refrigeration systems for customers in the retail food industry. It also provides a variety of services to help food retailers become more efficient and effective. Hussmann serves several key markets, including supermarkets, mass merchants, convenience stores, drug stores, dollar and discount stores, and foodservice operations. Hussmann is enabling excellence in food retailing by providing innovative solutions in areas such as merchandising, energy efficiency and sustainability, food quality and integrity, refrigeration, design and engineering, service and installation, and improving retail performance. We are passionate about food retailing and have a relentless dedication to our customers’ success. Hussmann Products, Services and Strategic Support Hussmann’s products include refrigerated and non-refrigerated display merchandisers, specialty display cases, self-contained display cases, LED lighting, glass doors and lids, refrigeration systems and other related products. To back up its broad product offerings, Hussmann provides installation, service, maintenance, and aftermarket parts through an extensive service organization.

Hussmann offers a variety of related services in selected markets, including project management, energy audits and upgrades, construction support, application engineering, and store layout and design services. We base all our offerings on a culture of innovation focused on meeting the unique needs of retail customers and the consumers they serve. To learn more, visit www.hussmann.com.

What’s All the Stink About Clean Restrooms? There is no rat to smell here. 95% of people avoid patronizing a business in which they have had a negative restroom experience. The clean restroom thing is for real, but before we hit the panic button, let’s drill down to see what is expected. A recent article in Convenience Store Decisions declared that the top complaint about restrooms was bad smell. Another major gripe was restrooms that were unkempt and not tidy. According to Scott Apter, President of Apter Industries, these statements are accurate. “We have worked with the convenience store industry to provide a clean, sanitary environment for over thirty years. Surprisingly, retailers do a decent job on the thorough night time restroom cleaning. The lack of consistent attention during peak hours is what leads to poor appearance and the foul odor situation. Fortunately, this is fixable.” Apter Industries addressed this issue by providing a simple illustrated chart to post in the restrooms. It also launched Garage Gorilla Odor Killer. This phenomenal enzymatic action based weapon kills odors at the source and leaves a pleasant fragrance to punctuate a clean, sanitary environment. Scott says, “It’s a simple solution that works. You can drastically improve the restroom experience in less than one minute. You enter the restroom with Garage Gorilla Odor Killer. The posted wall chart instructs you to spray the Gorilla Odor Killer in the sink and toilets, pick up the loose debris, check the towel and hand soap dispensers, wipe the sink and mirror, and away you go.” If you smelled a rat before, you won’t now. To get your “45 Second Restroom Spiff Up Chart” and Garage Gorilla Odor Killer (packed 6 quarts per box with a piston power trigger), call Apter Industries at 800-441-7146 or email Joe DeLuca at jdeluca@apterindustries.com. General information is available at www.apterindustries.com Questions? Contact Joe DeLuca at jdeluca@apterindustries.com or visit www.apterindustries.com.

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Quality, Reliability and Safety

JOB® Organic Hemp Cigarette Papers Republic Tobacco’s latest profit-driving innovation. The nation’s largest RYO/MYO distributor, Republic Tobacco L.P. is delighted to introduce JOB® Organic Hemp Cigarette Papers. JOB® is an iconic brand and the #1 selling premium cigarette paper brand in the U.S.A. The innovative new Organic Hemp range represents the brand’s dedication to serving the high-end consumer of today, by appealing to their desire to follow an eco-friendly, environmentally conscious life-style.

The BIC® Lighter is recognized as a worldwide leader in producing a safe, reliable flame for millions of consumers every day. In more than 160 countries around the world, BIC has sold more than 15 billion lighters.

In 2017, the consumer is discerning with their purchases, seeking to align themselves with brands that correspond to their personal and social values. Today’s RYO smoker seeks a cigarette paper which is grown organically, with sustainable practices, but which also enhances their smoking experience. JOB® Organic Hemp is tailored to meet the needs of this market with eco-friendly, quality cigarette papers.

Since BIC began manufacturing lighters nearly 40 years ago, we have developed and perfected the strictest quality and safety standards in order to give our consumers the best performing lighters in the marketplace. We employ these standards at manufacturing facilities throughout the world.

Made from organically farmed hemp, grown free from pesticides and fertilizers, the papers are unbleached, and gummed with vegetarian/GMO free acacia. JOB® Organic Hemp cigarette papers have a pale brown color and a fine texture which supports comfortable, smooth rolling every time.

BIC’s quality assurance criteria for its lighters meet or exceed the lighter safety standards established by the International Organization for Standardization (ISO), the American Society for Testing and Materials (ASTM), the U.S. Consumer Product Safety Commission (CPSC), and all other government agencies. The BIC® Lighter is recognized as a worldwide leader in producing a safe, reliable flame for millions of consumers every day. In more than 160 countries around the world, BIC has sold more than 15 billion lighters.

Packaging is true to the JOB® Gold genre, with a freshly introduced foil stamped logo and metallic-green leaf motif evoking a perception of luxury amongst high-end consumers. JOB® Organic Hemp Cigarette Papers are available in 1-1/2, Single Wide, 1-1/4 and Slim sizes, packed 40 boxes per case. A 4-box counter display is available for merchandising and various POP are available to support the brand. To take advantage of the growing organic hemp trend and increase the profitability and size of your register rings, contact us at (800) 288-8888 or email Mark Lopofsky at mmlopofsky@rpbtob.com.

Why Does Data Security matter in a C-Store? Though it may not be the first thing on a retailer’s to-do list, maintaining data security, specifically regarding customer payment information, PCI compliance and skimming devices, is vital for all merchants who process payment cards and participate in loyalty programs. The fallout from a data breach can be catastrophic since the results include loss of confidence, diminished sales, audit costs and potentially the cost of reissuing new payment cards and covering fraud losses. The recent highly-publicized data breach at Wendy’s in June of 2016 involved hundreds of “enslaved” credit card terminals and thousands of impacted customers. In the case of the Home Depot breach in 2014, the expense ran to the tens of millions of dollars and remediation took more than a year. The Payment Card Industry (PCI) publishes standards of compliance for customer data (the Data Security Standard, or DSS), and maintaining compliance with this PCI-DSS standard is one of the ways to keep your store and customer information safe in the event of an issue, and limits liability for the brand and the retailer, making the investment in compliance worthwhile for the merchant.

Systems are available from a variety of manufacturers to assist merchants in maintaining compliance and data security. One of the solutions gaining traction within the CS&P market is offered by Mako Networks, with several major oil companies having selected the product for PCI-DSS compliance at retail sites. Mako has an in-store appliance that maintains network security at the store level. What makes the Mako solution unique is the PCI certification template that allows store payment networks to be included in the scope of the PCI report on compliance that Mako maintains. This is made possible by combining features and technologies including a patented VPN creation system that is unique to Mako’s cloud-managed solution. Administrators can then manage the network connections at one or even thousands of sites through a single web interface without jeopardizing the networks’ PCI-compliant status. By allowing remote management of features like in-store wireless networks, LTE-failover settings or web content filtering and on-site visits by technicians and trouble can be minimized. CStoreDecisions ecisions .com

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InfoMarketing

Home Market Foods: Great Brands to Drive Your Growth! Foodservice sales are hot. Home Market Foods has the food solutions to help you drive sales.

Our products include: RollerBites® Bold! Different! Better! RollerBites are hot off the grill, bursting with flavor, and loaded with the good stuff like beef, chicken, bacon, and cheese. Great tasting and packed with protein, RollerBites offer the perfect on-the-go meal or snack that totally crushes hunger, and keeps customers coming back for more. RollerBites are available in our NEW Premium Burger Joint Cheeseburger flavors: Sriracha, Black & Bleu, Chipotle Bourbon, and Ghost Pepper. Flame-broiled Cheeseburger locks in juicy, savory, home-grilled flavor. RollerBites are also available in our popular Chicken and Breakfast varieties. Lightly breaded and seasoned all-white Chicken offers more protein than any other chicken product on the grill – check out the newest favorite flavor, Greek Chicken Gyro! RollerBites Savory Breakfast combines hearty eggs, sausage and cheese for a delicious breakfast on the run. Bahama Mama® Customer favorites Bahama Mama® premium sausages and frankfurters provide all-day snacking solutions. Made from high quality cuts of beef and pork, no fillers, and offered in a variety of flavors to satisfy hearty appetites.

Bahama Mama German-Style Sausage, Bahama Mama ‘N Cheddar, Fajita Dog, Jalapeño ‘N Cheddar, Hearty Ham ‘N Cheddar, Breakfast Sausages, Gourmet All-Beef Hot Dogs, and Twisted Pretzel Dog. Introducing NEW Bahama Mama Split Sausage for sandwich solutions any time of day. Cooked Perfect® Bring quality to your customers with ingredients from Cooked Perfect – the possibilities are endless! Shaved Steak made from USDA Choice Beef, seasoned with a proprietary spice mix, and cooked to perfection. Pulled Pork made from tender and juicy pork, specially seasoned and slow-smoked for hours to lock in great flavor. Cooked Perfect Meatballs – Crafted for Your Senses. Made from select cuts of meat, real cheeses, savory herbs, and flamebroiled to perfection.

For information, www.rollerbites.com or contact info@rollerbites.com or (800) 367-8325, ext. 529.

Boosting Wine Sales Gallo Family Vineyards is excited to offer delicious, slightly fizzy, wines with natural fruit flavors. Available in Sweet Peach, Sweet Pineapple and Sweet Berry, Gallo Family Vineyards Sweets is the perfect addition to any summer gathering. * Sweet Pineapple: Tropical fruit (pineapple) layered with sweet aromatics (honey) and hints of white flower (honeysuckle).

2) Promote the Category Like other products, location and communication are key when it comes to promoting the wine category. Feature the alternative packages in a perimeter position since these products answer the concerns of so many infrequent or non-purchasers of wine.

* Sweet Peach: Tree/stone fruit (peach) layered with sweet aromatics (honey) and hints of tropical fruit (pineapple) and white flower (peach blossom). * Sweet Berry: Jammy red fruit (strawberry, watermelon) layered with sweet aromatics (cooked sugar) and hints of tropical (tutti fruitti). Wine overall has been a strong growth category in convenience stores. Why? Consumers are discovering the versatility of wine and how it fits into their casual lifestyle. Fun, practical and convenient packaging has been the catalyst for this trend. Here is what convenience store operators can do to capitalize on this growing trend: 1) Expand Assortment Expand your selection of 187ml, tetra, pouch, zip lids and cans. Whether it be concerns about waste, portability, “non-wine” occasions or convenience, alternative packages can be the answer. Contact your local Gallo representative for more alternative strategies for increasing wine sales or visit www.gallo.com.

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Detour Lean Muscle Adds Powerhouse Flavor & New Packaging!

InfoMarketing

This quarterly publication is made available to convenience store and petroleum marketing executives on a complimentary basis, thanks to the sponsorships of a select group of interested and involved industry suppliers.

Protein products company Forward Foods LLC, the maker of the award-winning Detour bar, is thrilled to add a new flavor to their lineup of great tasting max protein Lean Muscle bars. The newest Lean Muscle flavor, Cookies n’ Cream Crunch, is a powerhouse flavor in the category, sure to gain attention from the loyal Lean Muscle consumer base with its new unique profile. The new flavor features a white chocolate coating and crunchy high protein cookie pieces baked into its soft nougat.

AIR-serv Group

In addition to adding a new flavor, the Lean Muscle brand is set to launch a new packaging design in August. This design refresh will help renew the appeal among young males and further enhance taste appeal.

Apter Industries BIC CBE, Inc.

“We are thrilled to launch a new Lean Muscle flavor along with updated packaging,” said Patrick Muldoon, CEO Forward Foods, which owns Detour. “There is no other max protein bar on the market like Lean Muscle, with its combination of whey protein, low sugar, omega-3s, and vitamins and minerals.”

Chef’s Cut Real Jerky Detour/Forward Foods

Detour Lean Muscle bars break the protein bar mold with 32 grams of protein. The bars are also packed with 1000 milligrams of Omega 3’s, 21+ vitamin and minerals, and all have less than 10 grams of sugar. They come in three flavors: Cookie Dough Caramel Crisp, Peanut Butter Chocolate, and Cookies n’ Cream Crunch.

E & J Gallo Winery Home Market Foods Hussmann Corp.

Detour Lean Muscle bars are available at convenience stores nationwide.

Kellog’s Convenience Store Team

For more information, visit www.detourbar.com

KraftHeinz

Oscar Mayer Can Pump Up Your Sales with Protein

Nestlé USA Confections Nestlé USA Foodservice

Protein snacking is a $19 Billion category with a projected annual growth rate of 7%, and 3 out of every 4 adults are adding more protein to their diet. Oscar Mayer’s Portable Protein Pack (P3) is a refrigerated protein snack containing simple, protein-rich foods with no artificial preservatives.

Nestlé Waters North America Prairie City Bakery Republic Tobacco

Each serving delivers 13 grams of protein for those adults who lead an active lifestyle and are looking for energy to keep going strong.

Swisher International Vivid Impact

P3 offers real Oscar Mayer Select meat, Kraft Natural Cheese and Planters Nuts packed into one protein-rich wholesome snack. Since market introduction in 2013, sales for P3 have been 71% incremental to the refrigerated case and seen turns 2-3 times greater in convenience stores than any other retail channel.

John Petersen Publisher John Lofstock Editor InfoMarketing is published quarterly for convenience store and petroleum company executives, operators and marketers.

P3 is available in a variety of combinations and has a suggested retail price of $1.99. Varieties include Ham, Monterey Jack & Cashews and Chicken, Monterey Jack & Cashews. Kraft Heinz is offering a rebate incentive on new distribution of Oscar Mayer and Kraft Cheese. To learn more, contact (888) 695-6733, visit ww.kraftinsights.com or email kraftcscommuni@kraftfoods.com for more information.

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ADDRESS CHANGES: Send address changes to: Convenience Directions® 19111 Detroit Rd, Suite 201 Rocky River, OH 44116 or via e-mail to info@conveniencedirections.com Phone: (440) 250-1583

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Nestle Waters Committed to Sustainable Operations At Nestlé Waters North America, we make sustainable resource management a top priority of our operations. We strive to manage our spring water sources so they can be enjoyed not just for today, but for generations to come. We know that in order for us to deliver water for many to enjoy, we need to work hand in hand with the communities and people around us. That’s why our dedicated employees manage our 40 spring sources and maintain nearly 14,000 acres of natural watershed area.

New Formats For Traditional Confections Brands

B G

In recent years, confections category manufacturers have driven category growth by positioning distinguished and trusted brands like Reese’s, Twix, M&Ms, KitKat, Snickers and Butterfinger® in different eating formats. Most major brands have embraced the hand-to-mouth eating experience by creating bite-sized versions of their highly-successful original versions. For example, you will now find KitKat Minis, Milky Way Bites, Snickers Bites and Butterfinger® Bites on shelves in most convenience stores around the country. These items have collectively helped drive confections category sales plus-4% during the past year.

T t o s c w c

When your customers open the cap on a sealed bottle of our water, they are making a conscious choice for quality-controlled refreshment using less energy, packaging and water to produce than any other packaged beverage. We are continuously working to minimize environmental impact by improving our operations at every stage of the bottled water life cycle: sourcing, manufacturing and packaging.

B p a t P As we head into 2017, we expect the bite-sized trend to continue as it provides the convenience store shopper a sharable and affordable indulgence. To continue growth, c-stores will need to embrace new formats and new items. One of the more popular new items for 2016 was new Butterfinger Peanut Butter Cups by Nestlé.

Our Bottle We know that a smaller footprint starts with less packaging. This focus on innovation is never-ending as we are constantly assessing our bottled water packaging and identifying design and material changes. Looking ahead, our goal is to incorporate more alternative packaging material, including recycled plastics and/or bioplastic made from renewable materials, into our packaging. Bottled water is one-tenth of 1% of a person’s carbon footprint. A life cycle analysis shows our .5-liter bottled water is among the best packaged beverage choices for the environment because it requires less energy and other resources to make and transport than a heavier bottle containing more ingredients. All of our “single-serve” bottles from eight ounces to three liter that are made from non-recycled PET #1 plastic, as well as our one gallon and 2.5 gallon bottles made from non-recycled HDPE #2 plastic, are completely BPA-free. Additionally, all of our five-gallon bottles are now made of PET #1 plastic which is also BPA-free.

T a b f b a t s a w

N D 1 v B p

This item attracted national notice three months before launch with an October USA Today article, as well as October and December Good Morning America features. Nestlé heightened the excitement by featuring Butterfinger Peanut Butter Cups in its first ever Super Bowl TV commercial. Due to the strong publicity this popularly-branded item received it was a “can’t miss” item for 2016 and is expected to continue to grow. To expand on the Butterfinger Cups and capitalize on the growing bite-size category, Nestlé launched New Butterfinger Cup Mini’s which hit stores February 2016. This item is available in two growing and popular pack sizes for convenience stores, Share Pack and Stand Up Bag. These larger packs not only provide a value for the customer, but bring in a higher dollar ring and larger profits for the retailer.

Across all of Nestlé Waters North America businesses, we are reducing our environmental footprint and working with others to help improve recycling rates in North America. Nestlé is committed to sustainability practices across all business sectors, from sourcing to manufacturing to product development all the way through the recycling process.

A a h r

For more information on Nestlé Waters, visit www.nestle-waters.com Overall, customer awareness of new items and pack sizes will be key for 2017. Take advantage of the high-impulse nature of this category by supporting new items with display vehicles, call outs on-shelf and promotional support where applicable. After all, who wouldn’t like to give the latest and greatest delicious new candy items a try?

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Building a Pizza Game Plan The top five annual pizza category sales days are: New Year’s Eve, Halloween, the night before Thanksgiving, New Year’s Day and football’s Big Game day! Customers are beginning to plan their Big Game meals now, and whether they are cheering for their beloved team, rooting against their hated rival or just simply there to watch a good game with friends and family, they will all appreciate a great warm meal. This year, some Americans will order from one of the dominant pizza delivery chains while numerous others will choose to forgo the potentially-long delivery wait times and select one of the appetizing frozen pizza options found in their nearest convenience store to satisfy their game-day craving. After all, who wants to wait for pizza delivery when a great-tasting frozen pizza is conveniently in hand? Beyond the Big Game, consumers turn to their favorite c-store for frozen pizza throughout the year. Frozen pizza is a $105 million business annually in the convenience store channel and is growing. Nestlé leads the category with a 63% share, and General Mills, Schwan’s and Private Label collectively comprise the rest of the category. Nestlé has earned this category leadership due to the popularity of the DIGIORNO® brand, which revolutionized the frozen pizza category in 1996 with the first rising-crust pizza. The brand now includes several varieties including a Classic Thin Crust, Cheese Stuffed Crust, Garlic Bread Pizza and the new Pizzeria™, which offers a flavorful sauce and premium toppings on a crispy crust.

Now is the time to make sure c-store frozen food doors are filled with pizza and that there is signage throughout the store to provide awareness for this important meal solution. To ensure maximum sales for all casual entertainment occasions and to provide consumers with a complete party experience, c-stores should also have other popular frozen items such as HOT POCKETS® sandwiches and ice cream, such as BREYER’S®/EDY’S® and HAAGEN DAZ® fully stocked. With all these items available in your stores’ frozen doors, you and your customers will be ready to party from the Big Game, through the college basketball season and beyond! For more information, please visit www.nestleusa.com.

Taking Jerky to a New Level Low in calories, high in protein and full of flavor, good beef jerky may be one of the world’s greatest snacks. Chef’s Cut Real Jerky was created by Chef Blair Swiler and Dennis Riedel. Blair has been smoking meats his entire life; a tradition passed along from his father. In 2009, becoming tired of having to buy terrible jerky every time they played a round of 18, golf buddies, Blair and Dennis, teamed up and began smoking and selling Chef’s Cut to golf and country clubs across the US (turns out jerky is the perfect golf bag accessory). Today the vision to change the jerky world has resulted in the best tasting, highest quality jerky on the market. The secret? We stay true to Chef Blair’s relentless attention to quality and flavor. We use only premium cuts of steak and white breast meat – unlike the tough, chewy pieces of “mystery meat” our competitors use. We always hand-cut each piece, using only the finest real ingredients--just like you would find at your favorite steak house. The result? A healthy, high in protein, low in fat and great-tasting jerky, making Chef’s Cut the perfect alternative to the standard high-fat, highcalorie snacking fare. And while we have grown to reach people beyond the golf course, our goal is still the same--change the way people think about jerky--one healthy snack at a time. As Chef’s Cut has penetrated the convenience store market, the positive reviews have been pouring in. In 2015, Chef’s Cut was voted a Best New Product brand by Convenience Store Decisions and received an award at the NACS Show for its steak, chicken and turkey flavors. For information, visit Chef’s Cut at www.chefscutrealjerky.com or call (877) 210-2575.

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Boost Profitability with CSC Service Works

CSC Service Works Formerly Air-Serv is the industry leader in the inflation and vacuum services, providing the most extensive distribution and service networks worldwide.

What do leading convenience store chains have in common?

19111 Detroit Road, Suite 201 Rocky River, OH 44116

RETURN SERVICE REQUESTED

Our machines provide additional revenue to your bottom line, at zero cost to you. Join over 70,000 convenience stores, gas stations and car washes that enjoy generous revenue sharing from our reliable, hassle-free air programs. CSC Service Works for Charity program builds customer loyalty and goodwill as a unique incentive to make your location a routine destination. With credit card capabilities, digital and calibrated equipment options and wireless monitoring technology for fast service, CSC turns air into income for you. No provider in the market today can match CSC’s combination of service, technology and design. For more information on CSC Service Works, visit www.cscsw.com.

Capitalizing on the experience of industry partners to bring retailers and suppliers together to identify emerging trends and boost sales. www.conveniencedirections.com

Prairie City Bakery’s Gourmet Foodservice Bakery Program More now than ever, Convenience Stores are competing with QSRs, Bakery Cafes, and Gourmet Coffee Shops for share of stomach, as customers are increasingly expecting a quality food experience. Initially c-stores had upgraded their coffee programs, but now they are noticing that in order to gain important market share, they must offer a quality foodservice program to match. And customers are often seeking foodservice bakery items to pair with their gourmet cup of coffee. So how can c-stores compete? The answer is simple; thaw and serve. Immediately frozen after baking, Prairie City Bakery gourmet pastries can be thawed for one hour and sold to the consumer, tasting just as fresh as an item baked in-store. The only difference is that this technique requires no additional labor and equipment, saving you money. Prairie City Bakery offers a wide variety of these thaw-and-serve foodservice products including: Cinnamon Rolls, Danish, Classic and Premium Donuts, Muffins, and Ooey Gooey Butter Cake. This way, you are able to keep a stocked bakery case with plenty of variety for your customers. Better yet, these items are packed in small inner packs (4, 5, and 6 pieces), so that you only use what you need daily, reducing your number of stales. Your foodservice bakery offering can be fresh, gourmet, and consistent. Try Prairie City Bakery pastries today. It’s always a great day on the prairie . . .

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Give us a call at 800-338-5122 or visit www.pcbakery.com for more information on these gourmet pastries or our foodservice merchandising solutions.

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What do leading convenience store chains have in common?

A division of Convenience Store Decisions The Convenience Directions concept has been in place for over 15 years in the convenience store industry. What we do is very unique in that we combine the InfoMarketing newsletter, which is mailed quarterly to over 10,000 c-store executives, with three Idea Exchange meetings. The newsletters give sponsor companies a InfoMarketing forum to communicate category information, new product introductions and best practices to the industry. Retailers get great information on a variety of categories and services in a quick read format.

THIRD QUARTER 2017

A Convenience Directions® Publication

www.csdecisions.com

• Talk about on-trend: 37% of U.S. consumers purchased a pumpkinflavored product last year, Google searches for “pumpkin spice” flavor are about 3-times as high as they were in 2010, and pumpkin sales have increased 34% in the past five years2. • Self-Merchandising: Frosted Pumpkin Pie Pop-Tarts® come in a flexible, easy to merchandise counter display that holds 24 packs. Draw your shoppers’ attention and drive impulse sales by strategically placing the display near the coffee bar and checkout counter. The merchandiser does hold the product in cartons which can be easily moved to a shelf or other permanent fixture when needed.

• All-day snack: Pop-Tarts® as a snack has increased 20% with 18 to 24-year olds in the past 5 years. They eat Pop-Tarts® as a snack 50% of the time, and are munching on their grab ‘n’ go favorites throughout the day and between meals1.

• Fans can’t wait: Consumers look forward to the annual seasonal offerings from Pop-Tarts®, especially Pumpkin Pie—and respond with excitement and elevated purchases. That’s because Pop-Tarts® fans love indulgent flavors and get revved up when their favorites are brought back.

Idea Exchange Meetings are designed to share latest trends, best in class standards, and ideas and recommendations to drive bottom line profits. The idea exchanges result in sponsor companies getting to know the entire senior management team of a company, understanding what their goals and objectives are and presenting category information to the retailer. Ongoing productive relationships are established in this setting that is difficult to replicate in any other venue.

24 CT. POP-TARTS COUNTER UNIT Each case contains three, 24 CT. Counter

Don’t miss out on this seasonal winner from Pop-Tarts®, the leader of the toaster pastry category1 — the snack brand with a celebration of fun flavors avid snackers crave2. Bring Frosted Pumpkin Pie Pop- Tarts® instore for the fall and winter holidays, and create enthusiasm and “Crazy Good” sales! Get ready for a spirited fall and winter, and order your Pop-Tarts® Pumpkin Pie Seasonal Counter unit today by calling your Kellogg’s® representative.

For more information, please visit www.specialtychannels.com/home/ convenience.

Receive exclusive access to trends and more by joining Grow My Store™. With on-the-go breakfasts, portable snacks and wholesome favorites, Kellogg’s® helps you capture the opportunities of now. Now is a good time to partner with Kellogg’s®.

Sources:

Nielsen XAOC Units/$MM ACV L 12 WKS W/E 12/31/16 (Nielsen Data)

Optimo Cigarillos Add Grape to Natural Leaf Lineup Sixth Blend of Optimo Natural Leaf Cigarillos Now Available

Optimo Natural Leaf Cigarillos continue a tradition of quality and innovation as Optimo Cigarillos are now available in a grape blend finished in first-class candela leaf wrapper.

Optimo Natural Leaf Grape Cigarillos are packaged in two-count, resealable foil pouches. Each Optimo Cigarillo pairs a top-quality natural leaf wrapper with an artful blend of imported tobaccos to deliver a smooth, rich, satisfying taste. The Optimo Natural Leaf Grape Cigarillo is the only cigar with the classic grape filler blend wrapped in green candela leaf. Optimo Cigarillos are available in “2 for 99¢”, “Save on 2”, and “2 for $.149” pouches. For more information or to place an order today, contact your Swisher representative or call (800) 874-9720. About Swisher International Jacksonville, Fla.-based Swisher International has manufactured quality tobacco products since 1861. The company ships over two billion cigars a year to more than 70 countries.

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These two-day sessions have proven to be very productive and well worth the time invested for every retailer who has participated in the past. Every retail participant has reported improved profitability as a direct result of their involvement.

Capitalizing on the experience of industry partners to bring retailers and suppliers together to identify emerging trends and boost sales. To have Convenience Directions host a free Idea Exchange for your chain, contact John Lofstock at jlofstock@csdecisions.com.

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NEWSTUFF Creations & Innovations to Convenience Products and Services

DISPLAY CASES

SIMPLY SATISFYING VAPOR

The VRL and VRM are new display cases now being offered from ConvenienceWorks by Hussmann. These are self-contained reach-in cases with bottom mount refrigeration systems, available in medium temperature (VRM) and low temperature (VRL) versions. These products use environmentally-friendly R290 hydrocarbon refrigerant that has zero ozone depletion potential and very low (3) global warming potential. The VRL and VRM feature contemporary styling and use Innovator doors with LED lighting for excellent product visibility and merchandising appeal. There is a visible digital thermostat and electronic case controller on the lower front of each case for easy access and control. The bottom mounted condenser coils in these cases are quickly accessible for easy cleaning.

JUUL is the simply satisfying vapor experience designed with adult smokers in mind. With an intelligent temperature regulation system and a proprietary nicotine salt-based formula for satisfaction (currently with five flavors - Virginia tobacco, cool mint, fruit medley, crème brulee and mango), JUUL is the genuinely satisfying alternative to smoking and one of the fastest growing brands in the vapor category.

For More Information From Hussmann www.hussmann.com

NEW SHAKE FLAVORS From refreshingly cool to sour and sweet, next year’s new flavors will pack the ultimate punch. Piña Colada Smoothie and Sour Path Kids Redberry Sherbet Shake will deliver happiness in a cup. It’s not too often you get vitamins A & C, plus calcium all blended into a tropical treat. Trust us, one sip of the new Piña Colada Smoothie and you will start to feel that island breeze (or maybe just a brain freeze). With the perfect balance of sour and sweet, try our new Sour Patch Kids Redberry Sherbet Shake, because you deserve the best of both worlds. With everything new to see, you won’t want to miss these new fave flavors at NACS Show Booth #7343.

For More Information From f’real foods *SOUR PATCH KIDS and the SOUR PATCH KIDS Design are registered trademarks of Mondelez International group, used under license.

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www.juulvapor.com/retail

PALLET GUARD SYSTEM For over 35 years, MasonWays has provided a wide range of custom solutions for retail, institutional and commercial use. Innovations include the world’s first Patented Double Wall Pallet Guard System, helping to prevent trip and fall accidents. Its adjustable Pallet Guard System allows you to safely drop pallets of product directly on to the store floor, instantly creating more attractive displays and eliminating the need for time-consuming shelf stacking. No longer waste time and money on temporary pallet wraps that only last a day or two.The Adjustable Pallet Guard System is the most effective way to merchandise any type of seasonal, promotional or sales stock in your store. Simply connect the four sides together to create a durable and attractive display. The unique rail system allows you to create continuous runs with a double wall rail that will not bend or bow and are expanded from 38.5 inches to 56 inches. Make your stock look attractive for sale and your store fresh and clean at all times. Add sign channels for instant pricing that can easily be changed. Available in a wide range of colors to match your store decor.

For More Information From MasonWays

(877) 367-7325

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For More Information From JUUL

October 2017

www.masonways.com

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The Editors and Editorial Advisory Board of Convenience Store Decisions are proud to honor Sheetz as the 2017 Chain of the Year! Don’t miss the opportunity to be a part of the oldest and most prestigous award event for c-store retailing on October 18th, 6pm-9pm at The Crystal Gardens at Navy Pier in Chicago during the NACS Show.

We are proud to celebrate Sheetz as the 2017 Chain of the Year!

To register, please visit: https://2017sheetz.eventbrite.com