Convenience Store Decisions October 2018 by WTWH Media LLC

Volume 29 • Number 10 • OCTOBER 2018 Business Solutions for Retail Decision Makers

® A

H A R B O R COMMUNICATIONS

P U B L I C AT I O N

Positioning 7-Eleven

for the Future

President and CEO Joe DePinto shares with Convenience Store Decisions how a customerobsessed culture is propelling the world’s largest convenience retailer forward.

INSIDE:

Tapping Into Flavor Adventures E-Cigarettes Face FDA Backlash Loyalty Points to Ponder

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October 2018

Vol. 29 • No. 10

CONTENTS 32 COVER STORY

Positioning 7-Eleven for the Future

President and CEO Joe DePinto shares with Convenience Store Decisions how a customerobsessed culture is propelling the world’s largest convenience retailer forward.

EDITOR'S MEMO 8 Convenience Stores and Trusted Partnerships

FRONT END 10 On Location: Parkland Fuel Corp. Eyes U.S. Expansion 18 CSD’s Quick Bites 20 Industry News

22 O’Connor Takes the Helm at NAG 24 Study Finds Lower Fraud Losses

26 Executive Corner: Bill Kent Gauges a Changing

C-Store Industry 28 Convenience Store Solutions: The Store Is Your Stage

FOODSERVICE 44 Tracking Foodservice Trends

46 Tapping Into Flavor Adventures 52 Growing the Food Menu

58 Packaging Seals Foodservice Marketing

62 Column: Creating Foodservice with a Single Purpose

CATEGORY MANAGEMENT 64 How Are Cigarettes Faring?

68 E-Cigarettes Face FDA Backlash

TECHNOLOGY 92 Tech Bytes

94 Exposing Loss Prevention

100 Column: Loyalty Points to Ponder 104 Prepaid Cards Add Balance

106 Column: Joining in the AI Revolution

OPERATIONS 108 Column: Post and Pray Doesn’t Work Anymore 112 Coming Clean about Car Washes

116 Financing Upgrades and Acquisitions

118 Recruiting Tips for Small Business Owners 120 Column: Today’s Diverse Market

BACK END 122 Convenience Directions InfoMarketing 131 Product Showcase 139 Quick Stop 141 Ad Index

142 Industry Perspective: Menu Kits or Menu Crypts

74 2018 Tobacco Roundup

80 Local Merchandise Sells Well

84 Sweetening Your Candy Sales

90 Adding Protein to Ice Cream

4 Convenience Store Decisions October 2018

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THE CSD GROUP Convenience Store Decisions • Leading Through Innovation A H A R B O R C O M M U N I C AT I O N S L L C C O . Convenience Store Decisions

CStoreDecisions ecisions .com

EDITORIAL

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

Robert Buhler, President and CEO Open Pantry Food Marts Pleasant Prairie, Wis. Jim Callahan, Director of Marketing (Retired) Geo. H. Green Oil Inc. • Fairburn, Ga.

Contributing Editors Mark Battersby Anne Baye Ericksen Brad Perkins Jeff Steele Lisa White Columnists Tom Briant Jim Callahan Ed Collupy Mel Kleiman Sylvia Klinger John Matthews Gary Stibel Production Manager Barbra Martin bmartin@csdecisions.com

NATIONAL ADVISORY GROUP (NAG) BOARD

Patrick J. Lewis, Managing Partner Oasis Stop 'N Go • Twin Falls, Idaho Scott Zaremba, President and CEO Zarco 66 • Lawrence, Kan.

Bob O’Connor, NAG Board Chairman Jetz Convenience Centers • Hales Corners, Wis. Mary Banmiller, Director of Retail Operations Warrenton Oil Inc. • Truesdale, Mo. Greg Ehrlich, Chief Operating Officer Beck Suppliers Inc. • Freemont, Ohio Doug Galli, Vice President, General Manager Reid Stores Inc./Crosby’s • Brockport, N.Y. Joe Hamza, Chief Operating Officer Nouria Energy Corp • Worcester, Mass. Brent Mouton, President and CEO Hit-n-Run Food Stores • Lafayette, La. Peter Tamburro, General Manager Clifford Fuel • Marcy, N.Y Vernon Young, President and CEO Young Oil Co. • Piedmont, Ala.

OFFICE LOCATIONS

SUBSCRIPTION INQUIRIES

Brad Call, President Colour Du Jour • Salt Lake City Bill Kent, President and CEO The Kent Cos. Inc. • Midland, Texas Greg Lorance, Dispensed Category Manager Cumberland Farms • Framingham, Mass. Billy Milam, President RaceTrac Petroleum Inc. • Atlanta

Headquarters 19111 Detroit Rd., Ste 201 Rocky River, OH 44116 P: (440) 250-1583 • F: (440) 333-1892 Editorial/National Advisory Group (NAG) 1420 Queen Anne Rd., Suite 4 Teaneck, NJ 07666 (201) 837-2177 http://twitter.com/CStoreDecisions www.facebook.com/CStoreDecisions www.linkedin.com/CStoreDecisions 6 Convenience Store Decisions October 2018

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To enter, change or cancel a subscription: Web (fastest service): www.ezsub.com/csd Phone: (844) 862-9286 (U.S. only, toll-free) Fax: (440) 333-1892 Mail: Convenience Store Decisions P.O. Box 986, Levittown, PA 19058 Copyright 2018, Harbor Communications, LLC

Director of Digital Strategy Eric Shanfelt eric@nearviewmedia.com Digital Operations Manager Nicole Lender nlender@csdecisions.com

ADVERTISING

Group Publisher Tom McIntyre tmcintyre@csdecisions.com 440-250-1583 Publisher John Petersen jpetersen@csdecisions.com 440-250-1583 Vice President, Sales Tony Bolla tbolla@csdecisions.com 773-267-1897 YOUNG EXECUTIVES ORGANIZATION (YEO) BOARD

Bart Stransky, YEO Board Chairman RaceTrac Petroleum, Executive Director, Merchandising and Supply Chain Garet Bishop, Chief Financial Officer BFS Cos. Caroline Filchak, Director of Wholesale Ops. Clipper Petroleum Kalen Frese, Food Service Director Warrenton Oil Co. Alex Garoutte, Director of Marketing The Kent Cos. Sharif Jamal, Corporate Training Manager Chestnut Petroleum Distributors Lindsay Lyden, Vice President, Development Truenorth Energy Jeremie Myhren, Vice President, IT Road Ranger

Convenience Store Decisions is a three-time winner of the Neal Award, the American Business Press’s highest recognition of editorial excellence.

Convenience Store Decisions (ISSN 1054-7797) is published monthly by Harbor Communications, LLC., 19111 Detroit Rd., Suite 201, Rocky River, OH 44116, for petroleum company and convenience store operators, owners, managers. Qualified U.S. subscribers receive Convenience Store Decisions at no charge. For others, the cost is $80 a year in the U.S. and Possessions, $95 in Canada, and $150 in all other countries. Single copies are available at $9 each in the U.S. and Possessions, $10 each in Canada and $13 in all other countries. The annual Sales Trend Handbook can be purchased for $75. Periodicals postage paid at Cleveland, OH, and additional mailing offices. POSTMASTER: Send address changes to Convenience Store Decisions, P.O. Box 986, Levittown, PA 19058. GST #R126431964, Canadian Publication Sales Agreement No: #40026880. Materials in this publication must not be reproduced in any form without written permission of the publisher. Direct requests to: Editorial Department, 1420 Queen Ann Rd., Teaneck, Suite 4, NJ 07666. Phone: (917) 601-9623. Copyright 2016, Harbor Communications LLC. All rights reserved. Circulation audited by Business Publications Audit of Circulation, Inc.

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EDITOR’S

Memo

Convenience Stores and Trusted Partnerships

HOPPERS COME TO CONVENIENCE STORES to get their needs met. But if retailers don’t fully understand what shoppers want, efforts to capture more of their business will probably miss the mark. This has been one of the biggest challenges facing cstores over the past couple of years, especially as retail is changing so dramatically. Retail, in fact, is evolving at such a pace that it’s almost impossible to predict where it will end up. Consider that over just the past year, Amazon has pushed the envelope in terms of technology and speed of service, quick-service restaurants (QSRs) are jumping into the home delivery business and store visits are being threatened by alternative fuels and electric vehicles, both of which require fewer trips to the local c-store for a refill. This cuts right to the core of what convenience stores do best: offer quick service, an outstanding product assortment and great locations.

ability to maintain a loyal custom“erThe base requires customer-centric strategies in collaboration with suppliers. ” However, we have entered a retail phase where customers can get all these things without ever leaving their couch, and that has the industry’s attention. These are times when retailers really find out who their friends are. The relationship between supplier companies and convenience stores has never been stronger and, for both sides to succeed, this relationship needs to be strengthened during these unprecedented times. This means delivering on what the customers want, when they want it and at an attractive price. Satisfying Loyal Customers For convenience stores, the data is simply too big to ignore. The Pareto Principle states that 80% of a store’s sales come from 20% of its customers. This means to keep customers returning, operators must take all the necessary steps to keep this core group of customers loyal to their stores. For convenience stores, this means giving the loyal customers what they want. The easiest, and possibly the

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For any questions about this issue or suggestions for future issues, please contact me at jlofstock@ csdecisions.com.

most affordable, way to build customer loyalty is to provide outstanding service. Let’s face it; delivering top-notch service has never been more important. While the economy is strengthening, discretionary spending is still selective, creating significant competitive challenges for retailers and suppliers alike. The ability to maintain a loyal customer base requires customer-centric strategies in collaboration with suppliers. It’s no secret that when store sales increase, everyone wins. To give you an idea of just how important the retail environment is, customer service experts seem to agree no matter what customers say they want, what they’re really looking for is something special. They can’t quite describe it, but when they find it, they know. Those little details of the buying experience may appear intangible, but what brands you sell and the price are usually less important to customers than a great shopping experience. Other tips for generating loyal, repeat customers at the convenience store level include: Treat them well. People simply want to be treated with respect and fairness. They want to feel like valued customers, whose time and opinions matter. If people can’t trust you to treat them right, they certainly won’t trust you with their money. Provide an efficient buying process. From start to end, did each step of the sale go smoothly? Could the buyers get the answers or help they needed? Could they find what they came for? Were prices and payment options clear and easy to apply? Eliminate aggravation. A buyer is willing to endure a little inconvenience, such as a line during rush hour, but not for long and not every time. Your job is to minimize inconveniences, not treat them like business as usual. Convenience stores and their supplier partners must work together to drive a steady stream of new and repeat customers. When they do, these customers will be the best brand ambassadors and that, ultimately, is how to grow the business.

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FRONTEND

Profile

Parkland Fuel Corp. Eyes U.S. Expansion Unifying its Canadian c-stores under the On the Run brand, the retailer is uniting its U.S. c-stores under a new banner as part of a strategy to grow its overall operational footprint. By Erin Del Conte, Senior Editor

After acquiring the On the Run/Marché Express brand in Canada from Imperial Oil in 2016, Parkland is remodeling its fleet of Canadian stores under the banner. Already 60 stores have received makeovers that include a more open layout that makes foodservice a focal point of the store.

FTER SEVEN STRAIGHT YEARS OF acquisitions, Parkland Fuel Corp. has achieved a pervasive retail presence across Canada, and is now focused on aggressively growing its store count in the U.S. from the Dakotas to Mexico, and from Denver out to St. Louis. Most recently, Parkland closed on the acquisition of Reinhart Oil, expanding its U.S. presence beyond North Dakota and into the Rocky Mountain region of the U.S. The company’s next acquisition of Missouri Valley Petroleum is set to close Oct. 1, 2018, providing Parkland with business synergies in North Dakota as it commits to collectively pursuing the retail, commercial and supply businesses. Simultaneously, Parkland is remodeling all stores and unifying its brand in Canada under the On the Run/ Marché Express banner it acquired from its Imperial Oil acquisition in 2016. It’s also creating a soon-to-be-announced banner for its U.S.-based c-store locations and preparing to remodel and unite those stores under one

10 Convenience Store Decisions October 2018

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cohesive U.S. brand that features foodservice as a central part of its business plan. Looking forward, the convenience chain anticipates even a more prosperous year in 2019. BEEF TO FUEL Parkland Fuel Corp. originally began as Parkland Beef Industries, a publicly-traded cattle feedlot. In 1975, Jack Donald acquired the company and named it Parkland Industries. Donald had previously founded and divested a chain of gas stations under the name of Parkland Oil Products Ltd., and he redirected Parkland Industries’ focus away from cattle and to the retail fuel segment, establishing Fas Gas Plus in western Canadian in 1977. “Jack started literally with one Fas Gas location, which today has grown into several hundred in Canada,” said Doug Haugh, president of Parkland USA. From there, the company transitioned through several phases. “There was the income trust phase. In Canada there was a structure similar to Master Limited Partner-

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ships (MLPs) in the U.S., where you distributed most of your cash flow to holders, but it was known as an ‘income trust’ versus an MLP. Those were eventually disbanded in Canada and that’s when we reverted to a C-Corp,” Haugh said. In 2010 Parkland Industries became Parkland Fuel Corp. and Parkland’s headquarters moved to Calgary, Alberta, Canada. In 2011 Bob Espey rose to chief executive. “Since Bob took on the CEO role, there’s been a pretty clear vision and mission to build a nationwide downstream champion across Canada,” Haugh said. Parkland Fuel Corp. began an aggressive acquisition plan, completing 18 purchases valued at more than $2.4 billion from 2011 to 2017, including acquisitions from Chevron Corp., Imperial Oil and CST Brands. In 2014, it announced the acquisition of Pioneer Energy, an Ontario gas station chain with 393 stations. The deal increased Parkland’s unit count to more than 1,000 sites in Canada. In 2016 Parkland acquired Imperial Oil Ltd. and the On The Run/Marché Express brand in Canada, plus the real estate assets of 17 Esso-branded sites in Saskatchewan and Manitoba. The transaction included the franchise agreements for about 80 On the Run / Marché Express convenience stores currently operated by Esso-branded fuel dealers and distributors. The agreement also gave Parkland the trademarks to On the Run / Marché Express. The CST Brands acquisition in Canada in June 2017 included 495 dealer and commissioned agent retail fuel sites, 73 commercial cardlock sites, 30 commercial and home heating sites, and 159 company-operated retail fuel sites, as well as a French speaking corporate presence in Montréal. BRAND UNITY Today, Parkland is embarking on a major rebrand-refresh initiative to unify all of its Canada-based stores under the On the Run brand over the next two years. Already, the chain has remodeled the first 60 stores and plans to complete renovations on all acquired stores.

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FRONTEND

Profile

“We do have a large number of sites across Canada with “That doesn’t mean that the fuel brand will change. There might still be a Fas Gas, Esso, Ultramar or Chevron Tim Hortons, which is iconic, sort of the Canadian Starfor the gas brand. But the stores will be on On the Run. In bucks,” Haugh said. In addition to Tim Hortons, some On the Run sites feaQuébec, stores will feature the same brand treatment and logo but are called ‘Marché Express,’ which is the French ture Triple O’s, a restaurant featuring burgers and handmade ice cream and shakes. version,” Haugh said. Some stores feature made-to order foodservice. All On In the U.S., Canadian convenience store conglomerate Alimentation Couche-Tard owns the On the Run brand. Be- the Run stores offer a grab-and-go selection of fresh food cause of this, Parkland plans to create a different banner brought in daily through a local distributor partner. While the exact food offering may vary, the biggest deunder which to unify its U.S. convenience stores. Parkland currently has a project underway to evaluate that process. sign change is that foodservice is now a focal point of the The stores are expected to be remodeled to resemble the store. Whereas some c-stores tack a quick-service restauOn the Run rebranding, leveraging up to 80% of the Cana- rant onto the end of a store, almost as a separate entity, dian On the Run design in terms of architecture and offer- On the Run is making food a central focus, fully integrating foodservice into its retail operation. ing, but with a different banner name. Parkland has been busy incorporating some of the best The in-store assortment will vary. “Like any retailer 2030% of the SKUs are going to be localized to appeal to concepts and practices from its acquired businesses. From Chevron, it took some design queues from the store layout, local tastes and preferences,” Haugh added. As in Canada, while the banner will be unified, the gas which offered a large wide-open floorplan where all seccanopy will continue to fly fuel brands such as Phillips 66, tions are part of one cohesive store experience, including foodservice. Sinclair, Chevron, Exxon, Arco and more. “Several of those newer (former Chevron) stores have When envisioning what the remodels in the U.S. might entail, one need only look to the store makeovers in Can- two story atriums to give a lot more head room and driveada for clues. As the Canadian c-stores are remodeled through lanes focused on foodservice,” Haugh said. Parkland aims to have a store banner finalized for the under the On the Run brand, stores are receiving a more open floorplan, featuring more glass and bright lights for U.S. and a pilot store up and running by the end of 2018 or a clean look, as well as common seating areas to allow for the first quarter of 2019. more dwell time in the store. The assortment is modernREGIONAL PURSUIT ized in terms of category management best practices. This August, Parkland announced two new acquisitions. At this point, Parkland is still developing its foodservice offering. “We’re really looking for strong partners that It acquired Reinhart Oil Co. on Aug. 27, which included the would share our vision of fully integrating the foodservice retail businesses in Utah, Colorado, Wyoming and New Mexico. At the time of this writing, Parkland was schedinto the stores,” Haugh said. Currently, most of its c-stores feature fresh foodservice uled to close on the purchase of Missouri Valley Petroleum (MVP) on Oct. 1. in some form.

As it rebrands its fleet of U.S. convenience stores under one banner, Parkland aims to leverage up to 80% of the Canadian On the Run design in terms of architecture and offering, only with a different banner name. As in Canada, the gas canopies will continue to fly a variety of gas brands.

14 Convenience Store Decisions October 2018

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FRONTEND

Profile

“

We are aggressively expanding in the U.S. In 2017 we achieved ubiquitous coverage across Canada and, not that we’re finished growing, but it’s the initial completion of our footprint in the Canadian market, meaning you can start in New Brunswick and drive all the way to Vancouver, across all of Canada, and never stop anywhere else except one of our stores.

”

-Doug Haugh, president, Parkland USA.

“We are aggressively expanding in the U.S. In 2017 we there, the president sees the company pursuing opportuachieved ubiquitous coverage across Canada and, not that nities across the Great Plains from Denver East to St. Louis. we’re finished growing, but it’s the initial completion of our But future opportunities also exist up and down the Rocky footprint in the Canadian market, meaning you can start in Mountain region, from Montana down to Mexico. In othNew Brunswick and drive all the way to Vancouver, across er words, opportunities for the progressive convenience all of Canada, and never stop anywhere else except one of chain seem far and wide. our stores,” Haugh said. Parkland now has its sights set on investing in the U.S. MVP TREATMENT The MVP acquisition adds three bulk plant terminals coand growing a national business across the country within located with cardlocks, six c-stores and 19 branded dealers the next five to 10 years. Parkland first entered the U.S. market with the acquisi- across North Dakota. Plus, a fuel distributorship that sells tion of SPF Energy Inc., the parent company of Farstad Oil 84 million gallons of fuel and petroleum products annually. “In North Dakota, we’re No. 1 in that market in terms of Inc. and Superpumper Inc. in 2014, which gave it a presence of about 20 stores in North Dakota. Today, Parkland overall volume, and volumetrically MVP is No. 2. There’s a operates 30 stores in the Dakotas and supplies almost 200 lot of opportunity to combine our strengths in those areas,” locations across Montana, North Dakota, South Dakota Haugh said. Parkland has a strong commercial fuel business across Canada, but the MVP acquisition allows it to and Minnesota. The Reinhart Oil Co. acquisition allowed Parkland to ex- grow its commercial propane operating capabilities in the North Dakota market. tend its footprint into the Rocky Mountain region. Haugh anticipates more acquisitions before the end of “If you look at demographics and gross domestic product, its an extremely attractive market. Denver and Salt 2018, as well as in 2019. “We’re not just the largest fuel supplier in Canada, we Lake City are two of the fastest growing metro areas in the country. They’re young demographically, which skews to run a really good collection of retail operations, and we a great market for c-stores, and there’s a lot of strong or- think we’re doing the right things now to turn that into a ganic growth opportunities, and new-to-industry develop- fantastic chain operation,” Haugh said. Parkland, Haugh stressed, is not just one product line or ment opportunities in those markets, which we like,” said Haugh. It’s also contiguous to Parkland’s other U.S. opera- one business line. It’s committed to the retail business, the tions. “There are some leadership and management syner- commercial business and the supply business. “If you look at those three areas of strength, that’s a lot gies there in terms of running a business close by.” different than other consolidators who only want to buy a The environment is also similar to Canada. “As far as beginning operations in the U.S., we thought piece of the business. We don’t want to bust up a compato go where it’s most familiar to our current operations, as ny and sell off the pieces or break up the team,” he added. That difference has resonated with companies such as opposed to jumping into Miami or southern Louisiana or someplace very different culturally and in terms of selec- Reinhardt and MVP, which are long-term, family-owned businesses, Haugh said. tion and far from our supply capabilities,” said Haugh. “Their employees mean a lot to them. They want to As Parkland grows it expects to first expand adjacent its refinery in Burnaby, Canada, which offers tremendous make sure they’re in the right organization with a holissupply assets. “We’d certainly like to have some additional tic team that can come in and really contribute,” he said. demand downstream of those assets,” Haugh said. From “And, that’s what we are.” 16 Convenience Store Decisions October 2018

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QuickBites

Pumpkin Spice Drives Fall Sales Buyers of Pumpkin Spice Lattes (PSLs):

Visit 2x as often as nonbuyers

Have an average check 10% higher than non-buyers

Spend an average of $3 more when PSLs are purchased

Make 3x as many non-PSL purchases as they do PSL

Have higher incomes: 60% have a household income of $75,000 and above

53% are female

45% are 45 years old and under

60% do not have children under 18 in the household

Source: NPD Group’s 2017 Checkout, a receipt harvesting research service.

Pit Stop Planning 72% of women factor in cleanliness. 60% of women passed on a restroom because it was too dirty

69% of Americans say cleanliness is a factor they consider when looking for a restroom while on the road.

54% of Americans passed on a restroom because it was too dirty

BREAKFAST

BELIEVERS At least 50% of U.S. households say breakfast is more important than lunch or dinner.

66% men factor in cleanliness. 49% of men passed on a restroom because it was too dirty

Those with a propensity to be ‘breakfast believers’— who believe in the superiority of breakfast above other meals— are: Women Adults over 65 African Americans Hispanics

Source: August 2018 Harris Poll commissioned by CINTAS Corp.

What’s Popping?

Source: “Packaged Facts in Bundle: Breakfast Trends and Opportunities”

Total U.S, retail sales of popcorn increased 32% in the last ﬁve years to reach an estimated $2.5 billion in 2017, with ready-to-eat (RTE) popcorn leading ﬂavor innovation—up 118% between 2012-17 to reach $1.1 billion.

RTE POPCORN CUSTOMER PREFERENCES

49% - Traditional varieties like cheese-ﬂavored

32% - Indulgent like chocolate/caramel covered

39% - Mixed ﬂavor such as salty, indulgent and cheesy popcorn in one bag

20% - Popcorn with additions mixed in like dried cranberries or candy

12% - Seasonal ﬂavored, i.e. pumpkin spice, gingerbread

Source: Mintel’s “Salty Snacks U.S. 2018”

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INDUSTRY

News

TravelCenters Divests C-Stores to EG Group After a $2.15 billion acquisition of Kroger’s convenience store business earlier this year, EG Group is buying TravelCenters of America’s 225 Minit Mart c-stores for $300 million. EG Group is a privately-held petroleum forecourt convenience store retailer based in Blackburn, Lancashire, United Kingdom. EG Group currently operates across nine Midwest states in the U.S. and employs a workforce of about 2,500.

Scott Apter Receives NAG Lifetime Award Scott Apter, president of Apter Industries, received the 2018 NAG Lifetime Award for Convenience Retailing during a dinner at the National Advisory Group (NAG) Conference. The award was presented during a dinner at the Surf Club at the Ponte Vedra Inn & Club in Jacksonville, Fla.

Scott Apter (left) and his wife Ruth Apter pose with last year’s NAG Lifetime Award winner Bill Kent of The Kent Cos., and CSD’s Editor-in-Chief and NAG Executive Director John Lofstock.

Industry Veteran Jenny Bullard Joins Conexxus Jenny Bullard has joined the Conexxus staff as manager, member engagement. Bullard, a highly-regarded technology professional in the c-store industry, comes to Conexxus with a long history of advocating for standards and using technology to benefit the industry and the Jenny Bullard organizations she has worked for. As chief information officer of Flash Foods (later acquired by CST Brands and then Circle K), she and her team introduced and implemented leading-edge technology in the 165-store chain throughout Georgia and Florida. Flash Foods was a founding member of Conexxus (formerly PCATS) and Bullard served in various leadership roles for the organization, including chair of the Board of Advisors in 2008. In 2014, Bullard was inducted in to the Conexxus Hall of Fame for her work on behalf of Conexxus and the industry.

Amazon Go Arrives in the Windy City

“I’m so proud of what NAG has done to bring back the idea that people care about what goes on in the business, what goes on in the industry,” said Apter. “I thank you all for your attention, for your approbation, for this wonderful award.”

Chicago’s first Amazon Go location opened its doors on Monday, Sept. 17. The new automated, cashier-less store located at 113 S. Franklin St. in the heart of downtown Chicago, is the first Amazon Go location outside of Seattle, where three currently operate. Instead of the standard cashier model, the store relies on camera tracking and charges shoppers’ accounts as they walk out the door, product in tow.

20 Convenience Store Decisions October 2018

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SMO Inc. Closes Tevis Oil Acquisition SMO Inc. (dba SMO Motor Fuels and Dash In), a subsidiary of The Wills Group Inc., has closed on the acquisition of Tevis Oil Inc.’s convenience retailing and wholesale motor fuel assets. The acquired assets consist of all of Tevis’ company-operated locations (dba Jiffy Mart) as well as its commission agent and lessee dealer sites. Tevis will continue to operate and is actively looking to grow its home comfort solutions, commercial fuels and HVAC businesses.

McLane Hosts Annual Trade Show McLane Co. hosted its annual National Trade Show (NTS), Sept. 5-6 at the Rosen Shingle Creek Hotel in Orlando, Fla. This year’s trade show theme was “Sun, Sand and Sales.” Focusing on hot topics impacting the grocery and foodservice categories, NTS featured celebrities, guest speakers and special appearances from a variety of top global firms and organizations. For the third year, McLane included an interactive foodservice booth experience under the banner of McLane Kitchen, a foodservice solution for generating optimum sales and profits for retailers. This year’s event showcased nearly 200 exhibitors and welcomed more than 1,200 attendees.

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FRONTEND

News

O’Connor Takes the Helm at NAG The president of Jetz Convenience Centers in Wisconsin succeeds Peter Tamburro, of Clifford Fuel, as NAG chairman and will oversee the trade association’s effort to support smaller and family-owned convenience store businesses. By CSD Staff

O’Connor, along with his cousin the convenience store industry,” said he National Advisory Group (NAG) provides the convenience Tim Klein, owns and operates four lo- John Lofstock, executive director of store industry one of the most cations, which include Jetz-branded NAG. “We are honored to welcome exclusive environments for small, mid- convenience stores, Jetz branded on- Bob as chairman and look forward to sized and family-owned retailers to in- site fueling, Jetz branded car washes working with him to continue our misteract with each other and share ideas and four nationally franchised restau- sion of serving small and mid-sized chains in the competitive convenience for reducing operating costs and in- rants. The Jetz brand though small in store industry. At the same time, I would creasing sales. NAG is pleased to announce that number is large in scope. Jetz has like to sincerely thank Peter Tamburro Robert “Bob” O’Connor, president gained the attention and respect of for his leadership as board chairman of Jetz Convenience Centers, has major competing Wisconsin retail- these past two years. Peter has been been named chairman of the Board ers and as a result O’Connor recently a mentor, friend and leader for NAG concluded his term as chairman of the members for the past 10 years, and I’m of Directors. He takes the reigns from Peter Wisconsin Petroleum Marketers and thrilled he will remain on the board to Tamburro, the general manager of Convenience Store Association. In continue our efforts to grow NAG.” New York-based Clifford Fuel Co., for November 2016, Jetz was the first to introduce E15 to the Milwaukee mar- NAG AT WORK a one-year term. NAG is a retail trade association “As a third generation petroleum ket and together with the Wisconsin marketer and as a participant in the Biofuels Association developed and driven by retailers for retailers and is convenience industry for more than 30 ran a marketing campaign that intro- an organization committed to building years I am honored and delighted to duced E15 to the entire state of Wis- profits and relationships. NAG is aimed at small, mid-size convenience and serve as chairman of NAG,” O’Connor consin. “Our NAG board represents a won- family-owned convenience store chains said. “Through continuous work and diligent effort NAG continues to ben- derful mix of the very best retailers in and the executives that run them. NAG members meet annually to efit your business and our industry examine pressing issues affecting the in many ways. Not only are we kept convenience store and petroleum ininformed in ‘real time’ by a trusted dustry. Through education, networksource, but we are introduced to new ing and NAG’s world-class Informaideas and best practices, which contintion Exchanges, NAG members and ue to move our industry forward. the supplier companies that support As an added benefit we are able them have formed lasting friendships to maintain strong social connections and partnerships that have helped and learn from the industry’s best and store owners increase profits, reduce most respected leaders through the operating costs and explore new annual NAG Conference,” O’Connor ideas for expanding their business. continued. “With continued participaFor information about NAG or YEO tion and support, NAG will continue contact NAG Executive Director John to raise the bar for our industry while Bob O’Connor, president of Jetz Convenience Centers in Wisconsin, was named chairman of Lofstock at jlofstock@csdecisions.com promoting greater levels of convethe National Advisory Group (NAG). He follows or NAG Chairman Bob O’Connor at nience, added value and higher levPeter Tamburro, of Clifford Fuel. bob@jetzusa.com. els of satisfaction for our customers.” 22 Convenience Store Decisions October 2018

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FRONTEND

News

Study Finds Lower Fraud Losses

The survey also revealed that 86% of responding issuers support at least one mobile payment option, up from 74% reported in the previous study. By CSD Staff

MOBILE ON THE MOVE The survey revealed that 86% of responding issuers support at least one mobile payment option, up from 74% in the previous study. Mobile payments are defined in the study as the ability to use a smartphone to pay at a physical point of sale. Cardholder enrollment in mobile programs doubled in the last year. However, transactions initiated with a mobile wallet represented only 0.6% of in-store debit card purchases in 2017, compared to 0.3% in 2016. Enhancing digital capabilities topped the list of 2018 priorities for respondents who participated in this year’s survey. They voiced the want to give cardholders tools for greater control and flexibility in managing their debit card activity. Issuers also want to communicate with cardholders for real-time verification and fraud management, and even to automatically provision a digital card in a mobile wallet while awaiting the issuance of a plastic card, for example.

EFT DEBIT Now, issuers increasingly track how the card is used by the cardholder (instore or online, for example) rather than the network through which the transaction is routed. This change was driven in part by growth in transactions requiring no authentication and card-not-present purchases, both of which are now offered by larger EFT debit networks in the U.S. “The debit landscape continues to change dramatically,” said Steve Sievert, executive vice president of marketing and brand communications for PULSE. “We’ve moved from the simple world of ‘PIN or signature’ to an array of options, including PINless and signature-less transactions at the point of sale and biometric authentication in digital commerce and mobile wallets.”

FRAUD LOSSES DECLINE Based on fraud losses incurred by the study participants and extrapolated to the entire U.S. debit industry, issuers lost an estimated $850 million on point-of-sale debit transactions in 2017, a 5.5% decrease from 2016. This decline is likely due to the transition to chip-enabled debit cards, which is now largely complete for issuers. Surveyed issuers have converted 91% of their debit cards to chip cards. Card-not-present transactions may be more vulnerable to fraud due to the lack of chip card authentication or, in the vast majority of cases, PIN protection. Even though card-notpresent transactions account for 21% of transaction volume, they represent 44% of net fraud cases. The average net fraud loss associated with these transactions listed was $123 per incident. “As the industry has moved to chip transactions, fraud has migrated to transactions that don’t require a physical card,” said Jim Lerdal, vice president of fraud and risk management for PULSE. “Survey respondents reported that the costs of this fraud are high, amounting to 10.5 cents for every card-not-present transaction, of which issuers bear 1.7 cents, on average. The remaining 8.8 cents constitute losses borne by merchants and cardholder claims that are not charged back.” On average, issuers in the survey authorized nearly 95% of all attempted debit transactions in 2017. The biggest reason for declined transactions among this group is not suspected fraud, which impacted 0.4% of their debit transactions, but insufficient funds, which affected 1.8% of transactions.

ABOUT THE STUDY The 2018 Debit Issuer Study is the 13th installment in the study series, commissioned by PULSE and conducted by Oliver Wyman, an independent management consulting firm. Fifty-nine financial institutions— including large banks, credit unions and community banks—participated in the study. Collectively, the participants issue approximately 148 million debit cards and represent 42% of the U.S. debit market. The sample is representative of the U.S. debit market in terms of institution type, geography and debit network participation.

24 Convenience Store Decisions October 2018

he new 2018 Debit Issuer Study found that consumer debit use continued to grow in 2017, contributing to improved overall debit performance, while fraud losses per transaction declined for the second consecutive year. On the mobile payments front, the 13th annual survey, commissioned by PULSE, a debit/ATM network, and conducted by Oliver Wyman, found that cardholder enrollment in mobile wallets doubled year-over-year while transactions per enrolled card remained relatively flat. Issuers also reported that the historical dichotomy of PIN and signature debit is largely obsolete. PIN transactions used to be the sole domain of electronic funds transfer (EFT) networks, while signature transactions were the card brand networks’ arena.

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EXECUTIVECORNER

Bill Kent Gauges a Changing C-Store Industry The chief executive of The Kent Cos. dishes on topics central to today’s convenience channel, including mergers and acquisitions, foodservice and the need for more workers.

Bill Kent

By David Bennett, Senior Editor

ill Kent, president of Midland, Texas-based The Kent Cos., which operates a chain of 44 Kent Kwik Convenience Stores, recently sat down with Convenience Store Decisions at the annual conference of the National Advisory Group (NAG) to discuss some pressing matters in the industry that the second-generation company is tracking.

BK: There are some good quality vendor supplied products today, so there are some options. I think people waste a lot of corporate money chasing the foodservice concept thing only to find that when you allocate true cost, most of us aren’t making much money. We like that QuikTrip model where you don’t have a massive menu. Most of us sell some things, but it’s not the profit center we like to think it is.

Convenience Store Decisions (CSD): In recent years, CSD: What main issue do you see that will be espemergers and acquisitions (M&A) in the convenience sector have become prevalent. What impact do these larger cially pressing for c-stores in 2019? Why? BK: I think the pressing issue we have is finding peocompanies have on smaller, independent c-store chains in ple. With the economy doing well and unemployment terms of their ability to compete? Bill Kent (BK): It doesn’t scare me. It’s good news if (down), there are serious challenges on the people side. someone wants to sell, because the multiples are pretty The thing I’m hearing from my fellow operators is it’s a good. We may see some tough times initially, when those battle to find good people. If we don’t find a way to atacquiring companies grab some market share at the be- tract and keep good people, it opens the door for Amaginning, but as a general rule we feel we can out-operate zon and delivery retailers to step in and take some of our them on a one-and-one basis, and I feel most small opera- customers. tors can. I think small operators are more in tune with their CSD: Many retailers would agree that recruiting and communities and their customers, and their employees. retaining good workers remain essential needs. ConsidCSD: Bigger convenience retailers use acquisitions to ering that the cities of Midland and Odessa, where you pick up innovative product segments. 7-Eleven’s recent operate, now lead the state in terms of job growth and acquisition of the Stripes brand and the concept, Laredo low unemployment, what is Kent Kwik doing to ensure its Taco Co. is one example. What’s your take on this ongo- stores are adequately staffed? BK: What we’re doing is building housing. We’ll probaing trend? BK: I don’t know if these acquisitions are as strategic bly spend $2 million building housing, where we can house as acquiring companies try make them out to be. They are workers. There’s really no entry housing to speak of. Apartmore about size, getting into the markets. They will tell ments are full so they can keep raising rents. Land costs themselves they want to learn and do that, but very sel- have escalated so apartment complexes have to charge dom does it ever get any legs and go anywhere. I will tell those kinds of rents, making it unaffordable for entry-level you as a competitor to Stripes, however, they do a really people to live here. So, we’re going to be able supply our good job with their foodservice. You can name half a doz- people with housing they can afford and hopefully give us en companies that do it right and the rest of the industry a leg up. But, it’s a challenge. is struggling. CSD: Speaking of 2019, how is the new year potenCSD: Foodservice is perceived as an imperative to the in- tially shaping up for Kent Kwik? BK: I think as long as the oil activity stays good, it’s godustry’s future. You allude to the fact that foodservice is a hard thing to do right. What’s a sensible approach for a retailer, ing to be good for us. We think ’19 will be a good year. 2018 is looking like it will be our best year, we’re hoping. looking to commit to a more entailed foodservice program? 26 Convenience Store Decisions October 2018

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CONVENIENCE STORE SOLUTIONS

The Store Is Your Stage Companies that understand that frontline employees are a key cornerstone to any brand’s overall success will always have an edge on the competition. By Jim Callahan, Contributing Editor

HERE ARE FEW THINGS MORE important to the success of a company than making sure each customer leaves the store feeling better than when they arrived. The premise is not new, nor is it mine, but I will take the liberty of providing a few personal thoughts on the topic, along with adding a little bit of flair. When I did employee training I often asked for a show of hands for those who had ever given even the briefest of thought to becoming an actor, a politician, motivational speaker, a radio or TV personality or a writer. After a little cajoling, I was usually rewarded with a majority of hands in the air. Imagine for a minute that you are an actor, indeed the leading character in a blockbuster movie. In fact, you are the star. Now understand that the area behind the cash register and the raised floor that you are standing on is the stage. The customers entering the store or those out at the fuel island are your audience. Those same cash registers are your applause each and every time they ring up a sale. Now consider that every customer exiting your “theater” is likened to a critic’s four-star rating (or was it a 1-, 2- or 3-star rating?) You can be the judge as long as you are honest with yourself and vow to keep working to improve your customer service skills so every ring is a 4-star experience. Sitting in Georgia as I write this article, I can already hear a wee bit of laughter and see a few doubters. So I challenge you to give it a fair try before you dismiss this analogy. What have you got to lose? The answer of course is, “nothing,” but the upside is clear: a more fulfilling job, a sense of accomplishment, greater confidence and the admiration of your customers, managers and co-workers.

ACTING YOUR ROLE Really, there’s no downside to making yourself more valuable to your employer and more knowledgeable for the future. Those in charge learn quickly that it isn’t the technology or the product that make a company great, it’s the people. Business leaders who adopt the attitude that anyone 28 Convenience Store Decisions October 2018

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Jim Callahan has more than 40 years of experience as a convenience store and petroleum marketer. His Convenience Store Solutions blog appears regularly on CStoreDecisions.com. He can be reached at (678) 485-4773 or via email at jfcallahan1160@ gmail.com.

is replaceable, thinking they can simply hire someone with a greater skillset or someone with a better resume, are fooling themselves. That said, an employee should be aware that his or her role in the company comes with responsibilities along with the required duties. Often, the two differ significantly. Like any actor, frontline employees must be properly prepared for their role: • Be on time. Understand the show cannot start without you. • Come prepared and look successful. Can you imagine the star of a Broadway show being unkempt and unshaven, showing up in wrinkled clothes with their hair not brushed? How many great employees forget their name badge? You need to let your fans know your name. • Know what the company plan is and follow it. Great employees are also fantastic team members. While you can be a star actor, you are still part of a cast that must work together to put on a great show for your customers. Educate yourself on suggestive selling and help others on your team be knowledgeable on your store offering. And remember that most companies fund bonuses and raises based on sales, so when your co-workers do well, everyone does well. • Greet every single customer with a great smile and outstanding attitude. Understand that you have an opportunity to change or improve a customer’s day every time they walk through the door. • Have your own sales goals. Try choosing items to sell that fit the occasion, such as placing umbrellas close to the register when it’s raining or sunscreen on weekends in the summer. Actors have to be dedicated and constantly find ways to improve and reinvent themselves, and they must be able to adapt to varying situations. Don’t be afraid to fail and always maintain a burning hunger for a better life and a taste of success. My wish for all of you is that you persevere and find that success. cstoredecisions.com

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Cover Story

7-Eleven

Positioning

7-Eleven

for the Future

President and CEO Joe DePinto shares with Convenience Store Decisions how a customer-obsessed culture is propelling the world’s largest convenience retailer forward. By David Bennett, Senior Editor

or 91 years, 7-Eleven Inc. has often been on the cutting edge of major trends across the convenience store industry. Whether it was the company’s launch of the first self-serve soda fountain, 24/7 store hours, coffee sold in to-go cups, or the first self-serve gas pumps and ATMs installed at a c-store, 7-Eleven can count many “firsts.” The biggest, of course, occurred in 1927. Convenience retailing got its start when employee “Uncle Johnny” Jefferson Green approached a young Joe C. Thompson of the Southland Ice Co. about selling bread, milk and eggs from the front dock of an ice house. With success comes growth. Today, a new 7-Eleven store opens somewhere in the world every 3.5 hours. Convenience, 7-Eleven style, remains in high demand. The Irving, Texas-based c-store chain, a subsidiary of Seven & I Holdings Co., operates, franchises and/or licenses more than 67,000 stores in 17 countries, including more than 11,800 locations in North America, making it the largest convenience retailer in the world. President and CEO Joe DePinto recently shared with Convenience Store Decisions his take on the headwinds and disruption in the c-store and retail environment and how 7-Eleven is not only addressing the complex business challenges now, but also how the company plans to maintain its leadership position in the industry, going forward. Since he was appointed president and CEO of 7‑Eleven in 2005, DePinto has led the charge of building long-term sustainable growth in part by implementing programs designed to satisfy its fran32 Convenience Store Decisions October 2018

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In the last few years, 7-Eleven has rolled out heat-and-eat meals and made an aggressive push with healthy foods and gourmet quality items sold under its 7-Select brand.

chisees and its customers. During the recognize this change, listen to the last 13 years, however, U.S. retail has customer and make the changes cusbeen reformed drastically by demo- tomers want,” DePinto added. “That graphic, technological, behavioral and is exactly what we are doing. That’s how 7-Eleven is going to win.” entrepreneurial changes. For a large corporation like Just in the last few years, the explosion of e-commerce has forced c-stores 7-Eleven, nimbleness and flexibility to rethink how they do business and are key and can be challenging in a evaluate what kind of job they’re doing marketplace punctuated by declining disposable income of low- and lowerto meet consumer demand. How well 7-Eleven is doing on a daily income Americans, the encroachment basis is what DePinto and his executive of dollar stores and aggressive quickteam concern themselves with every service restaurants (QSRs), and the day at its headquarters, known as the growth of e-commerce, DePinto said. “There has been a buzz about retail 7-Eleven Store Support Center. For a company that was preoccupied with channels blurring,” DePinto said. “In customer satisfaction when DePinto my opinion, there are no more chantook the helm in 2005, 7-Eleven now nels. I think the customer is deciding identifies itself as a customer-obsessed and they are looking for—particularly the low-income consumer—quality at and digitally-enabled company. “The consumer is changing as a strong value. The message I have is: fast as I’ve ever seen,” DePinto said. We need to recognize that, and cer“Product life cycles are a lot shorter. tainly our supplier partners need to (Consumers) are much more demand- recognize that we need products at ing and discerning. They have instant a fair cost, so we can compete in a information about products and loca- changing world.” tions from their smart devices. They can look at Yelp reviews. That is creat- NEW-AGE INNOVATION ing this wave of change. Once again, 7-Eleven finds itself “The best retailers are going to leading the charge in retail trends, but cstoredecisions.com

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this time, for a new generation. In the last few years, the company has rolled out several platforms including 7NOW (mobile app order delivery), heat-andeat meals, a proprietary cold-pressed juice program, and has made an aggressive push with healthy food offerings and gourmet quality items sold under its 7-Select brand.

Since taking the helm in 2005, President and CEO Joe DePinto has taken 7-Eleven to new heights.

October 2018 Convenience Store Decisions 33

9/22/18 1:43 PM

Cover Story

7-Eleven

THE EXECUTIVE TEAM From left to right, Joe DePinto, president & CEO; Rankin Gasaway, senior vice president, general counsel and secretary; Ken Wakabayashi, senior vice president, international & strategic planning; Scott Hintz, senior vice president, human resources; Chris Tanco, executive vice president & chief operations officer; Jack Stout, senior vice president, merchandising, marketing & demand chain; and Gurmeet Singh, senior vice president, chief digital officer & chief information officer.

One notable development is the company’s Expanded Beverage Platform concept, which will become part of future store design. The platform is an expansive space dedicated to an array of dispensed beverages including iced coffee, nitro coffee, bean-to-cup coffee, cappuccinos, frozen dispensed beverages, soft-serve

ice cream, fountain drinks and assorted teas. The beverage destination feature will be in 150 stores shortly, with a wider roll-out planned in the next few months, DePinto said.

STARS AND STRIPES As 7-Eleven expands product lines and services inside its stores, it is

The Expanded Beverage Platform concept, which will become part of future stores, is an expansive space dedicated to an array of dispensed beverages including iced coffee, nitro coffee, bean-to-cup coffee, cappuccinos, frozen dispensed beverages, soft-serve ice cream and fountain.

34 Convenience Store Decisions October 2018

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expanding its reach through strategic acquisitions. At the beginning of 2018, the chain closed on the purchase of approximately 1,030 Sunoco convenience stores located in 17 states. The $3.3 billion deal included the APlus, Laredo Taco, Ladson Grill and Stripes Stores brands, and provides 7-Eleven entry into Houston, the fourth-largest U.S. city, and a strong presence in Corpus Christi and across south Texas. This particular acquisition has a different feel, perhaps, compared to other 7-Eleven purchases. 7-Eleven is meticulously studying the best of what Susser Holding Corp., a subsidiary of Sunoco and creator of Stripes, has to offer and what made the brands so successful. When feasible, the company plans to integrate some of these best practices into its broader operation. For example, 7-Eleven recently launched a new Customer Experience Visit program that has been successful for Stripes stores in recent years. “We really like their assets, in particular the Stripes business created by the Susser family, which is an outstanding operation,” said DePinto. “We also like the Laredo Taco restaurant concept

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9/22/18 1:44 PM

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9/12/18 10:32 AM

Cover Story

7-Eleven

Serving a Growing Demographic

7-Eleven’s purchase of Sunoco’s retail assets, including the Stripes brand, was a major coup for the expanding chain.

a lot. We are on the ninth month of a major integration. It’s been going really well. We’ve learned some things from them, and they’re taking part in some of the beneﬁts of the 7-Eleven system, so it has been a great marriage. I’ve been very pleased with it.” At the time of the acquisition, Stripes Stores comprised at least 550 locations. DePinto said the company has no current plan to convert the Stripes locations, which is noteworthy, considering some of 7-Eleven’s previous c-store acquisitions. “The plan right now is not to rebrand,” said DePinto. “We are rebranding the APlus stores. The Stripes brand in south Texas is a very strong brand, and clearly, we like that operation. Sam Susser and his team did an outstanding job.”

REDEFINING CONVENIENCE Last year, 7-Eleven expanded its already popular 7Rewards loyalty program so customers could earn points on a wider range of eligible purchases—from a Big Gulp drink to chips to fresh food. 7Rewards members can earn and redeem on all products in stores excluding fuel, age-verified products and services. Gurmeet Singh, senior vice president, chief digital officer and chief 36 Convenience Store Decisions October 2018

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With 57 million Hispanics in the U.S. alone, this group now represents almost 18% of the country’s population and has significant spending power. Hispanics are a growing portion 7-Eleven’s customer base, and a majority fall in its demographic sweet spot—Millennial-aged and younger. Chris Tanco, executive vice president and chief operating officer, explained what the c-store chain is doing to better engage this consumer group. Convenience Store Decisions (CSD): You have mentioned that the U.S. Hispanic market represents a growing consumer segment for 7-Eleven. How is this trend Chris Tanco influencing the product mix in certain geographic regions? Chris Tanco (CT): Hispanic spending continues to rise across the total fast-moving consumer goods, and 7-Eleven wants to ensure we offer products this demographic wants to see on our shelves, conveniently and priced competitively. Recognizing this, 7-Eleven recently introduced a private brand version of four traditional Mexican sweet bread options: Mantecada, Panquecitos, Roles de Canela and Panque con Nuez. CSD: What are you doing to ensure Hispanic and Latino consumer are ready to see, hear and purchase what 7-Eleven has to offer? CT: We have a strong partnership with 7-Eleven Mexico and get great ideas from them. We know what sells well in Mexico often sells well in the U.S., so 7-Eleven Mexico is often a good source for us on product quality and ideas. Hispanic Packaged Bakery items were extensively tested in Mexico for flavor, texture, aroma and appearance and have been found to be at parity or better than the competition. Beyond the quality, we are excited to offer these items to our customers at a value price point compared to the competition. Other examples of Hispanic products available at participating 7-Eleven stores both nationally and regionally, year-round or for a limited time include private brand 7-Select chili mango dried fruit, horchata Big Gulp drinks, hot empanadas, fresh-baked pan de bono, mango and jicama with lime and tajin, Cuban sandwiches and more. CSD: How is 7-Eleven engaging its Hispanic and Latino customers? CT: To promote Hispanic products, we actively market directly to Hispanic segments. We leverage targeted channels to reach the demographic more effectively as well as run messages in English and Spanish.

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Last year, 7-Eleven expanded its already popular 7Rewards loyalty program so customers could earn points on a wider range of purchases.

information officer for 7-Eleven, played an important role in the expansion of the mobile loyalty platform, as well as a host of other digital initiatives. Singh said the convenience chain is always looking for new ways to deliver products and services to its customers, whenever and wherever they need them. As proof, the company processes 20 billion transactions across its global network each year. Recently, 7-Eleven introduced support for tap-and-pay services, such as Apple Pay and Google Pay. Company executives also are looking at “frictionless” checkout, as well

as how to make it even easier for customers to find what they want, as quickly as possible. Eventually, this could include scan-and-pay technology to eliminate lines, enabling customers to depart the store without having to wait for a cashier. The company is already testing such a system at its Store Support Center. In addition, 7-Eleven continues to roll out new digital services, including several major ones recently: • 7NOW. The proprietary smartphone app, currently being launched in select U.S. markets, enables ondemand ordering of products from local 7-Eleven stores, and offers Apple Pay as a payment option. • 7Rewards. The popular customer loyalty program through the 7-Eleven app allows customers to earn and redeem points upon checkout. • 7-Eleven Bot on Messenger.

7-Eleven has expanded its foodservice menu. The chain still offers staples such as fresh pizza, but has added other offerings including more breakfast choices.

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Cover Story

7-Eleven

STORE EVOLUTION Almost all of the chain’s bakery items such as muffins, doughnuts, cookies and brownies are made at local bakeries, then delivered to store locations daily.

7-Eleven customers, who are at home or another location can engage with the brand from within Facebook by chatting with the 7-Eleven Bot on Facebook Messenger. • Amazon Services. The in-store package pickup service, Amazon Locker, is in approximately 1,100 7-Eleven stores, and Amazon Cash may

be used at more than 8,000 7-Eleven locations. • BillPay. The app powered by PayNearMe enables cash-users to pay a variety of bills at participating 7Eleven stores. “Nearly 50% of the U.S. population lives within one mile of a 7-Eleven,” Singh said. “Even closer, if you consider that with a smartphone or device, a consumer has a 7-Eleven store in the palm of their hand. Now, we are adding digital to the equation. We can become the fastest fulfillment for customers who need us, anytime, anywhere. Our physical assets already give us a huge advantage. Now, with digital we are right there to disrupt DOWN THE ROAD and redefine convenience.” Keeping up with merchandising

1927 7-Eleven roots begin 1927 in Texas when the Southland Ice Co. began selling milk, eggs and bread .

1920

1940s It changed to its current name from the Tote’m name in 1946, by using the hours of operation, from 7 a.m. to 11 p.m., seven days a week.

1930

1940 1930s Joseph C. Thompson expanded the concept, eventually moving to a store setting. The new “convenience stops” are called Tote’m Stores.

40 Convenience Store Decisions October 2018

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7-Eleven Executive Vice President and Chief Operating Officer Chris Tanco is busy. He leads all aspects of operations for 7‑Eleven’s stores, including field operations, operations support, fuels, acquisition integration, store evolution, franchising as well as 7-Eleven’s Canadian business unit. While these present duties keep him occupied, Tanco is heavily involved in the future direction of 7-Eleven. Tanco explained that consumers expect more from the brands they shop and need a compelling reason to visit the inside of a c-store. “Customers today are much more demanding than they have been in the past, not just in how they want to shop, but what they want to shop for, how they want to pay for it, and how they want to receive products,” Tanco said. “The store of the future has to anticipate the customer’s needs, sometimes even before they know what they want, and give them what they want quickly, conveniently and at a great value.”

1960s 7-Eleven in 1964 enters the franchising business with the purchase of several Speedee Mart franchises in California.

1960

1950

1950s Implementing an expanded model, the one-stop shopping locations offered everyday items consumers need, including gas.

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Cover Story

7-Eleven

more differentiation,” Stout said. While private brands can help drive differentiation, more retailers across the board are trying to provide customers what they demand, which 7-Eleven has a reasonable handle on, for now. “Customers are looking for unique products, and In 2018, 7‑Eleven introduced a new line of organic, coldthey are eating differently, pressed juices, which is part of the retailer’s 7-Select so we see health conGO!Smart private brand line. sciousness as a real trend within food and beverage,” Stout said. “We also see people wanting authentic, local representation of trends, especially with the channel the products—wrapped in a great expeconsolidation previously mentioned rience, both online and off-line.” That’s a tall order, but 7-Eleven by DePinto, is more challenging than ever—even at 7-Eleven. Jack Stout, leaders are up to the task. 7-Eleven senior vice president of merchandis- works with both small and large vening, marketing and demand chain, dors to bring exclusive, first-to-market said once you cut through the chaff, products to customers. The company two merchandising trends stand out… created the Next Up event to give upones the company is watching closely. and-coming brands an opportunity to “You see more channels chasing share their products with 7-Eleven’s more immediate consumption and merchandising team. At least 50 com-

FUTURE PURSUITS 7-Eleven was named the top franchise of Entrepreneur’s “Franchise 500 List in 2017,” with the ranking based on franchise costs and fees, size and growth, support, brand strength and financial strength. The convenience retailer landed ahead of major corporations such as McDonald’s, Dunkin’ Donuts and Dairy Queen. As he looks to the future, DePinto sees bright horizons. “With entrepreneurial spirit and innovations coming from our Store Support Center, a strong franchisee community and dedicated supplier partners, I have no doubt 7-Eleven will reach its corporate goal of having 20,000 stores in North America by 2027. What a great way to mark the company’s centennial and honor its history of leadership in convenience retailing.” CSD

1990s 7-Eleven starts shipping fresh food products daily to meet the needs of healthconscious consumers.

1970s 7-Eleven offers self-serve gas and the first self-serve soda fountain. Americans are also introduced to the Big Gulp fountain drink.

1970

panies are expected to attend the full-day event Oct. 11 at 7-Eleven’s Store Support Center. Next Up will also provide small businesses and emerging brands an opportunity to participate in merchandising, logistics and operations workshops with company leaders.

1990

1980

2010

2000

1980s 7-Eleven continues its international growth, including stores in Taiwan, Hong Kong, the Philippines, Norway, South Korea and Thailand. 42 Convenience Store Decisions October 2018

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2018 7-Eleven operates, franchises and/ or licenses more than 67,000 stores in 17 countries, including more than 11,800 locations in North America, making it the largest convenience retailer in the world.

2000s The 7-Select brand is born in 2004.

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Foodservice

Cstore Food Trends

Tracking Foodservice Trends Understanding what your customers want will go a long way in meeting their daily need for fresh foods. By John Lofstock, Editor

ust a decade ago, convenience stores were struggling to penetrate the foodservice market. The industry battled with a reputation problem that had many people wondering if it could effectively shed the “gas station food” label, and rightfully so, as old hot dogs spinning on a roller grill was the impression many consumers had of c-store foodservice programs. But those who underestimated the c-store industry’s ingenuity, leadership and drive to satisfy customers’ immediate needs are now eating their words as c-stores have become one of the most preferred destinations for immediate-consumption fresh foods in the country. In fact, chains like Wawa, Sheetz, Rutter’s, Parker’s and many others have exceeded quick-service restaurants in terms of customer satisfaction. In a recent story, a McDonald’s in Philadelphia added touchscreen ordering kiosks and the burger franchisee, Tonya Holliday, said, “Now we’re just like Wawa.”

IN THE HUNT The hunter has indeed become the hunted. One of the biggest barriers to foodservice acceptance was that c-stores lacked the skillset, space and labor to produce fresh food on a daily basis. And while some people may still associate c-store food with old hot dogs, this stigma is quickly vanishing. To keep moving the needle forward, convenience stores must track foodservice trends and keep tabs on the competition. Here’s a look at some consumer trends that are driving foodservice purchases:

Changing Customer Preferences. want while keeping the food safe, reliBold and exotic flavors, snacking and able and profitable is a growing issue. health and wellness are at the fore- Customers need to know the food is front for consumer food preferences fresh and safe, especially as chains like in 2018, and the Millennial gen- Chipotle struggle with repeated outeration is frequently driving those breaks of foodborne illnesses. Young consumers are pushing this choice options with their adventurous palates. Subscription food home trend forward with 71% of Millennials delivery will also continue to evolve, saying they enjoy attending foodkeeping in mind consumers’ wishes focused events and 81% stating that to be part of the meal-making pro- they appreciate exploring new culcess with easy-to-follow recipes and tures through food. Foodservice healthy, fresh ingredients, according operators will see a continuation of to RSM US, a Chicago-based con- this trend, both in dining experience and innovation in global flavors. sulting firm. High Expectations. Consumers Likewise, on-the-go, convenient packaging, like bowl-based choices of all ages wish to establish trust with will grow in demand as eager con- food providers, and young consumers sumers look for quick but healthy are expected to continue this trend in eating options. Bowls, in particular, future years. Some 68% of Millennial said Jerry Weiner, president of Weiner consumers prefer local sourcing of Consulting, are an ideal solution for ingredients and 66% of them are willing to pay a little more for food that convenience stores. “Bowls are easy to create, cost- comes from local producers, accordeffective and portable for a variety of ing to a Y-Pulse study titled “The occasions for consumers,” said Weiner, Modern Consumer: Understanding who retired from Rutter’s in 2016 after Tomorrow’s Tastemakers Today.” Foodservice consumers want it serving more than 30 years in the c-store foodservice business. “That’s all and it’s a trend that’s here to stay. what customers are looking for— Sixty-seven percent of Millennial consomething quick and easy, that tastes sumers said they love ordering healthy great. Keep it simple, but make sure options offered at a restaurant. Yet, 63% of Millennial consumers also say it’s good.” Food Safety. A variety of healthy, they love restaurants that offer “overfresh food options are currently acces- the-top” menu items. Convenience stores will need to sible from most c-stores, as many have adapted their facilities to meet con- react to this consumer group to consumer demand. C-stores also offer tinue to earn their business. The key, prepared food options in addition Weiner said, “is understanding what to onsite food preparation stations you can do really well and doing it as store concepts converge to keep consistently. Be innovative, be fast, be up with consumer tastes. As a result, fresh, but above all else, you have to delivering fresh food that customers be really good.” CSD

44 Convenience Store Decisions October 2018

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Foodservice

Ethnic Food

Tapping Into

Flavor Adventures Americans want new ﬂavor experiences, but they also want food items that feel familiar. C-stores are adding more conventional ethnic foods, while eyeing ways to incorporate upcoming foodie ﬂavors, so they’re ready when they enter the mainstream. By Erin Del Conte, Senior Editor

s ethnic foods such as tacos and sushi become further entrenched as mainstays on American menus, foodie customers, especially Millennials and Gen Z, are seeking out the next global ﬂavor adventure. Middle Eastern fare is the big global ﬂavor trend gliding onto menus in 2018. Looking at four-year menu growth, Datassential explained that mentions of falafel and shawarma (a meat preparation similar to gyros) both grew by 45%; the spice sumac was up 16%,

tahini (a sesame seed paste) up 44% and Aleppo pepper up 179%, substituting for regular chili peppers. “We’re seeing spice blends like za’atar and ras el hanout popping up on a lot of different kinds of menus, and also dukkah and sumac, and North African flavors like harissa (a spicy chili paste) and berbere,” said Kyle Chamberlin, project manager for the Chicago-based market research ﬁrm, Datassential. While these flavors aren’t yet appearing on fast-food or fast-casual

Fast Facts: » Middle Eastern fare is the big global ﬂavor trend hitting menus in 2018. » Hispanic and Asian ﬂavors are becoming prime options for convenience store menus. » Customers from all demographics are requesting foods like tacos, burritos and Tex-Mex. 46 Convenience Store Decisions October 2018

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restaurant menus, they are catching on with a foodie audience eager for new taste experiences. At this point, such ﬂavors “have moved off of ethnic menus and are moving into the trendforward casual world, meaning your gastro pubs, your independent casual restaurants,” Chamberlin explained. But savvy c-store food operators are watching, knowing tomorrow ‘shawarma’ could become as ubiquitous as tacos. Meanwhile, as c-store retailers try to keep pace with the ever evolving taste buds of the younger generations, while still appealing to baby boomers, they’re ﬁnding the bold, Hispanic and Asian flavors that dominated trends only a few years ago settling into the mainstream and becoming prime options for convenience store menus. Customers from all demographics are requesting foods like tacos, burritos and Tex-Mex (a fusion of Mexican and American cuisines), and c-store retailers are more frequently considering the offering alongside more traditional food programs like pizza, sandwiches and burgers. cstoredecisions.com

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Foodservice

Ethnic Food

TACO URBANO Mario Spina, owner and CEO of The PRIDE Stores, with 12 locations in the Chicagoland area, introduced a Taco Urbano at the chain’s PRIDE of Batavia location a few years ago. “It’s a traditional Mexican restau-

rant with a modern twist, with all of our food offerings being made to order,” Spina said. Two of the most popular Taco Urbano menu items include the steak tacos and burritos. Spina is partial to the restaurant’s guacamole, which is

made fresh for each order with two avocados, lime, salt and made-inhouse Pico De Gallo. Even the salsas are made fresh in house. “We originally decided to create Taco Urbano to give us some diversity in our food offerings for each PRIDE location,” said Spina. “Mexican food is very mainstream these days, and all ages love a good taco or burrito.” The PRIDE Stores recently opened its second Taco Urbano location, a freestanding restaurant next to its PRIDE of Villa Park convenience store. The restaurant also features a drive-through. “We are hopefully opening a third Taco Urbano location at a new-build site in St. Charles, Ill. We are working to receive planning and zoning approvals for this year,” Spina added. If a c-store market already has a number of food concepts available that would compete with The PRIDE Stores’ Urban Counter offering—which consists of hand-pressed hamburgers—then Taco Urbano offers an alternative offering to draw customers. In addition to Taco Urbano and Urban Counter, PRIDE offers a PRIDE Café menu with panini, crepes, salads and more. All three concepts were created by The PRIDE Stores and are run by its team members. Employees are cross-trained between the c-store and restaurant at each location, and the same point-of-sale system is used for each restaurant and for the convenience store. “We really look at what the market currently has for each store to see which one of our three food offerings we would like to place inside,” said Spina. “We try to have different food offerings at PRIDE locations that are close to one another to allow commuters that pass multiple PRIDE locations to experience the different food concepts we offer.” Taco Urbano provides delivery through a partnership with Uber Eats. “We started working with Uber Eats to allow more consumers the

48 Convenience Store Decisions October 2018

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Foodservice

Ethnic Food

The PRIDE Stores’ Taco Urbano is a traditional Mexican restaurant with a modern twist, where all food offerings are made to order. It even offers delivery.

ing that students can eat easily while on their way to class.

FLAVORFUL TRENDS

opportunity to try our food,” Spina Chinese (68%) cuisine are also big said. “We prefer customers to come sellers with this generation, but it’s into the stores so they can see all the important to note that Gen Z is less other great offerings The PRIDE has likely to see these foods as global so under one roof, but this allows another much as American staples. These globally-influenced eating avenue to display our menus. Most people when they come to the restau- habits mean more opportunities for rant for the first time after ordering on foodservice operators. Sun Stop Convenience Stores Uber Eats are shocked the food comes from inside a gas station, which we recently confirmed firsthand that Gen Z is looking for more diverse flavors than love to hear.” The PRIDE also offers breakfast bur- generations past. When it was creating its Eat’s deli menu at its Florida State ritos as part of THE PRIDE Café. “We recently added to our PRIDE campus c-store, it first surveyed about fresh food grab-and-go selection a 30 students to understand what types Thai Chicken Wrap, which is very good of food they most wanted. The bigand has been selling well,” said Spina. gest request was for not for pizza or As for Middle Eastern fare, The hamburgers, but for Tex-Mex food. “I believe students requested TexPRIDE Stores includes a Hummus Dip with Carrots and Celery in its fresh Mex because of its bold flavors and the multi-cultural group of students we food selection. have visiting our store. It is also portrayed as a ‘fresh and healthier’ food GEN Z TASTES Research firm Mintel points out that option,” said Spencer Thomas, brand Gen Z and Millennials are the most manager, Southwest Georgia Oil Co., racially and ethnically diverse gen- which operates more than 100 stores erations in U.S. history. What’s more, in Georgia and Florida. “We added the Tex-Mex offerparents today are raising their kids to have broader palates. According to ing before we opened the store and Mintel, 36% of U.S. parents of children tested many different recipes until we under age 18 agree that their kids nailed down our core Tex-Mex offering,” Thomas said. “The Tex-Mex enjoy eating international foods. So it’s no surprise Gen Z is driving offering includes burrito bowls, burrithe consumption of more emerging tos, loaded nachos, homemade queso international foods and beverages. and homemade sauces. The most Gen Z likes to eat at international res- popular is our fajita chicken bowl.” Students are responding enthusiastaurants with Indian (36%), Middle tically to the Tex-Mex menu. Another Eastern (38%) or African (27%) fare. Italian (68%), Mexican (71%) and benefit is that it’s a grab-and-go offer-

While it’s going to be some time before Middle Eastern flavors are mainstream, opportunities to tap into this growing trend abound for c-store foodservice operators. “I don’t think the convenience store operators necessarily have to wait to incorporate Middle Eastern options,” Datassential’s Chamberlin said. A potential benefit to c-stores is most customers have a positive perception of Middle Eastern food, and yet they don’t know much about it. “This can be a good thing for c-store operators. They don’t necessarily have to compete with some idea of what authentic Middle Eastern food is in consumers’ minds,” said Chamberlin. They can bring some of these flavors to the table in a sandwich or in a prepared salad, and customers won’t mind that they’re not getting it from a traditional restaurant. Customers today are more open to trying new flavors and increasingly looking for new food adventures, but it’s important to provide a familiar framework around ‘exotic’ offerings. For example, instead of saying “Chicken seasoned with za’atar,” Chamberlin recommends saying “flavored with Middle Eastern spices.” Tabouli, hummus and pita chips are easy ways to add a hint of Middle Eastern flare to the grab-and-go section, Chamberlin said. If you make pita chips in-house you can add familiar seasonings like sour-cream-and-onion. “In other words, bring Middle Eastern flavors to a more traditional American format, or take a Middle Eastern format like pita chips and add more traditional American flavors to it.” CSD

50 Convenience Store Decisions October 2018

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Foodservice

Menu Development

Growing

the Food

Get the basics down pat—whether coffee and bakery, roller grill or sandwiches— to build a strong foodservice foundation. By Marilyn Odesser-Torpey, Associate Editor

he first foodservice offering at Ashland, Ky.-based Clark’s Pump ‘n Shop were prepackaged sandwiches and a microwave to heat them. After that came roller grills with hot dogs and tornados. Then, in 2009, the company took a big leap into the category by introducing Krispy Krunchy Chicken into some of its stores. The first hot cases were three feet long. While most of the stores now have five-foot hot cases, in its new store in Olive Hill, Ky., Clark’s had to install an eight-foot-long hot case and eight-foot-long deli case to accommodate all the food items on the store’s menus. Of the company’s 68 stores in Kentucky, Florida, Ohio and West Virginia, 22 feature grab-and-go hot and cold sandwiches and 20 have the full-service Clark’s Café concept which emphasizes made-to-order options. “As we grew our foodservice and got our feet wet we learned about the hurdles we would have to overcome,” said Brian Unrue, Clark’s director of operations. “Profit margins, labor and packaging costs can kill you.”

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52 Convenience Store Decisions October 2018

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For its ledgers, Clark’s divides its foodservice program into two categories, “Deli,” which is sliced meats, cheeses and salads sold by the pound, and “Fast Food,” which encompasses all the prepared items. To keep track of what’s selling, the company conducts ﬁve audits every month, one every Wednesday and one at the end of the month. Chicken—which Unrue emphasizes is fresh, never frozen—is a big seller in the stores, particularly boneless tenders. Seven stores feature Krispy Krunchy Chicken, while 12 others serve Clark’s own proprietary recipe. To differentiate its chicken from quick-serve restaurant competitors, Clark’s uses a larger four-ounce tender in its proprietary program. “Everything is carefully portioned to control cost of goods for us and provide value to our customers,” Unrue said. Stores have a core menu but can include other items that suit their customers’ purchasing preferences. “We sell the heck out of veal cutlet at our McArthur, Ohio store, but can’t even give it away anywhere else,” Unrue said. Breakfast platters with egg, biscuits and gravy, sausage or bacon are available in the cafe stores. Customers can also go down a hot line, a la Subway, to build their own breakfast sandwich. Some of the stores have other build-your-own options for deli sandwiches, grilled cheese and tacos, burritos, bowls and quesadillas. Appetizers are becoming increasingly popular with and between meals, Unrue said. “We’re selling a lot of cheese sticks, fried pickles, jalapeño poppers and potato wedges, so we keep them in the hot case all day long,” said Unrue. With food sales going strong, all seven of the Pump ‘n cstoredecisions.com

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Circle No. 51 on the Inquiry Card

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Foodservice

Menu Development

Shop stores opened over the past nine months have a Clark’s road and construction workers, we learned they want grabCafé with full kitchen that serves breakfast, lunch and din- and-go hot and cold sandwiches and snack cups so they can ner. As far as kitchen size, Unrue used to think less was more. come in and get right back out,” Gearhart said. “In other “We only allotted around 56 square feet for our original stores, we have customers who are willing to wait for madekitchens,” said Unrue. “I wish I had known before that con- to-order service.” To keep up with what customers crave, suggestions from sumers would trust us to provide a variety of high-quality store foodservice managers are sought. Many times, they foods so we would have made our kitchens bigger.” Kitchens in newer stores average 250 to 400 square inspire LTOs that are changed up every two months. feet and have deep fryers, griddles, convection ovens with stovetops and double-door coolers instead of the smaller BOLSTER THE BASICS walk-ins that were previously used. Food has become such With numerous store acquisitions under its belt and more to a big category at Pump ‘n Shop that the Olive Hill store pro- come, Des Moines, Iowa-based Yesway Convenience Stores is vides seating for 40 guests. juggling a lot of balls when it comes to foodservice. The comUnrue noted that the company is getting ready to test a pany currently operates 150 stores spanning nine states. customer ordering kiosk in one of its stores. “Within our portfolio are a lot of opportunities and plat“I see multiple benefits to that,” said Unrue. “From a labor forms including made to order and hot and cold grab and standpoint, there will be no more downtime waiting for cus- go,” said Jeff Keune, senior vice president of food service tomers to make up their minds what they want. Because the and innovation. “We take a lot of time elevating quality, order goes directly into the kitchen, it will save on mistakes taste and excitement around our platforms.” in order preparation and enhance speed of service. It will One of the first things Yesway does after acquiring a new also track what customers add on like tomatoes and onions, store is to invest in strengthening the basics, he said. That which will help with food costs.” includes installing roller grills if the store doesn’t already All food items, including the sandwich add-ons, are have them. The coffee and fountain programs are also assigned price look-up codes (PLUs) and the stores’ point- enhanced to use filtered water, Yesway’s own branded cofof-sale (POS) system tracks those sales making identifying, fee and the right ice; selecting the most popular beverage pulling and replacing non-performing products easier. To flavor profiles and providing the right cups. provide more options for replacement, quarterly limited time offers (LTOs) are offered. Those that track well, like a recent “potato keg” (a cheese-filled potato tot) may be retained on the menu while “losers Before embarking on any level of fresh foodservice, retailers have a lot get lost,” Unrue said. of homework to do, said New York-based restaurant, retail and hospitality

First Things First

TRIAL AND ERROR Thirty years ago, Nittany Oil MiniMart, which has 26 stores in Pennsylvania, launched its foodservice program with made-in-house hoagies, hot dogs and a few fryer items. Since then, the chain has evolved its menu to offer fresh-dough pizza, a wider variety of fryer selections and wraps inspired by customers looking for “better-foryou” alternatives to regular sandwiches. “A lot of what we did to discover what our customers’ wanted was trial and error over the years,” said Angela Gearhart, MiniMart’s food service category manager. Much of that trial and error adding to and tweaking the menu was done on a store-by-store basis. “In our stores where we get a lot of 54 Convenience Store Decisions October 2018

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consultant Arlene Spiegel. “Find out the board of health rules, what food-handling certifications are required for your state or states and insure the proper equipment is in place for merchandising and food safety,” said Spiegel. Every municipality has public records regarding the demographic makeup of each trade area so it’s easy to find the number of homeowners vs. renters, ethnic and religious ratios and economic status. But, she noted, that information is only part of the picture that will guide operators to the food concepts and items they should offer. “The deep dive into the communities’ lifestyle drivers and what they value is just as important,” she added. Spiegel recommended that retailers look around at competing fastcasual and quick-service restaurant concepts and see where the parking lots are full. That’s your competition and what your customers want,” she pointed out. “The store’s location in relation to the drive-by times—going or coming home from work or school—will also be a factor.” Spiegel also suggested that retailers consider partnering with other food producers such as local bakeries and caterers to support their local communities and increase the breadth of products in their stores.

cstoredecisions.com decisions.com

9/22/18 1:47 PM

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Foodservice

Menu Development From coffee to hot dogs, sandwiches and pizza, Yesway has focused on making its foodservice offerings as enticing as possible.

Even hot dogs are a big deal at Yesway. “You have to get it right,” said Keune. “We want guests to say ‘Wow. Have you had a hot dog from Yesway?’” Acquisition of stores has allowed management at Yesway to “stretch ourselves and our brains” by identifying products and concepts to make the company’s foodservice broader and more differentiated. He pointed to one of its stores in Spearfish, S.D. that has “a fantastic breakfast burrito” via its drive-through window along with an espresso bar and “a wonderful cinnamon roll.”

“One of the best things about acquisitions is that we can find great products and programs to incorporate into our other stores,” Keune said. Through acquisitions, Yesway has become the second largest franchisee of Orion Food Systems, with 20 of Orion’s concepts in its stores. These concepts are Orion’s Hot Stuff Pizza, Chix Chicken and Chopz sandwiches and salads. “We make the most of partnership opportunities,” said Keune. “Borrowed equity is fine with the right partner. At the same time, a chef-led team on Yesway’s staff is working to develop elevated pizza and fresh bakery offerings. “Our goal is a balance of branded and proprietary platforms,” he explained. Ideas for foodservice expansion also come from other sources within the Yesway system including store general managers and customers. “I’m out in the stores every week and I listen a lot,” Keune said. CSD

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9/12/18 10:26 AM 6/4/18 3:30 PM

Foodservice

Marketing

Packaging Seals Foodservice

Marketing

Packaging choices speak volumes about a convenience store’s commitment to foodservice. Consumers want transparency of what goes in their foods. By Marilyn Odesser-Torpey, Associate Editor

ackaging can make or break a aging materials can impact the quality food sale, found research ﬁrm of a food product. “With four in five U.S. consumers Mintel in its June 2018 “Food saying freshness and taste are top Packaging Trends“ report. “Consumers appear engaged with priorities when shopping for food, it food packaging,” the report revealed. makes sense that consumers equate “What’s on the outside impacts good food—even conveniencewhether shoppers buy into what’s on style ready meals and snacks sold in the inside [and] packaging plays a c-stores—with high-quality packagstrong role in delivering and convey- ing,” he added. Luttenberger explained that coning freshness.” For today’s consumers, packaging sumers also look for packaging that has to be more than just a pretty face. includes information regarding nutriThe Mintel study showed that packag- tion, that is easily opened, makes consumption convenient on the go ing integrity outweighs design. A quarter of shoppers said they and, in many cases, can reseal rather have avoided buying a product than only reclose. Shoppers are also because of a previous packaging fail- reading on-pack information. Sixtyure, a higher number than said they two percent said it was important to avoided buying a product because their food choice. Seventy-four perthey did not like the format or design. cent said they look for expiration An even smaller percentage of food dates, 66% look for ingredients and shoppers are willing to pay more for a 49% said calories. Fifty-eight percent of the responproduct because they like the format dents (49% of women, 61% of men) or design. said c-store food and drinks come in high-quality packaging, according to PACKAGING INTEGRITY “Food safety and a package’s ability the 2018 report. The highest quality packaging is to ensure it is a given for consumers, rather than a desired feature,” said what Scott Zaremba was looking for David Luttenberger, global packaging when he changed out the proprietary sub concept in his Zarco USA c-store director at Mintel. Quoting a Mintel 2017 Food in Lawrence, Kan., to the also proPackaging Report, Luttenberger noted prietary Stanley James Smokehouse that 46% of consumers believe pack- barbeque concept last February. 58 Convenience Store Decisions October 2018

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Fast Facts: » Consumers value package integrity over design. » Most consumers believe c-store food comes in high-quality packaging. » Food boxes should have transparent windows.

But with Stanley James serving up meat-and-sides platters and by-thepound orders as well as made-to-order and hot-case-held burritos, hot breakfast sandwiches and hot and cold barbeque sandwiches, finding the best packaging for all its offerings was a real challenge. The packaging also had to be sturdy enough to preserve the ﬂavor and textural integrity of the breakfast and barbeque sandwiches that are delivered daily to Zaremba’s second Zarco store to be microwaved. “It was a real trial and error process using multiple approaches from cardboard to plastic to an expensive Tupperware-like container—we weren’t going to skimp on the materials,” he said. “It was also important cstoredecisions.com

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Foodservice

Marketing

Eco-friendly Taking Over

About a third (35%) of consumers say reducing packaging waste is important to them, according to a Food Packaging Trends report published by Mintel research last June. For many of the dealers serviced by Dallas-based Empire Petroleum Partners, the trend is away from plastic to paper and other ecofriendly, recyclable and biodegradable materials, said Ted Roccagli, Empire’s director of partnerships and preferred vendor programs. “Millennials—both customers and dealers from multi-generational stores—are driving this trend,” Roccagli said. He pointed out that is a multitude of options exist in the marketplace made from sugar cane to bamboo and cornstarch. Even some utensils such as forks and knives are made from very thin wood that is biodegradable. For Empire’s corporate stores, the company is studying ecofriendly options that would be economically feasible to use while keeping food fresh, appetizing and convenient to eat. “There’s a higher cost associated with eco-friendly packaging and finding the ones that would work best for us is an educational process,” said Roccagli.

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to us that the packaging be clear, wherever possible, because clear packaging gives the food the madeon-site look.” Only hot platters are packaged in Styrofoam containers. Ribs are packaged in clear plastic and sides in plastic clamshells because “they hold the moisture better.” Sandwiches are wrapped in clear cellophane. “For the sandwiches, cellophane is the simplest, the most economical and holds the food at the proper consistency,” said Zaremba. With transparency all the buzz in both ingredient listings and packaging, the more you can show the product the better, agreed Ted Roccagli, director of partnerships and preferred vendor programs for Dallas-based Empire Petroleum Partners. Empire works with 1,762 dealers spanning 31 states and operates 74 locations in seven states. Roccagli noted that kraft paper and

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box packaging works well for foodser- SHOWCASING QUALITY vice, especially if it has a window to Food safety is always a concern. showcase the food inside. Descriptive To reassure customers that no one words such as “Made Fresh” or “Fresh has tampered with their food, Empire To Go” can also pack a punch when it advises its dealers to seal all packaging comes to tempting customers. with the product identification/ingredi“Fresh is the hot button,” he said. ent/nutritional information stickers. Many of Empire’s dealers use clear “If the sticker is intact, that tells the cellophane to wrap their cold sand- customer the product is safe,” he said. wiches. For green salads, clear plastic In addition to showing the quality clamshells are usually the packaging of sandwiches and other food prodof choice and clear plastic cups for ucts, clear packaging makes for a more fruit salads. colorful grab-and-go cooler display, One of the company’s preferred according to Chris Carter, president of vendors, Hunt Brothers Pizza, is Vinita, Oklahoma-based Shout & Sack. packaged in a cardboard box with a At Shout & Sack convenience stores, window for showing the quality of the sandwiches come in plastic triangles product inside. to show what’s inside, green and deli Both of Empire’s preferred vendors salads in eight-by-eight-inch clamfor chicken, Krispy Krunchy Chicken shells and pie slices in six-by-six-inch and Chester’s Fried Chicken, also pro- clamshells. vide cardboard boxes with viewing “It’s especially important to use clear windows. packaging for salads because custom-

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ers want to see what’s at the bottom,” said Carter. “We always see them picking up the containers and looking at the bottom.” Hot sandwiches are packaged in Styrofoam to maintain their temperature for take-out. “There’s nothing worse than eating a cold Philly cheesesteak or pastrami sandwich,” he said. Around the holidays, Carter gets creative with his packaging, especially for large items such as whole or half pork loins, racks of ribs and smoked turkeys by topping off the clear or foil wrap with a big colorful bow. He gets orders for these “gift-wrapped” food items from offices in quantities as high as 75 to 100. “We also noticed that at least 85% of in-store customers will pick up and look at these gift-wrapped items,” Carter said. CSD

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Foodservice

Column

Creating Foodservice with a Single Purpose

Cross training your employees to execute every phase of the foodservice operation not only creates bench strength but strengthens consistency of execution. By John Matthews

ecently, I spoke at the Florida Petroleum Marketers Association on “Developing a Winning Foodservice Strategy” and one fact is unmistakable: foodservice is where it’s at in the convenience store industry. The industry is not only competing against one another but with the casual and fast food industries as well. Every passing day, consumers continue to raise the “expectations bar” on c-store operators with regard to food. With every Panera and Chipotle restaurant that opens in your marketplace, the consumer sees foodservice in a completely different light. Here’s one approach you can take in your foodservice program: Start with the consumer. The new foodservice screams fresh. Your foodservice operation needs to address the consumer needs for quality, ready-prepared and made-toorder food where they work, live and travel. Product offerings should be matched to the needs and wants of workers, students and homeowners throughout the day based on a demographic matrix. This approach provides optimized convenience with a data-driven, diverse menu appealing to healthier eating habits. Make the design feel like food. It’s critical that within the design, you set the stage for the theatre of freshlyprepared food. For instance, accents of wood throughout add warmth and create a friendlier environment. Employees should look the part by wearing aprons and perhaps even chef hats. Seating within the store communicates to the consumer that they can relax and enjoy the food on premise. Adding restaurant materials such as quarry tile floors, darker counter tops, subway tile behind the counter, and stainless-steel prep tables further enhance the aesthetics of a true foodservice operation. Develop an appealing menu. Make your menu appeal to your targeted consumers. Creating your menu with locally-sourced ingredients and featuring them on a chalkboard tells the consumer about your authenticity. The key end caps of the grab-and-go signature-offering merchandiser should feature a variety of sandwiches that are freshly made each day in the kitchen. In addition, slicing meat throughout the day sends branding cues to the consumer that exemplifies the theatre and wholesomeness of fresh and better items for them. Lastly, creating a menu 62 Convenience Store Decisions October 2018

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John Matthews is the president and CEO of Gray Cat Enterprises (www.graycatenterprises.com), a management-consulting firm based in Raleigh, N.C. Prior to launching Gray Cat, he held management positions as president of Jimmy John’s Gourmet Sandwiches; many professional roles at Clark Retail Enterprises; and as national marketing director at the Little Caesars Pizza Corp.

that includes specialty items with names that tie to the communities in which you operate, make the offering unique and proprietary. Run it like a restaurant. This will be the make-or-break portion of your rollout, developing systems and procedures that position your concept to operationally satisfy the customer each and every time they visit. McDonald’s is better known for its consistency first, its food second, because its operational systems and procedures are second-to-none. Cross training your employees to execute every phase of the foodservice operation not only creates bench strength but strengthens consistency of execution. Training and ongoing monitoring of operations should include par level/build-to inventory management; optimized sequential prep of products; food safety, cleaning and sanitation; and step-by-step processes for foodservice execution, to name a few. Proforma the concept. This is where the pedal hits the wallet. The development of the Proforma in advance is a step often forgotten. Dedicating prime real estate within your store in addition to the capital investment should mandate that a Proforma be completed in order to judge whether your concept can be a success. In addition to the cost of the build-out, the next most important expenses to monitor are food, paper and labor. Failure to manage these “big three” will kill any chance for foodservice success. To get a true apples-to-apples comparison, create your Proforma as if it was a standalone concept. Remember, you have many options for the real estate you are earmarking for this concept, so it is important to know all the costs associated with the foodservice concept. Create a Proforma that captures those comparable items. Foodservice operations should have the consumer in mind first and foremost but keep the behemoths in the food industry close to the vest as well. Like it or not, we are all competing for share-of-stomach.

cstoredecisions.com

9/19/18 12:05 PM

Circle No. 51 on the Inquiry Card

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9/17/18 11:15 AM

Category Management

Cigarettes

How Are Cigarettes Faring?

Despite increasing taxes and regulations, the cigarette category remains a key component in c-stores’ bottom lines. By Lisa White, Contributing Editor

he cigarette category continues to face volume struggles based on several factors, including health risks, social pressures, purchase age law increases, public smoking laws, migration to alternative tobacco products and higher retail costs. And although cigarettes remain a stalwart category in the convenience channel, the impact of these many hurdles is evident. Nielsen All Channel Data indicates cigarette industry volume decelerated in the four-week period ending July 14, declining 4.2%, as competition from e-cigs and vapor has intensified, according to Wells Fargo Securities analyst Bonnie Herzog. Overall, industry cigarette sales declined 1.7% led by weaker volume but partially offset by cigarette pricing, which climbed 2.3% in this period. For 2018, the cigarette industry volume is expected to continue declining 3-4%. “The category continues to lose volume,” said Lou Maiellano, president of TAZ Marketing & Consulting Group, Sevierville, Tenn., which specializes in the tobacco industry. “All the regulations and health concerns are having

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a negative impact due to the stigma of smoking, while the vapor category is growing.”

CATEGORY CLIMATE Although a number of states have proposed raising cigarette taxes, only Kentucky and Oklahoma have pulled the trigger by 50 cents and $1 respectively. “Most of the states have adjourned their sessions for the year, so it doesn’t look like they’ll raise taxes for cigarettes at this point,” said Thomas Briant, executive director of the National Association of Tobacco Outlets (NATO). NATO is constantly monitoring the

cigarette environment and opposing local ordinances, while concurring with experts that the incidences of cigarette smuggling across adjacent state borders into regions with lower tax rates is on the rise. Another blow to the category happened in July this year, when San Francisco passed a ban prohibiting the sale of ﬂavored tobacco products, including menthol cigarettes. In addition to Minneapolis and St. Paul, Minnesota cities Duluth, St. Louis Park and Robbinsdale have recently restricted sales of menthol cigarette sales, along with mint and wintergreen smokeless tobacco products, to tobacco-only outlets or liquor stores.

Fast Facts: » The cigarette category continues to lose volume. » According to Nielsen All Channel Data, cigarette industry volume decelerated in the four-week period ending July 14, declining 4.2%. » There has been an uptick of cities and towns raising the legal age to purchase tobacco products to 21. cstoredecisions.com

9/22/18 1:48 PM

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Category Management

Cigarettes

“We compiled an economic impact maintain compliance,” said Hanke. the age minimum raised],” said Couch. There have also been more constudy on this and concluded the aver- “Recently, there have been several age c-store would lose up to $259,000 changes around product labeling, tractual agreements between tobacco in annual sales in tobacco, cigarettes packaging and advertising [to accom- manufacturers and retailers that have led to a more competitive marketplace. and ancillary products if these restric- modate these rules].” For example, when RJR and Altria At Maverik stores, Marlboro contive [flavor] ordinances passed,” said Briant. “As a result, stores would be tinues to dominate the category with began narrowing their marketing closing since they couldn’t make up over a 40% share. Newport, Camel dollars about seven years ago, The this revenue. This can devastate retail- and Pall Mall are a distant second, Growler Guys decided to get on board ers who have their life savings invested third and fourth respectively. Both with the new contract so as not to lose American Spirits and Eagle continue market share. in their stores.” “They dictate the minimum margins He added that the revenue decline to show solid growth over the same and promotions, but it has worked well would be substantial for states, period last year. “Newport has shown noticeable for us,” said Couch. “Still, there are although it’s less of a loss for cities growth in non-traditional menthol other retailers who chose to drop off since they can’t quantify the impact. There has also been an uptick of cit- markets now that it has cycled the because they didn’t want the tobacco ies and towns raising the legal age to anniversary of being re-merchandised companies to dictate this.” And because supermarkets like within the R.J. Reynolds Tobacco Co. purchase tobacco products to 21. “There are currently 330 cities and (RJR) share of space following the Safeway and Albertsons don’t market their tobacco or display it in the open, towns across the country that have age Lorillard transaction,” said Hanke. 21 as the minimum to buy tobacco versus six states, which include California; Hawaii, Maine, Massachusetts; New The manufacturers and retailers Jersey and Oregon,” said Briant. have to work closer than ever to Although the purchasing age maneuver through a category with requirement is 21, for most of these areas the minimum age for possessing evolving FDA regulations in order or using tobacco products is 18.

“

”

to maintain compliance.

C-STORE EFFECT

-Travis Hanke, Category Manager, Maverik Inc.

Travis Hanke, category manager at Salt Lake City-based Maverik Inc., which operates approximately 316 stores, said state tax increases have not directly impacted sales at its locations in 2018, because of geography, but year to date, the cigarette category volume is down 5% in c-stores overall. “There were over 20 states that had a state tax increase discussed or proposed, and those measures failed,” said Hanke. “States continue to look at taxing this category, both as a smoking deterrent and as addressing budget opportunities.” The menthol ban, however, has not impacted Maverik because of geography. “The manufacturers and retailers have to work closer than ever to maneuver through a category with evolving FDA regulations in order to

At The Growler Guys’ 14 stores throughout Oregon, Washington State, Idaho and Wisconsin, both national and the generic/lower tier cigarette brand sales are slowly decreasing about 3% annually, while smokeless is growing about 10%. “The taxes and prices keep going up, but this doesn’t seem to deter smokers,” said Kent Couch, co-owner of The Growler Guys. “What does deter them is the government’s advertisements encouraging them to quit.” Couch said he hasn’t seen much impact in his Oregon convenience stores’ cigarette sales since the purchasing age was raised from 18 to 21 this year. “The liquor and tobacco control folks also reported c-store violations increased 2% for sting regulations [with

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c-stores have been able to grow in a negative market. As c-stores and other retailers quit marketing, it has been our gain,” said Couch. “Now we’re competing with those playing the game with RJR and Altria; even losing 3% is better than the national average, which is about 8% or so.” In addition to these manufacturer agreements, c-stores have attempted to make up for the decrease in cigarette revenues by focusing more on foodservice. “I hang on to the fact that, as an independent c-store, we can ride these waves [of a turbulent cigarette market],” said Couch. This is significant, given that cigarettes currently comprise 34% of The Growler Guys’ annual store sales, and the chain promotes by price. CSD

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9/13/18 9:46 AM

Category Management

E-Cigarettes

Face FDA

Backlash

Robust proﬁt margins in the e-cig segment face pressure from federal regulators in addition to being squeezed by recent U.S. tariffs against China. By Anne Baye Ericksen, Contributing Editor

t midnight on Aug. 23, the second tranche of President Trump’s tariffs officially took effect, levying a 25% tax on 279 products from China, including electronic nicotine delivery systems (ENDS). While politicians, pundits and economists argue about the diplomatic and trade value of such actions, convenience store and vape shop owners and operators brace for the probable financial fallout. “It definitely will have an effect on profit margins, but to what extent I’m not sure yet,” said Tim Greene, category director of tobacco and general manager for the Cigarette Store Corp., dba Smoker Friendly. Based in Boulder, Colo., the business owns more than 100 retail sites, including Gasamat convenience stores. “It’s nerve-wracking because we don’t know what’s going to happen with vaping and e-cigarettes,” added Anna Bettencourt, senior category manager for VERC Enterprises, which operates 26 convenience stores in Massachusetts and New Hampshire. As a double whammy, the U.S. Food & Drug Administration (FDA) Commissioner Scott Gottlieb on Sept. 12 mandated the manufacturer of JUUL, British American Tobacco’s Vuse, Altria’s MarkTen XL, Imperial Brands’ blu and Japan Tobacco’s Logic submit details on how each will confront and prohibit youth access to and use of their products. The companies have 60 days from the original announcement date to comply or face the possibility of the FDA removing their items from store shelves. According to the FDA press release, “This could mean requiring these brands to remove some or all of their flavored products that may be contributing to the rise in youth use from the market until they receive premarket 68 Convenience Store Decisions October 2018

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authorization and otherwise meet all of their obligations under the law.” Concerned entities have argued that fruit, dessert, tropical and candy e-liquid and nicotine salt ﬂavors encourage underage vaping. Consequently, numerous cities and states have proposed and/or passed bans on flavored tobacco products, San Francisco being the most recent. “We’re also fully committed to the concept that products that deliver nicotine exist on a continuum of risk, with combustible products representing the highest risk, and electronic nicotine delivery systems perhaps presenting an alternative for adult smokers who still seek access to

Fast Facts: » One in 20 adults in the U.S. consumes ecigarettes. » U.S. News & World Report referenced a claim by Shenzhen ofﬁcials that more than 100 companies in the southeastern region of China manufacture 90% of all e-cigarettes sold around the world. » FDA issues 60-day notice to e-cig manufacturers to address underage sales.

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9/22/18 1:49 PM

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9/12/18 10:08 AM

Category Management

E-Cigarettes

satisfying levels of nicotine, but without all of the harmful TARIFFS TIMES THREE effects that come from combustion,” said Gottlieb. “But in What’s more, the president has proposed a third round enabling a path for e-cigarettes to offer a potentially lower- of tariffs for later this fall. risk alternative for adult smokers, we won’t allow the current “The third tranche originally had a 10% tariff on e-cigs, trends in youth access and use to continue, even if it means but the Trump administration recently signaled it could putting limits in place that reduce adult uptake of these increase it to 25%,” said Gregory Conley, president of the products.” American Vaping Association. A company spokesperson for JUUL, which was menSo how did e-cigarettes get caught up in an internationed specifically by Gottlieb, issued the following tional trade war? The U.S. government classified ENDS as statement soon after: “other machinery” for the second tranche. The reason why “JUUL Labs will work proactively with FDA in response the convenience store industry is concerned about this desto its request. We are committed to preventing underage ignation is that an overwhelming majority of e-cigarettes use of our product, and we want to be part of the solution are manufactured in and imported from China. The U.S. in keeping e-cigarettes out of the hands of young people.” General Accountability Office states 91% of the $342.3 mil“Our mission is to improve the lives of adult smokers lion customs value of e-cigarettes in 2016 came from China. by providing them with a true alternative to combustible U.S. News & World Report referenced a claim by Shenzhen cigarettes. Appropriate flavors play an important role in officials that more than 100 companies in the southeastern helping adult smokers switch,” the spokesperson added. region of China manufacture 90% of all e-cigarettes sold “By working together, we believe we can help adult smok- around the world. ers while preventing access to minors, and we will continue Under the tariff mandate, e-cigarette devices brought into to engage with the FDA to fulfill our mission.” the country will be taxed 25% by U.S. Customs and Border

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cstoredecisions.com

9/22/18 1:49 PM

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9/12/18 9:53 AM

Category Management

E-Cigarettes

Vuse is one of a handful of e-cigarette brands being mandated by the U.S. Food and Drug Administration to submit details on how they will confront and prohibit youth access to and use of their products.

The only major brand to report a loss in unit sales was Vuse. “Pod systems have revolutionized the category,” said Greene. “There’s been a shift from open systems to pod systems. Users are getting their nicotine delivery out of a more simple and smaller device and it’s had a great influence.” E-cigarette manufacturers are banking on this trend to stick around. Several Big Tobacco players have released new designs and updated models. Earlier this year, Imperial Tobacco introduced myblu. Both Greene and Bettencourt Patrol. That added cost almost certainly will be passed on to added it to their inventories, but agree it’s too soon to effecdistributors, who then will increase charges on retailers. As of tively gauge whether it presents a competitive challenge. “They did a promotion with a starter kit for $1, so it’s late summer, price hikes had not yet been realized, however, too early to say how well It’s really doing,” said VERC’s c-store owners and operators expect them soon. “Retailers are getting notices that wholesale will increase Bettencourt. “It’s been marketed hard throughout the summer, so 20-25% because distributors are not importing a year’s worth of product at a time. They bring in enough product I don’t know how good the customer response really is,” to keep customers satisfied for a month before importing added Greene. Also, R.J. Reynolds Vapor released Vuse Alto in August more,” said Conley. “If the trade war is prolonged, we could see some stores with plans for nationwide distribution in November. “It’s a bigger pod and the nicotine level is there. The shut down. Already we have states where retailers feel the effects of increased taxation,” he added. “For exam- price point is good and the margins are there for retailers. ple, if you add a 25% tariff on top of the 40% wholesale I think Reynolds will market the hell out of it,” said Greene. tax in Pennsylvania, you’ll see more consumers go online in hopes of saving a few bucks. That’s bad for growth.” REGULATION READY It’s also a challenge to profit margins. Various groups and policymakers have voiced concerns “The margins are good, but not good enough to absorb over e-cigarettes used by middle and high school-aged price increases,” said Bettencourt. youth. Therefore, consumers ultimately could end up bearing Also, more and more lawmakers are pushing to raise the overall cost. Last month, the Annals of Internal Medicine the minimum purchasing age. According to the National published a study indicating nearly one out of 20 adults in Association of Convenience Stores, approximately 350 citthe U.S. use e-cigarettes. ies, towns and counties have enacted 21 as the minimum age. In July, Massachusetts became the sixth state to pass 21, taking effect in January 2019. E-CONOMICS “But there’s a grandfather clause for those who turn 18 A prolonged period of sales growth starting in late 2017 could temporarily buffer losses caused by tariffs. The before Dec. 31 unless the town is already 21. It’ll be intere-cigarette category has been performing so strongly that esting because we might see some local activity before Wells Fargo Securities bumped up its annual projection to January to change the age to 21 where it has not already an estimated $2.33 billion based on statistics pulled from been done,” said Bettencourt. But even with all that, what keeps Bettencourt up at Nielsen-tracked channels—a spike of $1 billion more than night is making sure her stores have adequate space allotlast year. For the four weeks ending Aug. 11, JUUL maintained its ments for the popular category. “There’s a buzz of what’s coming down the road. I’m trylead with more than 837% growth in unit sales, according to Wells Fargo Securities. MarkTen claimed second place with ing to figure out where to put new products and how to an increase of more than 686%. Its companion MarkTen XL reallocate space,” Bettencourt said. “It may make sense to Bold gained 128% and even NJoy grew unit sales by 53%. take space from other categories.” CSD 72 Convenience Store Decisions October 2018

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9/22/18 1:49 PM

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Category Management

Tobacco

2018 Tobacco Legislative Roundup Local and state tobacco ordinances were abundant this year. Convenience stores should expect 2019 to be just as active. By CSD Staff

s 2018 begins to come to an end, Convenience Store Decisions asked Thomas Briant, executive director of the National Association of Tobacco Outlets (NATO) about what local and state tobacco legislative issues are affecting convenience retailers.

Convenience Store Decisions (CSD): It seems local legislators have been busy in terms of tobacco regulations. Is tobacco legislation becoming more restrictive? Thomas Briant (TB): This year, NATO has been monitoring and/or responding to local tobacco ordinances in some 18 states, more than in any previous year since 2012 when the association began helping retailers oppose restrictive local regulations. Some of the most prevalent local ordinance activity is in California, Minnesota and Massachusetts. However, other states have increasing levels of local activity including Illinois and New York with local ordinances also being proposed in Arizona, Colorado, Florida, Georgia, Idaho, Kansas, Maine, New Hampshire, Ohio, Pennsylvania, Rhode Island, Texas and Virginia. Currently, a growing number of cities and counties are considering restrictions or outright bans on the sale of flavored tobacco products. These 74 Convenience Store Decisions October 2018

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proposed bans can include menthol cigarettes and mint and wintergreen smokeless tobacco products as well as flavored cigars and flavored vapor products. Menthol, mint and wintergreen bans or restrictions have been adopted in such major cities as San Francisco, and Minneapolis, St. Paul and Duluth in Minnesota. In addition, localities consider regulations that set minimum package sizes for cigars and minimum prices, which generally are so high that the products become unsellable. Local cigarette and other-tobacco-products (OTP) taxes are also proposed by elected officials as well as limitations on the number of retail tobacco licenses that may be issued to retailers. To illustrate the financial impact of a flavor ban, an economic impact study was conducted by Management Science Associates on the proposed Minneapolis ordinance that prohibited the sale of menthol cigarettes and mint and wintergreen smokeless tobacco products in all stores except tobacco shops and liquor stores. The study concluded that the average cstore would lose up to $259,000 in cigarette, tobacco product and ancillary sales. That kind of financial loss will cause stores to close, employees to lose their jobs and retailers to lose their investment in their business.

CSD: What can retailers do to respond to local tobacco ordinances? TB: What retailers need to understand is that this threat of local tobacco issues is real and will continue into 2019 and beyond. They need to understand that participation in the local legislative process is extremely important to protect the right to sell legal tobacco products to adults. To become engaged in the local legislative process, retailers need to develop a relationship with their local elected officials by inviting them to tour their store or to meet them at their office in city hall. Retailers need to explain their store business model, the importance of tobacco sales to their overall business, the steps taken to train employees how to prevent the sale of tobacco to underage individuals, and how their store supports the local community. The most important thing a retailer can do is establish this relationship before any local ordinance is proposed so that elected officials will be educated about the potential impact of a tobacco restriction and not automatically support economically devastating regulations. CSD: What are the most prevalent legislative threats on the state level? TB: Continuing the trend of the past several years, only several states passed excise tax increases in 2018.

cstoredecisions.com

9/19/18 12:10 PM

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Category Management

Tobacco

Kentucky enacted a 50-cent per pack cigarette tax increase, Oklahoma raised the cigarette tax by $1 per pack and New Jersey assessed a new ten cents per liquid milliliter tax on evapor products.

However, there were 31 other states that considered bills this year to increase cigarette or tobacco tax rates, but the bills were not passed. These states include Colorado, Connecticut, Delaware, Georgia, Hawaii, Illinois,

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76 Convenience Store Decisions October 2018

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Indiana, Iowa, Kansas, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Hampshire, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia and Wyoming. The low number of states actually enacting a tax increase this year may be due in part to the fact that 2018 is an election year. However, with 2019 not being an election year, there may be a similar number of states that consider raising cigarette and/or tobacco product excise tax rates next year. CSD: Switching to the topic of raising the legal age to 21 to purchase tobacco products, how prevalent are those efforts? TB: The other prevalent issue that state lawmakers are considering is raising the legal age to purchase tobacco products. During 2018, some 26 state legislatures considered bills to raise the legal age to purchase tobacco products to 21 years old. Of those 27 states, only the Illinois and Massachusetts state legislatures passed an age 21 to purchase bill. The Massachusetts bill was signed into law and goes into effect on Jan. 1, 2019. However, Illinois Gov. Bruce Rauner vetoed the legislation that would have raised the Illinois legal age to purchase tobacco products from 18 years old to 21 years old. In his press release explaining his decision, Gov. Rauner said, “Unfortunately, this legislation will inhibit the choice of consumers while also not helping keep tobacco products out of the hands of youth.” The Governor went on to explain smokers would simply buy tobacco products in other states or from nonlicensed sellers if they can’t legally be purchased and that the state would lose cigarette and tobacco product tax revenue while public health problems remain an issue in the industry.

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9/19/18 12:10 PM

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9/13/18 9:57 AM

Category Management

Tobacco

Twenty-four other states that had age 21 bills introduced, but did not pass them included Alabama, Arizona, Connecticut, Florida, Idaho, Indiana, Iowa, Maryland, Michigan, Minnesota,

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Mississippi, Nebraska, New Hampshire, New York, North Carolina, Oklahoma, Pennsylvania, Rhode Island, South Dakota, Tennessee, Utah, Vermont, Washington and West Virginia. Also this year, a bill in the Maine legislature would have reduced the legal age to purchase tobacco products from 21 back to 18 just a year after the legal age was raised to 21, but the legislation did not pass. Currently, the six states with a le-

gal age of purchase of 21 years old include California, Hawaii, Maine, Massachusetts, New Jersey and Oregon. While some 350 cities and towns have adopted a higher legal age to purchase tobacco products, the states have been acting more cautiously about raising the age of adulthood from 18 years of age to 21 to purchase tobacco products. Moreover, most of these state laws do not prohibit possession or use of tobacco products by 18-, 19- and 20-year-old users. So, raising the legal age to buy tobacco products may not have a health benefit because these same young adults can possess and use tobacco products if they obtain them from other sources. CSD

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9/19/18 12:10 PM

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9/18/18 3:11 PM

Category Management

General Merchandise

General

Merchandising

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The convenience store industry has become a highly competitive channel that battles to gain market share and share of wallet from each and every consumer. In the bid to create in-store sales, even secondary categories such as general merchandise have gained critical status in the last few years. By David Bennett, Senior Editor

nce general merchandise was a small part of a c-store’s product mix. However, with a new generation of consumers, demand for apparel, accessories and other items is creating new opportunities for retailers looking to promote nonperishable articles. In fact, by implementing an effective general merchandise strategy, some convenience retailers are connecting with patrons in new ways. One way capitalizes on Americans’ need to collect mementoes when memories are still relevant. Localized merchandising can draw customers if the selection is right, said Jeff Campbell, associate professor at University of South Carolina’s Department of Retailing. Localized merchandise—whether it’s the favorite college athletic team or a tie to a tourist attraction such as the Grand Canyon—can connect with passing patrons even more than generic, functional merchandise such as razors or windshield wipers. Merchandise that carries sentimental value or spurs community pride can be a tangible reminder that helps customers relive a happening and share it with others. “Tailoring products to local markets, when appropriate, is a good strategy, particularly if the products stocked are good margin drivers and the type of localization adequately reﬂects the areas they serve,” Campbell said. “Local products in convenience stores can attract both customers who are passing through the area and want a little keepsake of their trip as well as customers who might 80 Convenience Store Decisions October 2018

80-82_CM_Gen Merch.indd 80

Fast Facts: » Local products in convenience stores can attract patrons who are just passing through. » Electronics is a big draw with highway truckers. » General merchandise can help differentiate a retailer from the competition.

cstoredecisions.com

9/24/18 10:32 AM

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9/17/18 11:16 AM

Category Management

General Merchandise

“

Certainly, we want to expose as many of our guests as possible to the Bass Pro concept. Once they’re exposed to it, we see great results in the sales and how they react whether it’s social, digital or even their feedback to us.

”

–Brian Ferguson, chief merchant, Flying Pilot J

seek event-based products—auto races, college sports—or location-based products like lake apparel or tourist items related to the area.” Even special events can resonate with consumers looking to capture an item that represents a moment in time. A good example of an event that captured the nation’s fancy occurred Aug. 21 2017. The first total solar eclipse visible coast-to-coast from the mainland U.S. in almost a century. “Here in Columbia, S.C., we had the solar eclipse last year and could not keep products in stock in c-stores. Sunglasses, t-shirts, etc. all sold well,” said Campbell.

CASTING FOR BASS Of course national brands that are highly sought after can be another weapon in a retailer’s merchandising arsenal. Just ask Brian Ferguson, chief merchant for Pilot Flying J. Two of the nation’s biggest—Pilot Flying J and Bass Pro Shops—in 2017 collaborated on a shop-in-shop initiative that is drawing even more interest to their popular brands. The collaboration between the leading outdoor lifestyle brand and the national travel center network marks the first of its kind for both companies. The shop-in-shop concept, which was rolled at a newly-renovated Pilot Flying J in Lebanon, Tenn. last summer, has generated strong customer feedback in the year it was installed on the floor of the travel center. Ferguson characterizes the venture in the Tennessee location as a success because of the positive results. “We have been really pleased with the partnership,” Ferguson said. “You have two really great brands coming together to do something unique, that really nobody has done before in the travel center/convenience store space. Our customers have responded strongly to the assortment, to the specialty retail concept.” Since last summer, the company has rolled out another Bass Pro Shop store-in-store concept in Gallop, N.M. and a third site in Tye, Texas. “We’re currently under construction for two more, which will open by the end of the year,” including a second Texas location as well as a new travel center in South Dakota, Ferguson said. 82 Convenience Store Decisions October 2018

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“Certainly, we want to expose as many of our guests as possible to the Bass Pro concept,” he said. “Once they’re exposed to it, we see great results in the sales and how they react whether it’s social, digital or even their feedback to us.” Headquartered in Knoxville, Tenn., Pilot Flying J currently operates more than 750 travel centers under the Pilot, Pilot Express and Flying J banners in 44 states.

OIL’S WELL “From a general merchandise standpoint, my primary goal is to differentiate Pilot Flying J from our competition in the industry and to offer products that are unique,” Ferguson said. “There’s a ton of trends out there. The strongest trends are in the consumer electronics side of the business. The innovations such as earbuds and accessories for your iPhone.” On the accessory side, ORCA drinkware has also become popular at Pilot Flying J locations. In additon, the company this past August announced the launched of its own heavy-duty motor oil, which is available at all company locations. The Pilot Flying J Heavy Duty 10W-30 Motor Oil and Pilot Flying J Heavy Duty 15W-40 Motor Oil are priced at $16.99 per gallon. Though motorists are Pilot’s bread and butter, consumers looking for that special item can make dough for c-stores. “When deciding which items to carry, c-stores should consider items that would yield high-sales per square foot— given the space limitations—as well as those which would turn fairly quickly,” Campbell said. “College t-shirts, hats or mascot related products tend to sell well as do products related to the professional sports teams close to the area.“ Promotions and displays that pair general merchandise items like cups and glasses with food and beverage items, such as homemade cheeses and fruits from the farmer’s market or the area craft brewer, can serve as ways to draw traffic. “Including those types of products in general merchandise as well as maybe a few stocked food-related items that are representative of the area such as local salsa or local beer/wine in a high traffic part of the store could be of benefit,” Campbell said. CSD

cstoredecisions.com

9/24/18 10:32 AM

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9/17/18 8/13/18 3:34 3:38PM PM

Category Management

Candy

Sweetening Your

Candy Sales

Despite consumer concern about eating more healthily, steadily growing sales show that they are still treating themselves to chocolate and non-chocolate confections on a regular basis. It makes sense, then, that strategic marketing ideas can help capture more impulse sales. By Marilyn Odesser-Torpey, Associate Editor

Fast Facts: » Brands should be active promotional partners. » Convenience store dollar sales in the overall confectionery category grew 2% between June 2017 and 2018. » Displays throughout the stores keep candy top of mind for shoppers.

84 Convenience Store Decisions October 2018

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ore than nine out of 10 adults report having purchased chocolate in one form or another over the past three months, according to an April Chocolate Confectionery report from the Mintel Group, a retail research company. In an April Non-chocolate Confectionery report, the firm found that 60% of candy consumers said they eat it as a snack, 42% as a personal reward. The National Confectioners Association (NCA) indicates that convenience store dollar sales in the overall confectionery category grew 2% between June 2017 and 2018, said Christopher Gindlesperger, vice president of public affairs and communications. Non-chocolate candy sales increased 2.7% and chocolate 2.4%. Mintel forecasts another 14% increase in chocolate sales between 2017 and 2022. In Mintel’s non-chocolate report, 63% of consumers who said they have increased their consumption of these confections credited a better selection of flavors. The firm’s Global New Product Database (GNDP) report showed that sour and tropical flavors are on the rise and innovative textures such as mixed media and filled products also helped to maintain consumer interest. While chocolate confectionery consumers overall are twice as likely to purchase the same type of candy as they are to look for new types, younger (18-34) consumers say they look for new items and buy on impulse. To encourage those impulse purchases, VERC Enterprises, cstoredecisions.com

9/19/18 12:19 PM

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9/12/18 9:50 AM

Category Management

Candy

Nearly half of the chocolate-eating

consumers polled for Mintel’s annual chocolate report said they’d like to see more mini bars and bites.

which has 26 stores in Massachusetts and New Hampshire, displays chocolate and non-chocolate confections in several visible places in the store. “We put them underneath the front counter, with the popular king-size varieties on the top row; in the closest gondola to the register and peg bags on an end cap,” said Meghann Eaton, VERC’s category specialist. “We also use manufacturers’ shippers to promote existing items and introduce new ones.” Eaton noted that manufacturers like Hershey come in with a lot of helpful research and merchandising analysis on how to lay out the candy offerings. They also assist in determining what the in-store trafﬁc ﬂow should look like to capture the customers who may not have candy on their minds when they come in. Overall, candy sales are up 2.5% at VERC stores. Eaton explained that most of that can be attributed to chocolate. Nearly half the chocolate-eating consumers polled for Mintel’s chocolate report said they would like to see more mini bars or bites. The researchers found that 68% of consumers surveyed purchased individual candy bars, 66% individually-wrapped chocolate pieces in a bag or box (e.g. Hershey’s Kisses,

Snickers Minis) and 54% non-individually-wrapped chocolate pieces in a bag or box (M&Ms, Junior Mints). “Over the next few years, consumers will see more options in smaller packages with clear calorie labels right on the front of the pack,” Gindlesperger said. For now, king-size packaging is the highest growth area in the VERC stores, Eaton noted. “But don’t forget to promote the standard sizes as well because there are good margins with them,” said Eaton. Twists on old favorite candies can tempt younger customers who always look for something different yet still have feelings of nostalgia for the sweet treats from their childhood, Mintel reported. Eaton agreed, pointing to the recent introduction of M&Ms Caramel that “set the candy world on ﬁre.”

MERCHANDISING MUST The chocolate category has grown significantly over the last four years at Klamath Falls, Ore.-based Fast Break stores, said Michael Cordonnier, the 29-store chain’s category manager/buyer/marketing manager. That growth has been particularly strong since the stores started offering two bars for $2.22 for standard size and two for $3.33 for king size in 2016.

GUM SALES FLAT AS BREATH FRESHENERS DIP PRODUCT

CURRENT $ SALES

% CHANGE VS Y/AGO

CURRENT $ SHARE OF CATEGORY

CHANGE VS Y/AGO

CURRENT UNIT SALES

CHANGE VS Y/AGO

CURRENT PRICE PER UNIT

GUM TOTAL

$1.04B

0.8%

100.00

0.00

699.7M

-3.3%

$1.49

Regular Gum (No Sugarless)

$186.7M

-3.4%

17.88

-0.77

203.7M

-5.5%

$0.92

Sugarless Gum

$857.4M

1.7%

82.12

0.77

495.9M

-2.4%

$1.73

BREATH FRESHENER TOTAL

$234.3M

-6.4%

100.00

0.00

119.4M

-7.2%

$1.96

Breath Freshener

$233.6M

-6.4%

99.72

-0.03

119.1M

-7.2%

$1.96

Breath Freshener Sprays/ Drops

$655,291

3.4%

0.28

0.03

353,331

1.4%

$1.85

Information Resources Inc. (IRI) Total U.S. Convenience Store Data for the 52 weeks ending Aug. 12, 2018 86 Convenience Store Decisions October 2018

84-88_CM_Candy.indd 86

cstoredecisions.com

9/19/18 12:19 PM

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9/12/18 10:10 AM

Category Management

Candy

PLAIN MINT SALES DOWN PRODUCT

CURRENT $ SALES

% CHANGE VS Y/AGO

CURRENT $ SHARE OF CATEGORY

CHANGE VS Y/AGO

CURRENT UNIT SALES

CHANGE VS Y/AGO

CURRENT PRICE PER UNIT

PLAIN MINTS TOTAL

$83.5M

-0.1%

100.00

0.00

63.57M

-3.2%

$1.31

Perfetti Van Melle

$49.4M

-2.7%

59.21

-1.60

39.58M

-4.6%

$1.25

William Wrigley Jr. Co.

$21.4M

18.2%

25.59

3.95

11.21M

10.1%

$1.90

Ferrara Candy Co.

$4.6M

3.5%

5.51

0.19

4.39M

-0.8%

$1.05

First Source LLC

$2.0M

-7.5%

2.42

-0.19

2.26M

-7.5%

$0.90

Private Label

$1.8M

-23.0%

2.13

-0.63

1.08M

-28.4%

$1.64

Information Resources Inc. (IRI) Total U.S. Convenience Store Data for the 52 weeks ending Aug. 12, 2018

“We initially did it for one month and experienced a big bump,” he explained. “The next summer we did it for two months and had similar success.” This summer, the confection sales strategy has changed to discounting items in the category to members of the stores’ Payday Rewards loyalty program. “We have over 35,000 customers who have our Payday cards and we want to give them high value offers,” said Cordonnier. “Besides, the margins were too slim to do the two-fers indefinitely.” Fast Break also robustly promotes its confectionery category with numerous shippers, window posters and danglers in the aisles to create various points of interruption. Some of the stores, depending on their size, have more than 1,000 SKUs of confectionery. The larger stores have four four-foot gondolas with five shelves of candy and one or two with gum and mints. Multi-vendor end caps and other displays facing the cash registers and cooler also showcase high-impulse items. Cordonnier noted that every year Mars Wrigley Confectionery and The Hershey Co. come in to talk to the store managers about new items and variations on familiar favorites. “Each meeting takes only about 20 minutes and ensures that our managers know all about the company’s latest products,” said Cordonnier. Molo Oil’s 15 Big 10 Marts in Iowa and Illinois are always testing new ways to merchandise and promote confectionery. Some are more successful than others, said Jacque Hager, director of retail operations. “We’ve been the most successful in the past year,” Hager said. A test she tried in one location in May 2017 was to put all the peanut butter items together and the same with chocolate, caramel, cookie wafers, etc. 88 Convenience Store Decisions October 2018

84-88_CM_Candy.indd 88

“Over 30 days we saw a decline,” said Hager. Another attempt to rev up sales involved displaying all the confectionery products in one section of the stores, with the shared-size bars positioned right next to the regularsize bars. “Again, we saw a drop in sales,” she said. When Hager moved the share size bars to the top of the display and near the checkout, she saw an immediate increase in sales. They also added three-tier counter baskets by the register and they run monthly specials with at least one candy, gum or mint on promotion for a 30-day period. In addition, they place promotional shippers in other parts of the stores to keep candy top-of-mind. “The baskets have been a great success,” Hager said. “They put the candy right in front of customers to encourage impulse purchases and it gives our team members an opportunity to upsell.” Confectionery manufacturer partners are also playing a role in boosting candy sales at Big 10 Mart. “We did a buy-one-get-one-free promotion with M&M’s and the response was crazy,” said Hager. “We’re just finishing running a Snickers share size promotion and our sales of this product increased by 1,132% for June.” For the Snickers promotion, Mars reimbursed Big 10 for window clings to help draw customers’ attention. The manufacturer also provided some prizes to award team members in a sales contest built around the promotion. Hager added that the manufacturers are doing a great job at keeping the confectionery category interesting by bringing out new products like the strawberry-layered chocolate bar that Hershey’s is introducing and all the different flavors of M&Ms from Mars. “Unique flavors and fusions is where the market is headed,” said Hager. “And customers are more willing to try these items if they are on promotion.” CSD

cstoredecisions.com

9/19/18 12:19 PM

Congratulations Kwik Trip

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Convenience Store Decisions’ 2018 Chain of the Year! Kwik Trip exempliﬁes what it means to be a “people company.” It is fully committed to customers, employees and its vendor partners, not as a strategy to grow the business, but because it’s the right thing to do. When this is your core mission, greatness surely isn’t far behind. The chain serves as a shining example of how to serve others and for this reason the Editors and the Editorial Advisory Board of Convenience Store Decisions are proud to honor Kwik Trip as the 2018 Convenience Store Chain of the Year.

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Category Management

Ice Cream

Adding Protein

to Ice Cream

At the top of the healthy heap is Halo Top, an ice cream brand that has been out a few years, but is spurring a following in more c-stores. By David Bennett, Senior Editor

ing stronger still. “I point to Halo Top as being the story in ice cream, and honestly, the story of all packaged food in the last three years,” said Koerten. “Halo Top has been just incredible, the growth that brand has put up has totally revolutionized the entire ice cream segment.” Reilly Robinson Musser, vice president of marketing and merchandising at Robinson Oil Corp., which does business as Rotten Robbie Gas Stations, said the California-based chain of 36 locations was never a yogurt destination, but has started to see stagnant ice cream sales thaw. “Our ice cream sales are up slightly—which is good, since they have become more and more pop- have been down the last two to three ular, Ben & Jerry’s this past February years or so,” said Reilly. “We got away PROTEIN PLEASE Consumers’ growing penchant to released a low-calorie ice cream of from an exclusive contract and now combine better-for-you treats with its own. Ben & Jerry’s version comes have multiple manufacturers in the ice indulgent offerings has opened the in three flavors: P.B. Dough, Caramel cream freezer.” Innovative manufacturers are begindoor to a segment of ice cream brands Cookie Fix and Chocolate Milk & that not only come billed as lower-cal- Cookies. The pints each have less than ning to carve a niche such as Snow 160 calories per serving and are low in Monkey Superfood Ice Treat, which is orie, but high-protein as well. dairy-free, vegan, gluten-free and nonHigh- or added-protein claims were fat, with no artificial sweeteners. Jared Koerten, a senior food ana- GMO. It claims to contain more fiber featured on 10% of all ice-cream launches in the 12 months ending in June 2018— lyst at Euromonitor International, sees than four bowls of oatmeal, more proup from 2% during the same period the the movement toward healthier ice tein than three eggs and more iron previous year, according to the market cream choices such as Halo Top grow- than a steak. CSD research firm Mintel Group. At the top of the heap is Halo Top, a brand that has been out a few years, but is spurring a following in more » Yogurt continues to perform well in the c-store channel. c-stores. An average pint of Halo Top has 320 calories—considerably less » High- or added-protein claims were featured on 10% of all than a regular pint of Ben & Jerry’s or ice-cream launches in the 12 months ending in June 2018. Blue Bell. Some varieties of Halo Top also boast 24 grams of protein and 20 grams of fiber. » An average pint of Halo Top has 320 calories—considerably As Halo Top’s “light” ice creams less than a regular pint of Ben & Jerry’s or Blue Bell.

t wasn’t that long ago that yogurt was the cream of the frozen and refrigerated dairy and novelty category. In fact, Greek still remains a dominant segment in the U.S. as manufacturers look for the next wave of growth. According to IRI, a Chicago-based retail research ﬁrm, frozen yogurt sales in convenience stores rose 9% to $2.6 million during the 52 weeks ending June 6, 2018. However it’s just a small fraction compared to the $509 million in ice cream sales that c-stores generated during the same period. So what’s the coming attraction in this ﬁnicky category?

Fast Facts:

90 Convenience Store Decisions October 2018

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TechBytes Artiﬁcial Intelligence

DEBIT, PLEASE

Cybersecurity

TOP 4 TECH TRENDS OF 2018

Younger customers are using bank or credit union-issued debit cards to avoid debt compared to older generations:

The Internet of Things

93% Younger Millennials (aged 24-31) 88% Adult iGens (88%) 47% of World War II/Swing Generation consumers (aged 73+)

Digital Transformation

Source: ZDNet.com,“The 4 hottest tech trends that are transforming the world in 2018,” July 2018.

Source: Mintel’s “Retail Banking and Credit Unions U.S. 2018” report

HOW ARE CUSTOMERS USING THEIR SMARTPHONES WHILE SHOPPING?

MOBILE SHOPPERS USE SMARTPHONES, ‘NEAR ME’ SEARCHES

92%

82%

of overall shoppers have done a “near me” search.

of Millennials have done a “near me” search.

62% use their smartphone to compare prices. 69% of customers use their smartphone to help them shop.

63% use their smartphone to research products.

54% check for store hours.

56% search for coupons or deals.

52% ﬁnd nearby store locations.

Source: Uberall Inc. “Near Me Shopping Report.”

EXECUTIVE VIEW

YOUNGER GENERATIONS MOST LIKELY TO SAY THEY’VE BEEN A SKIMMING VICTIM

84% of executives across industries agree that through technology, companies are weaving themselves seamlessly into the fabric of how people live today. 72% of executives report that their organizations seek to gain customer trust 25 and conﬁdence by being transparent in their AI-based decisions and actions. 20 60% of executives report that blockchain and smart contracts will be critical to their organizations over the next three years.

92 Convenience Store Decisions October 2018

92_Tech Bytes.indd 92

21%

15%

5 0

Source: “Redeﬁne Your Company Based on the Company You Keep,” Accenture Technology Vision 2018.

% who suspect they’ve been a victim of skimming at the pump in the last 12 months

Millennials

Gen X

Baby Boomers

Source: CompareCards, Fielded July 9-11, 2018

cstoredecisions.com

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9/12/18 9:36 AM

Technology

Loss Prevention

Exposing

Loss

Prevention Technological advances in security equipment are aiding convenience retailers’ push-back on shrinkage threats. By Jeffrey Steele, Contributing Editor

onitoring your conve- convenience store owners and opernience store operations via ators are increasingly exploring new-age security systems advances in technology that can help can pay off in ways that are stem shoplifting by customers and both cost-effective and eye opening. employees, not to mention it can help Just ask Eric Huppert, co-owner of ensure vendor pricing errors don’t Team Oil Travel Center, a convenience translate into margin erosion over time. company based in Spring Valley, Wis. Exactly 120 day-and-night cameras SECURITY SAFEGUARDS are positioned around the store’s inteIn planning security steps to prerior and exterior. Multiple cameras are vent losses, convenience retailers situated around the registers; others can access the CAP Index, the leader zoom straight down on drawers. in crime risk reports at www.capin“With different angles, we can see dex.com, said Robert Moraca, vice the faces of customers, the faces of president, loss prevention with the the cashiers, the items in the transac- Washington, D.C.-based National tion and the denomination of bills in Retail Federation. hand and in drawers,” Huppert said. CAP Index allows you to enter your “The cameras record audio and we store addresses and tap into crime stavery specifically train cashiers to ver- tistics, traffic data and other insights balize the amount of the item, the in a massive data base, Moraca said. amount presented by the customer The average CAP Index score is 100. and the amount of change given back. Where your store falls above or below The devices have helped eradicate that mid-point should determine the customer complaints, also. extent of security provisions. “It also “I’ve had customers call me and say acts as an affirmative defense,” said they didn’t receive the change they Moraca, who spent more than two were due from a transaction. I look it decades of his career with a major up on the camera [feed] and tell them. retailer and its 850 company-operated ‘Check your back left pocket,’ There’s convenience stores. a pause on the other end of the line, “If you have an ugly crime at your and then they say, ‘Oh my [gosh].’” location, you can go to court and say The anecdote helps point up why that you’ve matched the level of secu94 Convenience Store Decisions October 2018

94-98_Tech_Loss Prevention.indd 94

Fast Facts: » National Retail Federation loss prevention expert urges c-stores to use closed-circuit cameras and old-fashioned or newfangled drop safes to avoid losses. » Retailers understand the ROI offered by closed-circuit security camera systems. But they may balk at upgrading to IP Camera systems, due to the cost, time and inconvenience of the re-cabling required in switching from analog to digital. » Back-ofﬁce software upgrades can allow retailers to compare what should be with what is in inventory, allowing them to pinpoint where loss has occurred.

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Technology

Loss Prevention

He suggests those intrigued by the future of security to read up on facial recognition built into closed-circuit TV systems. Facial recognition will enable stores to immediately identify people arrested in the area for shoplifting and other crimes when they enter retail premises. “A text can be sent to the store manager and associates,” he said. “Facial recognition is not being used yet, it’s still in beta testing, but I believe it’s the next big thing.”

Thompson said. “Our district managers can assist our store managers if there is an issue with theft in our locations. They look at store reporting [systems] we built to pinpoint areas, and they can come in and look at the security system, come in on different shifts and do a mini-audit. Sometimes they can move the cameras to get a better view of the issue, or review with the staff what [customer behavior] they should look for.” Back at Team Oil Travel Center, Huppert maintains three 17-inch monitors and three 32-inch monitors atop a desk; each features 16 distinct shots. The store’s Subway fast-food operation is featured on another screen. Minimizing shrink’s cost to a store’s operation is why retailers employ multiple security tools and practices. The audio feed is dialed up just loud enough for Huppert to hear, but not so Losses from retail shrink dropped to $46.8 billion in 2017, down loud as to be intrusive as he attends to from $48.9 billion in 2016, according to the annual “National Retail other business. Security Survey” published by the National Retail Federation (NRF) “You’re not listening to everything, and the University of Florida. but it helps you monitor if, for instance, Overall, shrink came in at 1.33% of sales. That’s down from a customer is having trouble with a 1.44% in 2016, according to the NRF/UoF survey. check-verifying machine, or if a customer is acting inappropriately with cashiers. The ‘me-too’ stuff going on nically advanced drop safe that counts CAMERAS ADD CONFIDENCE right now is relevant for all of us. I’ve money for you as you drop it in. The Like Huppert, Diane Thompson, heard customers say things that were key is you’ve got to control your cash. director of stores for Oxford, N.Y.- inappropriate, and if I can get there Inside the stores, it’s still a high-cash based Blueox Neighborhood Market, soon enough, I’ll run down there and say, ‘I’d appreciate it if you didn’t act business. You’ve got to drop that believes in cameras. money in to keep your cash register “Actually all our locations have that way in my store.’” inventory of cash low.” always had security cameras,” said Moreover, Moraca urges retailers to Thompson. “Now everything is all dig- UNDER REVIEW deter crime by ensuring a camera sys- ital. Right now, there are nine cameras Even retailers with advanced loss tem is visible in the store. “If the criminal in each of the locations, inside and prevention technology maintain wish sees there’s no system, that will entice out, and that’s been the case for the lists of cutting-edge equipment they’d them,” Moraca said “The next thing 20 years I’ve been with the company.” like to add were the budget to justify you could add is a public view monitor.” The company’s security efforts go the expenditures. A final recommendation is to beyond relying on camera-based Thompson said she is considerdevelop a great relationship with local monitoring, added Thompson. ing adding one major enhancement. law enforcement. Let police in your Blueox has a corporate policy of From the Blueox corporate offices, she area know they’re welcome to free cof- monthly auditing, in which an out- would like to be able at any time to fee and soft drinks. Get to know each side firm undertakes counts of sales peek into any one of the chain’s locaofficer’s name. at both the stores’ retail and food ser- tions and view what’s taking place. “When you have an emergency, vice operations. From month to month, “That would give us the capability that’s not the time to be meeting the managers can see exactly where the to look into our sites to see customer police in your area for the first time,” company stands. flow,” she said. “And we hope to utilize Moraca said. “This doesn’t cost any“This is something we’ve done that not just for theft prevention but for thing, it’s just networking.” as long as I’ve been at Blueox,” better ways to staff our locations.” rity in your store with the level of crime risk at that location.“ Moraca recommends every retailer have a digital closed-circuit TV system with multiple cameras and multiple views of what’s going on in the parking lot and the store, “because the parking lot is where your liability begins,” he added. “The other key is to have a really good old-fashioned drop safe, where you’ll drop envelopes with, for instance, $100 counted out, or a tech-

Shrink Numbers Decline

96 Convenience Store Decisions October 2018

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Technology

Loss Prevention

Advances in security systems can help stem shoplifting by customers and employees in real time and allow you to monitor your stores by phone.

Huppert says there are many kinds of camera systems that offer a big upgrade over Team Oil’s current system. The store uses analog cameras that go to 16-channel DVRs. By contrast, newer systems use Internet Protocol (IP) cameras. IP cameras, which can transmit and receive data through computer networks and the internet, are growing more affordable. But for Team Oil with 120-camera systems, switching can consume time, effort and money. “Cable that runs an analog camera doesn’t run an IP camera,” Huppert said. “You would have to re-run cable to all your cameras, and the data storage is also totally different technology . . . [In addition] I haven’t seen any IP cameras that could hold up outside, because I don’t know how you could make that CAT-5 connection weather resistant. To get cameras to hold up even in our car wash is a challenge. That’s because of the acidic and always-wet conditions.” Recently, instead of buying cameras that do not withstand those conditions, Huppert bought a $20 camera like those rear-mounted cameras near rear license plates that deploy when vehicles are shifted into reverse, he said. “It has held up great so far,” he added.

Both Thompson and Huppert also view back-office software upgrades as instrumental in improving security. Thompson reports Blueox is planning to enhance security at some of its locations next year. “We’re undergoing some software upgrades that can help” with that effort, he added. “I’m hoping some of the reporting we get out of our new software upgrades taking place in the next month will help us identify areas to focus upon.”

Team Oil has back-office software A couple weeks later, a cashier called that tracks every single item that him and said, “He’s here; the tequila comes into and later goes out of the guy!” Huppert instructed her to keep him busy and called the police. When store with customers. Huppert recalls that when it was they arrived, the man was just leavpurchased a decade ago, it was cut- ing—with a bottle under his coat. He ting-edge software for which Team Oil was arrested. “We do one thing I haven’t seen othpaid about $8,000. “We figured we got that back in ers do,” Huppert said. “When you walk the first year,” he added. “You get into the store, you see 32-inch monitors an order in, it’s electronically sent to scanning the store. (It) seems that helps you, you print new tags for any items people with their consciences.” changed in price on the shelves, so you’re not losing any margin from BENEFITS, TRADE-OFFS week to week . . . You’re not just lookThe right security systems can gening to protect yourself from the thief, erate benefits that quickly more than you’re looking to protect yourself form return initial investment. But every vendors’ errors. My back-office soft- retailer’s approach to return on investware catches those errors.” ment and cost-benefit tradeoffs is That same software also tracks likely to be different, Thompson said. inventory, he said. He can carry a “I think it has to go by each indiremote handheld to any item in the vidual company as to their needs and store, scan that item and the system what they currently have in place,” said reports how many should be on the Thompson. “I don’t think I would go out shelf. Huppert once used the tool to and get a whole new system. But rather, scan an expensive bottle of tequila the I’d simply add to what we already have software indicated should have been in place. As store volume increases, it’s accompanied on the shelf by seven a necessary procedure to have in place. other bottles of the same brand. “We We have much more traffic in our locahad two on the shelf,” he recalled. “I tions, more vendors and more theft, so went back on the camera and saw a we have to grow with that.” customer hanging around in that aisle, Huppert believes tech-based and every time he came in he went out security benefits outweigh the costs. with a bottle under his coat.” “There’s the direct savings as far as Huppert printed a photo of the theft prevention. And there’s somethief, and placed it behind the counter thing to be said for being able to sleep so his cashiers would recognize him. at night as an owner.” CSD

98 Convenience Store Decisions October 2018

SOFTWARE SOLUTIONS

94-98_Tech_Loss Prevention.indd 98

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D R I V E E N G A G E M E N T. C R E AT E E X P E R I E N C E S . In the future, you’ll have more time to accomplish your goals. At least that’s what you tell yourself. Meanwhile, customers have never been more demanding. Engaging with them has never been more important, and creating relationships that drive loyalty has never been more challenging. The future just pulled onto your forecourt, and it’s never been more exciting. Take it for a spin. Ready to take a look? ncr.com/fuel-the-forecourt Retail.Info@ncr.com

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/ Loyalty Points to Ponder

Technology

Loyalty

When considering a new loyalty program, asking the right questions can help you determine which option is best for your business. By Ed Collupy

any convenience operators have their own experiences they can rely on related to loyalty programs either from their own efforts or one they’re supporting through major oil brand partners. In many cases, both continue to find ways to strengthen and expand their own programs while others are contemplating entering this marketing endeavor. As they all do this, there are as many answers to questions about the importance of loyalty in convenience retailing as there are compelling questions that need to be asked and then understood.

STRIKE UP CONVERSATIONS There will be many loyalty solution providers at the National Association of Convenience Stores (NACS) Show this year waiting for you to meet with them. Keep in mind that you will often run into existing users of the provider’s program in the booth too—strike up a conversation with both and ask away. Here are some questions to consider to asking. • How can my business/loyalty offering be ready for changes in technology and consumer preferences? • You need to build a 360-degree profile of each of your customers and use it to serve them with a relevant message in the right moment. How can you use the system’s data to create a better customer experience? • Your foot traffic is down; what system features can be activated to bring back people who have not been shopping lately or are only pumping fuel? Does their system allow customers to tap their phone at the pump to get an offer to come into the store? • Does the loyalty platform integrate with consumer packaged goods vendors for store-level promotions and campaigns, allowing your vendors to compete for your customers based on the consumer value of their products and their share in the category? • Consider other consumer services and offers you provide or are considering and find out if the loyalty solution can include ACH payment, a retailer-branded stored value card and Pump Authorization from one Loyalty ID. POINTS TO CONSIDER My colleague, Zach Pastko, recently led a team implementing a new loyalty program and from a lesson-learned session 100 Convenience Store Decisions October 2018

100-102_Tech_Loyalty Column.indd 100

Ed Collupy, executive consultant at W. Capra Consulting Group, can be reached at ecollupy@ wcapra.com. Be sure to visit www.capraplus. com for more retail technology and business insights. Collupy has IT leadership and business team experience providing strategic, operational and project leadership to retailers, emerging businesses and technology companies.

he took the client through here are a few questions to be asking: • How are relationships forged with third parties that inevitably are needed for the program not just to work, but succeed and expand? • What is the best organizational structure needed to support the program once implemented and to advance it as a true brand builder and customer experience? • Ensure support from the solution provider; what is their release schedule and list of priorities across clients you will be able to leverage? • On the priority front, be conscious of competing priorities. How can the loyalty program help management’s objectives of driving the bottom line and reaching other goals for the year? • It takes a team and your loyalty program needs to be an integrated part of your brand or you may want to use a loyalty program to build a new brand image; how does the loyalty program provider engage with your marketing team and agencies, what new sales and margin building offers will impact the marketing calendar? LET FACTS LEAD Come armed with facts for your conversations with solution providers. • Reference Brian Wise, sales manager for Infor CX, where in a recent article for Martec Advisors he asked the question, “So, how do Millennials react to traditional loyalty programs?” He contends that they don’t. What do loyalty providers think? Do they have capabilities, as he suggests you need to “flip the script” and treat the Millennial “in terms of how you can be loyal to them instead of them being loyal to you?” • Gone are the days of legacy loyalty solutions that take 12-18 months to implement, only to find that their program is outdated by the time it even gets to market. Ask the solution provider to demonstrate how their platform can enable a simple program you can take to market quickly and start learning about your customers. And ask for an

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9/19/18 12:24 PM

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Technology

Loyalty by that technology. Do the loyalty solutions you’re considering include a retailer-branded mobile app to engage with your customers? Ask solution providers how mobile app investments in mobile ordering, for both foodservice and other merchandise, can be leveraged with a loyalty program.

Bulloch Technology conceptual view of customer loyalty interaction at the point of sale.

introduction to a customer who has used a test, learn and iterate process. • On the mobile front, a study from CodeBroker found 75% of consumers would engage more with loyalty programs that make rewards information mobile-friendly while Bond reported 85% of loyalty program members who have redeemed with their mobile phone say their experience was improved

CONEXXUS CAN HELP As part of your journey on the show ﬂoor be sure to stop by the Tech Edge booth (#6147) sponsored by Conexxus and visit with the staff and active members to learn and discuss what the Loyalty Working Group is up to. Recent work by this group will result in an updated version of the standard that should be available for use in 2019. Such a version includes, among many things, support for new loyalty features on how to deliver messaging and offers to the consumer as they check out. In a prototype example in the proposal, a customer interactive screen could display current points available and a selection of merchandise offers where points the consumer chooses which, if any, points she wants to redeem for one or more of the offers being presented. And question the future, what does the next generation of customer engagement look like for your business and how can a loyalty provider open new channels for your business?

Your surveillance system is showing you a story.

Are you seeing it?

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Technology

Prepaid

Prepaid Cards

Add Balance More customers are opting for prepaid cards, which offer increasing functionality compared to a few years ago. By Brad Perkins, Contributing Editor

ash or card? It seems that many customers are opting for the latter, particularly when it comes to paying bills, redeeming rewards or giving gifts. While gift cards have always been popular, prepaid cards have been growing exponentially. In 2016, Americans put $324 billion on closedloop cards (those generally used at one location, like a convenience store brand card that customers use for gas

Fast Facts: » Prepaid card usage is growing as technology becomes more prevalent and cards offer increasing functionality. » To make prepaid cards a destination, offer a variety of options. » Learn the scams to watch for so you can reduce prepaid fraud or theft at your stores.

104 Convenience Store Decisions October 2018

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or in-store products) and $295 billion on open-loop cards (cards that feature credit card brands like Visa and Mastercard and can be used any place that accepts those cards), according to Mercator Advisory Group. “We are seeing a trend in Health Savings Accounts (HSAs) and insurance claims paid by prepaid debit cards as well as strong growth in the GPR category and person-to-person (P2P) payments like Venmo,” said Sue Brown, director of prepaid advisory service at Mercator. “They are basically a substitute for a checking account.” Another Mercator study showed that 56% of adults in the U.S. bought a prepaid card in 2014. That’s nearly a 10% increase from two years earlier. And among those 18-24, that number was 69%. Those gains reﬂect an overall shift toward choosing cards and technology over cash. Open-loop cards’ popularity, in particular, has grown 30% since 2004, mainly due to reloadable cards known as General Purpose Reloadable (GPR) cards. GPRs offer the ability to track purchases and register the cards, illustrating why they have moved beyond just being for those who don’t want or don’t have access to a credit card or checking account.

“The beneﬁt of offering these cards is, as a convenience store, we maintain our one-stop shop for convenience to our customers,” said Sean Sportun, manager of security and loss prevention for Mac’s Convenience Stores, a Toronto-based chain. “We pretty much offer everything and anything. Our prepaid vendor is InComm, and they cover everything from video cards to Visa prepaid cards to calling cards… you name it, we sell it in our stores.”

OPTIONS DRIVE SALES Variety is a key selling point. Because they can be used anywhere and in any way, some people choose them instead of a debit card. Some give them as gifts. They can be used in-person and online. They don’t require a credit check. They are often easy to activate, fill and use. Many stores have standalone kiosks where customers can activate the card or add value and leave. Others allow the cards to link to other retailers that can provide a mutually beneﬁcial relationship. “We offer an array of cards, everything from mobile phone services, third-party retailers, reloadable credit cards and Yesway-branded reloadable gift cards,” said Derek Gaskins, senior vice president of merchandising and cstoredecisions.com

9/19/18 12:25 PM

procurement at Yesway. “They expand the ability to sell products beyond your four walls through third party retailer gift cards like Amazon, Macy’s, Foot Locker and more.” Given the popularity of prepaid cards, some retailers are looking into offering reloadable, branded cards for use within their stores. “They are a viable way to market and have wide appeal especially when they can be loaded with a customerspecified amount,” said Ray McIntosh, president of McIntosh Energy, which served as a beta tester for a new Sunoco gift card that is not set with a preset amount, allowing customers to load from $10-$500 dollars and reload for $1-$500. And when you add in loyalty rewards to a reloadable card, it’s a winning proposition for many convenience stores. “We use Yesway gift cards as customer and team member incentives through our loyalty program,” Gaskins said. “We also look at seasonal fuel rewards on third-party gift cards as an incentive to capture more gift occasion shopping trips.” Recent legislation has made the cards even more appealing, by doing away with expiration dates on balances and making them less susceptible to fraud. “The cards offer significant functionality as compared to years ago and regulations have become much more stringent,” Brown said, referring to the Consumer Financial Protection Bureau’s January 2018 clarification of its 2016 prepaid rule. The updated ruling means that people can receive fraud and mistake protection on cards they register and have the ability to dispute charges or restore stolen money. It also allows people to make connections to digital wallets and offers expanded protections for unauthorized transactions and overdraft protection. “The best benefit there is instead of giving someone cash, you give them cstoredecisions.com

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TOTAL AMOUNT LOADED ON OPEN-LOOP PREPAID CARDS IN THE UNITED STATES, 2011-2020F $400 $350

$287.1 $295.0

$300 $242.9

$250 $200

020

016-2

5%, 2 CAGR

$190.8

$307.7

$321.5

$336.4

$352.6

$263.7

$207.9

$150 $100 $50 $0

2011

2012 2013

2014

2015 2016

2017 2018 2019 2020 Source: Mercator Advisory Board

a gift card, it is trackable to a degree,” Sportun said. “So, if there’s any fraud, whether it be during or after that gift card has been activated, for the most part through [the store] or the payment card provider there is some tracking involved.”

FRAUD WATCH Preventative measures can help employees identify fraud, avoid phone and in-person scams and help them direct customers to the card provider to both register the card and submit claims. Avoiding phone sales as a retailer and knowing your rights as a cardholder can help diminish scams. So, with consumer protections in place, including the ability to register the cards and the flexibility to choose physical cards or digital, gift cards are perceived as safe; or at least safer than cash. But that doesn’t mean fraud doesn’t still happen. “We are seeing payment card fraud where the bad guys come in and buy one or two cards and they go on a run and go from store to store to store; not just our stores, but any stores that sell the gift cards and use the tap feature,” which automatically loads a

card without the need to interact with employees. Employee scams can happen, too. “You’ll have an employee—usually they’re new, they’re not fully understanding the processes, so they’ll start activating gift cards, saying ‘if I just scan this gift card, I get $50,’” Sportun said. “You’ll see a lot of that with new employees and we catch on pretty quickly, but there’s always that challenge there with employees taking on an idea and being deceptive and taking money through gift cards.” Still, the benefits to both the customer and the store outweigh the risks, especially if convenience stores start allowing customers to redeem loyalty points for prepaid cards. And with the growth in buying and loading cards and the preference for cards as loyalty rewards, they’ve become more of a selling point than just a convenience. “The cards drive customer trips and provide true convenience for gift occasions,” Gaskins said. “They continue to be popular and are ideal for the channel. They take up a small footprint, and offer consumers flexibility to manage their spending, weekly budgets and gift giving.” CSD October 2018 Convenience Store Decisions 105

9/19/18 12:25 PM

Technology

Column

Joining in the AI Revolution

Artificial intelligence is set to change the face of retail within the next decade. Is your c-store chain prepared? By Erin Del Conte, Senior Editor

t a Shell station at Eighth and Market streets in San Francisco, a five-foot tall, 400-pound robot acts as the forecourt security guard. It’s equipped with four cameras, each pointed in a different direction to record activity from multiple angles as it rolls around the forecourt at three miles per hour scanning and recording its surroundings. Meanwhile in Chicago, Amazon has opened its fourth Amazon Go site—its first outside of Seattle, where customers scan an app to enter, select items and leave without checking out. Ceiling cameras monitor the selection process and customers’ credit cards are automatically billed. Amazon plans 3,000 of such locations by 2021, according to Bloomberg. At BevMo!, a California-based liquor store, thanks to a pilot program in conjunction with Fellow Robots, a robot scans shelves and lets employees know via text message when it’s time to restock a specific SKU, freeing employees up for more customer-facing tasks.

AI REVOLUTION “The fourth industrial revolution is alive and well in retail,” Paul Martin, head of retail, UK KPMG, said recently during a session on robotics at the National Advisory Group (NAG) Conference held recently in Jacksonville, Fla. The fourth industrial resolution, he said, is all about AI. Robotics are set to revolutionize retail, and not in some distant future scenario, but within the next 10 years. Not only will robots begin to handle more physical tasks, but they’ll also begin to manage more cognitive tasks by learning algorithms that allow them to make decisions on our behalf. Martin pointed to a San Francisco-based pilot by Target that used an inventory-control robot called Tally, built by Simbe Robotics, to browse aisles and scan 20,000 to 30,000 SKUs per hour, focused on taking inventory. Tally did in one hour what humans could do in four. Meanwhile, Amelia, the most advanced chatbot in the world and considered the most human AI, was created by IPSoft and is used by a variety of institutions. ‘She’ can answer calls and handle simple requests, such as for an address or store hours. Most importantly, she knows when to bring in a human to respond to more complicated inquires. 106 Convenience Store Decisions October 2018

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Erin Del Conte is a senior editor for Convenience Store Decisions magazine. She can be reached at edelconte@csdecisions. com.

Martin pointed out that in one study she cut down 80% of the calls that wasted local government time. Now is when c-store retailers should prepare for this inevitable shift toward AI, so they’re ready to act when the time is right. Not only will retailers need to roll out AI technology so as not to be left behind, but they’ll also need to grapple with ethical questions around the implications for employees, as well as the disruption AI will bring at store level. HUMAN ELEMENT One big question many retailers are asking is what will be the cost to human employees, what responsibility do business owners carry in looking out for their fellow man, while also needing to prioritize keeping pace with new technology? Some are more optimistic, imagining a future where technology complements human employees, as opposed to replacing them. They reason AI will allow employees to focus on face-to-face interactions with customers, while a robot handles the drudgery of inventory taking and stocking shelves. They expect human traits like empathy and friendliness to become more valuable hiring skills. Jobs may simply change. We’ll need more data scientists and robot mechanics. But Martin acknowledged AI will present a significant societal challenge. “On the one side I would argue that creativity is well and alive. There are a lot of opportunities out there that weren’t out there years ago. But there is a big risk of a cohort of people being left behind. I do believe policy makers do not understand the pace of change today.” Retailers are wise to begin thinking about these issues now before they are forced to make decisions that impact their business and employees. Where might you consider implementing AI? Are there pilots you could begin running now? And keep in mind, your frontline employees won’t be the only ones impacted. Within 10 years, robots are expected to be capable of replacing executive level decision making, too. AI disruption is coming. How will your c-stores respond?

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9/22/18 2:57 PM

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/ Post and Pray Operations

Human Resources

Doesn’t Work Anymore

In today’s competitive workforce, knowing how to poach quality employees and poach-proof your own employees are key strategies to success. By Mel Kleiman

emember about 10 years ago when you could post a “Now Hiring” sign in your front window on a Monday morning and have your choice of several quality applicants by the afternoon? Or you post a recruitment ad to a job board only to be inundated, in a matter of hours, with more applicants than you could possibly ever screen? But, as you may also recall, starting back in 2010-2011, the tide began to turn. At ﬁrst, employers didn’t really notice and just kept on posting until, ﬁnally, around 20122013, they would post and then have to resort to praying someone, anyone would respond. And, even though this past July the unemployment rate edged down by 0.1 to 3.9% and the number of unemployed persons declined by 284,000 to 6.3 million, according to Wikimedia Commons, some are still posting and praying today. If your organization is one of those, surely you’ve noticed that it’s an effort in futility for one simple reason—all the good people who want to work are already working (and few have the time to look for a new job). That’s why the name of the game now is “poaching” (new hires from

other employers) and “poachprooﬁng” your own people so other employers don’t lure them away. While the mention of poaching makes some business owners and hiring managers uncomfortable, the fact of the matter is, there is nothing unethical about offering an employed person a new and/ or better employment opportunity.

Mel Kleiman is a certiﬁed speaking professional, consultant and author on strategies for hiring and retaining the best employees. He is the founder and president of Humetrics, a developer of hiring systems, training processes and tools. He can be reached at (713) 771-4401 or info@humetrics.com.

POACHING 101 One of the best ways to approach working people is by using your existing business card as a recruiting tool. Have a supply of your cards printed on the backside with a message like: “We’re looking for great people like you to join our team. If you would like to explore full- or part-time employment opportunities with us, call me for a confidential interview.” Give this card to everyone who gives you great service or seems to be a good fit. This includes restaurant workers, vendor employees and people in your social networks, to name only a few. When you hand a prospective emNUMBER OF UNEMPLOYED PERSONS PER JOB OPENING, ployee your card, say something like: “I SEASONALLY ADJUSTED know you’re not looking for another job, but if you’re looking for extra hours or shifts, I would love to talk with you at your convenience.” Give all your employees their own business cards too (an inexpensive perk that builds pride) with a similar message on the back and tell them they’ll get some kind of reward (money, movie tickets, etc.) for every person who comes in or calls to apply with one of their cards. Give these cards out whether you have an existing job opening or not. I know you just can’t find the time for recruiting and interviewing when there’s no urgent need, but, in that case, you really need to make the time. Just because you don’t need someone today doesn’t mean you won’t tomorrow, or next week,

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9/21/18 3:51 PM

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Operations

Human Resources

or next month. The No. 1 reason employers put up with mediocre employees is because they have no bench strength. It will be a lot easier to fill a position if you have a stack of prescreened applicants to choose from and people to call who have already demonstrated an interest. Build a strategy that goes after the working people who are not looking for a job, but who might be interested if a new job came looking for them. Ask everyone you talk to every day: “Do you know anyone who is working, but who might be interested in a new or better job?” Go where the kind of people you want to hire congregate and socialize be it a motorcycle rally, the mall, or your local community street/wine/art fairs. When valued employees quit to work elsewhere, they often discover that the grass isn’t greener after all. In fact, polling shows that approximately 20-25% of supervisory and managerial employees have gone back to work at a company they once left. Imagine if 20% of all the good people who ever left you came back. You’d have instantaneously productive workers, requiring little or no training. All you have to do is ask. A month or so after someone good leaves, just call or email and ask if they would consider coming back. The worst they could say is “no,” and you’ve just given them a wonderful compliment. What’s so bad about that? Even if the answer is “no,” former employees can be valuable sources for referrals. PROTECT YOURS Now let’s look at poach-proofing your most valued employees. The optimal way to do this is to become a magnetic manager, the boss nobody wants to leave. According to a slew of different studies and sources, “Employees who stay primarily for their supervisors stay longer, perform better and are more satisfied with their pay.” A magnetic manager’s overall guiding philosophy is to help his employees get where they want to go so those employees will do their utmost to help the organization get where it wants to go. Magnetic managers attract and keep great employees through a number of proven techniques that I talk about at length during my in-person trainings and presentations. Here’s an overview: 1. They make time for recruiting activities and interviews every single week. 2. They let only A-players on the bus. They never settle for mediocrity. 3. They have an onboarding system that builds a 110 Convenience Store Decisions October 2018

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Source: WikiMedia Commons

personal relationship with each new employee. 4. They invest in their people (training, education, credentials, trust, promotions, etc.). 5. T hey manage people individually, not as groups or generations. (In every generation there are those who prefer lots of direction and feedback and those who want to go it alone.) 6. T hey learn to fail fast, recognize a hiring mistake right away and release that person to find a position that suits them better. 7. T hey make work fun. (Yes, it can be done.) 8. T hey’ve learned the art of being able to establish caring relationships while they maintain professional boundaries. 9. They leverage the power of recognition. A word about No. 9 above: The last time the Gallup organization asked, fully 69% of the employees polled said they had not received any recognition at all from their employer in the past year. We’ve designed what we call an “Employee Data Sheet” for new hires to complete so you can capture all kinds of interesting information about them (their favorite candy and restaurant, their hobbies and interests, etc.). Then, when you want to extend a token of appreciation, you can refer to the form and choose something perfectly suited to the recipient. (For a complimentary copy of our Employee Data Sheet, text the word Humetrics to 832.460.0498.) A Fortune magazine survey found that, “the single best predictor of overall excellence is a company’s ability to attract, motivate, and retain talented people.” When posting and praying fail to meet this standard, it’s high time business owners and hiring managers take the steps necessary to ensure the organization’s continued success.

cstoredecisions.com

9/19/18 12:26 PM

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9/12/18 11:02 AM

Operations

Car Wash

Coming Clean about

Car Washes There is a vast array of considerations for retailers when they are weighing the best car wash concepts. By Howard Riell, Associate Editor

onvenience store operators are generating additional revenue both in store and out by selling car washes—and finding that success involves significant planning and a solid strategy that includes more than just stocking soap and paying for water. Location, the available physical site, surrounding car wash competition, equipment and supply choices, good use of promotions, advertising, maintenance and more considerations must factor into the equation. However, retail operators can increase their chances of success by going with efficient equipment, water-saving systems and a savvy marketing approach that includes discounts, bundling and loyalty programs. According to research from the National Association of Convenience Stores (NACS), as gas margins and tobacco sales continue to thin, one category that has seen an evolution towards higher profits is the car wash.

Fast Facts: » One in four Americans say they will drive more—compared to only 8% who will drive less. » According to the International Carwash Association, proﬁts can average from $41,000 per year for a self-service car wash to $680,000 for a full-service business. » Many customers want car wash options and a covered place to park, dry and detail their cars.

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Part of that increase is the fact that c-store customers appear to be driving more. According to the latest NACS’ 2018 Consumer Fuels Survey, conducted bimonthly, those surveyed indicated they were ready to increase spending and driving over the last two weeks of the summer driveseason, due in large part to relatively low gas prices. “One in four Americans (24%) say they will drive more— compared to only 8% who will drive less. In addition, more than one in ﬁve (21%) say that they will spend more on nonfuel items this month, according to the survey. Both numbers are considerably more than the start of the summer driving season in May when 18% of Americans said they would drive more in the coming month and 16% said they would spend more in the coming month.” The three factors that most affect driving and related retail sales, NACS’ survey found, are weather, economic situations and gas prices. “All three are in a positive place as the summer ends,” said Paige Anderson, NACS’ director of government relations.

DRIVING TRAFFIC There continues to be a variety of car wash operations marking the c-store channel including tunnel conveyor systems, in-bay automatic offerings and touchless choices. Some retailers are committing vast resources to ensuring their car wash operations are driving trafﬁc to their stores, resulting in more sales. For instance, GATE Petroleum Co. this year began rolling out the GATE Express Car Wash, a company that will build and operate free-standing, express tunnel car washes throughout northeast Florida. The new GATE Express Car Wash locations feature a 125- to 145-foot tunnel system, the release continued, utilizing state-of-the-art technology and monthly membership packages to generate more steady trafﬁc. cstoredecisions.com

9/19/18 12:28 PM

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CStoreDecisions.com is geared toward C-Store retailers, convenience store suppliers, and distributors looking to stay abreast of industry trends, new product offerings and category management best practices.

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Operations

Car Wash

Some retailers convey that after initially launching an unlimited membership plan, some consumers tend to wash more frequently, but that high volume of washes eventually tapers off.

“There is no single best type of car wash or best way to market a car wash,” said Eric Wulf, CEO of the International Carwash Association (ICA), based in Chicago. “It’s like any other business; it depends on lots of factors.” A major factor is budget. The cost of an in-bay, conveyor system can be built for less than $300,000. A new express system like the GATE is currently installing can cost well over $1 million. Still the rewards can be worthwhile. According to ICA, profits can average from $41,000 per year for a self-service car wash to over $680,000 for a full-service wash annually.

“In the right location these can be a real boost to revenue,” Saunders said. Offering small discounts on the car wash when buying DOLLARS AND SENSE Neil Saunders, managing director and retail analyst at other products, or discounts on other products when buyGlobalData Retail, a research firm based in Paradise Valley, ing a car wash, makes good sense. “Many gas stations will Ariz., said to build car wash revenue, convenience stores knock a few cents off gas if customers order a car wash at should consider taking any of several steps, beginning with the pump,” Saunders added. Saunders also recommended convenience store operaadding new features to the car wash itself. “Customers like to have a choice of different programs tors offer ‘smart’ services like automatic payment or pay by and options, and will often trade up to features like hot apps available for use with the car wash. “Offering discounts or loyalty schemes for regular cuswaxes or special finishes.” Adding more service options like interior valeting is tomers with special prices for the car wash also works,” said Saunders. another good idea. At the same time, he warned against certain practices that he finds turn c-store shoppers off, such as having systems or washes that take too long. “Convenience stores are about convenience, and most drivers want a quick fix and then to get on their way.” Failing to promote the car wash at every opportunity— both in store and at the pumps—is another miscue. “People often have to be promoted and reminded to get a car wash, as for many it’s an impulse purchase,” said Saunders. Not having a range of car wash options can also cost an operator business. “Sometimes people want a cheap, quick clean. Other times, they want a deeper clean, and will pay more for it,” said Saunders. Depending on the space available to construct a car This GATE Express car wash in Florida offers numerous vacuum bays wash and the amount of resources at a retailer’s disposal— with free, high-suction vacuums located outside of the retailer’s car maintenance personnel on staff for instance—planning the wash tunnel. most efficient car wash operation requires due diligence. The best offering is sometimes more subjective. 114 Convenience Store Decisions October 2018

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“

There is no single best type of car wash or best way to market a car wash.

”

-Eric Wulf, CEO, International Carwash Association

“I wouldn’t say one style of wash is better or worse than the others,” said David Crawford, vice president of operations for 53-store Green Valley Grocery in Henderson, Nev. “It comes down to climate, roads—or lack of roads—water use, what you want to offer, the noise level you are allowed by the city you operate in, the type and size of cars that will use the wash, rural versus urban environment, what price point the customers are willing to pay and the level of service you can get to keep your wash running well.” Crawford said he has found that there is no single best way to market a car wash operation. “There are so many ways to do this, and some operators are doing great things right now, so it’s hard to pinpoint one,” said Crawford. “That said, you need to start out with a good system and use quality chemicals.” There are many new car wash competitors entering the market, Crawford pointed out. “The base model wash systems are not enough to compete anymore,” said Crawford. “Many customers want options and a covered place to park, dry and detail their car. Saving water is a requirement for us, so any system we use has to have this feature.” Fuel discounts for car wash users is, Crawford confirmed, a volume driver for Green Valley Grocery. “We have tied our offer to the Shell Fuels Rewards program and it has been very successful. If it impedes traffic flow on the site, or if there isn’t enough room, or if it isn’t easy to use for the customers, or if the city had very limited hours on operation, we would not build it.” Car washes make sense only if they make a profit. “I feel it boils down to what your goal is,” said Patsy Varpula, price book manager for Fabulous Freddy’s Car Wash, an eight-unit convenience store chain based in Las Vegas. “Our goal is to stand apart from our competition. There are a lot of local exterior-only washes, or self-serve washes. We like to capture any customer’s needs. We offer exterior-only, full-service washes to include the interior, and detail services to get your car back to its pristine condition.” Varpula recommended that convenience store opercstoredecisions.com

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ators with car washes call out what makes them unique. “Car washes aren’t necessarily an impulse item. We run our business best through word-of-mouth campaigns and local business partnerships, as well as community involvement. My owner believes we can sell car washes in the rain because we offer the interior detailing service.” Remaining profitable, Varpula said, is a result of keeping labor in check and working efficiently while keeping an eye on chemical usage and utilization. “Damages are the biggest issue we have with the car wash, be it scratches from brushes or overusing chemicals on incorrect materials to just dents and dings due to carelessness in the bays,” said Varpula. “Proper training and heightened awareness to the surroundings is an easy way to keep damages down.” Fabulous Freddy’s management considers eco-friendly water-saver programs very important. “We proudly display that we are a water-smart car wash on our locations,” said Varpula. The same holds true for loyalty programs to keep consumers coming back for washes and other store purchases. “We love rewarding our customers to get them coming back,” said Varpula. “Every 11th car wash is free, plus they receive our most popular wash for free during their birthday week, as well as saving on their gas with a car wash purchase.”

GREEN CLEAN Eco-friendly water-saver programs can also be an important topic for car wash operators, depending upon the municipality that issues the permit and the utility that determines regular energy and water costs, Wulf said. “But almost all car washes being built today are including water recycling technology,” said Wulf. The operational part of water saving is accomplished through equipment and technology. ICA manages its WaterSavers program, which is designed to educate retailers about the benefits of water conservation and how this approach can be marketed effectively. CSD

October 2018 Convenience Store Decisions 115

9/19/18 12:29 PM

Operations

Financing

Financing Upgrades and Acquisitions The means for offsetting the cost of new fixtures, equipment or a remodeled store can be done more easily because of revised rules allowing for bigger and faster write-offs. By Mark Battersby, Contributing Editor

ast December’s Tax Cuts qualified property begin with the conand Jobs Act (TCJA) not only venience store business, so long as it slashed tax rates, it allowed had not previously used the acquired m a n y w i t h i n t h e c o n v e - property. What’s more, if the property nience store industry to expense was not acquired from a related perand immediately write-off the cost of son or business it can qualify for the 100% deduction. much-needed business upgrades. Section 179 is an incentive Unfortunately, the new law keeps the general 39-year recovery period designed by lawmakers to encourfor so-called nonresidential real prop- age businesses to buy equipment erty such as a store building. While the and invest in their operations. In favorable treatment for improvements essence, Section 179 allows a conmade to leased, retail and restaurant venience store business to deduct property was eliminated by the TCJA, the full purchase price of equipment the means for writing off the cost of and/or software purchased during the new fixtures, equipment or a remod- tax year. Thus, if equipment or other eled store can be done more easily property is purchased as part of an because of revised rules allowing for upgrade, the full cost is deductible as an immediate expense. bigger and faster write-offs. Under our tax rules and the new law, a convenience store business can WRITE IT OFF For all property acquired by the choose to treat the cost of Section 179 convenience store business and property as an expense and deduct placed in service after Sept. 27, 2017, it in the year the property is placed the TCJA allows a full 100% deduc- in service. The new law increased tion for the cost of eligible new and the maximum amount that can be used property unless the convenience deducted from $500,000 to $1 million store operation chooses not to claim and the phase-out threshold from $2 the depreciation write-off for any class million to $2.5 million. The TCJA also expanded the definiof property. The new law eliminates the require- tion of Section 179 property to include ment that the original use of the improvements made to a building’s

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interior. Of course, the expenditure doesn’t qualify if due to: • the enlargement of the building, • any elevator or escalator, or • the internal structural framework of the building. The most important difference between the Section 179 first-year expensing allowance and bonus depreciation has long been that both new and used equipment qualified for the Section 179 deduction. Today, however, bonus depreciation includes used equipment. The Section 179 deduction is usually taken first, followed by the Bonus depreciation. Generally, Bonus depreciation is useful to very large businesses spending more than the Section 179 spending cap (currently $2.5 million) on new capital equipment. Of course, businesses with a net loss can still deduct the cost of new equipment and carry the loss forward.

MERGER UPSURGE Whether the recent trend of mergers and acquisitions (M&A) is attributable to last December’s Tax Cuts and Jobs Act (TCJA), the cash it freed up or the new lower corporate tax rate, M&As are on the

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upswing—with a great deal of the action involving smaller deals. The use of warranty and indemnity insurance to remove all or a great deal of the risk in M&A deals is yet another factor in that reported upsurge. Acquiring another business is one way of upgrading the convenience store operation. An acquisition refers to the purchase of one entity by another. An acquisition can also involve acquiring only the assets of another business. In a purchase of assets, one business acquires only the assets of another business. Asset purchases are common during bankruptcy proceedings, where other businesses bid for various assets of the bankrupt business, which is liquidated after the ﬁnal transfer of assets to the acquiring business.

TAXING UPGRADES

Fast Facts: » Section 179 of the tax law is an incentive designed by lawmakers to encourage businesses to buy equipment and invest in their operations. » If equipment or other property is purchased as part of an upgrade, the full cost is deductible as an immediate expense. » An acquisition can also involve acquiring only the assets of another business.

PAYING FOR IT Adequate funding is necessary since there is little doubt that upgrades are expensive. Fortunately, paying with cash is an obvious alternative. After all, cash transactions are instant and relatively mess-free. Unfortunately, smaller convenience store businesses without large cash reserves must usually seek alternative financing options in order to fund many transactions. Another option, the U.S. Small Business Administration (SBA) doesn’t do much lending. Rather, the bulk of its financing comes in the form of “guarantees.” The SBA guarantees the repayment of loans made by a bank or other financial institution, thereby lowering or reducing the institution’s risk and, in most cases, the amount of interest a borrower is charged. The SBA’s primary and most flexible 7(a) Loan Program is the most popular loan program, providing up to $5 million for refinancing, working capital or to buy a business. Even larger transactions are possible with so-called “mezzanine” financing or when real estate is included. cstoredecisions.com

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The SBA’s CDC/504 Loan Program provides long-term, fixed-rate financing to acquire fixed assets (such as real estate and equipment) for expansion or modernization. It’s ideal for small convenience stores requiring “brick and mortar” financing. Rather than through banks or other commercial lenders, 504 loans are delivered via Certified Development Companies (CDCs), which are private, non-profit entities set up to contribute to the economic development of their communities. The SBA also has a unique program to provide small (up to $30,000), shortterm “microloans” for working capital or the purchase of inventory, supplies, furniture, fixtures, machinery and/or equipment. Ideal for those needing small-scale financing and technical assistance, the SBA microloan is delivered through specially designated intermediary lenders (non-profit organizations with experience in lending and technical assistance).

The TCJA’s new tax rates and the promise of a smaller tax bill, is likely fueling the upgrading plans of many within the convenience store industry. Other provisions of the TCJA, such as the full-expensing of asset costs, may cause many to weigh their effects on any transaction. Obviously, these challenges are not insurmountable and acquisitions continue to emerge with and without tax breaks, alternative financing and risk insurance. As for those other upgrade strategies, expensing or immediately writing-off their cost is not always the best option. Expensing drops the book value or basis of the newly acquired asset to zero. That means, if the asset is sold, any amount up to the purchase price will be ordinary, fullytaxable income. Spreading the cost of improvem e n t s a n d u p g r a d e s t h ro u g h depreciation deductions will help offset or reduce taxable income down the road when the upgraded or improved convenience store business may be more profitable and have higher tax bills. Another time that immediate expensing may not be the most economic route is when the asset might be sold in the near future and/or the asset is one that holds its value. The changes in the cost recovery rules are already having a significant impact on whether newly acquired equipment or business property should be depreciated or expensed and whether to choose bonus depreciation or choose not to claim bonus depreciation. Because the new rules interact with other provisions of the law, every convenience store executive, owner or operator planning to upgrade or improve their operations should seek professional advice and assistance before attempting to maximize—or postpone—upgrade write-offs. CSD October 2018 Convenience Store Decisions 117

9/19/18 1:47 PM

Operations

Hiring

Recruiting Tips for Small

Business Owners When you operate a small business, every team member matters greatly, and an open position can drastically impact your success. Hiring expert Scott Wintrip reveals tips to help small businesses ﬁnd superior job candidates more quickly and easily. A CSD Staff Report

Fast Facts: » Carve out 30 minutes each week to recruit whether or not you have an open position. » Conduct hands-on interviews to observe frontline employees in the store. » Remember that the best way to attract top talent isn’t offering the highest salaries or fancy job titles; it’s being a great place to work.

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s a small business owner, you’re beyond busy—and that isn’t likely to change. One moment, you’re serving behind the counter or stocking shelves The next, you’re doing executive tasks like running to the bank to sign loan documents. Add to these roles more selling, negotiating with vendors and managing the team when, suddenly, your best employee gives notice. Hiring expert and business consultant Scott Wintrip asks the important question: As busy as you are, how will you find time to recruit, interview, hire and train a replacement? “Small business owners are competing with one another for quality employees,” said Wintrip, author of High Velocity Hiring: How to Hire Top Talent in an Instant. “The internet leveled the playing field, and now your company and all others—big and small—are able to reach out to top talent. This is straining an already tapped out talent pool and has left many small business owners searching far and wide for talented and resourceful job candidates.” Wintrip points out that small business owners have to find great talent quickly in order to perform at full capacity. “When you’re operating with a small crew you have to find smart, resourceful talent capable of keeping up with the fast-paced dynamics that come along with a small company,” Wintrip said. “Luckily, fitting hiring into your already busy day isn’t that complicated—it just requires a few easy adjustments.” Wintrip recommended four steps you can take to make hiring for your small business more efficient than ever. cstoredecisions.com

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• Leverage the most productive streams of talent. Asking for referrals and networking with other business people has long been a highly effective way to locate talent, Wintrip said. In fact, business owners who carve out time each week for networking and referral generation discover a secret: The labor pool isn’t as tapped out as they originally thought. They simply weren’t taking a disciplined approach to recruiting. • Actively share the talent you discover with other business owners. Keep in mind that you’re not going to be able to hire every great candidate you meet. Sometimes talented candidates just aren’t the right fit for your company, and other times, all of your positions are fi lled. When this happens, be sure to share candidates with other business owners to help them solve their own hiring challenges, often they will be happy to reciprocate. According to Wintrip, business owners who share talent in this manner with at least eight or more businesses report greater success in hiring faster and making better hires. • Conduct hands-on interviews.The standard approach to hiring is to conduct interviews where candidates talk about work. Not only is this a huge drain on time, it’s also an inaccurate way to assess whether a candidate fits your job. That’s why many small business owners have turned to doing hands-on interviews. “In a hands-on interview, you experience the candidate doing sample work,” Wintrip said. “If it’s for a sales role, the candidate joins you on a sales call. If you’re hiring for a customer service role, he can help solve a customer’s problem. By watching the candidate in action, you save time while also making a more accurate assessment of whether or not someone is a good fit.” • Line up key people before you need them. “Some roles are more vital than others, and when these roles are left unfilled, they can harm your business,” Wintrip said. “Plus, the extra work usually falls on your already overflowing plate. Instead of waiting until an employee in an essential job quits or gives notice to start recruiting, do yourself a favor and recruit ahead of time.” Dedicating 30 minutes to recruiting each week pays off by creating a pipeline of potential talent ready to be hired the moment that vital job becomes open. “Hiring cycles don’t always happen at the best time, but when they do, you must dive right in and locate talent that will keep your company thriving,” Wintrip said. “If you’ve maintained viable contacts through networking and referral generation, you’ll be able to locate and hire exceptional talent faster than you might expect—even in an overtapped labor pool. Then you can get back to your regular tasks and help your company stay strong.” CSD cstoredecisions.com

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Referrals 101:

Five Easy Tips to Network and Discover Talent

Word of mouth is a powerful and often overlooked way to find great talent and fill open positions in your small business. Hiring expert Scott Wintrip said developing a referral system can help chains find the job candidates to keep the company going strong. 1) Don’t be afraid to ask for help. If there’s a “magic bullet” for effective networking and getting quality referrals, it’s this: Just ask for help. This simple approach often paves the way for people to be generous in pointing you in the right direction. 2) Realize a little goes a long way. Investing a few minutes each day in referral recon pays off in dividends. And it’s so easy it doesn’t even feel like work. When a vendor stops by, ask for their help with referrals, or when you’re at a restaurant having lunch, network with the employees you meet. Small, quick inquiries such as these can turn into big wins when you find a great person to hire. 3) Get specific with qualities you’re looking for. Don’t just ask your contacts for referrals to people who are looking for a job. Ask for referrals to the specific type of person you want to hire. For example, if you’re looking for a store manager, you might say, “Who do you know who is good at managing a store? I’m looking especially for someone who listens more than they speak.” This precision helps the person you’re asking thoroughly “search” their mental Rolodex for the right person amongst the hundreds of people they know. 4) Don’t forget to ask your “obvious” networks for referrals. How often do you ask current employees for their help with candidate referrals? What about their family members or the previous employees who left your business on good terms? “It’s easy to overlook the obvious resources for strong referrals,” said Wintrip. “But when we do this, we’re likely missing out on the insight of the very people who are most likely to want to help us.” 5) Remember the most important “rule” for attracting great talent. The best attractor of top talent isn’t high salaries or fancy titles; it’s being a great place to work. “Make sure your business has a positive and engaging environment, and you’ll develop a reputation as an enjoyable place to work,” Wintrip said. “Then when you network and request referrals, the people you ask will go out of their way to refer their friends and colleagues to you.” October 2018 Convenience Store Decisions 119

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Operations

Hispanic Marketing

Today’s Diverse Market Asking the right questions and delivering what customers want and need is important, not only to attracting Hispanics, but in retaining them as customers. By Sylvia Klinger

hen was the last time you looked at your product inventory and considered how to make sure your inventory matched the needs and wants of all the demographic groups you serve? Have you gone above and beyond translating your merchandising materials? Have you seen the growth of your diverse customer base—especially Hispanics? As more studies indicate, the importance of the Hispanic market in the U.S. is obvious by looking at their spending power. In 2017, the Hispanic market had a spending power of $1.7 trillion in retail and consumer package goods, compared to $1.5 trillion in 2015. According to The NPD Group, a global information group, c-stores are experiencing an increase of 8% in the first quarter of 2018, mainly contributed by the top 20 core-based Hispanic communities. To say we have become a global industry is an understatement. For example, it has become common to see foods from all over the world on retail shelves. GROWING DIVERSITY So how can c-stores really deliver the goods to their diverse customers? I want to share five points that will make sure you are meeting the needs of your current customers, or perhaps attract those diverse customers that have been neglected by other retailers. I recommend these five strategies for making sure you are meeting the needs of your Hispanic customers: 1. Needs assessment 101. A key consideration for c-stores wanting to attract more Hispanic consumers is to assess their customers by posing certain questions: • What do you want in a convenience retailer as it pertains to products and services? • How can your c-store help meet their expectations as shoppers? • What key features can your c-store provide to confirm their shopping experience is positive? Asking the right questions and delivering what they want and need is important—not only to attracting Hispanics, but in retaining them as customers. 2. Merchandise your new products. It will be hard for your new/current customers to see what is new and beneficial to them if your c-store does

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not provide the right merchandising materials around the c-store. Find attractive and fun ways to merchandise your new products in a way that speaks to the heart of your customers.

Sylvia Klinger is the founder of Hispanic Food Communications Inc., a nutrition and food communications consulting company. A leading expert in crosscultural Hispanic food and culture as it relates to nutrition and health, Sylvia has been a consultant for major food, beverage, agricultural and pharmaceutical companies as well as non-profit organizations for more than a decade.

3. Samples deliver confidence. Latinos love free samples. There is something magical about giving a Hispanic something free of “returned favors.” To Hispanics it’s an expression of how much you appreciate them as customers. This is also a great opportunity to find out more about products likes and dislikes and what they want to see in the near future. Providing some free samples is also a way to get their individual attention and get them to try new products they may come to love. 4. Offer limited coupons and discounts. Who doesn’t like to get coupons and discounts? All Hispanics love to see that they are getting a good deal, especially Hispanic Millennials. Offer that instant gratification by providing daily or weekly specials, not only on new products, but also on products they already love. Since Millennials are tech savvy, offer online coupons/discounts they can download immediately at the point of purchase. 5. Invite friends and families. Inviting your customers for an event is a great opportunity to connect with current and new customers on a more personal level. Create wonderful moments with your customers while they are also fulfilling wonderful fun experiences and memorable moments as a family or with their friends. Nothing speaks louder than a personal invitation to a private event developed especially for them, with their needs and wants in mind. Connecting to Hispanics in a personal and more intimate level can be rewarding, if done tactfully and with relevance. It is important to engage them daily to keep the communication open while building trust. This is a shortterm investment that will certainly bring happy and loyal customers into your c-stores, not to mention foster longterm relationships.

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The convenience store industry’s young executives and next-generation leaders face unique challenges as they grow their businesses in the fast-paced, competitive convenience store market. The National Advisory Group’s (NAG) Young Executives Organization (YEO) was formed specifically to addresses these challenges and help the industry’s leaders of tomorrow identify solutions with others in their age group. YEO exists to serve as an effective conduit for getting young professionals more involved and prepared for leadership positions both in their companies and in the broader convenience store industry. YEO membership offers next-generation leaders a network of other young leaders in similar positions. The group meets twice annually at the YEO Conference in the spring and the NAG Conference in September.

For information on joining YEO contact NAG Executive Director John Lofstock at jlofstock@csdecisions.com. THANK YOU TO OUR 2018 YEO CONFERENCE SPONSORS:

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SPECIAL REPORT

So What Exactly is Convenience Directions?

An interactive Idea Exchange with leading suppliers and vendors illuminates what is shaping the market and what new ideas convenience store owners can take away to better their business. Best of all, there is no charge for these exclusive events. By CSD Staff

re you a convenience store chain concerned about emerging trends and how to connect with your customers? How would you like to get valuable input on new products and category insights that relate exclusively to your market? How would you like this all free of charge? dustry. Convenience Store Decisions, If this piques your interest, it’s time to which acquired Convenience Directions from Joe Leonardo and Randy partner with Convenience Directions. Convenience Directions offers ex- Fulkerson in 2013, has conducted clusive study groups centered around meetings for Maverik, TravelCenIdea Exchange meetings that are de- ters of America, MFA Oil, Truenorth, signed to identify the latest industry Country Fair, Kent Kwik, Gate Petrotrends, best-in-class standards and leum and many others over the past recommendations to drive bottom- five years. The Convenience Directions proline profits. The real benefit for the retailer is gram, led by John Lofstock, editor that they get to have senior manage- of Convenience Store Decisions, and ment from 20-plus diverse supplier Joe Leonardo, capitalizes on the excompanies bring them their industry perience of the supplier partners to experience and make specific rec- bring together a valuable discourse ommendations custom fitted to the for both retailers and suppliers. needs of the chain. Most meetings discuss general information, which INFO EXCHANGE What Convenience Directions does is helpful, but Convenience Directions Idea Exchange meetings are is very unique to the marketplace in constructed to leave retailers with that we combine the InfoMarketing bottom-line improving ideas and rec- newsletter, which is mailed quarterly to over 10,000 c-store executives, ommendations. Moreover, these Idea Exchanges with three Idea Exchange meetings result in sponsor companies getting to annually. The newsletters give sponknow the entire senior management sor companies a forum to communiteam of a company, understanding cate category information, new prodwhat their goals and objectives are uct introductions and best practices and presenting category information to the industry. Retailers get great to the retailer. Ongoing productive re- information on a variety of categories lationships are established in this set- and services in a quick-read format. Idea Exchange Meetings bring ting that are difficult to replicate in any together the senior management of other venue. For nearly 20 years, these Idea Ex- a leading retail company with senior changes have attracted the leading management of supplier companies convenience store chains in the in- representing a variety of categories

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and services to the convenience store industry. Suppliers that participate are guaranteed category exclusivity. These suppliers represent many of the key product and service categories being employed by today’s convenience stores and provide unequaled knowledge about their respective category. These industry specialists convene as a group to meet with the management personnel of leading convenience store chain, on a proprietary basis, one chain at a time. These two-day sessions are conducted and financed entirely by Convenience Directions. The purpose of these meetings is to create the opportunity for positive business development by providing a forum for the productive exchange of ideas and information. The open and relaxed surroundings created by having all supplier representatives present during the entire meeting, is not designed as a sales forum, but rather as a learning opportunity in a “think tank” climate. Past events have proven to be very productive and well worth the time invested for every c-store retailer who has participated. Every retail participant has reported improved profitability as a direct result of their involvement. If your chain is interested in hosting an Idea Exchange, contact John Lofstock at jlofstock@csdecisions.com.

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9/19/18 12:30 PM

THIRD QUARTER 2018

InfoMarketing A Convenience Directions® Publication

www.csdecisions.com

The cookie aisle is a GROWTH SWEET SPOT.

TASTY FACT: INDULGENCE IS A KEY INFLUENCER FOR COOKIE PURCHASES. The cookie category is a $623 million dollar business in C-Stores alone, growing 22% since 2014.1 No question, America has a sweet tooth, and when cravings crop up they look to cookies for satisfaction. Consumers known as Indulgent Explorers are especially passionate about their sweet snacks and will choose them over salty snacks 51% of the time.2 Win with these all-day snackers by stocking a wide variety of popular cookie brands that are conveniently located and offered at a great price point.2 NOW’S THE TIME to expand your cookie set with a broad selection of on-trend favorites. Keebler® shelf cookies turn an average of 2.4 units per store per week.3

For more information, contact your sales rep or visit www.kelloggsspecialtychannels.com

Nielsen AOD Latest 52 weeks ending 4.14.18 2 Kellogg Snacking Shopper Landscape (2015) 3 Nielson AOD Total US Convenience Channel Latest 52 weeks ending 4.21.18

ConvenienceWorks...WORKING with you to create total convenience store solutions to maximize your sales and profits. We have been serving the convenience store industry for many years

with equipment, services and solutions that meet the everyday needs of the retailers. But now as ConvenienceWorks® by Hussmann, we have better alignment of our business processes, better understanding of the convenience store industry and better focus on what convenience store retailers need to be successful in this dynamic marketplace. ConvenienceWorks by Hussmann is dedicated to providing you with the essential benefits that: – Attract more shoppers to your stores – Increase your fresh and prepared foods sales – Improve your overall operating performance – And lower your operating costs ConvenienceWorks is built on the legacy and expertise of Hussmann Corporation which is recognized as a leader in refrigeration and merchandising solutions for retailers selling fresh foods. And now as part of Panasonic Corporation, we can bring more innovation and technology to our total solution offering for the convenience store industry. From store planning and equipment selection to turnkey project management and after sale support, ConvenienceWorks by Hussmann is WORKING with you to create total convenience store solutions to maximize your sales and profits. Call ConvenienceWorks by Hussmann at 877.543.6034. Visit us at the 2018 NACS Show, Booth #5121, Foodservice – Central Hall.

www.csdecisions.com cstoredecisions.com

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InfoMarketing

Purpose-Built Reliable Site Control – The Verifone Commander Verifone has been the leader in the Petroleum and Convenience point of sale space for over 25 years. The Verifone Commander site controller along with Verifone’s retail hardened Ruby2 and Topaz POS terminals provide a turn key durable, secure, and reliable solution. The Verifone commander provides the latest in technology on a platform that will ensure best in industry longevity as new functionality and devices are developed. Available now with Commander is the iOrder Food Service customer self-service solution. With iOrder it is now simple to get into the made to order food service business. Combined with the optional Kitchen Display System, convenience retailers can get into a fully integrated solution efficiently that is easily maintained. Other innovative solutions include the Ruby Rover, a line busting portable terminal that can scan products, accept payments including EMV, reducing wait times during peak periods and special events. Self-check out on the new carbon terminal can help reduce labor costs and transaction times. Verifone continues to innovate and listen to retailers to develop the technologies the industry demands. CBE has been a partner with Verifone since 1994. We have over 150 certified VASC technicians in 40 states ready to install and service your Commander system. CBE also provides the best video surveillance and security systems available, and can handle most any IT related project, from a single site to a nationwide rollout. Contact us at info@cbe-inc.com or call us at 1-800-447-7038. www.cbe-inc.com.

Capture Healthy Snackers Morning, Noon and Night with Detour SMART!

Detour protein bars is expanding its award-winning product line to include Detour SMART, a breakthrough snack positioned in the sweet-spot between traditional protein bars and the fast-growing cookie segment. Detour SMART is sure to get the attention of younger, healthy snacking consumers with real, recognizable ingredients; starting with whole grain, organic rolled oats. Detour SMART stands apart by offering snacking excellence with a range of flavors that work perfectly from healthy breakfast, to mid-day snack, to “smart” after dinner treat and every need in between. “Detour SMART is the right healthy snack for where consumers are going,” said Ian Davison, Marketing VP Forward Foods, the owner of Detour. “The right ingredients, the right nutrition and the right delicious flavors create a fantastic value for consumers.” Detour’s mission is to create protein bars so insanely delicious you can’t wait to eat them. For 15 years, Detour bars have been the gold standard for nutrition and taste, winning many awards including Men’s Health protein bar of the year, twice. Detour SMART has 10grams of protein and less than 4g of sugar, per serving, and are made with whole grain organic rolled oats, real fruit, nuts, and indulgent chocolate. Detour SMART is a good source of fiber, gluten free, and non-gmo. Flavors include: Cookie Dough, Apple Cinnamon, Coconut Almond, Blueberry, Peanut Butter Chocolate and Banana Nut. Detour protein bars are available at convenience stores nationwide. For more information, visit www.detourbar.com

The Ultimate Taste of Summer from Swisher Sweets Kiwi and peach offer an enjoyable coastal cocktail for c-store tobacco sets. Summer is here and so is a unique blend of kiwi and peach now available as your favorite cigarillo. Swisher Sweets Limited Edition Coastal Cocktail cigarillos pair the tropical tartness of kiwi with sweet peach for the ultimate taste of summer. Available for a limited time in a resealable 2-count pouch with the “Sealed Fresh” guarantee, Swisher Sweets Coastal Cocktail is ready for shipment to stores nationwide. It is offered in “2 for 99¢”, “Save on 2”, and “2 for $1.49” options. Swisher Sweets Coastal Cocktail is sure to be a customer favorite from coast to coast all summer long. This edition of Swisher Sweets is available only while supplies last. For more information or to place an order, contact your Swisher representative at 1-800-874-9720. Visit www.trade.swisher.com/coastalcocktail/ for more information. 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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More information on Swisher and the various products offered can be found at www.swishersweets.com.

cstoredecisions.com

9/11/18 4:01 PM

Meet the Newest Member of the SweeTARTS Licorice Family

Increase Ancillary Income with CSC Service Works

We’re crazy passionate about making candy. Every obsession-worthy creation has a sweet flavor with a tart edge. It grabs hold of your senses and shakes them up, reminding you that amazing things happen when you jump into your passions. It’s no surprise that SweeTARTS Ropes beats all national-branded licorice at +17.5% YTD1, growing 5x faster than the Total Licorice Segment! That’s why we are so excited to introduce to you the newest mouthwatering member of our licorice family: Tangy Strawberry Soft & Chewy Ropes. Now available in a 3.5oz Share Pack, it is the perfect complement to our award-winning Cherry Punch Soft & Chewy Ropes. Indexing high with millennial consumers2, SweeTARTS Ropes delivers its signature thrilling jolt of flavor with the bendable fun of a soft licorice. This combination makes candy lovers go crazy about SweeTARTS and about life. SweeTARTS believes that extreme passions move the world forward and unapologetically inspires passionate misfits to come out and play. What gets you excited about life? We invite you to come explore the magical world where sweet and tart collide. #FollowYourTART. For more information, please visit us at www.sweetartscandy.com 1 2

Nielsen Total U.S. Convenience YTD ending 03.24.18. IRI Product Demographics, May 2017.

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.

CSC ServiceWorks is the industry leader in the inflation and vacuum services, providing the most extensive distribution and service networks worldwide.

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 highfat, high-calorie 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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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 ServiceWorks partners with Feed My Starving Children Charity program which helps build 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.

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InfoMarketing

Refresh Beverage Sales with Henry’s Hard Sparkling Water Henry’s Hard Sparkling Water is a lightly fruit flavored hard sparkling water with the same alcohol content as a traditional light beer. It’s perfect for drinkers who are looking for a fun, refreshing go-to drink this summer, a better-for-you option in their alcoholic beverage. Henry’s Hard Sparkling Water comes in three natural flavors: Lemon Lime, Passion Fruit, and new Strawberry Kiwi, which is exclusive to the 12-pack variety pack.

Roll In Profits With Make-Your-Own Republic Tobacco is the industry leader in the Republic Tobacco is the leader in(RYO) the category. make-your-own (MYO) andindustry roll-your-own make-your-own (MYO) and roll-your-own (RYO) category. The make-your-own (MYO) and roll-your-own (RYO) category is dynamic and extremely profitable. Driving factors behind its steady and reliable performance are its reasonable price, exceptional quality, and the ability for its adult consumers to customize their tobacco experience. Adult consumers choosing to make or roll their own regularly experience significant cost-savings, while retailers who embrace items from this category benefit a great deal due to increased foot traffic, larger basket sales and increased profits. Republic Tobacco has a proven track record of assisting all retail trade channels with entering, expanding, or maximizing the MYO/ RYO category. Our extensive portfolio includes some of the most iconic brands the tobacco industry has to offer; with items in pipe tobacco, cigarette tobacco, cigarette machines, cigarette papers as well as filter tubes, we have all of your category needs covered. Additionally, we offer merchandising displays, point-of-sale materials, and a national sales force with an incredible amount of category expertise to ensure our wholesale and retail partners continue to maximize their profitearning potential.

Just launched, Henry’s Hard Sparkling Water is now available in new 12-ounce slim cans at retailers nationwide. With only 88 calories and no sugar per 12-ounces, Henry’s Hard Sparkling Water has the lowest calories and sugar amongst the largest players in the category. “The goal is to offer the best possible hard sparkling water,” said Josh Wexelbaum, MillerCoors senior marketing director of emerging brands. “We heard from drinkers that calories and sugar matter most to them when choosing a hard sparkling beverage. So we delivered the lowest in both so women and men can feel good, and have fun all at the same time.” Henry’s Hard Sparkling Water is supported with a robust national marketing campaign that kicked off at the beginning of April with advertising on television; digital presence on Facebook, Instagram and YouTube; out of home; and traditional print media support, along with sampling at off-premise and on-premise accounts nationwide. The brand has also partnered up with social media influencers and most notably, pop singer Betty Who. Fans can learn more about Henry’s Hard Sparkling Water and share their experiences with the brand by following @HenrysHardSparkling on Facebook and Instagram and using the hashtag #GoodLightFun. Henry’s Hard Sparkling Water is available in convenience, grocery, liquor and drug channels in 6-pack, 12-ounce slim cans and 12-pack variety packs. For specific retail locations, visit the product locator at HenrysHardSparkling.com/locator.

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Let us help today! To roll in your profits and grow your OTP category, contact us at Republic Tobacco Customer Service: (800) 288-8888 or Mark Lopofsky at mmlopofsky@rpbtob.com.

cstoredecisions.com

9/11/18 4:01 PM

Celebrating a Milestone

InfoMarketing

Apter Industries celebrates the 20-year trademarking of GARAGE GORILLA fuel dispenser cleaner by continuing its vision of doing what’s right for the convenience store industry. You pioneered the idea of systemized cleaning of the Forecourt Area for convenience stores by developing safe, environmentally friendly cleaners. How did it start? After five or six years of manufacturing cleaners for the convenience store industry, we realized there was no easy way to clean the gas pumps and surrounding oil-laden concrete. That spawned the development of GARAGE GORILLA Diesel and Gas Pump Cleaner. How did the jump from GARAGE GORILLA Gas Pump Cleaner to the FORECOURT FIRST Total Gas Island Cleaning Kit happen? The short answer is: NEED! Well-meaning managers were sending their team members out to clean gas pads armed with dangerous acid and caustic cleaners. We replaced them with products that were safer, fasteracting, and easier to use. We added illustrated cleaning cards that attach to the safety carrying pail, and we even included a quart of GORILLA ODOR KILLER to keep the bees and flies away from the trash receptacles.

This stuff will remove oil and grime that has penetrated deep into the concrete and asphalt without scrubbing! It’s amazing. It has oil-eating microbes that break down oil. It’s safe and environmentally friendly (I know we say that a lot, but it’s true!) No less important is that it costs much less than typical cleaners and slow-acting bio-organic powders. It typically costs under a couple of bucks to clean a gas pad with GORILLA XDX. How are you celebrating the GARAGE GORILLA Trademark anniversary with your customers? We are offering the GORILLA FORECOURT CLEANING KIT at a crazy low price. Even after your grocery wholesaler mark-up, it will cost under $40. You get the four high-powered products and an abundance of cleaning accessories. To get started, simply contact your grocery wholesaler or visit our website at www.apterindustries.com. You can also contact Joe DeLuca at jdeluca@apterindustries.com.

Sparkling Water… It’s the NOW Big Thing! Bottled water has become the #1 beverage category in all retail channels. When consumers choose bottled water as their preferred packaged beverage, they are choosing water for its healthy hydration and calorie-free attributes along with its small environmental footprint. With the popularity of bottled water, a new growth driver is emerging and its future is sparkling!

CBE, Inc. Chef’s Cut Real Jerky CSC ServiceWorks Detour/Forward Foods Home Market Foods Hussmann Corp. Kellogg’s Convenience Store Team MillerCoors Nestlé USA Foodservice Nestlé Waters North America NJOY Prairie City Bakery Republic Tobacco Swisher International

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

Getting the Sparkling Mix Right – Call to Action • Carry multiple sparkling flavor varieties as 75% of new households enter the category this way, while existing sparkling buyers are purchasing more • Carry multiple package formats; cans, small & large PET • Carry sparkling water as individuals are seeking replacement to their CSD occasions Why getting Nestlé Waters Right is Vital to Success No company is better positioned to help you win the sparkling water category in 2018 than Nestlé Waters North America. In C-stores, our brands are 20% larger than all remaining branded bottled water brands combined, while driving the most growth. Nestlé Waters North America is unique in the beverage industry because of its unrivaled portfolio of outstanding brands, varieties and distribution methods. We work hard to satisfy every consumer preference for water.

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BIC

Vivid Impact

Embrace the Revolution Sparkling water offers the same healthy hydration benefits of still water. It’s calorie-free and has no added sugars, and many people find its fizziness especially refreshing. Sparkling water is perfect for on-the-go immediate consumption, pairing with a meal item and for a quick pick me up. • Sparkling water has added 5 million new households in the past 3 years – that’s 3 new households every minute! • New consumers are discovering sparkling water every day • Nestlé Waters projects the category to nearly TRIPLE in three years • Sparkling water is growing faster than any other carbonated beverage in 2017

cstoredecisions.com

Apter Industries

Ferrara Candy Co.

Your GORILLA XDX Gas Pad Cleaner is one of your fastest growing products. Why?

Nestlé Waters North America, Inc.

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.

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

www.nestle-waters.com

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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.

Emerging Trends BIC Lighters continue to drive fast-turning, highly-profitable, incremental front-end sales and e-commerce for retailers. BIC’s success in lighters continues to be driven by its safety, quality and the value that BIC Lighter brings to both the consumer and to the retailer. Lighter consumers are on-the-go and use their lighters for a variety of needs. Research shows that lighter consumers appreciate BIC’s extensive and expanding variety of new and exciting lighter sleeve designs. A lighter is not just a practical tool for consumers’ every lighting need – it’s personal. A BIC pocket lighter is an expression of its consumer’s personality, lifestyle, interests or mood. A Lighter for all life’s experiences. The ability to express themselves is one reason why consumers continue choosing BIC Lighters. For example, one series that continues to be among the most popular – and is regularly reviewed and updated – is the “Tattoo” series. BIC knows through research that 4 in 10 US adults have a tattoo and 38% of those who have a tattoo do so primarily to express their own style or character (Source: Statista Survey Tattoos, Piercings & Body Modiﬁcation 2017).

Every year BIC explores popular trends and makes sure it continues to offer lighter designs for every interest, personality and lifestyle. The BIC lighter is life’s perfect accessory. Purchase Considerations When a consumer chooses a lighter, they want safety, quality, and reliability - and those qualities are what set BIC lighters apart from the competition, in addition to having a wide assortment of the best designs. Many also appreciate that BIC proudly manufactures many of its lighters right here in the USA. Safety and quality are BIC’s top priorities. Every BIC Lighter is 100% quality inspected and undergoes more than 50 quality and safety checks during the manufacturing process. Additionally, BIC lighters meet or exceed the lighter safety standards established by ISO (International Organization for Standardization), the American Society for Testing and Materials (ASTM), the U.S. Consumer Product Safety Commission (CPSC), and all other government agencies. Consumers also choose BIC lighters because its full-size lighter provides twice the lights versus the next leading brand.

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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.

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.

Send the Right Message with Vivid Impact Everyone in the c-store industry has heard the age old question: How do you drive consumers inside your store to purchase your more profitable category items? Vivid Impact has one of the answers and it’s actually pretty simple: quality signage and messaging. Seems easy, right? It is, but I am amazed at how often it gets overlooked. Below are a few components that make up quality signage: Photography: Does the food, coffee, snacks, etc. look appealing enough to motivate someone to make a purchase, or rather, do your hot dogs appear green on your pump toppers? The solution: food photography. Make the slice of pizza appear mouthwatering, make the coffee piping hot, inviting the consumer to run in and buy! Consistency: Does your promotional messaging on the exterior match what is being sold in the store? Is your message consistent? Advertising at the pump is not enough and you need graphics throughout. What if they happen to not look at the pumptopper? Results show that if you combine multiple platforms of exterior signs (window graphics, a pump squawker, bollard signs, etc.) along with interior signs (wobblers, lobby signs, gondola headers, danglers, etc.) with the same clear messaging and quality imagery, the likelihood of the consumer paying attention to the message and acting on it increases exponentially. Clean Messaging: The average consumer is inundated with competing advertising everywhere they look. Studies show that you have mere seconds to grab their attention. Why “muddy the waters” with a bunch of wording and “busyness” that is not relevant? Keep the graphics clean: beautiful product imagery and a clear price point highlighted with your stores’ brand. Get to the point and get the customer!

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.

So, as the old adage goes, “keep it simple.” Signage is still the #1 most effective way to drive sales in your store. Vivid Impact is a creative graphic communications company that specializes in helping our c-store clients get the most out of their marketing promotions. We are experts in handling the entire process from Creative Design, to Technology Platforms simplifying ordering, distribution, and tracking, to Manufacturing and Fulfillment. Every chain has a unique brand. Contact us to maximize your efforts and drive in-store sales.

For a free consultation, please contact Justin Prather, Vice President: Client Solutions at Justin.prather@vividimpact.com. For information, www.rollerbites.com or contact info@rollerbites.com or (800) 367-8325, ext. 529.

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NJOY Poised for Strong Future NJOY is a pioneer in the electronic nicotine delivery system (ENDS) market. NJOY offers products across all form factors, from “e-cigalikes” to vaping devices and advanced “closed system” e-liquids in a variety of adult-oriented flavors and nicotine strengths.

What do leading convenience store chains have in common?

Available in all 50 US states, the NJOY Daily disposable e-cig and NJOY Convenience Vaping product lines have demonstrated significant retail sales since 2016. These products have built a foundation for NJOY to continue in its mission to end smoking-related death and disease by offering preferred alternatives to adult smokers. NJOY has devoted millions of dollars to scientific and behavioral research dedicated to helping smokers switch to an electronic nicotine delivery system. NJOY is developing a comprehensive program that includes support services from one-on-one mentoring to proven behavioral techniques which are designed to help smokers successfully and easily make the switch to NJOY products. Purchased in 2017 by a former 30+ year smoker – who switched using NJOY products – NJOY is poised to help millions of adult smokers “NJOY the Switch.” To stock the NJOY Daily or Convenience Vaping product lines, please contact a sales representative at sales@njoy.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 Introduces Walkin’ Wafels Waffles aren’t just for breakfast anymore. With nearly one-third of consumers saying they are purchasing breakfast fare beyond morning hours more often now than two years ago*, retailers have an opportunity to increase snack sales all day with this unique grab-n-go item – Walkin’ Wafels™. Walkin’ Wafels™ are individually wrapped indulgent Wafels that make the perfect portable snack for consumers that are craving something sweet. Inspired by Belgium’s beloved street-cart treat, our Walkin’ Wafels™ are meant to be enjoyed at all times of day without any syrup or toppings… they’re already sweet enough! No fork, no syrup, no mess. And these unique Wafels are made the traditional Liège way, featuring pearl sugar and a rich, whole wheat brioche batter that gives them a dense texture and super sweet taste. What’s more, Walkin’ Wafels™ boast about 16g of whole grains and are made with NO artificial ingredients. And with a 21-day shelf life, what’s not to love? The perfect, portable choice for breakfast, afternoon snacking, or anytime your customers are ready for a sweet treat, Walkin’ Wafels™ are a taste of Belgium with every step! Available in 4 great flavors: Apple Cinnamon, Blueberry, Buttery Maple, and Vanilla. Prairie City Bakery provides premium, fully baked, thaw-and-sell bakery programs to the Convenience Store, Foodservice, Grocery and Drug Store Channels nationwide. Known for their premium quality and innovation, Prairie City Bakery offers operators 4 turnkey programs: Foodservice, Wrapped Breakfast, Wrapped Snacks, and Wrapped Dulce Pradera Mexican Bakery products. 130 Convenience Store Decisions October 2018

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*2017 Technomic Breakfast Consumer Trend Report

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PRODUCTShowcase Blueberry, Creamy Coconut Cigarillos Customers looking for an out-of-this-world taste combination can find it in Swisher Sweets Limited Edition Coco Blue. It is a blast-off to a taste sensation when tangy blueberry and creamy coconut are combined. Available for a limited time in a resealable two-count pouch with the “Sealed Fresh” guarantee, Swisher Sweets Coco Blue is ready for shipment to stores nationwide. It is offered in “two for 99 cents,” “save on two” and “two for $1.49” options. Your customers will enjoy a trip to a galaxy of taste with Swisher Sweets Coco Blue. This edition of Swisher Sweets is available only while supplies last.

Company: Swisher Sweets (800) 874-9720 • http://trade.swisher.com/coco-blue

Pepperoni Pizza Hunt Brothers Pizza is introducing its newest limited time offer (LTO) flavor, Pepperoni Trio Pizza. The Pepperoni Trio Pizza features original crust topped with Hunt Brothers Pizza’s signature pizza sauce, 100% Mozzarella cheese, plus it is layered with generous slices of giant pepperoni, traditional pepperoni and crispy pepperoni. Preparation is finished by topping the pizza with its signature Just Rite Spice prior to baking. With the popularity of Hunt Brothers Pizza original pepperoni pizza, the company decided to introduce this brand new LTO, which perfectly combines bursts of savory pepperoni flavors. Beginning Oct. 8, 2018 and for a limited time, customers can order and enjoy this specialty pizza at participating Hunt Brothers Pizza locations while supplies last.

Company: Hunt Brothers Pizza www.huntbrotherspizza.com

Functional Bike Racks Paris Site Furnishings presents a full range of bike racks, which can keep facility exteriors tidy and accessible. The racks are available in a multitude of sizes, styles, materials, colors and mounts, so customers can choose the ideal bicycle parking for their location. These durable components can be selected as pedestal, mstyle, coil, horseshoe, loop, ground loop, grid and traditional designs, and provide years of maintenance-free functionality. They are available as stand-alone items or with complementary site furnishing such as benches, waste & recycling containers, planters, shade structures, picnic tables and more. Paris Site Furnishings’ bike racks are ideal for convenience stores.

Company: Paris Site Furnishings and Outdoor Fitness www.peml.com cstoredecisions.com

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New Energy Flavors XYIENCE (pronounced zience), a zero calorie, zero sugar energy drink made with all natural flavors and colors, has introduced two new flavors: Wild Grape and Fuji Apple. Like all other XYIENCE flavors, both are made with all natural flavors and colors. Grape is one of the leading and fastest-growing flavors in the Zero Calorie Energy Drink segment (IRI L52 week ending April 22, 2018). XYIENCE Wild Grape is bold, fruity and well-poised to capitalize on this recent zero-calorie flavor trend. XYIENCE Fuji Apple is the only zerocalorie energy drink to feature the popular apple flavor. The refreshing natural apple flavor gives XYIENCE the opportunity to pioneer a unique flavor in the market. These are the first new flavors from XYIENCE since Big Red’s acquisition of the brand in 2014. XYIENCE is available nationwide with a suggested retail price of $1.99 – $2.29 per 16-ounce can.

Company: XYIENCE www.xyience.com October 2018 Convenience Store Decisions 131

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PRODUCTShowcase On-the-Go Packs

Energy Chocolate Convenience Valet has partnered with BeON Energems, a brand from NRG Innovations. BeON Energems are portable and delicious dark chocolate energy bites whose pack size makes them an ideal candidate for the convenience store industry. With only 16 calories per piece, three Energems (one serving) equal the same caffeine content as a cup of coffee. The initial gem flavors will be the three best sellers: Dark Chocolate, Dark Chocolate Mint and Dark Chocolate Berry. Exciting new flavors expected later in 2019. BeON chocolate Energems come in six-count pouches, which are designed to be pegged or clip stripped but the pouches can also be merchandised at checkout or on shelf in a branded 12-count caddy. The recommended SRP is $2.99-$3.49 which is competitive for the category.

Company: Convenience Valet www.cvalet.com

Fresh Cravings, America’s fastest growing refrigerated salsa, adds a new graband-go product to their line: Salsa and Tortilla Chips snack packs. These bring excitement to kids’ school lunches, curb hungry after-school appetites and also offer a healthier snack option for busy parents who are always on the ‘go.’ Made with fresh vine-ripened tomatoes and crisp, handpicked vegetables, along with zesty peppers and spices, Fresh Cravings salsa is never cooked, which gives it a fresh authentic taste. These snack packs come in Fresh Cravings’ most popular recipe, Restaurant Style, in Mild heat. They include just the right amount of tortilla chips for it to be a nourishing treat without worrying about portion control.

Company: Fresh Cravings www.fresh-cravings.com

This fall, blu is offering myblu INTENSE Nicotine Salt Liquidpods—a line of prefilled pods that offer the benefits of an e-cig with the satisfaction of a traditional cigarette—in retailers across the country. myblu INTENSE are pre-filled pods made for the myblu device that feature blu’s proprietary blend of nicotine salt e-liquid with Pyrisalt. Providing a smooth, intense, fully-satisfying experience that offers consistency with every vape, the myblu INTENSE line will be available in five flavors with both 2.5% and 4% nicotine options at an RPP of $9.99. The flavors include Honeymoon: Rich honey flavor with light exhales of creamy milk; Neon Dream: Fruity and creamy blend to light up your senses; Citra Zing: A taste of sweet with a zing of citrus; Melon Time: The refreshing flavor of ripe, juicy fruit; and Tobacco Chill: A cooling take on classic tobacco flavor.

Company: blu www.blu.com/en/US/myblu-intense

Vapor With Nicotine Salts E-Alternative Solutions (EAS), a sister company to Swisher International, is set to introduce Leap, an innovative, nicotine-salts-based vapor system brand that takes adult users beyond smoking, at NACS 2018 (booth #2641). Leap features a sophisticated design, powerful battery and high capacity e-liquid pods. Leap delivers nicotine effectively using nicotine salts. The Leap Vapor With Nicotine Salts franchise includes both rechargeable and disposable models – each offering a wide range of e-liquid flavors and three nicotine levels (including a 0%), so adult consumers can experience a unique, customizable satisfaction. The Leap Device is offered in two kits, with (Leap e-Vapor Kit) and without (Leap Device Kit) a 1.5- milliliter e-liquid pod. The e-Vapor Kit includes a smooth Carolina Tobacco flavor with 4.8% nicotine, while both include a USB charging cable. Leap Pods come in eight bold flavors, each available in a 4.8% nicotine level, and soon in 2.4% and 0%. SRP: $7.99 for a package of two, 1.5-milliliter pods. Leap Go, the disposable Leap product comes in six flavors, each available in a 5% nicotine version and soon in 3% and 0%, SRP: $7.99.

Company: E-Alternative Solutions LLC www.ealternativesolutions.com

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Pre-Filled Pods

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PRODUCTShowcase Commercial Generators Promote KOHLER is introducing three new industrial light commer- Gut Health cial generator models for stationary emergency applications.

The KOHLER 25CCL, 30CCL and 36CCL are 60Hz generators, which can be fueled by either natural gas or liquid propane and integrate the KOHLER APM402 controller as well as a KOHLER 2.2-liter turbocharged engine. The new generators provide advanced voltage and frequency regulation along with ultra-low levels of harmonic distortion for excellent power quality and enhanced protection for sensitive, valuable electronics. They provide between 25kW and 36kW of reliable backup power. The new KOHLER 25CCL, 30CCL and 36CCL generators meet National Fire Protection Association (NFPA) 110, Level 1 requirements when equipped with the necessary accessories and installed per NFPA standards. All three models also utilize an aluminum sound-attenuating enclosure for quiet operation and come standard with a ﬁve-year or 2,000-hour limited warranty for additional peace-of-mind.

Company: Kohler Co. www.kohlerpower.com

Compostable Single Straws

Smart Coffee Brewing Introducing the Curtis GemX IntelliFresh Coffee Brewing System with FreshTrac. It combines “brains” and brilliant design to power a superior coffee program, helping c-stores maximize coffee freshness, reduce labor and deliver a better customer experience. GemX makes gourmet coffee brewing easy— with just the push of a button; and it’s encased in a slender, sophisticated form factor that will turn heads and attract sales. Curtis FreshTrac technology takes the guesswork out of serving fresh coffee. It replaces distracting audible alarms and timers with a simple, intuitive and customizable system of three LEDs that glow and ﬂash, letting operators track coffee freshness from across the room. GemX is also engineered with Curtis IntelliFresh. A “gentle” heating system that keeps coffee at its ideal temperature regardless of the volume.

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Repurpose is launching the ﬁrst ﬂexible, single-use Compostable Straws. These bendy straws are strong and durable, so they won’t crack mid-sip. The upcycled straws are also BPA-free, chlorine-free, nontoxic making them a smarter, better choice for you—and for the environment. Unlike traditional plastic drinking straws, which cannot be recycled, Repurpose’s straws are made from 100% compostable materials. The new straws break down in an industrial composter in just 180 days, as do Repurpose’s single-use cups, plates, bowls and utensils. Fewer fossil resources are required to produce Repurpose’s straws than conventional straws, further lowering their overall carbon footprint. Plus they are sold in packaging that is made of 85% recycled materials. Repurpose Compostable Straws have a MSRP of $2.79 for a package of 50 straws.

Company: Repurpose www.repurposecompostables.com

Pervida has developed a revolutionary and innovative solution to improving gut health. Pervida Immune capitalizes on the scientificallyproven, patented technology of pomegranate seed oil (PSO) to help ease the discomfort caused by overactive inflammatory responses in the gut and improve gut health. Pervida’s flagship product–Pervida Immune– promotes gut health and supports immunity by incorporating cold-pressed PSO, a rich source of punicic acid (PUA). There are currently no other beverages on the market that contain PSO – not even pomegranate juice. Every component of Pervida Immune has been carefully selected to maximize its gut health benefits, from the vitamin blend to the carbonation level. Every can is formulated with small batch craft fruit essences for an elegant balance of flavor, refreshment and gut health. Pervida utilizes the brand management services of Cascadia Managing Brands based out of Ramsey, N.J. The brand is currently available at over 279 Cost Plus World Markets in 37 states.

Company: Pervida info@pervida.net

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PRODUCTShowcase Regional Flavor Launch Perrier Carbonated Mineral Water introduces Perrier & Juice drink, a bold refreshment available for the first time in the U.S., and brought exclusively to the Los Angeles area. The new product line features the iconic Perrier mineral water, mixed with real fruit juices and a touch of sugar, for a treat worth savoring during life’s most extraordinary moments. Perrier & Juice drink is available in three vibrant flavor combinations – Strawberry & Kiwi, Peach & Cherry, and Pineapple & Mango – all of which are invigorated with touches of apple and lemon juices to round out the flavors. Perrier & Juice drink is available in 8.45-fluid-ounce slim can four-packs and 11.15-fluidounce sleek cans at select retailers throughout the greater Los Angeles area. Containing only 45 calories per the 8.45-ounce slim can and 60 calories per the 11.15-ounce sleek can, the fresh, flavorful selection of Perrier & Juice drink products is ideal for a refreshing treat any time of day.

Company: Perrier www.perrier.com

Probiotic Bars PROBAR, creator of delicious and convenient organic plant-based foods that power active lifestyles, has introduced PROBAR live, a new line of fresh, wholefood bars infused with the power of live probiotics. Available in four varieties, including Peanut Butter, Almond Butter, Coconut Cashew and Peanut Butter Chocolate Chip, each PROBAR live bar features a clean ingredient panel packed with real nuts, seeds and dates for natural sweetness. Launching just in time to power any activity under the sun, PROBAR live delivers 10 grams of plant-based protein and one billion CFUs (colony forming units) of probiotics with zero added sugar. Each bar contains 310-320 calories. PROBAR live bars are rolling out first at Whole Foods Market stores nationally, and at Amazon.com with additional retailers to follow this year.

Company: PROBAR www.theprobar.com

Icy-Cool Gum Mars Wrigley Confectionery’s ORBIT gum brand has unveiled its first intense mint flavor, ORBIT Freeze Mint. Expanding upon the brand’s mint offerings, ORBIT Freeze Mint gum is packed with intense arctic freshness and an icy-cool flavor, leaving your mouth feeling clean. The launch of ORBIT Freeze Mint marks the brand’s newest product innovation since introducing ORBIT White in 2016. ORBIT Freeze Mint is now available exclusively at Walgreens in 1.10-ounce Singles Pack for one month. The gum will roll out to additional retailers nationwide in the coming months in Singles pack (MSRP $1.09-1.59) and 3.58-ounce Multipack (MSRP $2.59-3.39).

Company: Mars Wrigley Confectionery www.orbitgum.com

Pure CBD Oil Pure Stasis CBD, or Cannabidiol, is an all-natural 100% USAmade therapeutic nutraceutical product. It’s doctor tested and patient approved for maximum body retention. Don’t be fooled with gimmicks about water-soluble products and products that contain false fillers. Pure Stasis products are made with timereleased oils allowing for complete absorption and lasting up to 12 hours. Scientists are rapidly discovering more about the rather amazing abilities of the cannabinoids found in the cannabis plant. Over the course of this year (and many years prior) Cannabidiol has been shown to be a potential therapy for: Anxiety, Epilepsy/Seizure, Psychotic Disorders, Stroke Rehabilitation, PTSD, Pain, Colitis, High Blood Pressure, Liver Injury. Many of these cannabinoids have therapeutic value and CBD is no exception. Pure Stasis CBD is a non-psychotropic cannabinoid, meaning it does not contribute to the euphoria associated with certain strains of cannabis. It is, however, psychoactive, because it crosses the blood-brain barrier. Unlike THC, Pure Stasis CBD can be administered at relatively high doses without undesired psychological side effects.

Company: Licensed E-liquids Manufacturing

orders@purestasis.com or andrew.mcintosh@licensedeliquids.com

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PRODUCTShowcase Automatic Hold-Open

Portable Snack Bites Hormel Foods, the maker of SKIPPY peanut butter, has launched SKIPPY P.B. Fruit Bites, a line of bite-sized real dried fruit covered in a delicious, smooth coating made with real SKIPPY peanut butter. Made with a real dried fruit center, SKIPPY P.B. Fruit Bites come in two varieties: strawberry-ﬂavored dried cranberry and dried grape – providing the classic taste of peanut butter and jelly in one bite. Portable and poppable, SKIPPY P.B. Fruit Bites are available in four-ounce resealable pouches, offering a perfectly-sized snacking solution with four grams of protein. SKIPPY P.B. Fruit Bites (MSRP $3.29 – 3.69) are available in select retailers across the country.

Anthony has introduced the Automatic Hold-Open feature to its 401 Series (Models 401E and 403E) commercial cooler and freezer doors. 401 Series doors, part of Anthony’s Rugged and Robust Line of doors, are the economical choice for entry-level doors, offering high-quality design, construction and premium features typically found only in more exclusive door models. The Automatic Hold-Open feature will replace the current manual holdopen function, allowing retailers to restock merchandise more efﬁciently. The Automatic Hold-Open will also make it easier for customers to prop open refrigerator and freezer doors, enhancing the overall shopping experience.

Company: Anthony International www.anthonyintl.com

Company: Hormel Foods www.peanutbutter.com

Pork Rind Variety Pack Southern Recipe Small Batch, an authentic, handcrafted, small batch pork rind snack, has released a new 12-pack of individual-sized 0.875-ounce bags. Included in each package will be the brand’s popular Korean Kimchi BBQ and Sea Salt & Cracked Black Pepper Pork Rinds. The multipack invites consumers to take advantage of high protein, low carb, bold and adventurous snacking with unparalleled convenience. The single-serve bags make it easier now than ever to take Southern Recipe Small Batch on the go. The multipacks will be available wherever Southern Recipe Small Batch Pork Rinds are sold beginning September 2018 at an SRP of $11.99.

Company: Southern Recipe Small Batch

(800) 241-7675

www.southernrecipesmallbatch.com

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More Vitamin C Vitamin Energy combines the beneﬁts of an Energy Shot with Vitamins and Minerals, creating a winning combination. With up to seven hours of energy, VitaminEnergy is a healthier alternative to traditional energy shots. Every shot of VitaminEnergy is super infused with more Vitamin C than 10 oranges. Vitamin C is needed for the growth and repair of tissues in all parts of your body. Vitamin C’s ability to stimulate collagen production does wonders for the skin and is a potent anti-oxidant that protects the skin from agecausing free radicals. With zero carbs, zero sugar and zero calories, the energy shot helps customers feel great without the crash that comes later from a sugareddown drink. Vitamin Energy utilizes the brand management services of Cascadia Managing Brands based out of Ramsey, N.J., to assist with sales and marketing efforts.

Company: VitaminEnergy www.vitaminenergy.com October 2018 Convenience Store Decisions 135

9/19/18 12:32 PM

PRODUCTShowcase Bold Croissant Sandwich

No Spoon Required As a further commitment to creating better for you grab-and-go options for kids and parents, Stonyfield Organic is introducing three new snacking options perfect for families on the move. Featuring a duo of creamy organic lowfat yogurt paired with either organic graham crackers or organic pretzels for dipping, the new Organic Snack Packs are the latest addition to Stonyfield’s kidfriendly line-up of organic yogurt, pouches, smoothies, tubes and string cheese. Currently available in three flavors, each Snack Pack contains a creamy, crunchy combination of Stonyfield Organic lowfat yogurt with either a sweet or salty choice of dipper, including: Strawberry Lowfat Yogurt and Graham Crackers, Chocolate flavored Lowfat Yogurt and Graham Crackers, and Chocolate flavored Lowfat Yogurt and Pretzels. Suggested retail price of $2.29.

Company: Stonyﬁeld Organics www.stonyﬁeld.com

Halloween Offerings In time for Halloween, The Hershey Co.’s Hershey’s, Kit Kat and Reese’s brands are introducing new Glow-in-The-Dark SnackSized Wrappers for customers’ favorite chocolate treats. Reese’s Peanut Butter Cups, Kit Kat and Hershey’s Milk Chocolate Bars with glow-in-the-dark wrappers are available in 9.35-ounce bags of snacksized bars for a suggested retail price of $2.99. The new product line joins other Hershey Halloween favorites, including Reese’s Peanut Butter Ghosts, Eyeballs and Pumpkins; and Hershey’s Candy Corn bars, which have bits of candy corn wrapped in white crème.

Tyson Foods Inc., a market leader in beef, pork, chicken and other proteins, as well as prepared foods, is expanding its offerings in convenience channels with the BIG AZ KICK AZ Croissant Sandwich. Designed for heat-seekers, the BIG AZ KICK AZ Croissant Sandwich packs bold, spicy ﬂavor that is sure to reach new customers. Made with Sriracha-glazed sausage, juicy ham, scrambled egg, creamy Swiss and pepper jack cheeses on a buttery croissant, the sandwich delivers a sweet, spicy kick. Each sandwich is hand-assembled and wrapped in packaging that allows hungry consumers to see exactly what’s inside.

Company: Tyson www.tysonfoods.com

Company: The Hershey Co. www.hershey.com/cstore

Heavy-Duty Range The Rapide Cuisine High-Powered/Heavy-Duty Induction Range offers industry-leading features to operators. Exclusive to the IRNG-PC1-36 and IRNGPB1-36 models are User Programmable Presets (UPP) to create preset programs, a food temperature probe and four surface temperature sensors for more accurate cooking control. The high-powered Rapide Cuisine can withstand high ambient kitchen temperatures up to 124 degrees, while an energysaving automatic shut-off prevents overheating. A fully-sealed top with conformal-coated boards adds extra protection against grease or moisture. Heavy gauge stainless-steel housing, side impact protection and a scratch-hiding cooktop surface complete this commercial kitchen proof unit. Standard features include Pan Sense Technology (PST), Magnetic Power System (MPS), a high resolution TFT display and a USB port for downloading system updates and adding new programmable Modes.

Company: HATCO (800) 558-0607

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PRODUCTShowcase New Beef Jerky KMB Foods is introducing Tapatío Beef Jerky in three flavors: Original, Spicy Teriyaki and Sweet & Spicy. KMB Foods is family owned and operated and committed to creating handcrafted, artisan meat snacks using the highest quality, freshest U.S. beef. Its Jim Beam Jerky is now stocked by McLane, Core-Mark and Eby-Brown.

Company: KMB Foods henry@kmbfoods.com

Lavender RTD Latte

Black Medicine Iced Coffee is expanding its all-natural product line with launch of a Lavender Latte to complement its existing Iced Coffee, Mocha and Latte items. The lavender flower is increasingly being used as a culinary herb in food and bevSwedish Match North America’s Garcia y Vega’s 1882 erages and is known for its brand began with the key pillars of heritage, quality floral and spicy aroma. Black and legacy in mind from inception. Till this day, 1882 Medicine Lavender Latte, provides a high-quality cigar rolled with nothing more than premium leaf and quality filler providing the per- which becomes the first of fect balance of aroma, body and taste. The brand is its kind in the ready-to-drink available in Bourbon, Honey Berry, Sweet Aromatic, (RTD) coffee category, is and NEW to the line-up, Natural. Same great smoke, with a new packaging design sets an all-natural product that this quality cigar apart from the rest. The new bold colors and frayed rolled leaf cigar is slightly sweetened with stand out on-shelf and will be a favorite to many. The 1882 items are available in the fol- organic cane sugar and lowing formats: Three for $1.99 and Save on five. has 185-milligrams of caffeine (same as existing line) Company: Swedish Match North America to deliver a potent energy (800) 367-3677 boost. The package design features lavender’s signature purple color and is tied to an overall package redesign of its 9.5-ounce sleek As more customers and businesses move away from plastic straws, cans this summer to imAardvark Straws, a major brand of paper straws, is offering soluprove on shelf visibility and tions. Over 8 million tons of plastic enters oceans every year, and communication of product World Economic Forum reported that by 2050, there will be more line flavors. Brighter colors plastic in our oceans than fish. Paper straws are a practical alteron Black Medicine’s iconic native to plastic because of their ability to decompose. Aardvark black can will enable conhas supported several nationwide campaigns to eliminate plastic sumers to better identify flastraws, including last September’s Strawless in Seattle Campaign, vors on shelf, and product which helped the city eliminate more than 3 million plastic straws names have been moved throughout the month of September and even led Seattle to ban to the top of the can. Nonplastic straws, which went into effect earlier this month. The Seattle restaurants and busiGMO designation and cafnesses that participated in this citywide takeover still use Aardvark Straws today. Aardvark feine content were added Straws, based in Indiana, is the nation’s only supply of biodegradable, marine-friendly to the front label as well. paper straws. The straws are naturally degradable, FDA/EU compliant and compostable.

High-Quality Cigar

Eco-Friendly Straws

Company: Black Medicine

Company: Aardvark Straws www.aardvarkstraws.com cstoredecisions.com

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www.blackmedicine.com

October 2018 Convenience Store Decisions 137

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PRODUCTShowcase New Gummy Bear Premium confectionery brand, Black Forest, is giving its famous gummy bear—known for its soft, chewy texture and juicy ﬂavor—a new makeover. As of midJuly the tasty gummy bears are not only richer and brighter in color, but they also now feature a signature Black Forest tree on their little juicy bellies. This vibrant, yet subtle design is a physical emblem that further differentiates a product known for its uniquely authentic ﬂavor and quality. Though the look is new, one thing remains unchanged: The brand’s commitment to making delicious treats with real and simple ingredients that consumers can feel good about eating.

Company: Black Forest www.blackforestusa.com

Natural Spice Mix Pereg, a purveyor of allnatural exotic spices, wants to shake up the salt and pepper standard. In fact, they think their newest spice mix may forever change the American table — and palate. Pereg has introduced new Everything But The Bagel Spice Mix, which offers that irresistible everything bagel taste, without all the carbs. A special mix of natural ﬂavors including onion, garlic, poppy, salt and three kinds of sesame seeds, you can jazz up practically everything with it. Stir it into plain cream cheese for a ﬂavor burst. Sprinkle it on grilled meats, avocado toast, rice, scrambled eggs, salads, chicken, pancakes and more. It’s set to debut this September. A 5.3-ounce jar will retail for $5.50.

Company: Pereg Natural Foods www.pereg-gourmet.com

EGG White Protein Bars NuGo Nutrition has launched a new Non-GMO product line, NuGo Egg White Protein Bars. These non-dairy, whole-food paleo bars are certiﬁed gluten-free and OU kosher pareve. NuGo starts with the highest quality real fruits and nuts, then adds three Non-GMO egg whites, resulting in 12-14 grams of protein per bar. Egg white protein is a complete protein, containing all of the amino acids the body needs, while being virtually fat and cholesterol free. The simple, clean ingredients combine to form a delicious whole food protein bar with 180-200 calories available in four ﬂavors: Dark Chocolate Sea Salt, Maple Pecan, Blueberry and Peanut Butter.

Company: NuGo Nutrition www.nugonutrition.com

Bolder Coffee Choice Coca-Cola introduced a new flavor of VEB brand Core Power—coffee—to the convenience channel earlier this year. Core Power also introduced redesigned packaging that has proven in testing to increase purchase intent among current consumers and category users. Core Power is a naturally flavored, high-protein milkshake made from real milk without protein powders that helps support the development of lean muscle. The brand focuses on the nutrition of athletes and active-lifestyle consumers who are making purposeful choices about their lifestyle and nutrition. Core Power is available in 11.5-fluid-ounce PET bottles. Core Power is available in two varieties: CORE (26 grams of protein) available in vanilla, chocolate, banana, strawberry banana and coffee; and ELITE (42 grams of protein) available in vanilla and chocolate.

Company: The Coca-Cola Co. www.coca-colacompany.com

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Apter Industries

8 00.441.7146 www.apterindustries.com Avery Dennison

www.averydennison.com/freshmarx Axis Communications

ww.axis-communications.com w /us/retail-quick-guide

11 107 102

Blu

www.blucigs.com Brakebush

8 00.933.2121 49 www.brakebush.com/cstore-burger Cash Depot

800.776.8834 / www.cdlatm.com Calico Brands

78 70

www.calicobrands.com CB4

646.776.0293 / www.cb4.com Chefâ&#x20AC;&#x2122;s Cut Real Jerky

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103

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E-Alternative Solutions

888.727.1841 www.LeapVapor.com www.cuevapor.com

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7 27.449.2296 www.gulfcoastsoftware.com

Hershey

www.hersheysolutions.com Home Market Foods

8 00.367.8325 www.HomeMarketFoods.com

Hoshizaki America

www.hoshizakiamerica.com Hunt Bros.

8 00-453-3675 51 www.huntbrotherspizza.com/CSD Hussman

8 77.543.6034 www.convenience-works.com Inline Plastics

8 66.254.6975 www.cheyenneintl.com www.clickitinc.com

Dover Fueling

8 00.826.5567 www.inlineplastics.com

63 60-61

Johnsonville

8 00.837.5391 38-39 www.cstore.johnsonville.com JUUL

www.JUUL.com/retail/wholesale Kent Companies

www.thekentcompanies.com

140

Kretek

www.djarumcigar.com

Krispy Krunchy

Classifieds /Ad Index

8 00.290.6097 www.krispykrunchy.com

23,59

KT&G

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www.ktngusa.com Lancer

Prairie City Bakery

800.338.5122 / www.pcbakery.com R. J. Reynolds

www.EngageTradePartners.com

79 47

Ruiz Foods

Liggett Vector Brands

Smoker Friendly

Little Caesars

313.471.6764 / www.LCEcorp.com Little Debbie

8 00.315.6208 www.LittleDebbieCStore.com

Loomis

www.loomis.us/SafePoint

MarkTen MasonWays

8 00.837.2881 www.masonways.com

141

McLane Company

NCR

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5 16.693.7367 www.RogueNicotine.com

North American Bancard

139

Paytronics

101

866.481.4604 / www.nynab.com www.paytronix.com Pierce Chicken

800.336.9876 / www.poultry.com

143

Republic Tobacco

8 77.734.2194 www.lancercorp.com/twinpour 877.415.4100

www.ruiz.foods.com ww.smokerfriendly.com/ w become-a-dealer Spark Vapor

8 00.280.8089 www.sparkvapor.com

81 73, 83

Stryve

Subway

www.stryvebiltong.com 203.877.4281 / www.subway.com Swedish Match

800.367.3677 www.smna.com www.whiteowlcigar.com

41 77

Swisher International

800.874.9720 www.swisher.com www.swishersweets.com Texas Pete

www.TexasPeteFoodservice.com Tyson Convenience

8 00.682.7272 www.tysonconvenience.com White Castle

75 144 35 53

6 14.228.5781 www.whitecastle.com

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INDUSTRY

Perspective

Meal Kits or Meal Crypts? Meal kits aren’t fool proof. They often take longer than advertised. Or, in the hands of faux chefs, don’t turn out as intended. By Gary Stibel

eal kits are the latest in a long line of food and beverage misadventures, from clear cola to diet wine that could have been prevented if more discussion in the marketing board room had taken place. On the surface, the concept of meal kits is straightforward and logical. In these days of busy, everyday lives, many Americans don’t have time to prepare meals. And even if they did, a portion of Americans don’t know how. It was in this spirit that the meal kit was born. Companies such as Blue Apron and HelloFresh, in the last few years, have increasingly carved out territory among U.S. consumers by offering another option to cooking. These meal kits are typically mailed once a week to subscribers as boxes containing pre-portioned ingredients and basic instructions on how to turn them into different meals.

JOIN THE CLUB Moreover, fast casual and quick-service restaurants are joining in. Earlier this fall, the fast-food chain Chick-fil-A announced that it will test a meal kit service through midNovember. Customers can pick up the kit at about 150 participating locations in Atlanta. The meals include chicken flatbread, crispy Dijon chicken, chicken Parmesan, chicken enchiladas and pan-roasted chicken. So if you can make it tasty, inexpensive, healthy and convenient, how can anyone resist, at least seven days a week? But humans don’t behave in the real world the way they do in market research. Chick-fil-A’s pilot program shows a fundamental misunderstanding of what fast food is all about: convenience and instant gratification. And, while the meal kit concept appears universally appealing, past experience indicates that it has limited appeal to a limited audience for a limited period of time. That’s a sign convenience stores should heed. BUT WHY? Even meal kits aren’t fool proof. They often take longer than advertised. Or, in the hands of faux chefs, don’t turn out as intended. And while the quantities may be perfect for the average American couple, we haven’t met many average American couples recently. 142 Convenience Store Decisions October 2018

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Gary Stibel is the founder and CEO of the New England Consulting Group. His career spans more 30 years of management consulting.

True, meal kits may be more convenient than home-prepared meals, but they are less convenient than restaurant or store takeout, home delivery or frozen food. And there’s less variety too. Next, the appeal of meal kits in the marketplace is far smaller than in market research. Add to this an overpopulated competitive landscape. There are already more than 200 meal kit brands on the market today. During the time it takes to read this post, another will have launched. In addition, there’s the novelty effect—in everything from fashion and electronics to food and beverages. Humans can’t wait to try something new once, or even twice. But then they return to tried-and-true foods like hamburgers and French fries, which continue to be mainstays, even after centuries. Perhaps a close look at the meal kit business model is warranted: High investment capital and consumer acquisition costs weighted down by low consumer retention and subscription rates. The players best positioned to win a meal kit war are not the freestanding companies that must rent space, buy equipment and hire personnel, or small footprint stores with limited assortment. They are the restaurants and major grocery chains that can easily add meal kits to their current assortment because of the wide array of food options they have already at their disposal. Beyond commercial companies, another difficult competitor is the woman or man of the house, who can whip up something in minutes that she or he knows everybody likes, and can serve as many as are present as much as they want. Meal kits are a great business, with two exceptions: too little demand and too much supply. Fortunately, those of us who have been in the business more than a few years have seen this movie before— many times. The next time you think about chasing after a shiny new object, like meal kits, first, listen to the advice of those of us who know how such trends are likely to play out. How do we know? Like those Farmers Insurance commercials state, “We know a thing or two because we’ve seen a thing or two.”

cstoredecisions.com

9/19/18 12:33 PM

N E W L O O K. SAME CRUSH. Contact your RAI Trade Marketing Services representative or go to EngageTradePartners.com to learn more. CIGARETTES

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