CStore Decisions March 2021 by WTWH Media LLC

CStoreDecisions Solutions for Convenience Retailers

The 2021 category Management

Handbook

CStore Decisions analyzes data and emerging trends shaped by the COVID-19 pandemic across 38 key categories, and how c-stores are preparing for the year ahead.

INSIDE Recognizing Category Management Leaders Hard Seltzer, RTD Cocktail Sales Soar Cigarettes Burn Brighter

28 64 84

Rusty Lantern Markets Offers Local Stop

12 March 2021

•

CStoreDecisions.com

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Robert Buhler, President and CEO Open Pantry Food Marts • Pleasant Prairie, Wis. Lisa Dell’Alba, President and CEO Square One Markets • Bethlehem, Pa. Raymond Huff, President HJB Convenience Corp. • Lakewood, Colo. Bill Kent, President and CEO The Kent Cos. Inc. • Midland, Texas Patrick Lewis, Managing Partner Oasis Stop ‘N Go • Twin Falls, Idaho Reilly Robinson Musser, VP, Marketing & Merchandising Robinson Oil Corp. • Santa Clara, Calif. Bill Weigel, CEO Weigel’s Inc. • Knoxville, Tenn.

NATIONAL ADVISORY GROUP (NAG) BOARD Doug Galli (Board Chairman), Vice President/General Manager Reid Stores Inc./Crosby’s • Brockport, N.Y. Mary Banmiller, Director of Retail Operations Warrenton Oil Inc. • Truesdale, Mo. Greg Ehrlich, President Beck Suppliers Inc. • Fremont, Ohio Derek Gaskins, Senior VP, Merchandising/Procurement Yesway • Des Moines, Iowa 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 Co. • Marcy, N.Y. Vernon Young, President and CEO Young Oil Co. • Piedmont, Ala.

YOUNG EXECUTIVES ORGANIZATION (YEO) BOARD Jeremie Myhren (Board Chairman), Chief Information Ofﬁcer Road Ranger • Rockford, Ill. Garet Bishop, Chief Financial Ofﬁcer BFS Cos. • Morgantown, W.Va.

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CStore Decisions (ISSN 1054-7797) is published monthly by WTWH Media, LLC., 1111 Superior Ave., Suite 2600, Cleveland, OH 44114, for petroleum company and convenience store operators, owners, managers. Qualified U.S. subscribers receive CStore 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. Periodicals postage paid at Cleveland, OH, and additional mailing offices. POSTMASTER: Send address changes to CStore Decisions, 1111 Superior Avenue, 26th Floor, Cleveland, OH 44114. GST #R126431964, Canadian Publication Sales Agreement No: #40026880.

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CSTORE DECISIONS does not endorse any products, programs or services of advertisers or editorial contributors. Copyright 2021 by WTWH Media, LLC. No part of this publication may be reproduced in any form or by any means, electronic or mechanical, or by recording, or by any information storage or retrieval system, without written permission from the publisher. Circulation audited by Business Publications Audit of Circulation, Inc. ©

CSTORE DECISIONS •

March 2021

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CONTENTS march 2021

•

Number 3

•

Volume 32

CStoreDecisions

EDITOR’S MEMO

10 Winning the Digital Message FRONT END

12 Profile: Rusty Lantern Markets Offers Local Stop 22 Quick Bites: C-Store Trends at a Glance 24 NATO Celebrates 20 Years 28 Category Management Leaders: Cuellar’s Passion Shines Through as OnCue Category Manager

32 Category Management Leaders: Been There, Done That: Plaid Pantry’s Nelson Is Ready for More

2021 Category Management Review FOODSERVICE 38 Chicken 40 Pizza 42 Sandwiches 44 Roller Grill 46 Hispanic Foods 48 Bakery 50 Hot Dispensed BEVERAGES 52 Carbonated Soft Drinks 54 Cold & Frozen Dispensed 56 Juices & Teas 58 Bottled Water & Sports Drinks 59 Energy Drinks 60 Energy Shots 62 Beer & Wine 64 Hard Seltzer & RTD Cocktails SNACKS 66 Meat Snacks 68 Salty Snacks 69 Sweet Snacks 70 Nuts & Seeds

72 HEALTH & BEAUTY AIDS 8

CSTORE DECISIONS •

74 MILK & ICE CREAM CONFECTIONS

76 Chocolate 78 Non-Chocolate

COVER STORY

82 CBD

36 The 2021 Category

TOBACCO 84 Cigarettes 86 Roll-Your-Own 88 Smokeless 90 Cigars 92 Vape 94 Accessories

Management Handbook

CStore Decisions analyzes data and emerging trends shaped by the COVID-19 pandemic across 38 categories, and how c-stores are preparing for the year ahead. Front cover photo shows Rusty Lantern Markets. Learn more about Rusty Lantern in this month’s profile article on p. 12.

TECHNOLOGY

96 Loyalty 97 Prepaid 98 POS & Back Office 100 Security & Cash Management 102 Electronic Payments OPERATIONS

103 Car Wash 104 Fuel & Fuel Alternatives 105 LED & Energy Efficiency

March 2021

BACK END 108 Product Showcase 113 Ad Index 114 Industry Perspective: Proactive Steps in Turbulent Times cstoredecisions.com

GSK is now the leader and your strategic partner for health and beauty care in Convenience.

Get all of your favorite brands from one familiar place! Contact your local GSK C-Store representative on how to order or email Scott.F.Breisinger@gsk.com

Editor’s Memo

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

Winning the Digital Message In normal times, a digital transformation can take months, even years. But the COVID-19 pandemic has forced convenience stores to change their messaging quickly to meet customers’ needs in these anything-butnormal, transformative times. While disruptor companies like Amazon, DoorDash, FreshDirect, Blue Apron, etc., are born ready to serve the needs of today’s mobile-obedient customers, traditional retail organizations find themselves reinventing their brand experience, and what they are finding is transition can be a long, arduous journey. This topic is covered in detail in Howard Tiersky’s new book, “Winning Digital Customers: The Antidote to Irrelevance.” While he concedes that transforming your businesses to meet the needs of mobile consumers is far more complex than it seems, he said there are small changes you can make right now to focus your messaging, while solidifying the infrastructure to compete with the more experienced companies in the future. “If you can identify some things you are doing that confuse, frustrate or disappoint your customers that you can fix, that’s a step in the right direction,” Tiersky said. “Taking these small steps might deliver quick, measurable, sustainable financial improvements, which can demonstrate that your overall transformation program is capable of driving tangible change. This will help you improve your customers’ experience, which improves brand perception.” The bottom line is that customers today have very high expectations. If you currently have a weak mobile user experience, it pays to address it now rather than months or years into your digital transformation. Tiersky recommended a few tips to get the transformation started: Identify glitches that might be turning off customers. Almost every retail company has small digital glitches in the user experience that add up over time to form an impression. This becomes even more problematic when a digital disruptor offers your customers excellent service and good prices, so it’s extremely important to avoid these types of flaws. Get your wording right. HubSpot did a study of over 40,000 “call-to-action buttons for email sign-ups.” They found that if the text of a button read, “Click Here,” site visitors were three times more likely to click than if it read 10

CSTORE DECISIONS •

March 2021

“Register.” This doesn’t mean that every button on your site should be labeled “Click Here,” but merely points to the importance of getting the wording right to get your customers to sign up for things like weekly promotions and menu updates. Proof your website. Sounds logical, but how many times have you noticed errors on websites or menu boards? Customers notice these things, too. Give your website and any materials you send or publish a careful review. A few seemingly careless errors or inconsistencies can cause your potential customers to lose faith in you. Fix the small stuff. Digitally transforming your retail business is a marathon, not a sprint, Tiersky said. The changes you make now will add to your momentum down the road. So retailers should take an honest, open-minded look at things like their mobile app, their website, online menus and even online recruiting materials. When you see a problem that negatively impacts customers’ experience, step up and deal with it. First, ask who should be in charge of fixing it. If there’s no obvious answer, form a new task force and get to work. Easy fixes should never be delayed. “Relatively quick-and-easy fixes can go a long way,” Tiersky said. “If you fix a dozen things this quarter, and then a dozen more things next quarter, over time you can have a substantial impact on your customers.” The pandemic has changed the way customers perceive your business, buy food and even the trips they are making to the store, so mobile apps, your website, your Facebook and Instagram pages are quickly becoming an important face for your business. Make sure they are closely monitored and maintained because, even online, you still only get one chance to make a good first impression.

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FRONT END Profile

Rusty Lantern Markets Offers Local Stop

The Brunswick, Maine-based c-store chain features fresh prepared foods, local products, a welcoming design and has its eye on continued expansion. Erin Del Conte • Executive Editor

A global pandemic hasn’t slowed Rusty Lantern Markets’ expansion plans in the Northeast. In 2020, the Brunswick, Maine-based c-store chain opened three locations — one new build and two acquisitions — bringing its total store count to 18 sites in Maine, New Hampshire and Massachusetts. 12

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March 2021

cstoredecisions.com

FRONT END Profile

The rusty lantern concept is carried throughout the interior design of the store, informing color and material selections. The convenience store interiors feature a deep rusty red color as well as a pale blue and beige color scheme.

In 2021, the chain plans to continue reﬁning its interior design and extend its design theme to the exterior of the stores, while also continuing to expand its footprint. Rusty Lantern’s mission is to elevate customers’ perceptions of what a convenience store can be. From its local products to its outdoor gathering areas, Rusty Lantern cultivates an environment that serves as a local gathering spot for friends and neighbors in the community.

Founded in October 2015 by CEO John Koch, the chain grew quickly in its first year, opening three convenience stores in the state of Maine in close succession, including a new build in Portland and acquisitions in Topsham and Brunswick. Koch had previously worked for a major oil company and for a wholesaler and was ready to try his hand at the c-store business. One of his first steps was to bring in design firm Paragon Solutions to help develop a brand, interior layout and design strategy for the new chain. In explaining his vision to Paragon Solutions for a convenience store that is also a neighborly gathering spot, Koch pointed to the back porch at his home where friends often gathered. The back porch has a rusty lantern, and friends began referring to get-togethers there as being at “the rusty lantern.” Out of that conversation, the name Rusty Lantern Markets came to life as a moniker for the new c-store chain. COMFORTABLE & LOCAL

Paragon carried the rusty lantern concept into the interior design of the stores, using it to inform color and material selections. The convenience store interiors feature a deep rusty red color as well as a pale blue and beige color scheme. “We brought in some stonework, primarily around 14

CSTORE DECISIONS •

March 2021

cstoredecisions.com

In the kitchen area, Rusty Lantern incorporates the lantern graphic, but with a fork and knife inside the lantern instead of the ﬂame. In the seating area, fresh ﬂowers welcome customers.

the cooler areas. It's a beige, brown stone, and the cabinets are a dark chocolate brown,” Koch said. The earthy tones create a relaxed, comfortable vibe. While the design has evolved since 2015, the color scheme and concept have remained, and the interior graphics incorporate the lantern theme throughout the convenience store. “We'll call out the beer cave with a graphic suspended from the wall using a rusty-looking guardrail material, suspending the graphic,” Koch said. “We highlight the cool-

cstoredecisions.com

ers with an LED lantern. The kitchens have a suspended kitchen lantern graphic with a little fork and knife inside the lantern instead of the ﬂame. We include the word ‘beans’ and a little logo work with graphics to elevate the coffee area.” Rusty Lantern opened its most recent new-to-industry store in Brockton, Mass., in July 2020. And in October, it acquired two existing sites, which are being remodeled to incorporate the Rusty Lantern branding and design this month and set to be completed by the end of April.

March 2021 •

CSTORE DECISION

FRONT END Profile

At Rusty Lantern Markets, restrooms incorporate modern touches as well as fresh ﬂowers for added ambiance.

“You could go into the first rebuild five years ago, and it'll look very similar to the most recent one we built in July,” Koch said. The biggest difference in newer locations is the layout, which has transitioned over time both to accommodate the physical limitations of some buildings and to allow space for the 1,000-1,500-squarefoot kitchens it’s incorporating into new builds. “We've moved the checkout area around to make it more conducive to the work with the kitchen,” Koch said. “We’ve expanded the footprint of the kitchen and extended the beverage cooler footprint.” Rusty Lantern stores range from 4,000 to 4,600 square feet and are well lit to ensure a feeling of safety. The forecourts fly the Irving fuel flag, except for one of its

original sites that features Shell-branded fuel. Due to property restrictions, not all locations include the original outdoor gathering area that spurred the idea for the rusty lantern concept and name, but many of the sites feature an outdoor gazebo complete with furniture where locals often gather for a cup of coffee. Inside, restrooms incorporate modern touches as well as fresh ﬂowers for added ambiance. In keeping with its positioning as the neighborhood gathering place, Rusty Lantern puts a big emphasis on stocking local products. “Our coffee is from a company called Coffee By Design, out of Portland, Maine. They’re a micro gourmet roaster,” Koch said. “We buy the fresh food from local vendors, where we can. We bring in bakery and confectionary, honey and snack products from local Mainebased companies.” The local products are featured in a special ‘Made in Maine’ section inside the store. Also unique, the chain offers a candy section for kids that sells individual pieces of candy — “with old drug stores in mind.”

The chain features a candy section where children can select individual pieces of candy, which is reminiscent of the ‘penny candy’ sections for which drug stores were renowned during much of the 20th century. 16

CSTORE DECISIONS •

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INTRODUCING

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Rusty Lantern sees a high demand for craft beer in the areas it serves and has increased its focus on local craft beer in its coolers and beer caves. “Most of the new builds include beer caves, with a double-door entrance and extra lighting,” Koch said. The title floor from the c-store extends into the beer cave and speakers play music inside the cave. FRESH, PREPARED FOOD

Rusty Lantern offers prepared made-to-order and grab-and-go food, including a proprietary pizza offering and fresh sandwiches. “Everything's made fresh and prepared on-site. We hand-toss the pizza dough. We crack every egg, all the coffee's ground fresh from beans before it's brewed,” Koch said. “We have hot and cold graband-go, as well as a made-to-order counter.”

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The coffee offering at Rusty Lantern is produced by Coffee By Design, a coffee roaster based locally in Portland, Maine. The chain also offers the coffee by the bag for customers to brew at home.

The chain offers a full hot breakfast menu featuring hot breakfast sandwiches, breakfast pizza, breakfast burritos, biscuits and gravy, eggs and hash browns, among many other options available both as graband-go or made-to-order offers. Lunch includes a range of options such as “Cubans and Rubens and what we call a New Englander, which is a Turkey and cranberry sandwich,” Koch said. Lobster rolls are also on the menu. The employees preparing the food don white chef jackets. The chain also features baristas who prepare

specialty coffee drinks. And it sells take-home bags of the Coffee By Design coffee. Each store includes a small sitting area with tables and seating for six to 12 customers. And tables feature a vase with fresh ﬂowers to welcome guests. GROWING OUT & UP

In 2021, Rusty Lantern plans to determine the best way to extend its interior brand design to the exterior. Currently, the chain features two types of building exteriors.

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FRONT END Profile

“

The key to our fast growth is our extremely dedicated and professional team members. Our people are very loyal, and they take a great deal of pride in delivering an excellent experience for our customers. — John Koch, CEO, Rusty Lantern Markets

“One is a New England Colonial-type that incorporates some stonework. The other is a little more modern, with double high ceilings and extra (windows),” Koch said. In determining a new exterior look, Rusty Lantern plans to keep the same basic colors and materials it has now, but also ensure a modern appearance that better fits its brand identity. Also ahead for 2021, Koch plans to continue to refine the interior design, further highlighting the food and beverage areas through additional branding. To date, Rusty Lantern Markets has grown at a speed that superseded what Koch originally imagined. He credits a number of unexpected opportunities, including the ability to acquire some sites from fuel-supplier Irving Oil, but noted the biggest factor has been the efforts of the hard-working Rusty Lantern team. “The key to our fast growth is our extremely dedicated and professional team members. Our people are very loyal, and they take a great deal of pride in delivering an excellent experience for our customers,” Koch said. “It’s difficult work, but we have a team of people who are willing to put in the time and energy in order to be the best.” Going forward, Rusty Lantern plans to continue growing its fleet of stores, 20

CSTORE DECISIONS •

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Rusty Lantern stores feature a beer cave with a double-door entrance and stone work around the outside. The tile from the conveneince store continues into the beer cave, and music plays inside.

primarily through new builds — but that doesn’t mean it’s ruling out acquisitions entirely. “Acquisitions are a nice way to balance your growth. An acquisition is nice because there's a history there. It gives you conﬁdence in what the store can produce right away,” Koch said. Koch noted he always has conﬁdence in the potential of new-to-industry Rusty Lantern locations but added there’s always a startup curve to a newly built site. “So it's nice to have a little balance of

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acquisitions and new builds, but we do tend to favor the new builds.” As for what the next five years hold, Koch envisions building one to two new stores per year. “People laugh because when I first started, I told people we'd open five (stores), and now we're at 18,” he said. “Every time I make a prediction on what the future holds, it's a little bit of an inside joke because nobody really knows for sure. It just depends on what opportunity comes our way.”

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March 2021 • CSTORE DECISIONS

quickBites C-STORE TRENDS AT A GLANCE FUEL PRICES ON ROAD TO RECOVERY

The pandemic hindered automobile travel and drove down fuel prices. Analysts at GasBuddy see prices and annual household fuel spending rising in 2021. 2021*

2020

2019

2018

2011

Total U.S. Gasoline Spending

$326 B

$280 B

$372 B $389 B

Yearly Household Spending on Gasoline

$1,670

$1,617

$1,952

$2,034

$2,615

Average Price/Gallon

$2.44

$2.17

$2.62

$2.73

$3.51

----

*Projected Source: GasBuddy, “Fuel Price Outlook 2021”

Candy is the gift that kept on giving through the pandemic. According to part one of a three-part report by the National Confectioners Association, consumers found candy to be a go-to option throughout 2020.

8 OUT OF EVERY 10 A TASTE OF CBD

In a preference survey, edibles led the way for CBD users by 18% over oils and tinctures. Don’t count out topical creams, which was preferred by nearly one in four CBD consumers. “Which CBD product do you prefer to use/are you most interested in using?”

Edibles/Gummies

41%

Oils/Tinctures

23%

Topical Creams

22%

Vapes

(dabs, wax concentrates, etc.)

Capsules/Pills 2,579 responses, weighted by U.S. Census 18+, rebased to exclude non-users Source: CivicScience 2021, survey dates: Nov. 10, 2020 to Jan. 27, 2021

APPS FOR APPETITES: FOOD DELIVERY ON THE RISE

As expected, U.S. consumers report getting food delivered through apps like Grubhub and Uber Eats signiﬁcantly more than this time last year. Nearly one-quarter say they get food delivered at some frequency.

Jan. 2020

April 2020

July 2020

Oct. 2020

Jan. 2021

Users

19%

21%

23%

22%

24%

Non-Users

81%

23%

78%

76%

Source: CivicScience 2021 – 279,991 responses, weighted by U.S. Census 18+, Survey Dates: 01/01/2020 to 01/31/2021

IF IT’S SWEET, PUT A BOW ON IT!

CSTORE DECISIONS •

March 2021

8% 7%

Americans who normally celebrate Easter, Mother’s Day, Father’s Day and the summer holidays with confectionery gifting were able to do so in 2020 despite the pandemic. Source: National Confectioners Association, “Celebrating Confectionery Seasons,” 2020

SNACKING NOT LACKING

Over the past ﬁve years, Americans added between-meal snacking occasions per capita, and consumption of snack foods at meals increased, according to NPD’s annual compilation of U.S. consumers’ eating behaviors.

2015

2020

Between Meal Snacking Occasions

505

530

Consumption of Snack Foods at Meals (percentage of eatings)

21%

26%

Source: NPD, “Eating Patterns in America,” Oct. 2020

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FRONT END NATO 20th Anniversary

NATO Celebrates 20 Years Today the organization helps more than 62,000 retailers in the U.S. navigate tobacco regulations. Erin Del Conte • Executive Editor

The National Association of Tobacco Outlets (NATO) is celebrating its 20th anniversary this month. The organization was founded in 2001 to fill a need for a national association that served tobacco outlet stores but has expanded to include every category of retail store that sells tobacco products. Over the past 20 years, NATO has succeeded in its primary vision of bringing the tobacco industry together to collaborate in protecting the right to sell and purchase legal tobacco products. NATO remains focused on its mission of improving business conditions for retailers that sell tobacco in the U.S., while providing information to members on federal, state and local regulations and laws that pertain to the sale, advertising, promotion, regulation and taxation of tobacco products. The association also offers retailers information on how best to comply with various regulations and laws, as well as how to respond to proposed regulations. Over the years, NATO’s scope has grown to include a focus on monitoring and opposing tobacco-related legislation at the local, state and federal levels, as well as monitoring regulations put forth by the Food and Drug Administration (FDA). Today, NATO’s membership is comprised of more than 62,000 retail stores (tobacco stores, convenience stores, service stations, grocery stores, liquor stores and corner retail markets), making NATO one of the largest retail trade associations in the country by store count. Compare that with 2006 — five years after NATO began — when its membership consisted of just 2,000 retail stores. These days, NATO also counts nearly 30 manufacturers from every segment of the tobacco industry, and numerous wholesalers, among its members. Collaborating with retailers, wholesalers and manufacturers has helped NATO grow into the country’s top tobacco-related trade association. Convenience stores make up a large segment of NATO members. “For convenience stores, there is a need for up-to-date information on local, state and federal legislation as well as FDA regulations,” said Thomas Briant, executive director of NATO. “NATO has a special expertise on each of these levels of government, which is beneficial to the convenience store segment.” 24

CSTORE DECISIONS • March 2021

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20 YEARS OF CHANGES

The tobacco industry has evolved a great deal in 20 years. One of the most significant changes has been the regulation of tobacco products by the FDA. “The federal regulation of tobacco products adds a whole new dimension to the regulation, which had previously been the purview of primarily local and state governments,” Briant said. “Also, another major change has been the consolidation at every level of the industry from retailers to wholesalers to manufacturers.” In 2006, when NATO celebrated its fifth anniversary, the organization noted it monitored and responded on 100 state bills that year. In 2020, the organization responded to 500 state bills — just one marker of how much tobacco regulation and ordinances have skyrocketed over the years. In recent years, NATO created the National Response Network (NRN), which includes more than 70 state and national trade associations. Using the NRN, NATO sends alerts regarding local tobacco

ordinances, updating these trade associations on talking points and pertinent information on ordinances, which then pass the alerts along to members with stores in the area where tobacco regulations are being considered, allowing these local retailers to better oppose ordinances. Looking ahead to the next decade, NATO aspires to further assist in helping elected officials understand the important role local retailers play in the economy and convince them to stop burdening these law-abiding retailers with unreasonable taxes or restrictive regulations. The NRN is already engaging an increasing number of retailers and giving them the tools to become more active in speaking out on legislative issues. Using educational webinars, NATO continues to provide retailers with information, allowing them to be well informed on current laws and regulations. For more information on joining NATO visit Natocentral.org.

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March 2021 • CSTORE DECISIONS

Front End | C a t e g o r y M a n a g e m e n t L e a d e r s

Cuellar’s Passion Shines Through as OnCue Category Manager In her role as category manager of beer, wine and packaged beverage for OnCue Express, Kim Cuellar draws on her background and education, while keeping her ear to the ground to keep pace with this explosive category. Isabelle Gustafson • Associate Editor

As the category manager of beer, wine and packaged beverage for Stillwater, Okla.-based OnCue Express, Kim Cuellar is responsible for space management and product selection as well as product optimization and promotion management. “Every time I tell someone I’m a beer and wine buyer, they respond, ‘That’s the dream job!’ And I say, ‘Yes, yes, it is,’” Cuellar said. In her role, she also works closely with the merchandising team to set up new cooler and shelf sets. “I believe each wine and beer assortment should be individualized by each store,” Cuellar said. “While it’s more work, it really helps provide a customized variety.” Cuellar also played a key role in the launch of OnCue’s new app, working with the app partner Rovertown and creating offers and promotions across categories to ensure its success and ability to provide value to customers, especially during difficult economic times. For all this and more, CStore Decisions is recognizing Cuellar as a 2021 Category Management Leader. 28

CSTORE DECISIONS •

March 2021

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Front End | C a t e g o r y M a n a g e m e n t L e a d e r s

HOW IT STARTED

Cuellar has a PhD in human sciences, a master of business administration (MBA) and a bachelor of science in marketing, all from Oklahoma State University (OSU). In the time between earning her MBA and her PhD, she worked for Sonic Drive-In’s corporate office as a sensory and consumer insight analyst. “When learning about sensory, I took a class with UC Davis, which is renowned for its extension education programs, largely focused on wine,” she said. “I was totally hooked on studying beverages after that course.” Her PhD research was primarily focused on food and beverage. And over the course of her career, she’s received her certified sommelier, multiple Wine & Spirits Education Trust (WSET) certifications, Society for Wine Educators certifications and her Certified Beer Server through the Cicerone program. 30

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March 2021

She spent seven years teaching food, alcohol and research courses at Virginia Tech, Texas Tech and at her alma mater, OSU. And she served as the director of the Wayne Hirst Beverage Education Center, the executive director of the Wine Forum of Oklahoma, the largest education and scholarship fundraiser for hospitality students in the state, and the founding director of the Craft Beer Forum of Oklahoma, a sister event to Wine Forum, focusing on beer education. “How I ended up at OnCue is a great story,” she said. While she was teaching at OSU, a program called the Distinguished Chef Series Dinner culminated in a special scholarship dinner four times a year, which OnCue’s Griffith and Aufleger families attended. The dinner included a wine component, and Cuellar was the beverage education director. “I knew that Jim Griffith, the CEO of OnCue, wasn’t the biggest fan of white wines but really enjoyed

big bold red wines like Cabernet Sauvignon. I also knew he was a big craft beer fan,” Cuellar said. “Every dinner, I would specifically pair a beer for him instead of white wine. I would also stop at their table and chat. Long story long, I guess my hospitality, wine and special beer pairings won him over because I went to OnCue as fast as I could!” HOW IT’S GOING

Cuellar is not only passionate about the category, but also about the company she works for. “OnCue is just the best company,” she said. “Waking up every day being able to take on new challenges while having the support of executive management is very rewarding. Everyone is incredibly kind and empowering, so it makes work very fun.” Ultimately, she said, collegiality supports growth and productivity in the workplace. The public relations, graphics, pricebook and purchasing teams work closely together for

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the betterment of the company and one another. Cuellar also has a deep respect for the leadership team. “I believe that Laura Aufleger, our president, is the epitome of class, grace, eloquence and logic,” she said. “She has been a tremendous role model and mentor. My supervisor, the Director of Purchasing Greg Webb, also has the most wonderful servant heart, so I try to emulate that as much as I can.” Of course, the pandemic has brought its challenges. For Cuellar, it’s significantly changed how she views sets and assortment. For example, she’s continuing to focus on 12-packs and larger and decreasing assortment of six-packs. She’s also keeping price optimization and elasticity in mind now more than ever before, and she’s filling voids caused by the aluminum shortage, “while still providing customers the product they want — and maybe product they don’t know they want yet.” She’s dubbing 2021 “the year of the full-flavor seltzer” and is looking forward to increased seltzer innovations, as well as ready-to-drink wine cocktails. But she’s also putting increased focus on local craft breweries, many of which have been struggling amid shutdowns and other pandemicrelated challenges. OnCue’s new brewery collaboration series teams up with Oklahoma breweries to create limited-edition beers sold in OnCue stores across the state. “They are providing an amazing product, so I really want to support our local economy as much as I can,” she said. “We are making investments in additional local craft beer space to support local breweries and to provide customers an opportunity to connect with product made in Oklahoma that they may or may not have tried before.” No matter what this year brings, Cuellar will be on the front lines, ready to provide customers with “the cstoredecisions.com

best product, with the best variety, at the right price.” “I love nothing more than going to our stores, seeing what their challenges and opportunities are and

seeing what our employees think about what products are out there,” she said. “I learn more from our amazing store managers and employees than anything.”

March 2021 • CSTORE DECISIONS

Front End | C a t e g o r y M a n a g e m e n t L e a d e r s

Been There, Done That:

Plaid Pantry’s Nelson Is Ready for More With three decades of experience in the c-store industry, Senior Category Manager Mike Nelson keeps putting the pieces together in the ever-changing convenience retail puzzle. Thomas Mulloy • Senior Editor

C-store veteran Mike Nelson, senior category manager for the 108-store Beaverton, Ore.-based Plaid Pantry chain, has seen a lot during his time in the industry.

For his expertise in adapting to new products, new methods and new technologies during 30 years of c-store evolution, Nelson has earned CStore Decisions’ recognition as a leader in category management. “I started in stores in 1991 and — minus a couple years when I moved to Arizona — I’ve been with the company ever since,” Nelson said. Nelson has spent most of his adult life in the c-store industry. The native of Roanoke, Va., attended Virginia Commonwealth University in Richmond before “deciding on a whim to move to Oregon.” He has been in his current department since 1998, which early on helped him meet vendors and develop relationships. “Which I think is a very important aspect of the job,” noted Nelson. “I was also able to help out with a lot of ‘back room’ aspects of the department before actually becoming a category manager.”

CSTORE DECISIONS •

March 2021

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Front End | C a t e g o r y M a n a g e m e n t L e a d e r s

“

I truly like the ‘puzzle-building’ aspect of set building. Taking all given information into consideration and bringing my vision to life in-store. And, hopefully, for the good of the company.

“

— Mike Nelson, senior category manager, Plaid Pantry

ROLLING WITH THE CHANGES

Nelson credited any success he has had to The convenience store environment has the people who showed him the ropes through evolved dramatically since Nelson ﬁrst clocked the years, especially one particular Plaid Pantry in. The rapid pace of technology continues to executive. “My mentor was our former Vice upgrade the tools of the trade in multiple ways, President of Marketing Tim Cote,” Nelson said. accelerated in the past year by the pandemic. “He is no longer with Plaid Pantry, but he led “As our department has gone through a numour team for decades and taught me so many ber of changes over the last couple years, I’ve things about how to approach category manhad an opportunity to manage quite a variety agement.” of categories,” Nelson explained. “Currently, I That tutelage no doubt came in handy jugmanage non-alcoholic beverages, meat snacks, gling the myriad hurdles that face today’s busy alternative snacks, and nuts and seeds.” category managers. But on his way to earning the “senior” in front of his category manager title, Nelson honed his PUTTING IT ALL TOGETHER merchandising skills managing products across “Every puzzle I build starts with way too many the c-store spectrum, including fresh foods and pieces!” Nelson said. “It can also be quite pastry, salty snacks, health and beauty, general a challenge trying to keep up with the evermerchandise, fountain drinks and coffee. changing trends and customer wants.” 34

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March 2021

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But that’s also where the satisfaction and, yes, the fun comes from the work. “I truly like the ‘puzzle-building’ aspect of set building,” Nelson added. “Taking all given information into consideration and bringing my vision to life in store. And, hopefully, for the good of the company.” And with Plaid Pantry’s team spirit, there are plenty of opportunities for Nelson to draw upon the wealth of c-store wisdom he has picked up over the course of three decades in the business. “We have always run a pretty lean company,” Nelson said, “so everyone here has to wear several hats at a time. That certainly keeps the days interesting. But I’ve also been lucky enough to be trusted with a fair amount of autonomy in my planning and decision-making.” Considering Nelson’s wealth of experience and willingness to adapt, that trust is well-placed.

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March 2021 • CSTORE DECISIONS

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Category Management Handbook | Introduction

THE 2021

CATEGORY MANAGEMENT

HANDBOOK

CStore Decisions analyzes data and emerging trends shaped by the COVID-19 pandemic across 38 categories — and how c-stores are preparing for the year ahead.

A CStore Decisions Staff Report

CSTORE DECISIONS •

March 2021

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At this time last year, c-store retailers were predicting a healthy economic landscape and sharing strong sales predictions across categories for the year ahead, while outlining strategies and plans to grow each segment. But whatever plans they had in mind were quickly replaced weeks later, as the COVID-19 pandemic arrived on the scene in the U.S. in early March. Almost overnight, c-store retailers rushed to year, down 19.6%. Meat snacks proved a bright change course and embrace new priorities. Many spot for the snacks category, up 5.3%. retailers looked to contactless payment options A few big winners stood out among c-store and introduced curbside pickup. Most worked shelves and coolers. Ice cream saw a big boost to to install plexiglass shields and social distancing the tune of 25% for the period. And the alcoholic decals in-store, hand out masks and gloves and beverage segment enjoyed a solid sales lift, with institute more intense sanitation practices to keep hard seltzer and ready-to-drink cocktails drawing customers and employees safe. Depending on customer interest during the pandemic as shoplocation, many retailers had to close down roller pers bought libations in bulk to drink at home grills and other self-serve areas such as coffee and instead of imbibing at bars and restaurants. 2021 is fountain or bring them behind the counter. Those expected to be another big year for the alcoholic that had the ability moved menus online and inbeverage category, both during continued social troduced order-ahead and delivery in record time. distancing and during the celebration period that Digital disruption leapt forward, accelerating by is expected to follow. nearly a decade in a matter of months. It’s no surprise that hand sanitizers had a record In the early days of the pandemic, c-stores year. Research ﬁrm Nielsen reported that the item reported mixed results, which varied by region. saw a sales lift of 485% by September 2020. It Some saw sales lifts as customers stocked up on proved an outlier among the health and beauty snacks, candy, alcoholic beverages and tobacco aid category, which saw plummeting sales among ahead of lockdowns. It was a year that required cosmetics and medicine given that customers retailers to be as nimble as possible in order to weren’t traveling as much. The tobacco category sway with each market shift. Many savvy retailoverall also celebrated a strong sales year with dolers completely reworked their product selections lar sales for cigars up 5.4%, smokeless tobacco up to include large packages of take-home items, 7.7%, electronic smoking devices rising 4.8% and including 18-packs of hard seltzer and bulk bags smoking accessories climbing an impressive 22.4%. of meat snacks, as well as new segments from pre-mixed cocktails to hand sanitizers, masks and ONWARD TO 2021 toilet paper. Looking ahead, many trends that escalated Of those that struggled through a challengduring the pandemic are expected to become ing spring, most were reporting a stabilization of engrained in shopper behavior, such as contactless sales by summer. But then fall came, and more payments, order-ahead, pickup in-store, delivery lockdowns arrived. Overall, foodservice segments and drive-through windows. A preoccupation with faced a challenging year. Those who already had health and immunity is already accelerating, as or were able to roll out order-ahead and delivery seen in beverage trends toward functionality. Store quickly reported weathering the storm better than sanitation and appearance will continue to matter their less-tech-forward counterparts. Retailers who to customers. As the world reopens, c-store retailcontinued to invest in their food offering are exers are well positioned to recapture lost sales. If pected to see a big rebound in food sales for the this year has taught the industry one thing, it’s how coming year. adaptable convenience stores can be and how Despite gains earlier in the year, salty snack sales quickly they can pivot to provide for rapidly changdropped 6.1% for the calendar year ending Dec. ing customer needs, whether it’s electric vehicle 27, 2020, per IRI data, with potato chips down 7.6%. chargers or online menus. C-stores are ready for Snack bars and granola bars also had a rough sales whatever the future may bring. cstoredecisions.com

March 2021 •

CSTORE DECISIONS

Foodservice | Chicken

Chicken Demand Holds Steady Although commuter business was significantly down last year, Americans are still on the road and must fill up their gas tanks, giving convenience stores ample opportunity to sell chicken for lunch and dinner, said Tom Super, senior vice president of communications for the National Chicken Council.

offers a breakfast chicken sandwich and just launched a chicken biscuit), and lunch is strong. The chain is renowned for its 2.5- to three-ounce tenders in regular and spicy versions, served with batter-fried JoJo potatoes, he said. FriendShip is also doing a chicken pizza and is planning to introduce chicken burritos. “We’re all about chicken,” Matthews said. Households that are stretching their food dollars can be attracted by fried chicken parts and products bundled with tasty side offerings that feature a good value price point, Super said. He also noted Costco sold 101 million rotisserie chickens during the last fiscal year and believes it may be viable for c-stores to either add their own rotisserie programs or partner with a “ghost kitchen” to deliver them hot and fresh from 4 p.m. to 8 p.m. Matthews expects family meal size orders to continue to increase. “We want to compete with the grocery stores and become a destination for chicken,” he said.

“Convenience has taken on new and added meaning over the more than 12 months since the pandemic hit the U.S.,” Super added. “Although consumer food buying and consumption patterns have been upended, there remains, nonetheless, a certain amount of stability with respect to what consumers want.” And what they want is chicken available at a good value and delivered to them in the most convenient way possible. Super pointed out that drive-through sales are growing, but for retailers who cannot add windows to their stores, curbside pickup is a viable option. FriendShip Stores offers online ordering and curbside pickup in four of its 27 c-stores in Ohio, according to Kirk Matthews, vice president of foodservice and marketing for FriendShip Stores. Plus, it promotes its store-made chicken with special loyalty deals such as nine tenders for $9.99 instead of the usual $17 after 5 p.m., a promotion that was introduced for November and Like most foodservice segments, chicken took a hit in 2020, but the outlook through 2023 is promising, with bone-in and boneless chicken wings both predicted to see 14% growth, and tenders to enjoy 11% growth. December and, due to its popularity, has remained on the menu. “You take a little less margin and get more volume,” Matthews explained. “We don’t want price to be a barrier.” At FriendShip, dinner sales are “a little lower than we had hoped,” but customers are ordering larger take-home meals, he said. Breakfast is picking up again (the company Source: Foodservice IP, “Capturing Opportunities in Convenience Store Foodservice,” January 2021

Chicken Sales forecast to climb

CSTORE DECISIONS •

March 2021

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Foodservice | Pizza

Takeout & Delivery Buffer Pizza Sales Sales in other categories may be suffering from the COVID crunch, but not pizza. “COVID-19 brought sudden gains to the modestly growing pizza category in 2020,” noted market research ﬁrm Mintel’s recent report “Pizza Restaurants: Incl Impact of COVID-19 US, September 2020.” “These gains are likely to have residual staying power over the next year as consumers rely on affordable and convenient meal solutions during a recession,” the report pointed out. Mintel’s report further suggested that retailers “reinforce the value equations” with topping-loaded pies, bundling deals and a variety of experiences that “allow consumers to see that they are getting the most bang for their buck.” During the lockdown period of March through June 2020, the initial re-emergence period beginning in July and the forecasted remainder of the re-emergence period through December 2021, takeout and delivery helped and will continue to help mitigate sales declines, Mintel reported. These will continue to be important through the recovery period of 2022 through 2025. “Pizza is widely considered an affordable treat and a welcomed comfort food,” the report said. “Consumers also like its shareability.”

Almost half of pizza restaurant consumers (45%) polled for the Mintel report said they prefer pizza over other restaurant foods during the COVID-19 pandemic. Those cravings are driven at least partially by nostalgia for better times. Seventy-two percent of the consumers said, “I enjoy things that remind me of my past (e.g. childhood).” The report recommended that retailers focus their pizza marketing messages around this nostalgia and family-friendly meals that please parents and children alike. At Kwik Trip and Kwik Star convenience stores, with 770 locations in Wisconsin, Minnesota, Iowa and Illinois, 12% of gross profit dollars are attributed to house-made pizza, a category Paul Servais, the chain’s retail food service director, reported has grown throughout the pandemic. Lunch and dinner daypart sales of whole pies have experienced the most substantial growth, though grab-and-go slices throughout the day are still strong sellers, Servais said. Breakfast pizza, a 15-plus-year favorite, also continues to move well. Mintel noted the majority of young consumers, particularly Gen Zers and millennials, agree restaurants should offer new pizza options during the pandemic to keep the menu exciting. Although sausage and pepperoni are the favorite go-to toppings at Kwik Trip and Kwik Star, the chain offers 15 flavors of take-and-bake pizza and six flavors of frozen pies with a wide array of crust and topping options. Servais agreed with Mintel that he expects pizza sales to continue to flourish in the coming months. “We plan to continue growing our pizza business — all aspects of it,” he said.

Pizza restaurant visitation, by generation, June 2020

“Which of the following locations have you eaten pizza from in the past three months (ie. eat-in, pickup or delivery)? Please select all that apply.”

Source: Mintel; “Pizza Restaurants: Incl Impact of COVID-19 US, September 2020”

CSTORE DECISIONS •

March 2021

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Foodservice | Sandwiches

Unique Options, Order Ahead Drive Sandwich Sales The category for deli-prepared sandwiches “was gaining a head of steam” until the pandemic hit, said Eric Richard, industry relations coordinator for the International Dairy Deli Bakery Association (IDDBA). Due to COVID-19, the sandwich segment took a 12% hit over 2019. Made-to-order sandwiches saw the biggest sales dip, partly because customers wanted to get in and out of stores as quickly as possible and partly because some deli cases had to close, Richard explained. Convenience became more important than ever, with customers opting for prepackaged grab-and-go selections. Before the pandemic, many store delis were going beyond the usual ham, turkey or roast beef and cheese to combine interesting ingredients and flavor profiles, Richard said. IDDBA was encouraging delis to go Mediterranean with meats such as mortadella, prosciutto and capicola and a variety of cheeses and toppings such as olive-oilbased spreads, tapenades and giardiniera. Consumers, he noted, are increasingly wanting to order their sandwiches online, so they will be

Sandwich Sales Decline

While hot and cold sandwich sales were down due to the pandemic, opportunity for a big rebound awaits in 2021. HoT handheld entrees

cold handheld entrees

Source: Foodservice IP, “Capturing Opportunities in Convenience Store Foodservice,” January 2021

CSTORE DECISIONS •

March 2021

ready for quick pickup or delivery. “They’re looking for the easiest, safest and most convenient ways to get their sandwich fix,” he said. Over the past few years, B-Quik convenience stores ramped up its fresh foodservice program featuring made-on-site breakfast-through-dinner sandwiches at its three Baton Rouge, La., locations. And, said David Schumaker, B-Quik’s general manager, it is anything but a cookie cutter program. The basic varieties may sound familiar — breakfast sandwiches, a hamburger, chicken, pulled pork, tuna and chicken salad — but Schumaker described the recipes and presentation as “unique.” For example, guests can get their morning sausage or bacon, egg and cheese sandwich on French toast. For lunch, sausage is presented in a po’boy, and the chicken sandwich has a spicy kick. Instead of white or wheat bread, some sandwiches are made with brioche, and in place of the traditional standard seeded bun, the cheeseburger is served on a sweet Hawaiian roll. “This small change really made an incredible difference,” Schumaker noted. “Our cheeseburger was good before, but now it is outstanding, and people tell us they go out of their way to get it.” At Nittany MiniMart, which has 26 (to be 27 in the spring) stores in Pennsylvania, customers like to try different flavor profiles in their sandwiches, according to Angela Gearhart, food service category manager. One easy way the stores vary their selections is by using different sauces such as garlic parmesan, sweet and spicy “boom boom” and sweet chili. Throughout the pandemic, family and combo meals consisting of cheeseburger or chicken sandwiches and french fries scored stellar sales. Instead of made-to-order deli sandwiches, more customers opted for made-in-store prepackaged grab-and-go wedge sandwiches, Gearhart said.

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Foodservice | Roller Grill

Meaty Sales Expected for Roller Grill

pointed out that shaking up the category with unique new items, a recent one being chicken andouille sausage, also gets customer attention, though they often try them and revert to old favorites.

In the midst of the pandemic, some retailers paused roller grill sales, while others brought the segment behind the counter to meet COVID-19 safety requirements, while continuing to serve guests. Roller grill remains an integral and consistent part of the expansive foodservice segment at Rutter’s convenience stores, which has 78 locations in Pennsylvania, Maryland and West Virginia, said Chad White, the chain’s food service category manager. In part because the grills are kept behind the counter and the customers do not have contact with the food, this segment was less affected than others by COVID restrictions and guest hesitation to purchase. In most locations, Rutter’s features ﬁve or six items on its grills to suit the varied palates of customers. Featured are meat items such as regular hot dogs (the No. 1 best seller) and jumbo beef dogs; fresh, “Ragin Cajun” hot smoked and regular smoked sausages; and roller grill cheeseburgers. Additional items such as egg rolls and tornados are added in stores that do not have ovens to prepare made-to-order selections. Adding fuel to the sales momentum are special roller grill centered promotions, one of the strongest being two-for deals, White said. He also

NEW FOR 2021

For 2021, White plans to explore some new plant- and chicken-based items. “These will definitely be geared toward grabbing new customers who haven’t previously viewed roller grill as an option,” he said. Overall, sales of hot dogs in 2020 rose about 20% and total pounds 7% over 2019, noted Eric Mittenthal, president of the National Hot Dog & Sausage Council. In March, early in the pandemic, sales soared 127% in grocery stores before they evened out. Dinner sausage sales experienced a similar surge. Since then, they evened out up 24% in sales and 15% in total pounds in 2020. While regular tried-and-true hot dogs are among America’s favorites, consumers are interested in trying new ingredients and flavor profiles, Mittenthal said. The same is true for sausages. Retailers have a wide variety of items from which to choose as the selections continue to expand. Mittenthal predicted that the category will continue to grow, even as life goes back to some semblance of normal. “People will always be looking for convenient and delicious solutions,” he said. Clever promotions can also highlight roller grill items. Last year, the council launched “Weiner Wednesday” and “Weiner Weekend” promotions, for which retailers can request a logo and other creative materials.

Customer Desire for Hot Dogs remains strong

The following table shows hot dog sales dollar growth in percentages by week in 2020 compared to the comparable week in 2019.

March 3/1

(3/8-3/29)

March

(4/5-4/26)

April

(5/3-5/31)

May

(6/7-6/28)

June

(7/5-7-26)

July

August

Sales W.E.

Beef

+35%

+47%

+27%

+17%

+19%

+25%

+21%

$35 M

Non-Beef

-1%

+29%

+26%

+14%

+8%

+11%

+9%

14%

$20 M

(8/16)

(8/23)

Source: IRI, MULO, 1 week $ growth versus year ago

CSTORE DECISIONS •

March 2021

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Foodservice | Hispanic Foods

Consumers Crave

Mexican Cuisine Mexican is but one of many types of Hispanic or Latinx cuisines, but it is by far the most ubiquitous — and most popular — in the U.S. A few months into the pandemic, market research ﬁrm Datassential asked U.S. consumers what they were missing the most from restaurants, and Mexican food was the top pick, with over one-third (36%) of consumers saying they craved it. “Mexican cuisine is really a mainstay for U.S. consumers today, with 82% of consumers saying they love it or like it, second only to Italian cuisine when it comes to global cuisines,” said Datassential Trendologist Mike Kostyo. To capitalize on its popularity, many c-stores are adding Mexican food partners or options to their menus. FROM BURRITO TO BOWLS

Market Express convenience stores, a division of Marshville, N.C.-based Brewer-Hendley Oil Co., offers Mexican food concept Naughty Chile Taqueria at four of its 14 locations. When Market Express Food and Beverage Director Jay Sergio ﬁrst learned of the program, he said, he knew it would be a hit. The three-daypart menu features authentic Mexican street tacos, burritos, bowls, quesadillas and nachos prepared using fresh, highquality ingredients.

What do you crave/miss the most from restaurants? A Datassential survey revealed consumers miss Mexican cuisine the most amid pandemic restaurant shutdowns and restrictions, followed by seafood and Asian options.

36%

Mexican food 31%

Seafood

30%

Asian food Pizza

29%

Burgers

29%

Italian food

29% 27%

Steak 19%

BBQ Fries

18%

Sushi

18%

Source: Datassential, “COVID-19 Report 17: The Next Phase,” May 2020

CSTORE DECISIONS •

March 2021

Popular items at Market Express include grab-and-go offers like the Western Breakfast burrito, which features ground beef, eggs, sausage, potatoes and jalapeño green chiles, as well as the nachos during the lunch daypart, said Sergio. While the grab-and-go offers are especially convenient for customers who are in a rush, he said, the made-toorder options are really popular as well. “We’re really, really excited about the program,” Sergio said. “The food is fresh, easy to prepare and tastes really good.” With the increase in popularity, it’s more important than ever to continue to offer on-trend options in order to stand out, said Datassential’s Kostyo. Burrito bowls are quickly becoming a new menu mainstay, he said, growing 77% in the past four years, while breakfast tacos and street tacos are also trending, up 77% and 64% respectively. “The popularity of Mexican cuisine also drives Mexican ingredient menuing, even outside of Mexican-inspired dishes,” Kostyo said. “Mexican cheeses have been some of the fastest-growing cheeses on menus, with options like cotija, queso blanco, and queso fresco all up double digits on menus.” On the flavor front, Kostyo said, Mexican and Latinx-inspired flavors that combine heat with another flavor, like sour or sweet, are trending, including chili lime, mango habanero and Tajín. That is to say, even if c-stores don’t offer an entire Mexican program, they can still feature Mexican-inspired ingredients or flavors on the menu.

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Foodservice | Bakery

Bakery Looks to Rebound In 2021, c-stores are looking to recoup fresh bakery sales after the COVID-19 pandemic sent 2020 bakery sales plummeting. Nouria Energy, which has 127 convenience stores in Massachusetts, Maine, New Hampshire and Rhode Island, had big plans to expand its two-year-old fresh bakery segment last year, but the pandemic brought those plans to a sudden halt. Joshua Clark, the company’s category manager, fresh foods, explained that “like everyone else,” Nouria’s bakery 2020 sales finished flat year over year. Hardest hit were morning meal replacement items such as muffins, doughnuts, danishes and croissants. But Clark is optimistic, a mindset fueled by watching a steady increase this year. “We got derailed, but the trend is up, and sales are growing,” he said. This year, Clark expects the expansion plans to rev up again, adding in-store bakeries to 16 more locations, more than doubling the present number. Another priority is to increase sales beyond the breakfast daypart into lunch and afternoon snack time. Nouria recently launched a loyalty app, which it will use to promote all-day bakery. At the onset of the pandemic, bakery sales dropped nearly 60% at The Hub c-stores, which has six locations in North Dakota, said Jared Scheeler, CEO of The Hub. Because customers were no longer receptive to the unwrapped self-serve bakery merchandising that had

served the stores well for many years, The Hub turned to packaging each individual item starting in March. Sales rebounded slightly, but the company felt that prepackaging items might subconsciously conflict with its “made fresh daily” message. As soon as COVID-19 cases significantly declined in its market areas, the stores returned to selling unwrapped products including made-in-store doughnuts, which Scheeler described as the bakery’s “anchor,” and its ever-popular fresh cinnamon and caramel rolls. This move helped shore up sales, but they have not yet returned to pre-pandemic levels. “I imagine the bakery category will continue to rebound in 2021; however, I do have concerns that the category in our stores may be forever changed,” he said. “Some customers may demand packaged items, while others may think the package diminishes the image of a fresh offering, even though it extends the product’s shelf life.” He noted it is critical to watch the category closely “to make nimble decisions on how to proceed in the future.” In its “Consumer Foodservice 2020/Fresh Food 2021” report, research firm Euromonitor International forecasted that U.S. retail sales of bakery products in limitedservice restaurants and bakery shops offering doughbased items for immediate consumption will grow 2.6% between 2019 and 2024 at a compound annual growth rate of 0.5%.

Perimeter Bakery Sales Struggle in Pandemic

Perimeter bakery sales were impacted by the COVID-19 pandemic, which resulted in the closing of bulk, self-serve sections at many stores across channels. The following chart shows the dollar sales increase/decrease over the comparable period in 2019 for the period ending each month. W/E March 3/1

Product

March

April

May

June

July

August

September

October

November

December

Dollar Sales

Bagels/Bialys

13%

-13%

-16%

-18%

-15%

-18%

-14%

-16%

-15%

-12%

$17 M

Breads

27%

$117 M

rownies/ B Squares/Bars

-12%

-6%

-2%

-1%

-5%

-7%

-3%

-16%

$23 M

20%

-10%

-5%

-4%

-8%

-5%

-8%

-11%

-9%

$64 M

Cakes

-3%

-10%

-25%

-8%

-1%

-3%

-6%

-10%

$320 M

-18%

-10%

-3%

-6%

-5%

-7%

-10%

-17%

$193 M

Buns & Rolls

Croissants

16%

34%

16%

15%

12%

$33 M

Doughnuts

-2%

-14%

-34%

-32%

-29%

-25%

-24%

-21%

-22%

-20%

$56 M

-8%

-6%

-3%

-8%

-3%

-8%

-3%

$61 M

-4%

-7%

-1%

-6%

-8%

$104 M

Muffins Pastry/Danish/ Coffee Cakes

Source: IRI, Total US Integrated Fresh, MULO, % growth versus year ago includes fixed and random weight baked goods known to be commonly found in the perimeter bakery area based on IRI’s Integrated Fresh research process powered in cooperation with IDDBA

CSTORE DECISIONS •

March 2021

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Foodservice | Hot Dispensed

Coffee Ready to Rally Sales of hot dispensed beverages were down 24% in the third quarter of 2020 and 36% in quarter four, in large part because “the breakfast daypart was destroyed” with commuters working from home and competition in the breakfast category increasing, reported Eric Dzwonczyk, co-leader of the restaurant, hospitality and leisure practice at AlixPartners convenience store consultants. He also pointed to the research firm Statista’s “Consumer Market Outlook Hot Drinks Report 2020,” which estimated that revenues last year in hot dispensed beverage declined 18% compared to pre-COVID projections. But, he noted, some top-quartile c-store chains are demHe also recommended that c-stores include onstrating their resiliency with the introduction of premium more selections such as made-to-order speand seasonal products and innovative promotions. 7-Eleven, cialty beverages that are difficult to replicate at for example, added its Seven Reserve premium coffee, and home. Customers will also be looking for the Cumberland Farms offers a subscription program allowing most convenient ways to purchase their bevercustomers to get two cups of coffee, tea, hot chocolate and/ ages, according to the National Coffee Assoor cappuccino per day for a $25 monthly fee. ciation (NCA). Pilot Flying J, which has 750 locations in 44 states and six “As the pandemic is brought under control, Canadian provinces, offered a free cup of coffee for National we expect coffee drinkers will return to some Coffee Day and features various hot dispensed incentives pre-pandemic routines, but also look for more through its app, said Jamie King, senior director of food and convenience like in drive-through, delivery and beverage for Pilot Co. The premium quality of its coffee has app ordering,” said Bill Murray, CEO of the NCA. always been a point of pride for Pilot, as has its variety, including fun flavors such as caramel macchiato and seasonal and limited-time offers COVID-19 has kept coffee drinkers at home, impacting where Americans buy and drink coffee. such as Reese’s or Pumpkin Maple Percent decrease in Americans getting coffee at: Cappuccino. Nearly 20% fewer Dzwonczyk suggested that retailAmericans had coffee ers target post-breakfast dayparts away from home due for their hot dispensed promotions, to COVID closures. even as pandemic restrictions ease. “I don’t know if and when the breakfast daypart will come back because remote working policies are likely to endure,” he said. “Retailers would do well to shift their efforts to lunch and 2 p.m. to 5 p.m. Source: National Coffee Association “USA, Coffee, Consumers & COVID-19: Road Map to Recovery” dayparts to build this category.”

How COVID-19 Is Impacting Coffee Trends

CSTORE DECISIONS •

March 2021

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Beverage | Carbonated Soft Drinks

Soft Drinks See Gains Comfort and familiarity drove carbonated soft drinks to growth in 2020, but evolution in both options and ingredients could drive sales in 2021. “One positive business impact of the COVID-19 pandemic was the changing of shopper habits that led to customers using us more as a one-stop shop than in the past,” said Jared Scheeler, CEO of The Hub, which operates six locations across North Dakota. “Carbonated soft drinks comprised 24.1% of our company’s packaged beverage sales in 2019 and 26.4% of the category in 2020. I attribute that to increased sales of take-home packages. I fully expect our increase in take-home packages to continue in 2021.” In addition to portability, existing brands and new tastes helped drive the category, which market research ﬁrm Mintel forecasted to rise 3.5% to $37 billion, according to its report “Carbonated Soft Drinks: Incl Impact of COVID-19 US, May 2020.” “The top-heavy carbonated soft drink category has a unique advantage in this equally unique time: deeply rooted connections with not only their most engaged fans, but also with less frequent users,” Mintel Food and Drink Analyst Kaitlin Kamp wrote in the report. “Decades of legacy brand building centered not only on refreshment and enjoyment, but also community and family, are likely paying off.” Scheeler echoed that, noting 20-ounce bottles and subtle package redesigns helped drive sales. But new products and sizes also helped. “Dr Pepper & Cream Soda performed much better than I could have imagined and ﬁnished as a top 20 SKU

in the subcategory,” Scheeler said. “But the item that provided the biggest surprise in 2020 was a 16-ounce can of 1919 Root Beer, manufactured by Schell Brewing Co. in New Ulm, Minn. It’s a popular malt shop and state fair brand in the Upper Midwest that previously only came in keg format.” Nielsen data showed U.S. convenience store soft drink sales increased 3.8% for the 52 weeks ending Dec. 26, 2020. Meanwhile, IRI data found carbonated beverages at convenience stores ﬂat, up just 0.5% for the calendar year ending Dec. 27, 2020. Mintel’s study showed that 35% of consumers are reducing the amount of soft drinks they consume and are focusing more on health beneﬁts. INNOVATION BUBBLING

To capture customers, companies will need to introduce hybrids such as energy, digestive aids, immunity or detoxiﬁcation, as well as low- or no-calorie options. “When looking at the innovation calendars from the major manufacturers, the word “zero” seems to dominate the entire year,” Scheeler said. “As our society evolves, even those who don’t consider themselves “health nuts” are starting to understand the dangers of too much sugar in a diet, and these healthier offerings are starting to get traction in the category.”

Soft Drink Sales Trend Upward Nielsen found that carbonated soft drink dollar sales grew 3.8% to $8.22 billion for the 52 weeks ending Dec. 26, 2020. For the last quarter of 2020, sales rose 5.7% compared to the previous year.

Dollar Sales Segment Carbonated Soft Drinks

Percent Change in Dollar Sales

1 year ago: 52-week period ending 12/28/19

Latest 52-week period ending 12/26/20

Q4 2020 (ending 12/26/20)

1 year ago: 52-week period ending 12/28/19

Latest 52-week period ending 12/26/20

Q4 2020 (ending 12/26/20)

$7.92 B

$8.22 B

$2.03 B

0.7%

3.8%

5.7%

Source Nielsen, Total U.S. Convenience, Product Share Basis, ending Dec. 26, 2020.

CSTORE DECISIONS •

March 2021

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Beverage | Cold & Frozen Dispensed

Determining Dispensed Beverage Strategies Americans’ love of all things healthy — especially in the age of COVID-19 — includes nearly every product category, including cold and frozen dispensed beverages.

COLD/FROZEN DISPENSED BEVERAGES

“What best describes your experience with cold or frozen dispensed beverages from gas stations and convenience stores?”

At Army & Air Force Exchange Service’s (AAFES) Express stores, healthier-for-you continues to be a trend for cold beverages, according to Marissa Tinoco, consumables buyer for AAFES, which operates 479 c-stores. “Regional spicy flavors like turmeric and ginger are making their way into beverage lines, as well. For frozen options, coconut flavor is seeing a lot of growth.” National brands like Hershey’s and Reese’s are trending, and Express shoppers continue to seek opportunities to customize their beverages. “Syrups and different condiments will help drive customers to the counters when they are able to self-serve again,” Tinoco said. The fastest-growing frozen dispensed flavors, noted Tinoco, include horchata, coconut, blueberry, watermelon, ‘straw-banana’ and mango. Among cold-dispensed beverages, shoppers love lemon-ginger, papaya, melon, berry and blood orange. “The Exchange has found success by creating a beverage destination with designated in-store signage such as window decals, floor decals, danglers and wobblers to capture shoppers’ attention,” Tinoco said. PERFORMED WELL

“Frozen carbonated beverages performed well as customers viewed this as a treat and escape during COVID,” said Connie Kelehan, dispensed beverage category manager for West Des Moines, Iowa-based Kum & Go, which operates more than 400 c-stores in 11 states. “In addition, there is not a replacement for this product in a packaged beverage form.” Several new flavors from Mtn Dew have proven popular in the fountain section for the chain. But success with frozen beverages depends on meeting customer preferences in each market, as operators have discovered. “I have ice-cold coffee available, but I don’t sell much,” said Dave Simendinger, president of 38-unit Champlain Farms based in South Burlington, Vt. Smoothies and shakes also fizzled out when he tested them at 10 stores during 54

CSTORE DECISIONS •

March 2021

18-24 (12%) 25-34 (18%)

43%

14%

37%

35-54 (34%) 55+ (36%)

46%

26%

35%

13%

33%

14%

31%

15%

11%

51%

0 and I like 20them. 40 60 n I’ve tried them, I’ve tried them, but I don’t like them. n n I haven’t tried them, but I plan to. n I haven’t tried them, and I’m not interested. n I’ve never heard of these kinds of beverages.

11%

100

Source: Generated by CivicScience on Feb. 1, 2021; weighted according to U.S. Census figures for gender and age, 18 years and older

2020. Clearly, not every trend works for every chain. As beverage trends evolve, many retailers are focusing on local trends and the demands of their customer demographic to come up with the right beverage mix for their shoppers. LOOKING AHEAD

Kelehan is optimistic about the category in 2021, anticipating fewer sanitation concerns and more normal routines once COVID-19 is in the rearview mirror. Kelehan’s recommendation to other convenience store operators is to bundle frozen and cold dispensed beverages with foodservice offerings, as foodservice is expected to rebound in the wake of the pandemic. AAFES’ Tinoco agreed, “Combo meals work well to attract customers to try a new beverage with the purchase of their favorite snack or hot item.” Discounts on dispensed beverages with the purchase of foodservice items, as well as incentives for loyalty members, can also help drive fountain sales in 2021, Kelehan noted.

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Beverage | Juices & Teas

Wellness Trends Influence

Juice, Tea Demand Consumer demand for teas and juices is set to continue in 2021, while shoppers’ interest in wellness products and innovative flavors is set to help sales of this segment climb. “As consumers look for more functionality, uniqueness and pleasure from beverages, marketers continue to develop hybrids that combine the best attributes from different drinks,” according to Packaged Facts’ “U.S. Beverage Market Outlook 2020.” “This is a trend that should see continued expansion as consumers seem to have an insatiable desire for new and more satisfying drinks that often defy categorization,” including tea and juice, the report noted. Fruit-flavored beverage volume, including juice and juice drinks, experienced a resurgence in 2020 thanks to more

Juice & Tea Dollar Sales Decline

While juice and tea dollar sales were down in 2020, several juice flavors saw increased interest, including lemon/lime, cranberry, pineapple, prune/fig, cherry and cider.

Dollar Sales Product

Current

1-Year % Change

Asceptic Juices

$34.6 M

-37.3%

Canned Juices - SS

$355 M

-14.8%

Bottled Juices - SS

$1.51 B

-2.2%

SS Bottled Fruit Juices

$652 M

-5.5%

SS Bottled Lemonade

$209 M

2.2%

SS Bottled Apple Juice

$162 M

-0.4%

SS Bottled Orange Juice

$147 M

2.0%

$3.30 M

20.8%

$758,496

22.1%

SS Bottled Lemon/Lime Juice SS Bottled Cranberry Juice/Juice Blend SS Bottled Pineapple Juice

$222,987

96.2%

SS Bottled Cider

$293,076

28.8%

SS Bottled Prune/Fig Juice

$105,978

76.2%

SS Bottled Cherry Juice

$61,056

77.3%

Canned and Bottled Tea

$1.53 B

-7.9%

Refrigerated Teas

$216 M

-2.8%

Kombucha

$2.40 M

-5.8%

Source: Market Advantage TSV; IRI Liquid Data, Total U.S. Convenience for the calendar year ending Dec. 27, 2020

CSTORE DECISIONS •

March 2021

people staying at home during the COVID-19 pandemic, Beverage Marketing Corp. found. But at c-stores, aseptic juices dollar sales fell 37.3%, while canned juices fell 14.8% and bottled juices dipped 2.2% for the calendar year ending Dec. 27, 2020, per total U.S. convenience IRI liquid data. For the same period, canned and bottled tea dollar sales declined 7.9%, while refrigerated teas dipped 2.8% and kombucha fell 5.8%. In 2021, category management is going to be key, said Eric Patterson, merchandising manager for Flint, Mich.-based Beacon & Bridge Market, which operates 25 c-stores. “In order to capitalize on an increased demand for traditional big-box items, cstores will have to abandon expanded assortment in things like auto, general merchandise, etc. Wellness is going to be front of mind for customers, as well.” Two-for-one promotions work best, said Patterson. “But moving into 2021, three-fors may emerge as more viable promotions used to build the basket.” Especially as customers look to reduce trips. TEA APPEAL GROWS

“Tea overall is gaining popularity in many aspects, but especially as the better-for-you caffeine source versus big brother coffee,” noted Buddy Gillespie, director of culinary & restaurant services for JBH Advisory Group in New York City. As customers look to wellness, tea’s health benefits are giving it a boost. “Adding adaptogens to teas in 2020 was a hot topic,” Gillespie said. “Turmeric, ashwagandha, maca and tulsi were popular options, and I feel will continue to grow with people needing stress support and looking for ways for potential increased immunity.” COVID-19 has made customers more aware of how they can and should try to increase health and immunity, Gillespie suggested. “Tea with additives is a quick, convenient way to achieve this, and most consumers at a c-store like and want all things convenience. COVID has changed how people know and feel about overall immunity. What was once just ‘increase your vitamin C intake’ has increased to ‘what are all the ways I can boost my body’s defenses to disease?’”

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Beverage | Bottled Water & Sports Drinks

Flavors, Functionality Drive Bottled Water, Sports Drinks Plain bottled water continues its popularity among consumers, but new flavors and features will bring opportunities to both bottled water and sports drinks in 2021.

tea and juice drove the growth within those categories. Our most established brand, Gatorade, greatly exceeded expectations.” FUNCTIONALITY GAINS TRACTION

“Bottled water is dominated by the big brands from the major companies,” said Gary Hemphill, managing director of research at Beverage Marketing Corp. “They have the infrastructure and the economies of scale required to succeed in this category, which is often driven by price.” Beverage Marketing Corp. reported the bottled water segment grew for the fifth straight year, increasing 5% from 2019 to 2020, to a total of 14.95 million gallons sold across channels. “The bottled water category experienced healthy growth in 2020,” Hemphill said. “It’s one of the rare beverage categories that actually got a boost from the pandemic with more people staying at home. Single-serve still water continues to dominate, accounting for about two-thirds of the category’s volume.” Still, data from market research firm Nielsen indicated that, at c-stores specifically, dollar sales of bottled water fell by 5.8%, while sports drinks increased 10.1% for the 52 weeks ending Dec. 26, 2020. But not all c-stores experienced a dip in bottled water dollar sales. “Taking out March and April, the category performed above expectations; however, the product mix was different,” said Samantha Overmole, category manager at West Des Moines, Iowa-based Kum & Go, which operates more than 400 c-stores in 11 states. “Take-home packages within water,

In 2021, products with added benefits will challenge water for the top spot. “Whether that’s water with zinc or vitamins or sports drinks with caffeine, consumers are looking for something extra for their money,” Overmole said. “The two newest trends in water are products with functional benefits and caffeine. Treo (an organic fruit and birch water drink) and Voss (bottled water) plus vitamin D are a couple items that I think will do well in 2021.” Hemphill agreed, saying there is more innovation in value-added waters and sports drinks than in traditional bottled water. Those that innovate with healthy options are expected to succeed. “The pandemic essentially put an exclamation mark on health and wellness as a consumer need,” Hemphill said. “The products with the greatest health and wellness attributes are seeing the greatest growth.” And because customers are willing to try different flavors if they can’t find their favorite, the category will continue to be popular. “Customers are shopping by their needs,” Overmole said. “Products like Alo (an aloe vera line that includes coconut and infused water among its lineup) and Sparkling Ice +Caffeine are blurring the lines between categories within the cold vault.”

Sports Drinks See Steady Increase

Sports drinks were up 10.1% year over year for the 52 weeks ending Dec. 26, 2020, while dollar sales were down 5.8% for the same period, per Nielsen. Flavors and functionality are two trends expected to drive sales of both bottled water and sports drinks in the year ahead.

Dollar Sales Q4 2020 (ending 12/26/20)

Latest 52-week period ending 12/26/20

Q4 2020 (ending 12/26/20)

$1.91 B

$404 M

-1.9%

-5.8%

-4.0%

$2.98 B

$612 M

8.5%

10.1%

11.2%

Latest 52-week period ending 12/26/20

Bottled Water

$2.03 B

Sports Drinks

$2.70 B

Segment

Percent Change in Dollar Sales 1 year ago: 52-week period ending 12/28/19

1 year ago: 52-week period ending 12/28/19

Source Nielsen, Total U.S. Convenience, Product Share Basis, ending Dec. 26, 2020

CSTORE DECISIONS •

March 2021

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Beverage | Energy Drinks

Energy Drinks Enjoy Upswing As customers hunkered down during 2020 lockdowns due to COVID-19, many looked to energy drinks to help them power through lockdown and pandemic fatigue.

According to IRI, the convenience store channel during calendar year 2020, ending Dec. 27, saw sales top $9.8 billion, a 2.5% increase. Leading the way in the category were Red Bull, with sales of nearly $2.2 billion, up 3.6%, and Monster, with nearly $1.2 billion in sales but a 3.8% dip. VPX topped $800 million in sales, rising by just 0.3%. Other major players included NOS, Reign Total Body Fuel and Rockstar. In the era of COVID-19, concerns around immunity and energy are also impacting how consumers gauge their health needs, said Blaine Becker, senior director, marketing at The Hartman Group Inc. in Bellevue, Wash. Beverages with added functionality are products enhanced with added vitamins, minerals, botanicals, protein, pre or probiotics, etc., to improve health. An example would be sports/energy drinks with added Taurine. “We as a company do very well with 5-hour Energy shots, as well as our entire energy drink category,” said Jessica Catanzaro, director of purchasing for the 43-year-old Green Valley Grocery convenience store chain based in Las Vegas. “We plan to add G-FUEL into our spring assortment. Since we cannot do wet sampling because of COVID, we run two-fors and bundle deals with water companies to increase sales.” The target market is specific and youthful; the brand’s sugar-

free, gluten-free, antioxidant- and vitamin-fortified, focus-enhancing and high-performance energy products target gamers, and has gained a reputation as the official energy drink of esports, a form of sport competition using video games. ENERGY EVOLVES

Energy drinks with enhanced sports nutrition ingredients are among those seeing sales on the upswing, according to Scott Swiger, director of business development for the JBH Advisory Group in New York City. “Functional beverages will continue to grow in popularity as people look to alternatives to caffeine for daily boosts,” he said. “People are much more aware of what they are putting into their bodies, and the dependency on caffeine has become a concern for more people.” Many c-stores have decided to focus on brands that feature added vitamins, new flavors and no sugar. Some keep these brands in barrels of ice and close to the point-of-sale area. Savvy c-stores are selling more energy drinks by marketing them to customers at the pumps to entice shoppers inside. “If trending items are in the coolers within the store, they should be marketed at the pump to let consumers know,” Swinger said.

Energy Drinks Trend Upward The energy drink segment, including shots and drink mixes, rose 2.5% in calendar year 2020, ending Dec. 27. Non-aseptic energy drinks grew 3.6% for the period, led by Red Bull, which was also up 3.6% at $2.17 billion. Monster Energy Drinks raked in the second-highest sales at $1.20 billion, down 3.8% over 2019.

Dollar Sales

Case Sales

Price Per Case

Product

Current

1-Year % Change

Current

1-Year % Change

Current

1-Year Change

Energy Drinks

$9.83 B

2.5%

3.69 B

1.4%

$2.67

$0.03

SS Energy Drinks Non-Aseptic

$9.26 B

3.6%

3.50 B

2.3%

$2.64

$0.03

Red Bull

$2.17 B

3.6%

685 M

2.5%

$3.17

$0.03

Monster Energy

$1.20 B

-3.8%

484 M

-4.5%

$2.46

$0.02

VPX Bang

$814 M

0.3%

322 M

1.0%

$2.53

-$0.02

Red Bull Sugar Free

$535 M

0.3%

174 M

-0.3%

$3.08

$0.02

Monster Energy Zero Ultra

$410 M

-5.9%

155 M

-6.8%

$2.64

$0.03

NOS

$339 M

-5.2%

136 M

-6.4%

$2.50

$0.03

Source: Market Advantage TSV; IRI Liquid Data, Total U.S. Convenience for the calendar year ending Dec. 27, 2020 cstoredecisions.com

March 2021 • CSTORE DECISIONS

Beverage | Energy Shots

Energy Shots Look to Bounce Back Energy shot sales faced a challenging year in 2020, but c-store operators have an opportunity to grow their energy shot business in 2021 with smart promotions, merchandising and product selection, as well as larger package sizes, better pricing and even suggestive selling.

OPPORTUNITY IN LARGER PACKAGES

Some convenience store operators have begun merchandising the declining segment further away from the checkout area, and in general providing it with less real estate. Others are changing up their merchandising set. “New companies keep coming in, and IRI figures for the total U.S. convenience store chan- they, like 5-hour Energy, are introducing nel for calendar year 2020, ending Dec. 27, showed new flavors,” noted Mike Askwith, chief sales of energy shots reached nearly $579 million, but operating officer for PBD USA Inc. in Elsaw a 12.2% decline over the previous year. Of that mhurst, Ill., which includes 25 owned and number, Living Essentials LLC’s 5-hour Energy brand franchised locations in Illinois, Georgia (also down by 12.2%) accounted for nearly $524 miland Florida. “The problem is the priclion, dwarfing the next-largest brand, Tweaker, which ing is getting pretty much out of whack. finished with sales of just over $24.5 million, a dip of Before, it used to be $2.99, and now you 3.4%. Other high-ranking brands included VPX, Red find prices at $3.29, two for $6, two for $7. Dawn, Vital 4U, Rip It, Stacker 2, Rhino Rush and So those prices are getting out of reach a ways.” Quick Strike. Private-label saw sales peek over the That explains why some retailers are introducing $3-million mark, representing a 36.8% drop. lower-priced alternative brands and offering larger According to Packaged Facts Communications Maneconomy packages in addition to individual items. ager and Associate Marketing Analyst Daniel Grander“With lower foot traffic because of the pandemic, the son, energy shots remain a niche appealing primarily to Exchange is seeing growth in larger packages of energy a relatively small cohort of young adults. Mintel Group shots,” reported Amber Seibert, sports nutrition buyer Ltd.’s Caleb Bryant, associate director-food & drink, for the Army & Air Force Exchange Service, which opernoted the segment will continue to see a slump that ates 479 c-stores. will likely be inflated by the impact of COVID-19. The hottest sellers in 2020 were the six- and 10-packs of 5-hour Energy. The coming of the pandemic changed the equation, she noted. Energy shot dollar sales at convenience stores totaled $579 million, down 12.2% for the calendar year ending Dec. 27, 2020, “Because of COVID, per IRI. 5-hour Energy, also down 12.2% compared to 2019, led the category with $524 million in dollar sales. Exchange shoppers Dollar Sales Case Sales Price Per Case have been drawn to larger packs, so stores 1-Year % 1-Year % 1-Year Product Current Change Current Change Current Change will adapt and shift assortment to meet SS Energy Shot $579 M -12.2% 186 M -13.2% $3.11 $0.03 these changes in 5-hour Energy $524 M -12.2% 152 M -13.3% $3.44 $0.04 shopper demand.” Tweaker $24.5 M -3.4% 20.5 M -5.6% $1.20 $0.03 In addition to addVPX Redline Xtreme $4.86 M -14.5% 1.42 M -15.3% $3.41 $0.03 ing larger pack sizes, suggestive selling to VPX Bang $4.76 M -12.5% 1.44 M -15.3% $3.31 $0.10 highlight energy shot Private Label $3.06 M -36.8% 1.40 M -37.6% $2.18 $0.03 promotions can help Red Dawn $2.84 M 1525.0% 428,956 1622.7% $6.62 -$0.40 c-stores boost sales.

Energy Shots Face Challenging Year

Source: Market Advantage TSV; IRI Liquid Data, Total U.S. Convenience for the calendar year ending Dec. 27, 2020

CSTORE DECISIONS •

March 2021

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Beverage | Beer & Wine

Pandemic Boosts Beer & Wine Sales Beer and wine sales climbed at convenience stores during the pandemic, as customers turned to their local retailers for purchases as lockdowns and social distancing drew customers away from bars and restaurants. In 2021, that sales momentum is expected to continue. “We haven’t had a flat year to date and don’t expect to start in 2021,” noted Mario Spina, CEO, The PRIDE Stores, which operates 15 locations in Illinois, with a 16th scheduled to open later this year in Indiana. “With the incremental growth every year, one-of-a-kind offerings — not just for beer/wine — and increased traffic due to COVID in 2020, our customer base has been loyal, consistent and growing.” At U.S. c-stores, dollar sales for beer rose 13.7% and case sales grew 8.9% for the calendar year ending Dec. 27, 2020, according to market research firm IRI. Dollar sales of table wine were up 7.9%, while case sales for wine increased 5.5% for the same period. At The PRIDE Stores, as consumers increased spending on beer and wine during the pandemic, they prioritized quality over quantity. “The $9.99 craft four-pack is becoming a thing of the past, replacing it with $14 to $18 options,” said Spina, adding that due to the increased cost of producing high-quality beers, the margins are similar to cheaper brews. Many retailers have told CSD that large packs of beer, such as 15- or 18-packs of core items are selling well. Looking ahead, as the pandemic subsides, alcoholic beverages are likely to be a go-to choice as customers look to reconnect and celebrate. “Past Q2 of (2021), we expect to see more of the social events that consumers missed out on in 2020 to start coming back, from sports to barbecues to family and work celebrations,” said

Mike Kostyo, trendologist, Datassential. These social gatherings are expected to be a big opportunity for beer, with many of the pre-COVID beer trends — like sour and coffee beers — returning to the forefront. WINES TO WATCH

Datassential listed rosé as a summer trend to watch, not only in wine but also rosé-style beers and ciders. Sparkling wine can help customers celebrate the end of lockdowns, while canned wines and natural or biodynamic wines are also expected to trend upward, especially with young adult consumers. Spina has found new opportunities in wine during the pandemic. As restaurants closed, The PRIDE Stores was able to purchase wine usually reserved for restaurant sales. “Our customers were able to purchase and consume at their homes some great items in the higher level of price ranges and larger quantities than ever before,” he said. “Our wine sales have increased every year As more customers turned to c-stores for beer and wine purchases during the pandemic, beer dollar sales grew by as more customers real13.7% to $23.4 billion, while wine dollar sales increased 7.9% to $1.11 billion for the 2020 calendar year, per IRI. ize our inventory, and with Dollar Sales Case Sales Price Per Case more people eating in their 1-Year % 1-Year % 1-Year houses versus dining out, we Product Current Change Current Change Current Change felt a pretty good increase in 2020, and we are positive it Beer $23.4 B 13.7% 880 M 8.9% $26.55 $1.12 will continue through 2021.” Table Wine $1.11 B 7.9% 12.0 M 5.5% $92.40 $2.00

Beer & Wine Sales at C-Stores Trend Upward

Source: Market Advantage TSV; IRI Liquid Data, Total U.S. Convenience for the calendar year ending Dec. 27, 2020

CSTORE DECISIONS •

March 2021

cstoredecisions.com

Beverage | Hard Seltzer & RTD Cocktails

Hard Seltzer, RTD Cocktail

Sales Soar

Hard seltzer and ready-to-drink (RTD) cocktails are trending upward at convenience stores. Hard seltzer sales totaled $1.52 billion at convenience stores, up 214% year-over-year, according to total U.S. convenience data from Nielsen for the 52-week period ending Jan. 23, 2021. “2021 is going to be a defining year for the (hard) seltzer category,” said Kelsey Capellino, category manager for United Pacific, which operates 453 company-operated stores and 56 fee-operated sites. “With all the innovation and new items coming out, consumers are going to really settle into their core packages that they will constantly buy for years to come.” Alcoholic beverage segments are blurring and blending. Nielsen noted in its June 2020 report, “Hard Seltzer Defies Categorization and Limits as the Most Resilient Alcoholic Segment in U.S.,” that today’s customers have no shortage of options: traditional hard seltzers, cider seltzers, wine seltzers, spritzers, spirit type seltzers and so on. “Hard seltzer-correlated RTD cocktails drove $120 million in U.S. off-premise sales in the 52-week period ending June 13, 2020, while growing at a 127% rate compared with the previous year,” the Nielsen report noted. Nielsen further found, “hard seltzer has the most sustainable growth trajectory across the U.S. alcohol landscape.” With limited shelf space, success depends on everything from price point to flavors and branding. Manufacturers are also stretching the boundaries of what constitutes ‘hard seltzer’ from various base liquids to bold flavors. “We have invested hard in the lemonade trend going into 2021, and I am particularly excited about Mike’s Hard Lemonade Seltzer,” Capellino said. “So many new items

Hard Seltzer beverage consumption Climbs

“Which of the following do you drink most often? Which do you also drink?”

Source: Mintel, “RTD Alcoholic Beverages: Incl Impact of COVID-19 US, December 2020”

CSTORE DECISIONS •

March 2021

prepared cocktails Expected To Grow This graphic shows total U.S. volume sales, as well as the forecast of spiritsbased prepared cocktails from 2015-2023 (inlcludes on- and off-premise). From 2020-2023, RTD cocktails are expected to be up 17%, per Mintel.

Source: The Beverage Information & Insights Group, “2020 Liquor Handbook”/Mintel; “RTD Alcoholic Beverages: Incl Impact of COVID-19 US, December 2020”

came out in early January, and it is a little too early to see if these items will stick. But on the positive side, White Claw and Truly are still on the incline, and there is no sign of slowing down.” RTD COCKTAILS

“Pre-mixed cocktails are going to see a rise in interest in 2021,” Capellino predicted. “We are definitely looking to expand this segment in 2021, particularly in brands backed by a strong social media following.” She added a solid overall marketing campaign will be key to growing the segment. In its report, “RTD Alcoholic Beverages: Incl Impact of COVID-19 US, December 2020,” market research firm Mintel noted the largest percentage of RTD consumers are motivated to choose RTD because of convenience. And RTDs outperform other alcoholic beverages across multiple consumer perceptions, i.e. convenience, flavor and refreshment. Room for improvement exists in ‘perception of value.’ “Presenting RTDs as a quality means of diversifying the drinking experience can cater to loyal drinkers and new category entrants, and may sway drinkers who haven’t yet dabbled in the space,” Mintel reported.

cstoredecisions.com

Snacks | Meat Snacks

Meat Snacks Grow

Along With Bag Size, Consumer Options Consumers were stocking up on a variety of goods during the pandemic, and meat snacks were no exception. Bigger bags, ﬂavor options and local products all contributed to strong sales growth and optimism for the coming year. According to market analyst Nielsen total U.S. convenience data, meat snacks dollar sales cooked along at a 10.8% growth rate for the 52 week period ending Dec. 26, 2020, strongly outpacing its 2019 growth of 4.4%. Meanwhile, IRI liquid data found that for calendar year 2020, ending Dec. 27, 2020, dried meat snacks sales at convenience stores grew at a savory 5.3%, while unit sales remained virtually ﬂat. Jerky dollar sales in c-stores performed consistently, rising 5.0%, despite unit sales dipping 3.3%. As with many other categories, consumers in pandemic lockdown tended to stock up. Retailers may be wise to carry the larger bags and offer more options. “Our shoppers are trading up to higher-value, bigger bags, 10 ounces and above,” said Devon Nitta, category manager for Holiday Oil, based in West Valley, Utah, which operates 63 stores in the state. “We sell jerky that’s 16-ounce bags for retail — it’s like $24.99 — and people are buying it.” The big gainers nationally for the category last year, according to Nielsen, were meat and cheese combo

(18%) and jerky (14.2%), which more than doubled their growth rates from 2019, and sticks (12%). “Larger bags continue to drive this category — and spicy hot flavors,” said Jodi Leibowitz, center store category manager for Santa Clara, Calif.-based Robinson Oil’s Rotten Robbie chain, operating a mix of 34 c-stores and kiosks throughout Northern California. Meat snacks haven’t been immune to the pandemicinduced supply problems that have plagued many products across the entire economy. But there are solutions. “Supply chain has been tough,” Leibowitz noted, “but I work closely with our reps and distributor to bring in new items, different flavors, constantly looking for refreshes.” She also shops her area’s smaller grocery stores to find local vendors to fill open shelf space. Holiday’s Nitta echoed that advice. He said that while the big-name makers always perform, the home-team products sell, too. “Massive dollar rings out the door,” he noted. “We sold $30,000 in the last three months off two SKUs.” As 2021 unfolds with hopes of COVID-19 eventually fading, many pandemic-related challenges will remain. Still, Nitta said that the category is looking up for Holiday, with the chain’s meat snacks dollar sales climbing 15% over the past four months. To say that Nitta is highly optimistic about the coming year may be an understatement. “I think it’s going to be amazing!” he said.

Meat Snacks Enjoy Beefy Sales During Pandemic

Nielsen total U.S. convenience sales for the 52-weeks ending Dec. 26, 2020, found that meat snacks sales grew 10.8%, with jerky up 14.2% and meat-and-cheese combos up 18%.

Dollar Sales

Percent Change in Dollar Sales

Description

Calendar year 2019: 52-week period ending 12/28/19

Calendar year 2020: 52-week period ending 12/26/20

Calendar year 2019: 52-week period ending 12/28/19

Calendar year 2020: 52-week period ending 12/26/20

Meat Snack

$1.46 B

1.62 B

4.4%

10.8%

Jerky

$519 M

593 M

2.8%

14.2%

Meat-and-Cheese Combo

$74.2 M

87.5 M

8.3%

18.0%

Nuggets and Tenders

$13.0 M

12.5 M

-41.4%

-5.2%

Steak, Kippered, Bar

$253 M

255 M

3.4%

0.9%

Stick

$590 M

660 M

7.5%

12.0%

Source NielsenIQ, Total U.S. Convenience, Product Share Basis, ending Dec. 26, 2020

CSTORE DECISIONS •

March 2021

cstoredecisions.com

Snacks | Salty Snacks

Salty Snacks

Sales Hit a Snag The salty snack category in the last few years has experienced a resurgence with new products and healthier options. In its “Salty Snacks: U.S. Market Trends and Opportunities” report published prior to the COVID-19 pandemic, Packaged Facts forecast that dollar sales of salty snacks in the U.S. will grow at a compound annual rate of 4%, reaching $29.3 billion in 2022. However, the pandemic took its toll on sales in 2020, according to market research firm IRI. For the 2020 calendar year, IRI reported salty snack sales fell 6.1% overall as a category, due to reduced store visits during the pandemic. Sales still totaled a solid $5.3 billion. The two biggest segments of salty snacks — potato chips and tortilla chips — saw dollar sales decline in the convenience channel 7.6% and 5.0%, respectively. Despite the reduced store traffic, potato chips managed to ring up $1.64 billion in sales, while tortilla chips sales totaled $1.11 billion.

Salty Snacks Struggle in Pandemic

Salty snack sales at c-stores fell 6.1% to $5.36 billion in calendar year 2020, per IRI. While most top brands saw a sales dip, Ruffles Sabritas saw sales grow by 9.2%. Sales

1-Year % Change

Unit Sales

1-Year % Change

Salty Snacks Category Total

$5.36 B

-6.1%

2.52B

-10.5%

Potato Chips Total

$1.64 B

-7.6%

801 M

-11.7%

Lay's

$523 M

-1.9%

255 M

-4.9%

Ruffles

$286 M

-6.7%

131 M

-9.7%

Description

Pringles

$168 M

-1.3%

72.7 M

-6.2%

Lay's Kettle Cooked

$63.0 M

-12.8%

27.0 M

-15.5%

Ruffles Sabritas

$52.9 M

9.2%

26.4 M

8.6%

Herr's

$51.1 M

-9.10

24.6 M

-14.1%

Tortilla Chips Total

$1.11 B

-5.0%

485 M

-9.7%

Doritos

$716 M

-2.9%

325 M

-7.0%

Takis Fuego

$141 M

7.7%

57.6 M

3.1%

Doritos Sabritas Dinamita

$46.1 M

-14.2%

23.9 M

-15.0%

Tostitos

$37.8 M

-1.7%

11.1 M

-12.0%

Tostitos Scoops

$33.4 M

10.1%

7.99 M

10.3%

Doritos Sabritas

$13.1 M

-55.0%

6.81 M

-56.1%

Source: Market Advantage TSV; IRI Liquid Data, Total U.S. Convenience for the calendar year ending Dec. 27, 2020

CSTORE DECISIONS •

March 2021

Retailers remain optimistic that sales will snap back in this key category as store visits continue to increase. “The COVID-19 pandemic created unique challenges for the convenience store industry. Store visits were down, but market baskets were up for the year,” said Greg Ehrlich, president of Friendship Kitchen, the retail division of Beck Suppliers, which operates nearly 30 stores in Ohio. “As we move forward in 2021, we remain optimistic that all categories, including salty snacks, will see sales and volume increases to pre-COVID levels and beyond.” LOOKING FORWARD

A number of convenience stores continue to dedicate considerable shelf space to salty snacks, but also use temporary floor displays and wing-like fixtures on aisle end cap shelving to offer and expand on their salty snack selection throughout the store. The more placements, the better. Innovative flavors, healthier options and protein snacks are expected to remain on trend in this category for the foreseeable future, as consumers seek more nutritious meal replacement options without sacrificing flavor. Spicy and hot flavors are also expected to remain popular, and the numbers seem to bear that out, according to IRI. In the potato chips segment, Ruffles Sabritas was the only product in the top 10 brands to show sales gains in the pandemic, jumping 9.2% to $52.9 million. Unit sales increased 8.6% to 26.3%. Similarly, in the tortilla chip segment, Takis Fuego became the No. 2 top-selling brand, with a 7.7% increase in sales to $141 million in 2020, behind only Doritos, which suffered only minor sales loses of 2.9%, while still posting an impressive $716 million in sales in the convenience channel, according to IRI.

cstoredecisions.com

Snacks | Sweet Snacks

Sweet Snacks Look to Rebound

From COVID Decline Energy bars are most often associated with top athletes and endurance sports. But as consumers have found themselves pressed for time — and energy — the category has morphed into an array of tasty, low-cost products that provide a quick meal solution across multiple dayparts. More importantly, the category has evolved to include a multitude of variations from healthy snacks to sugar-free and low-carb options that target niche consumers. The popularity of food bars lies in their simplistic, portable format. Any kind of food bar provides grab-and-go convenience and portion control. But as the COVID-19 pandemic has continued to rage on for more than a year, store visits and trips to the gym have fallen precipitously, as have food bar sales. The snack bars category overall experienced a sharp drop in dollar sales of 19.6% to $663 million, according to market research firm IRI, for calendar year 2020. Unit sales fell 22.2% to 361 million units sold in the convenience channel. Of the category segments tracked by IRI, nutritional and health bars experienced the biggest drop, falling 21.6% to $428 million. Unit sales slipped more than 23% to 176 million. Breakfast bars fared better, with one-year sales down 12.8% to $167 million. Unit sales were down 16.5% to 110 million.

Snack Bars Suffer

Sales for the snack bar category in convenience stores dropped 19.6% for calendar year 2020, per IRI data, with unit sales down 22.2%.

1-Year % Change

Unit Sales

1-Year % Change

$663 M

-19.6%

361 M

-22.2%

$167 M

-12.8%

110 M

-16.5%

Description

Sales

Snack Bar Category Total Breakfast/Cereal Total Kellogg's Rice Krispies Treats

$58.0 M

-15.8%

40.8 M

-18.3%

Kellogg's Nutri-Grain

$19.2 M

-22.3%

18.8 M

-24.7%

GM Cinnamon Toast Crunch

$10.1 M

-7.0%

6.33 M

-10.5%

Best Maid

$9.91M

-6.8%

5.77 M

-6.2%

Kellogg's Rice Krispies Poppers

$8.26M

-15.9%

2.27 M

-17.7%

$428 M

-21.6%

176 M

-23.1%

Clif Bar

$82.2 M

-20.1%

40.0 M

-21.9%

Quest Bar

$48.9 M

-21.1%

16.0 M

-21.2%

Nutritional/Health Total

One

$28.5 M

-3.9%

9.90 M

-4.3%

Kellogg's Special K Protein

$22.9 M

-24.8%

10.9 M

-25.8%

KIND

$19.4 M

-13.5%

8.70 M

-14.3%

Source: Market Advantage TSV; IRI Liquid Data, Total U.S. Convenience for the calendar year ending Dec. 27, 2020

In a normal year, these numbers would be devastating, but 2020 was certainly no ordinary year. For that reason, Gary Wilson, a Krauszer’s franchisee who operates three Krauszer’s Food Stores in central New Jersey, expects bar sales to return to normal by the summer. “All the signs show store visits increasing, and as that happens, sales will get right back to where they were prior to COVID-19,” Wilson said. “Prior to the pandemic, we were having a strong year across all categories, but health bars were doing particularly well, so I expect to get back to those levels by August or maybe September.” TARGETING FUTURE CUSTOMERS

The bars market has rapidly become more specialized in order to target the growing number of interested consumers, including women, the diet-conscious (both for weight loss and general health) and those with special dietary needs, such as arthritics and diabetics. The changes in the market’s structure have aided its growth, specifically as c-stores became a major player in overall sales growth. Over the past five years, the share of sports and energy bar products sold in health food stores dwindled from 38.7% to 7.5%, as the mass distribution networks of conveniences stores and supermarkets took control, research firm Mintel reported.

cstoredecisions.com

March 2021 • CSTORE DECISIONS

Snacks | Nuts & Seeds

Down Year for

Seeds and Nuts

Over the past decade, seeds and nuts have enjoyed exceptionally broad appeal across a variety of demographic groups thanks to their healthful benefits and snack appeal. But like many core categories in the retail channel, seeds and nuts took a big hit during the past 12 months due to the COVID-19 pandemic. Total sales for the snack nuts, seeds and corn nuts category sank 14.6% to $824 million, according to IRI liquid data for the calendar year ending Dec. 27, 2020. Unit sales were also down sharply for calendar year 2020, falling 22.8% to 505 million units sold in the convenience channel. In the snack nuts category, IRI reported sales fell 14.4% to $534 million. Sales volumes dropped 24.5% to 321 million. Sales of sunflower and pumpkin seeds were also down sharply, declining nearly 16% to $245 million. Unit sales were down 21% to 157 million. While sales are down, store operators remain optimistic that volume will pick up as more customers receive the coronavirus vaccine and feel more comfortable visiting retail establishments. “While the numbers look bad on paper, it’s been a very difficult year to gauge sales trends,” said Levent Sertbas, president of

SEEDS AND NUTS SALES SLOW

Nuts, seeds and corn nuts saw convenience store dollar sales decline 14.6% during calendar year 2020, ending Dec. 27, 2020, per IRI data.

Sales

1-Year % Change

Unit Sales

1-Year % Change

Snack Nuts/Seeds/ Corn Nuts Category Total

$824 M

-14.6%

505 M

-22.8%

Snack Nuts Total

$534 M

-14.4%

321 M

-24.5%

Planters

$135 M

-14.0%

104 M

-17.8%

Wonderful

$86.6 M

2.2%

22.4 M

-5.7%

Description

Nut Harvest

$46.6 M

-27.1%

23.5 M

-26.0%

Blue Diamond

$42.7 M

-18.5%

23.3 M

-19.6%

Private Label

$35.7 M

-13.3%

16.4 M

-15.5%

$245 M

-15.9%

157 M

-21.0%

$81.1 M

-13.6%

38.5 M

-17.8%

Sunflower/Pumpkin Seeds Total David Spitz

$43.2 M

-22.0%

20.0 M

-23.8%

Frito-Lay

$38.5 M

-19.9%

60.7 M

-23.4%

Bigs Regular

$34.2 M

-12.7%

13.5 M

-16.8%

Bigs Vlasic

$16.6 M

-15.2%

6.59 M

-19.6%

Source: Market Advantage TSV; IRI Liquid Data, Total U.S. Convenience for the calendar year ending Dec. 27, 2020

CSTORE DECISIONS •

March 2021

Sertbas Inc., which owns two Quick & Fresh stores in northern New Jersey. “I think we all have to remain optimistic that sales will recover as more people receive the vaccine and start visiting stores in person again.” PEANUT PRICES SURGE

Increased prices could also be affecting the category. The price of seeds and nuts has leapt to record highs during 2020 due to warmer weather and drought conditions in key growing regions. Prices have almost tripled in the U.S. since 2011. The peanut price jump has been felt most acutely in the U.S., where it has forced retailers to push through large increases in the price of peanut butter — a staple of kitchen cupboards and food banks. Still, despite the pandemic, consumption of peanuts has been steadily increasing. According to the National Peanut Board, the average American consumes more than six pounds of peanuts and peanut butter products each year. Other facts include: • Peanut butter is consumed in 90% of U.S. households. • Women and children prefer creamy, while most men opt for chunky. • Four of the top 10 candy bars manufactured in the U.S. contain peanuts or peanut butter. • Americans spend almost $800 million a year on peanut butter. • The average child will eat 1,500 peanut butter and jelly sandwiches before graduating high school.

cstoredecisions.com

SCHEDULE OF EVENTS: During these challenging times, extraordinary leadership and informed decisions are more important than ever, especially when it comes to convenience retailing. With this in mind, plan to join the NATIONAL ADVISORY GROUP (NAG) and the YOUNG EXECUTIVES ORGANIZATION (YEO) for the NAG/YEO Spring Leadership Series. This fivepart series will focus on key areas that will help c-store retailers boost sales and profits.

MAY 19 /

Exclusive Research from partner CivicScience. Topic: How Consumer Behavior has Changed During Covid.

MAY 26 /

The Impact of Delivery and Online Sales: How do we reach new food customers?

JUNE 2 /

How to Create a Next-Generation Store. Everything from EMV compliance to foodservice is forcing retailers to innovate and future-proof their stores to maximize revenue streams.

JUNE 9 /

The Future of Tobacco: Reshaping the back bar amidst legislative threats and PMTA.

JUNE 16 / Fuel Disruption: How a new administration will impact the fuel market by mandating electric vehicles and flex fuels.

Healthy & Beauty Aids | Personal Care, Cosmetics & Medicine

Hand Sanitizers See Biggest HBA Growth In 2020, the health and beauty aid (HBA) category struggled overall, but sales of hand sanitizers and masks helped compensate for category losses. In a year when people worked and attended school at home, and when social gatherings were discouraged, instore sales of certain HBAs slacked off substantially, especially cosmetics. There simply weren’t as many reasons to pop into convenience stores for that last-minute lip gloss or mascara replacement, and the data reflects this. According to IRI market research, cosmetics dollar sales dropped for eye, facial and lip products in calendar year ending Dec. 27, 2020 — 85.6%, 80.1% and 68.1%, respectively. Unit sales experienced disappointing decreases of 85.1% for eye makeup, 80.7% for facial products and 77.0% for lips. On the health side of the category, some of the more reliable segments also experienced declining sales within some product families. For example, IRI reported negative yearover-year dollar and unit sales for cold/allergy/sinus liquids and tablets. Vitamins, however, experienced a gain of 2.4%, thanks in part to a growing popularity of Remedy Organics and Kryptic Kratom brands of liquid vitamins/minerals, which both posted impressive dollar sales gains. PERSONAL CARE PRODUCTS SOAR

The biggest lift for the HBA category, however, came from personal hygiene and protective gear items. Although c-stores offered hand sanitizers and antibacterial wipes before 2020, they commanded a small portion of HBA

planograms until COVID-19 hit. “Products geared toward personal care, health, safety and sanitation saw the greatest growth. The sales velocity increased significantly as other outlets shut down, and as community-focused local retailers, the convenience channel benefitted greatly,” said Derek Gaskins, chief marketing officer at Yesway. The Fort Worth, Texasbased company operates Yesway and Allsup’s stores throughout the Midwest and South. Indeed, this segment assumed a much larger and more prominent presence in stores. Per Nielsen research, c-stores added more than 100 SKUs of hand sanitizers last year that weren’t around in 2019. It also reports that, by September, hand sanitizers had cashed in nearly $3 million more than all of 2019 transactions, an increase of 485%. C-stores also added face coverings due to COVID-19, which helped cushion in-store sales. According to Nielsen, masks earned $7.7 million by September. And as the pandemic enters its second year, this HBA segment stands to take up long-term residence on shelves. “I believe COVID-19 will indeed change the category for the next few years. Everyone’s shopping pattern have changed due to COVID,” said Rick Staley, merchandising manager for Tri Star Energy LLC, which owns and operates Twice Daily, Hightail and Sudden Service Convenience Stores. “We will continue to carry masks and larger inventories of hand sanitizers. People will still need to protect themselves.”

Health and Beauty Aid Sales DROP Due to COVID-19

While vitamin sales ticked up, sales of cold and allergy tablets and cosmetics fell during 2020 as customers made fewer trips during the pandemic.

Dollar Sales

Unit Sales

Price Per Unit

Product

Current

1-Year % Change

Current

1-Year % Change

Current

1-Year Change

Cold/Allergy/Sinus Liquids

$32.8 M

-19.9%

3.58 M

-20.9%

$9.16

$0.12

Cold/Allergy/Sinus Tablets

$131 M

-17.2%

32.9 M

-21.2%

$3.99

$0.19

Internal Analgesics

$364 M

-8.0%

128 M

-12.9%

$2.85

$0.15

Vitamins

$295 M

2.4%

41.8 M

-3.3%

$7.07

$0.39

Cosmetics - Eye

$46,922

-85.6%

16,856

-85.1%

$2.78

-$0.11

Cosmetics - Facial

$108,557

-80.1%

34,636

-80.7%

$3.13

$0.11

Cosmetics - Lip

$126,391

-68.1%

38,996

-77.0%

$3.24

$0.90

Cosmetics - Nail

$6.44 M

-6.9%

3.11 M

-12.3%

$2.07

$0.12

Source: Market Advantage TSV; IRI Liquid Data, Total U.S. Convenience for the calendar year ending Dec. 27, 2020

CSTORE DECISIONS •

March 2021

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Dairy | Milk & Ice Cream

Opportunity in Ice Cream & Dairy Over the past year, sales of dairy products in supermarkets and grocery stores have done very well, with milk up double digits to 10%, said Eric Richard, industry relations coordinator with the International Dairy Deli Bakery Association (IDDBA). In pre-pandemic February 2020, category sales were $58.3 billion, and by August, sales had soared to $63.7 billion. With families preparing and eating more meals at home and shopping more often, Richard said he expects the trend upward will continue. “The pandemic hasn’t changed the ways people are eating and drinking,” he said. “They’re looking for natural, not processed, protein-rich selections for themselves and their families.” For the calendar year ending Dec. 27, 2020, IRI found that milk dollar sales at convenience stores were flat (up 0.5%) at $1.36 billion, while whole milk specifically grew 5.5% and skim milk dipped 1.7%. Ice cream and sherbet at c-stores climbed 24.9% to $655 million in dollar sales for the same period. Packaged Facts research firm reported that plantbased dairy and egg product sales reached $4.3 billion in 2020, up from $3.9 billion in 2019, and anticipated that the sub-category would rise at an average rate of 6.0%, reaching $5.2 billion by 2024. Plant-based milk alone accounted for $2.4 billion in sales in 2020. But, Richard pointed out, just because people are shopping for plant-based products, they are not giving up on traditional dairy items.

“We have found that 90% of people who have plantbased dairy products in their baskets also have regular dairy products,” he said. In a report entitled “The Driving Force Behind Dairy Performance, Sept.16, 2020,” prepared by IRI for IDDBA, pre-pandemic sales of ice cream (week ending Feb. 2 to week ending March 1) was $124.3 million, up 3.1% over the year before. During the ‘Panic Buy Early in the Pandemic’ period (week ending March 15 to week ending March 22), sales rose 39.4% over the year before; during the shelter-athome period (week ending April 5 to week ending May 10), they increased 34.5%; and during re-opening (week ending May 17 through week ending Aug. 2 and future weeks), sales were $173.3 million, up 17.2%. ICE CREAM SALES LIFT

At Rutter’s convenience stores, with 78 locations in Pennsylvania, Maryland and West Virginia, ice cream showed “strong sales” in 2020, reported Joseph Bortner, center store category manager. “Take-home sizes outpaced novelty items as consumer habits shifted from instant consumables to purchases meant to eat at home,” he said. Bortner anticipates a continuation of these buying habits through 2021. Therefore, he is looking for pints and half-gallons to be the bestsellers. “I also expect to see the novelties business growing,” he said, “especially during the six-month spring and summer window, just at a smaller rate than the larger sizes.”

Ice Cream Increases While Milk Holds Steady

At convenience stores for the calendar year ending Dec. 27, 2020, overall milk sales came in flat, while ice cream and sherbet sales grew by 24.9% to $655 million.

Dollar Sales

Unit Sales

Price Per Unit

Product

Current

1-Year % Change

Current

1-Year % Change

Current

1-Year Change

Milk

$1.36 B

0.2%

503 M

-7.2%

$2.70

$0.20

Refrigerated Whole Milk

$538 M

5.5%

171 M

-2.4%

$3.15

$0.24

Refrigerated Skim/Lowfat Milk

$454 M

-1.7%

143 M

-9.9%

$3.18

$0.27

$655 M

24.9%

135 M

19.5%

$4.84

$0.21

$635 M

25.0%

131 M

19.7%

$4.86

$0.21

Ice Cream/Sherbet Ice Cream Ice Milk/Frozen Dairy Dessert

$12.3 M

24.6%

2.91 M

20.1%

$4.21

$0.15

Frozen Yogurt/Tofu

$3.52 M

39.5%

708,988

26.8%

$4.97

$0.45

Sherbet/Sorbet/Ices

$3.50 M

-5.5%

1.04 M

-8.3%

$3.35

$0.10

$766 M

-0.4%

337 M

-2.5%

$2.27

$0.05

Novelties/Frozen

Source: Market Advantage TSV; IRI Liquid Data, Total U.S. Convenience for the calendar year ending Dec. 27, 2020

CSTORE DECISIONS •

March 2021

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Confections | Chocolate

Innovation, Indulgence

Carry Chocolate Into 2021 While pandemic-mired treat lovers bought big and confectioners thought big, self-reward and innovation are keeping chocolate top of mind as treat lovers search for the old normal moving into 2021. Overall, chocolate candy held firm during pandemicplagued 2020 with relatively flat growth of 1.6%, per IRI. While snack-size and novelty chocolate saw large dollar sales drops of just over 35%, gift boxes maintained sales, losing less than a percent. Sugar-free chocolate candy experienced a huge dollar sales jump of 54.3%. “Throughout the past year, people across the country have turned to chocolate and candy for little moments of normalcy and joy in an otherwise uncertain time,” said Carly Schildhaus, manager of public affairs for the National Confectioners Association (NCA). She explained that during the pandemic (measured from March 15 to Sept. 6, 2020), chocolate sales gained 5.5%, outperforming the confection category as a whole, which rose 4.1%. And candymakers have plenty of sweet somethings to choose for every member of the family. Innovation in candy is running at a fever pitch, especially with new forms and flavors colliding with classic favorites. “Snickers is launching the new Snickers (Peanut) Brownie that’s out in stores now,” noted Tim Young, category manager with Newcomb Oil’s Bardstown, Ky.-based Five Star Food Mart with 87 stores in Kentucky, Indiana and Tennessee.

He also pointed to ongoing innovation in Hershey’s Reese’s products, including the Reese’s Big Cup with Pretzels in stores now and the upcoming Reese’s Big Cup with Chips, which is stuffed with potato chips. Other noteworthy innovations include Kit Kat Duos Mocha + Chocolate and the Whozeewhatzit, a version of the Whatchamacallit bar that includes a peanut butter crème layer and rice crisps coated in chocolate. PERMISSIBLE INDULGENCE

It’s all about comfort, Young stressed. “You just want to come in and get a candy bar and just take your mind off the madness. You can walk in and find a lot of items and a lot of brands that are just very comfortable.” Young calls it “permissible indulgence.” Simple items. Small price tags. Guilt-free rewards. Numbers from the NCA agree. According to Schildhaus, more than nine in 10 Americans — 92% of consumers — have purchased chocolate since the start of the pandemic. Pandemic or not, chocolate will continue to be a customer ‘go-to’ for a quick break and sweet reward.

Sugar-Free Candy Surges as Overall Chocolate Sales Ring in Flat

Despite increased innovation, chocolate sales came in flat, up only 1.6% for the 2020 calendar year ending Dec. 27, 2020, per IRI. Chocolate candy box/bag/bar less than 3.5 ounces edged up slightly by 2.3% for the period. Sugar-free chocolate candy saw the biggest surge, up 54.3%.

Dollar Sales

Case Sales

Price Per Case

Product

Current

1-Year % Change

Current

1-Year % Change

Current

1-Year Change

Chocolate Candy

$2.89 B

1.6%

1.56 B

-4.8%

$1.85

$0.12

Chocolate Candy Box/Bag/Bar < 3.5oz

$2.37 B

2.3%

1.33 B

-4.5%

$1.77

$0.12

Chocolate Candy Box/Bag/Bar > 3.5oz

$379 M

1.4%

149 M

-2.7%

$2.55

$0.10

Chocolate Candy Snack Size

$1.45 M

-35.5%

358,612

-52.6%

$4.03

$1.07

Novelty Chocolate Candy

$1.22 M

-35.9%

530,396

-30.3%

$2.29

-$0.20

$403,634

54.3%

122,286

34.2%

$3.30

$0.43

Sugar-Free Chocolate Candy

Source: Market Advantage TSV; IRI Liquid Data, Total U.S. Convenience for the calendar year ending Dec. 27, 2020

CSTORE DECISIONS •

March 2021

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Confections | Non-Chocolate

Bigger Bags, Price Bumps Make for

Sweet Non-Chocolate Outlook

Despite drops in some non-chocolate candy segments, retailers are hopeful for 2021 as consumers have proven willing to spend more and buy bigger. Dollar sales of non-chocolate candy grew 4.4% during 2020, according to IRI liquid data for the calendar year ending Dec. 27, 2020. Unit sales in the category as a whole, though, saw a 4.6% drop. Pandemic lockdowns have affected consumer buying habits of gum and mints. Convenience channel dollar sales of plain mints dropped nearly 14% in 2020, with unit sales down almost 20%. Gum sales really felt the bite, with dollar sales down 23.9% and units down even more ( -29.2%). Jodi Leibowitz, center store category manager for Santa Clara, Calif.-based Robinson Oil’s Rotten Robbie 34 stores, pointed out the switch to remote working has decreased sales of gum and mints. “Our stations are located in counties that are still pretty locked down a year later, and many tech companies will work from home the remainder of 2021, which has had a huge impact on gum and mint sales,” explained Leibowitz. “We adjusted planograms this year to reduce 10% in this category and chose to move to king-size candy and more peg candy.”

Between March and September 2020, non-chocolate candy sales ticked up by 1.6%, according to data from the National Confectioners Association (NCA). Eight of 10 consumers have purchased non-chocolate since the start of the pandemic, the NCA reported. “We’re adjusting sets to increase the number of stand-up packages offered in our stores,” said Category Manager Joe Bortner of York, Pa.-based Rutter’s, with 78 stores in Pennsylvania, Maryland and West Virginia. “We’ve seen consumers willing to purchase higherpriced items throughout the store.” Non-chocolate novelty items saw a boost of 12.7% in 2020. “We constantly bring in novelty candy and hold a few spots in our sets to allow for in/out every month,” Leibowitz noted. It also pays to tailor candy offerings to local preferences, Leibowitz advised. “We added a third (candy) location to house local Hispanic candy through a local direct-store-delivery rep, and this sells out monthly,” she said. “Great way to be part of the community and bring them into our sites for candy and add-on items.” Rutter’s Bortner is optimistic for 2021. “We’re predicting private label, peg, gum and mint to all hit doubledigit growth on same stores.”

Non-Chocolate Sales Edge Up As Gum Plummets Amid Social Distancing

With customers social distancing and less concerned about fresh breath given mask-wearing, gum, mints and breath fresheners faced a challenging 2020. Meanwhile, non-chocolate candy enjoyed a sales lift, led by novelty and chewy candy.

Dollar Sales Product

Current

Non-Chocolate Candy

1-Year % Change

Case Sales Current

1-Year % Change

Price Per Case Current

1-Year Change

$2.18 B

4.4%

1.35 B

-4.6%

$1.61

$0.14

Non-Chocolate Chewy Candy

$1.57 B

6.8%

924 M

-2.5%

$1.70

$0.15

Novelty Non-Chocolate Candy

$223 M

12.7%

141 M

5.6%

$1.58

$0.10

Licorice Box/Bag

$112 M

-0.3%

51.5 M

-6.2%

$2.18

$0.13

$68.8 M

-13.8%

45.4 M

-19.8%

$1.52

$0.11

Plain Mints Hard Sugar Candy/Pkg & Roll Candy

$86.0 M

-9.7%

115 M

-15.5%

$0.75

$0.05

$685,960

-24.9%

315,009

-25.5%

$2.18

$0.02

$790 M

-23.9%

443 M

-29.2%

$1.78

$0.12

Sugarless Gum

$656 M

-24.4%

312 M

-30.4%

$2.11

$0.16

Regular Gum (No Sugarless)

$134 M

-21.3%

131 M

-26.2%

$1.02

$0.06

$167 M

-28.1%

78.8 M

-29.9%

$2.12

$0.05

Sugar-Free Diet Candy Gum

Breath Fresheners

Source: Market Advantage TSV; IRI Liquid Data, Total U.S. Convenience for the calendar year ending Dec. 27, 2020

CSTORE DECISIONS •

March 2021

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CBD | Hemp & CBD

Pandemic Sets the Table for C-Stores

to Claim CBD Consumers As homebound consumers shifted to online purchasing in 2020, many also gravitated toward cannabidiol (CBD) products to alleviate anxiety and promote general wellness. While that hurt in-store retail, it could bode well for c-stores to claim those consumers post-pandemic. “CBD did not perform well in the convenience channel in 2020,” said Don Burke, senior vice president with Management Science Associates (MSA). “As the pandemic wore on, in fact, sales declined further as consumers moved their purchases to online vendors.” Data from MSA illustrates a roaring CBD market in brickand-mortar retail during Q1 of 2019 with double- and tripledigit dollar sales increases in products with the greatest comfort factor for the c-store customer — gummies (66%), tinctures (144%), topicals (185%) and beverages (92%). Products containing CBD have begun to take off in U.S. general retail, but Food and Drug Administration (FDA) restrictions on CBD as a food additive have kept legitimate manufacturers away from the general retail channel. In December, cannabis market analyst BDSA said it expects the FDA to lift those restrictions in 2021. Congress is pushing, too, taking another swing with HR 841, a bipartisan bill to designate cannabinoids as legal dietary supplements.

C-STORE OPPORTUNITY

C-store chains like Circle K, Rutter’s, Yesway and others have committed to carrying CBD products. Some smaller chains are following suit, like Massachusettsbased VERC Enterprises, which is experimenting with store-within-a store concepts that offer CBD. With vaccines rolling out, the table is set for CBD sales to recover. Stronger competition is yielding higher-quality products while pandemic anxiety is driving first-time consumers, prime prospects for convenience retail. BDSA forecasts CBD beverages in general retail to account for 6% of spending in 2021, growing to 10% in 2025. And MSA data show topicals’ robust rebound with a 59% dollar sales increase for the final quarter of 2020. As a whole, the category bounced back 7% for that same period after a dramatic 37% drop in Q3. “It’s expected that, in 2021, there’s the possibility of a slight increase in sales near the end of the year as some consumers may return to more normal commuting and shopping patterns,” Burke said. “The real recovery will not likely occur until 2022, when there’s a better chance that the CBD consumer will re-adjust their shopping patterns to brick-and-mortar stores.” Retailers would be wise to prepare now to meet the anticipated demand.

CBD Quarterly trend

After a significant decline in Q3 2020, total CBD sales rebounded in Q4 2020, with an increase of 7% vs. Q3 2020, per data from Management Science Associates. The increase is driven by strong topicals growth of 59%.

Average Weekly Dollars % Change CBD Form

Q2 2019 vs Q1 2019

Q3 2019 vs Q2 2019

Q4 2019 vs Q3 2019

Q1 2020 vs Q4 2019

Q2 2020 vs Q1 2020

Q3 2020 vs Q2 2020

Q4 2020 vs Q3 2020

Gummies

66%

-7%

-20%

-24%

-22%

-3%

Vape

81%

-7%

-67%

-71%

-26%

93%

-20%

Tinctures

144%

-18%

-20%

-23%

-17%

Topicals

185%

16%

0.5%

91%

0.1%

-55%

59%

Pills

58%

-29%

26%

54%

-73%

-23%

Beverage

92%

11%

-13%

-37%

-13%

Moist/Snuff

96%

40%

23%

387%

-72%

-18%

-23%

Hemp Smokes

537%

74%

-17%

-15%

-13%

26%

-32%

Total

94%

-3%

-24%

-2%

-37%

Total Excluding Vape

98%

-2%

-14%

-39%

Source: Management Science Associates Inc., distributor shipment to retailer data through 12/26/2020

CSTORE DECISIONS •

March 2021

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Tobacco | Cigarettes

Cigarettes Burn Brighter For most convenience store categories, flat yearover-year sales figures would not be considered good news. For cigarettes, however, it signals a reprieve from several years of declining sales. Although IRI market research suggests the top tobacco segment lost a bit of footing in unit sales for the calendar year ending Dec. 27, 2020 — down 5% — dollar sales compensated with a rise of 1.1% to more than $56.1 billion for U.S. convenience stores. What’s more, Nielsen reported cigarette volume expanded 4.2% the first few weeks of 2021. Combine all the data, and it appears cigarettes have at least held steady in the midst of a global pandemic. “Tobacco sales were up all during COVID. I was surprised. I do not believe that anyone could have anticipated how c-stores would fare during this time,” said Layne Taylor Stuckey, vice president of Washington, Ind.based Chuckles Convenience Stores. And after an extended period during which third- and fourth-tier brands challenged well-known names, it appears consumer preferences have switched back again, at least at the 29 Chuckles sites in southern Indiana and western Kentucky. “Premium brands performed better than expected,” said Stuckey. REGULATORY WOES

Of course, local and state legislation continue to plague the category. The New England Convenience Store & Energy Marketers Association revealed that Massachusetts lost nearly $62 million in menthol cigarette tax revenue during the first six months of the state’s ban on flavored tobacco — the menthol portion became effective last June — per the National Association of Convenience Stores (NACS).

Now that New York lawmakers are debating expanding its flavor ban to include menthol, the New York Association of Convenience Stores (NYACS) presented evidence of the possible economic impact. A study conducted by Regional Economic Models Inc., commissioned by NYACS, forecasted a loss of $3.4 billion in tax revenue over the next decade, approximately $500 million annually in lost sales for stores and a loss of 1,200 jobs in retail and related industries. Bans aren’t the only regulation affecting the category. Even though the Food and Drug Administration (FDA) postponed the date for integrating updated cigarette warnings, there’s no time to waste for c-store promotions to meet the requirement. “Retailers that create their own cigarette advertisements are required to file a cigarette health warning plan with the FDA, and preferably by March 16,” advised Thomas Briant, executive director for the National Association of Tobacco Outlets (NATO). “The health warning rotational plan is required to show that cigarette advertisements produced by retailers will have the correct FDA graphic cigarette health warning when the new warnings go into effect on Jan. 14, 2022.”

Cigarettes Hold onto flat dollar sales deSPite pandemic

Unit sales of cigarettes fell 5% for the 2020 calendar year, ending Dec. 27, 2020, according to IRI. Meanwhile, cigarette pack prices grew by 46 cents in 2020, boosting dollar sales to come in flat at 1.1%.

Dollar Sales

Unit Sales

Price per Unit

Product

Current

1-Year % Change

Current

1-Year % Change

Current

1-Year Change

Cigarettes

$56.1 B

1.1%

7.28 B

-5.0%

$7.70

$0.46

Source: Market Advantage TSV; IRI Liquid Data, Total U.S. Convenience for the calendar year ending Dec. 27, 2020

CSTORE DECISIONS •

March 2021

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Tobacco | Roll-Your-Own

Tight Market for RYO 2020 proved a tough year for the roll-your-own (RYO) tobacco segment at convenience stores. “Looking at same-store sales of 2020 versus 2019, we continued to see a downward trend on the RYO category, down 6%; however, that trend slowed some in Q4,” noted Tim Greene, category director of tobacco and general manager for Smoker Friendly. Its parent company, The Cigarette Store Corp., based in Boulder, Colo., operates more than 160 retail stores across seven states, including Gasamat convenience stores, as well as tobacco outlets and cigar lounges. Data from IRI confirms RYO tobacco units are down nationwide impacted by COVID-19. Convenience stores sold 8% less for the calendar year ending Dec. 27, 2020, compared with the same period the previous year. It is worth noting, though, that’s a slight improvement over the -10.7% recorded for the end of 2018 and the -9% the year before. Similar to RYO, pipe tobacco doesn’t account for a large percentage of what’s regarded as other tobacco

products (OTPs), which covers smokeless tobacco, modern oral tobacco, e-cigarettes and vape items. Also similar to RYO, pipe tobacco declined in both dollar and unit sales, 8.3% and 15.0%, respectively, per IRI. Interestingly, the research shows that RYO inched up approximately two points in dollar shares over the past year. CATERING TO RYO CUSTOMERS

Still, carrying these specialty OTPs pays off for some c-stores through nurturing customer loyalty. In communities that lack tobacco specialty shops, convenience stores may be the only outlets stocking RYO and pipe tobacco. Not only do consumers come in for these OTPs, but they’re likely to add other basket items to each purchase, which drives greater transaction totals, and that makes the investment worthwhile. “I probably won’t phase RYO out because I have regular customers who buy it,” said John Archer, who owns the Shell Food Mart in Hinsdale, Ill., a town 20 miles west of Chicago. He added that rolling papers continue to perform well. “I’m sure cannabis being legalized has a lot more to do with that than roll your own.” Despite the less-than-encouraging figures from last year, Greene hopes the OTP niche segment will turn around this year in response to Colorado’s Proposition EE. The new regulation, which took effect Jan. 1, 2021, raises taxes and sets minimum prices on tobacco products, including packaged cigarettes. “We do expect to see increased sales on both (RYO and RYO accessories) in Colorado due to the erroneous tax changes,” said Greene.

RYO Unit Sales Fall

Roll-your-own tobacco dollar sales came in flat at $50.1 million, while unit sales fell 8.2% for the segment in 2020, according to IRI data. Meanwhile, pipe tobacco dollar sales fell 8.3% as unit sales dropped 15%. Dollar Sales

Dollar Share of Category

Unit Sales

Price per Unit

Product

Current

1-Year % Change

All Other Tobacco Products

$147 M

-5.5%

100.0%

0.00%

Pipe Tobacco

$96.8 M

-8.3%

65.9%

-2.03%

$10.7 M

-15.0%

$9.06

$0.66

RYO Tobacco

$50.1 M

0.5%

34.1%

2.03%

$5.85 M

-8.2%

$8.56

$0.75

Current

1-Year % Change

Current

1-Year % Change

Current

1-Year Change

$16.5 M

-12.7%

$8.88

$0.68

Source: Market Advantage TSV; IRI Liquid Data, Total U.S. Convenience for the calendar year ending Dec. 27, 2020

CSTORE DECISIONS •

March 2021

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Tobacco | Smokeless

Spitless Shines in 2020 For many convenience stores, the overall tobacco category delivered a welcomed lift for in-store sales, albeit surprising during a historic public health crisis. Many of the subcategories performed well, but none posted as impressive figures as the smokeless tobacco sector, specifically spitless tobacco products, such as modern oral nicotine pouches. According to IRI data, chewing tobacco still collected the larger share of total dollars, in excess of $7.1 billion, but spitless tobacco products posted substantially greater growth percentages for the calendar year ending Dec. 27, 2020 — approximately 67% in each dollar and unit sales. Some of this can be credited to a growing awareness of nicotine pouches. By this time last year, Swedish Match’s ZYN had reached 80,000 stores in the U.S., and R.J. Reynolds Vapor Co.’s Velo and the Altria Group’s On! have fueled competition. Smaller boutique brands are wanting in on the hot market, too. “Nicotine pouches are taking right off. It certainly exceeded my expectations in terms of sales of the product,” said Doug Galli, vice president and general manager for Reid Stores and Crosby’s, which operates more than 80 sites in New York and Pennsylvania. “The data showed that spitless products deserved more share, so we made the change (to include more spitless items) for the benefit of the whole category. The additional space for spitless did not come from sacrificing chew, but rather was the result of a government ban on vape flavors in early 2020,” said Adam Long, senior category manager for Rutter’s, who oversees tobacco products for Rutter’s more than 75 stores in Pennsylvania, West Virginia and Maryland.

“Oral nicotine pouches have gained share as consumers continue to evolve. Part of that evolution is a growing desire to move through the harm-reduction spectrum to products that will deliver nicotine satisfaction, but with less perceived risk of harm,” he added. Yet again, though, regulations threaten to slow momentum this year. “While vaping is capturing all of the attention, laws are being proposed that would sweep all tobacco and nicotine products under flavor bans — even products that are granted a modified risk order from the Food and Drug Administration,” said Alex Clark, CEO for Consumer Advocates for Smoke-Free Alternatives Association (CASAA), a nonprofit advocacy organization for consumers seeking reduced-harm tobacco products. Indeed, Connecticut and Maryland are the latest to introduce legislation proposing to ban all flavored tobacco options, including menthol. New York, New Jersey and Rhode Island have already banned flavored e-cigarettes and vaping options, but also new bills plan to add menthol, which would affect smokeless tobacco, too.

Spitless Tobacco Buoys Smokeless Sales Growth

Smokeless tobacco dollar sales grew 7.7%, with spitless tobacco dollar sales rising a whopping 66.9% in calendar year 2020, ending Dec. 27, 2020, per IRI. Chewing tobacco/snuff accounted for $7.12 billion — an increase of 2.5% — of the category’s $8.13 billion in dollar sales. Dollar Sales

Dollar Share of Category

Unit Sales

Price per Unit

Product

Current

1-Year % Change

Smokeless Tobacco

$8.13 B

7.7%

1.0%

0.00%

1.38 B

-0.2%

$5.88

$0.43

Chewing Tobacco/Snuff

$7.12 B

2.5%

87.6%

-4.40%

1.19 B

-6.5%

$5.99

$0.53

Spitless Tobacco

$1.00 B

66.9%

12.4%

4.40%

195 M

67.8%

$5.17

-$0.03

Current

1-Year % Change

Current

1-Year % Change

Current

1-Year Change

Source: Market Advantage TSV; IRI Liquid Data, Total U.S. Convenience for the calendar year ending Dec. 27, 2020

CSTORE DECISIONS •

March 2021

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Tobacco | Cigars

Headwinds and Hurdles Can’t Slow Cigars With a pandemic causing supply disruption across the manufacturing spectrum and the ever-present hurdle of increased regulation, the cigar category continues to march forward thanks to stable pricing, form and flavor innovation, and nimble market adjustments by manufacturers. Dollar sales of cigars in the total U.S. convenience channel rose 10.1% for the 2020 calendar year ending Dec. 27, according to IRI liquid data. Unit sales rose 5.4%, with unit price rising just seven cents to $1.58 for the same period. Premium cigars in 2020 were again a reliable performer. “In the few stores we have humidors, the premium cigar sales have been steady,” said Jesse Dix, category manager for Sayre, Pa.-based Dandy Mini Marts, with 65 stores in Pennsylvania and New York. And while homogenized tobacco leaf (HTL) are the “bread and butter” of the cigar category, natural leaf is the product to watch, according to Michelle Signorelli, category manager at Atlanta-based RaceTrac, with 560 convenience store locations in Alabama, Georgia, Florida, Louisiana, Mississippi, Texas and Tennessee. “With natural leaf, just the growth in that segment is huge,” said Signorelli. “You can see it with the Dutch (Masters) and Game Leaf and Backwoods (brands), and Optimo.” REGULATIONS LOOM

The only thing that seems to be holding cigarillos back is the shifting regulatory landscape. “I foresee our cigarillo business, in New York, in particular, dropping a bit due to the tax increase, which forced us to remove the two-for99-cent pouches,” Dix said. Despite local and state flavor bans — and the threat of a federal flavor ban circulating on Capitol Hill — innovation in cigarillos is alive and well. More flavors, new mashups.

Cigars Steadily March Forward

Cigars continued as a reliable performer in the c-store channel with solid dollar and unit sales growth, while maintaining friendly pricing that kept smokers lighting up. Dollar Sales

Unit Sales

Price per Unit

Product

Current

1-Year % Change

Current

1-Year % Change

Current

1-Year Change

Cigars

$3.85 B

10.1%

2.43 B

5.4%

$1.58

$0.07

Source: Market Advantage TSV; IRI Liquid Data, Total U.S. Convenience for the calendar year ending Dec. 27, 2020

CSTORE DECISIONS •

March 2021

“ITG keeps releasing new flavors and offerings on Dutch and Backwoods, it seems like every few weeks,” Dix said. And that’s despite supply disruption due to COVID-19, which has been a factor, especially with labor-intensive natural leaf or handrolled cigars, noted Signorelli. “Units inclined at the same time that manufacturing declined,” she said. “So, it really hit them pretty hard, a lot faster than I think anybody was anticipating.” Manufacturers responded, though, by focusing on top SKUs, which retailers found helpful. “Supply will continue to be issue, but I’m hoping we will see some improvement in the spring,” Dix said. Driven by stable prices, flavor innovation and diligent navigation of local and state regulation, the cigar category looks to keep rolling along in 2021.

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Tobacco | Vape

Vape Sales

Push Past Obstacles Despite a challenging 2020, vape sales have persevered. Electronic smoking devices ended the year with dollar sales in convenience stores up by nearly 5%, thanks to a bump of more than 14% in unit sales per IRI data for calendar year ending Dec. 27, 2020. At the start of 2020, convenience stores began realizing the fallout from the federal ban on flavored tobacco products, especially e-cigarettes and vaping devices. “Our vape category was flat to down compared to (the previous) year. This is mostly due to the increased regulation and removal of flavored product by the Food and Drug Administration (FDA) and New York state,” said Mike Clifford, category manager for Clifford Fuel Co. The company runs 19 Cliff’s Local Market stores throughout central New York state.

Vapes Sales on the Rise

Sales of electronic smoking devices at convenience stores grew by 4.8% to $4.87 billion, with unit sales up 14.5% to 368 million, in calendar year 2020, ending Dec. 27, 2020, according to IRI data. Dollar Sales

Unit Sales

Price per Unit

Product

Current

1-Year % Change

Current

1-Year % Change

Current

1-Year Change

Electronic Smoking Devices

$4.87 B

4.8%

368 M

14.5%

$13.20

-$1.21

Source: Market Advantage TSV; IRI Liquid Data, Total U.S. Convenience for the calendar year ending Dec. 27, 2020

That was just one setback. Then came COVID-19 lockdowns, and in September, the long-awaited deadline for the FDA Premarket Tobacco Applications (PMTAs) for ongoing market authorization arrived. Brands that didn’t submit PMTAs were forced to pull product, though documentation was turned in for thousands of items. According to the National Association of Tobacco Outlets (NATO), the FDA confirmed 10,184 PMTAs were filed by August, and another 4,567 applications were filed by the September deadline. “I will definitely be paying close attention to the FDA and which products they approve. I’m not making any changes in the short term, but until they announce which items are approved, I will certainly be more careful as to which products I add,” said Clifford. Then the election happened, and the day before his inauguration, President Joe Biden announced a freeze on pending rules set forth in the final days of the previous administration, including PMTAs. Would this move create yet another delay, furthering the uncertainty of how retailers should plan the vaping category in 2021? “While some smaller manufacturers have celebrated the freeze of the finalized PMTA rule, the move is unlikely to have a significant impact on the FDA’s review process,” said Gregory Conley, president of the American Vaping Association. “There is virtually no chance an incoming Biden nominee at FDA will liberalize the rules in a way that helps bring clarity and efficiency to the process.” 2021 HEADWINDS

The year ahead could prove to be just as disruptive as 2020 once the FDA announces which e-cigarettes and vape products gain approval and which do not. Plus, state regulatory actions continue to interfere. “Tax hikes and flavor bans remain a big threat to the category. It is critical that legislators become educated on new developments in FDA regulations and Congressional actions on the online sale of vaping products,” said Conley. 92

CSTORE DECISIONS •

March 2021

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Tobacco | Accessories

Tobacco Accessories Tick Up For years, the most innovative development to hit the subcategory of tobacco accessories was lighter covers highlighting sports teams or colorful designs. There were even the occasional movie- or TV-based themes to attract mega fans. So when BIC introduced the EZ Reach lighter with an extended wand last summer, surely convenience store operators and managers hoped it would give the after-market segment a flick of energy.

CANNABIS CONSIDERATION

Market research firm Fact.MR also shows a higher global demand for herb alternatives instead of tobacco, and that usage prompts more purchases of waterpipes, grinders, vaporizers and rolling papers. Recreational cannabis is now legal in 11 states and Washington, D.C. — New Jersey, Arizona, Montana and South Dakota voters approved ballot measures in 2020 — and Euromonitor International estimates more than 360% growth of the sector by 2025, totaling more than $53 billion in sales. “Lighters have been on an uptick for us, but that might be partly for the legalization of recreational marijuana. People still buy roll-your-own tobacco and use rolling papers for recreational cannabis,” said Anna Bettencourt, senior category manager at VERC Enterprises. Based in Duxbury, Mass., the c-store chain owns 34 stores and two standalone car washes. Although the cannabis business is heavily regulated and product sales fall outside the parameters of most c-stores, selling accessories operates under much less oversight, which could invite more chances to engage that customer base. “There’s a big opportunity for convenience stores to facilitate people who want to consume cannabis legally by providing those products because states heavily limit the hours of operation for straight cannabis retailers,” said Morgan Fox, media relations director and committee manager for the National Cannabis Industry Association. “There are opportunities for convenience stores to take up the market during those off hours.”

While it’s difficult to discern how much impact one new design could have on a legacy segment, tobacco accessories enjoyed substantial gains last year after logging losses in 2019. IRI recorded a 22.4% increase in dollar sales for all smoking accessories in convenience stores for the calendar year ending Dec. 27, 2020. The market research firm also noted a nearly 16% increase in unit sales. The real driver behind the gains most likely can be attributed to both COVID-19 lockdowns and a growing number of states legalizing adult use of recreational cannabis. COVID-19 conditions meant smokers spent more time at home instead of public spaces, so they could indulge with fewer restrictions. Analysts suspect the steadying of cigarette sales correlates with more people enjoying the freedom of smoking at home, which consequently pushed the demand for lighters and other accessories.

Tobacco Accessories Sales Climb by Double Digits

Dollar sales of smoking accessories, such as lighters and pipes, grew by 22.4%, with unit sales up 15.9% for 2020, according to IRI data. Dollar Sales

Unit Sales

Price per Unit

Product

Current

1-Year % Change

Current

1-Year % Change

Current

1-Year Change

Smoking Accessories

$370 M

22.4%

192 M

15.9%

$1.92

$0.10

Source: Market Advantage TSV; IRI Liquid Data, Total U.S. Convenience for the calendar year ending Dec. 27, 2020

CSTORE DECISIONS •

March 2021

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Technology | Loyalty

Build Relationships Through

Loyalty Marketing Did you know it costs five times more to acquire new customers than it does to retain current customers? And did you know existing customers are 50% more likely to try a new product of yours as well as spend 31% more than new customers? Whether or not you currently have a loyalty program that encourages your customers to return and conduct more business with you, these statistics from HubSpot, which tracks consumer sales, clearly show the importance and impact of a successful customer loyalty program. One of the main reasons to promote customer loyalty is because those customers can help you grow your business faster than your sales and marketing teams. There are a number of other reasons why customer loyalty is critical to your success. Customers convert and spend more time and money with the brands to which they’re loyal. These customers also tell their friends and colleagues about those brands, which drives referral traffic and word-of-mouth marketing. Customer loyalty also fosters a strong sense of trust between your brand and customers. When customers choose to frequently return to your company, the value they’re getting out of the relationship outweighs the potential benefits they could get from one of your competitors.

Types of Customer Loyalty Programs • Point-based loyalty program • Tiered loyalty program • Paid loyalty program • Value-based loyalty program • Coalition loyalty program • Game-based loyalty program

loyalty program offerings to yield true competitive advantage. But research also shows that loyalty programs shouldn’t focus solely on cheaper prices and giveaways. According to data insights firm LoyaltyLion, customers are looking for loyalty programs that reflect their personal standards. For example, the company’s data shows that 66% of people will join a loyalty program if it builds an COMPETITIVE ADVANTAGE ongoing relationship. Sixty-eight percent There is a clear need for loyalty programs in the retail industry. How- of loyalty cardholders want to align with a ever, rather than mimicking current programs, which will only lead to retail company that shares its values. a competitive stalemate and increased costs all around, retailers — Personalization is a key loyalty trend both those planning to introduce a loyalty program for the first time for 2021. The “Bond Loyalty Report 2020” and those wanting to tune up their existing program — should design found loyalty programs that offer high levels of personalization throughout the membership experience see significant increases in word-of-mouth, increased One of the biggest motivators of loyalty among customers is whether a brand shares their values, spending and customer retention. followed by whether they feel they can build a relationship with a brand. “At its base level, the loyalty program is a way for retailers to understand their customers beyond a cash transaction,” said Pat Lewis, a partner with Oasis Stop ‘N Go, which operates 25 stores in Twin Falls, Idaho. “It’s extremely important to recognize your loyal customers and how important they are to your business. Our goal is to create unique and memorable experiences to show our appreciation for Source: LoyaltyLion: Loyalty programs: Five benefits of a loyalty program, June, 2020 their business.”

Values Alignment Key Factor in Loyalty Considerations

CSTORE DECISIONS •

March 2021

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Technology | Prepaid

Pandemic Brings New Prospects

for Prepaid Cards The prepaid card category has continued to fare relatively well at many c-stores during the pandemic — for gift-giving, budgeting and as part of loyalty programs, with accelerated interest in digital versions. “Because c-stores and pharmacies stayed open when many other locations were closed, c-stores naturally had a larger portion of the total market than in the past,” said Perry Kramer, managing partner at Retail Consulting Partners. “Additionally, we were seeing an increase in the use of prepaid cards, as they were perceived as faster than cash, and speed has equated to safety for many consumers during this pandemic.” The use of both open- and closed-loop cards is growing, and many retailers continue to market closed-loop credit cards as a way to capture and enhance their loyalty systems. However, open-loop cards’ growth — both branded and unbranded — has out-paced the growth of closed-loop cards about two to one, said Kramer. Part of this growth can be attributed to the movement of the EMV deadline, which gave many retailers the time they needed to implement this new hardware/software prior to the compliance date, which includes contactless EMV. “This implementation parallels with the major card brands issuing contactless cards, which plays right into the sweet spot of this generation, which loves contactless,” Kramer said. “This will contribute to the growth of any card that supports contactless and/or being loaded to a mobile wallet.” Prepaid cards also serve as a tool for people who are under- or un-banked. In April 2020, 7-Eleven added a new prepaid card to its offer, Trans@ct by 7-Eleven Prepaid Mastercard, as a way for these customers to

U.s. open-loop market forecast through 2024 The open-loop prepaid card market in the U.S. is expected to experience a compound annual growth rate (CAGR) of 8.2% through 2024.

Source: Mercator CustomerMonitor Survey Series, 2020 Payments Survey

receive direct deposit payments including stimulus checks. The card can be purchased at 7-Eleven stores or online. Money can be loaded onto the card at any 7-Eleven store, and it can be used anywhere that Debit Mastercard is accepted. Plus, 7Rewards loyalty program members can link their account to the Trans@ct by 7-Eleven card to earn points that can be redeemed for 7-Eleven merchandise. TIPS AND TRICKS

While Good Oil Co. Director of Marketing & Foodservice Mike Jones said the company’s Good to Go c-stores, with 14 locations in Indiana and Illinois, have not seen a significant increase to sales for the prepaid category since the pandemic began, he expects sales to rise later this year. The c-store chain offers both retail and mall gift cards as well as prepaid phone and loadable Visa cards. Kramer recommended that c-stores merchandise a display of greeting cards near the prepaid gift card display to grow sales of both categories, while increasing inventory on pandemic-friendly gift cards. “If you do not have strong reporting or monitoring of what prepaid stock is selling/on display, consider paying the extra fee to have the vendor stock the prepaid gift cards,” he said. “We have seen sales increase by as much as 22% when this change was implemented to correct out-of-stocks caused by store personnel never filling the racks or reorders never being properly generated.”

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March 2021 •

CSTORE DECISIONS

Technology | POS & Back Office

POS & Back Office Evolve When it comes to point-of-sale (POS) and back-office technology, a number of emerging trends are expected to pick up steam in 2021. Hybrid POS systems and hardware-agnostic POS software are two areas for convenience stores to watch in the year ahead, noted Patrick Raycroft, the Convenience and Energy vertical lead at W. Capra Consulting Group. “More POS deployments will involve certain POS functions running in the cloud and critical POS functions running at the storelevel,” he said. “Although we are still some time away from pure cloud deployments of POS software due to issues with network reliability, abstracting non-business-critical POS functions to centralized cloud instances provides retailers with efficiencies in deployment, operations and data management.” Meanwhile, c-stores are one of the final retail spaces where most POS software relies on specified register hardware, he noted. “The ability to select and integrate POS software without being bound to particular POS software provides retailers substantial opportunities to reduce site-level costs and improve reliability of site systems.” Several POS providers are already offering solutions that remove this 1:1 software-hardware connection, Raycroft pointed out.

for our site-level technology control plane and, in my opinion, it cannot be over-emphasized.” Myhren compared it to the shift from mechanical cash registers to electronic 30-40 years ago. Road Ranger is using microservices to Internet of Things (IoT)-enable devices and equipment. “This enables integrations with our digital offerings to our customers, and it powers the next generation of systems we will use to manage and monitor our stores,” Myhren said. “Our industry’s stores need such an IoT platform in order to maintain relevance and to scale. In its simplest form, this means we need to collect more data and use it to drive more automation in our stores.”

SAAS & IOT

“Convenience retail POS and back office is in the early stages of a major architectural shift to Software as a Service (SaaS),” said Jeremie Myhren, chief information officer for Road Ranger. “This change is seismic in terms of what it does and what it will enable

NEEDS-DRIVEN PROGRESS

Top pos priorities for 2021

The following bar graph shows retailer priorities when it comes to point-of-sale technology. Some 33% noted mobile POS as a priority this year. Add/Enhance OMS integration/ 67% real-time product visibility POS software upgrade/replacement Omnichannel capabilities/ integration like BOPIS or BOPAC

52% 52% 33%

Mobile POS POS hardware upgrade/replacement

30%

Add/Enhance CRM capabilities including customer information protection

30% 22%

Unified or single payment platform Payment security/PCI compliance

15%

Source: Retail Consulting Partner’s “2021 POS/Customer Experience Survey”

8% 7%

CSTORE DECISIONS •

March 2021

A number of retailer needs are expected to drive back-office trends in the year ahead. For example, c-stores need a more robust, (near) real-time transactional and consumer behavioral data, which Raycroft predicted will result in more integrations and adoption to Conexxus standards. Today, many retailers are looking to convert commerce practices — like delivery and contactless ordering and fulfillment — that they previously outsourced to third-parties as the pandemic began, back in-house, which Raycroft believes will spur delivery and curbside logistics functionality in back-office systems. And, as foodservice continues to expand, Raycroft pointed out that more robust foodservice capabilities in back-office systems (and POS as well) are likely to be implemented.

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Technology | Security & Cash Management

Cash Management Remains Key Around-the-clock business like the convenience store and petroleum industry drives many conversations about site security, but such efforts today go far beyond locking things down and being preventative. The reality remains that there’s a crucial need for loss prevention activities and systems. According to the 32nd Annual Retail Theft Survey conducted by Jack L. Hayes International, a leading loss prevention and inventory shrinkage control consulting firm, two-thirds of participating retailers reported that shrink at stores is increasing. “Overall, retail theft continues to be a serious problem for retailers, negatively impacting their bottom-line and creating more out-of-stocks and higher prices for the consumer,” said Mark Doyle, president of Hayes International. More than 348,000 shoplifters and dishonest employees were apprehended last year by just 21 large retailers surveyed across all retail channels. Thefts ranged from cash to merchandise to office supplies. CASH HANDLING CONSIDERATIONS

sionals looking to find increased transparency and control over their cash handling and working capital. These safes and cash handling solutions continue to evolve. For example, note readers can verify and authenticate the bills and track the drops by each employee in real time and report back to store managers or corporate loss prevention managers. Each year, thousands of employees are caught stealing from their employers and co-workers. Over the past decade, Hayes International has witnessed a steady and significant rise in this serious problem. “Furthermore, our studies reflect that this group of thieves are being caught stealing far more than a few insignificant supplies,” Doyle said. For example, the survey found that: • One out of every 50 employees was apprehended for theft from their employer. • Survey participants apprehended 32,941 dishonest employees. Employee theft apprehensions have increased in eight of the past 12 years. Employee theft is perceived by some to be the most severe problem facing industry today. Many people often think of theft and abuse in companies as being isolated acts, which in themselves cost an organization little. “Unfortunately, this isn’t true,” Doyle said. “Retailers must remain diligent.”

Despite the new mobile payment methods available at retail aimed at creating secure, seamless transactions, cash is still a significant portion of the way customers pay — about one-third at c-stores, according To evaluate the severity of employee theft, Hayes International analyzed Applicant Review questionnaires the National Association (pre-employment ‘honesty tests’) given by CertiFinder to retail job applicants nationwide. Of these 19,165 job of Convenience Stores applicants, 12,283 (64.1%) were rated as “low risk,” and 3,700 (19.3%) were rated as “high risk” due to their admissions of previous wrongdoings, and their attitudes regarding honest and dishonest behavior. Listed below (NACS) data. And the Fedare items on the questionnaire and the percent of high and low-risk applicants admitting to each. eral Reserve says greater than 50% of transactions High Risk Low Risk under $25 are paid with I have frequently associated with fellow employees who cash. Plus, according to 18.4% 5.4% admitted they were stealing merchandise from the company. a recent research report from CreditCards.com, I am not an honest person and might steal and cheat. 9.3% 1.7% cash is preferred by 63% of I could be tempted to steal from my employer. 26.7% 7.8% consumers with incomes I might help friends steal from my company. 14.6% 1.3% under $50,000, a group that makes up over 70% of I have stolen money within the past three years. 17.5% 5.2% the population in the U.S. I have stolen merchandise within the past three years. 15.9% 4.5% Automated cash hanI would possibly use marijuana/illegal drugs in the future. 23.1% 6.5% dling solutions can be valuable tools for retail I have previously sold marijuana or other illegal drugs. 4.3% 0.9% loss prevention profes“32nd Annual Retail Theft Survey “conducted by Jack L.Hayes International

Job Applicant Admissions

100

CSTORE DECISIONS •

March 2021

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Technology | Electronic Payments

Electronic Payments Accelerate The COVID-19 pandemic sped up digital disruption, with businesses rushing to enable contactless payment options from EMV to mobile wallets. “The accelerated move to contactless payments has been driven by the major card issuing banks, which expedited the issuing of contactless cards, and the retailers who accelerated the software and hardware changes needed to implement contactless EMV,” said Perry Kramer, managing partner, Retail Consulting Partners. In the pandemic, “we consistently see consumers associating speed with safety in every retail segment,” he added. And contactless payments are fast. TOUCHLESS SOLUTIONS

Most c-stores are making transactions easier, safer and quicker for customers, agreed Mark Cosenza, senior vice president, for Waltham, Mass.-based Global Partners, which operates nearly 300 company-owned c-stores. “Many customers don’t want to have to pull out their wallets anymore. They want to pay by phone. Younger generations were already starting to expect that, but COVID moved everyone in that direction.” When COVID-19 arrived, Global Partners was already working toward introducing touchless payment options at its c-stores. “As with many things, COVID accelerated our timeline,” said Cosenza. “To minimize the risk of transmitting COVID, customers need to be able to purchase goods without touching a keypad.” Global Partners has implemented PayByCar, a vehicle payment solution, at its 30 Alltown convenience stores in Massachusetts, allowing customers to pay for gas and other products via their mobile device. “The PayByCar technology uses the text app available on every smartphone,” Cosenza said. Once customers enroll in PayByCar, their car’s E-ZPass toll transponder is recognized, and a welcome message requests the pump number. Vehicles without a toll transponder can use PayByCar’s non-toll sticker to enroll. 102

CSTORE DECISIONS •

March 2021

“If buying gas, you enter the pump number, which instantly turns the pump on,” he said. “You pump your gas, and when finished, an electronic payment is automatically completed and PayByCar sends a receipt by text.” Customers can also use contactless through the Alltown Insider app — both at the pump and inside the store. “Many of our legacy brand sites currently accept Near Field Communication (NFC) as a touchless payment option,” Cosenza said. “We have a new app that will be announced soon.” WHAT’S AHEAD

In 2021, convenience stores with fuel pumps face the April 2021 deadline to implement EMV at the pump to avoid increased chargebacks. And mobile payment acceptance continues to grow, especially when it comes to well-known platforms. Retail Consulting Partners’ “2021 POS/Customer Experience Survey” found 70% of retailers outside of c-stores are accepting Paypal and Apple Pay. “This is a very significant increase from two years ago,” Kramer said. By contrast 80% of retailers are taking a ‘wait-andsee’ approach to emerging payment trends, such as Alipay and WeChat Pay.

Retailers Developing Mobile plans

The majority of retailers have customer-facing mobile apps or are looking to implement them in the next two years. Mobile in-store offers targeted by proximity are also on retailers’ radar, as are real-time selling and promotions based on weather. Mobile site designed/ optimized for mobile access Customer-facing mobile app Geolocation of customer Product locator in-store Mobile in-store offers

(triggered by proximity)

37%

41%

15%

Associate wearables 11% 4% Real-time selling and promotions based on 7% 15% weather or other events

26%

11%

15% 4% 15%

30%

26%

15%

19%

33% 22%

08% 11% 20

44%

Implemented and 8% 7% Implemented but needs improvement working well

100

Implement within 2 years

Source: Retail Consulting Partner’s “2021 POS/Customer Experience Survey”

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Operations | Car Wash

Car Wash Market Forecast to Grow While c-stores had plenty to do in-store to cope with the pandemic, many were surprised to find those changes extended even to their car wash operations. “Yes, COVID did affect car washing,” said Justin Alford, one of the principals of 69-year-old B-Quik Convenience Stores/Benny’s Car Wash, which operates nine locations in Baton Rouge and Gonzalez, La. “A lot of it depended on which state you were located in.” Some states required car washing to shut down completely, while others allowed it to continue. The full-service side, which includes cleaning car interiors, was hit the hardest and continues to struggle to regain pre-COVID levels. “The exterior side was hurt initially, but it is returning to pre-COVID levels, Alford noted. “We are still cautiously optimistic for 2021 and hoping for no more lockdowns.” The technological trends were similar to those in many other businesses, Alford added. “‘Contactless’ was a big word in the car wash business as well: pay stations instead of people, and everyone is trying apps.” The International Carwash Association (ICA) emphasized the valuable services that car washes provided to COVID-19 essential workers, which includes providing disinfection services for all essential methods of transportation such as ambulances, FedEx, UPS and medical services vehicles, and allowing essential workers to continue to operate. The ICA added that car washes can also support automotive maintenance facilities and the safe transportation of chemicals. The size of the car wash and auto-detailing market is expected to increase 5.3% in 2021, said Dr. Colleen Meyer, president of Meyer and Mintz Consulting LLC in Forest Falls, Calif. “That is good news.” INTEGRATING TECHNOLOGY

Retailers will continue to focus on technology, whether that means using apps and focusing on the mobile aspect of car washing or continuing to offer no-touch options. “It must be customer-focused,” she said. “The best way to provide an excellent customer experience is to listen to them and stay current with trends in technology.” cstoredecisions.com

MOST COMMON CAR WASHES BY TYPE, U.S.

In-Bay Automatic car washes are the most common type of car wash in the U.S., with nearly double the number of conveyor and self-service car washes nationwide.

Type of Car Wash

Total Locations

In-Bay Automatic/Roll-Over

28,999

Conveyor

17,487

Self Service

16,182

Total

62,668

Source: International Carwash Association/2020

Advances in technology have also helped the car wash industry become more compliant and engaged through operators’ ability to place their business into the palms of their customers through smart phone apps. “This technology,” Meyer said, “allowed car washes to offer on-demand services by utilizing car wash mobile apps, which attract a younger audience, create convenience and can help car washes build a stronger relationship with their customers.” While mobile apps are effective, Meyer urged c-store operators to remember the tried-and-true practice of subscription or club packages. “Subscription packages create loyalty with customers. Customers get to save some money, and car washes are more likely to see an increase in customer traffic. Remember that old saying, ‘If it isn’t broke, don’t fix it’? Well, it is true when it comes to subscription and reward programs.” March 2021 • CSTORE DECISIONS

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Operations | Fuel & Fuel Alternatives

Fueling the New Year From electric vehicle chargers (EVC) to biodiesel and ethanol blends, convenience retailers are working to provide customers with the fuel and fuel alternative options they need, while looking forward to increased demand as vaccines roll out. Ankeny, Iowa-based Casey’s General Stores’ fuel offer varies by location, said Tony Spuzello, manager of commercial fuels for Casey’s. But its new stores offer five products: E15, E85, E10, a premium gasoline option and diesel. “This will be a standard for Casey’s as we build new locations and look to remodel existing fuel island locations,” Spuzello said. “Biodiesel and higher blends of ethanol are a part of the demand equation and help to offer consumers a choice while also helping them save money compared to non-blend petroleum products.” In states along the West Coast, he’s seeing a rise in demand for renewable diesel as well as renewable diesel-biodiesel blends. Other SUMMER SEASON states closer to the Midwest are continuing to look at low-carbon Brandon Lawrence, founder of Fuel Inprograms, he said, which may shift renewable products closer to where sight, a data science consultancy, noted a they’re produced. chain’s in-store offer will continue to prove Meanwhile, Sunshine Gasoline President Maximo Alvarez Jr. said the increasingly important this year, too. 350-store Florida chain partnered with retail tech company GetUpside “The biggest shift that we’ve seen is to learn more about its customers’ fuel preferences and behaviors and that volume is no longer king,” he said. drive new customers. Before the pandemic, GetUpside was driving “The pandemic showed that a strong around 2.5% of all Sunshine’s Chevron volume, he said. Since April 2020, inside offer can be a lot more resilient.” it’s increased to close to 5%. Casey’s has seen success with its inUltimately, Sunshine Gasoline aims to stay competitive on price, store offer, Spuzello said, and its Casey’s Alvarez said, as well as customer service and cleanliness. Rewards program, both of which help to keep the chain top-of-mind when it comes time to purchase fuel. “As we recover from COVID, we hope to see fuel demand improve as we get After a huge drop at the start of the pandemic, rack prices are trending back up. into the summer of 2021,” he said. Lawrence, too, is cautiously optimistic for a strong summer and overall year ahead. “We’re at a turning point, a fork in the road,” he said. “Either things are going to get much better, or they’re going to get worse. But I err on the side of bullish on this one. I think we’re going to have a very strong year. I don’t think it’s going to be as strong as 2019, but maybe 3% or 4% down.” And while the regulatory environment will play a bigger role than ever before, “When it comes to electric,” he said, “I don’t think it’s a matter of if; it’s a matter of when.” Source: https://cstoredecisions.com/rack-prices/

Rack Prices Recover After Pandemic Shock

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Operations | LED & Energy Efficiency

C-Stores Upgrade to LED, Add Solar Power C-store retailers are turning their attention to ambitious lighting and energy efficiency goals this year, particularly with LED and solar power. Pilot Co. plans to complete its LED upgrading project across all remaining stores by the end of 2021 — a project that’s six years in the making and includes its more than 750 stores in North America. The Knoxville, Tenn.-based chain will also upgrade 120 Pilot stores with new LEDs in outdoor signs and canopies. “The biggest benefits of LED lighting for Pilot are the improved lighting output in our stores, increased safety, easier maintenance and energy savings compared to older light models previously used in our stores,” said Pilot Co. Senior Manager of Facility Services and Energy Management Bryan Martin. “By installing new LED models at Pilot stores across the country, the average store can save over 50% on their energy costs.” Des Moines, Iowa-based Kum & Go, with more than 400 stores in 11 states, will retrofit interior and exterior lighting to 100% LED at 18 stores in 2021. Plus, all new construction stores will be designed with 100% LED lighting systems. Kum & Go Energy Manager Kurt Bohlman pointed to both the reduction in maintenance requirements and cost and lower energy consumption and cost as major benefits of LED for the chain, along with improved customer experience and security. “Depending on the existing lighting systems and facility type, LED retrofits at Kum & Go stores have reduced electric consumed by lighting from 57% to 86% and total electric consumed by the facility from 10% to 35%,” Bohlman said. “The average simple payback for LED retrofits is 3.8 years.”

under the ‘The Market’ banner, announced the acquisition of 40% of the shares of Altenergy Inc., a solar energy company also headquartered in Charlottesville, Va. The acquisition is set to be complete late spring of this year. Two of Tiger Fuel’s Market locations currently use solar power, with solar panels powering up to half of their electrical needs. The company anticipates adding solar power to all of the locations where it owns the real estate, including its bulk plants. Tiger Fuel President Gordon Sutton expects to see more retailers use solar power in the next few years. “It is a good return on your capital, and if you are on the leading edge of the movement, it is a great way to differentiate yourself from your competition,” Sutton said. “I also think as more and more of us add charging stations to our repertoire and our demand for electricity goes up, we will be well served to generate as much of that electricity as we can on-site.”

LED Lighting’s Rapid Acceleration

The graph shows how LED lighting has progressed and gained market shares compared to other technologies within their markets.

SOLAR POWER OPPORTUNITIES

In June 2020, Charlottesville, Va.-based Tiger Fuel Co., which operates nine c-stores cstoredecisions.com

Source: “The Low Carbon Economy Report” by Goldman Sachs, 2015 March 2021 • CSTORE DECISIONS

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Clean and safe

shouldn't be a secret Much of the hard work keeping stores clean and safe happens behind the scenes, and it isn't always apparent to customers. Communicate better with Safe Shop Assured™ certification.

Strategize for the new normal! info@safeshopassured.com www.safeshopassured.com

PRODUCTShowcase

Walk-In Cooler and Freezer Programs Leer Inc., manufacturer of temperature-controlled storage solutions, released updated Quick Ship and Quick Ship Plus Walk-In Cooler & Freezer Programs. The programs promise shipment dates of two or 10 days to meet the immediate needs of customers. Leer’s Quick Ship program marries the most efficient manufacturing process to the most common accessories, therefore delivering economical, high-quality and robust Walk-In Quick Ships. Plus, they have extra options, including coolers and freezers, indoor and outdoor, multiple heights, multiple floor and refrigeration options. Many customers will still benefit more from standard custom-built Walk-Ins, which are also available.

Microwave Speed Assist Oven Ovention’s MiSA-a12, the newest addition to the ventless countertop oven lineup, is designed for high-efficiency airflow in the cavity, which allows for even browning. With the smallest footprint among quarter-size pan rapid cook units, the MiSA has superior power output, highest warmup power, highest airflow, quiet sound operation and the lowest energy usage on the market. This ventless oven allows for flexible installation and features a full-color seveninch touchscreen display that makes it easy to access the Ovention library of over 1,000 recipes, a USB port for easy service diagnostics and software updates.

Ovention

(855) 298-OVEN connect@oventionovens.com

www.oventionovens.com

Leer Inc.

www.leerinc.com

Ready-to-Eat Sushi Moji Sushi is the ultimate grab-and-go option for lifestyles on the run. Treat your taste buds to a ﬂavorful, nutritious and healthy snack. Available in Classic California, Spicy Crab, California Cream Cheese and Coconut Shrimp. Moji Sushi is fully cooked and ready to eat in an eight-count tray that contains individual packets of wasabi, ginger and soy sauce.

Trident Seafoods

sales@tridentseafoods.com

www.tridentseafoods.com/mojisushi

Folding Lighter Colors Calico Brands announced new packaging and lighter colors of its popular reﬁllable Scripto Folding lighter, now available in three bold new colors: berry red, cobalt blue and ash gray. The reﬁllable Scripto Folding Lighter conveniently lights in multiple positions and folds into a compact 5.5-inch lighter, allowing for easy storage in small spaces such as kitchen drawers and backpacks. The Scripto Folding Lighter is perfect for all indoor and outdoor lighting activities. It’s available in a single pack on a full-size blister card or space-saver blister card with a suggested retail price of $7.59.

Calico Brands Inc.

www.calicobrands.com 108

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PRODUCTShowcase

Double Stack Display The Double Stack Platform is an all-plastic versatile display system for deﬁning selling space for heavier and bulk items. SPC Retail’s unique no-tool assembly allows you to achieve a well-organized product presentation within minutes. Standing at eight inches tall, this display will provide enough lift to protect merchandise from passing foot trafﬁc while maintaining product accessibility. The consistent, smooth surface of the Solid Top platform makes it easy to slide heavy items off the display, while the Grid Top surface allows debris to pass through easily, keeping your retail space looking clean. Available in 24- and 36-inch widths and lengths up to 96 inches.

SPC Retail

(800) 953-6899 • www.spc-retail.com

Tobacco-Free Synthetic Nicotine Pouches NIIN is introducing a new era of nicotine technology with its line of 100% tobaccofree synthetic nicotine pouches. NIIN pouches are made with Certiﬁed TobaccoFree Nicotine (TFN) and are free of the residuals and constituent impurities found in tobacco-derived nicotine. Combined with an uncompromising approach to quality and user experience, NIIN’s focus on 100% tobacco-free innovation has positioned its products as a must-have for c-store owners.

NIIN LLC

CBD Bath Salts CBD Living’s newest topical product, CBD Living Bath Salts, is available in four scents: Relaxing Lavender, Soothing Eucalyptus, Refreshing Coconut Lime and Zenful Amber Bergamot. Each 16-ounce tin contains 500 milligrams of Nano CBD (about seven milligrams CBD per heaping scoop). CBD Living Bath Salts are manufactured using CBD Living’s Proprietary Skin Retention Technology, which allows nutrients to better penetrate the layers of the skin and stay on the skin longer for lasting relief. All CBD Living products are third-party tested, contain no THC and are made in the U.S.

(714) 823-3750 • sales@niinpouches.com

www.niinpouches.com

Crunchy, Chewy Candy Bar The Whozeewhatzit bar, the Whatchamacallit brand’s ﬁrst new bar in a decade, takes wacky, crazy, crunchy and chewy to a new level. The new bar, which has an added peanut butter crème layer and rice crisps, all covered in a chocolatey candy, is available in a 1.5-ounce standard size, with a suggested retail price (SRP) of $1.11, and a three-ounce king size, SRP $1.66.

The Hershey Co.

www.thehersheycompany.com

CBD Living

www.cbdliving.com cstoredecisions.com

March 2021 • CSTORE DECISIONS

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PRODUCTShowcase

Portable Snack Cups The Laughing Cow is now making it possible for cheese-lovers to take a little laughter on the go with The Laughing Cow & Go portable cups. Only 140 calories per cup with five grams of protein, The Laughing Cow & Go are available in three flavors: Creamy Original paired with whole wheat breadsticks, Creamy White Cheddar paired with pretzel breadsticks and Creamy Herbs paired with multigrain breadsticks. The Laughing Cow & Go portable cups contain no artificial colors or artificial flavors and no artificial growth hormones. The Laughing Cow & Go can be purchased in a two-pack for a suggested retail price of $2.49.

Bel Brands USA

www.belbrandsusa.com

Dipping Sauces Chester’s Chicken has added five new dipping sauces to the menu to accompany its delicious chicken. Consumer data shows that dipping sauces drive purchasing behavior, and Chester’s is excited to offer great-tasting sauces that perfectly complement its Tenders, Bone-In Chicken, Chicken Bites, Chicken Sandwiches and Potato Wedges.

Chester’s Chicken

Protein-Packed, Single-Serving Dairy Drinks

www.chesterschicken.com

Oikos is launching a collection of high-protein dairy products: Oikos Pro. Oikos Pro dairy drinks contain 25 grams of protein per 10-ounce serving and come in Strawberry Banana, Mixed Berry, Caramel Macchiato and Coffee flavors. Fans in search of some extra caffeine may enjoy the Caramel Macchiato and Coffee flavors of Oikos Pro drinks, which feature 100 milligrams of caffeine per bottle — as much as a cup of coffee. Oikos Pro single-serving dairy drinks are available for a suggested retail price of $2.49 per 10-ounce bottle.

Danone North America

CSTORE DECISIONS •

Snickers Peanut Brownie Ice Cream is a mashup of three beloved treats: Snickers, brownies and ice cream. Similar to flavors found in the recently launched Snickers Peanut Brownie Candy Bar, this frozen treat features brownie-flavored ice cream with chewy brownie bits, topped with a thin layer of caramel and peanuts and covered in a milk chocolate-y coating. This product marks the first time ever that Snickers Ice Cream and Snickers Chocolate have launched the same flavor variant, giving fans more ways to enjoy this new, satisfying treat with two different formats.

Mars Inc.

www.danonenorthamerica.com 110

Peanut Brownie Ice Cream

www.mars.com March 2021

cstoredecisions.com

PRODUCTShowcase

Tangerine Mineral Water Topo Chico is expanding its portfolio with a new flavor — Twist of Tangerine. Providing enriched hydration without sweeteners, the unique Twist of Tangerine flavor is perfect for those seeking a healthy alternative with a hint of flavor. A natural addition to Topo Chico’s “Twist” line, Tangerine joins fan favorites Twist of Lime and Twist of Grapefruit, complete with a refreshing splash of citrus that mirrors flavors people love. The product comes in the brand’s iconic 12-ounce glass bottles in single bottles, four- and 24-packs.

The Coca-Cola Co.

www.coca-colacompany.com

Plant-Based Patty and Frittata Sandwich Jimmy Dean Delights Plant-Based Patty & Frittata Sandwiches feature a vegetable and grain patty made of soy protein, black beans, brown rice, quinoa and egg white, topped with a spinach and egg white frittata and American cheese, all inside a whole wheat English mufﬁn, providing 15 grams of protein and 280 calories per serving. The sandwiches will be available nationwide in Spring 2021 as a four-count pack.

Tyson Foods

www.tysonfoods.com

Creamy Peanut Butter Spread The Jif Brand is launching its latest innovation with Jif Natural Squeeze Creamy Peanut Butter Spread. The new product is easy to use and can conveniently measure out the perfect portion of peanut butter for recipes, cookies and smoothies or be enjoyed right from the 13-ounce pouch on apples, celery or carrots. Made with just ﬁve ingredients and 90% peanuts, Jif Natural Squeeze Creamy Peanut Butter Spread contains no preservatives or GMOs.

The J.M. Smucker Co. www.jmsmucker.com

Watermelon Flavor With a Twist Mtn Dew is going pink with Mtn Dew Major Melon, a new thirst-quenching offering that takes flavor to the extreme. This marquee addition to the brand’s beverage portfolio features the flavor of watermelon with a Dew twist. Mtn Dew Major Melon — also available in a Zero Sugar variety — is the first permanent flavor offering in more than a decade and is available nationwide now in 20-ounce bottles, two-liter bottles, 12-packs of 12-ounce cans and a variety of other single and multipack sizes.

PepsiCo

www.pepsico.com cstoredecisions.com

March 2021 • CSTORE DECISIONS

111

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Classifieds/Ad Index 5-Hour Energy

GSK C-Store

NRS Petro Solution

Abbott

Gulfcoast

Oberto Snacks Inc.

www.5hourEnergyRetailer.com linnea.solbrook@abbott.com

Scott.F.Breisinger@gsk.com 727.449.2296 / www.gulfcoast.com

888-260-0112 / www.nrspetro.com www.oberto.com

ADD Systems

115

The Hershey Company

Perfetti Van Melle

Apter Industries, Inc.

Home Market Foods, Inc.

Petro Active Services

Byrne Dairy

Hunt Brothers Pizza

Philip Morris USA Prairie City Bakery, Inc.

Premier Manufacturing, Inc.

Proctor & Gamble

800.922.0972 / www.addsys.com 800.441.7146 / www.apterindustries.com

315.475.2121 Ext. 2220 / sales@byrnedairy.com

Calico Brands, Inc.

800.544.4837 / www.calicobrands.com

CB Distributors

6-7

888.824.3256 / www.cbprices.com / www.hempbombs.com / www.naturesscript.com

Chester's Chicken

800.646.9403 / www.chesterschicken.com

Cheyenne Cigars

866.254.6975 / contactus@cheynneintl.com / www.cheyenneintl.com

Click It Inc.

43 85

101

www.clickitinc.com

DeIorio Foods Inc.

E-Alternative Solutions

E&J Gallo Winery Einstein Bros. Bagels

315.732.7612 / www.deiorios.com LeapVapor.com/Retailers

720.458.9735 petrolicensing@coffeeandbagels.com

Forth CBD

www.ForthCBD.com/Contact-US

80-81

www.HersheySolutions.com 800.367.8325 / info@HMFfoodservice.com www.HMFfoodservice.com www.huntbrotherspizza.com/csd

International Packaged Ice Association 55 800.742.0627 / www.PackagedIce.com

Jet Brands Krispy Krunchy Chicken

Legal Lean

Liggett Vector Brands

Loomis Armored US, LLC

Mars Wrigley

800.290.6097 / www.krispykrunchy.com 321.236.2619 / www.legalleanstore.com 877.415.4100

www.loomis.us/SafePoint

800.283.5988

401.424.1429 / www.petroactive.net

www.pcbakery.com

www.gopremier.com

www.PGConvenience.com

Republic Tobacco Safe Shop Assured

106-107

Smithfiled Culinary

www.safeshopassured.com

888.327.6526 / www.SmithfieldCulinary.com

Swedish Match

MasonWays Indestructible Plastics, LLC 113

800.367.3677 www.zyn.com www.gamecigars.com www.whiteowlcigar.com

23 33 57, 91

McLane Company, Inc.

Swisher International

800.874.9720 / www.swisher.com

11, 116

Naughty Chile

www.mars.com 800.837.2881 / www.masonways.com

www.mclaneco.com/edge

303.329.0900 /trespicosos.com/naughtychile.com

North American Bancard

866.481.4604 / www.nynab.com

www.masonways.com cstoredecisions.com

112

TPE International

www.tobaccoplusexpo.com

Trion Industries, Inc.

800.444.4665 / www.triononline.com

Vitamin Energy

26-27

800.420.3106 / Sales@VitaminEnergyLLC.com

800-837-2881 March 2021 • CSTORE DECISIONS

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IndustryPerspective

Proactive Steps

in Turbulent Times In a tough operating environment, c-store retailers can focus on best practices from assessing their business to joining state associations to emerge stronger when the tides change. Mark Radosevich • PetroActive Services

Let’s see a show of hands if you’ve become a fan of American Pickers, the Cartoon Channel or even the NFL because the news has become so darn depressing. In a few short weeks, the Biden Administration has reversed policies that led us to energy independence and fostered middle class economic wellbeing. Unfortunately, this is just the beginning of what will surely be some challenging times ahead. Any business with a petroleum stake is now in an existential fight for survival against avowed zealots devoted to destroying our industry. The utopian desire to install a “green” future for America, coupled with other “feel good” measures like increasing the minimum wage, necessitates that petroleum marketers become lean, mean and proactive to help ensure this isn’t the swan song for the oil business. Following are some fundamental actions that marketers should consider to best weather the storm. FOCUS ON THE PROFITS

Conducting a comprehensive business assessment highlights where the money is made. Pragmatically assess each business segment to determine its net contribution to earnings. This will highlight the core competencies of the business and areas of divestment. For example, some marketers run great stores with solid fuel margins and inside sales. After investigation, 114

CSTORE DECISIONS •

March 2021

the ancillary dealer business may be discovered to be more of a low-profit afterthought. Decisively divesting this business segment will help the company become more competitive, while providing valuable growth capital. Others may determine that the dealer supply or commercial segments are preferred and that alleviating the preoccupation in running marginal stores will enhance overall business success. RATIONALIZE YOUR BUSINESS

The next step is to factor the competitive landscape and the implications of higher fuel prices. For store operators, this may highlight the divestiture of sites on the edge of profitability, volume viability or that will be most negatively impacted by current government policies and regulations. On the commercial side, the cost to fund receivables rises along with fuel prices, necessitating the need for increased cash or credit availability, prompting a tightening of customer credit and a pragmatic assessment of the contributory value of each account. Dropping low margin, low volume accounts may mitigate company credit issues, while ultimately enhancing efficiency and profitability. CONSIDER A CUSTOMER OUTREACH CAMPAIGN

Much like the “Neighbors Serving Neighbors” campaign of the

late ‘90s, c-store operators have the unique ability to directly reach and inform a wide cross section of the country. Through a formal outreach campaign, the motoring public can be reminded of the immense benefits that refined petroleum products deliver, while stressing the negative impacts that anti-petroleum policies have on the economic wellbeing of everyday Americans. Through a concerted effort, we can tangibly support a return to logical, pro-American values in the 2022 midterm elections. JOIN YOUR STATE PETROLEUM MARKETERS ASSOCIATION

The Energy Marketers Association of America (formerly the PMAA) and the affiliated state associations are on the front line of defense against antipetroleum policies. Now is the time for all marketers to join and become actively engaged, as this is truly an existential fight for survival. Proactive commitment to improving efficiency will put a business in a better position to succeed. Feel free to contact me for a jumpstart on the process. Mark Radosevich is a strong industry advocate, recognized petroleum veteran and president of PetroActive Services (www. petroactive.net). He can be reached at mark@petroactive.net or (423) 442-1327. The views and opinions expressed in this piece are the author’s perspective.

cstoredecisions.com

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PETROLEUM DISTRIBUTION C-STORES HVAC 800•922•0972

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Your Swisher Sweets customers always enjoy good times with friends. But with a style of their own, sometimes they go their own way. That’s a BLK moment. They see no limits. Neither should you. Please contact your Swisher Representative, call 800.874.9720 or visit swisher.com.