NACS Magazine—June 2020

convenience.org | JUNE 2020

N E OP s.

emand d w e n e c lers fa i a t e r s p l e n 2019 h i h t w o r g Solid

COVID-19

Shifts Consumer Needs

CENTER STORE Drives New Growth

AUTHENTICITY Wins Over Customers

2

| NOVEMBER 2019

CONVENIENCE.ORG

JUNE 2020

Growth Interrupted 28

NACS State of the Industry Virtual Experience analyzed 2019 industry performance and addressed how COVID-19 is shifting consumer needs.

44 Sustainable—and Safe

Retailers weigh sustainability goals against customer safety concerns.

50 Cleaning Solutions

COVID-19 is impacting how c-stores achieve clean—and what it means if they don’t.

he Future of Mobility 56 TIncludes Electric

The growth of the electric vehicle market is set to accelerate.

58 Dressing Up

Retailers are rethinking their uniform policies to attract and retain engaged employees.

62 The Power of Community

HR leaders gathered ahead of the pandemic to connect and strategize on issues in the workplace.

Cover Art by Beyond Definition STAY CONNECTED WITH NACS

TWITTER @nacsonline FACEBOOK facebook.com/nacsonline INSTAGRAM instragram.com/nacs_online LINKEDIN linkedin.com/groups/1776505 Subscribe to NACS Daily—an indispensable "quick read" of industry headlines and legislative and regulatory news from Washington, along with knowledge and resources from NACS, delivered to your inbox every weekday morning. Subscribe at www.convenience.org/NACSdaily.

CONVENIENCE.ORG

JUNE 2020 |

1

JUNE 2020

The massive disruption of COVID-19 has created an emergency-type need for grocery items from convenience retailers.

We wanted to create an old school general store with self-service technology to serve our neighborhood.

P.80

IDEAS 2 GO | P.24

08 From the Editor 10 NACS News 16 Good Work 18 Inside Washington

NACS advocates for the industry during the COVID-19 pandemic.

24 Ideas 2 Go

Platte Street Mercantile is a laboratory for frictionless payments, price strategy and product mix.

66 Gas Station Gourmet

How two c-stores are handling foodservice in the age of COVID-19.

68 Global Trends

Survey results from the Australasian Association of Convenience Stores demonstrate the value of convenience at any time.

72 Category Close-Up

Hot weather is prime time for cold dispensed beverages; convenience retailers are going above and beyond in the grocery category to satisfy consumers.

88 Back Page PLEASE RECYCLE THIS MAGAZINE The presence of an article in our magazine should not be permitted to constitute an expression of the association’s view.

2

| JUNE 2020

CONVENIENCE.ORG

iStock.com/LauriPatterson

06 Convenience.org

20

20 $ 20

$

20 2200

$ S US L US U L U ULEY M U I M M I Y TI ONEY T SS ST NE N O M O M M

20

ATM

20 20

$ $$ 0

20 2 20

www.cdlatm.com 1-800-776-8834

sales@cdlatm.com

VOLUME 19, ISSUE 6

JUNE 2020

Conference Conference//Oct Oct11-14, 11-14,2020 2020 Expo Expo//Oct Oct12-14, 12-14,2020 2020 Las LasVegas VegasConvention ConventionCenter Center

EDITORIAL Kim Stewart Editor in Chief (703) 518-4279 kstewart@convenience.org Sara Counihan Managing Editor (703) 518-4278 scounihan@convenience.org Lauren Brooks Digital Content Manager (703) 518-4283 lbrooks@convenience.org

TTO O SSUUCCCCEESSSS I I NN CCO ONNVVEENNIIEENNCCEE

CONTRIBUTING WRITERS Terri Allan, Sarah Hamaker, Al Hebert, Pat Pape, Jerry Soverinsky DESIGN Beyond Definition www.beyond-definition.com

ADVERTISING

Early EarlyBird Bird Registration Registration And And Preferred Preferred Housing Housing Are AreNow Now Open.

Open.

With Withhealth healthand andwellness wellnessin in mind, mind,enhancements enhancementshave have been beenmade madeto tothis thisyear’s year’sshow, show, including includingextending extendingour our cancellation cancellationpolicy policyto to30 30 days dayspre-event pre-eventto tooffer offeryou you maximum maximumflexibility. flexibility.

Save Save $300 $300 Register Registerbefore beforeJune June24 24 Learn Learnmore moreat at nacsshow.com/SAVE300 nacsshow.com/SAVE300

Stacey Dodge Advertising Director/Southeast (703) 518-4211 sdodge@convenience.org Jennifer Nichols National Advertising Manager/ Northeast (703) 518-4276 jnichols@convenience.org Ted Asprooth National Sales Manager (703) 518-4277 tasprooth@convenience.org

PUBLISHING Erin Pressley Publisher and Vice President, Education & Media (703) 518-4208 epressley@convenience.org Rose Johnson Audience Development and Production Manager (703) 518-4218 rjohnson@convenience.org

NACS BOARD OF DIRECTORS CHAIR: Julie Jackowski, Casey's General Stores Inc. OFFICERS: Lisa Dell'Alba, Square One Markets Inc.; Andy Jones, Sprint Food Stores Inc.; Jose Victor Paterno, Philippine Seven Corp.

(7-Eleven Convenience Store); Ken Parent, Pilot Travel Centers LLC; Donald Rhoads, The Convenience Group LLC; Jared Scheeler, The Hub Convenience Stores Inc.; Kevin Smartt, Kwik Chek Food Stores Inc. PAST CHAIRMEN: Frank Gleeson, Aramark Northern Europe; Joe Sheetz, Sheetz Inc. MEMBERS: Chris Coborn, Coborn's Inc. Little Dukes; Joseph DePinto, 7-Eleven Inc.; Bhagdeep Dhaliwal, Dhaliwal & Associates Inc.; Anne Gauthier, St. Romain Oil Company LLC; Varish Goyal, Loop Neighborhood Markets; Thomas Gresham, Double

Quick Inc.; Brian Hannasch, Alimentation Couche-Tard Inc.; Christine Hogan, Wheels Convenience Stores; William Kent, The Kent Companies (Kent Kwik Convenience Stores); Chuck Maggelet, Maverik Inc.; Chuck McDaniel, QuikTrip Corporation; Charles McIlvaine, Coen Oil Company; Lonnie McQuirter, 36 Lyn Refuel Station; Glenn Plumby, Speedway LLC; Robert Razowsky, Rmarts LLC; Stephen Spinks, The Spinx Company Inc.; Richard Wood, Wawa Inc. SUPPLIER BOARD REPRESENTATIVES: Rick Brindle, Mondelēz International; Drew Mize, PDI STAFF LIAISON: Henry Armour, NACS GENERAL COUNSEL: Scott Sinder, Steptoe & Johnson LLP

NACS SUPPLIER BOARD CHAIRMAN: Drew Mize, PDI CHAIRMAN-ELECT: Rick Brindle, Mondelēz International VICE CHAIRMEN: Thomas Blair, MillerCoors; Brent Cotten, The Hershey Company; Frank Squilla, InComm PAST CHAIRMEN: Jay Ard, Coca-Cola Company; Kevin Martello, Keurig Dr Pepper; Brad McGuinness, Qopper Inc. MEMBERS: Blake Benefiel, Altria Group Distribution Company; Steve Bradley, Wilbur Curtis Co. Inc.; David Charles Sr., Cash Depot; Alicia Cleary, Anheuser-Busch InBev; Tony Gaines, NVIP LLC; Josh Halpern, FIFCO USA; David Jeffco, Krispy Krunchy Foods LLC;

Tim Knight, BIC Corporation; Vito Maurici, McLane Company Inc.; Bryan Morrow, PepsiCo Inc.; Sharon Porter, Saputo Convenience; TJ Powers; John Thomas, iSEE Store Innovations LLC; George Ubing, E&J Gallo Winery; Dean Zurliene, Monster Beverage Company RETAIL BOARD REPRESENTATIVES: Stephen Loehr, Kwik Trip Inc.; Chuck Maggelet, Maverik Inc.; Chuck McDaniel, QuikTrip Corporation STAFF LIAISON: Bob Hughes, NACS SUPPLIER BOARD NOMINATING CHAIRMAN: Joseph Vonder Haar, iSEE Store Innovations LLC

NACS Magazine (ISSN 1939-4780) is published monthly by the National Association of Convenience Stores (NACS), Alexandria, Virginia, USA. Subscriptions are included in the dues paid by NACS member companies. Subscriptions are also available to employees of nonmember companies at a rate of $70 per year.

Please add $15 for delivery outside the United States.

Subscription requests: nacsmagazine@convenience.org POSTMASTER: Send address changes to NACS Magazine, 1600 Duke Street, Alexandria, VA, 22314-2792 USA. Contents © 2020 by the National Association of Convenience Stores. Periodicals postage paid at Alexandria VA and additional mailing offices.

1600 Duke Street, Alexandria, VA, 22314-2792

CONVENIENCE.ORG

WARNING: This product contains nicotine. Nicotine is an addictive chemical.

Summer Promotion MSRP Starting at

$14.99* *May not include state, local, or excise tax.

Funding available starting June 1, 2020

2020

Global — Brand Guidelines

Contact your JUUL representative Age restriction symbols for details and how to qualify.

Slate JUUL Device

Silver JUUL Device

The sale of tobacco products to minors is prohibited by law.

This is an age-restricted product and age verification is required at sale.

CALIFORNIA PROPOSITION 65 WARNING: This product contains chemicals known to the State of California to cause cancer and birth defects or other reproductive harm.

TM and Š 2020 JUUL Labs, Inc. All rights reserved.

Uncharted Waters: Now Entering a New Era of Anytime, Anyplace Convenience.

CONVENIENCE.ORG

WHAT’S ONLINE | JUNE 2020

A Sustainable Business The concept of sustainability presents opportunities for both sales growth and increased efficiencies. The NACS Sustainability Toolkit is a robust resource that can help convenience retailers think about building a more sustainable future for their customers and business.

NACS published the toolkit just as the world was facing the effects of an economic downturn brought on by the coronavirus pandemic. While this resource provides timeless guidance, it also can help businesses sustain themselves by: • Reducing costs • Growing their customer base • Creating efficiencies • Fostering a community spirit Content throughout this resource highlights where retailers can take credit for initiatives that are doing well and identifies opportunities to do more. Every business is on a different level of their sustainability journey, and retailers can use this toolkit as a guide for advancing the areas most relevant to their business today and consider how other areas could transform their business in the future.

Access the toolkit at www.convenience.org/sustainability.

Navigating today’s dynamic landscape requires agility, a balance of efficiency and effectiveness.

The newest report provides the industry metrics and benchmarking data you need to navigate the headwinds of retail disruption, technology and consumer shopping behavior, and turn them into tailwinds to accelerate innovation.

Order your copy now: convenience.org/SOIreports2020

Emergency Planning Resources

The NACS Convenience Store Emergency Planning and Job Aids are a customizable resource and include a plan evaluation document and Job Aids of tasks and checklists for specific functions that store employees perform during emergency and disaster planning and recovery. The Job Aids can also be used as onboarding training, refresher training or immediate training when emergency conditions approach.

Be Prepared

Convenience stores are beacons in their communities, providing much-needed food and fuel to first responders and residents before, during and after an emergency or disaster. NACS provides tools for convenience stores to help prepare for and stay up to date during an emergency.

CORONAVIRUS RESOURCES The health and safety of the convenience retail community is our highest priority.

The NACS team is actively monitoring the coronavirus situation, keeping in touch with local, state and federal agencies, health experts, employment law firms, event venue partners, retailers and suppliers as conditions evolve, so you can be informed.

Find these resources and more at www.convenience.org/disaster.

CONVENIENCE.ORG

OUR BAIT HELPS YOU PASS DOWN TRADITIONS.

Help your customers pass down a tradition with our DMF

LIVE BAIT PROGRAM for retailers, offering an extensive product range, P.O.S. support, along with impressive margins. Drop us a line, or visit us at NACS 2020.

800 -332-2248 / ORDERS @ DMFBAIT.COM

DMFBAIT.COM

FROM THE EDITOR

Count Us In Kim Stewart Editor-In-Chief

Your sacrifices haven’t gone unnoticed.

8

| JUNE 2020

J

une is a time for new beginnings and fresh starts—high school graduations, weddings, vacations.

This year, instead, June brings the lifting of stay-at-home orders and reopening of businesses forced to shut their doors to the public as the pandemic swept across the U.S. Of course, the convenience and fuel retailing industry never closed. I suspect retailers and their teams at times may feel like the one kid who stayed inside for study hall while their classmates enjoyed recess. Your sacrifices haven’t gone unnoticed.

Kevin Smartt, CEO and president of Kwik Chek and NACS treasurer, in May represented NACS and our industry at a Senate Judiciary Committee hearing to explore legislation to protect essential businesses from unfounded lawsuits alleging that someone contracted COVID-19 on their premises, given how impossible it is to uncover the source of a particular infection in a community. “My businesses, like other essential businesses, have strived to keep our doors open and provide customers and first responders with essential items like food and fuel,” Smartt told the committee. “Staying open has not been easy. We’ve had to overcome numerous obstacles to do so, including significant supply chain deficiencies.” Smartt shared the myriad ways Kwik Chek is diligently working to protect the health and safety of employees and customers. “We’ve tried to do the right thing. We chose people first over economics,” he said. Kwik Chek isn’t alone. Industry-wide, retailers of all sizes have stood in the gap to put people first.

Our industry entered 2020 on solid footing, coming off a year of record pretax profits driven by strong fuel margins and in-store merchandise and foodservice

sales but facing ever-climbing direct store operating expenses and employee turnover, despite rising wages. The pandemic is further pressuring costs—one of the reasons why examining performance metrics is more important than ever.

This month’s magazine offers a taste of the 2020 NACS State of the Industry Summit Virtual Experience. When meeting in-person in Chicago became untenable, NACS created an all-new virtual experience, and our speakers graciously flexed with us to offer insights into ways to manage the crisis and look ahead to map out what a “new normal” might look like. If you haven’t signed up to experience the learnings and thought leadership yet, there’s still time. The sessions are available on demand until September 1 at www.convenience.org/SOISummit.

Maintaining clean stores and forecourts has been top of mind for all retailers, so we’ve tapped experts to share their advice on how to approach the job. As one supplier told us: “In a pre-COVID world, a store maybe spent one to two hours a week cleaning their forecourt. Now, some are doing it hourly, 10 minutes per hour, maybe three hours per day.”

So how do you manage amid the chaos?

Corinne Hancock, a chaos coach, shared some advice at the NACS HR Forum.

Remember your mission, assess and evaluate the situation and get creative when obvious solutions are no longer on the table. “Chaos makes you stronger,” she said. “Looking back, you are the proudest of the results after the chaos.”

Be well, my friends.

CONVENIENCE.ORG

Get treated like the big chains Communication

Attention independent store owners Communication

You already know that 5-hour ENERGY is one of the most profi table brands Freebies in your store. You want to sell more. That’s why you should sign up for the Freebies enjoyed 5-hour ENERGY Retailer Rewards program. You’ll get the advantages by the big chains – promotional programs, merchandising programs, Price Promotions and more – all designed to help you sell more 5-hour ENERGY and make Price Promotions you more money. Plus, you’ll get freebies! Who doesn’t love freebies? ®

®

®

New Flavors

Here’s what you’ll get: Communication Communication

Communication Communication

New Flavors

Communication: You’ll receive emails telling you about new flavors, displays, marketing programs, and promotion programs. That way you’ll know about them at the same time the big chains do, so you can compete on the same level. You’ll also get simple tips to help you sell more bottles of 5-hour ENERGY and make more money.

®

Marketing Promotions Marketing Promotions

New displays: See the hottest trends in 5-hour ENERGY counter racks, end caps, power wings and floor displays. As soon as it’s available, you’ll know about it!

®

Freebies: Why should the big guys get all the good stuff? As a member of the 5-hour ENERGY Retailer Rewards program you’ll have access to freebies year-round. It might be a branded counter mat, or clock, or even something you can sell in your store.

®

®

Freebies Freebies

Freebies Freebies

Price Price Promotions Promotions Price Promotions Price Promotions

Promotion programs: Periodically, you’ll receive information about money-saving promotions you can pass on to your customers. So, when the big chains offer 2 for $6, or buy-2-get-1-free, you can, too.

Marketing promotions: Every year 5-hour ENERGY launches multiple national marketing promotions, and we want you to participate! Being a member of the Retailer Rewards program gives you the chance to jump on board right away.

New Displays New Displays

Get your free merchandising kit!

New flavors: When new flavors of 5-hour ENERGY are released, consumers buy them. As a member of the Retailer Rewards program you’ll find out about new flavors, release dates and availability at the same time the big chains do. ®

New Flavors New Flavors New NewFlavors Flavors

Marketing Promotions Marketing MarketingPromotions Promotions

Marketing Promotions

Sign up today at www.5HErewards.com Mailings and promo items are subject to change. You may opt out of mailings and messaging at anytime. ©2020 SI Online, LLC. All rights reserved. SI Online, LLC is an independent distributor of 5-hour ENERGY® products.

CONVENIENCE.ORG

New Displays

DECEMBER 2019 |

9

NACS NEWS

M

odern diesel engines, designed to deliver greater performance and efficiency, are increasingly susceptible to impurities in diesel fuel. To better understand the quality of the diesel fuel being delivered into these engines, the Fuels Institute’s Diesel Fuel Quality Council (DFQC) has launched a diesel fuel sampling study to test fuel for certain properties identified by the Council as being particularly harmful to engine performance and efficiency. Technicians will collect samples through July, and the Council will peer review the results before releasing them to the public.

As modern engines equipped with common rail high pressure injection systems entered the market, reports about performance issues attributed to fuel quality increased. This spurred the creation of the Fuels Institute’s Diesel Fuel Quality Council, a non-advocacy, cross-industry collaborative group dedicated to better understanding the relationship between diesel fuel and the needs of modern diesel engines. The Council’s mission is to determine whether the compatibility between diesel fuel and modern diesel engines can be improved to enhance engine performance and

10

| JUNE 2020

reduce repair costs. The Council includes organizations representing engine manufacturers, diesel refiners, biofuel producers, fleet operators, distributors, retailers, fuel equipment manufacturers, additive manufacturers, fuel tank management and others.

“It is important that we better understand the quality of the fuel being dispensed into vehicles so we can determine what characteristics may be presenting the greatest challenge to efficient vehicle operation and focus our attention on those challenges,” said John Eichberger, executive director of the Fuels Institute. “This sampling project is intended to provide more concrete data to help the industry direct its resources to addressing the source of the problem, so an effective solution can be developed.”

The Council partnered with DFQC member Tanknology to pull diesel samples from 190 nozzles at retail and captive fueling sites across the nation. In addition to the nozzle samples, Tanknology will also take a bottom and middle tank sample from 95 of those sites.

“We chose to partner with Tanknology because of their unique business model focused on CONVENIENCE.ORG

iStock.com/gsermek

Nationwide Diesel Fuel Quality Study

compliance, their high volume of sampling visits to both retail and fleet fueling facilities, and their experience doing national sampling studies,” said Eichberger. “While in the field, the Council decided to take tank samples to further support efforts to address concerns about corrosion in diesel storage tanks, which also could be contributing to fuel quality concerns.”

All samples will be sent to Iowa Central Fuel Testing Laboratory and analyzed for water, acidity, microbial count, metals and several other properties. The results will be evaluated by Decision Innovation Solutions, which will prepare the final report for review by the Council.

“Concerns about fuel quality and engine performance affect all stakeholders in the fuel distribution process, from refining to consumption,” Eichberger explained. “This sampling project will provide data about what is happening at the fuel dispensing level of the system and may provide valuable insight to guide additional efforts to evaluate other parts of the diesel value chain and identify solutions that will benefit all stakeholders. This is the goal of the Council, and it is why there is such strong support from companies throughout the value chain for what the Council is doing.”

For more information about this sampling project or the Diesel Fuel Quality Council, contact Amanda Appelbaum, Fuels Institute director of research, at aappelbaum@fuelsinstitute.org. Results of the study can be found at www.fuelsinstitute.org.

MEMBER NEWS RETAILER Casey’s General Stores announced restaurant industry veteran Michelle Wickham will join the company as vice president, foodservice. In this role, Wickham will continue to evolve Casey’s $1.1 billion prepared foodservice business.

Michelle Wickham

SUPPLIER Harbor Foods Group has hired Rick Jensen, formerly of Spokane, Washington-based URM, to serve as president of Harbor Wholesale.

Rick Jensen T&S Brass and Bronze Works has hired Tim Shipley as the eastern regional sales manager for foodservice.

KUDOS Stuzo, a technology solutions company, was Tim Shipley named a Top Workplace by The Philadelphia Inquirer. The award is based solely on employee feedback gathered privately and anonymously through a third-party survey administrator on behalf of the newspaper.

Benchmark Better The NACS State of the Industry Report® of 2019 Data is here! Published every year since 1970, the NACS State of the Industry Report® is the convenience and fuel retailing industry’s premier benchmarking tool and the most comprehensive collection of data and trends.

This year marks the 50th anniversary of the publication of the State of the Industry Report.

The report highlights business-critical categories of finance, store operations, merchandising and fuel sales.

The data are analyzed and presented in a comparative performance quartile format based on store operating CONVENIENCE.ORG

profit, which allows retailers to benchmark and improve their own operations by understanding the drivers of key performance metrics.

And don’t forget about the NACS State of the Industry Compensation Report of 2019 Data. This report provides critical benchmarking data and up-todate standards in the key human resource categories of compensation, turnover, benefits and recruitment. It also breaks down the newest available numbers in the convenience industry and is considered an essential guide for HR professionals.

Purchase your digital or hard copy report today: www.convenience.org/Research.

JUNE 2020 |

11

NACS NEWS

NEW NACS MEMBERS NACS welcomes the following companies that joined the organization between March 16, 2020, and April 15, 2020. NACS membership is company-wide, so we encourage employees of member companies to create a username by visiting www.convenience.org/Create-Login. All members receive access to the NACS Online Membership directory, latest industry news, information and resources. For more information about NACS membership, call (703) 684-3600.

NEW RETAIL MEMBERS

Alligood Tire and Alignment Salisbury, NC Bowman Family Holdings Inc. Indianapolis, IN www.bfhinc.com

Shell Polska sp. z o.o.

Warszawa, Poland www.shell.pl

Coco & Gio LLC dba Total Cluster Fudge Brighton, MI www.totalclusterfudge.com

Shell Thailand Bangkok, Thailand

Dee's Nuts & Snacks LLC Jacksonville, FL www.grabdeesnuts.com

The Shell Company (P.R.) Ltd. San Juan, Puerto Rico

Kee Enterprises LLC dba Harpers One Stop Harpers Ferry, IA www.harpersonestop.com

Tillamook Farmers Cooperative Tillamook, OR www.tillamookfarmerscoop.com

Shell Brasil Rio de Janeiro, Brazil

Whitewater Travel Plaza Saint Charles, MN

Shell China Beijing, China

NEW SUPPLIER MEMBERS

Shell Mexico Col. lomas de chapultepec, Mexico

Cloverdale Foods Mandan, ND www.cloverdalefoods.com

DKI Services dba DKI Commercial Solutions Elk Grove Village, IL www.dkiservices.com Giant Killer LLC Westerville, OH www.giantkiller.com Oracle Corporation Redwood City, CA www.oracle.com

NACS Calendar of Events

2020

OCTOBER 25-30

NACS Women's Leadership Program Yale University, New Haven, CT

OCTOBER 11-14 NACS Show Las Vegas, NV

12

| JUNE 2020

Platinum Goods Corp.

North Miami, FL Positive Beverage Company Newport Beach, CA www.positivebeverage.com The Imagine Group Shakopee, MN www.theimaginegroup.com

NEW HUNTER CLUB MEMBERS SILVER

American Express New York, NY www.open.com

For the most up-to-date information on event cancellations, please visit www.convenience.org.

NOVEMBER 1-6

NOVEMBER 1-6

NOVEMBER 1-6

For more information about these NACS events, visit www.convenience.org/events.

NACS Financial Leadership Program Wharton School of Business, University of Pennsylvania Philadelphia, PA

NACS Marketing Leadership Program Kellogg School of Business, Northwestern University Chicago, IL

NOVEMBER 1-5 NACS Executive Leadership Program Cornell University Ithaca, NY

NACS Innovation Leadership Program Massachusetts Institute of Technology, Boston, MA

CONVENIENCE.ORG

NACS NEWS

BY THE NUMBERS

The Top 10 This year’s NACS SOI Summit Virtual Experience attracted more than 1,700 retailers and suppliers eager to understand last year’s category performance and how to pivot in 2020 for category success.

When looking at categories found in convenience stores, it’s easiest to sort them based on sales contributions. In 2019, the top 10 sales categories drove 80% of sales dollars. However, putting a retail lens on and looking at gross profit dollars, it’s clear to see that packaged beverages contributed the highest amount of gross profit in 2019. In fact, it has contributed the highest amount of gross profit dollars over the past seven years consecutively.

OTP (other tobacco products) has also been a bright spot for a few years, delivering double-digit sales and gross profit dollar growth. OTP eclipsed beer as the No. 3 gross profit dollar contributor in 2019.

Eight of the top 10 sales categories grew sales dollars last year. What’s more, all six of the top six categories grew sales despite a unit decline. Four of the top six categories increased margins—but remember, price inflation is not a sustainable method for growth.

Top 10 Sales Categories (2019) PER STORE/PER MONTH

Sales $

GP$

GM%

Cigarettes

$58,936

$8,433

14.31%

Packaged Beverages

$31,359

$13,726

43.77%

Beer

$17,366

$3,312

19.07%

OTP

$16,501

$4,898

29.68%

Salty Snacks

$8,312

$3,177

38.22%

Candy

$6,928

$3,683

53.17%

Packaged Sweet Snacks

$6,208

$1,736

27.91%

General Merchandise

$4,132

$1,713

41.46%

Milk

$3,641

$1,040

28.57%

Alternative Snacks

$2,262

$973

43.03%

GP$ leader 7th consecutive year

OTP eclipses beer as the No. 3 GP$ contributor

Source: CSX, www.csxllc.com

14

| JUNE 2020

CONVENIENCE.ORG

T H E

A R T

O F

M E R C H A N D I S I N G

T M

HOOKS | SHELF & COOLER MERCHANDISING | LABELING WWW.TRIONONLINE.COM/ART | 800-444-4665 ©2015 Trion Industries, Inc.

GOOD WORK

Dramatic Changes in Retail

BY THE NUMBERS

49% Retailers offering free or discounted food, beverages or fuel to first responders

32% Retailers who said that employee conversations with customers were the most effective way to share their pandemic response activities

16

| JUNE 2020

I

t would be quite the understatement to say our industry’s core offers have changed dramatically since March, as the coronavirus pandemic quickly upended day-to-day operations.

In 2019, fuel sales, which make up more than 60% of total industry sales, were down 3.9% compared with 2018, recently released NACS State of the Industry data indicate. As states of emergencies due to COVID-19 swept across the nation, fuel demand was cut in half, and commuter traffic virtually disappeared. Convenience stores that served these daily commuters and those located off major highways were hit the hardest.

Less forecourt traffic also affected instore sales, with fewer customers going inside the store to purchase additional merchandise. For reference, the NACS Consumer Fuels Survey (see the March 2020 NACS Magazine cover story) found that more than half of gas-buying customers also went inside the store (52% in 2020 vs. 35% in 2015) to purchase drinks, snacks and other grab-and-go items.

Foodservice, one of the largest profit drivers inside the store, had its own challenges as safety precautions impacted self-serve offerings like coffee, roller grill, hot bars, salad bars, bakery and cold- and frozen-dispensed beverages.

CONVENIENCE.ORG

iStock.com/zoranm

52%

Retailers who said their grocery sales had increased since March

Convenience stores traditionally sell immediate consumption items—83% of all products sold at a store are consumed within an hour—but retailers pivoted early on during the pandemic crisis to offer more center-store items like cleaning and toiletry items, and 52% of retailers surveyed in March said their grocery sales increased.

NACS research shows that convenience stores contribute more than $1 billion a year to charitable causes, and there is no question this community spirit has remained strong during the pandemic.

Convenience retailers have long supported first responders and are continuing to do so: Nearly half (49%) of retailer members surveyed in March are supporting these individuals by offering free beverages and steep discounts on food, delivering free meals and providing free fuel. Retailers are also donating product to local food banks and other programs and supplying masks and other PPEs to emergency and health-care professionals.

Retailers expressed the importance of their teams serving customers. Nearly one in three (32%) said that employee conversations with customers were the most effective means of communication for sharing their pandemic response activities.

There are many amazing stories to tell, including these: •S heetz and Wawa, which compete in some markets, teamed up to provide emergency food bank relief amid COVID-19. The companies donated a combined 1,000 lunches and a combined $4,000 to Helping Harvest Food Bank and Second Harvest Food Bank in Pennsylvania.

• 7 -Eleven opened its first-ever hospital pop-up c-store at Children’s Medical Center Dallas, the flagship hospital of Children’s Health, which is open to hospital staff, patients and their families. “The doctors, nurses and care teams at Children’s Health are true heroes,” said 7-Eleven President and CEO Joe DePinto.

•C asey’s donated 30,000 pounds of deli meat to a local food bank to support hunger relief CONVENIENCE.ORG

and is donating $500,000 over the coming year through a new partnership with Feeding America to support 52 food banks serving school-age children across 16 states.

•T he Hershey Company committed $1 million to produce face masks among numerous other community response efforts it is undertaking in the wake of COVID-19.

•G eneral Mills facilities are manufacturing and donating $5 million worth of product to Feeding America food banks.

•E xxonMobil reconfigured manufacturing operations in Louisiana to make medical-grade hand sanitizer. The products will be donated to health-care workers and first responders across the country.

While we all hope to return to some sort of normalcy very soon, there is no question that the efforts of the convenience store industry will help us move forward more quickly.

IN THE COMMUNITY The Corporate Works of Mercy Foundation, founded by St. Romain Oil Company, donated $20,000 to the Food Bank of Central Louisiana as a result of efforts from the annual Y-Not Peanut Butter Drive to STOP Hunger in Central Louisiana.

Califia Farms, an independently owned plant-based food and beverage company, pledged to provide one million servings of nourishing beverages to frontline health-care workers and other communities in need due to the COVID-19 crisis.

Pilot Company donated $100,000 to St. Christopher Truckers Development and Relief Fund to support professional drivers and their families in times of need and during the pandemic crisis.

JUNE 2020 |

17

INSIDE WASHINGTON

Advocacy During a Pandemic The more things change, the more they stay the same.

BY PAIGE ANDERSON

FACTS & FIGURES

Number of virtual meetings conducted with members of Congress in a three-week period (more are being added to the schedule each week)

35

Retailers participated in virtual meetings

1,600

Messages sent to Capitol Hill in less than 24 hours in response to a call to action on liability

18

| JUNE 2020

T

he spring of 2020 will go down in the history books as one of the most dramatic and unprecedented times in our history, as our nation faced the COVID19 pandemic health crisis. In a matter of days, global travel stopped, and our borders shut down. Major sporting events, such as NCAA March Madness, NBA and NHL games and the Masters, were either cancelled or postponed.

States enacted shelter-at-home orders.

Businesses closed, companies implemented work-from-home protocols, and

schools developed virtual curriculum programs. And, after completing a very successful NACS Day on the Hill, which we now know was one of the last fly-ins on Capitol Hill, NACS suddenly found itself thrown into a Pandora’s box of pandemic policy response and a new era of advocacy.

IMPROVISE, ADAPT AND OVERCOME The famous phrase “Improvise, Adapt and Overcome” best describes the NACS response to the plethora of issues and CONVENIENCE.ORG

iStock.com/sborisov

8

Our mission was to designate the workforce of the convenience and fuel retailing industry as essential.

NACS staff and retailers connected with Rep. Pete Stauber (MN-8) on how COVID-19 is impacting the industry.

challenges facing the convenience industry, as states issued shelter-at-home mandates, and businesses—including NACS and Capitol Hill—shut their physical doors.

The first urgent issue to tackle was how to keep convenience stores open and continuing to provide the essential services and products to communities and customers.

In any successful campaign, you have to know your mission and objective, identify your targets and implement your strategy using all the weapons at your disposal. The mission was to designate the workforce of the convenience and fuel retailing industry as essential. Our target was the White House and Department of Homeland Security, and our relationships with the Trump Administration and Capitol Hill were our weapons. The rapid response of NACS was to maximize these relationships built over time and make sure the convenience industry’s workforce was designated as critical CONVENIENCE.ORG

infrastructure. NACS was successful in this new advocacy era. As states issued various social distancing requirements, most referred to this federal designation allowing essential businesses to remain open.

Following this, myriad other issues faced the industry, such as liquidity, liability protection, supply chain challenges, tax relief to essential employees, flexibility in the seasonal fuel grade transition and waiving hours of service

STAYING ENGAGED A key component of NACS political engagement is NACSPAC. Initially, NACSPAC temporarily suspended fundraising in response to COVID-19. However, with all the activity in Congress, NACS decided to resume fundraising. If you have any questions, please contact NACSPAC Manager Katie Bohny at kbohny@convenience.org.

JUNE 2020 |

19

INSIDE WASHINGTON

requirements, among many other issues.

As NACS worked on these issues, we utilized new methods of technology to meet with members of Congress, congressional staff and other industry stakeholders.

Additionally, NACS implemented an

effective grassroots and grasstops strategy to connect convenience retailers with their congressional leaders through tried-and-true methods—call-to-action alerts and targeted outreach through calls and emails.

ONE VOICE This month, NACS talks with Lesley Saitta, founder and CEO, Impact 21 What does NACS political engagement mean to you, and what benefits have you experienced from being politically engaged?

As a business owner in this channel, the Lesley Saitta greatest benefit that NACS political engagement has provided me is timely and comprehensive education on the regulatory issues impacting our industry and most importantly, actionable solutions I can support at the grassroots level. Whether it is participating in Day on the Hill, attending state organization meetings or leveraging relationships with state congressional leaders, being prepared and able to communicate our messages clearly and concisely is very powerful.

One of the most important benefits that NACS provides its members (both retailers and suppliers) is the incredible work that is being done every day on the Hill to protect the best interests of the convenience and fuel retailing industry. The rate of regulatory change is increasing rapidly, and it is even more important than ever to ensure that Congress and federal government agencies understand the true impact of these changes on our channel and are educated on the best ways to execute them.

20

| JUNE 2020

What federal legislative or regulatory issues keep you up at night?

Given the COVID-19 crisis, my worldview has shifted, as most everyone’s has. I am incredibly proud to be working in an “essential” industry that has done incredible things at the national, state and community levels to celebrate the heroes in health care and essential businesses who are putting themselves at risk to serve us. Therefore, I have been extremely focused lately on those legislative bills that support our customers, small businesses and essential employees.

That said, any issue that can negatively impact our channel is always on my radar. The most important thing is to be on the front-end of these “winds” and be able to influence them as quickly as possible. Therefore, legislation on electric vehicles, charging infrastructure, payments standards and consumer data privacy are now taking a greater share of my energy. As a consultant on loyalty and payments, the last two are particularly relevant to our customers and could put the convenience channel (and consumers) at a huge disadvantage. Anything that unfairly targets our channel and/or gives other industries an unfair advantage is a huge red flag for me.

What c-store product could you not live without?

I would have to say that bottled spring water is my go-to item.

The other items in the basket can vary dramatically, depending on the trip, but most often will include a protein bar, pistachios or gummy bears. Of course, when traveling, foodservice items become imperative for breakfast, lunch and dinner; therefore, testing out new salads, pizza, tacos or other foodservice offerings is research—or at least that is what I tell myself!

CONVENIENCE.ORG

For trade purposes only. ©2019 Swedish Match North America LLC

CONTACT YOUR SWEDISH MATCH REPRESENTATIVE OR CALL 800-367-3677 FOR ADDITIONAL DETAILS

INSIDE WASHINGTON

Paige Anderson is the NACS director of government relations. She can be reached at WLP_JUNE_Half.pdf 1 5/11/20 panderson@convenience.org.

Although NACS is unable to utilize one of its most successful grassroots programs, NACS In Store, a new alternative to the in-store program was created.

In lieu of a retailer hosting a member of Congress with a tour of their store, behind the counter experience and discussion of their issues, retailers and members of Congress connected via virtual meeting platforms to discuss how COVID-19 was affecting their businesses and gaining support for key proposals that could help the convenience industry. These virtual round tables have been so successful that this program will continue beyond the coronavirus crisis as an added engagement and grassroots tool.

Although it will take time to determine what lessons are to be learned in 6:06 PM response to the COVID-19 crisis, there

is already one fundamental lesson we’ve learned on how to best advocate for our industry. In the past, NACS built a strong foundation based on people and relationships, created an effective strategy that includes knowledge, connections and engagement and filled a toolbox with grassroots and grasstops programs, NACSPAC and other engagement tools.

In this new era of advocacy, the foundation and the strategy are the same. The only real change is that we have added new tools to strengthen the foundation and build the structure.

In a Paris publication in 1848, JeanBaptiste Alphonse Karr wrote his famous epigram, “plus ça change, plus c’est la meme chose,” which translates to “the more things change, the more things stay the same.”

You’ve made an impact.

Now, leave a legacy.

Join industry leaders October 25-30, 2020. convenience.org/ExecEd-Yale Half Horz.indd 1

22

| JUNE 2020

5/14/2020 6:24:36 PM CONVENIENCE.ORG

NACSPAC DONORS

ELIMINATE UP TO 100% ELIMINATE UP TO 100% ELIMINATE UP TO 100% ELIMINATE UP TO 100%

NACSPAC was created in 1979 by NACS as the entity through which the association can legally contribute funds to political OF CREDIT PROCESSING FEES! candidates supportive of ourYOUR industry’s issues.

For CARD more information about NACSPAC andFEES! how political action committees OF YOUR CREDIT CARD PROCESSING OF YOUR CREDIT CARD PROCESSING OF YOUR CREDIT CARD PROCESSING FEES! (PACs) work, go to www.convenience.org/nacspac.

OF YOUR CREDIT CARD PROCESSING FEES! FEES!

ELIMINATE UP TO 100%

OF YOUR CREDIT CARD PROCESSING FEES! NACSPAC donors who made contributions 2020, are: NAB makes itApril easy1-30, to offset credit processing NAB makes it easy toyour offset yourcard credit card processing NAB makes it easy to offset your credit card processing fees with our non-cash adjustment. fees with our non-cash adjustment.

NAB makes it easy to offset your credit card processing NAB credit card processing Kevin Martello Blake Benefiel Robertmakes Eastman,itIIeasy to offset your Danielle Keck Holloway Andrew Sokolski fees with our NAB makes it easy to offset your credit card processing feesAltria withGroup our non-cash non-cash adjustment. adjustment.

Altria Group Beacon & Bridge Markets fees with our non-cash adjustment.

Keurig Dr Pepper Whirley-DrinkWorks!

Distribution Company

Tony El-Nemr Nouria Energy Corp.

Jon Bratta RPP Products Inc.

Scott Hill Jack Link's Protein Snacks

Matt Domingo RAI Trade Marketing Services Company

Drew Mize PDI

Jonathan Ketchum Energy North Group

Bradley R. Heetland Advantage Solutions

Lucia Romanello Crater Impact 21

Midwest Petroleum Company

Ben Juda FIFCO USA

Kevin Farley GSP

Patrick Cordle BIC Corporation

fees with our non-cash adjustment.

ELIMINATE UP TO 100% Donald McNutt Thomas OF YOUR CREDIT CARD John PROCESSING FEES!

Distribution Company

Jeff Lenard NACS Stephen Loehr Kwik Trip Inc.

iSEE Store Innovations LLC

NAB makes it easy to offset your credit card processing Sarah Vilim fees with our non-cash adjustment.

Keurig Dr Pepper

Anthony Perrine Lou Perrine's Gas & Groceries

Thomas Wake Eby-Brown Company LLC

Matt Seymour Q Squares

Todd Walker Altria Client Services LLC

Joseph Sheetz Sheetz Inc.

FREE Credit Card Terminal Placement Wireless/Landline/High-Speed/Dial-Up Easy setup (with no setup fees and quick approvals)

REDUCE YOUR CREDIT CARD PROCESSING FEES

FREE Credit Card Terminal Placement Wireless/Landline/High-Speed/Dial-Up

Seamless integration with your current POS

Easy setup (with no setup fees and quick approvals)

$295** towards your early termination fee (if you have one) with your current proc

Seamless integration with your current POS

Access to Payments ourhave secure, online portal $295** towards your early terminationHub fee (if–you one) with yourmerchant current processor

FREE Credit Terminal Placement Wireless/Landline/High-Speed/Dial-Up Free paper** Access to Payments Hub – our secure, online merchant portal FREECard Credit Card Terminal Placement Wireless/Landline/High-Speed/Dial-Up FREE Credit Card Terminal Placement Wireless/Landline/High-Speed/Dial-Up Free paper** FREE Credit Cardno Terminal Placement Wireless/Landline/High-Speed/Dial-Up EasyCard setup (with no(with setup fees andfees quick approvals) FREE Credit Terminal Placement Wireless/Landline/High-Speed/Dial-Up Easy setup setup and quick approvals) Easy setup (with no setup fees and quick approvals) setupintegration (with noyour setup fees approvals) Seamless integration with current POSquick Easy setup (withEasy no setup fees and quick approvals) Seamless with yourand current POS • FREE NFC & COMPATIBLE WITH FREE NFC & EMV-READY Seamless integration with your current POS COMPATIBLE WITH EMV-Ready Terminal FREE NFC & EMV-READY Seamless integration with your current POS $295** towards your early termination fee (if you have one) with your current processor Seamless integration your current POS GAS CARDS $295**with towards your early termination fee (if you have one) with your current processor & PIN PAD & Pin PadPAD or wireless GAS CARDS TERMINAL &TERMINAL PIN WRIGHT EXPRESSprocessor $295** towards your early termination fee (if you have one) with yourFLEET current terminal.

OR WIRELESS OR WIRELESS CARDS towards your early termination fee (if you have one) with your current processor to Payments Hub – our secure, online merchant portal $295** Access towards$295** your early termination fee (if you have one) with your current processor Access to Payments Hub – our secure, online merchant portal VOYAGER TERMINAL TERMINAL • Accept payments in-store, AND MORE… Access to Payments Hub – our secure, online merchant portal Access to – Payments Hub – ourmerchant secure, online paper** online, or on-the-go.

Access Free to Payments Hub our secure, online portalmerchant portal Free paper** Free paper** Free paper** Free paper** GROW YOUR BUSINESS. PARTNER WITH NAB TODAY! GROW YOUR BUSINESS. PARTNER WITH NAB TODAY!

Rates as low as .05%*

Accept EMV/NFC (Apple Pay, ETC.) EBT, Snap, Checks and more

Pay-at-the-pump compatible

Next Day Funding with weekend settlement

WRIGHT EXPRESS FLEET CARDS VOYAGER AND MORE…

866.481.4604

866.481.4604

COMPATIBLE WITH WITH COMPATIBLE FREEFREE NFC &NFC EMV-READY & EMV-READY COMPATIBLE WITH FREE NFC & EMV-READY GASGAS CARDS COMPATIBLE WITH FREETERMINAL COMPATIBLE WITHCARDS & PIN TERMINAL PIN PAD FREE NFC &&PAD EMV-READY NFC & EMV-READY OPTIONAL PROGRAMS: GAS CARDS WRIGHT EXPRESS

WWW. NYNAB.COM

WWW. N

©2018 North American Bancard is a registered ISO of Wells Fargo Bank, N.A., Concord, CA, and The Bancorp Bank, Philadelphia, PA. American Express may require separate approval. *Durbin regulated Check Card percentage rate. A per transaction fee will also apply. **Some restrictions apply. This advertisement is sponsored by an ISO of North American Bancard. Apple Pay is a trademark of Apple Inc.

©2019 North American Bancard is a registered ISO of Wells Fargo Bank, N.A., Concord, CA, and The Bancorp Bank, Philadelphia, PA. American Express may require separate approval. *Durbin regulated Check Card percentage rate. A per transaction fee will also apply. **Some restrictions apply. This advertisement is sponsored by an ISO of North American Bancard. Apple Pay is a trademark of Apple Inc.

TERMINAL & PIN PAD OR WIRELESS GAS CARDS GAS CARDS OR WIRELESS TERMINAL & PIN PAD & PIN PADwith Make the same profit margin with TERMINALOR WIRELESS WRIGHT EXPRESS FLEET CARDS FLEET CARDS WRIGHT EXPRESS VOYAGER VOYAGER WRIGHT EXPRESS WRIGHT EXPRESS FLEET CARDS AND MORE…AND FLEET CARDS MORE… FLEET CARDS VOYAGER VOYAGER VOYAGER AND MORE… AND MORE… AND MORE… NAB makes it easy to make the same profit from non-cash payments as you do with cash payments with our cash discount program.

cash and non-cash payments!

• Cash Discount

Ordering TERMINAL TERMINAL OR WIRELESS OR• Curbside WIRELESS TERMINAL • Point of Sale Systems TERMINAL TERMINAL Recommendations, Solutions

4G / Wifi

& Integrations

GROW YOURYOUR BUSINESS. PARTNER WITHWITH NAB TODAY! GROW BUSINESS. PARTNER NAB TODAY! GROW YOUR PARTNER WITH NAB GROW YOUR BUSINESS. BUSINESS. PARTNER NAB TODAY! TODAY! GROW YOUR BUSINESS. PARTNER WITH NABWITH TODAY!

866.481.4604 866.481.4604 866.481.4604 866.481.4604

WWW. NYNAB.COM WWW. NYNAB.COM WWW. WWW. NYNAB.COM NYNAB.COM WWW. NYNAB.COM

©2020 North©2019 American Bancard is a Bancard registered of Wells Fargo CA,Concord, and The Bancorp Bank, Philadelphia, PA. North American is ISO a registered ISO of Bank, Wells N.A., FargoConcord, Bank, N.A., CA, and The Bancorp Bank, Philadelphia, PA. American Express mayExpress require separate approval. *Durbin regulated Check Card percentage rate.

A per transaction fee will also apply.

American may require approval. *Durbin regulated Check Card percentage rate. A per transaction fee will also apply. ©2019 North American Bancardseparate isisasponsored registered ISOan ofISO Wells Fargo American Bank, N.A., Concord, CA, and Bank, Philadelphia, PA. **Some restrictions apply.

This advertisement by of North Bancard.

Apple PayThe is Apple a Bancorp trademark of Apple Inc. of Apple **Some restrictions apply.

This advertisement is sponsored by an ISO of North American Bancard.

Pay is a trademark ©2019 North American Bancard is a registered ISO of Wells Fargo Bank, N.A., Concord, CA, and The Bancorp Bank, Philadelphia, PA. Inc. American mayISO require separate *Durbin regulated Card percentage rate. A perPA. transaction fee will also apply. ©2019 North American Bancard is aExpress registered of Wells Fargoapproval.

Bank, N.A., Concord, CA, andCheck The Bancorp Bank, Philadelphia, American Express may require approval. *Durbin regulated Check Card percentage AApple perapply. transaction fee will also apply.Inc. **Some restrictions apply.

Thisseparate advertisement is sponsored by an ISO ofANorth American Bancard.

Pay is a trademark of Apple American Express may require separate approval. *Durbin regulated Check Card percentage rate. per transaction feerate. will also restrictions apply.

This advertisement sponsored by an ISO of North Bancard. Apple PayInc. is a trademark of Apple Inc. **Some restrictions apply.**Some This advertisement is sponsored by an ISO ofisNorth American Bancard.

Apple American Pay is a trademark of Apple

Half Horz.indd 1 CONVENIENCE.ORG

23

5/13/2020 2:09:51 PM

JUNE 2020 |

IDEAS 2 GO

Learning on the Job

Platte Street Mercantile is a laboratory for frictionless payments, price strategy and product mix.

BY SARAH HAMAKER

Our Platte Street guests are more organic, more vegan and local-driven.

The Denver store is an incubator for cutting-edge self-pay technology and a carefully curated mix of best-selling national brands and local favorites—including CBD products—in an airy, modern space.

W

ith its urban general store design and modern cashless checkout, Platte Street Mercantile in Denver is about as far from a laboratory as possible. But co-owners and friends

SEE MORE! Ideas 2 Go showcases how retailers today are operating the convenience store of tomorrow. To see videos of the c-stores we profiled in 2019 and earlier, go to www.convenience.org/Ideas2Go.

24

| JUNE 2020

Janine Williams and Tammy Williams (no relation) founded the convenience store to conduct research for Impulsify, a software company that develops retail solutions for the hotel industry.

The company’s Retail Management System and self-pay kiosks are used by 950 hotels to manage grab-and-go lobby stores, but Platte Street is both women’s first foray into owning and managing their own convenience store.

“We’ve had this idea for a convenience store for a while,” said Janine, Impulsify’s founder and CEO. “We wanted to create an old school general store with self-service technology to serve our neighborhood,” Janine said, “as well as a CONVENIENCE.ORG

ABOUT

Name of company Platte Street Mercantile Date founded December 2019

Co-owners Tammy Williams and Janine Williams opened the self-pay, grab-and-go convenience store in December 2019.

Customers can choose from a variety of beverages, fresh-made pastries, pre-packaged sandwiches, salads, wraps and breakfast burritos, plus specialty candy, granola and CBD products like chocolate and coffee.

lab to test our proprietary POS technology, design and retail philosophies.”

BEHIND THE SCENES Janine and Tammy, vice president of retail design for Impulsify, mined tons of UPC performance data captured by Impulsify’s POS software to choose the right product mix for Platte Street Mercantile. Platte Street carefully curated its product mix with best-selling national brands alongside local favorites.

“Our clientele is a little different from the average hotel guest we are used to, where anything chocolate or chips flies off the shelf,” Tammy said. “Our Platte Street guests are more organic, more vegan and local-driven.”

Popular local items include specialty candy, granola and CBD products like chocolate, mac and cheese and coffee. (Colorado allows the sale of CBD products.) “About half of our store is completely local,” Tammy said. “In our hotel stores, the top three beverages are Diet Coke, Coke and water. Here, it’s sugar-free Red Bull, Rowdy Mermaid Kombucha and regular Red Bull.”

CONVENIENCE.ORG

# of stores 1

The store stocks a wide variety of graband-go food, such as fresh-made pastries, pre-packaged sandwiches, salads, wraps and breakfast burritos. “We order two to

Website www.plattestmercantile.com

BRIGHT IDEAS During the social distancing phase of the coronavirus pandemic, Platte Street Mercantile quickly adapted its products to meet the changing needs of its customers. “To better accommodate our shift in clients—from local businesses and offices to almost exclusively apartment dwellers and nearby residences—we changed up our assortment to carry groceries, quick meals, frozen meals, toiletries and toilet paper,” said Janine Williams, one of the co-owners. “We have also been putting together a daily post of dinner, snack and baking ideas with a focus on comfort foods.”

Its self-pay kiosk offers easy social distancing without having to interact with a cashier. “Our neighbors are able to shop, self-check and be on their way with almost no interaction,” she said. “They have been very supportive and very grateful for our presence during this time.”

JUNE 2020 |

25

IDEAS 2 GO

The nearby businesses are very techdriven, which brings customers who are used to cashierless payment.

Sarah Hamaker is a freelance writer and NACS Daily and NACS Magazine contributor based in Fairfax, Virginia. Visit her online at www.sarahhamaker.com.

26

| JUNE 2020

three times a week from [local purveyor] Olive & Finch, which packages items on their menu for resale to avoid any in-store food prep,” Tammy said.

What also sets Platte Street Mercantile apart is how it has embraced technology with its self-checkout. That aspect has worked well in the neighborhood, which is mostly populated by people in their twenties and thirties. “The nearby businesses are very tech-driven, which brings customers who are used to cashierless payment,” Janine said. “We’ve only had a handful of people in the months we’ve been open ask about paying with cash.”

The store has at least one attendant on hand at all times to greet, restock and assist customers checking out at the kiosk if needed. “Studies show people generally want a convenient way to pay with minimal cashier interference in a grab-and-go purchase, so we offer our kiosks to help our customers get what they want and go but provide friendly assistance if they need it,” Janine said.

TESTING GROUND The pair use the store as both an incubator to see how their ideas are playing out and as a way to serve the neighborhood.

“We get to watch how end-users shop the store and how they purchase using our technology, which shows us very quickly the holes and flaws,” Janine said. “It’s been a tremendous learning experience.”

Every 90 days, the pair reviews the data to decide what changes to the merchandise mix might be needed.

“Our system tracks and measures sales velocity and gives us the information to see what products are moving quickly and which aren’t,” Janine said. “Because we analyze the data so frequently, we’re able to make merchandise adjustments to accommodate what our customers want right now.”

It's not just the product mix that Janine and Tammy study—it’s also the

The Platte Street co-owners review sales data every 90 days to decide if the merchandise mix should change based on what customers are buying.

technology and how their customers use it. “Retail’s constantly evolving,” Janine said. “What’s working now in self-pay might not work tomorrow. We love being able to test new products and new trends in our microcosm of Platte Street because what is popular here, might be an emerging trend worth expanding into hotel stores and beyond.”

But all of this focus on data doesn’t mean Platte Street Mercantile has ignored its customers. “We could have named it anything, but we called it Platte Street Mercantile to tie it into the historic Platte Street neighborhood,” Janine said. “Our tagline, ‘Hello, Neighbor!’ is the heart of what we want to be in our community.”

“Even though we have self-pay as our only checkout option, we want to engage with our customers in an authentic way,” Tammy added. “We train our attendants to genuinely interact with customers with questions like ‘How did you hear about our store?,’ ‘Do you live nearby?,’ and ‘Is there anything you would like us to carry?’ It’s a way for us to connect and offer hospitality to our neighbors in an increasingly self-service world.”

CONVENIENCE.ORG

ience n e v n o r the c 9. o f n o i ID -1 ndat V u O o f C e r th fo 19 laid try to pivot OUNIHAN 0 2 g n C n d us SARA A stro retail i Y KIM STEWART & B

T

he U.S. convenience and fuel retailing industry entered the coronavirus pandemic coming off another year of measured growth.

For 2019, pretax profits reached a record $11.9 billion, driven in part by strong fuel margins but also because of in-store merchandise sales and foodservice, according to NACS State of the Industry data for 2019. Declining fuel sales and rising operating expenses, including labor costs and credit card swipe fees, continued to be headwinds even before the COVID-19 storm.

“Overall it was a solid sales year inside and not a bad one on the forecourt either,” said Charlie s, McIlvaine, chairman and d n e r yt d u s tr in g CEO of Cohen Oil Co. and k n i r a e t hm ple benc he NACS Co m member of the NACS d n a in t f ht s or t o insig available Research & Technology p e R y e are dustr r purchas n Committee, who shared I data e h of t le fo Key Operational and .o r g / State a, availab e c n Dat e n ie e gin Financial Lessons from 2019 ww.conv ing will b at w h ip p 2019 as part of the NACS ort (s -June). p e R d SO I State of the Industry Virtual in m i Experience. The virtual event, which opened in April, took the place of the in-person

28

| JUNE 2020

NACS State of the Industry Summit. The coronavirus pandemic forced event cancellations nationwide as state governors issued stay-athome orders, including in Chicago, longtime home to the SOI Summit.

As of May 1, more than 1,700 attendees have participated in the on-demand virtual experience, which includes 12 sessions on topics such as analyzing 2019 industry performance, trends and economic forces, as well as forward-looking topics such as how COVID-19 is changing consumers’ shopping behavior in ways that could shape long-term buying patterns.

In 2019, in-store sales increased 4.4% to $251.9 billion, up from $242.2 billion in 2018, while total transactions edged up just 0.2% over 2018.

Total industry sales, which include $395.9 billion in total fuel sales, fell 1% ($647.8 billion in 2019 vs. $654.3 billion in 2018), largely because of a 4.7% slide in the price of fuel. Overall, total convenience store sales last year comprised 3.1% of the U.S. gross domestic product of $21.4 trillion.

FUEL SALES Fuel sales at convenience stores, which sell about 80% of the fuel purchased in the United States, CONVENIENCE.ORG

declined 3.9% to $395.9 billion in 2019, compared with $412.1 billion the year earlier, according to NACS State of the Industry data. In 2019, gas prices averaged $2.59 per gallon, compared with $2.70 for the year prior.

Fuel sales accounted for 61.1% of total convenience store revenue and 36.2% of gross profit in 2019. Fuel margins saw another record year (26.3 cents per gallon in 2019 vs. 24.2 cents per gallon in 2018). Of the 152,720 convenience stores operating in the United States, per the 2020 NACS/Nielsen Convenience Industry Store Count, 121,998 stores sell fuel.

The top-performing c-stores sold 3.7 times as many motor fuels gallons as bottom-quartile stores, accounting for nearly 31% of their gross profit dollars. Exclude fuel sales, though, and only the top-quartile stores would remain profitable.

“The SOI speakers I think over the past years have been talking about how we need to evolve to a new model, and fuel is undependable as a source of gross profit dollars in the future for a whole number of reasons,” McIlvaine said.

Last year’s fuel sales performance signaled eroding fuel demand in 2020 ahead of the novel coronavirus pandemic. Even with a lower price per gallon at the pump in 2019, consumers said they weren’t making as many stops to refuel, which translates to fewer trips per week to a convenience store. A January 2020 NACS consumer survey echoed a similar finding: More than half of American drivers (59%) were driving the same amount as they did in 2018, while 20% were driving less and 22% drove more. And then in mid-March, fuel demand collapsed as social isolation practices and stay-at-home orders curtailed commuter and highway traffic. Many areas of the country saw the price of gasoline sink to below a $1 a gallon.

OPERATING EXPENSES Increases in direct store operating expenses (DSOE) continued to create challenges for CONVENIENCE.ORG

CONTRIBUTION MIX IS SLOWLY EVOLVING 5.9%

39.7%

14.3%

GP$ MIX 2014

F UEL 40.1% MERCHANDISE

39.1% 36.2%

FOODSERVICE ALL OTHER Other Income: Car wash, ATM, Lottery, Money Transfers, etc.

GP$ MIX 2019

Foodservice: Food Prepared, Commissary/Packaged Sandwiches, Hot/Cold/ Frozen Beverages

5.7% 19.0%

Source: NACS CSX

INSIDE SALES REACH 2018

$242.2B

$412.2B

$647.8B

2019

$251.9B

$395.9B

$654.3B

TOTAL INSIDE SALES UP 4.0%

TOTAL FUEL SALES DOWN 3.9%

T OTAL

Source: NACS State of the Industry Report and CSX

JUNE 2020 |

29

DIRECT STORE OPERATING EXPENSES ON THE RISE Repairs & Maintenence $5,653 Utilities $4,003

$62,830

$66,879

$18,170

$19,654

Supplies $2,392

CC Fees $9,383

2018

2019

FACILITIES

Wages & Benefits $37,852

D SOE

Source: NACS CSX

DESPITE INDUSTRY-WIDE WAGE GROWTH, EMPLOYEE TURNOVER CONTINUES TO RISE $35,000

120% 110%

$30,000

100% 90%

$25,000

80% 2015

2016

M ONTHLY WAGE EXPENSE Source: NACS CSX

30

convenience retailers, with new business investments contributing to a higher DSOE, which increased 6.9% in 2019, compared with a 5.1% rise in 2018. Credit and debit card fees increased 6.3% to a record $11.8 billion, as more consumers paid by plastic—74.6% of all c-store sales were made with a credit or debit card. “This is a really important issue for us as an industry, and we find ourselves in a predicament—all the work that we do to generate pretax profits is almost equivalent to the credit card fees,” McIlvaine said.

Overall, wage and benefit expenses increased 7.5%, and hourly wages for full-time employees reached $11.75 per hour and $10.83 per hour for parttime staff. These figures are expected to increase even further in 2020 as many convenience retailers announced temporary hourly wage increases and bonus pay for frontline hourly and part-time employees amid the coronavirus crisis. Employee turnover surpassed 110%, up nearly 18% since 2015.

“I hope that one of the key things coming out of this crisis is that we can make more of a career in our industry for our team members and have that progression occur over time, versus having the disruptions of turnover,” McIlvaine said.

The pandemic will weigh on DSOE in 2020 as retailers adopt more frequent deep cleaning and sanitation procedures and new safety measures such as installing plexiglass guards and social distancing cues and outfitting employees with personal protective equipment. However, it’s possible reductions in other expenses could help offset increased spending in other unplanned areas, such as less energy usage at stores closing during nighttime hours and for some foodservice equipment due to reduced use of self-serve options (roller grill, coffee, fountain), as well as less waste generated both inside the store and at the pump.

| JUNE 2020

2017

2018

EMPLOYEE TURNOVER

2019

FOODSERVICE In 2019, foodservice sales rose 4.4% and represented 25.4% of inside sales—up from 22.6% in 2018.

Foodservice also drove overall success at stores: CONVENIENCE.ORG

ARE THE GENERIC LIGHTERS YOU SELL PUTTING YOU AT RISK? Consistent flame height Resistance to elevated temperature Drop-resistant from a height of 5 feet Flame extinguishes within 2 seconds Safe volumetric displacement Not a BIC® Lighter

BIC. SAFETY YOU CAN COUNT ON. ®

BIC will never compromise on the safety and quality of its lighters.

Every day, BIC produces more than 7 million lighters worldwide and every lighter undergoes more than 50 separate, automatic quality checks.

Trust BIC for safe, high-quality, reliable lighters.

VISIT BICLIGHTER.COM * BIC® Full-Size Lighter Only

*Source: IRI C-MULO Vol Sales of Pocket for the 52 weeks ending 12/29/2019

© 2020 BIC USA Inc., Shelton, CT 06484

TOP PERFORMERS: BIGGER STORES, MORE INSIDE BUSINESS AND HIGHER FUEL VOLUMES Per Store Per Month

Top Quartile

Bottom Quartile

Multiple

Motor Fuels Gallons Sold

246,865

104,013

3.7X

Merchandise Sales

$220,533

$84,444

2.6X

Foodservice Sales

$102,103

$13,219

7.7x

In-Store GM%

39.01%

28.89%

10.12 pts

Cigarette GM%

15.71%

13.73%

1.98 pts

Average Square Feet

4,266

2,634

1.6X

In Store Sales/Sq. Foot

$75.43

$37.02

2.0X

Source: NACS CSX

Top-quartile-performing companies sold 7.7 times more foodservice than bottom-quartile performers.

For the top performers, foodservice accounted for more than 30% of their gross profit dollars in 2019.

In 2014, the average foodservice contribution was 14.3%, and “now after years of focusing on food, we’re averaging around 19% in foodservice margin contribution, which I think is an excellent evolution,” McIlvaine said. The top-performing stores are running “more promotions on prepared food, made-to-order coffee, smoothies and merchandise offers that stress value and not just price. I think that is a distinctive marketing difference,” he said.

Considered “essential businesses” by the U.S. government during the pandemic, convenience stores are often the only and/or closest location for much-needed fuel and food and grocery items, particularly in smaller towns, where eight in 10 rural Americans (86%) said in a 2018 NACS consumer survey that a convenience store was within 10 minutes of their homes.

An April 2020 NACS Retailer Member survey found that overall foodservice sales had decreased, while 52% said that grocery sales had increased during the pandemic. Foodservice sales so far this year have been affected by the extra precautions retailers have taken to decrease the risk of potential contamination by removing self-service options for roller grills, bakery cases and cold, frozen and hot dispensed beverages.

32

| JUNE 2020

For some retailers, that meant moving self-serve foods and coffee behind the counter so that an employee could serve the customer. For others with extended prepared foodservice programs, this meant shutting down seating areas or continuing foodservice menus and barista services via touchscreen ordering.

CATEGORY PERFORMANCE Chuck Maggelet, Maverik Inc.’s chief adventure guide, shared insights in part two of the numbers presentation: Understanding Categories and the Need States That Drive Growth.

In 2019, the main categories as a percentage of overall in-store merchandise sales included: •T obacco: Cigarettes: 27.1%; other tobacco products: 7.3% • Foodservice: 25% •P ackaged beverages: 15% •C enter store (salty snacks, candy, packaged sweet snacks, alternative snacks): 10% • Beer: 8% • Other: 8% Tobacco continues to lead in sales at a 34% total contribution, but packaged beverages still contribute the highest amount of gross profit when excluding foodservice. For the first time, OTP eclipsed beer as the No. 3 gross profit dollar contributor in 2019.

CONVENIENCE.ORG

IF FUEL WAS REMOVED, FEW COMPANIES WOULD REMAIN PROFITABLE Per Store Per Month Inside Gross Profit Dollars

Top Quartile

2nd Quartile

3rd Quartile

Bottom Quartile

$64,105

$68,303

$60,007

$49,153

Merchandise Shrink

$280

$973

$763

$772

Foodservice Waste

$1,548

$3,833

$1,226

$4,198

DSOE Net Card Fees

$42,648

$57,579

$54,577

$49,595

Facility Expense

$14,802

$18,229

$17,848

$19,340

Inside Store Operating Profit

$9,890

-$2,147

-$239

-$14,411

Source: NACS CSX

The convenience channel is seeing share erosion in four of the six top categories: beer, packaged beverages, salty snacks and candy, while grocery stores are expanding their share of these key categories. “We still clearly dominate cigarettes and OTP, selling more than 90% of tobacco unit volume,” Maggelet said. “But we’ve lost share of units in the remaining four.”

In late December, the Trump Administration raised the minimum age to purchase tobacco products to 21, and the Food e omplet and Drug Administration in c e h t l View irtua mmit V January published guidance u .

S I w O w at w NAC S S emand banning the sale of most d . n I o O e S nc n t s/ Experie rg/eve fruit and mint-f lavored .o e is c n g ie win conven tion vie a e-cigarettes but allowed use t n e il s t e n r ad u Video p downlo of f lavors in open vaping r fo le 20. availab e r 1 , 20 systems and in single-use b m e t p Se disposable products. The shift to tobacco 21 and the f lavor ban is projected to erode sales by 7% to 9% in 2020.

In addition, “We are clearly competing hard with QSRs for food occasions and driving traffic with hopes of building profitable

34

| JUNE 2020

baskets,” Maggelet noted. “I think the bigger picture here is the four out of five foodservice categories that reflect healthy growth in GP dollars.” Convenience stores “need more profitable food operations” to counter rising wages and operating expenses, he said.

THE LOOK AHEAD “The extent to which the global coronavirus pandemic will ultimately affect the convenience industry throughout 2020 and into 2021 is unknown—there is no precedence in modern history that can provide context or modeling for this level of economic uncertainty. Factors such as temporary or permanent store closures, government regulations, the length of stay-at-home restrictions, the spread of the virus and finding a cure all influence both short-term and long-term economic impacts,” NACS Vice Chairman of Research Andy Jones (Sprint Food Stores Inc., based in Augusta, Georgia) said ahead of the Summit.

“Even with these considerable challenges, the convenience industry has shown, over decades of its existence, that it is resilient to economic depressions, natural and man-made disasters and yes, even pandemics,” he said.

CONVENIENCE.ORG

ew face n ns. s r e l i a io ing ret er expectat p l e h is m n 2019 and consu i h t w ro ice Solid g in foodserv ds deman

P

reparing for disasters is baked into the convenience industry’s DNA, but the coronavirus pandemic is a storm unlike any other. Strong growth in 2019 helps to soften the blow somewhat for what lies ahead, including critical operational changes and new consumer expectations of convenience.

In 2019, trips to c-stores were up 6.2% overall, according to IRI’s Larry Levin, executive vice president of consumer and shopper marketing for the Chicago-based market research firm. In his virtual presentation, The Convenience Consumer, Levin reported that U.S. consumers made more than 17.7 billion trips to retail last year, and trip growth was up 1.8% overall. C-stores accounted for 2.8% of those total trips in 2019. Online and dollar stores, two of c-stores’ largest competitors, saw trip growth of 3.3% and 6.5%, respectively.

“We’ve seen an incredible growth within the trips,” said Levin. “But as we look at revenue, trips are really sparking growth in the industry.” C-stores brought in $160.9 billion dollars in revenue, and dollar growth is up 3.3%. “And compared to the rest of CPG, which was up 2.2%, we’re punching basically 50% higher in terms of growth,” said Levin.

More than 19% of all sales in CPG came through c-stores last year, and according to Levin, the rest of the CPG market is underdelivering in their contribution to industry growth. In particular, the food channel is struggling to keep up the rates of its overall general market competition, which CONVENIENCE.ORG

presents a strong growth opportunity for the c-store channel.

“I think the industry should be very proud of the fact that it drove 28% of the [CPG] growth in the industry year on year,” said Levin. “Comparatively, the food channel, which does 38% of our business, did 28% of our growth.”

Focusing on the consumer, Levin shared findings from IRI’s interviews of more than 600 recent c-store shoppers, with a first wave completed in 2018 and a second in 2019. Heavier convenience store shoppers grew from 15% surveyed in the first wave to 25% in the second wave. Lapsed shoppers, those who have not been in a c-store in the past three months, declined to 31% in the second wave from 38% in the first wave.

Millennials and Gen Z are a growing segment of the heavy shoppers. In 2019, 37% of heavy shoppers were millennial and Gen Z, and in the second wave, half of the heavy shoppers were millennial and Gen Z. “They are coming into the channel because the channel is responding to needs that they have,” said Levin.

Looking at light to medium shoppers, 29% have reduced the number of trips made. “The challenge for the industry is what are we going to do to rebuild that relationship with some of these light to medium buyers?” asked Levin.

Attracting female consumers also is another challenge c-stores should address, according to Levin. Twenty-five percent of women who are

JUNE 2020 |

35

less frequent visitors to c-stores are going to dollar stores instead, Levin said.

Pointing to the current consumer climate, Levin said that in 2019, 23% of consumers were cautious and worried about the economy, and 30% were optimistic. “We see nearly a flip where now just in the past three weeks, a third of the U.S. population has become cautious and worried, and one out of five are now optimistic,” said Levin. “We have a population that’s really scared about what the future holds.”

Levin encouraged the industry to continue to drive innovation and build on the healthy options momentum the industry has touted over the past few years. “Let’s hope as we come out of COVID-19 that we rebuild the power of the channel. Let’s have

open, consumers fear food safety and additional contact with people. Grocery stores are unable to keep certain foods in stock, so people are turning to c-stores for a quick in and quick out.

Wolf said the c-store industry should take advantage of foodservice technologies that the restaurant industry has already mastered, such as home delivery, preorder mobile apps, online ordering and cashierless shopping.

In the midst of the coronavirus pandemic and in the aftermath, adapting certain foodservice tech will be especially beneficial for c-stores, specifically technologies that decrease human interaction.

Panera Bread, for example, offers a preorder app that addresses just this. “What they now have […] is an app that allows you to [order], pull up, go in, get

Convenience stores are the preferred, for many consumers, location for food and prepared food. an empathic ear to our shoppers who are physically, mentally, and financially challenged by COVID-19 today, and unfortunately, maybe tomorrow.”

FOODSERVICE IN A NEW ERA The pandemic has turned the foodservice industry completely upside down, and restaurants to QSRs to convenience stores are altering the way they provide food to the consumer. According to Chris Wolf, senior vice president, strategic insights & planning at The Marlin Network, and Chef Thomas Talbert, vice president, culinary marketing at CSSI, consumers are turning to convenience stores to fulfill their needs for not only quick food items but also full meals and pantry staples.

According to Datassential, 32% of people would go to c-stores to avoid contact with the coronavirus, said Wolf in the session, Transforming Convenience Through Food Experiences.

“Convenience stores are the preferred, for many consumers, location for food and prepared food,” said Wolf. “So, what we saw as trends and possibilities for your industry are actually accelerating right now in the time of change.” Consumers are perceiving restaurants as closed, and if they are

36

| JUNE 2020

a bag and leave with your food without really interacting with anybody in the store, because at that moment, consumers are looking for as little friction in that exchange as possible,” said Wolf.

When customers are interacting with c-store employees, good customer service is one of the most important things, Wolf said. According to research firm Mintel, Chicago, 56% of consumers said good customer service is one of the most important aspects of using a convenience store, which followed convenient locations (67%) and good prices (60%).

WINNING CUSTOMERS NOW AND LATER Ahead of the pandemic, the top-performing convenience stores were clean, well-maintained and focused on fresh, healthy food and quality products, Jose Gomes, president, North America, dunnhumby, shared. Now, retailers can fully lean into their roles as essential businesses as they feed and support their communities amid the crisis.

In the session, The Voice of the Convenience Customer: Winning Their Preference, Gomes offered insights from the dunnhumby Retailer Preference Index (RPI) for Convenience Study and also outlined key markers to watch as the CONVENIENCE.ORG

United States progresses through the pandemic.

“We believe that there’s this real opportunity for retailers to lean into this sense of community, to be seen as the centers of food and support,” Gomes said. Think about “how you can leverage that in your messaging, and how you can win the trust and confidence of customers for the fact that you’ve stayed open, that you’ve supported them.”

For the RPI study, the London-based customer data science firm surveyed nearly 7,000 U.S. consumers in August 2019 and evaluated 27 retailers in the convenience channel to discover not only what the respondents think and feel about c-stores and how their preferences drive them to choose one retailer over another but also to understand how they perceive quality, convenience and price. The researchers then linked those customer perceptions to retailers’ market and sales performance.

The core pillars driving customer perceptions and choice within the convenience channel are what dunnhumby calls fresh and healthy (private label brands, fresh meats and produce, healthy food options and appetizing ready-to-eat meals) and convenient quality (easy in and out, fast and easy checkout, convenient locations, friendly and welcoming staff, beverage variety and right product variety, high quality products, safe and comfortable stores and clean and well-maintained stores). The supporting pillars are digital, price and discounts/rewards.

The study, released in October 2019, ranks retailers based on value perception and financial performance.

“We see that clean and well-maintained stores really do have a connection with performance and with profitability of those stores,” Gomes said. “So, you’re more likely to go to these top-performing retailers because they have great ready to eat, because of their produce or because of anything that is fresh. And you’re less likely to go there purely because of tobacco, alcohol or gambling,” Gomes said.

Stores in the top-ranked first quartile of dunnhumby’s four-quartile value perception map are: 1) QuikTrip, 2) Wawa, 3) Sheetz, 4) Kwik Trip/Kwik Star, 5) RaceTrac, 6) Casey’s General Stores and 7) Maverik.

Retailers in the bottom half have more than four times as many stores as those in the top half (2,459 vs. 572), yet the top-half stores are growing their five-year sales at a compound annual growth CONVENIENCE.ORG

The industry should be very proud of the fact that it drove 28% of the [CPG] growth in the industry year on year. rate (CAGR) that’s one and a half times faster than retailers in the bottom half (6.2% vs. 3.9%).

Underperforming retailers should prioritize getting the basics right, Gomes said. Then turn to developing ready-to-eat and fresh and healthy food offerings, followed by digital and reward programs. Foodservice is a key differentiator of growth, according to 2019 NACS State of the Industry data: Top quartile performing companies sold 7.7 times more foodservice than bottom quartile performers.

Gomes outlined three phases of how society is dealing with the pandemic—insecurity, transition and recovery—and said the United States is currently in the middle phase. “We expect consumer attitudes to move from this period of real uncertainty right now, to actually move quite quickly through to the higher levels of confidence as the worst is behind us and as people go back to normal lives,” Gomes said.

Gomes advises retailers to map out their strengths (beverages, foodservice, locations and hours to capture impulse and emergency trips outside of normal hours, for instance) and weaknesses (price perception, cleanliness and healthy food options, for example), along with opportunities (e-commerce growth, drive-thru, people reconnecting with their neighborhoods) and threats (consumers making fewer quick trips in favor of bigger stock-ups, price sensitivity and aggressive pricing by grocery stores).

And at this time, it’s crucial that retailers support their team members on the front lines of customer engagement by recognizing their work as essential employees and being transparent about things like stock availability, sanitization and product handling procedures so they can inform customers.

“We think it’s an unprecedented moment, but also a real opportunity to reconnect with customers and to build on the community experience,” Gomes said.

JUNE 2020 |

37

r n d s fo a m e m er d on ding . u s n o c p a p i n g l e r s a re res h s e r ret a i -19 is D d I n V a O e C n ie n c conve

A

s stay-at-home advisories swept across the country, consumers turned to convenience stores for quick fill-in trips between stock-ups at mass merchants and wholesale clubs. In addition to the usual alcoholic beverages and tobacco products, shoppers hunted for dairy products, pantry staples and paper goods, and convenience retailers doubled down on communication efforts to connect with customers and their employees.

During the NACS State of the Industry (SOI) Virtual Experience, Caitlyn Battaglia, associate client director with Nielsen, explored how the pandemic impacted consumers and how convenience retailers responded in the session, How Coronavirus Is Reshaping Consumer Demands for Convenience. Battaglia shared Nielsen data on week-over-week growth for six top NACS SOI categories: cigarettes, packaged beverages, beer, other tobacco products, candy and salty snacks, from the week of February 22 to the week of March 21.

38

| JUNE 2020

BIGGER PACKAGE SIZES Consumers in the “restricted living” weeks in March made fewer trips but bought larger quantities, especially of beer and packaged beverages. “For both beer and packaged beverages, larger pack sizes are starting to become even more important as prepared pantries begin to dwindle when it comes to supplies,” Battaglia said. Beer and many subcategories of tobacco saw significant increases in sales, particularly premium brands.

CENTER STORE GROWTH “We’re seeing the largest percent change in terms of dollar growth from that pantry preparation week of February 29 through our most recent week of March 21. Consumers are looking to the convenience channel to fill in things like eggs or laundry care,” Battaglia pointed out. Sales of paper, plastic and foil products, for instance, surged more than 230% in the week of March 21, compared with the week of February 29, and sales of eggs jumped more than 140%. Center-store CONVENIENCE.ORG

Get Your Weekly COVID-19 Consumer Behavior Report Now, more than ever, you need the right information to serve your community and keep profit margins up. Powered by PDI Insights Cloud, this weekly report provides basket-level data and analysis that enables essential businesses around the country to deliver what their customers want and need right now.

Get your weekly report

Š 2020 PDI Software. All rights reserved.

categories traditionally account for a small proportion of c-store sales.

Battaglia said this may signal the opportunity for c-stores to grow the center-store categories as U.S. consumers shift into the recovery phase.

NEXT MOVE Use innovation and technology to connect with community. “Leverage your online presence to ensure that you’re staying top of mind with your consumers,” she advised. “Keep consumers up to date on the things that you’re doing, the products that you’re offering, and the ways that you’re interacting with your community.”

Resolve bottlenecks in supply. Manage stock levels to better prepare for tomorrow not only in core categories but also in center store categories, she said. “It will be really important to ready your supply chains for living a new normal.”

Who would have thought people would be coming to Casey’s to see if we had toilet paper?

Take a close look at your foodservice supply chain and work with your vendor partners to see if you need to adjust your offerings to account for customers who might not be leaving their homes as often, are looking for more health-minded or safety-oriented packaging or want easier eat-athome meal options.

TELL YOUR STORY IN A CRISIS Because the novel coronavirus has disrupted everything, communicating with customers and team members has never been more important.

Jeff Lenard, NACS vice president of strategic industry initiatives, was joined by Chris Jones, senior vice president and CMO for Casey’s General Stores; Nick Ruffner, public relations manager

40

| JUNE 2020

with Sheetz; and Stephanie Sikorski, NACS vice president of marketing and executive director of the NACS Foundation, to address the new challenges for convenience retailers during the session, Pivoting to Meet Communication Expectations in a New Normal.

Lenard asked the panelists to consider how convenience has changed and what the industry might need to look at as the nation evolves during the pandemic. “What we are really focused on at Sheetz right now is leading with our values, that we are community connected,” Ruffner said. “We are working with our store teams and helping them create safe environments in our stores, while also getting ready to welcome [customers] back.”

Customers’ needs have changed, driving a shift from immediate consumption to take-home consumption, and they’re looking for products they wouldn’t typically buy at a c-store. “Who would have thought that people would be coming to a Casey’s general store to see if we had toilet paper in stock?” Jones said.

One way Sheetz has pivoted is to focus on digital efforts, especially on its new Scan and Go app, which rolled out to all 600 of its stores and allows customers to order food and pay for purchases via their smartphones. “We want our store team members to interact with our customers because we pride ourselves on totally focusing on those customers. But if we can limit the physical interaction for now, then I think, that’s a win-win for everybody,” Ruffner said.

The c-store chain also introduced curbside delivery.

As for messaging, now is not the time to “pick a new path for your brand,” Jones said. “It helps to have been consistent leading up to this period. And it helps to continue to be consistent and authentic during this period.” Casey’s messaging (in place before the outbreak of COVID-19) is “we’re about being here for good, which means doing good in the community … especially where we have over 1,000 stores that are in towns of 5,000 people or less.

That role hasn’t changed,” Jones said.

Sikorski agreed. “At the end of the day, it comes down to being authentic. And consumers can feel that out more than ever right now.” Sikorski shared CONVENIENCE.ORG

that the NACS Foundation uses #conveniencecares on social media to amplify positive messages about how c-stores are open and serving their communities. Casey’s and Sheetz are sharing positive feedback from their customers with their team members at the store level. “We have store teams that are working in a really challenging environment right now,” Ruffner said. “And we can’t communicate with them enough.”

CANDID TALK Charlie McIlvaine, chairman/CEO, Coen Markets Inc., and Chuck Maggelet, chief adventure guide, Maverik Inc., joined Britt Brewer, marketing manager at NACS, to share what their companies and leadership teams learned in the early days of the pandemic, and how they are coping with the uncertainty facing us all.

“It’s important everybody has a plan, and the plan has to be something that is not strict, and we need to be able to pivot,” McIlvaine said.

Communication is vital. “I can’t stress how important it is to communicate, communicate, communicate,” Maggelet said.

McIlvaine agreed. “Social media has really shown itself to be effective and cost-efficient, a quick pivot way of getting our messages out there and having that bilateral conversation with our guests,” he said.

Brewer asked the executives to share how their companies are maintaining work culture. At Maverick, company managers are “reevaluating their work plan and making sure employees have workforce documents they need.” He expects retailers to face bigger challenges recruiting new employees due to sweetened federal benefits for unemployed workers. “Many retailers have already provided increases of $2 to $3 per hour for their hourly employees, as well as a one-time bonus for salaried employees—it’s battle pay—but is that going to be enough to make sure you can retain the people you need to keep […] your business running to serve your customers?”

McIlvaine said, “We really ought to put ourselves in the shoes of our employees. We’re asking them CONVENIENCE.ORG

to go on the front lines, and it’s hard.” He continued saying that the industry has a citizenry obligation as employers to keep our people employed as long as possible and to stave off layoffs and furloughs.

When reviewing relationships with banks and vendors, Maggelet encouraged companies to review projects and assumptions and discover pressure points: “Do the downside scenario, or two or 12.

2019 STATE OF THE INDUSTRY KEY INSIGHTS AND LEARNING 1. Winning Trips Is Key: Customers are shopping across multiple channels to support increasingly busy lifestyles 2. Growth Is Driven by Pricing: Units are in decline • Inflation-driven increases, not a sustainable method of growth • Impact of multi-channel shopping, channel blurring and e-commerce 3. Tobacco Challenges Ahead: T21 and flavor ban could reduce overall tobacco sales anywhere from 7-9% in 2020 4. Relevancy Matters: Opportunities exist to reduce leakage and missed purchases with product innovation and operations • Evolve assortment by daypart and effectively leverage fuel occasions • Integration of larger package sizes, e.g. multi-packs in sets where appropriate 5. Innovation Is Redefining Categories: Emerging segments driving growth • Premium, healthy/better-for-you, natural and simple vs. commoditized discount • Functional foods and beverages in high demand, e.g. protein snacks, enhanced water and energy drinks 6. Top Quartile: Pulling away from bottom in foodservice 7. Cannabis: Emerging opportunities in cannabis products expected to rival tobacco in five years

JUNE 2020 |

41

Leverage your online presence to ensure that you’re staying top of mind with your consumers.

GOING THE LAST MILE

Last mile delivery was a $31.2 billion market in 2018 and is expected to grow to $50 billion in 2022, said Lori Buss Stillman, NACS vice president of research, in her session, The Future of Last Mile Fulfillment in Convenience Retail.

Instacart is the No. 1 last mile fulfillment partner for most retailers by far. More than 70% of U.S. households in 5,500 cities have access to Instacart services.

The market is going to continue to grow as legacy retailers bring solutions to their shoppers through last mile, said Stillman. For example, Costco recently purchased logistics company Innovel Solutions for $1 billion, which was originally the delivery company for Sears and Kmart.

This is a logical partnership, according to Stillman, and she encouraged c-stores to look for channel-appropriate delivery partners.

How people are accessing products also is changing, and consumers are increasingly wanting products the same day.

“Twenty-five percent of all delivery will be ordered by the consumer for same-day delivery in just five short years,” said Stillman.

Consumer expectations for last mile fulfillment also are morphing, as speed and transparency priorities are shifting to a focus on pricing and readily available customer service, such as chat bots.

Like many other industries, the coronavirus pandemic has altered last mile fulfillment, with 43% of U.S. households saying they will continue to shop online for food after the pandemic subsides. This equates to about 17 million new household users of last mile fulfillment.

“Right now, there are a lot of people trying and learning new behaviors, and not all of them are simply going to go back to the way that it was,” said Stillman.

NACS fielded a survey to better understand the pressure that “anytime, anyplace convenience” is putting on convenience and fuel retailers to find last mile fulfillment solutions. NACS will share the results in a white paper that will detail the evolution of last mile fulfillment in the convenience channel.

42

| JUNE 2020

Make sure you understand where your break-evens are. What are the outcomes that you need, and what are the scenarios that will help you get there?”

McIllvaine stressed how important communication is with these entities. He said to look out for ways to find cash through temporary term modifications with vendors and to have continuous dialogue with banks to keep them up to date on how the business is doing and if there are opportunities for lower interest rates.

Brewer also asked the executives where they think the industry is headed and how they are designing for tomorrow in this new environment. Maggelet remarked that this is a huge learning moment for his company.

“I’ve been working toward challenging our leaders to stay on the same page and coordinate with others on lessons learned,” he said. “Fundamentally right now we’re doing things in the middle of a crisis this week that becomes normal operating procedure next week. And we need to make sure we’re learning quickly now on what’s working and what’s not.”

Wrapping up the session, Maggelet offered some words of encouragement. “Make sure that you and your teams are leading your employees and customers forward. Don’t expect to be perfect, just make sure your direction is correct.”

Kim Stewart is editorial director of NACS and editor-in-chief of NACS Magazine.

Sara Counihan is managing editor of NACS Magazine and content project manager at NACS.

CONVENIENCE.ORG

When it comes to your business,

play it safe.

SafePointÂŽ by Loomis combines industry-leading technology and service with scalable, under-counter-size smart safe and cash recycler solutions to help you boost profits, streamline cash handling, and most importantly, reduce risk to your business.

Cut operating costs Keep funds secure

Streamline cash handling Maximize ROI

loomis.us/SafePoint Š 2020 Loomis Armored US, LLC. All rights reserved.

Sustainable –and Safe 44

| JUNE 2020

CONVENIENCE.ORG

Retailers weigh sustainability goals against customer safety concerns.

By Terri Allan

iStock.com/gebai, lila-es

E

fforts by socially responsible convenience store operators in recent years to provide sustainable packaging options for their customers have been derailed lately in the wake of the COVID-19 outbreak, victim to spiraling concerns over public health and food safety. And while retailers remain committed to sustainability goals, given the current climate, the timeline for reaching those goals remains uncertain.

“At the store level, the ongoing coronavirus emergency has shone a bright light on the need to assign food safety and sanitation a No. 1 priority, and that sustainability initiatives— while important—are secondary,” remarked Jim Calvin, president of the New York Association of Convenience Stores (NYACS). Indeed, in the weeks following the initial outbreak of the virus in the U.S., leading retail operators paused sustainable initiatives, such as refillable beverage programs, due to cross-contamination concerns for employees and customers.

Kwik Trip, Yesway and 7-Eleven were among many c-store chains across the country to halt refillable incentives, which—often tied to membership programs—allow guests to fill up their own hot- or cold-beverage containers. In mid-March, Dallas-based 7-Eleven announced that it was “temporarily discontinuing the use of personal cups for hot and cold dispensed beverages.” But the company added, “We will still honor the discount offered for anyone who brings in a personal cup to participating stores.” Iowa-based Yesway, meanwhile, announced that the use of refillable mugs or cups wouldn’t be allowed “until further notice.”

Calvin said the bans make sense. While in early April he noted that he wasn’t aware of any NYACS members that were running refillable beverage programs, he said, “In the current public health emergency, it would make it even harder for stores to maintain a clean and safe environment for their customers.”

According to Heather Hamilton, barista at Jake’s Convenience store in Staunton, Virginia, customers have been “very understanding” CONVENIENCE.ORG

about the shop’s curtailment of its coffee and fountain drink refillable programs. However, the store continues to fill customers’ own beer growlers, Hamilton said, noting, “We’ll clean them before filling, if needed.”

The suspension of refillable beverage programs requires that retailers, of course, revert to single-use cups. Ironically, single-use foodservice packaging emerged more than 100 years ago in the wake of a tuberculosis outbreak, when a Kansas doctor launched a campaign to discourage the sharing of cups and utensils. That campaign led to the creation of singleuse cone cups, according to the Foodservice Packaging Institute (FPI), which represents single-use foodservice product purveyors. “Single-use containers were born out of communicable disease prevention,” remarked Natha Dempsey, FPI president. “Just as we see during natural disasters, single-use containers are preferred during epidemics due to fewer touchpoints,” she explained.

REUSABLE BAG OUTCRY The reusable bag—another tool promoted in recent years by leading retailers as a sign of their commitment to sustainability—has also experienced pushback in the months following the coronavirus outbreak, while plastic bags, the scourge of many environmentalists, have reemerged.

A number of cities and states have called for a temporary

“ Single-use containers were born out of communicable disease prevention.” halt of reusable bags by consumers, citing crosscontamination concerns, including jurisdictions that have previously soured on single-use plastic bags. San Francisco, for example, the first city to outlaw plastic bags in 2007, recently moved to restrict consumers from bringing their own bags into stores. Other states, such as Maine and Oregon, have postponed enforcement of recently passed plastic bag bans.

JUNE 2020 |

45

Prior to the pandemic, “there was a ton of interest in sustainability practices among retailers.”

In New York, where a plastic bag ban went into effect on March 1, “there’s been a fair amount of speculation among retailers and customers about whether cloth bags, if not cleaned regularly, could jeopardize sanitation in the store,” Calvin said. New York has delayed enforcement of the ban until after June 15, and neighboring Massachusetts has suspended enforcement of municipal bans on plastic bags. Leading retailers, meanwhile, such as Hy-Vee, had banned reusable bags from its stores earlier this year.

Scot Case, founder of Responsible Sourcing Solutions, said that while c-stores and other retailers have been forced to make decisions based on safety concerns, the moves don’t necessarily mean that their sustainability goals have been thrown off kilter. “It’s not really a moving away from reusables,” remarked Case, who described his firm as one that works to “find ways for businesses to make money through sustainability.” Rather, the stores are “trying to minimize contact between the customer and the employee,” he explained.

“Sustainability is about people, planet and prosperity,” Case continued. “Suspending a beverage refill program is about protecting people’s health, and that’s the most important thing.” Indeed, he’s optimistic that once the virus has run its course, “there will be a rebalancing of people, planet and prosperity. We’ll pull together, and the reusable movement will take off.”

Prior to the pandemic, “there was a ton of interest in sustainability practices among retailers,” Case noted, including the promotion of reusable containers. “More and more retailers were moving toward reusable products.” Kum & Go, for example, last fall announced plans to open its first urban store in downtown Des Moines, a shop that will have a big focus on sustainability practices, including the emphasis of reusable bags, rather than plastic. If successful, the store could serve as a prototype for other new stores, Kum & Go said.

And in March, the Midwestern chain announced that it was overhauling its food packaging by moving toward a host of environmentally friendly and compostable products, including salad bowls, lids and cutlery made with renewable resources.

“Supporting sustainability efforts is important throughout our business,” said Jeff Shamburger, vice president of foodservice. “By switching our food packaging, we’re reducing waste and better presenting our premium products.”

FINANCIALLY FULFILLING PROGRAMS Inroads by retailers in recent years to adopt increasingly sustainable practices have yielded both social and economic benefits. There’s no question that with landfills filling up and recycling programs seeing limited success, all businesses must work more sustainably. Yet for convenience retailers, sustainability efforts like refillable beverage programs can be financially fulfilling as well. “Refillable coffee cup programs are good examples of sustainability initiatives with a profitability side,” remarked Case. “A branded reusable mug with a store’s logo, providing deals on refills, helps build the long-term image of a brand. It also builds customer loyalty.” Moreover, the reusable cups programs help reduce retailer costs, while the cups themselves—if branded—are a form of free advertising, Case continued. “A number of c-stores are doing well with those programs.”

CONVENIENCE.ORG

iStock.com/MahirAtes, Chinnapong, Lemon_tm

Beyond the c-store channel, other retailers are also finding ways to make reusable containers not only a socially responsible move but also a profitable one. The Good Food Store, an organic grocery in Missoula, Montana, for example, has offered a reusable plastic container program for years. The program, which carries a $5 membership fee, features Eco-Takeout polypropylene containers, which customers can use throughout the store, including in the deli, prepared foods and bulk departments. Customers then return the containers to the store—which cleans and sanitizes them—and swap them out for new containers. More than 1,200 of the containers have been signed out, said Teresa Drew, marketing director. In fact, the program has been so successful that earlier this year the Good Food Store launched a similar mason jar program, which, Drew said, is expected to save the store from using about 20,000 compostable containers a year. “They’re flying off the shelves,” she remarked of the mason jars, noting that the two programs in general have “cut down on our usage of a lot of plastic and to-go containers.”

Then there’s Loop, an e-commerce business, that offers branded products in reusable containers. After use, the containers are returned to Loop,

The Sustainable Choice

Choice Market in April launched a campaign to remove all single-use plastic water bottles from its convenience stores by 2021. Denver, Colorado-based Choice is installing advanced purification FloWater Refill Stations at its two Denver-area c-stores and plans to use them in the three additional locations slated to open by the end of 2020.

“At Choice, there’s nothing more important than the communities we serve,” said Choice Market Founder and CEO Mike Fogarty. “Single-serve plastic water bottles are one of the CONVENIENCE.ORG

Making Sustainability Convenient

At its core, the concept of sustainability is to meet current needs without compromising the ability of future generations to meet their own needs. For businesses, sustainability presents opportunities for both sales growth and increased efficiencies.

A new online NACS resource, “Making Sustainability Convenient,” launched earlier this year as the world faced an economic downturn brought on by the COVID-19 pandemic.

That context is important, as this resource shares both timeless guidance for addressing sustainability and ideas for helping businesses sustain themselves.

The resource covers four areas: • Reducing costs around energy and water usage • Attracting consumers who are more likely to support businesses with a sustainability focus • Creating efficiencies that can help stores manage costs, even during times of crisis • Fostering a community spirit For insights and retailer examples of sustainability strategies at work, visit www.convenience.org/ sustainabilitytoolkit.

leading items sold in our industry, and yet most of these bottles end up in the landfill or the ocean.”

The FloWater technology removes up to 99.9% of all impurities, viruses, toxins and heavy metals from tap water.

Choice also will offer FloWater’s recyclable aluminum multi-use water bottles, making it easy for customers to grab a drink of water, even if they have forgotten their own refillable container.

In 2019, NACS visited Fogarty, and his team showcased the Choice Market concept in the NACS Ideas 2 Go program.

To watch the video, visit www.convenience.org/ideas2go.

JUNE 2020 |

47

LEGAL HURDLES Many retail sustainability programs are born out of a need to comply with state or local regulations. Yet, in some cases it can be unclear if the mandates are actually helping or hindering sustainability goals. In California, for example, Berkeley’s Single Use Foodware Litter Reduction Ordinance requires, that as of February 1, all prepared food vendors must charge 25 cents for every disposable beverage cup provided, a move that would presumably drive consumers toward reusable cups. However, the ordinance allows vendors to refuse to fill “unsuitable or unsanitary cups provided by customers.” And a law that went into effect last year in the Golden State that revises existing regulations on the refilling of consumer-owned food and beverage containers, while designed to prevent crosscontamination, could deter retailers from allowing guests to use the containers. Under the measure,

Still More…

For more resources and reports on how you can more fully embrace sustainable practices in your stores, visit www.convenience.org/sustainability. From an Energy Star toolkit to surveys revealing consumer perceptions about recycling and trash at your stores, NACS can help you meet your sustainability goals.

48

| JUNE 2020

food facilities are required to isolate refillable containers from the serving surface or sanitize the serving surface after each fill-up.

New York’s plastic bag ban also has been mired in controversy. “This program was designed to wean consumers off of plastic bags by substituting paper bags as a cheap alternative until they transitioned to reusables,” explained Calvin. “But paper bags were in short supply, so that small hurdle became a big wall for customers.” Some consumers were forced to carry purchases in their arms, he said, transforming “convenience stores into inconvenience stores.”

Indeed, while retailers work to regroup post coronavirus, programs and goals previously established are now being looked at in a new light.

Reusable container and bag programs are among the initiatives that c-store operators will continue to study to ensure they balance sustainability goals with customer safety and convenience.

Terri Allan is a New Jerseybased freelance writer, specializing in the beverage industry. She can be reached at terri4beer@aol.com, and on Twitter at @terriallan.

CONVENIENCE.ORG

iStock.com/Altayb, robynleigh

cleaned, refilled and shipped to more consumers. In some markets, Loop has partnered with the likes of Kroger and Walgreens to spread the concept, and Case sees similar opportunities for convenience retailers down the road.

For c-stores, one of the biggest drawbacks to reusable containers is cross-contamination fear, as the recent coronavirus crisis has demonstrated.

FPI’s Dempsey said retailers must weigh the benefits and drawbacks of reusable programs for their customers before making a decision.

“Sustainability is a huge issue,” she remarked.

“C-store and other foodservice retailers must know their customers. They must know what their customers want. If they’re aligned, retailers will make better decisions.”

reborn.

™

PET is reborn at Inline Plastics All our products are made in part with post-consumer recycled PET

Learn more at inlineplastics.com/reborn

Packaging for a Better Planet

T COVID-19 is impacting how c-stores achieve clean—and what it means if they don’t.

By Jerry Soverinsky

50

| JUNE 2020

he beginning of any meaningful discussion of c-store cleanliness today must concede the following: “There isn’t a retailer that can guarantee a germ-free environment,” said Mike Zahajko, executive vice president of sales for CAF. That’s not to say it’s dirty; in fact, the industry has made great strides in upping its cleanliness game and positive perception among consumers.

But if we’re talking about cleanliness in a COVID19 and post-COVID-19 environment, we need to set expectations. And with that stipulation aside, let’s begin a discussion about c-store cleanliness.

Stipulation No. 2: There will be a new normal.

“As we look ahead, let’s refuse to accept the idea of getting back to normal,” said Zoran Ploscar, CEO of Trillium Facility Solutions, which provides facility management services for multisite customers. “We aren’t going back, we’re moving forward.”

At least for the time being, that assessment appears to be playing out among consumers. U.S.

CONVENIENCE.ORG

shopping behaviors changed dramatically as stayat-home orders took hold and consumers stocked up on pantry staples and household goods, according to Caitlyn Battaglia, associate client director with Nielsen. Shoppers made fewer trips to brickand-mortar stores but bought larger quantities when they did venture out. Online and click-andcollect purchases jumped 32% in March, with 50% of holdouts (those who did not shop online) planning to do so in the future, according to “The Impact of COVID-19 on Shopping Behavior,” a report by marketing agency Blue Chip. And the No. 1 reason for online adoption: to minimize exposure to health risks (89% of respondents).

Until a COVID-19 vaccine or effective treatment protocol exists, exposure to health risks will be a lingering concern, and it’s one that store operators must address to reassure customers that they are shopping in a safe and secure environment. We spoke with industry experts who weighed in with recommendations for key focus areas.

PROCEDURES At a minimum, retailers should exercise protocols that adhere to the Centers for Disease Control (CDC) recommendations, which address everyday cleaning steps, what to do when someone is sick and other considerations (see the NACS coronavirus resources page for links to cleaning and disinfecting resources and guidelines at www.convenience.org/coronavirus). The agency’s guidelines focus on two key steps: 1. Clean: Routinely clean high-touch surfaces using soap and water.

2. Disinfect: After cleaning a surface, apply disinfectant using an EPA-registered household disinfectant, diluted bleach solution or alcohol solution with at least 70% alcohol.

Certain products require that you leave them on a surface wet for a period of time; check the product label (bleach solutions should remain on a surface for at least one minute to be effective).

Certain cleaning chemicals require specific handling instructions; if so, make sure to train your workers accordingly when handling, complying with OSHA’s Hazard Communication standard.

CONVENIENCE.ORG

JUNE 2020 |

51

At a minimum, retailers should exercise protocols that adhere to CDC recommendations.

Cleaning and disinfecting have become de facto procedures for all facilities, but the work doesn’t stop there. Zach Richter, president of Coast Workplace Solutions, recommends addressing internal risks among employees, some of which might be easily overlooked. For instance, tasks as routine as emptying a garbage should be reassessed. “Don’t squish the bags when you lift them out. Lift the bag carefully and place it into another bag before tying it,” he said.

PRODUCTS Cleaning and disinfecting are not just about routine, said Scott Apter, president of Apter Industries, which manufactures cleaning products. “If you’re trying only to teach a skill set, you’ll fail. You must give [employees] the right [cleaning and disinfecting] products.”

Apter’s products are EPA-approved to kill the coronavirus, “which is a big thing,” he said. “Keep in mind, the CDC does not approve products, and the USDA does not approve products.” He recommends promoting this designation to your customers, something that may distinguish you from your competitors.

Like the CDC, Apter stresses routine and frequent cleaning of high-touch surfaces, which includes the main counter, credit card machines, door handles and coffee pots. “Those need to be addressed every hour or more. [...] If you think somebody touched it, wipe it. I walk around with a spray bottle and spray things all the time, even in the supermarket.”

LAYOUT In addition to cleaning and disinfecting, Richter said the lethality of the coronavirus and the ease with which it spreads may prompt stores to rethink their layouts and offerings, beginning with foodservice.

“C-stores that have self-serve areas, all of that must be rethought to include sneeze guards and reduce the chance of people getting their hands

52

| JUNE 2020

into the food product,” he said. “Automation and packaging will be key, which will mean more pre-packaged items and individually wrapped cups and cutlery.” Richter is installing plexiglass guards that shield store clerks and marking floor areas to space customers at least six feet apart.

“You need to avoid clusters in your store," he said.

Foodservice operations may undergo even more significant changes that require labor reallocation.

“I know of one retailer who is considering putting in a coffee person in the morning to assist customers,” said Liza Salaria, senior principal consultant with Impact 21. “That coffee steward would grab the cup and preps, morphing self-service into full-service.”

Restroom amenities should be reconsidered, too, with things like providing paper towels and installing touchless faucets and soap dispensers.

Whatever you do, don’t be afraid to promote your efforts to your customers, a possible competitive distinction. “If you have a professional come in weekly, get a sticker that announces that,” Ploscar said. “It shows you’re being proactive.

You’re selling that perception now.”

FOCUS ON EXPECTATIONS “Customers are now expecting a higher level of cleanliness and protective sanitation,” Salaria said.

As such, implement robust cleaning and disinfecting processes, as well as provide your customers with self-service sanitation options, such as gloves and hand sanitizers they can use to navigate your store.

These will be among a growing list of customer expectations. Pay attention to what they, and others, are saying for guidance. Consumer Reports recently provided advice to its readers for handling gas pump handles and performing other tasks at a station. Like any high-touch surface, “pump handles and keypads can be contaminated,” the magazine said, “so take precautions to avoid exposure.” CR’s advice included the following: •U se disposable nitrile or latex gloves. While CR advised consumers to carry their own, consider offering these gratis at the pump, along with sanitizing wipes, so motorists can wipe down the gas pump handle. Many c-stores provide gas gloves and are cleaning pump touchpoints and gas nozzles several times an hour.

CONVENIENCE.ORG

•U se hand protection when entering payment information at a keypad. While some customers will bring their own gloves, consider offering disposables at your payment terminals. Many retailers wipe down keypads after every customer.

•C lean your hands after you’re done. Provide customers with hand sanitizer or wipes as they exit your store or at the fuel islands, reassuring them that you have their safety in mind.

FOCUS ON LIABILITY In the U.S., operating in the age of COVID-19 raises liability issues, where best efforts at cleaning and disinfecting may not be enough.

Retailers should take multiple steps to protect their employees and customers, according to Law360.com: •S tay informed: Follow government reports to understand evolving risks, standards and best practices.

• Issue warnings: Post signage that warns customers you are unable to eliminate all risks of COVID-19 and remind them to maintain social distancing. “In many states, adequate warnings will be considered sufficient to protect business guests from dangers.”

•T ake preventive action: “The steps recommended by official agencies, industry groups and the actions of competitors should be considered in shaping the proper response to the evolving pandemic.” These include CDC guidelines, those issued by state health authorities, as well as actions taken by others in your industry.

•R egularly disinfect: Systematically clean and disinfect your store and high-touch surfaces, documenting your regimen.

•M aintain distance: Introduce markings that space customers six feet apart (or whatever the evolving standard may be).

Additionally, consider restricting in-store movement through aisles to one way, again using markings, if space allows. And do not overlook entrances and exits. “Ensure that measures taken to protect customers in the store do not lead to crowded and possibly dangerous conditions outside the location.”

CONVENIENCE.ORG

“We expect that essential retailers, assuming they follow best practices to reasonably inform and protect their guests, may limit liability for infections allegedly originating on their premises,” Law360.com said. “These businesses would be well advised to document the steps they are taking now to protect visitors. This may be a tall task in the middle of a crisis, but it can make all the difference if they are later forced to rely on an unreliable memory of events from the chaos of a pandemic.”

Finally, as we go to print, there is a debate in Congress about shielding businesses from litigation related to coronavirus, with Republicans marking it as their top priority in the next stimulus package.

The Trump Administration has signaled support as well. “It is something we are looking at carefully,” said White House economic adviser Larry Kudlow at a recent White House press conference.

NACS is leading a coalition of essential industries who are advocating for liability protection

Best Practices

Industry experts offer key tips for maintaining a clean c-store.

Scott Apter, president of Apter Industries • Wash hands often and thoroughly with a high-quality hand cleaner.

• Use an appropriate disinfectant cleaner recognized by the EPA for killing the coronavirus.

• Continually disinfect counters, keyboards, tables, restrooms and any area where public contact occurs.

Mike Zahajko, executive vice president of sales for CAF • Follow CDC guidelines and clean and disinfect hightouch areas regularly.

• Make sure you have products/tools, training and a process for follow-through.

• Provide customers control (offer hand sanitizer, gloves) and reassurance (let them see your team cleaning and share proof that you’re cleaning).

• Adjust or limit high concern activities (self-service food and drinks).

JUNE 2020 |

53

from civil suits alleging that COVID-19 was contracted at businesses, provided the businesses were not grossly negligent. “Convenience stores were designated as an essential industry and asked to stay open to serve the needs of the American public during the pandemic,” said Anna Ready Blom, director of government relations at NACS. “Our retailers have implemented unprecedented virus mitigation measures to protect our employees and customers, and they should not have to bear the cost of unfounded litigation brought by some attorneys looking to take advantage of this crisis,” Blom said.

Free Resources

For services and supplies for cleaning and sanitizing, including training and CDC guidance for areas where COVID-19 could be present, visit www.convenience.org/coronavirus.

There, you can find the following resources: •A list of companies that offer cleaning and sanitizing services and supplies for both inside the store and the fuel island.

•N ACS e-learning partner Ready Training Online (RTO) has created a free seven-minute training module on how to help prevent the spread of illness and disease at businesses.

•A list of EPA-registered surface disinfectant products.

The EPA notes that coronaviruses are enveloped viruses, meaning they are one of the easiest types of viruses to kill with the appropriate disinfectant product.

•C DC recommendations for the cleaning and disinfection of rooms or areas that those with suspected or with confirmed COVID-19 have visited.

•F ree resources from the Partnership for Food Safety Education, of which NACS is a partner, about handwashing and food safety that retailers can download and share in stores.

54

| JUNE 2020

PARTNERSHIPS Back to our initial premise: The traditional c-store is not a sterile environment. Perhaps COVID-19 is ushering in a new c-store model, where convenience is recalibrated, along with customer expectations. Turn to industry resources like NACS for ongoing guidance and support, while reaching out to relevant third parties for feedback. “Make the health department your friend,” Richter advised. “Have them come out to your store and guide you on what you should be doing.

Make them a partner in your business.”

Additionally, if tackling the new norm is too labor intensive, consider working with a deep-cleaning service. “Don't try to be a hero and quarterback everything yourself because likely, this is one small piece of a much larger comeback play,” Ploscar said.

When selecting a cleaning service, “make sure they use a CDC-recommended disinfectant. [...] It’s a great way to boost employee and customer confidence.”

Collectively, these focus areas promise to fundamentally change the operations at your store, beginning with labor. “I’m getting a lot of calls from retailers,” Zahajko said. “They have a sourcing problem; there is a labor shortage.” And even if retailers have a full staff, a question arises: Are there enough hours in the day to tackle jobs that are now far more time consuming? “In a pre-COVID world, a store maybe spent one to two hours a week cleaning their forecourt. Now, some are doing it hourly, 10 minutes per hour, maybe three hours per day.”

That’s a lot of extra work. And assuming you can get past that hurdle, your bottom line will no doubt end up far different than in previous years. That’s the new norm in a COVID-19 and (hopefully soon) post-COVID-19 world.

Stay safe and prosper.

Jerry Soverinsky is a Chicagobased freelance writer and a NACS Magazine contributing writer. Visit his work at www. jerrysoverinsky.com.

CONVENIENCE.ORG

C

M

Y

CM

MY

CY

CMY

K

A SHOUT OUT TO OUR INDUSTRY’S FRONT LINERS

Apter Industries would like to thank the people that have kept America running through the Coronavirus pandemic. Front liners in the convenience stores and travel plazas risked an uncertain environment, against an invisible enemy, to provide us with the essential products we needed to keep going. Thanks also to their management teams that went to extraordinary measures to keep their front liners safe.

Apter Industries was fortunate enough to help their cause by providing a trusted and consistent source for Apter Disinfecting Cleaner and other products needed to battle Covid-19. Thanks also to all of our customers who trusted us to do our small part in keeping them safe.

PLEASE CONTINUE TO: 1) Wash your hands thoroughly and often.

2) Use Apter Disinfecting Cleaner or a similar product that is recognized by the EPA against the Coronavirus. (See EPA.gov) 3) Continually disinfect counters, POS equipment, restrooms, door handles, fuel dispensers, and any area designated as a high touch point by store managers.

(They know their stores best).

BETTER TIMES ARE AHEAD: CONTACT US AT MAIL@APTERINDUSTRIES.COM

Tile Time Floor Cleaner

Gorilla Odor Killer

Apter Industries ENVIRONMENTALLY FRIENDLY CLEANERS

Garage Gorilla Pump Cleaner

Gorilla XDX Concrete Cleaner

Apter Disinfecting Cleaner EPA Reg # 1839-220-12017

800-441-7146  www.apterindustries.com Copyright © 2015, All rights reserved.

THE FUTURE OF MOBILITY INCLUDES

ELECTRIC

With automakers redirecting more than $1 billion in resources to deliver more than 100 new electrified models in the coming years, the growth of the electric vehicle (EV) market is set to accelerate. Electricity will soon become a common fuel for transportation.

McKinsey & Company projects that the United States will need as many as 13 million chargers by 2030 to support consumer demand—compared with less than 100,000 today. Now is the time for convenience and fuel retailers to begin preparing to offer new EV charging services to your customers, and NACS and the Fuels Institute are delivering two new resources to help you navigate your opportunities.

U.S. ELECTRIC VEHICLE ENERGY CHARGER DEMAND BETWEEN 2020 AND 2030

13 MILLION

6 MILLION

2 MILLION 2020

2025

Source: McKinsey Š Statista 2019

2030

NACS ELECTRIC VEHICLE INFRASTRUCTURE PROGRAM NACS is working with organizations focused on deploying EV charging infrastructure to ensure that NACS members can take advantage of opportunities to expand into this fast-emerging market. Through this program, NACS will help: •N avigate the diverse market and find solutions to fit your business •D efine high-demand markets to capitalize on the EV charging equipment investment •C onnect with network charging providers to install charging stations at your stores • I dentify partners to help install equipment, reduce costs and maximize profitability •S ource funding and technical support programs to assist with your entry to the market •A ssist with future-proofing new stores to enable EV charging when the time is right and protect the value of your 20+ year asset

This program is open to any NACS member interested in entering the electric vehicle charging market. For more information and to participate, visit www.convenience.org/EV.

FUELS INSTITUTE ELECTRIC VEHICLE COUNCIL This collaborative research body is pulling together stakeholders across the EV market to provide the necessary insights and knowledge to establish a sustainable charging business network. The Council is developing the following: • Analysis of state and local regulations and incentives that affect the installation and operation of EV charging equipment •A tool kit to help interested businesses effectively evaluate opportunities for offering EV charging services •D ata-driven best practices and case studies to help businesses successfully enter the charging market in a way that optimizes long-term profitability •A report on consumer preferences regarding charging station amenities that will satisfy the needs of current and future drivers of EVs

The Fuels Institute Electric Vehicle Council is focused on delivering valuable resources to the market. For more information on what the Council is doing and how you can get involved, visit www.fuelsinstitute.org/EVCouncil.

For insight into the electric vehicle market and the demands for charging infrastructure, download the recent Fuels Institute report “Electric Vehicle Market: Focus on Charging” at www.fuelsinstitute.org.

CONVENIENCE.ORG

JUNE 2020 |

57

58

| JUNE 2020

CONVENIENCE.ORG

RETAILERS ARE RETHINKING THEIR UNIFORM POLICIES TO ATTRACT AND RETAIN ENGAGED EMPLOYEES. onvenience store uniforms used to focus solely on durability and functionality— and as way for customers to easily spot employees. Those attributes are still important, but increasingly retailers are thinking outside these parameters and using their uniform policies to retain employees, lift morale and attract potential applicants.

TIME FOR A CHANGE “A big part of Sheetz is that we have this unique culture. Our employees are our brand, and [our uniforms] let their personalities shine through,” said Lainie Snider, manager of employee relations at Altoona, Pennsylvania-based Sheetz Inc. Sheetz recently overhauled its uniform policy to “refresh and upgrade,” Snider explained. “We decided that it was time to evolve from khaki pants.”

Sheetz’s former uniform consisted of khaki or black pants, a Sheetz-branded t-shirt for sales employees and a black polo for supervisors, assistant managers and store managers. Employees could wear jeans on Fridays. As part of the new uniform policy, the company decided to allow jeans any day of the week and nix the dress pants entirely.

“Jeans everyday was such a big win for them.

Not everyone owns dress pants, but everyone has jeans. They’re more comfortable,” said Snider.

The new uniform policy also allows the sales team to wear a black, red or gray t-shirt that is lightweight and breathable. (The former uniform t-shirts were made of a thick, 100% cotton material.) Supervisors can now wear short- or long-sleeve polos in red or gray, and store managers and assistant managers are allowed to wear a short- or long-sleeve button-up shirt. On Fridays, all employees can wear a t-shirt.

“We wanted our uniform to fit our employees’ lifestyle. We wanted something they wear to CONVENIENCE.ORG

work but can take their name tag off and go run errands,” said Snider.

MORALE BOOSTER Uniforms could easily be viewed as a minor operational decision, but a uniform policy that keeps the employee in mind goes miles in terms of morale.

“It’s nice for our employees to express themselves,” said Snider, who says that Sheetz regularly reviews feedback from employees and customers on its uniforms. For example, store managers shared that their required button-up shirts wrinkled easily, and with the managers being busy and on-the-go, they asked if Sheetz could look into different fabrics, which Sheetz promptly did.

Sometimes feedback doesn’t stick to just the physical uniform. Snider said that Sheetz’s customer base noticed that employees weren’t allowed to have visible tattoos. “We were getting feedback from customers pertaining to tattoos.

They were saying ‘You have these big, edgy billboards, and you are trying to attract an edgy, creative customer base, and yet your employees can’t have tattoos,’” said Snider. After internalizing this feedback, Sheetz decided to allow employees’ tattoos to show, with the exception of facial or front-of-the-neck tattoos.

DRESS FOR THE JOB YOU HAVE When telling the story of your convenience store, uniforms play a huge part in the narrative.

“Our co-workers set the bar for Kwik Trip’s professional and positive image in the workplace,” said Steve Wrobel, spokesperson for the La Crosse, Wisconsin-based retailer. “Their appearance is very important. They are a reflection of the brand and present a favorable impression of the company to our guests.”

JUNE 2020 |

59

The EPA estimates clothing and footwear generated 12.8 million tons of waste in 2017, and only 13.6% was recycled.

How can retailers help combat the environmental impact of textile waste?

J.T. Marburger owns a consulting company called Circular Solutions Advisors, which helps companies, including convenience retailers, set up effective recycling programs in their businesses. Marburger said he helps companies set up buying agreements with manufacturers that can turn a company’s recycled bottles into its uniforms. “One bottle can go back 100% into a uniform,” said Marburger. In the midst of the COVID-19 outbreak, Marburger also is working with hospitals and medical supply companies to implement buying agreements that can use recycled bottles to make masks and scrubs.

CHANGING TIMES

The spread of COVID-19 has forced companies around the globe to rethink their business models. Convenience stores have not been immune, especially when it comes to employee safety. Seeing c-store employees donning masks and gloves is commonplace now, and some retailers have installed plexiglass at checkout and foodservice counters to protect employees. Many retailers do not have set policies for personal protective equipment, but if an employee chooses to wear a mask, retailers say it must be medical-looking and not have offensive markings or writings on it. 7‑Eleven provided all stores and franchisees with a supply of masks for employees and donated the remaining inventory of one million masks to the Federal Emergency Management Agency (FEMA) to aid the medical community.

60

| JUNE 2020

THE COST TO CLOTHE The cost of hiring an employee can be a large percentage of a retailer’s budget. According to the NACS Compensation Report of 2019 Data, it CONVENIENCE.ORG

iStock.com/malven57

SUSTAINABLE WEAR

Kwik Trip expects employees’ uniforms to be neat, clean and properly pressed—and uniform providers are making that easier for employees.

“Our customers have moved from pique-knit, Lacoste-type shirts to fabrics that don’t fade and don’t lose their fresh look,” said Bruce Main, CEO of uniform provider Christy & Main Inc., based in Marietta, Georgia.

According to Main, retailers have transitioned to shirts made of polyester, a fabric that retains its color and is widely used in the retail industry now. Christy & Main even offers shirts that are 100% polyester on the outside and 100% cotton on the inside for employees that may be sensitive to polyester.

“Employees are wearing these shirts five to seven days a week. They have to be easy to clean, easy to work in and must be able to last,” said Russ Main, president at Christy & Main.

Finishes that can be added to shirts include sweat-wicking, which helps the shirt stay fresh from body order; antimicrobial, which keeps stains off—even grease—and antiwrinkle. “No one wants to iron anymore,” said Bruce Main.

An employee-friendly uniform policy also can help with recruiting. Sheetz allows its associates to wear one of four promotional t-shirts on Fridays and holidays. The company worked with its marketing department to come up with “cutting edge slogans” to add to the t-shirts. For example, Pennsylvania recently allowed convenience stores to sell beer, so for its stores in the state, Sheetz created a shirt with a beer bottle on the back and the slogan: “Sheetz run and done.”

“If you came in as an applicant, you can say, ‘I get to wear a shirt with a beer bottle on it,’” said Snider. “Who wouldn’t want to wear that to work?”Sheetz’s store managers also can approve sports shirts and team jerseys for employees to wear on game days if the store is near a sports team, including high school, college and professional teams. “It’s pretty cool and has received a good reaction from our fanbase. They love walking in and seeing an employee wearing a Pittsburgh Penguins jersey,” said Snider.

cost on average $1,716 to hire, train and equip a full-time sales associate and $3,213 to do the same for a store manager last year. If employers can provide uniforms that last longer, it can help their bottom line.

“Back 20 years ago when you bought a polo shirt, they would lose their color.

Over the process of 10 washes, they were course, and they just didn’t hold up,” said Bruce Main. “Today, we have people wearing our shirts for up to five years, and they still look good. It’s reducing the overall cost for uniforms.”

A California-based retailer has begun outfitting its new hires with a company vest to wear over their street clothes and then leave at the store after each shift.

After they have worked for a set period of time, they receive four uniform shirts. This way, the retailer can cut down on turnover costs. Turnover was 125% for a part-time sales associate in 2019, according to the recent NACS Compensation Report.

The majority of retailers provide employees with their uniforms free of charge upon hire.

One retailer based in Michigan provides three branded shirts to full-time employees and two branded shirts to part-time employees at no cost. If they become stained or torn, the company provides a replacement shirt for free.

If an employee leaves the company without returning the shirts or name tag, the retailer deducts $25 from their last paycheck (the employee signs an agreement to allow this deduction during the hiring process).

Kwik Trip provides an “allowance” for each new hire based on full- or part-time status to purchase a sufficient number of uniform shirts required by the employee’s specific work conditions. Additionally, employees are given an annual uniform allotment to replace worn uniforms or purchase additional uniform pieces.

Christy & Main has a policy of “order today, shipped tomorrow,” as the industry CONVENIENCE.ORG

demands uniforms quickly to keep up with turnover. Even the larger companies that have custom orders expect speedy delivery. “There is so much turnover in the convenience store industry. It’s critical that every new hire is in their uniform as quickly as possible,” said Russ Main.

3rd Square.indd 1

Sara Counihan is managing editor of NACS Magazine and content project manager at NACS.

JUNE 2020 |

61

5/6/2020 11:55:58 AM

THE POWER OF

COMMUNITY HR leaders gathered ahead of the pandemic to connect and strategize on issues in the workplace.

BY SARA COUNIHAN

62

| JUNE 2020

CONVENIENCE.ORG

N

ow in its 28th year, the NACS HR Forum brings together HR leaders to collaborate and work to resolve some of the industry’s most pressing labor issues. And this year in early March, nearly 90 HR professionals gathered in Dallas to discuss the convenience industry’s hiring, retention and leadership challenges. This year’s pressing issue, which rapidly gained momentum while attendees settled in, was coronavirus.

Joanne Loce, president of Virginia-based Loce Consulting and event moderator, guided attendees through the three days of education and collaboration, which kicked off with a legislative update—and a timely focus on how employers should navigate coronavirus in the workplace.

“The most important thing to do is educate your employees about how the virus can be contracted,” said Arthur Lambert, a partner at Fisher Phillips LLP. He added that HR personnel should manage employees’ emotions regarding the threat of the virus. He encouraged attendees to train supervisors on overreaction impacts and emphasized the importance of adhering to antidiscrimination policies.

In light of the virus, encountering a coworker who is coughing or sneezing can make employees uneasy, and as an HR professional, you cannot legally divulge if an employee has the virus or not, Lambert said. He shared advice on what to do if employees test positive for COVID-19, if employees suspect they have the virus but it isn’t confirmed and if employees come into contact with a presumptive COVID-19 case.

Following Lambert’s presentation, John Skousen, also a partner at Fisher Phillips LLP, gave attendees a few other updates in the legal and legislative space, including news from the National Labor Relations Board. He then gave updates from the Equal Employment Opportunity Commission, which included retaliation and sexual harassment cases and discriminatory cases based on hairstyles, LGBTQ, gender identity and English-only policies.

Skousen addressed marijuana and CBD use in the workplace, and how marijuana, including CONVENIENCE.ORG

medical marijuana, is still federally illegal and classified as a schedule one drug. He emphasized the safety implications of a person under the influence in the workplace, and how there are legal carveouts in marijuana-legal states to ensure workplace safety is maintained. Finally, Skousen discussed avoiding common wage and hour pitfalls and how to stay compliant with the Fair Labor Standards Act. THRIVING IN CHAOS Unexpected challenges and changes are a new reality, so how can you not only cope but thrive among the chaos—even when things are completely out of your control?

“Chaos happens when reality is different than your expectations,” said Corinne Hancock, a chaos coach.

How we react to chaos can be the difference between success and failure and determines whether our team

BENCHMARK YOUR TALENT

The NACS State of the Industry Compensation Report of 2019 Data allows retailers to benchmark their business with the latest industry data on employee compensation, benefits and turnover for every position, seniority level and store size. This year’s report was compiled with metrics from more than 120 retail companies, representing more than 20,000 stores.

Inside your digital copy, you’ll find annual base salaries and the dollar value of all additional compensation for 15 executive-level positions, 11 operations positions and 10 store-level positions, sorted by region and firm size. Also included is an Independent Operator section, providing a breakdown of salary, health care and benefits for smaller companies. Purchase your digital copy today at www.convenience.org/compreport.

JUNE 2020 |

63

FIND YOUR SUPPORT

The NACS Human Resources Forum is designed to educate and connect HR professionals working in the convenience and fuel retailing industry.

At the three-day event, attendees engage in interactive presentations and valuable networking and learn from case studies that can generate new ideas. Year over year, attendees say they develop stronger peer networks that can function as a personal board of advisers to help with work issues and opportunities for years to come. An online community—exclusive to HR Forum attendees— provides anytime access to peers searching for answers to pressing HR challenges.

Learn more about HR Forum and the 2021 conference to be held in Savannah, Georgia, at www.convenience.org/hrforum.

comes together or completely falls apart, said Hancock. She then presented a model for how people should react in the midst of chaos.

1. Prepare: Are you chaos ready?

2. Do: What do you do when chaos hits?

3. Be: Who are you being?

4. Adjust: How do you use this chaos to your advantage?

Hancock said that companies can prepare for chaos by clarifying their mission and making sure employees know the mission, as well as their role within the mission and their leaders’ roles.

“Ask people what their role is. ‘What do you think you’re responsible for?’ And in turn, ask, ‘what

What you do when chaos hits can make a huge impact on your employees and your company.

64

| JUNE 2020

do you think my role is and what I’m responsible for?’” said Hancock.

What you do when chaos hits can make a huge impact on your employees and your company.

Hancock advises to remember your mission, assess and evaluate the situation and get creative when obvious solutions are no longer on the table.

Hancock then posed the question, “Who are you being in the midst of chaos?”

“Who are you going to be to change the culture in your company,” asked Hancock “Because how you’re being is how everyone else is going to show up.” If you are panicking, blaming or complaining, so will your employees, she said.

Hancock said you must take on the responsibility for your team, their reactions and ultimately, finding the solution to thrive in chaos. “Are they [your team] focusing on the problem or the solution?” asked Hancock. “Are you adding to the chaos, or are you solving the problem?”

Perhaps the most important piece of the chaos model is how someone will adjust to the chaos and use it to their advantage. “Chaos makes you stronger,” said Hancock. “Looking back, you are the proudest of the results after the chaos.”

PEOPLE FIRST Jayme Gough, NACS analyst, presented attendees with in-depth benchmarking data and insights from the newly released NACS Compensation Report.

“The number of global organizations that have implemented people analytics in the past three years has grown from 15% to 68%,” said Gough.

People are taking their investment in employees seriously, as unemployment (pre-pandemic) hits a 50-year low, and wages skyrocket, she added.

Wages made up 40% of direct store operating expenses in 2019—a 5% increase over 2018. Gough says the reason for the increase is that employers are choosing to invest in good employees who can help their companies generate profit.

Gough discussed health-care costs and showed that costs have remained relatively stable during the past 10 years. However, discretionary wellness benefits, such as flexible spending accounts and tuition reimbursement, have decreased, and Gough CONVENIENCE.ORG

said that companies may be minimizing these expenses to keep health-care costs consistent year over year.

Recruitment is a hot topic in the HR industry, as the competition for employees remains fierce.

Sixty-three percent of hourly workers said that higher wages were most important to them, followed closely by a predictable work schedule at 53%.

According to Gough, it’s now commonplace for an employer to offer competitive pay, so she encouraged attendees to think of other ways to attract and retain employees through benefits and a good work culture. “Benefits will attract all people, but we want exceptional people. So what benefits are going to attract the right people?” she asked.

Turnover is a difficult aspect of the industry to manage, as turnover rates for c-store retailers remain high. The turnover rate for full-time store associates was 81.3% in 2019, while the rate for parttime store associates was 160.2%. The total average store associate turnover rate was 121% last year, slightly up from 2018’s 118%. The manager turnover rate in 2019 remained the same as 2018 at 22.0%.

This year, the NACS Compensation Report began tracking the employee “ghost” rate, which refers to employers that interview, hire and receive an acceptance from candidates, but the candidates do not show up for work on their first day and never inform the employer. The ghost rate for full-time store associates in 2019 was 15%, and the rate for part-time store associates was 18%.

BETTER TOGETHER The HR Forum also explored other themes designed to help HR attendees build better organizations. Mary Beth DeNooyer, CHRO of Keurig Dr Pepper, explored how to differentiate your company through employee engagement. And Chris McKinney, director of human resources at Jackson, Mississippi-based Sprint Mart, led attendees through an interactive session on using scheduling as a competitive advantage inspired by his time working at Walt Disney World.

What if there was a better way to “do” change, facilitators Dave Croci and Rashel Rogers asked CONVENIENCE.ORG

Benefits will attract all people, but we want exceptional people.

So what benefits are going to attract the right people? and provided an action plan for attendees to conquer change fatigue. Attendees discovered how change fatigue is playing out in their workplaces and collectively developed strategies to prevent it.

The immersive experience allowed participants to network and discuss challenges with their peers from other organizations.

Joni Dolce, assistant professor at Rutgers, The State University of New Jersey, shared ways to create mental-health-friendly work environments conducive to employee productivity. Dolce shared that stress, depression, anxiety and other mental health challenges may contribute to an employee's increased absenteeism, lateness and overall drive to do well and succeed in a company. She shared strategies that HR attendees can use to retain these workers and to create supportive and accessible environments that allow for increased productivity.

Throughout the event, networking breaks and roundtable discussions brought everyone together during a time of confusion and chaos as attendees reacted to COVID-19 emails and phone calls from their home offices. Through it all, the community of HR professionals gathered in Dallas did what they do best: Share ideas and support to help each other help their organizations.

Sara Counihan is the content project manager at NACS and the managing editor of NACS Magazine. She can be reached at scounihan@convenience.org.

JUNE 2020 |

65

GAS STATION GOURMET

Safety Is a Priority

How two c-stores are handling foodservice in the age of COVID-19.

BY AL HEBERT

The Stop and Go Mini Mart in Bend, Oregon, started a delivery service as the pandemic took hold. On the forecourt, attendants use grabber tools to handle credit cards and offer customers disinfectant wipes as part of social distancing.

T

here is no blueprint for handling the current economic situation. There are no pandemic seminars and nothing written in textbooks. Early this year, COVID- 19 hit quickly, and today, convenience stores with foodservice operations struggle with a new reality.

At NACS, we wanted to connect with stores Gas Station Gourmet profiled in the past to see how they’ve pivoted to survive in a business environment like none before.

STOP AND GO MINI MART Kent Couch is a c-store innovator. Whether it’s a beer cave—that’s an actual cave—or putting gas pump attendants in retro uniforms (Oregon is one of two non-self-serve fuel states, although the pandemic has temporarily changed that), Couch is always looking to offer great customer service at the Stop and Go Mini Mart in Bend, Oregon. We profiled the c-store in the February 2020 issue.

When the COVID-19 pandemic began, Couch gave away a roll of toilet paper with each fill-up.

“We ended up giving away 1,300 rolls. The goal was to put a smile on customer’s faces,” Couch said, adding, “We didn’t realize how many customers didn’t need the fuel but needed the toilet paper. We should’ve just given away the toilet paper.”

66

| JUNE 2020

Once the toilet paper promotion ended, the store continued to add a bit of flare to the customer experience. Attendants use grabber tools to retrieve credit cards, and customers get free disinfecting wipes to clean off their steering wheel. With wipes a scarce commodity, Couch innovated. “We created our own wipe using a special towel soaked in a disinfectant. Customers enjoy it; it’s a lot of fun,” he explained.

Couch also acted quickly to start foodservice delivery. “It’s doing really well, but it’s a big risk.

We deliver up to five miles, and we’re doing $1,000 a day,” he said.

Beer sales are up 36% since the start of the pandemic. “We’re down 22% on fuel, and in-store, we’re way up,” Couch said. “Beer and cigarettes are a primary growth factory. People are home probably drinking more beer; maybe they’re nervous and smoking more.”

Supply chain hiccups make it difficult to find some commodities. “Our main provider is out of all kinds of products like chicken and beef,” he said, adding, “So, we just call all the [purveyors] who’ve wanted our business. We’re trying to forward-buy two months ahead and preparing freezer space.”

Hand sanitizers have been placed at the entrance to the store, at the register and outside CONVENIENCE.ORG

the restrooms. There’s plexiglass at the register. It’s all about keeping employees and customers safe. “We met with employees to see what they felt it would take to feel safe,” said Couch, who also believes the store is “giving customers the peace to come in.”

SHOPRITE/BOURBON ST. DELI/ TOBACCO PLUS ShopRite Inc./Tobacco Plus is a family owned chain of 62 convenience store locations throughout southern Louisiana.

(NACS Daily in April featured ShopRite’s new alcohol delivery service via a partnership with Drizly.) Carter Ledbetter, marketing director, said of the current situation: “Our main goal is to be transparent and let customers know all of the precautions we’re taking to keep employees and customers safe.”

Hanging on to employees in this environment is a challenge. Fear is often a factor for staff leaving, so making work fun is a strategy to keep employees comfortable. “At ShopRite/Bourbon St. Deli/ Tobacco Plus we’re doing dress-up days

Employees of ShopRite and its sister stores compete to see whose costume gets the most likes on social media. It's one way the Louisiana c-store chain is boosting morale during the COVID-19 crisis.

CONVENIENCE.ORG

to boost morale and make it enjoyable for employees to come to work,” Ledbetter said. “It’s a contest—whoever gets the most likes for pictures on Facebook gets a pizza party or donuts.”

Overall, keeping the store safe is a priority. “We have a sanitizing program.

We’re spraying down pump handles, keypads, cooler handles, and we have fuel assistants outside,” she explained, adding that “we wipe down touchable surfaces every 30 minutes.”

When employees at two separate stores tested positive for COVID-19, ShopRite shared the news on its social media account. “We fogged the store, which took a day. We let everyone know that we were also sanitizing the store according to CDC guidelines using EPA-approved chemicals. The cleaning process covered the entire store and started immediately,” explained Ledbetter.

“Everyone who works in the store, no matter what shift they work, is sent home and can’t return until fully released by a physician, which has been anywhere from seven to 14 days,” said Bobby McGee, director of foodservices.

Once the store is safe, the challenge of staffing it begins. “We have to pull from neighboring stores—if we have any—and pull from the office,” McGee explained.

“We also have to adjust the hours until we can get some of the crew back.”

On May 1, Louisiana Governor John Bel Edwards relaxed some of the restrictions on restaurants. Customers can either take the food order to go, or they can eat outdoors. Tables must be 10 feet apart, and the exterior capacity for customers must be only 25% of the maximum allowed by the state fire marshal.

ShopRite/Bourbon St. Deli/Tobacco Plus has a team approach to dealing with everything, including the pandemic. “We meet as team and throw around ideas.

There’s never a bad idea. I love that about this company,” Ledbetter said, adding, “Our goal is to be transparent and proactive. We want people to understand the precautions we’re taking for the safety of our employees and customers.”

Our main goal is to be transparent and let customers know all of the precautions we're taking to keep employees and customers safe.

Al Hebert is the Gas Station Gourmet and showcases America’s culinary treasure— gas station cuisine. He shares these stories and on occasion, a recipe or two at www.

GasStationGourmet.com. He is a NACS Magazine contributor, bringing foodservice ideas to readers.

JUNE 2020 |

67

GLOBAL TRENDS

COVID Down Under

Survey results from the Australasian Association of Convenience Stores demonstrate the value of convenience at any time.

A

ACS, the Australasian Association of Convenience Stores, in partnership with CMA Consulting, conducted a study in late March to understand the role that fuel and convenience stores play in servicing the Australian community through these unprecedented times.

As the increased threat of COVID-19 spread through communities and lockdown directives were issued—just like in the U.S. and other parts of the world—the Australian government required essential services to remain open. While more people practiced social isolation and were less likely to be out and about, AACS, the voice of more than 33,500 convenience stores, wanted to explore the question: Is there still a vital role for fuel and convenience stores to play, outside of selling fuel?

The results show that convenience stores—no matter the country—serve an essential role in communities, even in the darkest of times.

Consumers indicated they are using convenience stores more than previously as an alternative to grocery stores. During the past two weeks:

•4 7% of grocery shoppers said they were using them more often •4 4% of convenience shoppers reported using them more often

USAGE OF CONVENIENCE STORES VS. PREVIOUS MONTH

1

Visiting more 11%

Visiting the same 44%

Visiting less 45%

Males 46%

The items purchased more frequently from convenience stores are household products, including milk, general groceries and paper products.

ITEMS BEING PURCHASED MORE IN CONVENIENCE STORES

2

39% 33% 23%

22%

Milk

Snacks

30% 22%

General Groceries

Convenience Shoppers

68

| JUNE 2020

29% 23%

Paper Goods

29% 23%

Bread

28% 20%

Cold Beverages

Supermarket Shoppers

25% 19%

Food on the Go

19% 21%

Personal Care Products

19% 19%

Cleaning Supplies

16%

19%

Medicinal Products

15% 15%

Coffee

14% 14%

10% 11%

Meal Kits Cigarettes*

*Results with non-smokers removed at 20% and 25%

CONVENIENCE.ORG

3

REASONS SUPERMARKET SHOPPERS ARE VISITING CONVENIENCE STORES MORE

I am getting fuel anyway, and it means I have to go to less places

49%

I can get in and out quickly

39%

Over 51 years old (46%)

There are less people in convenience stores at any one time

31%

31–50 years old (37%)

It means I avoid the supermarket

30%

31–50 years old (37%)

It is closer to home, so this means I have to travel less

26%

I cannot get the products I want elsewhere

25%

They have longer opening hours

20%

There are less people going to convenience stores overall They have no limits on number of products I trust the hygiene practices more in convenience stores

4

Over 51 years old (53%)

17% 8% 7%

REASONS FOR VISITING CONVENIENCE STORES LESS

I'm not going out as much 31% Over 51 years old (44%)

I am not needing to buy fuel as often

25% 31–50 years old (30%)

I am trying to spend less money, so I am buying less I am cooking more at home rather than buying food when I am out

21% Females (26%)

I'm ordering online more

20%

I have stockpiled goods, so I do not need to shop as much

20%

They are running out of things I would normally buy

20%

I'm going to supermarkets more

17%

I am not going to work or study, so I do not need them as much

17%

I am concerned about the level of store hygeine

17%

CONVENIENCE.ORG

JUNE 2020 |

69

GLOBAL TRENDS

NACS GLOBAL CALENDAR OCTOBER 11-14, 2020

NACS Show Las Vegas, Nevada www.nacsshow.com

5

Time has changed 42%

CHANGES IN SHOPPING TIME OF DAY

Of the 42% whose time has changed: 67%

34%

26%

MARCH 2-4, 2021

NACS Convenience Summit Asia Bangkok, Thailand

JUNE 1-3, 2021

To avoid crowds

Product availability

The store is cleaner

NACS Convenience Summit Europe Dublin, Ireland

Men ages 31 to 40 years old were more likely to indicate they are still using convenience stores for food on the go. And although grocery still ranks as the No. 1 option for shopping for one to three items in a trip, convenience stores are considered safer due to:

METHODOLOGY Researchers polled 1,000 respondents in an online survey in line with national representation. Respondents included 500 regular convenience store shoppers (determined by shopping for items other than fuel at least twice a week) and 500 regular grocery shoppers (determined by shopping at grocery stores a minimum of every two weeks). The study was conducted March 30–31, 2020, by AACS (www.aacs.org.au) and CMS Consulting.

70

| JUNE 2020

Time has not changed 58%

17%

16%

Fitting in around modified school schedules

Fitting in around modified work schedules

•L ess people in the store •E asier and quicker to get in and out •M ore likely to have stock availability While most convenience shoppers haven’t changed their behavior, 42% are shopping at different times than usual: •6 7% to avoid crowds • 3 4% for better stock availability The role of fuels and convenience during this difficult period remains an important one, even more so than usual: • 63% of convenience shoppers rate eight or above on an agreement scale that stores should remain open • 47% of grocery shoppers said they are likely to use convenience stores for items other than fuel during this period.

CONVENIENCE.ORG

3-Ply Disposable Face Masks Available Now ADULT SIZE, DISPOSABLE, 3-PLY FACE MASKS THAT USE NONWOVEN TECHNOLOGY AND HAVE HIGH FILTRATION EFFICIENCY.

One Case Minimum Order a. 200 COUNT CASE (40 Boxes of 5, 10 Packs - $1,050.00 + Shipping b. 250 COUNT CASE (50 Boxes of 5, 10 Packs) - $1312.50 + Shipping

FOR MORE INFROMATION AND TO PLACE ORDERS PLEASE E-MAIL masks@quicksave.com Beacon & Bridge Market | www.beaconandbridge.com/masks

CATEGORY CLOSE-UP / COLD DISPENSED BEVERAGES

Climate Change

Hot weather is prime time for cold dispensed beverages.

BY PAT PAPE

JUST THE FACTS Cold dispensed beverages generated $21,733 gross profit dollars per store annually in 2019.

72

| JUNE 2020

of respondents in a recent Statista survey reported drinking soda several times a week, if not daily. Notably, only 49% of younger respondents were regular drinkers compared with older consumers (57.5%).

COLD, CONVENIENT REFRESHMENT For the past decade or so, consumers have indicated a preference for more healthy foods and beverages, shunning drinks containing artificial ingredients and showing interest in more natural offerings, such as tea and water, and energy and sports drinks. Cold dispensed beverage sales increased slightly from 2018 to 2019, to $45,896 per store annually, and were the third largest percentage of foodservice sales following prepared food and hot dispensed beverages, according to Jayme Gough, an analyst for NACS. “Cold dispensed beverages generated $21,733 gross profit dollars per store annually in 2019 and had an average gross margin of 47.35%,” she said. “Cold dispensed beverage offers are a great way to drive customer loyalty, sales volume and incremental basket spend.”

Despite Davenport’s early morning cola craving, most cold dispensed beverages are purchased during the lunch daypart, which makes them ideal for bundling with prepared food at a special price.

“The ability to combine a dispensed beverage with a prepared food offer or some other high margin item is a key strategy for convenience retailers,” Gough said.

Traditional carbonated beverages from major producers still dominate the c-store CONVENIENCE.ORG

iStock.com/unalozmen

E

very weekday morning on her way to work, Pamela Davenport of Austin, Texas, pulls into her nearest convenience store to purchase a large fountain drink. While other commuters sip their cups of joe, Pamela gets her a.m. jolt from Diet Coke, a ritual she’s enjoyed for years.

“Diet Coke has enough caffeine to wake me up, and I can drink on this until mid-afternoon,” said Davenport, who prefers the taste of fountain drinks over soda from cans or bottles. “I even like it when the ice melts and kind of dilutes the last bit.”

According to Statista, the consumer research provider, soft drink consumption in the United States dropped for the 13th straight year in 2018 to 38.87 gallons per person, a decrease of 25% since 2000 when per capita consumption was 53 gallons.

Despite those numbers, the U.S. remains a nation of soda sippers. More than 50%

Industry Sales

% of In-Store Sales 2018

2019

2.15% 1.93%

Avg. Sales/Store 2018

2019

$45,466 $45,896

% of Stores Selling 2018

2019

96.7% 96.3%

Source: NACS State of the Industry Report of 2019 Data

iStock.com/undefined undefined

cold-beverage bar. Carbonated fountain beverages made up 62.7% of category sales in 2019, but sales of “other” dispensed beverages are growing, due in part to the popularity of iced or cold-brew coffee, cold-brew tea and kombucha, a fermented tea containing live bacteria that aids in healthy digestion. Other dispensed beverages accounted for 20.6% of category sales, followed by sports drinks (5.1%), non-carbonated (5.1%), refills (4.2%) and club mugs (2.2%).

JAZZING UP THE FOUNTAIN With so much competition in the category, primarily coming from quick service restaurants, convenience retailers continually seek new cold dispensed options that will attract more consumers and boost sales.

Irving, Texas-based 7-Eleven offers kombucha on tap at its trendy lab store in downtown Dallas, and the chain recently added Jarritos, a popular fruit-flavored craft soda from Mexico, to its fountain offerings companywide. Until now, Jarritos has been sold in bottles, and 7-Eleven has offered it in the proprietary Slurpee format.

This is the first time Jarritos has materialized as a fountain beverage.

“We are always looking for new and interesting flavors for both Slurpee and fountain drinks by monitoring flavor trend CONVENIENCE.ORG

experts, as well as social media buzz,” said Jacob Barnes, senior product director for proprietary beverages, 7-Eleven. “Jarritos is not only the top-selling soft drink from Mexico, but it’s also great-tasting and has broad appeal among all ages and demographics.”

Two convenience chains recently added bubbler machines featuring Pure Craft Beverages to their drink programs.

While bubble machines are not new equipment, the product inside appealed to Rutter’s, the York, Pennsylvania-based chain, because it’s made with real sugar, real juice and natural flavors.

“Pure is a brand that utilizes no high-fructose corn syrup in its products,” said Chad White, category supervisor for Rutter’s. “Pure offers unique flavors, such as ginger beer,

Customization is particularly important to young customers.

THE POWER OF CSX DATA CSX, the engine behind category metrics and NACS State of the Industry data, provides current and customizable tools for financial and operational reporting and analysis in the convenience industry. Retailers can measure their company by any of the myriad metrics generated via our live database. Contact Chris Rapanick at (703) 518–4253 or crapanick@convenience.org for a complimentary executive walkthrough.

JUNE 2020 |

73

CATEGORY CLOSE-UP / COLD DISPENSED BEVERAGES

PER STORE, PER MONTH SALES

2017

2018

2019

$5,492 $5,500 $5,300 $4,391

$5,100 $4,900

$4,377

$4,700 $4,500 $4,300 $4,100 $3,900 $3,700 $3,500 $3,300 $3,100 JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

Source: CSX; csxllc.com

Providing flavorings on the beverage bar increases drink options without tying up in-store real estate.

74

| JUNE 2020

orange Dreamsicle and cucumber lime, and these flavors help bring some excitement to the beverage bar.”

At High’s, the Mid-Atlantic chain with headquarters in Baltimore, the bubblers were added to full foodservice stores as part of an expanded beverage offer, said Sherryn Diamond, director of foodservice at High’s. Pure was chosen to fill them because it’s a “clean label” product, she said. “The flavors arrive in one-gallon jugs and are mixed with water and put into the bubblers. We plan to rotate LTO flavors based on the season.”

Dallas Wells, vice president of foodservice for High’s, said, “We chose Crathco bubblers [equipment] due to the limited parts that need to be removed for cleaning. Stores tear down the machines, clean them and refill them with fresh product every seven days.”

While the product’s better-for-you attributes and the equipment’s ease of care are important, the most impressive feature is Pure’s margin—“approximately 55%, higher than traditional fountain soda,” Wells said.

A wide selection of flavors and the ability to manipulate them are important to beverage consumers, according to Glenn Hodess, manager of national sales and export development for Zavida Coffee Roasters of Ontario, which also produces a line of syrup concentrates made with natural flavors and organic sugars.

“Flavorings are a huge market for us,” said Hodess. “You see kids in a convenience store putting cherry, grape and lime in their drink. They make it their own beverage—something they created— and that’s what this is all about. It gives people an experience.”

CONVENIENCE.ORG

Electrolit.com

CATEGORY CLOSE-UP / COLD DISPENSED BEVERAGES

Subcategory Performance COLD DISPENSED BEVERAGES

% of Sales

Avg. Sales/Store

Avg. GP$/Store

Gross Margin %

2018

2019

2018

2019

2018

2019

2018

2019

Fountain - Carbonated

66.0%

62.7%

$29,989

$28,789

$13,150

$12,653

43.85%

43.95%

Other Cold Dispensed Beverages

21.8%

20.6%

$9,905

$9,434

$5,918

$5,274

59.75%

55.90%

Fountain - Sports Drinks

4.0%

5.1%

$1,838

$2,361

$1,024

$1,419

55.70%

60.11%

Fountain - Non-Carbonated

4.0%

5.1%

$1808

$2,357

$1,004

$1,336

55.50%

56.70%

Refills

3.6%

4.2%

$1,649

$1,929

$536

$660

32.52%

34.23%

Fountain - Club Mugs

0.6%

2.2%

$277

$1,027

$62

$390

22.29%

38.03%

100.0%

100.0%

$45,466

$45,896

$21,694

$21,733

47.71%

47.35%

TOTAL

For more information on NACS category definitions, visit www.convenience.org/categorydefinitions.

Source: NACS State of the Industry Report of 2019 Data

A challenge worth pursuing.

NACS Leadership for Success offers rising industry leaders an invaluable experience for growing their skills and becoming stronger performers in their companies and in their careers.

Own your future.

August 9-14, 2020 | Glen Allen, Virginia convenience.org/LFS2020 Half Horz.indd 1

76

| JUNE 2020

5/13/2020 1:41:43 PM CONVENIENCE.ORG

Consumers will add flavors to everything from sodas and tea to coffee and water, he said, so providing flavorings on the beverage bar increases their drink options without tying up in-store real estate.

“Our products come in five-ounce bottles, and each bottle flavors 400, 12-ounce beverages,” Hodess said. “If you have peach, pomegranate, raspberry and mango [flavorings], you can brew two regular ice teas—sweet and unsweetened—and you’ll have eight different flavored ice teas.”

“Customization is particularly important to young customers,” said Gough. “They love to experiment with flavors and create something they have never tried before. More retailers are

providing dispensed options that let customers create something truly unique to their tastes.”

COLD AS NITRO In 2017, the U.S. cold-brew coffee business was about $166 million, according to Statista, and was predicted to hit $944.16 million by 2025. Much of that is driven by the demand for nitro cold brew, the coffee drink that relies on nitrogen gas to create a creamy head like that found on a stout beer. Thanks to high-tech coffee equipment, what was once a difficult drink to produce can now be easily incorporated into a cold dispensed beverage program.

YOUR PARTNER FOR PROFIT • Superior Products • Turnkey Program • Best-in-Class Customer Service Visit us at NACS Booth #4651

COLD BREW

Ultimate Dispensability

Great Tasting On-Trend Flavors

* No mixing, mess or hook-ups

iStock.com/burwellphotography

ARABICA COFFEE

Black & Bold • Salted Caramel Horchata • Frappé * Wholesome Dairy Ingredients * Certified Kosher For more information call 1-800-948-1922 or visit www.goodwest.com

Half Horz.indd 1 CONVENIENCE.ORG

* Sanitary, aseptic 6 liter bags * Minimal contact surface area means safer experience for both shoppers and employees * Smallest footprint in the industry with LED backlit graphics * Custom graphics available

5/13/2020 2:06:36 PM

JUNE 2020 |

77

“If your customer base is looking for menu options, it ought to be there,” said Spencer Turer, vice president of Coffee Enterprises, a coffee and tea consultancy in Hinesburg, Vermont. “Your nitro consumer may or may not be your traditional convenience store consumer, but your traditional c-store consumer evolves.

You’re attracting new customers as soon as you upgrade your foodservice and grocery offerings. There are dozens of coffee roasters out there who are happy to get you a cold-brew product.”

Pat Pape worked in the convenience store industry for more than 20 years before becoming a full-time writer.

See more of her articles at patpape.wordpress.com.

78

| JUNE 2020

POST COVID During the COVID-19 pandemic, many convenience stores changed the way they operated the cold dispensed beverage category—from banning personal refill cups to converting to full-service-only fountains. Among the Food and Drug Administration best practices for foodservice during the COVID-19 pandemic was the recommendation to discontinue “salad bars, buffets, and beverage service stations that require customers to use common utensils or dispensers.”

At the same time, guidance on self-serve fountain beverages and foodservice operations differed by locality, injecting some confusion into the mix. As some states began reopening non-essential businesses in late spring, convenience retailers expressed hope that customers soon would be able to

help themselves to their favorite cold dispensed beverage.

Nick Ruffner, public relations manager with Sheetz of Altoona, Pennsylvania, said the convenience retailer is messaging to customers that the situation is temporary.

“We know, at some point, we are returning back to that traditional way of having self-serve beverages,” Ruffner said.

Pilot Flying J of Knoxville, Tennessee, implemented a fresh cup policy for all refills at no extra charge. “We remain focused on protecting the health and safety of our guests and team members and will continue to follow social distancing guidelines and frequently sanitize all areas of our stores, including the self-service fountain beverage stations,” said a company spokesperson.

Employees at Square One Markets of Bethlehem, Pennsylvania, continue serving individual customers seeking fountain drinks. “To protect everyone— our team and our customers—it’s important, and it could be long term,” said Lisa Dell Alba, president. “If we wake up tomorrow and everything is back to normal, I think we have new expectations out there, and our behavior will be altered for a period of time.”

No one is certain exactly how those changes will impact c-store foodservice operations going forward, but one thing is guaranteed. Summer is hot, and hot weather makes people crave cold beverages.

CONVENIENCE.ORG

iStock.com/Irochka_T

CATEGORY CLOSE-UP / COLD DISPENSED BEVERAGES

24/7 Day: United in Crisis

The NACS Foundation is uniting the convenience industry to honor those on the front lines of our communities.

24/7 Day, hosted by the NACS Foundation, along with participating convenience industry retailers, suppliers and partners, in support of the American Red Cross, is a day to celebrate and honor the incredible life-saving work being done every day by first responders and local heroes.

See how your company can amplify the reach and impact of its positive charitable efforts by taking part in this year’s 24/7 Day, held on July 24, 2020.

For more information, contact NACS Foundation Executive Director Stephanie Sikorski at ssikorski@convenience.org or visit 247Day.org.

THANK YOU TO OUR 24/7 DAY 2020 PARTNERS:

NACS FOUNDATION MEDIA PARTNER

#WeHeartHeroes The American Red Cross name, emblem and copyrighted materials are being used with its permission, which in no way constitutes an endorsement, express or implied, of any product, service, company, opinion or political position. The American Red Cross logo is a registered trademark owned by The American National Red Cross. Should you require a receipt, please donate by calling 1-800-RED CROSS (1-800-733-2767), or give online at redcross.org

CATEGORY CLOSE-UP / EDIBLE AND PERISHABLE GROCERY

Essential Needs

Convenience retailers are going above and beyond in the grocery category to satisfy consumers.

BY SARAH HAMAKER

JUST THE FACTS Edible grocery brought in $5,910 in gross profit per store in 2019, with a gross margin average of 43.70%, according to NACS State of the Industry 2019 data.

80

| JUNE 2020

to get necessities during this time of social distancing and isolation.”

Porky’s Convenience Store, Deli & Restaurant in Mound Valley, Kansas, always offered groceries because of its rural small town location. “We try to offer last-minute staples needed for any meal because the nearest Walmart is 20 minutes away,” owner Jayme Winters said. But the pandemic has increased the amount of groceries the store is stocking.

Located in a college town, Convenient Deli & Café in New Paltz, New York, provided groceries to help its customers avoid a trip uptown to the supermarkets.

“We have many students and residents within walking distance of our store,” owner Khalil Jamal said. However, with the university closed, Jamal pivoted to more curbside pickups of grocery essentials to stay in business.

AN ESSENTIAL OUTLET Designated as “essential retail” by Congress, convenience stores have been able to remain open with modified procedures during the pandemic. “This has enabled convenience retailers to continue to aid the public and the communities in which they serve,” Gough said. “Grocery has always been a tricky category for convenience retailers.

Typically, the category is designed for fill-in trips or travelers/vacationers looking to stock up on daily necessities.”

The coronavirus has impacted how some grocery items are shelved. For example, Jamal started wrapping individual pieces CONVENIENCE.ORG

iStock.com/dcdr

A

cross the country, convenience stores have proven once again to be essential to their communities.

During the coronavirus pandemic, more Americans are turning to convenience retailers for pantry items. More than half of convenience stores (52%) have seen grocery sales rise during the time of social distancing and stay-at-home orders, according to a NACS survey.

Convenience stores also started stocking more at-home products, such as cleaning and toiletry items (52%), as well as offering more multi-pack or bulk items (28%). “The massive disruption of COVID-19 has created an emergency-type need for grocery items from convenience retailers,” said Jayme Gough, NACS analyst. “These retailers have become a key outlet for customers

Edible Grocery Industry Sales

% of In-Store Sales 2018

% of Stores Selling

Avg. Sales/Store

2019

0.62% 0.54%

2018

$15,204

2018

2019

2019

97.3% 98.7%

$13,525

iStock.com/alenkadr; lleerogers; Michael Burrell

Source: NACS State of the Industry Report of 2019 Data

of produce in plastic wrap to help facilitate a safer shopping experience during the pandemic. “We also started ordering more varieties of fruit, such as clementines, oranges, grapes and strawberries to try to keep our customers as healthy as possible,” he said.

While Jamal ran into a few restocking issues from his regular suppliers at the beginning of the stay-at-home orders, he quickly found other sources for those items. “Being an independent store, I was able to overcome the outages with a few phone calls,” Jamal said.

At Porky’s, the pandemic has meant adding some extra items to provide better service to customers. “For example, we brought in five-pound rolls of ground beef,” Winters said. “We also adjusted our order quantities of other items as the needs have changed.”

Winters also has had supply issues for some essential items, such as hand sanitizer, disinfectant spray and flour. “I never

had an issue getting flour before, but it’s been ‘out of stock’ at my supplier each week,” she said. While Porky’s doesn’t have express limits on any particular item, “we do make it clear we expect our customers to all be courteous to others in the area who may also need the same items.”

Suppliers are stepping up to help retailers meet the need for more groceries during the coronavirus pandemic. “We’ve partnered with convenience chains and independents to offer wholesome grocery, pantry staples and snacks,” said Robert Agnew, senior vice president of sales for Bob’s Red Mill, which produces pantry staples like flour, rolled oats and sugar.

StarKist has worked with retailers “to place a greater emphasis on healthy, convenient, portable products, which many convenience retailers are embracing,” said Andy Mecs, vice president of marketing and innovation. For example, Sheetz featured StarKist Tuna Creations pouches in the refrigerated area near

COVID-19 has created an emergencytype need for grocery items from convenience retailers.

Category Performance GROCERY

Gross Margin % 2018

2019

Avg. GP$/Store 2018

2019

Gross Margin Contributions 2018

2019

Edible

41.22%

43.70%

$6,268

$5,910

0.74%

0.69%

Perishable

37.40%

40.25%

$4,047

$4,829

0.46%

0.51%

For more information on NACS category definitions, visit www.convenience.org/categorydefinitions.

Source: NACS State of the Industry Report of 2019 Data CONVENIENCE.ORG

JUNE 2020 |

81

CATEGORY CLOSE-UP / EDIBLE AND PERISHABLE GROCERY

EDIBLE GROCERY | PER STORE, PER MONTH SALES

2017

2018

2019

$2,176

$2,200 $2,026

$2,100

$1,928

$2,000 $1,900 $1,800 $1,700 $1,600 $1,500 $1,400 JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

Source: CSX; www.csxllc.com

We want to help out as much as we can by shopping locally first.

the front doors, while some Circle K divisions positioned StarKist pouches by the bread. “The retailers are all on board with placing an emphasis on healthy, convenient products in their stores because everybody recognizes that many consumers have shifted in this direction,” he said.

SELLING PERISHABLE The perishable grocery section has been growing at convenience stores even before the pandemic upped the demand for produce and deli items. Perishable grocery accounted for $11,997 sales per store in 2019, with 40.25% in average gross margins, according to NACS State

The NACS Convenience Tracking Program (CTP) comprises consumer behavior analytics from more than 10,000 convenience store shoppers across 42 states, representing the most comprehensive consumer-driven metrics available to the industry.

To learn more about CTP and how to participate, contact Leroy Kelsey, director of industry analytics, at lkelsey@convenience.org or visit www.convenience.org/ctp.

82

| JUNE 2020

of the Industry 2019 data. “Prior to the current supply chain disruption as a result of coronavirus, retailers often used the grocery category to highlight locally sourced items,” Gough said.

Convenient Deli & Café buys locally as much as possible for its produce and eggs.

“We want to help out as much as we can by shopping locally first,” Jamal said. He promotes the grocery items on the store’s Facebook, Instagram and LinkedIn accounts, as well as in local community groups. “We want to let customers know we are stocked and capable of fulfilling any of their grocery needs.”

The stay-at-home edicts during the pandemic meant more people bought perishable grocery items from Porky’s deli department. Winters increased the amount she ordered because of higher demand for deli items. One way she boosted sales of perishable items is by advertising her selection with photos on social media. “Social media has been a great asset to our small store,” she said.

“For example, we get several calls a day for delivery or curbside pickup of fresh deli meats and cheeses.”

CONVENIENCE.ORG

SCAN. TAP. BUY.

Tomato Basil

Thai Green Curry

Spicy Rice & Beans

Latin Citrus

CATEGORY CLOSE-UP / EDIBLE AND PERISHABLE GROCERY

Perishable Grocery Industry Sales % of In-Store Sales 2018

2019

0.42% 0.44%

Avg. Sales/Store 2018

$10,821

2019

$11,997

% of Stores Selling 2018

2019

87.7% 88.9%

EDIBLE INTEREST Most convenience stores have an edible grocery section, but this time of stay-athome edicts has drawn more attention from customers to those products. Edible grocery brought in $5,910 in gross profit per store in 2019, with a gross margin average of 43.70%, according to NACS State of the Industry 2019 data.

Due to market shifting toward betterfor-you options, edible grocery products with natural and more nutritious ingredients are gaining popularity. For example, Bob’s Red Mill line of single-serve oatmeal cups mixes oats with chia and flax seeds in a variety of flavors. “Customers love these cups for a quick, wholesome breakfast or snack,” Agnew said.

Spicy flavors have migrated to the edible grocery category as well, such as StarKist’s Tuna Creations Bold lineup that includes hot buffalo style, jalapeño, sriracha and Thai chili style flavors. “The spicier flavors tend to be very popular with the millennial crowd,” Mecs said.

GROCERIES TO GO The expansion of online grocery delivery has threatened the edible and perishable

84

| JUNE 2020

grocery category at convenience stores in the past. “However, typically consumers do not use convenience retailers to replace their grocery trip but to supplement it instead,” Gough said.

With social distancing the new normal, many convenience stores have added or ramped up curbside pickup or delivery options, especially for the grocery category. “Curbside pickup has always been an option because we have a lot of elderly people in our little community,” Winters said. “But we have done more promoting of this service since the social distancing.”

Convenient Deli & Café partnered with a local company to provide home delivery for its customers during the pandemic, in addition to adding curbside pickup. “We got on that right away by posting signs everywhere and advertising on social media, too,” Jamal said.

The delivery menu is slightly different, but customers can order anything in the store for curbside takeout. “Delivery and curbside orders are picking up more each day because customers don’t want to leave their homes and/or don't want to get out of their vehicles,” Jamal said.

CONVENIENCE.ORG

iStock.com/LauriPatterson; Jaromila; taviphoto; serezniy

Source: NACS State of the Industry Report of 2019 Data

News When You Need It, How You Need it.

Introducing the NACS Magazine digital experience—featuring instant access to online articles and a PDF digital edition with premium extras. Enjoy solutions-focused articles on industry trends, best practices, metrics and advocacy—on your schedule.

And it’s FREE for NACS members.

Discover instant access today at NACSMagazine.com/instant

CONVENIENCE.ORG

JUNE 2020 |

85

CATEGORY CLOSE-UP / EDIBLE AND PERISHABLE GROCERY

PERISHABLE GROCERY | PER STORE, PER MONTH SALES $525

2017

2018

2019

$499 $482

$500 $475 $450

$415

$425 $400 $375 $350 JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

Source: CSX; www.csxllc.com

Sarah Hamaker is a freelance writer and NACS Daily and NACS Magazine contributor based in Fairfax, Virginia.

Visit her online at www.sarahhamaker.com.

86

| JUNE 2020

AFTER THE STORM Convenience stores provide muchneeded grocery necessities for their communities, especially during the pandemic, and customers will continue to be reminded that c-stores' grocery offer will always be there when they need it.

“During the time of social distancing, convenience stores served as a primary grocer for a large percentage of consumers who are sticking closer to home and limiting the number of trips they take,” Agnew said. “Currently, shelf-stable products are reliable and comforting, but c-store shoppers are also seeking fresh and better-for-you foods to nourish their families on an ongoing basis.”

The grocery category at convenience stores had begun to evolve as timestarved consumers were migrating toward healthier and more convenient food options. “The current pandemic has induced trial of new types of products as consumers were grabbing whatever was on the shelf,” Mecs said.

“The future will bring less of an emphasis on the traditional grocery section and more of an emphasis on bringing healthy, convenient grocery items to the perimeter of the store as consumers seek grab-and-go options.”

For Jamal, the social distancing has helped him see how to redefine the grocery section. “I will expand my selection of fruits and veggies once my customer base grows with school being back in session and people leaving their homes again,” he said.

Overall, the coronavirus pandemic has made people realize how necessary stores like Porky’s are to their communities.

“Especially in a small community like ours, I believe this pandemic has put more value on our store,” Winters said. “While Walmart and other chain stores have run out of items, we have been able to keep them in stock by reaching out to as many different resources as possible to make sure our customers are not lacking in any of their needs.”

CONVENIENCE.ORG

ADVERTISER INDEX Contact Information

Page

Contact Information

Thank you to these advertisers who have demonstrated their support of the convenience and fuel retailing industry by investing in NACS Magazine.

Page

7-Eleven Inc.............................................................................................27 www.7-eleven.com

G oodWest Industries ................................................................. 77 (800) 948-1922 www.goodwest.com

A ltria Group Distribution Company................ Inside Front Cover AGDCTradeRelations@Altria.com www.altria.com

Inline Plastics Corp. ...............................................................................49 www.inlineplastics.com/reborn

Apter Industries..................................................................................... 55 (800) 441-7146 mail@apterindustries.com www.apterindustries.com B IC Corporation............................................................................31 www.biclighter.com C ash Depot.....................................................................................3 (800) 776-8834 sales@cdlatm.com www.cdlatm.com Chevron Corporation Chevron Energy Solutions LP... Inside Back Cover (866) 354-4476 www.Havoline.com/PitPack Christy & Main Inc. .................................................................................. 61 (800) 382-5394 andy@christyandmain.com DMF Bait Company....................................................................................7 (800) 332-2248 orders@dmfbait.com www.dmfbait.com Electrolit USA...........................................................................................75 www.electrolit.com

Half Horz.indd 1 CONVENIENCE.ORG

ITG Brands.....................................................................................13 www.itgbrands.com JUUL................................................................................................5 retailers@juul.com L iving Essentials LLC (5-hour ENERGY)........................................9 (866) 960-1700 www.5HErewards.com Loomis......................................................................................................43 www.loomis.us/safepoint M cLaneCompany Inc.................................................... Back Cover www.mclaneco.com Midway Displays......................................................................................87 (708) 563-2323 www.midwaydisplays.com North American Bancard........................................................................23 (866) 481-4604 www.nynab.com NACS Foundation.....................................................................................79 www.conveniencecares.org

Contact Information

Page

NACS Leadership for Success..................................................................76 www.convenience.org/LFS2020 NACS Magazine........................................................................................85 www.nacsmagazine.com/instant NACS Show.................................................................................................4 www.nacsshow.com NACS State of the Industry Report...........................................................6 www.convenience.org/SOIreports2020 NACS Women’s Leadership Program.....................................................22 www.convenience.org/ExecEd-Yale PDI................................................................................................39 www.pdisoftware.com Quick-Sav Food Stores/Beacon & Bridge Markets.................................71 beaconandbridge.com/masks StarKist Company....................................................................................83 www.starkist.com S wedish Match North America (Zyn)......................................... 21 (800) 367-3677 www.smna.com Swisher International Inc...........................................................33 (800) 874-9720 www.roguenicotine.com Trion Industries Inc. ............................................................................... 15 (800) 444-4665 www.triononline.com/art

5/6/2020 12:00:12 PM

JUNE 2020 |

87

BACK PAGE

A Generous Gift

Food for Thought Owners of American Petroleum in Sturgeon Bay, Wisconsin, are partnering with a local Habitat for Humanity to build and stock free food pantries throughout the community to help address food insecurity caused by coronavirus-related layoffs. The owners had been stocking various pantries in the area but noticed that there were none on Sturgeon Bay’s west side. They put out a call for help, and three new pantries were built through partnerships with local volunteers and organizations.

88

| JUNE 2020

A group of gas station and convenience store owners in Shelby County, Tennessee, donated masks, gloves and hand sanitizer to their local law enforcement agencies. The group purchased 4,000 surgical masks, more than 100 N95 masks, more than 2,000 small bottles of hand sanitizer and 4,000 pairs of gloves. “They have to serve our community, and we want to make sure they are safe all the time,” said one owner.

Pump Up the Giving A Randolph, Maine, gas station gave away free gas to all first responders for a day, and owner Max Patel even pumped the gas himself. His son, Om Patel, said his family wanted to do something special for people who are risking so much.

“They put their lives on the line every day, in danger every day, and they are the real heroes,” he said.

CONVENIENCE.ORG

Better for oil storage... and the environment.

Chevron PitPackÂŽ is your solution to managing SKU complexity while also reducing plastic waste by 89% compared to quart bottles. That means fewer dumpster pickups at your shop and less landfill waste in the environment.

Learn more at Havoline.com/PitPack or call us to order: (866) 354-4476 Š 2020 Chevron. All rights reserved. All trademarks are property of Chevron Intellectual Property LLC or their respective owners.

CONVENIENCE.ORG

DECEMBER 2019 |

3

EXTRAORDINARY CHALLENGES. REMARKABLE PEOPLE. IMMEASURABLE GRATITUDE. TOGETHER, WE WILL GET THROUGH THIS. McLane’s teammates are working diligently to do our part to keep our grocery and foodservice supply chain flowing, while prioritizing the health and safety of our teammates, customers, suppliers, and communities. We could not do it without all the unsung heroes that keep our industry moving, and we thank them for their hard work, bravery, and dedication. mclaneco.com

© 2020 McLane Company, Inc. All rights reserved.