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W H AT ’ S N E X T I N C O N V E N I E N C E A N D F U E L R E TA I L I N G

FORECAST 2019 SIX SPROUTING REASONS TO STOCK PLANT-BASED FOODS & BEVERAGES

THINGS ARE LOOKING UP The convenience store industry’s constituents have a largely positive view on the year ahead.

JANUARY 2019 CSNEWS.COM


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VIEWPOINT

Keep the Faith 2019 will be a great year for the convenience store industry THE BEGINNING OF A NEW YEAR is an appropriate time to look ahead and think about the future. People often set goals and make resolutions for the year ahead. I was inspired recently by a book my wife gave me: “Factfulness — Ten Reasons We’re Wrong About the World — and Why Things Are Better Than You Think” by Hans Rosling, with Ola Rosling and Anna Rosling Ronnlund.

I think, in general, I’m a very positive person, but my job as an editor and journalist often requires a healthy bit of skepticism. You might be surprised with the amount of “spin” we deal with from all sorts of industry players — from retailers and suppliers to public relations professionals, consultants and government officials. The media today focuses so much on the problems we face: global unrest, rising fuel prices, the gap between rich and poor families, the labor shortage and rising labor costs, anti-business government regulation, entitled millennials, the demise of brickand-mortar stores, the next recession, etc. “Factfulness” reminds us that we live in an amazing time and that things in general are getting better for nearly all of us. And, more than that, it will make you feel more positive, less stressed and more hopeful as you go about your everyday

business and personal lives. The book is not only filled with facts that contradict many commonly held beliefs about impending disaster, but also explains why people focus so much more on the negative and do not see the world as it really is. After reading the book, I was heartened to see the results of our 17th annual Forecast Study, which shows c-retailers are optimistic about their business prospects for the coming year (see our full study findings on page 30). In fact, a quarter of retailer respondents to our survey said they think 2019 is going to be their “best year ever.” That’s how we all should be thinking. Helen Keller said, “No pessimist ever discovered the secrets of the stars or sailed to an uncharted land or opened a new heaven to the human spirit.” Could Jeff Bezos have launched his online book store in 1994 if he was a pessimist?

Finalist, Best Editorial Use of Data, June 2017

2013 Jesse H. Neal National Business Journalism Award Best Single Issue, October 2012

2013 Jesse H. Neal National Business Journalism Award Finalist, Best Profile, August 2012

For comments, please contact Don Longo, Editorial Director, at (201) 855-7606 or dlongo@ensembleiq.com.

EDITORIAL ADVISORY BOARD

2018 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Website Business to Business, Retail, Full Issue, October 2017 Business to Business, Editorial Use of Data, June 2017 2017 Eddie Awards, Folio: magazine Winner, Business to Business, Retail, Single/Series of Articles, May 2017 Honorable Mention, Business to Business, Retail, Single/Series of Articles, June 2016 2016 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2015 Business to Business, Retail, Single/Series of Articles, August 2015 2015 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Single Article, February 2014

Brett Atherton Bolla Management

Vito Maurici McLane Co. Inc.

Jon Bratta Core-Mark International Inc.

Jack Lewis GPM Midwest

Rick Crawford Green Valley Grocery Edward Davidson ER Davidson & Associates (7-Eleven Inc., retired)

Danielle Mattiussi Maverik Inc. Richard Mione GPM Southeast Jonathan Polonsky Plaid Pantries Inc. Greg Scriver Kwik Trip Inc.

2016 American Society of Business Press Editors, National Azbee Awards Gold, Best How-To Article, March 2015 Bronze, Best Original Research, June 2015

2014 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2013 Business to Business, Retail, Single Article, February 2013

Jim Hachtel Eby-Brown Co.

Roy Strasburger Strasburger Retail

2016 American Society of Business Press Editors, Midwest Regional Azbee Awards Gold, Best How-To Article, March 2015 Silver, Best Original Research, June 2015

2013 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2012

Ray Johnson Speedee Mart

Frank White Yesway

2015 American Society of Business Press Editors, National Azbee Awards Silver, Best Profile (long form), February 2014 2015 American Society of Business Press Editors, Midwest Regional Azbee Awards Gold, Best Special Supplement, November 2014 Silver, Best Profile (long form), February 2014 2013 American Society of Business Press Editors, Midwest Regional Azbee Awards Bronze, Best Editorial/Commentary, July 2012

4 Convenience Store News C S N E W S . c o m

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So, my New Year’s resolution for 2019 — with apologies to Monty Python’s Flying Circus — is this: I will try harder to “always look on the bright side of life.” As we enter this new year, there is a positive vibe throughout the industry, and I’m convinced there’s no better time than now to be an optimist.

EDITORIAL EXCELLENCE AWARDS (2013-2018)

2018 Jesse H. Neal National Business Journalism Award

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2016 Trade Association Business Publications Intl. Tabbie Awards Silver, Front Cover Illustration, June 2015

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January 2019

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CONTENTS JAN 19

VO LU ME 55 N UMB ER 01

30

FORECAST 2019

FEATURES COVER STORY

TREND FORECAST

30 Things Are Looking Up The convenience store industry’s constituents have a largely positive view on the year ahead.

44 Nine Ways to Be Trendy in 2019 From CBD to plants to probiotics, consumers are more conscious about their purchases.

RETAILER FORECAST

48 Planting the Seed Six sprouting reasons to be mindful of plant-based foods and beverages.

32 Hopeful Heading Into 2019 C-store retailers predict their total in-store sales will grow by 3.4 percent in the year ahead. CATEGORY FORECAST

36 Favorable Expectations C-store operators don’t expect a knockout 2019 across all product categories, but most feel good about the months to come.

52 On the Move Mobile marketing, ordering and payment continue to change at a rapid pace, and today’s c-store operators need to keep up to compete.

SUPPLIER FORECAST

42 Accentuate the Positive Convenience channel suppliers are more bullish this year than they were last year.

6 Convenience Store News C S N E W S . c o m

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CONTENTS JAN 19

VO LU ME 55 N UMB ER 01

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8550 W. Bryn Mawr Ave., Ste. 200, Chicago, IL 60631 (773) 992-4450 Fax: (773) 992-4455 www.csnews.com Direct Mailing Address for Convenience Store News: 11-43 Raymond Plaza West, 16th floor, Newark, NJ 07102 BRAND MANAGEMENT Vice President/Group Brand Director Paula Lashinsky (917) 446-4117 plashinsky@ensembleiq.com EDITORIAL Editorial Director (201) 855-7606

Don Longo dlongo@ensembleiq.com

Editor-in-Chief (201) 855-7608

Linda Lisanti llisanti@ensembleiq.com

Senior News Editor (201) 855-7618

Melissa Kress mkress@ensembleiq.com

Associate Editor (201) 855-7619

Angela Hanson ahanson@ensembleiq.com

Associate Managing Editor (201) 855-7604

INDUSTRY ROUNDUP

DEPARTMENTS VIEWPOINT

12 Thorntons Becomes Latest M&A Target 14 Fast Facts

4 Keep the Faith 2019 will be a great year for the convenience store industry.

14 Couche-Tard & CrossAmerica Ink Asset-Exchange Agreement

10 CSNews Online

16 Eye on Growth

22 New Products

16 Competitive Watch

SMALL OPERATOR

18 Retailer Tidbits 20 Supplier Tidbits

CATEGORY MANAGEMENT FOODSERVICE

46 What’s Hot on C-store Menus? ampm’s Cinnabon Streusel Muffin scores big with consumers.

Danielle Romano dromano@ensembleiq.com

Contributing Editor (303) 741-3377

Renée M. Covino reneek@aol.com

Contributing Editor (201) 280-2614

Tammy Mastroberte tmastroberte@gmail.com

ADVERTISING SALES & BUSINESS Associate Brand Director & Northeast Sales Manager (508) 385-2524

Rachel McGaffigan rmcgaffigan@ensembleiq.com

Associate Brand Director & Western Sales Manager (330) 840-9557

Ron Lowy rlowy@ensembleiq.com

Associate Publisher & Midwest Sales Manager Kelly Fischer (773) 992-4464 kfischer@ensembleiq.com Account Executive & Classified Advertising Terry Kanganis (201) 855-7615 tkanganis@ensembleiq.com Classified Production Manager Mary Beth Medley (856) 809-0050 marybeth@marybethmedley.com EVENTS Executive Vice President, Events & Conferences Ed Several (860) 830-8321 eseveral@ensembleiq.com

26 Looking at the Glass Half Empty M&A shook the convenience channel in 2018, leaving small operators less optimistic about 2019.

AUDIENCE ENGAGEMENT

STORE SPOTLIGHT

Subscriber Services/Single-Copy Purchases (978) 671-0449 EnsembleIQ@e-circ.net

56 Welcome to the New School of Convenience Our Lady of the Lake University in Texas boasts a first-of-its-kind on-campus convenience store. NEW HORIZONS

58 The Big Reveal Eliminate #MeToo harassment with transparency and tracking. GETTING TO THE CORE

74 How C-stores Need to Adapt Research sheds light on what’s most important in the convenience shopping experience.

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Director of Audience Engagement Gail Reboletti (224) 632-8214 greboletti@ensembleiq.com Audience Engagement Manager (215) 301-0593

Shelly Patton spatton@ensembleiq.com

List Rental (847) 492-1350 ext.318

MeritDirect Elizabeth Jackson

PROJECT MANAGEMENT/PRODUCTION/ART Vice President, Production (877) 687-7321 Creative Director (973) 607-1320 Advertising/Production Manager (773) 992-4418 Art Director (224) 632-8245

Derek Estey destey@ensembleiq.com Colette Magliaro cmagliaro@ensembleiq.com Ed Ward eward@ensembleiq.com Michael Escobedo mescobedo@ensembleiq.com

CORPORATE OFFICERS Executive Chairman Alan Glass Chief Executive Officer David Shanker Chief Financial Officer Dan McCarthy Chief Digital Officer Joel Hughes Chief Innovation Officer Tanner Van Dusen Executive Vice President, Events & Conferences Ed Several

CONVENIENCE STORE NEWS AFFILIATIONS Premier Trade Press Exhibitor

The contents of this publication may not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for product claims and representations.

Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by EnsembleIQ, 8550 W. Bryn Mawr Ave., Ste. 200, Chicago, IL 60631. Copyright © 2019 by EnsembleIQ. All rights reserved. Subscriptions: One year, $93; two years, $152. One year, Canada, $110; two years, Canada, $175. One year, foreign, $150. Payable in advance with a bank draft drawn on a U.S. bank in U.S. funds. Single copies, $10, except foreign, where postage will be added. Printed in U.S.A. Periodicals postage paid at Chicago, IL, and at additional mailing offices. POSTMASTER: Send address changes to Convenience Store News, PO Box 3200 Northbrook IL 60065-3200

8 Convenience Store News C S N E W S . c o m


CSNEWS ONLINE

ONLINE EXCLUSIVE

TOP 5 DAILY NEWS HEADLINES

1

Tension Escalates Between 7-Eleven Corporate & National Coalition of Franchisees

An overwhelming majority of NCASEF’s board of directors voted to skip the 2019 7-Eleven Experience, the company’s annual trade show. The national trade association for 7-Eleven franchise owners said it is urging all members of its franchisee associations to follow suit.

2

Sheetz Appoints First Chief Operating Officer in Company’s 66-Year History

Former Executive Vice President of Operations Travis Sheetz is advancing to the role of president and chief operating officer (COO), making him the first COO in Sheetz’s history. “I am humbled by this new opportunity and the chance to continue our mission and bring innovation to the industry, anchored by the values my uncle, Bob Sheetz, instilled when he founded this company in 1952,” Travis commented.

3

Couche-Tard Views Organic Growth as Key Driver for Its Future

Alimentation Couche-Tard Inc. may be known as an active player in the merger-and-acquisitions arena, but organic growth is also a key item on the Canada-based convenience store retailer’s current to-do list.

4

Largest Wawa Store Yet Welcomes Customers

Located at the corner of Chestnut and Sixth streets near Philadelphia’s Independence Mall, the Wawa store welcomed its first customers on Thursday, Dec. 14. The 11,300-square-foot store is more than 2,000 square feet bigger than Wawa’s former largest store.

5

GOP Lawmakers Speak Out Against FDA’s E-Cigarette Crackdown

Taking to Twitter, U.S. Sen. Ron Johnson (R-Wis.) expressed concern over the agency’s proposal to only sell flavored e-cigarette and vapor products in age-restricted, in-person locations or online under heightened age-verification, while Sen. Richard Burr (R-N.C.) took issue with the FDA’s decision to advance a Notice of Proposed Rulemaking that would seek to ban menthol in combustible tobacco products, including cigarettes and cigars.

WEBINAR: Targeting the Most Important Technology Investments Technology touches nearly every aspect of convenience retailing today, from loyalty programs to promotions to the point of sale and beyond. As a result, convenience store operators are preparing to increase the amount of money they spend on technology in the future, according to the 2018 Convenience Store News Technology Study. Deciding which kinds of technology to invest in is a big challenge for retailers. They must understand where they are currently and how they can build up from there. CSNews recently hosted a webinar, entitled “Investing in Future Tech,” to help c-store operators meet this challenge head-on. Presenters included Ed Collupy, executive consultant at W. Capra Consulting and former IT chief at The Pantry, and Tim Tang, market technologist for Hughes Network Systems.

10 Convenience Store News C S N E W S . c o m

Industry Veterans Help Develop the Next Generation at Convenience Store News’ Inaugural Future Leaders in Convenience Event While addressing the attendees of the inaugural Convenience Store News Future Leaders in Convenience conference, master of ceremonies Dave Riser spoke of the importance of staying open-minded throughout your career. “You never know where your career’s going to take you,” said the vice president of external relations at Reynolds American Inc. Trade Marketing Services Co. The Future Leaders in Convenience conference, held Nov. 15 in Indianapolis, featured multiple industry veterans sharing stories about their own career paths and what they learned, followed by question-and-answer sessions. For more exclusive stories, visit the Special Features section of www.csnews.com.

MOST VIEWED NEW PRODUCT

Ignite CBD BO Caps Under a new collaboration, the creative designers behind BO vaping products have engineered technology that can now offer consumers Ignite’s pure CBD oil in co-branded BO Caps. The first two varieties are Tropical Fruit and Blood Orange, with additional releases scheduled for December and January. Each BO Cap holds 1.5 milliliters of e-liquid, more than double the capacity of competitors, according to the company. BO Caps are made from premium ingredients and are easy to insert into BO’s closedend e-cigarettes. BO Vaping Garden City, N.Y. (516) 373-2400 www.bovaping.com


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INDUSTRY ROUNDUP

Thorntons Becomes Latest M&A Target A joint venture between ArcLight Capital Partners and BP is taking ownership of the chain OWNERSHIP OF ANOTHER well-established family business in the convenience store industry is changing hands. In December, Ricker’s closed on its sale to Giant Eagle and now, Thorntons Inc. is being acquired by a joint venture between affiliates of ArcLight Capital Partners and BP.

According to the Louisville, Ky.-based chain, all of its existing convenience stores will continue to operate under the Thorntons name. The joint venture will also retain Thorntons employees working out of the company’s Store Support Center in Louisville. “My family and the Thorntons team are incredibly proud of the company we have built over the last 47 years. While we are proud of where we are today, our vision extends well beyond 191 stores in six states and we know this new joint venture will help us to accelerate store growth and serve even more guests every day,” said

12 Convenience Store News C S N E W S . c o m

Matt Thornton, chairman and CEO of Thorntons. “We are excited to begin this new chapter and are pleased that we are able to take these next steps in our hometown, working with our existing team. This partnership is a winwin for everyone involved,” he added. ArcLight previously ventured into the convenience store industry by purchasing Gulf Oil LP through its affiliate Chelsea Petroleum Products Holdings LLC from Cumberland Farms Inc. That acquisition closed in late December 2015. At the same time, ArcLight affiliate Blue Hills Fuels LLC acquired Gulf’s Assured Dealers business. The Thorntons acquisition is subject to government review and regulatory approval. Terms of the private transaction were not disclosed. Founded by James H. Thornton in 1971, Thorntons currently operates 191 c-stores in Florida, Illinois, Indiana, Kentucky, Ohio and Tennessee. The company’s mission is to provide top-of-the-line food and beverages, while making giving back a priority in every market.


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INDUSTRY ROUNDUP

FAST FACTS

Nearly eight in 10 U.S. millennials eat meat alternatives, compared to more than half of non-millennials. — Mintel

More than half of consumers who pay for gas using a mobile app (57 percent) said they would do so more often if they could also use the app to pay for c-store products. — PYMNTS & GasBuddy, Paying at the Pump Report: Driving Gas Pump Payments to the C-Store

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%

Roughly 90 percent of c-store retailers see huge potential downside from any Food and Drug Administration ban on menthol cigarettes. — Wells Fargo Securities LLC, Tobacco Talk

Couche-Tard & CrossAmerica Ink Asset-Exchange Agreement In a series of moves, a total of 265 sites will change hands By Melissa Kress ALIMENTATION COUCHE-TARD INC. and CrossAmerica Partners LP reached an asset-exchange agreement that will see 265 sites change hands in a series of transactions.

As Valencia explained, the 17 convenience stores are a diverse group of sites, including Holiday Stationstore locations and other brands.

CrossAmerica Partners is a wholesale distributor of motor fuels and owner and lessor of real estate used in the retail distribution of motor fuels. Its general partner, CrossAmerica GP LLC, is a wholly owned subsidiary of Couche-Tard.

“We looked at the portfolio of all of the sites that currently CrossAmerica owns and operates in that area and we looked at the ones that were the best fit for a convenience retail strategy like the one that Circle K has, so that they can definitely identify the best way to capture value from those sites,” the chief executive said.

During a call detailing the agreement on Dec. 17, CrossAmerica President and CEO Gerardo Valencia called the exchange a first step toward the Allentown, Pa.-based company’s goal of simplifying its business and capital streams. As part of the exchange agreement, CrossAmerica will receive 192 company-operated convenience and retail fuel stores in the United States. Of these sites, 162 are fee-based and 30 are leased. The transaction is valued at $184.5 million. For its part, Couche-Tard’s Circle K unit will receive the real estate property for 56 U.S. company-operated convenience and retail fuel stores currently leased and operated by Couche-Tard/Circle K. The fuel supply agreement for these sites — which are part of CrossAmerica’s wholesale segment — will remain unchanged, according to Valencia. In addition, Circle K will receive 17 company-operated stores in the upper Midwest region of the U.S. Fourteen of the sites are fee-based and three are leased. All 17 sites are currently part of CrossAmerica’s retail segment.

14 Convenience Store News C S N E W S . c o m

The total transaction value for the 73 sites is $184.5 million. “While we expect these asset exchanges to be moved in tranches over no more than a 24-month period, we’re working diligently to get our first transaction completed in the first half of calendar 2019,” Valencia noted. The asset-exchange agreement was approved by the CrossAmerica board of directors following approval of the transaction terms by its independent Conflicts Committee. “After a thorough review with our general partner and our board, we reached the conclusion that this exchange plan made the most sense for both parties,” Valencia said. “We will begin transitioning the sites … in various tranches as we secure dealers to operate the sites.” A CrossAmerica team is already in the process of vetting potential operators.


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INDUSTRY ROUNDUP

Eye on Growth

EG Group closed on its acquisition of the Minit Mart portfolio from TravelCenters of America LLC. The $330.8-million deal included 225 standalone convenience stores. Enex, a subsidiary of Chile-based Quiñenco SA, completed its purchase of Road Ranger travel centers. The $289-million acquisition serves as Enex’s entry into the United States. Giant Eagle Inc. officially added Ricker’s convenience stores to its portfolio. In addition to acquiring 56 stores, the pact included Ricker Oil’s wholesale fuels distribution business of approximately 80 branded supply accounts. RaceTrac Petroleum opened its 500th store in Hapeville, Ga. That opening was quickly followed by three additional openings, pushing the retailer’s footprint over the 500-milestone mark. An affiliate of Circle K Stores Inc. acquired four convenience stores and gas stations from Carls Oil Co. Inc. The sites are located outside of the Chicago metropolitan area.

Competitive Watch

Raley’s is selling its 13 Aisle 1 gas stations to Anabi Oil, a Southern California-based company. Anabi Oil will assume operations of the Aisle 1 stations Raley’s and Anabi Oil will become in early 2019, exclusive fuel partners after the retaining the transaction closes. brand name.  Atlantis Management Group LLC completed its acquisition of Dattilo Petroleum Inc. and its affiliated companies. The network, which includes 27 Shell and CITGO branded retail sites in New York and New Jersey, features a mix of commission- and company-operated locations. Par Pacific Holdings Inc. inked a definitive agreement to acquire U.S. Oil & Refining Co. and certain affiliated entities for $358 million. The downstream business includes a refinery, marine terminal and unit train-capable rail loading terminal. Parkland Fuel Corp. is buying the assets and business of Bradco Inc. and its affiliates through a wholly owned subsidiary. Bradco is a distributor of fuel products and services to customers throughout the Southwest United States.

The Kroger Co. is testing two new initiatives at select Walgreens drugstores: Kroger Express storewithin-a-store and Home Chef Express. The pilot programs launched in the Cincinnati and Chicago areas.

Dollar General Corp. expects to add fresh produce to about 200 remodeled stores. Currently, 425 locations carry the About half of the remodels will be in “traditional-plus” formats, which are traditional in produce terms of size, but have more cooler space. offering.

Walmart is testing Flippy, a robot that can grill 150 hamburgers an hour. The robot could eventually move to delis and kitchens to take over repetitive tasks.

Digital convenience retailer goPuff is building a new technology and distribution center in Gloucester County, N.J. The 299,750-square-foot facility is expected to be fully operational by the end of 2019.

16 Convenience Store News C S N E W S . c o m


INDUSTRY ROUNDUP

Retailer Tidbits

Domino Food and Fuel Inc. tapped Skip for the rollout of frictionless checkout across its 17 Domino convenience stores. The self-checkout option is expected to go live in the beginning of the first quarter of 2019.

Global Partners LP is selling 11 company-operated stores with gas Four of the sites are spread throughout fee-owned properties and seven are leaseholds. upstate New York. The buildings range from kiosks to 3,355 square feet. Phillips 66 teamed up with Visa to add Visa Checkout to its branded mobile apps. Customers can use the payment option through the My Phillips 66, My 76 and My Conoco mobile apps at the pump and in-store.

QuikTrip Corp. is hiring for a hybrid position that combines armed security with typical store clerk duties at select locations. It tested the position for six months at some locations in Wichita, Kan. Kum & Go LC and the Krause family’s eight other companies moved into their new home at the Krause Gateway Center. The six-story, 159,000-square-foot Krause Gateway Center cost nearly $150 million to build.

Wawa Inc. partnered with 2SP Brewing Co. to create 2SP + Wawa Winter Reserve Stout, a beer made with the convenience store chain’s seasonal Reserve Winter Blend coffee. Only 1,000 cases of the stout beer were manufactured. 20954_2019_Jan_CA_CStore_News_Half_Page_Ad_FNL.pdf

Yesway is expanding its private label catalog with the addition of Yesway Candy and Yesway Baked Goods. The retailer started its private label offering with Yesway Water.

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12/14/18

8:04 AM

1. Dipped Chips Ahoy! Thins Bites Consumer Study, Feb 2018. © Mondelēz International group

18 Convenience Store News C S N E W S . c o m


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INDUSTRY ROUNDUP

Supplier Tidbits

Altria Group Inc. discontinued the production and distribution of all MarkTen and Altria also made a $1.8-billion inGreen Smoke vestment in Canadian cannabis vapor products, company Cronos Group Inc. and VERVE oral nicotine-containing products. The decision was driven by the financial performance of these products, coupled with regulatory restrictions. Reynolds American Inc. launched a comprehensive parental leave policy that offers 16 weeks of full paid leave for employees who are new mothers or fathers. New parents can also take up to eight months of a flexible work arrangement. ConvenienceWorks by Hussmann opened a new e-commerce store through its Convenience-Works.com

20 Convenience Store News C S N E W S . c o m

website. The e-commerce store will offer a select number of self-contained merchandisers. Essentia won Best Functional Water and Best Marketing or Social Media Campaign for its “Overachieving H2O” marketing campaign in the 2018 Global Bottled Water Awards. Winners were announced at the 15th annual Global Bottled Water Congress. Mars Wrigley Confectionery launched a new plan to overhaul its cocoa supply chain. Titled “Cocoa for Generations,” the plan is backed by an investment of $1 billion over 10 years. 22nd Century Group Inc. submitted a Premarket Tobacco Application with the Food and Drug Administration to market the company’s “BRAND A” cigarette products under the proposed brand name VLN. The proposed VLN brand contains very low levels of nicotine.


NEW PRODUCTS

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1. Fairlife Smart Snacks

2. Combos Jalapeño 3. Improved-Recipe Cheddar Butterfinger

4. Swedish Match Thunder Xtreme

Fairlife LLC rolled out a new collection of snack-sized beverages designed to be the perfect snack to help curb hunger between meals. The fairlife smart snacks line is made with fairlife ultrafiltered milk, which is dairy milk that has been coldfiltered to remove the lactose while delivering 50 percent more protein and 50 percent less sugar than regular milk. Available in three varieties, the beverages are blended with a touch of honey for sweetness and oats for a rich, creamy texture, plus real strawberries, cocoa or vanilla for flavor.

New for 2019, the Combos brand will launch Combos Jalapeño Cheddar nationally. The bitesize, on-the-go snack combines “cheesy goodness” plus a mix of spices inside a baked tortilla shell. Combos Jalapeño Cheddar fulfills millennial consumers’ preference for bolder, spicier flavors, according to the maker. Its packaging focuses on food imagery to drive appetite appeal and purchase.

Swedish Match is launching Thunder Xtreme — a bold new product line featuring three varieties, two strengths and two flavors — in the United States. Consumers can choose from Original, Original Strong and Red Strong varieties. Both strong options are 50 percent stronger than regular-strength snus, the company noted. Thunder Xtreme is a shelf-stable product that does not require a chiller. The cans contain 24 one-gram pouches for long-lasting enjoyment, and a compartment for easy disposal.

Mars Chocolate North America Hackettstown, N.J. marschocolate.com

The Ferrara Candy Co. Oakbrook Terrace, Ill. ferrarausa.com

Fairlife LLC Chicago fairlife.com

5. BluTaco Hot Food Program

The Ferrara Candy Co., which acquired Nestle’s confectionery brands, is introducing an Improved-Recipe Butterfinger. The new product continues to deliver on the crispety, crunchety, peanut-buttery flavors that Butterfinger fans love, while ushering in better ingredients, better packaging, improved freshness and increased advertising support. The ImprovedRecipe Butterfinger is available in four package sizes: 1.9 ounces, 3.5 ounces, 3.7 ounces and 8 ounces.

Swedish Match Owensboro, Ky. (556) 015-0756 swedishmatch.com

5

BluTaco is the newest hot food program from PFSbrands. As a business within a business, BluTaco is off to a quick start with seven locations across the nation due to its location-friendly small footprint, limited SKUs, easy prep procedures, quick-serve “built-to-order” style and taste, according to the company. BluTaco uses blue corn tortillas and a “Go TruBlu” sauce to differentiate itself. If a customer goes TruBlu, they can coat their entrée in warm green chile sauce or three cheese queso. BluTaco can be paired with PSFbrands’ Champs Chicken program. PFSbrands Holts Summit, Mo. (888) 581-9188 customer.success@PFSbrands.com pfsbrands.com/blutaco 22 Convenience Store News C S N E W S . c o m


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10. RowdyDow bbQ C-Store New, a division of MEZ Enterprises Inc., added RowdyDow bbQ Worldwide to its convenience store portfolio. The line includes premium pulled pork and brisket that deliver casual gourmet appeal. RowdyDow bbQ features antibiotic-free meat raised on family-owned farms, hand-seasoned with a secret rub, and live fire-smoked to perfection. C-Store New New Lenox, Ill. (815) 863-4607 mzielinski@c-storenew.com c-storenew.godaddysites.com

24 Convenience Store News C S N E W S . c o m

10


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SMALL OPERATOR

Looking at the Glass Half Empty M&A shook the convenience channel in 2018, leaving small operators less optimistic about 2019 By Danielle Romano as one of, if not, the most active years for mergers and acquisitions in the convenience channel, with some of the biggest chains only getting bigger. If small operators (those operating one to 10 stores) were concerned about the rumbles of consolidation, then the aftershock is reflected in their less optimistic outlook on 2019.

2018 MAY GO DOWN IN HISTORY

According to the 2019 Convenience Store News Forecast Study, an overwhelming amount of c-store retailers (82.9 percent) forecast an increase in their average dollar sales per store in 2019 vs. just 62.9 percent of the small operators surveyed. And that small operator number is down from 71.3 percent who forecasted an increase in the 2018 study. Nearly one-quarter of small operators (23.1 percent) believe their sales will stay the same, compared to 11.4 percent of total retailers. Year over year, a higher number of small operators predict their sales will decrease in 2019 — 7.7 percent vs. 4.1 percent last year. When asked what issues they believe will most impact sales and profitability for their c-stores in the coming year, small operators ranked the following as their top five concerns: motor fuel prices (cited by 49.6 percent), labor issues and regulation (39.6 percent), healthy eating trends (35.1 percent), mobile commerce (30.9 percent) and demographic changes (30 percent).

26 Convenience Store News C S N E W S . c o m

Do you expect your 2019 average sales per store to: Increase

Stay the same

SMALL OPERATORS

7.7%

Decrease

TOTAL RESPONDENTS

5.7% 11.4%

23.1% 69.2%

Net change: +3.1%

82.9%

Net change: +3.4%

Source: Convenience Store News Market Research, 2019

Which will have the biggest impact on sales and profitability for your convenience store(s) in 2019? Small Operators

Motor fuel prices Labor issues/regulations Healthy eating trends Mobile commerce/marketing Demographic changes Emerging technologies E-commerce competition Tobacco & e-cigarette regulations Brick-and-mortar competition

49.6% 39.6% 35.1% 30.9% 30.0% 28.0% 25.3% 21.3% 15.6%

Total

61.9% 34.7% 41.2% 27.7% 22.2% 30.4% 15.9% 34.0% 24.9%

Multiple responses accepted Source: Convenience Store News Market Research, 2019

Technology also has increased trepidation among small operators. In the last year alone, larger chains (defined as 11 or more stores) have adopted different technologies to support new business moves, such as EMV compliance at the pump, the rollout of mobile loyalty programs and implementation of frictionless checkout in-store. According to one small operator, technology is a concern because “consumers are becoming more tech savvy and live on their smartphones.� Noting that emerging technologies (28 percent) and e-commerce competition (25.3 percent) are top of mind in the year ahead, some small operators are planning to use technology to their advantage. When asked what major initiatives their companies plan to implement in 2019 to increase sales and profitability, one small operator said it will implement e-commerce and internet marketing efforts to drive customers in-store from the pump.


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SMALL OPERATOR

How will your store count change in 2019? Small Operators

We plan to increase our store count We plan to decrease our store count Our store count will remain the same

Total

31.8% 0.7% 67.5%

59.5% 0.9% 39.6%

Source: Convenience Store News Market Research, 2019

How does your company view the overall conditions for the U.S. economy in 2019? Small Operators

Total

71.9% 21.6% 6.5%

69.5% 26.4% 4.1%

Positive Neutral Negative Source: Convenience Store News Market Research, 2019

Do you expect cross-channel competition (including e-commerce) against the convenience store industry in 2019 to: Increase

Decrease

Stay the same

SMALL OPERATORS

39.7%

56.9%

TOTAL RESPONDENTS

41.7%

Keeping an Eye Out Other concerns small operators have are labor availability; growth in alternative fuel use, requiring additional investments at the forecourt; and increases in interest rates. In last year’s study, small operators’ biggest concerns were slightly different, centering on labor costs, rising gas prices and uncertainty over the change in the Oval Office. One outlook this year that small operators and the larger chains have in common is that they expect cross-channel competition — including e-commerce — against the convenience store industry to increase in 2019. Similar percentage points reflect this belief, as it was cited by 56.9 percent of small operators and 58.3 percent of total industry retailers. When considering their biggest cross-channel competitive threats, grocery home delivery services like Walmart’s Jet.com (40.2 percent) and Amazon (35.9 percent) and convenience delivery services such as goPuff (19.6 percent) round out small operators’ top three. They are less concerned about click-and-collect services and ride-share vending services like Cargo (tied at 4.4 percent), even less so than they were in last year’s survey (5.8 percent).

Confidence Boost?

58.3%

While bracing for increased competition, small operators do have a more favorable view of overall conditions for the U.S. economy in 2019 than the c-store industry as a whole.

3.4% Source: Convenience Store News Market Research, 2019

Which do you consider the biggest cross-channel competitive threats? Small Operators

Total

40.2% 35.9%

60.9% 52.2%

19.6% 4.4% 4.4%

56.5% 10.3% 9.4%

Grocery home delivery services (Walmart’s Jet.com, Target’s Restock, Amazon Fresh, etc.)

Amazon Convenience home delivery services (i.e., goPuff)

Click-and-collect services Ride-share vending services (i.e., Cargo) Multiple responses accepted Source: Convenience Store News Market Research, 2019

On a scale of 1 to 5, how optimistic do you feel about your business in 2019? Small Operators

1 = Terrible, wake me when it’s over 2 3 4 5 = It’s going to be our best year ever! Source: Convenience Store News Market Research, 2019

28 Convenience Store News C S N E W S . c o m

0.0% 3.4% 51.1% 29.6% 15.9%

Total

0.0% 4.2% 33.3% 37.5% 25.0%

Nearly three-quarters of small operator respondents (71.9 percent) view the economy in a positive light vs. 69.5 percent for the total industry. About a quarter of small operators have a “very positive” view on economic conditions. Only 6.5 percent have a negative view of the economy, and less than 1 percent (0.7 percent) have a “very negative” outlook. Looking ahead to 2019, small operators are optimistic about a few things. The foremost reasons why they say they’re feeling good are: an increase in customer incomes (which means more expendable spending), lower federal taxes and growing foodservice sales. On a scale of 1 to 5 — with 1 representing “Terrible, wake me when it’s over” and 5 representing “It’s going to be our best year ever” — a little more than half of the small operators surveyed by Convenience Store News (51.1 percent) teeter on the pessimist/optimist scale, at a ranking of 3. On a happier note, 15.9 percent rank their optimism at a 5, and no small operator gave their outlook for 2019 a ranking of 1. CSN


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COVER STORY

THINGS ARE LOOKING UP

The convenience store industry’s constituents have a largely positive view on the year ahead A Convenience Store News Staff Report

CONVENIENCE STORE RETAILERS, suppliers and distributors are more optimistic about their business prospects for 2019 than they were last year at this time when looking toward 2018.

The findings of the 17th annual Convenience Store News Forecast Study show that 62.5 percent of the c-store retailers surveyed have an optimistic view about their business in the year ahead. That figure is an improvement from last year, when 57 percent of the c-store retailers surveyed indicated they felt positive about their business prospects for 2018. What’s more, a whopping 82.9 percent of the retailer respondents in this year’s study said they expect their sales per store to increase in 2019 — up from 75.1 percent a year ago. The c-store industry’s suppliers and distributors are even more upbeat about 2019’s potential. They are largely positive about the U.S. economy, about their respective product categories and about the convenience channel overall vs. other retail channels.

FORECAST 2019 SNAPSHOT Total store Foodservice Alternative snacks Salty snacks Packaged beverages Other tobacco products Beer Candy Edible grocery Motor fuels Cigarettes

DOLLAR SALES

UNIT VOLUME

+3.4% +6.0% +3.6% +3.4% +3.3% +2.5% +2.4% +2.4% +1.2% +1.1% +0.5%

n/a +5.9% +3.5% +2.8% +2.5% +1.7% +2.1% +1.5% +1.8% +1.5% -0.4%

Source: Convenience Store News Market Research, 2019

30 Convenience Store News C S N E W S . c o m

This year’s Forecast Study findings show that 91.2 percent of the suppliers and distributors surveyed believe 2019 will be a good year for their category, compared to 84.2 percent in 2018. They also give the convenience channel top marks among the retail channels they work in. Specifically, 92.9 percent rate the convenience channel as positive, compared to 59.6 percent positive for mass merchandise, 56.3 percent for drug, and 56 percent for grocery. As in years past, this year’s CSNews Forecast Study includes a Retailer Forecast and a Supplier Forecast, both based on the results of a survey fielded in November 2018. Participants were asked to predict 2019 sales per store for a variety of product categories, as well as to share their opinions on overall business, economic and consumer trends. They were also asked to identify and rate the issues that are expected to have the most impact on their business in the year ahead, and share initiatives they are planning to increase sales and profitability. Although the sales projection for the total store is down slightly this year — 3.4-percent growth forecasted vs. 3.9 percent last year — the growth outlook for many product categories is improved. Higher dollar-sales growth year over year is projected for alternative snacks, salty snacks, packaged beverages, other tobacco products, beer and candy. Read on to find out much more about what 2019 will bring for your business, including the top nine consumer trends you must embrace to meet the evolving needs of your customers.


FORECAST 2019

J AN

20 1 9

Convenience Store News

31


FORECAST 2019

RETAILER FORECAST

Hopeful Heading Into 2019 C-store retailers predict their total in-store sales will grow by 3.4 percent in the year ahead By Don Longo CONVENIENCE STORE RETAILERS are

slightly more optimistic about their business prospects for 2019 than they were last year at this time when looking toward 2018. According to the 17th annual Convenience Store News Forecast Study, 62.5 percent of the c-store retailers surveyed have optimistic views about their business in the coming year. That compares favorably to the 57 percent of c-store retailers that felt positive about their business prospects on the eve of the just-completed year. A whopping 82.9 percent of retailer respondents expect their sales per store to increase in 2019, up from 75.1 percent a year ago. Only 5.7 percent expect a decline in same-store sales. Those expecting increases cited several factors for their optimism, including adding more graband-go and ready-to-eat food to their stores, growth in beverage sales, and increased availability of healthier food options. Perhaps even more significantly, 25 percent of retailer respondents think 2019 is going to be their “best year ever.” Again, that’s more than the 20.2 percent who felt that kind of enthusiasm a year ago. Among the reasons they cite for their optimism: • New products; • Continued positive fallout from President Trump’s economic policies; • Availability of money (ability to borrow); • Construction booming in our markets; • Same-store sales increases are strong; • Continued strong culture and leadership at our company; • Technology advances and increased investment in new tech;

• Strong consumer confidence; • Sales increases in the third and fourth quarters of 2018; and • Tax cuts and higher incomes of customers. Retailer optimism about their own company’s prospects is high despite less positive feelings about economic conditions in general for the coming year compared with a year ago. Just under 70 percent of retailer respondents said they view overall conditions for the U.S. economy in a positive light. That’s a little less than the 73.6 percent who felt positive last year about the economy. On the other hand, fewer retailers this time around have negative views on the economy for the coming year. Just 4.1 percent see difficult economic times ahead — half the percentage of a year ago. On average, c-store retailers predict their total in-store sales will grow by 3.4 percent in 2019. They were slightly more optimistic a year ago, when they predicted 2018 in-store sales would rise by 3.9 percent — after a relatively soft year in 2017 when actual in-store sales rose only 2.1 percent. Preliminary 2018 results indicate in-store sales will likely grow 2-3 percent. Not surprisingly, retailers expect foodservice to lead the way in in-store sales growth in 2019. They predict a 6-percent gain in sales of prepared food and hot, cold and frozen dispensed beverages. Retailers are also bullish on alternative snacks (projecting a 3.6 percent sales gain), salty snacks (3.4 percent gain) and packaged beverages (3.3 percent gain). In terms of volume, retailers are less sanguine about edible grocery units (1.8 percent gain projected), motor fuel gallons (1.5 percent gain) and cigarette units (0.4 percent decline).

32 Convenience Store News C S N E W S . c o m

Do you expect your 2019 average sales per store to: Increase

Decrease

Stay the same

Net change: +3.4%

5.7%

11.4%

82.9%

Source: Convenience Store News Market Research, 2019

Which will have the biggest impact on sales and profitability for your convenience store(s) in 2019? Motor fuel prices Healthy eating trends Labor issues/regulations Tobacco & e-cigarette regulations Emerging technologies Mobile commerce/marketing Brick-and-mortar competition Demographic changes E-commerce competition

61.9% 41.2% 34.7% 34.0% 30.4% 27.7% 24.9% 22.2% 15.9%

Multiple responses accepted Source: Convenience Store News Market Research, 2019

How does your company view the overall conditions for the U.S. economy in 2019?

Positive

69.5%

Neutral

26.4%

Source: Convenience Store News Market Research, 2019

Negative

4.1%


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FORECAST 2019

RETAILER FORECAST

Do you expect cross-channel competition (including e-commerce) against the convenience store industry in 2019 to: Increase

Decrease

Stay the same

Motor fuel prices (61.9 percent), healthy eating trends (41.2 percent), labor issues/regulations (34.7 percent), tobacco and electronic cigarette regulations (34 percent) and emerging technologies (30.4 percent) are the top five factors that will have the biggest impact on convenience store sales in 2019, according to the retailers surveyed.

58.3%

“Fuel pricing always affects store sales,” one retailer remarked in commenting on what will impact sales in 2019. Another looked further into the future: “Alternative fuel will decrease the need for gasoline by 2025.”

Source: Convenience Store News Market Research, 2019

Which do you consider the biggest cross-channel competitive threats? Grocery home delivery services

60.9% Convenience home delivery services (i.e., goPuff) 56.5% Amazon 52.2% Ride-share vending services (i.e., Cargo) 10.2% Click-and-collect services 9.7% (Walmart’s Jet.com, Target’s Restock, Amazon Fresh, etc.)

Multiple responses accepted Source: Convenience Store News Market Research, 2019

We plan to increase our store count We plan to decrease our store count Our store count will remain the same

59.5% 0.9% 39.6%

Source: Convenience Store News Market Research, 2019

On a scale of 1 to 5, how optimistic do you feel about your business in 2019?

33.3% 37.5% 25.0%

1 .......................................................................................................5

Terrible, wake me when it’s over

Comments about rising labor costs were also common. “A lot of regulations and new laws will cost our company more,” said one retailer. “Labor regulations regarding training will create additional costs. Mandatory hourly wage increases are coming,” said another. Tobacco regulation is a concern, too. “Regulation of tobacco and e-cigs could materially impact the channel, especially if age is increased and products withdrawn from the shelves,” said one retailer. “Vape is a huge category that could be greatly affected by regulation,” added another. Retailers were also asked to talk about the major initiatives their companies plan to implement in 2019 to increase sales and profits. “We are planning an e-commerce and internet marketing effort to drive customers into the store from the pumps,” said one operator. Another said they will focus on employee training to increase “Plus Sales” efforts. Several mentioned improving their loyalty programs and/or driving new membership. And many talked about further developing their foodservice programs and improving their proprietary food offerings.

How will your store count change in 2019?

4.2%

About half (52.2 percent) consider Amazon overall to be their biggest cross-channel competitor, slightly up from a year ago. However, the threat that shows the biggest one-year increase in concern is that of convenience delivery services, such as those offered by goPuff. More than half of retailer respondents (56.5 percent) cite these services as a threat for 2019 vs. only 28.7 percent a year ago.

41.7%

0.0%

Retailers are unanimous in their belief that cross-channel competition will either increase or stay the same in 2019. A majority (60.9 percent) consider grocery home delivery services like Amazon Fresh and Walmart’s Jet.com as their biggest cross-channel competitive threat.

It’s going to be our best year ever!

Source: Convenience Store News Market Research, 2019

34 Convenience Store News C S N E W S . c o m

Interestingly, in an industry where store count has remained relatively flat over the past several years, nearly 60 percent of respondents expect to increase their store count in 2019. Less than 1 percent think they’ll reduce their number of stores. Retailers were also asked to name their top concerns about business conditions in 2019. Among the responses were: • E-commerce and internet taking sales away from stores; • Black market sales of regulated products; • Labor shortage intensifies; • Increase in fuel costs; • More competition, especially in foodservice; • Additional regulations adding a level of complexity; • Rising interest rates; • Growth of electric cars; • Pricing concerns due to tariffs; and • Potential impulsive decisions by President Trump.


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FORECAST 2019

CATEGORY FORECAST

Favorable Expectations C-store operators don’t expect a knockout 2019 across all product categories, but most feel good about the months to come By Angela Hanson challenges in the form of competition from other retail channels and e-commerce, changing consumer tastes and innovation that could be the next big thing or the next big bust, c-store operators express general optimism for 2019.

MOTOR FUELS

WHILE THE CONVENIENCE STORE INDUSTRY faces

Across most product categories, operators expect both dollar sales and unit volume to rise or remain the same year over year, according to the 2019 Convenience Store News Forecast Study.

Increase

Decrease

GALLONS

21.9% 15.6%

26.7% 62.5%

Foodservice garners the most optimism, with c-store retailers looking to menu variety, healthier food options and increased convenience via third-party delivery services to drive sales. Sentiment around the fuels category also has bounced back, helped along by lower fuel prices, more alternative fuel options and retailers’ own improved amenities. Operators are worried, though, about regulatory and legislative changes — particularly in the tobacco category, which faces a potentially rocky year if the Food and Drug Administration moves forward with its proposed sales ban on flavored e-cigarette products. Individual product category projections for 2019 are:

Net change: +1.1%

The number of retailers who expect no change in the fuels category year over year is a distant second, with 21.9 percent believing dollar sales will stay the same and 26.7 percent forecasting gallons sold will be unchanged. Negative expectations are in the minority, as just 15.6 percent expect dollar sales to decline and 13.3 percent foresee a drop in gallon sales. Surveyed retailers cited lower fuel prices and alternative fuels, such as compressed natural gas (CNG) and biofuels, as factors in their optimism. Others pointed to their own improved offerings as a reason for expected sales increases, predicting that loyalty programs, truck stop amenities and additional pumps will attract more motorist traffic to their sites. Retailers also expect to see increased consumer driving, but are wary of the potential effects of electric vehicle usage, ride-share services and future natural disasters.

36 Convenience Store News C S N E W S . c o m

13.3%

60.0%

Net change: +1.5%

Source: Convenience Store News Market Research, 2019

CIGARETTES Increase

Decrease

DOLLAR SALES

14.9%

MOTOR FUELS After a year of flagging optimism, the majority of c-store operators are positive about fuel sales in 2019, with at least six out of 10 expecting an increase in both average dollar sales (62.5 percent cited) and gallon sales (60 percent). This is a jump from last year, when 52.4 percent expected dollar sales to increase and only 46.6 percent expected gallon sales to increase.

Stay the same

DOLLAR SALES

Stay the same UNIT VOLUME

18.5%

18.5%

44.4% 40.7%

Net change: +0.5%

63.0%

Net change: -0.4%

Source: Convenience Store News Market Research, 2019

Overall, retailers predict net increases of 1.1 percent for average fuel dollar sales and 1.5 percent for gallons sold per store. This is down slightly from last year’s expectations of a 1.7-percent increase in dollar sales and 1.6percent increase in gallons.

TOBACCO One year ago, c-store retailers could not reach a clear consensus on what they expected for the tobacco category in 2018. As for 2019, they are even more divided, with uncertainty regarding regulation around e-cigarettes contributing to a very mixed forecast. In the cigarettes segment, most retailers expect a change in sales, but there is no consensus on what kind of change will occur — 44.4 percent expect their average dollar


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CATEGORY FORECAST

OTHER TOBACCO PRODUCTS Increase

Decrease

Stay the same

DOLLAR SALES

UNIT VOLUME

28.0%

30.0% 59.1%

12.9%

56.9%

Net change: +1.7%

Source: Convenience Store News Market Research, 2019

FOODSERVICE Increase

Decrease

DOLLAR SALES

4.1%

Stay the same UNIT VOLUME

3.1%

12.9%

Net change: +6.0%

However, regulation, including the FDA’s proposed ban on most flavored e-cigarettes, could quickly turn the sentiment negative. “The FDA ruling on e-cigarettes could make the category a lost cause,” one retailer remarked. With foodservice having grown into one of the most valuable categories in the c-store industry, it’s no surprise that retailers continue to be enthusiastic about its future.

78.7%

Net change: +5.9%

Source: Convenience Store News Market Research, 2019

sales per store to rise, while 40.7 percent believe they will decline. Meanwhile, 18.5 percent believe their unit volume per store will increase, while 63 percent expect it to decline. The overall predicted net change for the category is dollar sales increasing 0.5 percent and unit volume falling 0.4 percent. This is a more negative outlook than last year, when only 26.1 percent of retailers expected their cigarette dollar sales to decline and 37.8 percent expected unit volume to decline. Why the downward slide? Foremost, retailers cite increased regulation, such as the growing movement to raise the tobacco purchasing age to 21. The popularity of e-cigarettes and vapor products is also having an effect on the cigarettes category. Tobacco loyalty programs and better pricing are bolstering some retailers’ optimism. However, one operator pointed to large retailers driving cigarette margins down and contributing to a general downward trend. Others also

38 Convenience Store News C S N E W S . c o m

The popularity of e-cigarettes and vapor products — Juul, in particular — is a positive factor for OTP. Product innovation and variety are also contributing to retailers’ optimism.

FOODSERVICE

18.2%

83.0%

C-store operators are considerably more positive about the other tobacco products (OTP) category. While 28 percent expect average dollar sales per store to stay the same and 30 percent expect unit volume per store to stay the same, 59.1 percent of retailers believe their OTP dollar sales will rise and 56.9 percent expect an increase in unit volume. The expected net change for OTP is an increase of 2.5 percent for dollar sales and 1.7 percent for unit volume. Overall, positive sentiment is up slightly from the 2018 forecast.

13.1%

Net change: +2.5%

anticipate the legalization of marijuana to have an effect, although this factor is very region specific for now.

Positive expectations for both dollar sales and unit volume are up, with 83 percent of retailers saying they expect their foodservice dollar sales per store to increase in 2019 (compared to 78 percent a year ago) and 78.7 percent saying they expect their unit volume to increase (compared to 77.4 percent a year ago). A miniscule 4.1 percent believe their foodservice dollar sales will decline and 3.1 percent believe their unit volume will decline. Retailers surveyed anticipate a healthy net change in foodservice sales, which includes prepared food and hot, cold and frozen dispensed beverages. Overall, they expect a 6-percent increase in dollar sales and a 5.9-percent increase in unit volume in 2019. While c-store operators are largely unified in their sentiment about the foodservice category’s future, they did cite a wide variety of trends that they expect to have a sizeable impact this year. Numerous retailers pointed to healthier options and items with clean-label attributes, such as GMO-free. Adding new menu items to cater to consumers’ hunger for variety should boost both dollar sales and unit volume, according to some respondents. The increasing acceptance of c-stores as a food destination and the availability of third-party delivery services are also positive indicators of category growth. “Increased meal plan sales always equal increased foodservice sales,” said one retailer.


FORECAST 2019 PACKAGED BEVERAGES

PACKAGED BEVERAGES

Despite their high expectations for the foodservice category and the fact that beverages are frequently added to prepared-food purchases, convenience store retailers are less excited about the packaged beverages category this year. The good news is that very few expect packaged beverage unit volume to decline, and no surveyed operators expect dollar sales per store to drop. However, they are fairly split on whether sales will stay the same or increase. A slight majority believe the latter, with 52.4 percent saying they expect both dollar sales and unit volume to rise, while 47.6 percent expect dollar sales to stay the same and 42.8 percent expect unit volume to be unchanged. Retailers cited price increases most frequently as the foremost factor that will prevent unit volume, and possibly dollar sales, from rising in 2019. Others listed overall challenges with carbonated soft drink (CSD) suppliers, but speculated that slowing soda sales will be offset by increased sales of teas and flavored waters, tying in with consumer demand for healthier options.

Increase

Decrease

DOLLAR SALES

47.6%

UNIT VOLUME

52.4%

42.8%

52.4%

4.8% Net change: +2.5%

Net change: +3.3% Source: Convenience Store News Market Research, 2019

BEER Increase

Decrease

DOLLAR SALES

Sparkling water, protein drinks and kombucha are also among the trending packaged beverages that retailers expect to have a category impact in 2019. Planned category promotional efforts include loyalty program initiatives and deals pairing food and beverages.

Stay the same

47.0%

Stay the same UNIT VOLUME

41.2%

52.9%

35.3%

BEER Convenience store retailers that are permitted to sell beer and malt beverages are looking forward to a fairly positive 2019, although they are generally split on whether sales will change.

11.8%

11.8%

Net change: +2.1%

Net change: +2.4%

More operators expect their average dollar sales per store to stay the same rather than increase, at 47 percent compared to 41.2 percent, respectively. A slight majority expects their unit volume per store to stay the same instead of rise, at 52.9 percent vs. 35.3 percent, respectively. Although few retailers (11.8 percent) think their sales in the beer category will decline in 2019, this is still a drop in positivity from 2018, when 57.1 percent of retailers expected their beer dollar sales to go up and 52.6 percent expected their unit volume to increase. Despite the flagging optimism, the expected net change for the beer category is increases of 2.4 percent for dollar sales and 2.1 percent for unit volume. While the impressive growth of craft beer and microbreweries has slowed as the segment becomes more and more mainstream, retailers still point to the new varieties they offer as keeping sales steady, on account of consumer demand for new brews. Improved consumer confidence and more single sales are also among the factors that some retailers believe will increase both dollar sales and unit volume in 2019, while

Source: Convenience Store News Market Research, 2019

beer prices and the drinking habits of millennials could contribute to a decline.

CANDY Consumers have been asking for healthier food, beverage and snack options, but that doesn’t mean they’ve lost their taste for occasional indulgences — which is encouraging news for the candy category at convenience stores. This year, the number of c-store retailers expecting a decrease in candy sales fell to zero, compared to the 7.5 percent who expected their average dollar sales per store to decline in 2018 and the 11.8 percent who expected their unit volume per store to decline. Still, the majority of c-store operators expect status quo in 2018: 65 percent forecast their candy dollar sales will stay the same, while 63.2 percent anticipate no change in unit volume.

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CATEGORY FORECAST

CANDY Increase

Decrease

Stay the same

DOLLAR SALES

UNIT VOLUME

35.0% 65.0%

36.8% 63.2%

The overall expected net change in the candy category is a 2.4-percent increase in dollar sales and a 1.5-percent increase in unit volume. Retailers note that while the desire for healthy products is a factor in sales staying at their current levels, “people are willing to pay up for fancy and quality items.” Loyalty programs, two-for-one pricing, impulse merchandising and introduction of new candy products are expected to drive sales this year. Gum, which has struggled in recent years, is starting to bounce back and can be helped along with proper promotion and marketing, as one retailer commented.

Net change: +1.5%

Net change: +2.4%

SALTY SNACKS Increase

Decrease

DOLLAR SALES

52.6%

Stay the same UNIT VOLUME

47.4%

58.8%

Source: Convenience Store News Market Research, 2019

ALTERNATIVE SNACKS Increase

Decrease

DOLLAR SALES

41.2%

Loyalty programs, two-for-one pricing, impulse merchandising and introduction of new candy products are expected to drive sales this year.

Stay the same UNIT VOLUME

50.0%

50.0%

58.8%

Net change: +3.6%

Most convenience store retailers expect their salty snack sales to hold steady, with 52.6 percent believing average dollar sales per store will stay the same and 58.8 percent believing unit volume per store will stay the same. Meanwhile, increased dollar sales are expected by 47.4 percent of surveyed retailers and 41.2 percent expect unit volume to rise.

41.2%

Net change: +2.8%

Net change: +3.4%

SNACKS The lack of negative expectations for the candy category is mirrored in the snacks categories, indicating that c-stores remain a top destination for small treats and meal replacements.

Source: Convenience Store News Market Research, 2019

Net change: +3.5%

Source: Convenience Store News Market Research, 2019

40 Convenience Store News C S N E W S . c o m

The overall expected net change in the salty snacks category for 2019 is a 3.4-percent increase for dollar sales and 2.8-percent growth for unit volume. Some retailers believe rising costs will inflate dollar sales even as unit volume remains the same. The introduction of new flavors — particularly spicy varieties — as well as private-label products and loyalty programs are expected to have a positive impact on salty snacks, along with another product category, where legal. “Increased beer sales contribute to this increase,” said one retailer. C-store operators forecast a rosier future for alternative snacks, with 58.8 percent saying they expect dollar sales in the category to increase, and an even 50 percent saying they expect unit volume to increase. No retailers predict a decline.


FORECAST 2019 The overall predicted net change for the alternative snacks category in 2019 is a 3.6-percent increase in dollar sales and a 3.5-percent increase in unit volume.

EDIBLE GROCERY Increase

Decrease

Stay the same

DOLLAR SALES

As the demand for healthier snacks grows and consumers seek alternatives to traditional snacks like chips, clean-label attributes will be more impactful to the category, retailers note.

UNIT VOLUME

18.7%

25.0%

EDIBLE GROCERY

6.3%

Increased acceptance of convenience stores as a destination for fresh food is likely having a favorable impact on the edible grocery category, which is notable this year for how much pessimism shrank, rather than how much optimism grew.

68.7%

6.3%

75.0%

Net change: +1.2%

Net change: +1.8%

Only 6.3 percent of c-store retailers this year say they expect average dollar sales and unit volume per store to decrease, down from the 20 percent who expected dollar sales to decrease in 2018 and 19.3 percent who expected unit volume to decrease last year.

grocery is a 1.2-percent increase in dollar sales and 1.8-percent growth in unit volume.

A quarter of retailers believe dollar sales will rise in 2019, and 18.7 percent believe unit volume will improve. The overall net change forecasted for edible

Primary obstacles to category growth include online retailers and local competition from supermarkets, according to operators.

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Source: Convenience Store News Market Research, 2019

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SUPPLIER FORECAST

Accentuate the Positive Convenience channel suppliers are more bullish this year than they were last year By Melissa Kress ONE WORD CAN DEFINE

how the supply side of the convenience store equation feels heading into 2019: Positive — positive about the economy, positive about their respective product categories and positive about the convenience channel overall.

tive product categories. The findings show 91.2 percent believe 2019 will be a good year for their category, compared to 84.2 percent in 2018. Similar to the sentiments about the economy, only 1.8 percent have some trepidation category-wise.

An overwhelming 93 percent of c-store industry suppliers, manufacturers, wholesalers, distributors and brokers said they are heading into the new year with a positive view on the U.S. economy. On the flip side, only 1.7 percent hold a negative view of the economy, with 5.3 percent remaining neutral, according to the 2019 Convenience Store News Forecast Study. These numbers reflect an uptick from 2018, when 83.4 percent checked the positive box for their economic view.

Once again, more than half (52.6 percent) said they are “very positive” and what’s more, zero respondents indicated they are very negative about their category.

Digging deeper, of this year’s supplier respondents who say they hold a favorable view of the U.S. economy, more than half indicated they feel “very positive.” And the economy is not the only bright spot among the supplier community. Survey respondents also feel good about their respec-

The suppliers that participated in the 2019 Forecast Study give the convenience channel top marks among the retails channels they work in. Specifically, 92.9 percent rate the convenience channel as positive, compared to 59.6 percent for mass merchandise, 56.3 percent for drug, and 56 percent for grocery. Looking to the coming 12 months, c-store industry suppliers are split about what will be the biggest keys to their success. Roughly one-quarter point to growth in consumer spending, while a nearly equal number point to retailer unit expansion.

How does your company view the overall conditions for the U.S. economy in 2019?

Positive

93.0%

Neutral

5.3%

Negative

1.7%

Source: Convenience Store News Market Research, 2019

What do you believe will be the biggest factor in your company’s success in 2019? Consumer spending growth Retailer unit expansion New product development in your category Raw material costs Increasing regulation E-commerce Retailer consolidation Rising labor costs Other

25.5% 23.5% 13.7% 9.8% 8.6% 7.8% 5.9% 2.0% 3.9%

Source: Convenience Store News Market Research, 2019

For your particular product category, how do you view the upcoming year?

Rate conditions in each of the following retail channels your company works with: 92.9%

Positive

Neutral

Negative

90

Positive

91.2%

80

7.0%

Negative

1.8%

Source: Convenience Store News Market Research, 2019

70

59.6%

56.3%

60

56.0%

Which do you consider the biggest cross-channel competitive threats?

50 40

31.9%

30

35.4%

34.0%

Amazon Grocery home delivery services

8.5%

8.3%

10.0%

3.6% 3.6%

0

Convenience

Mass Merchandise

Source: Convenience Store News Market Research, 2019

42 Convenience Store News C S N E W S . c o m

Drug

Grocery

68.6%

41.2% Convenience delivery services (i.e., goPuff) 33.3% Click-and-collect services 8.3% Ride-share vending services (i.e., Cargo) 5.9% Other 5.9% (Walmart’s Jet.com, Target’s Restock, Amazon Fresh, etc.)

20 10

Neutral

Multiple responses accepted Source: Convenience Store News Market Research, 2019


FORECAST 2019 Other factors cited include new product development (13.7 percent), raw material costs (9.8 percent), increasing regulation (8.6 percent), e-commerce (7.8 percent), retailer consolidation (5.9 percent), and rising labor costs (2 percent). Curiously, the supplier community saw new product development as a more significant factor last year, when 28.7 percent cited it as the biggest factor in their company’s success.

As Optimistic as 1-2-3

Added another, “Construction is still booming in our markets. Several non-business friendly ballot initiatives were defeated; several tax increase initiatives were defeated.” And underscoring that technology is not just important on the retailer side of the equation, many said technological advancements are lifting their business moods. “The developing ability of c-stores to access and use information to run the store and forecourt (IOT realized) more effectively will enable our channel to compete with other channels that are much more data-powered,” explained one survey taker.

Still, product innovation frequently appeared in suppliers’ remarks when asked to share their top three reasons for being so optimistic about the year ahead. Also high on their list: the economy, consumer shopping trends, and legislative and regulatory issues.

Top-of-Mind Concerns

“Continued positive fallout from [President] Donald Trump’s policies. Continued negative fallout from Democrat stupidity. Continued positive outlook for economic growth,” one supplier respondent stated.

“Labor shortage for menial/labor-intensive jobs intensifies,” one supplier noted.

Do you expect cross-channel competition (including ecommerce) against the convenience store industry in 2019 to: Increase

Decrease

Stay the same

Other top-of-mind concerns about business conditions for 2019 include: material costs driven higher by tariffs, the geopolitical climate, rising interest rates and fuel prices. Increased competition ranks high among the concerns, as well. Amazon still hangs heavy over the channel. In fact, 68.6 percent of those surveyed see the e-commerce giant as the biggest cross-channel competitive threat. This is slightly higher than the roughly two-thirds who saw Amazon as the biggest threat in 2018. The opening of several Amazon Go locations — the first of which welcomed customers in January 2018 in the retailer’s hometown of Seattle — is likely a contributing factor in this year’s bump. While wariness grows over Amazon’s impact on the convenience channel, less supplier respondents consider grocery home delivery services, like Walmart’s Jet.com, a competitive threat in 2019. Just more than half cited it as the biggest cross-channel competitive threat heading into 2018, compared to 41.2 percent who feel the same way now.

30.8% 67.3% 1.9%

Convenience delivery services like goPuff, though, have jumped up the competitive ladder. One-third of this year’s survey takers cite it as the biggest cross-channel competitive threat vs. 20.3 percent in last year’s poll.

Source: Convenience Store News Market Research, 2019

On a scale of 1 to 5, how optimistic do you feel about your business in 2019?

0.0%

Just as some point to these factors as optimism drivers, others see these same factors as reasons for concern. However, the one concern that seems most widespread is labor and just about anything associated with it — rising costs and shortage of prospective employees, to name just two issues.

4.9%

7.3%

61.0% 26.8%

1 .......................................................................................................5

Terrible, wake me when it’s over Source: Convenience Store News Market Research, 2019

It’s going to be our best year ever!

Other competitive threats include click-and-collect services (8.3 percent) and ride-share vending services like Cargo (5.9 percent). Both, though, are less of a concern than last year when the numbers came in at 8.7 percent and 7.3 percent, respectively. Suppliers also added that contracts that limit distribution, dollar stores, mobile food vendors and quick-service restaurants are additional competitive pressures for c-stores. Despite these concerns, the supplier side of the convenience channel is looking forward to 2019 overall. On a scale of one to five, with one representing “Wake me up when it’s over,” no supplier respondent selected this option. Two-thirds ranked their optimism about 2019 at a four, and slightly more than one quarter foresee 2019 being their best year ever.

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TREND FORECAST

Nine Ways to Be Trendy in 2019 From CBD to plants to probiotics, consumers are more conscious about their purchases By Linda Lisanti NO OUTLOOK ON THE COMING YEAR can be complete without a rundown of the consumer trends that are expected to have the greatest impact on food and beverage retailing in 2019. Consumers these days are a demanding and discerning bunch, making it imperative for convenience store retailers to stay on top of the latest trends so they can meet the needs of their customers.

2.The Adventurous Consumer

To help the c-store industry anticipate what’s next, Convenience Store News has combed through multiple forecasts from leading research firms, consulting firms, technology firms and convenience channel suppliers. Here is our curated list of the top nine trends for 2019:

The connected world has led consumers of all ages to become more knowledgeable about other cultures, propelling them to move out of their comfort zones to explore bolder flavors and multisensory food experiences. Consumers are expanding their appetites to encompass global flavors and international ingredients. Targeting increasingly adventurous consumers, set on new discoveries and experiences, will be key in the food and beverage industries in 2019, according to Innova Market Insights’ Top 10 Trends for 2019. The company maintains an extensive tracking system for new food and beverage product launches in more than 75 countries.

1.Replenishing With Purpose

3.Cannabidiol Craze

Consumers want to get more out of their meals and thus are looking for functional foods that don’t just satisfy their hunger, but also pack a nutritional punch, according to Culinary Visions Panel’s 2019 Trend Forecast. Culinary Visions Panel is a food-focused insights and trends research practice that studies a wide range of culinary topics. Seventy-three percent of consumers surveyed say they enjoy eating superfoods that serve specific functional purposes. Whether providing a powerful protein boost or a healthy dose of antioxidants, consumers are setting high ingredient expectations for the foods and beverages they consume.

2019 will mark the year when the cannabis plant extract cannabidiol (CBD) spreads throughout the food and beverage industries, according to KIND Healthy Snacks’ forecast of the top 10 food and nutrition trends for 2019. CBD’s presence was seen in coffee, cocktails and even olive oil in 2018. This year, KIND anticipates that CBD will infiltrate other product categories including yogurts, soups, salad dressings and more. Imbibe, the beverage development company, also put CBD on its list of the top beverage trend predictions for 2019. CBD is said to aid with pain, nausea, seizures, anxiety and depression, which makes it an enticing functional ingredient. It’s also risqué in nature and that may add to its appeal, noted Imbibe.

4.Plant Power

The market for plant-based products shows no signs of slowing down. Plant-based product claims experienced a compound annual growth rate of 62 percent worldwide from 2013 to 2017, according to market researcher The NPD Group, and 86 percent of people buying plant-based products are meat-eaters. For many consumers, going plant-based is about achieving a healthy and sustainable balance between eating meat and vegetables. Manufacturers are increasingly “greening up” their product offerings to attract mainstream consumers who want to add more plant-based options into their diets. Further plant-based product innovation is expected in 2019 around nuts, extruded seeds, beans, water lentils and algae.

44 Convenience Store News C S N E W S . c o m


FORECAST 2019

5.Go With Your Gut 8.Vehicle-as-a-Service

Probiotic-rich and probiotic-fortified beverages, such as kombucha, juices and enhanced waters, have been growing in popularity over the past few years and won’t lose momentum in 2019, predicts Imbibe. Digestive health has emerged as a core component of the modern view of health and wellness, echoes KIND. In the year ahead, the company anticipates more new products coming to the market that tout the gut health trio of fiber, prebiotics and probiotics.

Vehicle-as-a-service (VaaS) will grow quickly in 2019 — enabled by connected car technology, predicts Todd Walter, chief technologist at Teradata, a data intelligence and analytics company. VaaS providers such as Uber, ZipCar and Maven are changing the definition of vehicle ownership. The change will be slow but accelerating over the next couple of years. Companies should see the writing on the wall that there will be a lot less vehicle ownership and a lot more VaaS

6.Hyper-Personalized Functional Beverages

Functional beverages in 2019 will be “hyper-personalized” for consumers around wellness attributes such as improved sleep, energy, cognitive function, beauty, weight loss and gut health, according to Imbibe. Also, expect new products to launch that support even more personalized needs like oral or cardiovascular health. In particular, coffee that delivers health benefits beyond a dose of caffeine will be in the spotlight. Expect coffee to be fortified with additional functional ingredients such as protein, MCT oil, CBD oil and adaptogens like reishi mushrooms.

7.E-Commerce Expansion

E-commerce expansion will continue in 2019 with various brick-and-mortar implications. Online retailers will continue to move selectively into brick-and-mortar spaces or partner with established retailers to grow their reach, according to Acosta’s 2019 consumer packaged goods (CPG) industry predictions. Acosta is a sales and marketing agency serving the CPG industry. At the same time, brick-and-mortar operators will continue to play catchup with e-commerce players like Amazon, and click-and-collect will evolve as retailers refine their implementation.

providers, and they should try to adjust their businesses now to get ready for and hopefully take advantage of this movement, according to Walter.

9.Do No Harm

Consumers today are looking to leave a light carbon footprint behind, and they want to spend their dollars with companies that can help them achieve this mission. Efforts around reduced packaging and ethical ingredient sourcing can go a long way, as sustainability claims have been shown to significantly impact purchase decisions. Data from Nielsen and Mintel also suggests consumers will pay more for products that boast sustainability claims. CSN

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FOODSERVICE

What’s Hot on C-store Menus? ampm’s Cinnabon Streusel Muffin scores big with consumers

OPERATOR: ampm ITEM TYPE: Limited-Time Offer DATE: November 2018 PRICE: $1.99 Give your taste buds the breakfast they’ve been dreaming about: a sweet and fluffy Cinnabon muffin. Don’t sleep in too late, this streusel-topped, cream cheese-filled treat is only available for a limited time.

WHETHER FOR BREAKFAST,

A One-of-a-Kind LTO

as a dessert or as a snack, ampm’s Cinnabon Streusel Muffin has all the ingredients for a successful, crave-worthy limited-time offer (LTO). The cinnamon muffin is streusel-topped and filled with cream cheese.

While the Cinnabon name and its signature cinnamon rolls are familiar, this particular item stands out as a unique treat because it is a Cinnabon in the form of a muffin and containing a cream cheese filling. The item surpasses 92 percent of all other items for Uniqueness.

In Datassential’s SCORES survey, the item shows very strong purchase interest, outperforming 91 percent of all other items and 96 percent of other breakfast pastries. And it has very high Purchase Intent ratings for both branded and unbranded, meaning it would do well anywhere.

When creating a LTO, see where you can take familiar items and put a different twist on them. For example, what kinds of fillings can you add to a muffin, doughnut or other baked good?

Know Your Target This menu item appeals much more to women than men. CSN

Will Drive Visitation — Frequently Scoring in the 95th percentile for Draw, consumers are attracted to ampm just to get this product. With its high score for Frequency, consumers will come back for more of these muffins. Its price of just $1.99 is seen as an exceptional value, too.

Datassential, a Chicago-based food and beverage industry research and consulting firm, brings clients real-world insights on flavor trends, foodservice and consumer packaged goods, globally.

46 Convenience Store News C S N E W S . c o m


Convenience stores are changing like never before to fit consumers’ diverse needs – make sure your foodservice offerings don’t fall behind! J&J Snack Foods sandwich carriers are simple options that will take your menu to the next level. Visit our website to learn more! jjsnackfoodservice.com 1-800-989-9534 x6140

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FEATURE

PLANTING THE SEED

Six sprouting reasons to be mindful of plant-based foods and beverages By Renée M. Covino PLANT PROTEIN isn’t just for vegetarians and vegans anymore.

From plant-based meat and dairy alternatives, to energy bars and beverages boasting plant protein, the “plant power” trend is growing among consumers at-large, which means the trend is growing among convenience store shoppers. Do you have a “green” merchandising thumb? If not, here are six reasons why you should start cultivating one:

1. Plant-Based Innovation Is Flourishing Growing consumer interest in health, sustainability and ethics is propelling plant-derived ingredients and products into high popularity, according to Innova Market Insights. Gravitation toward plant-based diets in general, along with interest in vegan, vegetarian and flexitarian lifestyles and concerns over animal welfare, are contributing factors. Four in 10 U.S. consumers increased their consumption of meat substitutes/alternatives during 2017, according to market researcher The NPD Group. And plant-based dairy alternatives are expected to comprise 40 percent of the total dairy/dairy alternatives market by

48 Convenience Store News C S N E W S . c o m

2021, reports market research firm Packaged Facts. “Vegetarians and vegans together account for less than 15 percent of all consumers and their numbers do not grow very rapidly, but a growing number of consumers identify themselves as flexitarian and lessitarian, meaning they’ve cut back on their consumption of animal-based foods and beverages,” said David Sprinkle, research director for Packaged Facts. “It is this group that is most responsible for the significant and ongoing shift from dairy milk to plantbased milk.”

2. There’s Much to Milk In recent years, the plant-based dairy beverage alternatives category has expanded beyond nut- and legume-based milk alternatives like soy, rice, coconut and almond. The category now includes options made from cashews, hazelnuts, macadamia nuts, peanuts, pecans and tiger nuts. Additionally, there are non-dairy milks being offered that are sourced from bananas, cassava, oats, potatoes and more.


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FEATURE

The Top Six Plant-Based Food Segments • Tofu and tempeh • Meat alternatives • Milk alternatives • Other dairy alternatives (cheese, yogurt, ice cream, novelty and frozen desserts, butter and “buttery” spreads, dips, dressings, sour cream, creamers, etc.) • Egg substitutes and mayo • Meals

Tyson Foods Inc., a company synonymous with chicken (and other meat) products, has a plan to make a substantial shift to alternative proteins, according to an August report in Bloomberg Businessweek. Tyson recently joined in the financing of Beyond Meat Inc., a leading national brand of plantbased protein products. Tyson is also reportedly formulating protein bowls made from ingredients such as quinoa, lentils and chickpeas for the company’s vegetarian brand, Green Street, set to hit stores in 2019. And Tyson isn’t the only traditional meat player going the way of meat alternatives. Cargill Inc. and Hormel Foods Corp. are reportedly getting in on the animal-free development trend, too.

Source: Nielsen (commissioned by the Plant Based Foods Association)

And the innovation is far from over. Looking ahead, Packaged Facts expects several other new and novel non-dairy milks to find a wider audience, including barley milk, flax milk, hemp milk, pea milk and quinoa milk.

3. Convenience Is Playing a Role In-home consumption of plant-based proteins has grown by 24 percent since 2015, according to NPD. The heaviest users of plant-based foods are more convenience-oriented than others, the global information company found. Other attributes of the heaviest users include: • Those who are more likely to be on a diet; • Consumers who have a medical condition; • Consumers who tend to think of food as fuel; and • Those who are less confident in their cooking skills.

4. Gone From Niche to Mainstream “The plant-based foods industry has gone from being a relatively niche market to fully mainstream,” said Michele Simon, executive director of the Plant Based Foods Association (PBFA), which represents plant-based food companies. 2018 marked the second year that PBFA released Nielsen retail sales data. In July, the trade association that represents 114 of the nation’s leading plant-based food companies released new data showing robust sales in the plant-based foods industry, with dollar sales growth of 20 percent over the last year and sales now topping $3.3 billion. Comparatively, overall food sales growth is around just 2 percent.

5. Big Meat Companies Are Making Big Plant Investments

In fact, more food companies — big and small — are investing in plant-based food brands and lines, or launching their own. Among them: • Unilever is launching Growing Roots, an organic, plant-based food brand that will support urban farming with each purchase. The product line includes snack bites and clusters made from organic ingredients like coconut, corn and seeds. • Dean Foods Co. increased its ownership percentage and took a majority stake in Good Karma Foods, a leading brand of flaxseed-based milk and yogurt alternatives. Good Karma’s plant-based alternatives are said to be free of all major allergens and deliver strong nutritional benefits. • J&J Snack Foods has a new plant-based treat: Corazonas Heartbar Oatmeal Squares.

THE U.S. CENSUS DIVISIONS THAT HAVE SEEN THE STRONGEST GROWTH IN CASE SHIPMENTS OF PLANT-BASED PROTEINS TO FOODSERVICE OPERATORS ARE: • Mountain/Pacific (including Arizona and California) • South Atlantic (including Florida, North and South Carolina) Source: The NPD Group

“The new data confirms what we are hearing and seeing every day from our members: sales are up, investment is increasing and new jobs are being created in the plant-based foods industry,” said Simon.

50 Convenience Store News C S N E W S . c o m


Available in nine varieties, the company touts that one square has the same amount of plant sterols found in 61 tomatoes, 36 bananas or 30 apples. • thinkThin is making the move toward plant-based nutrition with the release of two plant-based product lines: High Protein Bars and Protein Powder Mixes. “Food manufacturers and operators have improved the quality and taste of plantbased foods over the past several years and these foods are appealing to a variety of consumer segments for a variety of reasons,” said David Portalatin, industry advisor for NPD’s food sector. “It’s clear by the growth of plant-based proteins that this category has mainstreamed beyond those consumers who choose a meatless diet.”

6. The Global Garden Is Growing Plant-based product claims increased by 62 percent globally between 2013 and 2017,

The Greenhouse Effect A roundup of data highlights from the U.S. plant-based products arena • Plant-based meat alternatives are growing by 24 percent (compared to 6 percent the previous year) topping $670 million in sales. By comparison, animal meats are growing at 2 percent. • Plant-based dairy alternatives, which includes plant-based cheeses, creamers, butter, yogurts and ice creams (but excludes milks), are experiencing explosive growth, up 50 percent.

“The plant-based foods industry has gone from being a relatively niche market to fully mainstream.” — Michele Simon, Plant Based Foods Association

according to Innova Market Insights, with growth occurring on platforms such as plant proteins, active botanicals, sweeteners, herbs and seasonings, and coloring foodstuffs. “The dairy alternatives market has been a particular beneficiary of this trend, with the growing availability and promotion of plant-based options to traditional dairy lines, specifically milk beverages and cultured products such as yogurt, frozen desserts and ice cream,” said Lu Ann Williams, director of innovation at Innova. The dairy alternatives category was largely pioneered by, and continues to be led by, beverages. Dairy alternative drinks accounted for more than 8 percent of all global dairy launches recorded by Innova in 2017, up from 7 percent in 2016. Global sales of dairy alternative drinks are set to reach $16.3 billion in 2018. The spoonable, non-dairy yogurt category also has seen strongly rising levels of interest, albeit from a smaller base. With a 48 percent compound annual growth rate for the 2013-2017 period, spoonable, non-dairy yogurt’s share of overall dairy launches rose from less than 0.5 percent in 2012 to 1.5 percent in 2017.

• The plant-based milk category is up 9 percent (compared to 3 percent the previous year) and represents about half of the total dollar volume of all plant-based foods, at $1.6 billion. • Cow’s milk dollar sales are down 6 percent, while plant-based milk now comprises 15 percent of total milk sales. • Growth in plant-based creamers has been particularly impressive, with a 131-percent increase, reaching $109 million in sales. • Plant-based cheeses are growing at 43 percent, now at $124 million in sales. • Plant-based yogurts are growing at 55 percent, now at $162 million in sales. Source: Nielsen (all outlets for the 52-week period ended June 16, 2018)

According to Innova’s consumer research, one in three U.S. consumers increased their consumption of plant-based milk/yogurt in the past two years. CSN

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FEATURE

ON THE MOVE

Mobile marketing, ordering and payment continue to change at a rapid pace, and today’s c-store operators need to keep up to compete By Tammy Mastroberte continues to evolve, convenience store retailers must follow suit not only to accommodate shopper preferences, but also to remain competitive and capture customer loyalty and spending. And when it comes to mobile — whether it’s marketing, ordering or payment options — many companies start with a branded app.

AS CONSUMER TECHNOLOGY

Through an app, customers can access loyalty programs, coupons, pay for purchases and more. Those who have been in the app game for a while are continually rolling out updates and new features to benefit the customer, and the c-store company’s bottom line as well. “Mobile unlocks a tremendous opportunity to drive more consumers into the store and encourage them to buy more items, spend more money and come back more frequently,” Charlie Lang, executive vice

C-store retailers with mobile apps, like Maverik Inc., continually roll out updates and new features to benefit the customer.

president of product and marketing at Koupon Media, a promotion network in small-format retail, told Convenience Store News. Shell recently rolled out an updated app, Shell Pay & Save, to offer its customers more ways to pay for fuel and in-store purchases by linking a checking account, credit card or debit card. As of March 2018, Shell branded stations across the United States began accepting the Shell app with Chase Pay, but the most recent update in October 2018 added a wide array of payment options to the platform, said Albert Rivas, head of North America marketing technology for Shell Retail, based in Houston. “The Shell app offers improved speed, convenience, value and security for a better overall customer experience, including fewer prompts when paying for fuel and no need to carry multiple cards and additional Fuel Rewards program savings,” Rivas explained. “Our focus is on providing solutions designed to simplify and better the overall experience, integrate loyalty, and deliver a differentiated and personalized customer experience.” C-stores have an advantage in the mobile space due to the high frequency of customer visits in the channel, making it more likely consumers will download and retain a c-store app, according to Joel Udwin, mobile product manager at Paytronix, a loyalty provider based in Newton, Mass. He believes an app is a “necessity” in the c-store space, allowing companies to get personalized in their marketing when tied to a loyalty program or payment capability. However, there are other mobile strategies outside of an app available to operators. “Mobile apps are important, especially in c-stores relative to other verticals because of the frequency of use, but an app is not a mobile strategy in and of itself,” Udwin said. “There is SMS marketing that allows you to get in front of customers who don’t have your app, or using Google Pay and Apple Pay to identify loyal customers, redeem offers and get credit for transactions.”

Mobile Marketing When it comes to mobile marketing best practices, today’s leading c-store retailers are offering branded mobile apps with a loyalty program and payment options built in — allowing them to

52 Convenience Store News C S N E W S . c o m


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FEATURE

through in-store signage. Start with a small ask like ‘Want a free coffee? Text COFFEE to this short code to receive your offer.’ The c-store now has the shopper’s phone number, creating opportunities for them to reengage,” said Lang. Geofencing and location-based marketing is another way c-stores can connect with customers on their mobile devices via messaging when they’re on the lot fueling their vehicle or within a certain distance of a store. This can work in conjunction with a branded app.

Shell Pay & Save offers customers more ways to pay for both fuel and in-store purchases.

reward customers, capture data to know what customers want, and then send targeted and personalized offers to customers in the future based on their past purchases. “From an industry perspective, integrating loyalty programs is one of the ways in which mobile payment can reach and connect with consumers,” noted Rivas. “In our case, the Fuel Rewards program is integrated into Shell Pay and Save, creating a simple, seamless and rewarding customer experience.” There is more to mobile marketing than an app, though. C-stores need to recognize the variety of customers they have and their different needs and preferences, and take a broader approach to mobile marketing in order to draw in more customers.

“Our focus is on providing solutions designed to simplify and better the overall experience, integrate loyalty, and deliver a differentiated and personalized customer experience.” — Albert Rivas, Shell Retail “For many retailers, it makes sense to have a mobile app and a loyalty program, but they can’t stop there,” said Lang. “It’s important to have a multifaceted strategy to meet customers where they are. That means engaging consumers across channels like SMS, e-mail, Facebook and more. Not every customer will want to join a loyalty program, so it’s important to engage them in other ways.” The percentage of customers who are in a c-store’s loyalty program averages only around 10 percent to 20 percent, Lang cited. This leaves 80 percent to 90 percent of shoppers that can be engaged and put on a path to join a loyalty program. “An easy way for c-stores to begin engaging shoppers is

54 Convenience Store News C S N E W S . c o m

“C-stores can use this to convert people from the pump to the store,” Udwin shared. “When someone has the app installed and is sharing their location information with the brand to be messaged, they can get a push notification through the app with an offer or message to get them into the store.”

Mobile Ordering With convenience stores using foodservice to differentiate themselves, drive customers into the store and add profit to the bottom line, many operators are offering online ordering, mobile ordering and even delivery. But it’s still in the early stages, Udwin acknowledged. “I don’t think a lot of people have implemented it and found the groove, but it’s a good time to take stock of other industries and how they have been performing with order ahead and online ordering, especially the restaurant space,” he said. Things to consider include ordering through an app, online or through thirdparty services, as well as pickup methods and options, according to Udwin. C-stores must decide if they want to offer delivery — and if it will be done in-house or through a third party. Also, should they offer curbside pickup or even delivery at the pump? “They may also want to streamline the SKUs available for online ordering, as most restaurants don’t offer everything on their menu online,” he explained. When working with clients looking to roll out mobile ordering, Koupon Media starts with these questions: Why is the customer using this service? How is the consumer benefitting? Often, the answer is that mobile ordering is easier and more convenient. There must


be some type of value to be gained, which is either saving money or time. These same questions can be applied to the implementation of almost any new product or service, Lang said. “Making it easy to get started and incentivize repeat usage are important elements for a service like this,” he advised. “Ease of reordering or repeat usage is particularly important. Amazon makes it incredibly easy to reorder items that you’ve purchased in the past. In the c-store space, many people are buying the same things over and over again, so why shouldn’t these retailers offer the same benefit?” The next piece is making sure it’s easy to get the things ordered, whether it’s through delivery or pickup, and also making sure the quality is the same as if an order was placed in the store. For example, if someone orders a slice of pizza, ensure it’s still warm when they arrive to pick it up, Lang said, noting that c-stores should also know when that customer arrives. If they have to wait in line to pick up their order, that defeats the purpose of mobile ordering.

Mobile Payment The options for mobile payment continue to grow, whether it’s Chase Pay, Apple Pay, Google Pay, Samsung Pay, Android Pay or via a branded app. Some large brands are even creating their own forms of mobile payment, such as Walmart Pay. Adoption of mobile payment in the United States still lags behind other countries, such as China — 25.3 percent of smartphone users in the U.S. expected to pay for purchases in a store by phone in 2018 compared to 77.5 percent in China, according to an eMarketer report. However, adoption of mobile payment in the U.S. is growing each year. “Customers are constantly looking for an improved experience when paying for goods and services,” said Rivas. “Generally, mobile payment is certainly a growing trend and, from a fueling perspective, we know that this trend includes payment at the pump and within the convenience store.”

Apple Pay, Google Pay and NFC payments,” Udwin shared. Many c-stores are also offering payment through their own branded mobile app and giving customers a reward to do so as an incentive to utilize the app — which gives the operator data and the ability to market to customers. Lang said it goes back to the question of: How is the customer benefiting? A discount on fuel would be one answer. “A customer isn’t going to use mobile payment unless they see a direct benefit,” he said. “And while mobile payment may ultimately be easier than getting out my credit card and inserting it into a payment terminal, the initial steps required to configure payment on a phone are still a hurdle. Some successful retailers are addressing this by delivering an offer as an incentive to not only download the app, but also enroll in mobile payment.” Overall, the goal of the c-store owner when it comes to all things mobile is to gather data and move the customer into their system so that this data can be acquired and used to personalize the experience and create more loyalty — and, of course, more sales. “It goes back to getting more shoppers into the funnel to get more engaged with my brand,” said Lang. CSN

The Shell app is designed to deliver improved speed, convenience, value and security for a better overall customer experience.

With so many payment wallets and options available, it’s important for retailers to offer a variety of ways for customers to pay via their mobile phone, both in the store and at the pump. While Apple Pay is reported to have higher adoption in the U.S. than Google Pay, it’s still important to offer both because if an Android user sees an Apple user having the ability to tap and pay — which is faster than chip today — it will create customers who are unhappy. “It’s really about keeping it simple for the customer; not making them jump through hoops to use their preferred payment method and enabling a broad array of payment solutions that make sense, including

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STORE SPOTLIGHT

Welcome to the New School of Convenience Our Lady of the Lake University in Texas boasts a first-of-its-kind on-campus convenience store By Danielle Romano

The Cyber Café opened in fall 2017 as a traditional convenience store. It began offering cashierless service in spring 2018.

At a Glance Cyber Café

Location: Our Lady of the Lake University, 411 S.W. 24th St, San Antonio Size: 1,200 square feet Unique features: Self-service, cashierless experience; an expanded assortment of convenience, grocery, personal hygiene and cleaning products

COLLEGE STUDENTS TODAY are no different than those of yesteryears in that their busy, on-the-go lifestyles demand ease and convenience. What is different, however, is how their perspectives on ease and convenience have evolved, with students today demanding more from their on-campus experience and the way convenience is delivered to them.

Enter Cyber Café, a first-of-its-kind on-campus convenience store developed through a partnership between Our Lady of the Lake University (OLLU) in San Antonio and Chartwells Higher Education, a company dedicated to reinventing the on-campus dining experience. Open 24 hours a day, seven days a week, the 1,200-square-foot OLLU Cyber Café is unique in that it is completely self-service, offering busy students a cashierless experience. “Students tell us that they really like the variety available in the store and they appreciate the 24/7 access because it fits with their schedules,” said Shaun Comeaux, director of dining services for Chartwells Higher Education. Of Chartwells’ 24 higher education accounts in Texas, Cyber Café is the first to provide 24/7 cashierless service, according to Comeaux.

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A New Take on Tradition The idea for Cyber Café arose when a new apartment-style residence hall with full kitchens opened on the OLLU campus earlier this year. Armed with the knowledge that students were seeking a store that offers extended hours to accommodate their schedules and an expanded assortment of grocery items for those who frequently cook for themselves, OLLU and Chartwells came together to convert the space that would eventually become Cyber Café. It took six months to bring the concept to fruition. Members of OLLU and Chartwells’ IT staff worked together using technology already deployed on-campus to outfit the c-store. Swipe-card access technology, security cameras and cashier terminals used in other campus operations were modified for use in the new self-serve retail environment. The six-month conversion process also included time to maximize and optimize the space, and install and test the in-store technology. The Cyber Café opened in fall 2017, but did not offer cashierless service until spring 2018. Now, students access Cyber Café via a swipe-card access system using their OLLU ID. Once they’ve selected their items and


“Students tell us that they really like the variety available in the store and they appreciate the 24/7 access because it fits with their schedules.” — Shaun Comeaux, Chartwells Higher Education

have their shopping lists ticked off, they scan and swipe their debit, credit or university dining card to pay. While the self-service system goes by the honor system, Cyber Café is equipped and monitored with security cameras. Additionally, the store is managed by a Chartwells employee, who handles the inventory, orders, stocking and keeping the convenience store clean.

Meeting the Needs of Students & Faculty “The students love it. It’s very close to all the dorms. You walk out your front door, grab whatever you need and go back to your room,” Comeaux commented. “There are almost 500 students in the OLLU residence halls who access the store. In addition, many of our commuter students and faculty and staff purchase items from the store.” Serving approximately 2,500 students a week, Cyber Café carries everything a traditional convenience store would — from candy to snacks to packaged beverages — plus a few grocery additions. Packaged grocery items include in-house produced salads, sandwiches, fresh-cut fruit and healthy meal options. For those students who prefer to cook, they have their pick of fresh produce, meal kits, bacon, eggs, tofu and other fresh foods. With the university’s new residence halls designed like small apartments — many with private bathrooms and kitchens — students can also purchase necessities at the store, such as personal hygiene items, beauty products, medicines and cleaning supplies. According to Comeaux, some of the most popular products at Cyber Café are: • Dasani bottled water; • Smart Water; • Flamin’ Hot Cheetos; • Totino’s Pizza Rolls; • Tofu; • Cinnamon Toast Crunch cereal; and • Febreze air freshener. Describing Cyber Café as “convenient, abundant, easy-to-use and high-tech,” Comeaux shared with Convenience Store News that Chartwells Higher Education is working on a similar store model at a few of its other 23 partner universities. CSN

To pay, Cyber Café shoppers simply swipe their debit, credit or university dining card.

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NEW HORIZONS

The Big Reveal Eliminate #MeToo harassment with transparency and tracking LAST YEAR WAS MARKED BY WOMEN acting together. In small groups and large, women took on one of the most formidable barriers to gender equality: sexual harassment.

By Sarah Alter, President & CEO, Network of Executive Women

Women and their supporters took to the streets, the airwaves and the courts, charging some of the biggest names in corporate America with sweeping workplace harassment claims under the rug. Many of these women’s efforts were aimed at ridding the workplace of mandatory private arbitration of sexual harassment accusations, a practice that prevents women from having their day in court or sharing their accusations publicly, so that other women who may be vulnerable to the same harassment would be warned. Last May, after 14 women who had accused Uber drivers of assault wrote a letter to Uber’s board enjoining them to end mandatory arbitration, Uber eliminated the practice. Lyft quickly followed suit. That same month, workers at McDonald’s restaurants in eight states filed 10 complaints with the Equal Employment Opportunity Commission, alleging they

had been sexually harassed or assaulted on the job and had faced retaliation when they complained. At the time, a McDonald’s spokeswoman said the company didn’t tolerate misconduct. “We are and have been committed to a culture that fosters the respectful treatment of everyone,” Terri Hickey said in a statement. But in September, hundreds of McDonald’s workers who claimed they faced workplace sexual harassment went on strike in 10 cities. Those who led the strike urged the company to hold mandatory training for managers and employees, and create a better way of responding to sexual harassment complaints. McDonald’s responded, noting it has “strong policies, procedures and training in place specifically designed to prevent sexual harassment.” And the company went a step further, saying, “To ensure we are doing all that can be done, we have engaged experts in the areas of prevention and response, including RAINN [Rape Abuse & Incest National Network], to evolve our policies, so everyone who works at McDonald’s does so in a secure environment every day.” Two months later, thousands of Google employees staged a walkout after The New York Times revealed the company had given millions of dollars in payouts to male executives accused of sexual harassment, while remaining silent about their wrongdoing. Employees who organized the global walkout asked for the end of mandatory arbitration, a report on sexual harassment instances, greater transparency on salaries and other compensation, an employee representative on the board and a chief diversity officer with direct access to the board. A week later, Google changed its policy mandating private arbitration for sexual harassment cases. Facebook followed and changed its arbitration policy the next day. From 1991 to 2017, the share of U.S. private sector, nonunion employees who were subject to forced arbitration rose from 2 percent to 56 percent,

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according to a report by the Economic Policy Institute. While arbitration has its place, especially for women who prefer to maintain confidentiality, organizations must be more forthcoming in their handling of sexual harassment and discrimination claims — and their efforts to put an end to both.

The Power of Accountability Talented women steer clear of companies that allow hostile, unhealthy or unsafe work conditions. Touting gender equality and diversity and inclusion policies on a company website is not enough. Companies need to back up their words with decisive action, and tell the world about it.

Companies can avoid putting themselves in jeopardy — legally and competitively — by treating the elimination of gender bias and harassment as a business priority.

A common refrain from victims of sexual harassment — and from women who doubt their company’s gender-equality efforts — is the lack of process, commitment and transparency around bias, harassment and discrimination, which often lets perpetrators continue without consequences and creates a hostile workplace. Sexual harassment and gender-diversity training is a must, of course. But here are other actions your company’s leaders should be taking to ensure transparency:

Convenience Store News is pleased to continue this series of educational columns by the Network of Executive Women (NEW), coinciding with the annual CSNews Top Women in Convenience awards given out each fall. Forty-five female managers, executives and directors who work in the convenience store industry were honored in our 2018 program. In addition to being a presentation sponsor for the Top Women in Convenience program, NEW and CSNews have partnered to develop this series of columns directed at helping corporate leaders drive more inclusive company cultures. 2018 SPONSORS

• Publish and share — widely — clearly written policies around bias and harassment and make very explicit the consequences for breaking them. • Encourage employees to speak up if they notice a problem. Professor Rosabeth Moss Kanter of Harvard Business School recommends appointing selected employees as “witnesses” to keep an eye out for misbehavior. • If a complaint is made, respond immediately. A company that does not address an accusation straightaway could be credibly accused of disregarding the complaint or attempting to hide it. • Communicate to all staff when harassment has occurred and what has happened to the harasser. • Keep and publish metrics on gender diversity, women’s leadership, pay parity, and number of claims of gender bias and harassment. The most successful companies keep and share with their employees metrics on sales, margins, expenses and profits. Today, measuring, benchmarking and sharing gender-related metrics is just as crucial to your business.

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Companies can avoid putting themselves in jeopardy — legally and competitively — by treating the elimination of gender bias and harassment as a business priority, with goals set to measurable metrics that are communicated to all stakeholders. CSN Sarah Alter is president and CEO of the Network of Executive Women, a learning and leadership community representing 12,500 members representing 900 companies and 22 regional groups in the United States and Canada. Learn more at newonline.org. Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the view of Convenience Store News.

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HOT PRODUCTS SPECIAL ADVERTISING SECTION

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Beverages


HOT PRODUCTS SPECIAL ADVERTISING SECTION

Cash Registers/Scanning Items

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HOT PRODUCTS SPECIAL ADVERTISING SECTION

Grab N Go Chocolates

General Merchandise

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HOT PRODUCTS SPECIAL ADVERTISING SECTION

Gourmet Pet Treats

Age Verifier

Flavored Cone Leaf

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CLASSIFIEDS

Services

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CLASSIFIEDS

Credit Card Processing / Merchant Services

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CLASSIFIEDS

ATMs

Air Vacs

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CLASSIFIEDS

Credit Card Processing / Merchant Services

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CLASSIFIEDS

Air Vacs

C-Store Recruiters

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CLASSIFIEDS

Plastics

ATM’s

Health and Beauty Care

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CLASSIFIEDS

Air Vacs

Equipment / Supplies

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CLASSIFIEDS

Credit Card Processors

Age Verifier

Services

Help Wanted

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CLASSIFIEDS

Foodservice

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Petroleum/Equiment


CLASSIFIEDS

Equipment / Supplies

Equipment / Supplies

Sunglasses

Equipment / Supplies

Wholesale Refrigeration

ADINDEX ADD Systems ......................................................... 53 Altria Group Distribution ..................................... 2-3 Blu E-Cigs ................................................................. 13 Calico Brands ........................................................... 20 Campbell Soup Company .................................. 11 Cookies United ........................................................ 7 E-Alternative Solutions ....................................... 17 Forte Products ........................................................ 41 GlaxoSmithKline ..................................................... 49 Harris Tea ................................................................. 19 Home Market Foods ............................................. 35 Hunt Brothers Pizza .............................................29 J&J Snack Foods Corp. ...................................... 47 John Middleton Company ................................. 27 JUUL Labs ................................................................. Back Cover Liggett Vector Brands ........................................... 33 Mondelez International ....................................... 18 Nestle Professional ............................................... 23 Premier Manufacturing ....................................... 21 Procter & Gamble Distributing Company ...... 15 Swedish Match North America LLC ................. 5, 37 Swisher International ............................................ 9 The Hershey Company

............................. 25

Tyson Foods .............................................................. 75 Universal Merchants ............................................... Outsert

8550 W. Bryn Mawr Ave, Suite 200, Chicago, IL 60631 Phone 773-992-4450 Fax 773-992-4455 www.ensembleiq.com

Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by EnsembleIQ, 8550 W, Bryn Mawr Chicago, Il 60631. Copyright © 2018 by EnsembleIQ. All rights reserved. Subscriptions: One year, $93; two years, $152. One year, Canada, $110; two years, Canada, $175. One year, foreign, $150. Payable in advance with a bank draft drawn on a U.S. bank in U.S. funds. Single copies, $10, except foreign, where postage will be added. Printed in U.S.A. Periodicals postage paid at Deerfield, IL, and at additional mailing offices. POSTMASTER: Send address changes to Convenience Store News, P.O. Box 1842, Lowell, MA 01853.

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GETTING TO THE CORE

How C-stores Need to Adapt Research sheds light on what’s most important in the convenience shopping experience Today’s consumers are a demanding bunch. They want attractive prices, high product quality, a curated product selection, a clean store, and friendly and helpful employees — all in a quick trip. But are some of these attributes more important than others? EIQ Research Solutions, sister company of Convenience Store News, surveyed convenience store shoppers to determine the strengths and weaknesses of varying store types, and understand what the convenience channel needs to do in order to compete and win against other retail types.

Shopping Experience Importance Most Important

Price Product quality Clean store Product selection General convenience Friendly employees Organization Trip speed Helpful employees

SAYS IMPORTANT

IMPACTS EXPERIENCE

Least Important

Key Takeaway Price is often misunderstood, as price can be a barrier to purchase, but is rarely a driver in customer experience. Friendly and helpful employees who keep the store organized and clean, however, are a low-cost method to provide a positive shopping experience.

Shopping Experience Importance by Generation Most Important

Clean store Organization Product selection Helpful employees General convenience

Price Trip speed MILLENNIAL

GEN X

BOOMER

Least Important

Key Takeaway We can see why convenience stores have had so much success among baby boomers: they are less impacted by price, organization and cleanliness of stores, and place more emphasis on convenience and speed. To cater to millennials, however, more care must be placed on cleanliness and price to see similar success with younger shoppers.

Want to collaborate and share expertise with your peers? The Council of Retail Experts (CORE) is an exclusive network of convenience store retail leaders who do just that. For more information on how to join CORE, please visit www.cvcoreinsights.com.

74 Convenience Store News C S N E W S . c o m

Survey respondents sourced via ProdegeMR, reinventing the market research process by taking a respondent first approach. Visit prodegemr.com/ensembleiq for more info.

The survey was conducted among 1,002 convenience store shoppers in September 2018


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