CSN - February 2019

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IN THE EXPRESS LANE Midwest regional chain Family Express is growing its brand its own way.


The Olympidis family (from left to right): Spiro, Dimitri, Gus and Alex.


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Midsized Chains Still a Force Some of the convenience store industry’s best competitors are middleweights THE TREMENDOUS AMOUNT OF MERGER and

acquisition activity that’s been going on in the convenience store industry certainly puts a lot of pressure on midsized chains to grow their business, or even achieve acceptable returns on their investment. Interest rates for buyers have been so low and EBITDA multiples (earnings before interest, taxes, depreciation and amortization) for sellers have been so high that a midsized retailer who’s even thinking of selling, or has no family succession plan, is greatly tempted to sell.

“It made sense to me,” said Jay Ricker, founder and chairman of Ricker Oil Co., when he sold his 56-store family chain to Giant Eagle late last year. “If you don’t grow at a substantial rate, I think you’re going to get left behind.” However, if you think all midsized, family-run chains will disappear from the convenience store landscape, think again. According to the latest Convenience Store News Top 250 ranking, there are currently 100 individual, freestanding c-store chains that operate between 40 and 90 stores each. Altogether, these 100 chains operate more than 5,820 convenience stores. That’s a significant force in this industry. The chains include such excellent retailers as Yesway, Tri Star Energy, Toot’n Totum, Spinx, Gate Petroleum, Weigel’s, Certified Oil, OnCue, Fastrac, Parker’s, Dash In, Kwik Chek and more. And that brings us to this month’s cover story on Family Express (FE), the Valparaiso, Ind.-based chain of 74 convenience stores (see page 30). FE is not only one of the c-store industry’s most successful and profitable retailers,

but it also just embarked on the most ambitious growth plan in its 40-year history. I had an opportunity to take an exclusive tour of the retailer’s headquarters, central distribution center and prototype stores with founder and CEO Gus Olympidis. I got a firsthand look at: • Family Express’ “living brand” concept, which has paid off in lower workforce turnover and higher-than-average industry profits; • The development and growth of the retailer’s proprietary Cravin’s Market Fresh prepared food products and its new beanto-cup coffee program; • The planned expansion of the company’s central distribution center and bakery; and • FE’s plans to create a completely frictionless customer engagement strategy through partnerships with several technology providers that will enable customer-friendly activities such as one-click ordering, curbside delivery and no-wait checkout. Family Express is certainly “In the Express Lane” as one of the fastest-moving, dynamic midsized convenience store chains in the United States. For comments, please contact Don Longo, Editorial Director, at (201) 855-7606 or dlongo@ensembleiq.com.


2018 Jesse H. Neal National Business Journalism Award 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


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

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

REDEFINING CONVENIENCE The sea change washing over retail is forcing retailers of all stripes to transform their businesses. In convenience, requirements to adopt EMV in the store and at the pump are coinciding with rapidly evolving consumer expectations for fresh, fast and friction-free products and experiences. To remain relevant, convenience stores must undertake thoughtful digital transformation.

The industry is under pressure to comply with mandates and technology challenges…


of unattended payment terminals are still not EMV-compliant HEALTHY CHOICES…

PCI/Security mandate driving more active risk management


of consumers say “better-foryou” options are important when choosing a c-store

Increasing c-store cloud applications

…and cope with radically changing consumer expectations:



of high-income Millennials are more likely to visit a gas station if its app offered them convenience, loyalty and savings ...SO THEY CAN MOVE ON QUICKLY


of convenience stores have implemented mobile payment at the pump and 38.5% plan to add it

Enabling infrastructure is critical to solving these challenges. Using an application-aware SD-WAN: • Enables EMV and mobile pay at the pump by prioritizing these transactions • Enables a secure, direct, always-on path to the internet and cloud • Can help provide sales gains up to 41% higher Sources: Convenience Store News, IHL Group, NACS, PaymentSource.com, Pymnts.com, Thales Security




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30 In the Express Lane Midwest regional chain Family Express is growing its brand its own way.

4 Midsized Chains Still a Force Some of the convenience store industry’s best competitors are middleweights.

68 Convenience on the Go The Hy-Vee Fast & Fresh convenience store-grocery hybrid caters to customers on the move.

10 CSNews Online



40 Reexamining Tobacco Proposed rule shifts at the federal level could change the future of flavored and menthol tobacco sales. 42 Menthol Ban Would Bring Big Hit More than a third of all cigarette volume in the convenience channel is menthol. 46 Wading Through At Nouria Energy Corp., various tobacco legislation has had a negative impact on both tobacco and non-tobacco sales.


23 Focusing on the Customer Experience NRF 2019: Retail’s Big Show featured all kinds of new technology trends and innovations. 24 New Products



62 Are You Leveraging the Loyalty Gold Mine? C-store retailers can dig deeper into their program data for insights to drive more traffic and sales.

26 Your Competitor Is Your Best Teacher The tactics of using a competitor as a benchmark fall into three categories.

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70 Jenny Bullard, Conexxus The 2015 TWIC Woman of the Year has found that respect comes from listening and learning. GETTING TO THE CORE

86 What Do C-store Shoppers Think About Enhanced Convenience? Consumers were asked to provide feedback on various “convenient” shopping options, from home delivery to frictionless checkout.



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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 Editor-in-Chief (201) 855-7608

14 Fast Facts 14 Delek US Holdings Makes Consolidation Moves With New Subsidiary 16 Eye on Growth


50 What’s Hot on C-store Menus? The ampm Churro Donut stands out for high purchase intent, value and uniqueness. FOODSERVICE

18 Seen on Social Media

36 Meet the Needs of Multicultural Shoppers The U.S. is expected to be dominantly multicultural by 2044, so c-stores need to adapt starting now.

Associate Editor (201) 855-7619

Angela Hanson ahanson@ensembleiq.com

Associate Managing Editor (201) 855-7604

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


Classified Production Manager Mary Beth Medley (856) 809-0050 marybeth@marybethmedley.com

56 Beverage Bonanza With packaged beverage options at an all-time high, follow these tips to find the right mix. CANDY


Melissa Kress mkress@ensembleiq.com

52 The Next Level of Do-It-Yourself New advances in technology deliver higher quality with the labor savings of self-service.

16 Retailer Tidbits 18 Supplier Tidbits

Linda Lisanti llisanti@ensembleiq.com

Senior News Editor (201) 855-7618


12 Convenience Store Retailers Face New Regulations Around the U.S.

Don Longo dlongo@ensembleiq.com

59 Four Growing Candy Trends You Should Know About Sweetly profitable opportunities exist for c-store operators willing to evolve with consumers.

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

EVENTS Executive Vice President, Events & Conferences Ed Several (860) 830-8321 eseveral@ensembleiq.com AUDIENCE ENGAGEMENT 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

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



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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

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Casey’s General Stores Prepares to Pilot Several Digital Initiatives

The company is getting closer to going live with a new mobile app and loyalty program. Both initiatives are components of the convenience store retailer’s digital transformation — a key factor in its value creation plan, which was unveiled in March 2018.


Stewart’s Shops Charts Additional Growth in 2019

The Saratoga Springs, N.Y.-based convenience store retailer will invest more than $50 million in construction of new convenience stores and additions, with 18 new locations slated. As it moves through its construction agenda, Stewart’s Shops may close some smaller stores that cannot serve customers with the standards they expect, the company said.


Buc-ee’s Loses Trademark Infringement Suit Against Nebraska Chain, Bucky’s

A federal judge threw out a lawsuit brought by Buc-ee’s against the Nebraska-based convenience store with a similar name. In early 2017, Buc-ee’s filed a lawsuit in federal court in Houston against Bucky’s as the Omaha-based chain made plans to enter the Texas market.


Coen Markets Takes Ownership of CoGo’s Convenience Stores

Coen Markets is more than doubling its store count with the acquisition of 38 CoGo’s convenience stores for an undisclosed price. Following the purchase of CoGo’s, also a family-owned company based in western Pennsylvania, the chain plans to make store improvements across the Pittsburgh region.


Nielsen Recognizes 25 New Products as 2018’s Breakthrough Innovations

Endurance, sales and distinction were among the catalysts that led to success for Nielsen’s 2018 Top 25 Breakthrough Innovations in the United States, which reflect a range of successful approaches that cut through the clutter of today’s crowded product marketplace.

EXPERT VIEWPOINT: Does Menu Labeling Compliance Still Have You Scratching Your Head? No one has ever said menu labeling compliance is fun. Reactions range from “yawn” to “I’m decidedly uninterested” or some combination of both. It may generate panic in some of us, but definitely does not generate excitement for many of us, according to Jessica Williams, founder of Food Forward Thinking LLC. Menu labeling compliance has garnered quite a bit of attention recently since it became law for thousands of convenience foodservice locations in the United States on May 7, 2018. Convenience and grocery retailers have been scrambling to first determine if they are considered a “covered establishment” by the rules and, if so, what to do next. There are four steps you can take to navigate the details and meet the standards of compliance.

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PHOTO GALLERY: Inside Wawa’s Largest Store Yet Located in Philadelphia’s historic Independence Mall, at the corner of 6th Street and Chestnut Street, Wawa Inc.’s 11,500-squarefoot store is one-of-a-kind. It celebrates Philadelphia’s Old City with a number of unique features, including: • Two murals that feature “Philly Firsts” as imagery, created in partnership with the City of Philadelphia Mural Arts Program; • Industrial and art deco designs, weaved together with warm copper and vaulted ceilings; • A living greenery wall that celebrates freshness and quality; and • Seating zones that provide customers with the comfort of couches or the convenience of café seating. For more exclusive stories, visit the Special Features section of www.csnews.com.


Heineken 0.0 In a category where building occasions and meeting shifting consumer tastes is critical, Heineken USA introduces Heineken 0.0, a versatile brew for a variety of drinking occasions. Heineken master brewers created the zero-alcohol brew, which is made with natural ingredients. The Heineken brand’s iconic label has been turned blue to match the color associated with the alcohol-free category globally. Heineken 0.0 connects with the discerning tastes of a wide range of drinkers, according to the brewer. Containing only 69 calories, it is available now in six-packs of both cans and bottles. Heineken USA White Plains, N.Y. heinekenusa.com


Convenience Store Retailers Face New Regulations Around the U.S. Legislation changes cover everything from tobacco and beer sales to the minimum wage THE STROKE OF MIDNIGHT ON JAN. 1 ushered in a new year, but it also brought with it myriad new rules that affect the convenience store industry. The changes touch all corners of an operator’s business — from foodservice to tobacco to the ever-growing wage battle.

Convenience stores, gas stations and grocery stores in Colorado began adding full-strength beer to their alcoholic beverage offerings starting Jan. 1. Prior to the new year, those outlets were limited to selling 3.2-percent beer. Colorado c-stores, gas stations and grocery stores are still prohibited from selling wine and hard alcohol.

From the “here we go again” department, 2019 brought more minimum wage hikes. The federal minimum wage has been holding steady at $7.25 an hour; however, that has not stopped several states from upping their own minimum wage. Since 2009, 29 states plus Washington, D.C., have set their minimum hourly wage above the $7.25 mark.

In Massachusetts, a new Tobacco 21 measure went into effect statewide on Dec. 31. Consumers who turned 18 before Dec. 31 can still buy tobacco products, unless they are in a municipality with a local Tobacco 21 measure on the books. The new rule also prohibits the sale of tobacco products by pharmacies and bans the use of e-cigarettes in places where state law already prohibits smoking.

Notably, 19 states saw their wage rise around the start of 2019. They include: Alaska, Arizona, Arkansas, California, Colorado, Delaware, Florida, Maine, Massachusetts, Minnesota, Missouri, Montana, New Jersey, New York, Ohio, Rhode Island, South Dakota, Vermont and Washington. Additionally, Michigan will see its base wage increase to $9.45 this spring.

Moving to the Big Apple, New York banned single-use styrofoam products, prohibiting restaurants, stores and manufacturers from using such products to package food or fill packaging. For now, the city will only issue warnings, but it will begin fining vendors July 1.

A look at specific categories finds changes in beer and tobacco sales, as well as foodservice.

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Also in New York, with the new year, drugstores and other stores that contain pharmacies, such as supermarkets and discounters, are prohibited from selling cigarettes and other tobacco products. About 500 pharmacies still sell tobacco products, according to the city.

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Convenience stores contribute to or collect more than $1 billion for charities annually. Overall, 95 percent of c-stores support charitable causes, with 66 percent of these stores supporting five or more charitable causes. — NACS, the Association for Convenience & Fuel Retailing

New players and new flavor offerings drove a 17-percent increase year over year in dollar sales in the $2.1-billion sparkling water category during 2018. — Nielsen Innovation Measurement Activity

During the 12 months ending March 31, 2016, 95.8 percent of New York stores declined to sell tobacco to undercover minors working with health inspectors.


— New York State Department of Health

Americans consumed nearly 386 billion ready-toeat snack foods in 2018, with the vast majority of those eaten between main meals. — The NPD Group

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Delek US Holdings Makes Consolidation Moves With New Subsidiary DK Trading & Supply LLC brings several commercial activities under one umbrella is consolidating its commercial activities for crude oil, refined products and renewable purchases, sales and other commercial activity under one umbrella: a new, wholly owned subsidiary dubbed DK Trading & Supply LLC.


These activities were previously conducted through a series of companies under the Delek US Holdings umbrella, according to the Brentwood, Tenn.-based company. “Following a series of acquisitions, customers and suppliers were previously working with different entities under Delek US,” said Avigal Soreq, executive vice president and chief commercial officer. “This step should enhance the customer and supplier experience as it consolidates these activities under one name in the marketplace that should simplify processes with our counterparts. Our strategy, values and relationship with customers, partners and stakeholders remains the same.” Customers and suppliers began transitioning to DK Trading & Supply in January. As the transition continues during the first half of 2019, business previously carried out under the Delek US umbrella will now be done through DK Trading & Supply. This includes, but is not limited to: • Delek US Holdings Inc. • Delek Refining Inc. • Lion Oil Co. • Delek Marketing & Supply LLC • Alon USA LP • Alon Refining Krotz Springs Inc. • Delek Renewables LLC


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Eye on Growth

TravelCenters of America LLC acquired 20 locations from its principal landlord, Hospitality Properties TravelCenters and HPT Trust also agreed to reduce the aggregate minimum annual (HPT), for rent paid by $43.1 million $308.2 and to extend the term of each lease. million. TravelCenters continues to lease 179 properties under its five leases with HPT.

The Spinx Co. opened a 6,600-squarefoot location in Greenville, S.C. Its largest store to date, this location also features a 72-foot tunnel car wash.

Sprint Food Stores grew by 50 percent with its acquisition of 10 Greg’s Gas Plus locations. The retailer plans to keep all Greg’s Gas associates under the new brand. Wawa Inc. opened its second Washington, D.C., store, this time in the Georgetown neighborhood, on Dec. 20. The chain will open another location in the Tenleytown section of the nation’s capital in the first half of 2019.

Retailer Tidbits

Global Partners LP is shedding 24 convenience stores with gas from its portfolio on the East Coast. Twelve of the stores are in New York, five in Connecticut, four in Maryland, two in Massachusetts and one in New Hampshire.

Rutter’s opened its 73rd convenience store and its first in Maryland. The 7,500-squarefoot store in Frederick, Md., includes a full restaurant with seating for 30.

for video gaming terminals (VGTs) in Pennsylvania. The chain filed applications to bring VGTs to 20 of its c-stores. The c-store buildings range from kiosks to 3,355 square feet.

Rutter’s selected Marquee by Penn LLC, an affiliate of Penn National Gaming Inc., as its terminal operator

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Sunoco launched a new mobile app in partnership with Stuzo. The app’s features include mobile pay-at-pump and payin-store capabilities, along with support for several payment options like Apple Pay and Google Pay.

Cenex Zip Trip joined Convenience Stores Against Trafficking to help fight human trafficking. All Cenex Zip Trip employees are required to complete the training.

A23823_4b_CTC6044-T21-Resizes-Print-CSNews-8x10.75.indd 01.08.19 Epson HP

Enmarket is building a new 22,000-square-foot headquarters in Savannah, Ga., located behind one of its longtime gas stations. That site will be replaced with a 5,900-square-foot convenience store with a 40-foot-long tunnel car wash. GPM Investments LLC subsidiary Broyles Hospitality LLC unveiled a next-generation Dunkin’ store in Erwin, Tenn. The restaurant offers a first look at the Dunkin’ brand’s U.S. store of the future experience.

Buc-ee’s moved outside of Texas for the first time with the opening of a new location in Robertsdale, Ala. The Buc-ee’s store measures more than 50,000 square feet and boasts 124 fueling positions on the forecourt.

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Supplier Tidbits

Altria Group Inc. made a $12.8-billion investment in Juul Labs Inc. The move represents a 35-percent economic interest in Juul, which remains fully independent. AB InBev formed a partnership with Canada’s Tilray to research non-alcohol beverages containing cannabidiol (CBD). The joint venture, which will also explore THC-infused drinks, is limited to Canada.

based payments platform into its enterprise point-of-sale solutions.

Each company intends to invest up to $50 million in the partnership.

PepsiCo Inc. unveiled a fleet of snackbots at the University of the Pacific in Stockton, Calif. As part of a partnership with Bay Areabased Robby Technologies, the snackbots are outdoor, self-driving robots from Hello Goodness, a curated portfolio of better-for-you brands from PepsiCo. NCR Corp. acquired JetPay, a provider of end-to-end payment processing and human capital management solutions. The $184-million deal enables NCR to integrate a cloud-

Corona is piloting plastic-free six-pack rings in select markets. Its partnership with Parley for the Oceans began with a commitment to protect 100 islands by 2020 and grew to include the pursuit of scalable innovation. Franke Foodservice Systems acquired Chain Link Services LP. Chain Link’s two principal business activities are Turnkey Resources and Step Foodservice. GasBuddy is teaming with the ParkWhiz Arrive Network so that users can find, book and pay for parking at lots and garages nationwide within the GasBuddy app. They can also earn GasBack rebates in the form of free gasoline.

Seen on Social Media

Stewart’s Shops Saratoga Springs, N.Y. Time is running out to get applications in for #HolidayMatch! We have over $2 Million to give away to nonprofit children’s charities. Deadline is January 31, 2019. Apply here: https://www.stewartsshops. com/holiday-match/holiday-match-overview/

Sheetz Inc. Altoona, Pa. We are getting ready to open our 100th North Carolina location on Thursday, January 31st and we have big plans to celebrate! Visit https://www.facebook.com/ events/390914301713629/ for more information about our day of celebration. As part of the 100th North Carolina New Store Opening Celebration, we are doing a NC state-wide scavenger hunt. The Sheetz Team has 10 stops planned over 5 days. If you are one of the first 10 people to find the Sheetz Jeep, you will win a Sheetz Prize Pack and be given the opportunity to win a grand prize of an Amazon Echo! Be sure to follow us on Twitter (https://twitter.com/sheetz) or check back here for real-time scavenger hunt location updates!

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Sponsored by

Retailers Gearing Up to Meet Amazon’s Challenge C-stores and grocers are exploring and deploying their own self-scanning payment apps By Debby Garbato EIGHTY-SIX PERCENT OF SHOPPERS avoid stores with habitually long lines, 74 percent will shop a competitor rather than a store whose checkout queues are usually long, and long lines prompt 41 percent of shoppers to change their minds about a purchase, according to findings from ZK Research.

States plan to implement self-scanning over the next year, 23 percent within two years, 12 percent over the next three years, and 8 percent say they are more than three years away from implementation. Thirty-eight percent have no plans to implement.

The year-ago launch of Amazon Go, a cashierless store that allows Amazon Prime members to select food and other merchandise from a shelf and walk out of the store without stopping at a checkout stand, has prompted a growing roster of convenience stores and grocery chains to implement app-based, self-scanning payment solutions.

Grocers that have introduced app-based scanning include Kroger (multiple divisions), Giant Eagle, Meijer, H-E-B, Albertson’s, BJ’s Wholesale Club, Fairway Market, Costco, and Stop and Shop. Many of their applications were developed in-house. (Walmart also had self-scanning but discontinued it.)

The reason, similar to Amazon’s, is to provide shoppers with a frictionless checkout experience and allow the retailer to better deploy resources to other tasks in the store.

Among convenience stores, frictionless checkout has been implemented at select stores operated by Cruizers, Ricker’s, Domino C-stores, Parker’s, 7-Eleven, Enmarket and Jiffy Trip. Kum & Go, Family Express and Circle K are also said to be working on frictionless checkout solutions.

U.S. consumers spend almost 37 billion hours annually waiting in lines, according to technology provider Zippin, which has created an AI-powered frictionless shopping platform. A January 2019 Retail Transformation Study by IHL Group found that 19 percent of retailers in the United

Frictionless checkout could forever change how in-store consumers shop and pay for merchandise. Most of the current technology being tested and


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deployed requires shoppers to download a smartphone app, scan their own merchandise, and use their phone to check out with their payment method of choice. Unlike at Amazon Go stores, self-scanning does not necessitate that an entire store be outfitted with cameras, sensors and other technology.

Amazon’s Track Record Amazon, which reportedly is considering opening 3,000 Amazon Go stores by 2021, currently operates seven locations in Seattle, San Francisco and Chicago. It also plans to open soon in New York. Most Amazon Go stores range from 1,200 to 2,300 square feet. Seven stores certainly does not make a super chain, but if Amazon realizes its 2021 goal of 3,000 stores, RBC analyst Mark Mahaney told Forbes that each location could generate annual sales of about $1.5 million, making them about 50 percent more profitable than a typical c-store. Multiplied by 3,000, that translates to $4.5 billion in annual sales for Amazon Go. While retailers’ lofty aspirations for store expansion do not always materialize, Amazon’s track record in gobbling up market share is cause for concern. Consider that: • In 1997, Amazon had two fulfillment centers. Today, it operates 75 in North America alone. • Amazon’s U.S. e-commerce share is approaching 50 percent. Last year, Amazon shipped more than 5 billion Prime packages. • Amazon is cannibalizing online brand sales with 40 proprietary labels that generated about $450 million in 2017, according to OneClickRetail. CPG represents a significant portion. • In August 2017, Amazon purchased Whole Foods, a sign that it sees a significant future in food. Like a traditional c-store, Amazon Go features grab-and-go food offerings and groceries, putting it in direct competition with traditional convenience stores. Both venues attract a young customer base. Convenience Store News’ 2018 Realities of the Aisle consumer study showed that 61 percent of millennials purchased prepared food at a c-store over the past month; 43 percent chose to buy grab-and-go foods rather than made-to-order.

U.S. consumers spend almost 37 billion hours annually waiting in lines. Source: Zippin

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Consumers Are Ready for Frictionless A study of c-store shoppers, conducted in October 2018 by consultancy AlixPartners, noted that 36 percent of millennials and 20 percent of Gen Xers said they would shop more at Amazon in the year ahead for convenience store products. Self-scanning strongly appeals to millennials, who seek personalized shopping experiences and like feeling in control and using technology. A July 2017 Acosta study, Bricks & Clicks: Understanding the Omnichannel Landscape, found that almost half of millennials are “very interested” in self-scanning, while 36 percent are “interested” or “somewhat interested.” Among Gen X, 28.7 percent are very interested, 16.2 percent are interested and 23.3 percent are somewhat interested. Additionally, more than 20 percent of baby boomers indicate they are very interested/interested, with 22.5 percent somewhat interested. Self-scanning’s benefits can extend beyond speedy checkout. Depending on the technology employed, customers can check prices, locate products, track their spending as they shop and view retailer/supplier videos. They also can access information unavailable on product labels, like allergy interactions and traceability data. There are retailer-specific perks, too. Since customers must identify themselves, self-scanning is usually linked to a retailer’s loyalty program. This is not always so with stationary self-checkout kiosks. Retailers can use self-scanning technologies to send consumers promotions while they shop — not when they are about to leave — based on their individual profiles. If self-scanning is artificial intelligence (AI) enabled, retailers can gather data for analytical insights, with AI continually “learning” and building on its knowledge regarding shopper behavior, dwell times and purchasing patterns. Kim Otocki, content marketing specialist at Paytronix Systems, working in the convenience store space, recently pointed out in her blog that loyalty programs work best when integrated into all operations. “Programs succeed when they are integrated into every aspect possible starting with enrollment. … Loyalty also extends to operations for messaging and providing a frictionless checkout experience, through a mobile payment or online ordering.”

The C-store Frictionless Experience For most convenience stores, self-checkout overall is a fairly underdeveloped concept. Introduced in 2010 by Whitehouse Station, N.J.-based QuickChek, most other c-store chains never embraced the stationary self-checkout kiosks that are popular in supermarkets. One big drawback is that kiosks occupy valuable space in what are usually small-footprint stores. The c-store approach to frictionless checkout is proving different than that of grocers like Kroger. With the exception of industry leader 7-Eleven, most operators are too small and/or lack the size or type of IT staff needed to create their own frictionless checkout app. Also, since they are in a race against time against Amazon, they do not want to invest the time such development requires. Instead, many c-stores are utilizing outside providers. One of the most popular is Skip, which has created self-scanning checkout solutions for grocery stores. Its convenience store package uses a simpler process that requires minimal implementation and infrastructure. This costs less and lets c-stores ramp up quickly. Skip is integrated with point-ofsale and loyalty providers. It can be outfitted with many of the perks available to supermarkets, including the ability to provide valuable feedback on customer shopping patterns. Skip also allows customers to order food online or at the pump before they enter a c-store. Unlike the technologies used in Amazon Go, Skip’s frictionless checkout app does not require users to scan their phone upon entering. They simply scan products and use their phone to checkout, paying via cash, credit, Google Pay or Apple Pay. “At Amazon Go, you can’t pay with cash,” notes Marshall Mann, Skip’s director of marketing. “We fit the retailer’s current model much better.” Skip says it reduces checkout time from an average of 60 seconds to an instant pay-and-go transaction controlled by the customer. Ricker’s, a chain of 58 Indiana convenience stores that was recently acquired by Giant Eagle, was among the first c-store operators to implement Skip and believes the increased convenience will augment customer traffic. The Ricker’s model has been described as a hybrid of mobile pay and Amazon Go’s “just walk out” experience. “We expect higher frequency and volume of transactions simply from the competitive advantage the partnership will provide,” former CEO Quinn Ricker told CSNews. “Not to mention being able to convert frequent fuel purchasers into loyal in-store customers.”

Automation Pioneers Following Amazon Go’s debut, there has been a dramatic increase in the number of retail automation startups. According to PitchBook Data Inc., venture capitalists’ 2018 investments topped $110 million — compared to just over $40 million in 2017.

Retail industry experts agree that ease of use for customers is the foremost requisite for success around frictionless checkout.

Among the new startups are: • Zippin created an AI-powered frictionless shopping platform that uses machine learning, cameras and sensors. Customers download an app and get a digital key to enter the store. They “shop naturally, walk out and get a receipt on the app.” Retailer users can obtain real-time inventory data and advanced analytics. Zippin’s software costs $25 to $30 per square foot. Retailers purchase the hardware elsewhere. In August, Zippin opened a store in San Francisco that showcases its technology. • Santa Clara, Calif.-based AiFi introduced the NanoStore, a 160-square-foot, fully automated convenience store, at January’s NRF Show. Resembling a shipping container, AiFi cameras and sensors track people as they browse and shop. Upon departing, shoppers tap an app or swipe a credit card to pay. AiFi said France-based Carrefour and Zabka, a Polish convenience chain, will test the concept. • Caper’s retrofitted shopping cart does not require outfitting a store with cameras or sensors. The cart has a scanner and payment system attached. Shoppers scan barcodes as they fill their carts, which also have scales for produce and other items sold by weight. The cart becomes “smarter” with use, since cameras shoot pictures after each item is scanned. Eventually, Caper wants the cart to be able to recognize items without scanning. Caper is already being used by Foodcellar, a grocer in Queens, N.Y. To what degree retailers and consumers will embrace frictionless checkout remains to be seen. While the technology has been available since the early 2000s, it was not viable for widespread use until more recently, and smartphone applications were not as sophisticated or prolific as they are now. At the same time, Amazon Go’s concept may require more work to be implemented large scale. If 3,000 stores are created using current technologies, Morgan Stanley estimates Amazon would need as much as $3 billion to roll them out. With RBC projecting a $4.5 billion annual sales opportunity for Amazon, it would take some time for the company to realize a return on its investment. But Jeff Bezos is not always concerned about immediate ROI. CSN


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Frictionless Engagement Positive Revenue Impact is a competitive imperative for convenience store retailers, according to Andrew Robbins, president of Paytronix Systems, the most advanced provider of loyalty programs and customer engagement solutions for restaurants, retail chains and convenience stores.


Cruizers, Ricker’s, Parker’s, 7-Eleven and Enmarket are Andrew Robbins among the convenience retailers that are testing some type of frictionless checkout at their stores. Family Express, a Paytronix client, is also working on frictionless checkout and engagement solutions. The regional retailer, like other convenience chains, sees the writing on the wall. “They don’t want to get ‘Amazoned,’” said Robbins, referring to both the online retailer’s powerful e-commerce platform and its small, but growing Amazon Go brick-and-mortar chain with its “just walk out” technology. For years, Amazon has used customer data to enable a more convenient purchasing experience. From making relevant product recommendations based on past purchase behavior, to making the actual purchase and delivery of product as frictionless as possible. “When we talk about frictionless engagement, we believe it’s all about reducing the hurdles or barriers for a consumer to engage with the brand,” said Robbins. “In frictionless engagement, we want to conduct commerce and communication with consumers using their preferred method of interaction.” The rising demand for off-premise ordering coupled with frictionless transactions is opening a new frontier for convenience stores. Armed with more consumer data than ever, retailers need to think relevance and omnichannel. Robbins pointed out that some consumers prefer mobile messages like SMS or push notifications. Not only is using the preferred channel important today, but the customer expects the message to be both timely and relevant. “Let’s communicate with them via their preferred channel and send a message that is relevant to the individual. That’s an effective way to build brand preference and trust,” said Robbins. After communicating with consumers in their preferred way, relevancy becomes paramount. “When they get a message, they want it to be relevant to them. Some messages are important and relevant, but some are not,” according to Robbins. For example, sending someone a message about lottery tickets and cigarettes might not be the right kind of

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Sponsored by

More Customers =

Paytronix suggests eight key frictionless methods for acquiring more customer data: 1. Coupons and credit card token matching. Measure new customer vs. repeat customer coupon efficiency and then convert the customers from unknown to known customers. 2. Apple or Google NFC tap and NFC with payment. It is the ultimate convenience: one simple tap at the point-of-sale system transfers payment and program membership to the merchant. And if the customer is not yet a member, Google and Apple, through the Paytronix integration, will ask them to join. 3. Text to join. Customers can join by texting their email to a short code and keyword. 4. Text to join via POS. Cashiers enter the customer’s mobile phone number through the point of service. 5. Mobile app. A retailer’s best customer is likely the one who will download and utilize a mobile app. 6. Kiosk enrollment. Kiosks are everywhere in the convenience channel and by displaying the loyalty enrollment page, customers have a one-stop shop to enroll. 7. A physical card. 28 percent of U.S. adults still do not have a smartphone. 8. Reverse enrolling. Invite members to join a program on your website.

message if they are a non-smoker and typically shop your store for milk and bread. “In frictionless engagement, don’t make a consumer read four different messages if only one applies to them,” said Robbins. Paytronix has worked with both convenience retailers and restaurants to identify clusters of customers who will respond to a particular message that is relevant to them. “This is where artificial intelligence comes in,” he noted. “We look at the types of messages people like and what they’ve purchased before to be able to send them relevant messages.” Paytronix can predict the next visit to the pump with machine learning. If the customer misses an expected visit, Paytronix automatically sends a message to the consumer in a message cadence that is relevant to that individual consumer. The idea is to capture more than the store’s fair share of fill-ups. Frictionless engagement has a huge impact on revenue. “We do see that every time we remove the barrier, we compel more people to purchase more. This customer-focused approach marketing strategy and programs related to it are all about the impact the brand can make on sales,” noted Robbins. CSN Andrew Robbins is the president and co-founder of Paytronix Systems Inc., a SaaS company that specializes in helping brands deliver exceptional program impact through frictionless guest experiences — online ordering, loyalty, gift, mobile payment, apps, messaging and more.


Focusing on the Customer Experience NRF 2019: Retail’s Big Show featured all kinds of new technology trends and innovations By Don Longo & Melissa Kress ARTIFICIAL INTELLIGENCE (AI).

Frictionless commerce. Wire-

less connectivity. Those were just a few of the many technology trends and innovations on view at the National Retail Federation’s NRF 2019: Retail’s Big Show, held Jan. 13-15 at the Jacob Javits Convention Center in New York. Beyond all the technology and innovation, though, there’s one thing that’s most important and that’s the customer. “It’s easier than ever in 2019 to adopt technology; there is no shortage of the types of technology. But the more technology we put into place, the further away we get from the customer,” said Future Commerce podcast host and session moderator Phillip Jackson. Implementing new technology without losing sight of the customer sets convenience store retailer Sheetz Inc. apart from many other large retail chains. “There are community stores where [employees] know everyone’s names,” said Emily Sheetz, vice president of strategy development and execution for the Altoona, Pa.-based chain. Speaking at a NRF Show session entitled “Systemic Satisfaction,” Sheetz explained that the 600-store retailer views technology as “a key part of the experience” for its customers. Sheetz works with CGI, a global IT and business consulting services company.

The expo floor included more than 800 exhibitors.

all about advanced technologies and their mobile phones. Asian consumers are accustomed to providing personal information on mobile devices and receiving goods and services, Wee noted. In Europe, real-time price comparisons — including both online and in-store prices — provide the consumer with the best pricing information. Despite location, what these moments all have in common is that “the experiences all consumers wanted were very human,” Wee said. “These are small experiences, but how do you scale this?” she asked, advising that technology can help.

Recession or No Recession?

“It’s easy for tech companies to get wrapped up in the technology,” said co-panelist Dave Henderson, president of U.S. operations at CGI. “However, we are much better when we understand what is the right thing to build. We have to be very attuned to the experiences in-store that our customers want to create. If you focus on the human side, the technology will follow.”

In an economic roundtable open to press only, three economists concurred that business conditions entering 2019 are not quite as rosy as they were entering 2018.

As technology innovation changes at the speed of light, retailers are working hard to build up the customer experience — both online and at brick and mortar. At the intersection of the digital and physical retail spaces are “magic moments.”

It’s a more complicated economic situation this year, he said, noting that consumer spending and sentiment remain strong, households are not overladen with debt, unemployment is low, wages are rising and oil prices are trending lower. However, he noted a few headwinds: price increases caused by trade wars, slower global growth and cautious businesses taking a wait-and-see approach to investment.

Technology giant Cisco highlighted three magic moments from around the globe. In the Americas, it is the merging of online and in-store; in Asia, mobile is a way of life; and in Europe, it is synchronized inventory and pricing. Susie Wee, senior vice president and chief technology officer at Cisco DevNet, explained that in the Americas, magic moments can be ordering groceries online and picking them up at the store, or buying items online with the ability to return them in-person. In Asia, where people spend hours commuting to work, it’s

“By no means is the economy falling apart, but I expect slower growth this year,” said NRF Chief Economist Jack Kleinhenz.

Constance Hunter, chief economist at KPMG, was a little less optimistic. “2019 is all about recession watch,” she said. “I think we’ll see a recession sometime between the second half of 2019 and 2020.” Meanwhile, Steven Blitz of TS Lombard, sees optimism in indications that the Fed will ease up on raising interest rates the rest of the year. However, he is concerned about the Chinese economy. “This might be the first U.S. recession that’s made in China,” he noted. CSN


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2 1 3

1. Tecate Titanium Tecate Titanium is a 7.5-percent ABV brew in a 24-ounce single-serve can created specifically for sale in licensed off-premise accounts, specifically convenience stores. With a bold, yet refreshing taste that packs a punch, Tecate Titanium aims to capitalize on the continuing growth of Mexican imports and on the sizeable opportunity for high-ABV brews in cans in the convenience channel. The launch program will include out-of-home advertising, radio, digital and social media in Tecate’s top markets, as well as high-impact merchandising materials and consumer sampling (where legal) to drive trial and awareness.

2. Night Owl Pipe Tobacco Cigars Swedish Match’s Night Owl brand brings to market tipped cigars that are crafted with the finest pipe tobacco. Offered in a resealable FoilFresh pouch, Night Owl Pipe Tobacco Cigars began shipping Jan. 3 in four varieties: Classic, Wine, Tropical and Black Cherry. Night Owl Pipe Tobacco Cigars are available in 2 for 99 cents, Save on 2 and four-pack formats. Swedish Match Richmond, Va. swedishmatch.com

Heineken USA White Plains, N.Y. heinekenusa.com

3. Bubly Fountain PepsiCo Foodservice’s bubly Fountain is part of the company’s development of a broad spectrum of water and hydration solutions designed to meet the growing consumer demand for flavored and sparkling water across multiple channels. Bubly sparkling water combines refreshing and delicious flavors with an upbeat and playful sense of humor to shake up the sparkling water category, while keeping it real with no artificial flavors or sweeteners and zero calories, according to the company. The four-valve fountain unit provides access to a wider variety of bubly flavors while away from home, including fan-favorites such as lime and orange. PepsiCo Inc. Purchase, N.Y. (800) 433-2652 pepsico.com

5. Reese’s Thins Arriving on shelves in March, Reese’s Thins are 40 percent thinner than regular Reese’s peanut butter cups. The new option comes individually wrapped in bags for on-the-go snacking. Reese’s Thins will be available in dark chocolate, as well as the traditional milk chocolate used for Reese’s products. The Hershey Co. Hershey, Pa. (800) 468-1714 thehersheycompany.com

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



4. Tillamook Country Smoker Gourmet Style Snack Sticks Conveniently packaged in both 5-ounce and 12-ounce sizes, Tillamook Country Smoker Gourmet Style Snack Sticks bring cleanlabel, real food to everyday snacking. The full list of ingredients is: beef, pork and water. Following the brand’s recent debut of Zero Sugar Jerky, Tillamook Country Smoker is making it a priority to provide consumers with products they can indulge in guilt-free. The new 4-inch snack sticks contain less than 2 percent dextrose, natural flavors, sea salt, sugar and autolyzed yeast extract. The product begins shipping in early first-quarter 2019. Tillamook Country Smoker Bay City, Ore. tcsjerky.com





6. Red Bull Summer 7. Coca-Cola Edition Beach Breeze Freestyle 9100

8. Trolli Sour Brite All-Star Mix

9. Steve’s Healthy Fruit Chillers

Red Bull is expanding its Summer Edition series with the launch of Red Bull Summer Edition Beach Breeze. Packaged in a bright turquoise can, the beverage has an initial tropical fruit profile, which then blooms into a warm coconut finish that is light and crisp. The product will launch nationwide on April 29 for a limited time to “give wings” to the 2019 summer season, the company stated.

Trolli, the original inventor of the gummy worm, will launch Sour Brite All-Star Mix in the first quarter of 2019. The mix features the most original shapes in a single bag. Each package includes five of the hottest-selling Sour Brite shapes: Crawlers, Sloths, Octopuses, Llamas and Tiny Hands. Three of these shapes (Crawlers, Octopus and Sloths) drove 40 percent of Trolli brand growth in 2018, the company noted. Trolli Sour Brite All-Star Mix will be available in four package sizes: 4.25 ounces, 6.3 ounces, 8.5 ounces and 25.5 ounces.

Healthy Fruit Chillers, a new line of healthy slushie drinks, was originally developed by Steve’s Frozen Chillers for schools, ensuring the beverages meet rigorous USDA regulations. Made with fruit juice concentrates, each 16-ounce drink provides 4.5 servings of fruit with no artificial coloring or flavors. Healthy Fruit Chillers are available in pineapple/coconut, strawberry, strawberry/ mango, strawberry/banana, pineapple, peach and orange varieties.

Red Bull North America Inc. Santa Monica, Calif. energydrink-us.redbull.com/en

Coca-Cola Freestyle 9100 is a next-generation dispenser outfitted with Bluetooth connectivity that allows consumers to connect via the Freestyle app to make and pour their favorite mixes. The dispenser’s large, high-definition screen makes it easier for consumers to choose from more than 200 drink options. Additionally, the unit’s improved content management system allows CocaCola to launch new brands over the air with “digital recipes” and offer unique national programs such as Olympic custom mixes, and Fanta Halloween and CocaCola holiday mixes. The Coca-Cola Co. Atlanta coca-colacompany.com

Steve’s Frozen Chillers Boynton Beach, Fla. (800) 572-2252 stevesfrozenchillers.com

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

10. Well Yes! Sipping Soups Campbell Soup Co.’s Well Yes! Sipping Soups come in convenient grab-and-go packaging. The smooth, creamy soups are a good source of fiber, meet vegetarian dietary needs, are non-GMO and contain zero artificial flavors or colors, according to the maker. The Well Yes! Sipping Soups line features five varieties: Tomato & Sweet Basil, Butternut Squash & Sweet Potato, Roasted Red Pepper & Tomato, Harvest Carrot & Ginger, and Sweet Corn & Roasted Poblano. Campbell Soup Co. Camden, N.J. campbellsoupcompany.com



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Your Competitor Is Your Best Teacher






The tactics of using a competitor as a benchmark fall into three categories “THAT’S INTERESTING.” Have you ever walked into your main competitor’s shop and had that reaction?

As you look around the store, you see a product you had not heard of, a promotion you had not thought of, or a new price for products that you both sell. These are incredibly important pieces of information and they are there for you to take back to your own store and make your own. By Roy Strasburger, President, Strasburger Retail

We all have competitors. They may be good competitors or they may be lousy competitors. But they are competitors and every customer that goes into their store is probably a customer that won’t come into your store. It is a zero-sum game. The eternal question is: Why did the customer choose one store over the other? It could be a question of location — one store is better situated in the traffic flow, making egress easier. It could be that one store has a better physical presence than the other. Both of these advantages are very difficult to overcome on a day-to-day basis without investing a lot of capital, or moving your store. However, if neither of those points are a factor, then it must have something to do with the inside of the store. It can only come down to one of three

things: appearance, product mix or customer service. In previous C-Store Rescue columns, we’ve talked about store appearance and customer service. Now, I’d like to focus on product mix (including pricing and promotions). Customers are always on the lookout for new products and new ideas. We, as store operators, need to be on the lookout as well. Unfortunately, most of us do not have a large marketing department that can be constantly scouring the industry for new products. Of course, we will hear about new items at trade shows and when our vendors come to the store but, on a day-to-day basis, it’s very difficult to keep up with new offerings and promotions. This is where your competitor becomes your teacher. By keeping an eye on your competition, you are effectively increasing your marketing and new product development capabilities. More likely than not, if your competitor has a new product, it will not be on an exclusive basis or, if it is, the exclusivity will be short-term. If it looks like the product is being a success in one store and you don’t have it in your store, then you need to try it out. The bottom line is: You need to have successful products in your store. The tactics of using a competitor as a benchmark fall into three categories: 1. When you allow the competitor to stay ahead of you and you do nothing to meet or beat what they do. Your competition will always have the advantage and, I’m afraid, you will eventually run out of customers. End of business. Goodbye. 2. Keeping up with your competitor. You need to see what your competitor is doing and have the same things in your store. Check out their pricing on a regular basis to make sure you are offering an equal or better value. Find products that will appeal to your core customer base. Using ideas from your competitor does not have to be limited to products and pricing. It can also include loyalty programs, customer service initiatives or the reallocation of space within your store.

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








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3. Surpass what your competitor is doing. In my opinion, this is the best way to learn from your competitor. Always stay one step ahead. If your competitor is doing something new, take that idea, modify it so that it becomes yours, and implement it quickly and effectively. Every time your competitor makes a move, you make a countermove so that you stay ahead in the game. This is not as difficult as it sounds. You can find new products and good ideas by reading industry publications (such as Convenience Store News), asking your vendors questions, and visiting other stores that are not in your immediate neighborhood or market. Find out what Walgreens, Walmart and Wawa are doing. Do it once or twice a month. The idea is to find and experiment with things before your competitor finds out. I try to shop our competition at least two or three times a week, and we ask our store managers to do so at least once a week to see what’s going on in the marketplace. Frankly, the competitor’s managers know who our team members are and we often see them in our stores as they check us out. That’s fair and it requires us to stay at the top of our game. The great thing about competition is that it can raise the level of everyone’s game. If it’s an active competition, it can provide you with an ongoing stream of new ideas and products. The more stores that you can visit, the more ideas you will discover. Perhaps it goes without saying, but the other thing you can learn from your competitor is what mistakes to avoid. Not everything works when it’s introduced into the marketplace. The product may be inappropriate for the customer base, it may be priced incorrectly, or it may just be a bad idea. It’s important to recognize the bad as well as the good. By keeping your eye on your competitor, you’re not only using them as a marketing department, but also as a test laboratory. Let them go through the trials and tribulations to see whether the product is successful. You may lose the first-mover advantage, but you may avoid wasted time and resources with a product or promotion that doesn’t work. Please don’t take this as suggesting you should not be the first try new products and ideas. I strongly think you should be the first whenever possible. However, when you do see a new product or program in your competitor’s store, keep an eye on it to see whether it’s going to work. If the competitor has placed the product in his/her store, you’ve already lost the first-mover advantage, so make sure it is going to be a successful product before you place it on your sales floor. Having said that, watch out for fads. We all know the products that come out and are hot for a month or two and then disappear. (Anyone have any spinners left on their shelf?) It is very difficult to determine what is a fad and what product will have the staying power to be profitable

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

over the next year or two. Our rule of thumb: If it comes in a box from Asia, it’s a fad. Buy early and don’t over-purchase. If you find out the item has legs, you can always order more. One final piece of advice is to keep your definition of a competitor very broad. Your competitor may be the next convenience store down the street, but it also can be the local pharmacy, grocery store or dollar store. All of these retailers are trying to take your customer from you, and you need to have a strategy to keep your customers in your store(s). This is a daily consideration and you must focus on it consistently. Once you lose a customer to a competitor, it is very difficult — and usually expensive — to get them to come back into your store. The best strategy is to not lose the customer in the first place. Give your regular customers a reason to come back to your business trip after trip, and new customers a reason to return. As the lines that separate retailers continue to blur, it matters less and less to the customer where they pick up their bottle of water or candy bar. The sign on the door or the type of business you run isn’t the overriding concern. The customer is interested in convenience, selection, price and customer service. That’s it. You can compete on all of these points and who better to learn from than your competitor? CSN Roy Strasburger is president of Strasburger Retail (previously Convenience Management Services Inc.), a privately held retail consulting, operations and management provider serving the small-format retail industry nationwide. Strasburger Retail operates retail locations for companies that don’t have the desire, expertise or infrastructure to operate them. Learn more at strasburgerretail.com. Editor’s note: The opinions expressed in this article are the author’s and do not necessarily reflect the views of Convenience Store News.



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FAMILY EXPRESS CORP., one of the convenience store industry’s finest regional chains of c-stores and fueling centers, is embarking on the most ambitious growth plan in its 40-year history.

The plan included opening five new stores in 2018 and calls for entering a new market in suburban Indianapolis, enlarging its 165,000-square-foot central distribution center and investing in new technology to bring seamless customer engagement to all of its stores. The Valparaiso, Ind.-based chain of 74 convenience stores — still led by its founder Gus Olympidis — flies under the radar in most discussions of best-in-class convenience chains, but the vertically integrated retailer is a market leader in northwest Indiana, known for its uniquely friendly employees who embrace the company’s “living brand” culture of exceptional customer service. The “living brand” concept has paid off in lower workforce turnover and higher-than-average industry profits for the family-run retailer. Convenience Store News recently had the opportunity to tour Family Express’ headquarters, central distribution center and a handful of stores in the Valparaiso market with the chain’s outgoing and confident president and CEO. “We don’t measure success by the number of stores we open,” Olympidis told CSNews as he showed off the company’s modern headquarters, replete with two training centers and a fully outfitted fitness center for employees. “We want to be the best convenience store retailer. We will never be the largest. Our business model has delivered record earnings throughout the last recession and beyond.” While watching a class of store managers attending an advanced financial class, Olympidis explained that “living brand” is a key component of Family Express’ employee training. “You become a ‘living brand organization when your workforce becomes so uniquely powerful as a motivator to customers that they choose your store over that of a competitor,” he said. Olympidis compares his company to La Crosse, Wis.-based Kwik Trip Inc., but on a smaller scale. Like Kwik Trip, Family Express owns its own warehouse and trucking fleet, and makes private label a big part of its business. Private label milk, waters, energy drinks and more help create differentiation in the market, according to Olympidis.

IN THE EXPR The Olympidis family (from left to right): Spiro, Dimitri, Gus and Alex.

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


Midwest regional chain Family Express is growing its brand its own way By Don Longo


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Convenience Store News



“Six out of our top 10 candy SKUs are our own brand,” he noted. Family Express also has its own on-premise central bakery that produces 30,000 items per day, including fresh-baked doughnuts, muffins and cookies for its stores. In fact, the entire central distribution facility is bursting at the seams due to the chain’s growth. An enlarged warehouse facility will more than double the bakery’s capacity, while improving both product and sanitation; provide more freezer space for the chain’s Cravin’s Market Fresh prepared food products; and increase the number of truck loading docks from four to 10. The expansion is expected to be completed by May 2019 and will increase the facility to 180,000 square feet.

Becoming an Institution Olympidis immigrated to the United States from Greece as a teenager, met his wife Beth, and settled in Valparaiso, a city of about 30,000 located 20 miles southeast of Gary, Ind. His first store opened Dec. 25, 1975 on the west side of “Valpo,” as the city is often called. His three sons are all in the business. Dimitri currently runs Family Express’ central enterprises, which includes the distribution center, bakery and POP production facility. Alex heads up company operations and The chain currently operates 74 convenience stores.

Family Express’ current 5,500-square-foot prototype store prominently features its proprietary Cravin’s To Order foodservice restaurants.

human resources. Spiro is responsible for fuel procurement. Family Express has become a major figure in the political and charitable activities of Indiana. The retailer also has been a strong advocate for the convenience store industry, pointing out how some manufacturers’ channel pricing policies often disadvantage convenience store retailers while favoring similarly sized retailers like dollar stores and drugstores. Olympidis’ stores were originally branded “Time Low,” but that nondescript name was changed in 1987 to Family Express. In 1998, the chain launched its proprietary Java Wave brand coffee, as well as its own branded fuel. In 2010, its state-of-the-art Corporate Office and Learning Center opened in Valpo. Over the years, the stores’ upscale colonial architecture and enhanced landscaping became familiar throughout northwest Indiana as the chain grew. Today, the company also operates a number of “theme” stores. These stores are imaged to celebrate the local “education brand” of a community, such as the University of Notre Dame, Purdue University and Valparaiso High School. These celebratory theme stores, according to Olympidis, help embed Family Express more completely into the local community. (A soon-to-open store in Carmel, Ind., will feature a unique Art Deco architecture as mandated by the community.) The chain’s current 5,500-square-foot prototype store prominently features Family Express’ proprietary Cravin’s To Order foodservice restaurants — a kitchen selling fresh made-to-order pizza, boneless wings, pretzels, breakfast bowls and breakfast sandwiches.

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Ordering is made simple via electronic kiosks. Family Express stores featuring Cravin’s To Order prepared food generate approximately 18 percent of their in-store sales from food. New stores also include interior and exterior seating and a pet wash. Additionally, new Ryko car wash technology allows customers to purchase a car wash code that is digitally redeemable at any Family Express car wash.

Getting Ahead of the Competition Back at headquarters in the retailer’s laboratory store, Olympidis demonstrated to CSNews a new next-generation bean-to-cup, Euro-coffee/expresso machine from Franke. This machine is currently being tested at three Family Express stores. As mentioned earlier, Family Express is also partnering with several technology providers to bring seamless customer engagement to all corners of its stores. The new technology will enable such customer-friendly activities as oneclick ordering, curbside delivery and no-wait checkout. Partners in this new ecosystem include Paytronix for loyalty, Olo for the online ordering platform, Big Club Digital for website development, and National Carwash Solutions to tie in all elements of Family Express’ business to create a holistic experience for customers. Going forward, Olympidis believes the biggest challenge for midsized convenience store chains like Family Express is removing “friction” of any kind from the retailer’s operations, and the decline of major product categories. The best thing that could happen in 2019 to boost sales and profits for c-store retailers is “getting ahead of the competition in facilitating the ‘last mile’ of delivery,” he said. CSN

Family Express owns its own distribution warehouse, central bakery and trucking fleet, and makes private label a big part of its business.

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Meet the Needs of Multicultural Shoppers The U.S. is expected to be dominantly multicultural by 2044, so c-stores need to adapt starting now By Angela Hanson


convenience store customers doesn’t just mean examining their current wants and needs; it requires looking into the future and anticipating how those wants and needs will change. This is particularly relevant for millennials, who are not only poised to overtake baby boomers as the largest generation, but also are the most diverse generation. That diversity will continue with the generations that follow — projections show that by the year 2044, the United States will be dominantly multicultural. While the rate of change will vary by region, convenience store operators in particular are likely to observe the movement firsthand, and it will bring both challenges and opportunities. “Multicultural shoppers make up 37 percent of all [c-store] visitors, but 43 percent of core (weekly or more often) shoppers — and their share of core shoppers continues to grow, up two points from 2014,” said Coca-Cola North America’s Doug Middlebrooks, group director, shopper marketing. “Tailoring your offering and message to your shopper is not a new idea, but the notion of having a more fragmented and diverse shopper base is a new reality.” This is particularly reflected in foodservice. With a more diverse generation comes more diverse tastes. Food industry market research firm Datassential’s menu

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database shows that a strong interest in ethnic food is currently among the top trends. More than half of the current fastest-growing ingredients and flavors have ethnic origins, with food from Asia, Latin America and the Middle East showing particularly notable menu growth. In the beverage aisle and at the fountain area, the popularity of tropical flavors and drinks with unique flavor offerings is on the rise. At events like the 2018 NACS Show, multiple companies displayed aguas frescas targeted to the c-store market. Candy and snacks that tend to do well with multicultural shoppers include non-chocolate and gummy items, as well as hot and spicy and sweet and spicy flavor profiles. At the 2018 Sweets & Snacks Expo, Jaime Enrique (Rick) Parra, executive director of multicultural/Hispanic consulting at Winston Weber & Associates Inc., recommended that retailers target multicultural consumers by understanding the candy traditions that different countries have.

Multicultural Millennials Millennials provide a tremendous opportunity for c-stores, especially those in urban markets. “‘Convenience’ is no longer just the purview of convenience stores. This is especially true in urban markets where young multicultural shoppers live, work and play,” Middlebrooks said.

Call to Action l The United States is expected to be dominantly multicultural by the year 2044, so convenience stores need to start adapting now. l Millennials are not only poised to overtake baby boomers as the largest generation, but also are the most diverse generation. With a more diverse generation comes more diverse tastes. A strong interest in ethnic food is currently among the top menu trends. l In the beverage aisle and at the fountain area, the popularity of tropical flavors and drinks with unique flavor offerings is on the rise. Think aguas frescas. l Candy and snacks that tend to do well with multicultural shoppers include non-chocolate and gummy items, as well as hot and spicy and sweet and spicy flavor profiles.

“Many traditionally larger-format players are innovating to create smaller footprints, offering more nimble assortments and executing precise marketing tactics that will challenge convenience retail’s dominance of the grab-and-go trip,” he continued. “The good news is that c-stores have the early advantage of being in these communities today.”

l On average, multicultural shoppers prioritize product selection more highly than other groups, and Hispanic shoppers may make it the deciding factor in which store they choose.

Being “the most convenient” option for multicultural shoppers may include advanced foodservice offerings, personalization and curated assortments, according to Middlebrooks.

l Product reviews, deals/coupons and online shopping convenience are the three main trends driving Hispanic purchasing in the U.S. today.

• Asian-Americans, whose buying power has grown faster than all other ethnic groups since 2000 to reach $986 billion in 2017, according to Nielsen data; and • U.S. Hispanics, who have more effective buying power due to their younger median age, the fact that they live in larger, multigenerational households, and they are particularly tuned in to the digital world.

l Higher involvement in digital is common among multicultural shoppers. Research shows that multicultural shoppers who visit c-stores at least weekly are 75 percent more likely to utilize social media related to their shopping.

Demographic groups worth taking particular note of include:

In fact, higher involvement in digital is common among multicultural shoppers in general. Coca-Cola’s research has found that multicultural shoppers who visit c-stores at least weekly are 75 percent more likely to utilize social media related to their shopping. This includes reporting on their experiences, interacting with brands and more. Multicultural shoppers who visit c-stores at least weekly also buy immediate-consumption beverages from the cold vault near checkout 43 percent more than other customers.

Hispanic-American and African-American shoppers are primary convenience store shoppers, with 65 percent and 56 percent, respectively, visiting c-stores at least once a week.

Today, Hispanic-American and African-American shoppers are primary convenience store shoppers, with 65 percent and 56 percent, respectively, visiting c-stores at least once a week. These core shoppers tend to be more loyal to particular stores,


20 1 9

Convenience Store News


especially if they can get genuine value via rewards programs. However, that loyalty isn’t limitless. On average, multicultural shoppers prioritize product selection more highly than other groups, and Hispanic shoppers may make it the deciding factor in which store they choose. Marketing specifically to multicultural shoppers is a sound practice — one virtually guaranteed to be necessary for wide-scale success in time. The most effective tactics, though, depend on the local market in which a c-store operates. Some retailers may think their area’s demographics won’t change much, meaning they don’t need to change their strategy much, but that isn’t the case, according to retail experts. “Our perspective is that the answer lies in how quickly retailers want to maximize their business results. This notion goes back to catering to local shoppers,” Middlebrooks said. “Multicultural shoppers are important to every store in every market, and they are the primary shopper in many areas already.” CSN






Highlighting the U.S. Hispanic Market


This demographic group is growing fast, with buying power to match



While the growing number of multicultural consumers encompasses many races and ethnicities, one demographic group in particular deserves attention from the retail world: Hispanic customers, or the gender-neutral Latinx population. “Latinx consumers are the drivers of the demographic shift we’ve been experiencing in the U.S., where multicultural has become the new mainstream,” said Stacie de Armas, vice president, strategic initiatives and consumer engagement for Nielsen. “This multicultural market represents tremendous growth opportunities for brands, both immediate and long-term.”

“Latinx consumers are inherently social, using digital channels to gather information prior to purchase, as well as to make recommendations and to tap into a dimension of Latinx culture that is often not well-understood: the desire to align with trusted brands,” de Armas said.

The U.S. Hispanic market is one of the fastest growing in the nation, with $1.5 trillion in buying power as of 2017, according to Nielsen research.

An important part of their purchase process is giving and receiving advice. As de Armas explained, this represents an opportunity for convenience stores.

Retailers looking to cater to Hispanic customers should keep in mind that they gravitate toward items that are economical for larger families and lean into cultural flavors and traditions, as many of them live in multigenerational homes and frequently make bulk purchases.

Giving and receiving advice can occur through reading and writing online product reviews, as well as in-person. Additionally, digital technologies such as loyalty programs, mobile coupons and shopping apps are central to the U.S. Hispanic shopping experience.

Product reviews, deals/coupons and online shopping convenience are the three main trends driving Hispanic purchasing today.

“Understanding the importance of signage and messaging that provides coupons, as well as product opinions can boost sales,” de Armas said.

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January 2019


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REEXAMINING TOBACCO Proposed rule shifts at the federal level could change the future of flavored and menthol tobacco sales By Melissa Kress THEY SAY THE ONLY GUARANTEES IN LIFE are death and taxes. Some may add tobacco regulations to that list.

explore additional actions,” the commissioner cautioned.

Most of the concern centers on the amount of legislation swirling around at the local level. However, this past fall, Food and Drug Administration (FDA) Commissioner Scott Gottlieb revealed several proposals that would, if implemented, be some of the biggest tobacco-related moves at the federal level since the FDA received regulatory authority over tobacco products under the 2009 Family Smoking Prevention and Tobacco Control Act.

While the directives are alarming for the tobacco category, and could have a huge negative effect on one of the top-selling categories in the convenience channel, they are, after all, just directives and nothing is set in stone.

On Nov. 15, Gottlieb directed the FDA’s Center for Tobacco Products (CTP) to reexamine its policies on the sale of flavored electronic cigarette and vapor products — specifically, new considerations around allowing the sale of such products only in age-restricted, in-person locations and, if sold online, under heightened practices for age verification. In addition, the CTP was directed to revisit the issue of menthol in combustible tobacco products. Taking into account the comments the FDA received on its initial Advanced Notice of Proposed Rulemaking on menthol in March 2018, the agency will advance another Notice of Proposed Rulemaking that would seek to ban menthol in products like cigarettes and cigars. Flavored cigars would also be on the chopping block if Gottlieb’s directives make their way past the proposal stage to full implementation. “This policy framework is an important step toward reversing the epidemic that is underway and that is confirmed by the data from the National Youth Tobacco Study. I could take more aggressive steps. I could propose eliminating any application enforcement discretion to any currently marketed ENDS [electronic nicotine devices], which would result in the removal of all such products from the marketplace. At this time, I am not proposing this route, as I don’t want to foreclose opportunities for currently addicted adult smokers,” Gottlieb said. “But make no mistake. If the policy changes that we have outlined don’t reverse this epidemic, and if the manufacturers don’t do their part to help advance this cause, I’ll

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Watching Closely

“While the announcement on Nov. 15 by [the commissioner] references potential regulatory actions regarding flavored electronic cigarettes, no formal action has been taken by the FDA at this time,” noted Thomas Briant, executive director of the National Association of Tobacco Outlets (NATO). NATO representatives met with Gottlieb and CTP Director Mitch Zeller in December to discuss concerns about potential regulations on flavored e-cigarettes and menthol cigarettes. During the meeting, NATO suggested the agency convene a working group comprised of FDA staff members and industry members to explore means to reduce youth access to and use of tobacco products. Given the FDA’s focus on youth prevention, and its zeroing in on the rising popularity of vapor products among underage users, Gottlieb’s directives did not come as much of a surprise. And as analysts have noted, any changes are likely to face legal challenges. Courtroom arguments aside, Briant pointed out that FDA representatives have publicly acknowledged that the process to adopt a new regulation takes a couple of years. With the series of steps it must follow — including the publishing of proposed regulation for public comment, reviewing all submitted comments, obtaining final review and approval of the regulation from the White House Office of Management and Budget, and publishing the final rule — the FDA has a long way to go before implementing any new tobacco regulations. “NATO will oppose regulations that seek to restrict or prohibit the sale of legal tobacco products. Retailers are a part of the solution to the underage youth access/use issue, not the problem,” he said. “Legal tobacco products can be sold in a responsible manner to adults of legal age.”


MENTHOL BAN WOULD BRING BIG HIT More than a third of all cigarette volume in the convenience channel is menthol By Melissa Kress


arettes is nothing new; the agency’s menthol report has been on the table since 2011. However, talk of a potential ban is picking up steam now that FDA Commissioner Scott Gottlieb directed the agency to advance a Notice of Proposed Rulemaking that would seek to ban menthol in combustible tobacco products, including cigarettes and cigars. To draft the new notice and shape any proposed regulation, the FDA’s Center for Tobacco Products (CTP) will use information gathered from an Advanced Notice of Proposed Rulemaking it issued in late March 2018. Gottlieb’s directive to the CTP in mid-November came just five months after San Francisco voters approved a ballot measure prohibiting the sale of flavored tobacco products — including menthol — making San Francisco the first major city to impose such a ban. The San Francisco Board of Supervisors, which has joint jurisdiction over the city and the county, first unanimously approved the ordinance prohibiting the sale of all flavored tobacco products, including menthol cigarettes, in June 2017. At the time, the city’s Office of Economic Analysis estimated the value of flavored tobacco cigarettes that would be affected at approximately $50 million per year. This number was based on roughly 726 retailers — mostly convenience stores and gas stations — that sold tobacco products in the affected area.

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Now, imagine the impact of a federal ban, affecting tobacco sales across the United States. During a fall webcast examining tobacco trends hosted by the Convenience Distribution Association, Don Burke, senior vice president of Management Science Associates Inc. (MSA), presented numbers pointing to menthol’s importance to all classes of retail trade. According to Burke, 36 percent of all cigarette volume in convenience and gas is menthol, and this retail channel represents 74 percent of all menthol cigarette sales. For tobacco outlets, 32 percent of their cigarette business is menthol, yet only 7 percent of all menthol cigarette sales go through tobacco outlets. “It goes down from there. Dollar stores: 33 percent of their business is in menthol cigarettes, yet they represent only 2 percent of menthol cigarettes that are sold,” Burke explained. “What screams here is really the line for convenience and gas: 36 percent of all cigarettes sold in a convenience/gas location are menthol and that represents 74 percent of all menthol cigarettes sold.” Menthol cigarette sales are less affected by seasonality than non-menthol cigarettes, according to MSA’s numbers. In addition, menthol cigarette sales are not declining at quite the rate of non-menthol, Burke pointed out. Since the FDA announced its new tobacco roadmap in July 2017, menthol — in terms of stores selling — has only continued to increase. Non-menthol cigarettes are essentially flat, with a slight uptick in September 2018, according to MSA data. “Looking at the percentage change in volume is an even more significant story. Overall, menthol cigarettes — 52 weeks ending July 2018 — are down about 3.1 percent.


Non-menthol during that same period declined by almost double, at 5.7 percent,” Burke cited. “In convenience/gas, menthol cigarettes declined by only 2.8 percent and non-menthol declined 5.1 percent.” Also in terms of dollars and cents, federal excise tax dollars from menthol cigarettes equal about $4.02 billion per year. Total state excise taxes from menthol equals $5.9 billion per year. “If I add all this up, there is about $10 billion a year in tax revenue that is generated from the sale of menthol cigarettes. That’s something that would be pretty hard for the government to do without,” said Burke.

FDA & the Menthol Issue The FDA has been eyeing menthol cigarettes and their impact on public health for roughly eight years now. The agency’s Tobacco Product Scientific Advisory Committee reported its menthol findings in March 2011; however, that report met resistance and spent the next few years wrapped up in legal proceedings.

“There are a lot of red herrings here that hopefully will all be thoughtfully reviewed before any bans or broad-scale regulatory action is taken.” — Marc Scheineson, Alston & Bird’s Food and Drug Law Practice

Gottlieb’s Nov. 15 announcement and directive brought the issue back to the public’s attention, even though the agency’s own findings may not back up a case for a menthol ban. “The 2011 menthol report started out to show that menthol increased the harm of a tobacco product, and all the reports showed menthol had no effect on that, so the FDA pivoted to some soft science to try to show that maybe menthol encourages initiation,” explained Marc

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Scheineson, partner and leader of Alston & Bird’s Food and Drug Law Practice. Scheineson is a former FDA associate commissioner for legislative affairs. “The truth is, most people that start smoking tobacco products start with products like Marlboro, not menthol,” he said. “There are a lot of red herrings here that hopefully will all be thoughtfully reviewed before any bans or broadscale regulatory action is taken.” Even if the FDA moves forward with a menthol ban, implementation will take time. As Scheineson explained, any proposed regulatory action by the FDA needs to go through a review by the federal Office of Management and Budget (OMB). OMB has 90 days to review the proposal, but can extend the timeline. The FDA must also do a detailed cost benefit analysis and a regulatory flexibility analysis that shows the impact on small businesses — which is considerable here, Scheineson added. “That all gets reviewed. Menthol is 30 percent of the tobacco market. A ban, as opposed to a kind of ratcheting down levels or staggering it or whatever ends up happening, is going to be challenged by the industry at every step,” he added. There was a reason the previous administration under President Barack Obama — an administration that saw the passage of the Family Smoking Prevention and Tobacco Control Act of 2009 — did not implement a menthol ban, according to Scheineson. “It’s a huge policy issue. Everybody knows smoking is bad, but if you are going to do it, should consumers have that choice? How much of a nanny state are we going to become with the kind of false pretense that we are going to protect underage smokers?” he posed.


WADING THROUGH At Nouria Energy Corp., various tobacco legislation has had a negative impact on both tobacco and non-tobacco sales By Melissa Kress

MASSACHUSETTS CLOSED OUT 2018 by becoming the sixth state to raise the legal minimum age to buy tobacco products to 21. Consumers who turned 18 before Dec. 31 can still buy tobacco products unless they are in a municipality with a local Tobacco 21 measure on the books.

The new state rule also prohibits the sale of tobacco products by pharmacies and bans the use of e-cigarettes in places where state law already prohibits smoking. While the Tobacco 21 (T21) law went into effect with the stroke of midnight on Dec. 31, the Bay State was certainly no stranger to T21 rules. Prior to the statewide regulation, more than 175 municipalities in Massachusetts had adopted local Tobacco 21 ordinances. Combined, those municipalities accounted for more than 70 percent of the state’s population. As a result, convenience store operators have been wading through a patchwork of local tobacco legislation since Needham, Mass., became the first town to embrace T21 in 2005. One such operator is Worcester, Mass.-based

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Nouria Energy Corp. which owns and operates 116 convenience stores and 49 car washes in Massachusetts, Maine, New Hampshire, Rhode Island and Connecticut. Currently, 87 of Nouria’s c-stores in three states are affected by some version of Tobacco 21 regulation, according to Nik DiMambro, category manager. As for Massachusetts, the majority of Nouria’s stores there were affected by some type of T21 legislation before Dec. 31. “Each store was negatively impacted. Not just our tobacco volume, but overall store volume,” DiMambro said. “In one example, we had a store get an age and flavor restriction imposed. They lost 25 percent of their tobacco sales and 15 percent of their non-tobacco sales.” Thankfully, having locations in nearby towns has helped recoup the losses. “Our store four miles away that did not have restrictions picked up most of the business the restricted store lost,” noted DiMambro. “People are willing to travel to get something they want.” With the walls now torn down in Massachusetts, so to speak, between municipalities that banned the sale of tobacco products to anyone under 21 and those who allowed it, DiMambro expects the playing field to level out — eventually.


“Currently, any town that did not have a 21 and older rule in place before Dec. 31 can still sell to adults under 21 as long as they were born before Dec. 31, 2000. Stores in those towns will still have an advantage, but the retailer has to be especially vigilant in making sure they are following the proper procedure to ID a customer,” he said.

Other Causes for Concern The legal purchasing age is not the only regulation Nouria has to grapple with. Another major concern is flavor bans, which DiMambro said affect a c-store’s tobacco and non-tobacco volume similar to age limit rules. Customers travel to another town to buy the products they want. “Adults like flavors and choices. We made sure that our adult customers are able to get what they want. Once towns started taking away what the adult customer wanted, the adult customer took their business to other towns,” he explained. With tobacco one of the top categories in the convenience channel, any missed sale can have a significant impact. For Nouria, tobacco makes up at least 40 percent of its inside sales.

“In one example, we had a store get an age and flavor restriction imposed. They lost 25 percent of their tobacco sales and 15 percent of their non-tobacco sales.” — Nik DiMambro, Nouria Energy Corp. DiMambro is also concerned over the recent news coming out of the Food and Drug Administration (FDA). The agency is considering sweeping tobacco rule changes at the federal level. He noted that the agency’s own study in 2016 showed that 89 percent of underage tobacco users rely on social sources to obtain some form of electronic cigarette product. To that end, he believes restricting certain products to adult-only locations will not stop social sources from helping enable underage usage. “Convenience stores go to great lengths to train their employees on restricting underage usage and purchasing. Our company has required quarterly training on proper procedures that include carding anyone who looks under 40, refusing a sale without a valid ID and refusing a sale if a customer mentions that the product is not for their use,” he pointed out. This past summer, 96.7 percent of retailers passed FDA-sponsored compliance checks by not selling an e-cigarette to an underage buyer. “I do not see how restricting sales in convenience stores will accomplish keeping product out of underage hands,” DiMambro said. Still, the category manager does see a case for regulation to combat youth usage. “Customers are willing to travel to where they can get what they want. If it is to another town or a smoke shop, adults will buy the product and potentially enable underage usage. To truly help with underage usage, I recommend restricting all online sales of nicotine products, raising the minimum age to 21 (no grandfathering) and making it illegal for anyone under the legal age to possess a nicotine product,” he explained. “We have similar restrictions and laws with alcohol and cannabis. Why not tobacco, too?” CSN

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What’s Hot on C-store Menus? The ampm Churro Donut stands out for high purchase intent, value and uniqueness NEARLY HALF of

OPERATOR: ampm ITEM TYPE: Limited-Time Offer DATE: December 2018 PRICE: 2 for $1 Wake up your taste buds with our new Churro Donut, a combination of the familiar flavors of a churro with a classic donut. Don’t snooze on your chance to try one! Come in today and get two for $1.

the limited-time offers (LTOs) that consumers tested in Datassential’s SCORES platform in December included a doughnut variety — and all led the field in Value rating. In particular, consumers ranked ampm’s Churro Donut in the 97th percentile for Value and the 98th percentile for Branded Purchase Intent.

Unique = Successful

that appeal to a wide spectrum of consumers across generations, genders and ethnicities, doughnuts are a mainstay in the all-important breakfast daypart. And, while the Churro Donut wins with everyone, that doesn’t mean you can’t also find success with another unique flavor.

Honorable Mentions Also in December, Casey’s General Stores’ Candy Cane Crunch Donut featured a holiday theme, unique flavor and visual impact in the bakery case. Maverik’s The North Hole Donut used a foundation of peppermint cake to deliver on the holiday theme. And GetGo offered three different Glazed Donut Breakfast Sandwiches showcasing indulgent, even over-the-top, builds including Bacon, Egg & Cheese between glazed doughnut halves. CSN

It’s not enough for shoppers just to see value and purchase intent, though. Today’s crowded marketplace rewards items that stand out with high Uniqueness ratings as well. The ampm Churro Donut is a triple threat, scoring in the 95th percentile in that category, too. Datassential predicts that global and ethnic flavors will continue to drive shopper interest — and traffic — in 2019. The churro is a great way to use safe experimentation to reach variety-hungry consumers.

Doughnuts for Everyone! As you look for offerings

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.

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

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The Next Level of Do-It-Yourself New advances in technology deliver higher quality with the labor savings of self-service By Angela Hanson IN SOME CIRCLES OF THE FOODSERVICE INDUSTRY,

full-service is automatically considered superior to self-service due to the mindset that personalized attention is associated with a better product. At convenience stores, however, made-to-order isn’t always the best bet, as some customers want to be in and out quickly, others want to do their own customization and some simply don’t see the need for made-to-order if the food or beverage they want is just as good self-serve. Also, for many c-store operators, self-serve is the best or only option because of external factors such as store space, costs and staffing. The good news for retailers committed to self-service is that food and beverage equipment manufacturers are upping their game. Self-serve is no longer an afterthought. More technologically advanced units are being created that put quality and customization in the customers’ hands, particularly when it comes to beverages.

Hot Dispensed Beverages The idea that c-stores must choose between

This year, Coca-Cola is giving its Freestyle fountain machine an upgrade with the addition of Bluetooth connectivity and a larger touchscreen.

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barista-staffed coffee programs and self-serve coffee that goes stale as it sits being heated for hours is false; for several years, the convenience channel has been closing the gap between regular java and gourmet coffee, according to industry research and reports from the National Coffee Association. Millennials and other young consumers in particular are open to touchscreen technology that lets them be their own baristas. Self-serve bean-to-cup coffee machines are capable of connecting the speed of technology with the quality of a fresh brew. “Consumers also appreciate the speed at which the coffee is brewed before their eyes,” said Curt Hilliard, vice president of sales and marketing for SEB Professional North America, which developed the Schaerer Coffee Art Bean-to-Cup platform. “Yes, it’s fresh and yes, it’s fast.” The platform was designed to serve 20-ounce hot or iced coffee in 45 seconds, while including tools useful to a retailer, including customer preferences, peak hours and service maintenance. Marketing opportunities, with Internet of Things-enabled technology, is coming in 2019.

“Customers appreciate a frictionless experience. They want to make their own decisions and offering a customized drink offering through a selection menu is the best way to deliver that choice,” Hilliard said. “All customers appreciate having a freshly brewed cup of coffee every time, just for them.”

Frozen Dispensed Beverages Retailers looking to offer frozen beverage options, either as indulgent treats or healthier beverages, can do so while letting customers serve themselves with smoothie machines. La Crosse, Wis.-based convenience store chain Kwik Trip Inc. recently partnered with Welbilt on Fresh Blends smoothie machines, which first rolled out at 30 test stores in 2018. The initial test period gave the companies the chance to improve the menu and make improvements to the software and hardware. “Customer response has been outstanding. Many comment that the drinks are coffee shop/barista quality,” said Paul Servais, retail foodservice director for Kwik Trip. “We have stores selling 100 a day already. A few stores have seen days over 200!” Servais believes the best self-service foodservice equipment is successful in two key areas:

• User Interface — “It has to be simple for our guests. All ages and generations need to be able to make a drink, grab a sandwich, etc.” • Reliability — “It has to work every time. Deliver the perfect drink every time.” Other self-serve frozen beverage options popular with c-store customers include the f’real blending machine that lets individuals select their favorite flavor and blend their own smoothie, milkshake or frozen coffee. Along with featuring the top ice cream flavors, f’real has partnered with popular brands such as Oreo and Reese’s for milkshake varieties.

Cold Dispensed Beverages The Coca-Cola Co. made waves in 2011, when it gave customers the ability to create hundreds of options by mixing and matching different dispensed beverages and flavorings. In 2019, Coca-Cola is giving

Kwik Trip recently put the Fresh Blends self-service smoothie machine from Welbilt in select stores.



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its Freestyle machine a tech update with the addition of Bluetooth connectivity. With the new Freestyle 9100 machine, when customers who have the Freestyle app on their smartphone come within range of the machine, the machine will recognize them and pour the custom mixed beverage they created ahead of time using the app. “It’s the ultimate in personalization,” said Eric Lewis, group director, marketing, Coca-Cola Freestyle. A larger touchscreen and LCD touch-to-pour button also make it easier for users to find and confirm their drink of choice. Plus, the addition of an optical sensor helps futureproof the Freestyle 9100 in advance of facial recognition to “enhance security access for employees and consumer movement tracking to accelerate screen transitions and improve transaction times.” Other cold beverage dispenser units on the

market help operators capitalize on the growing demand for healthier beverages, alternative flavors and non-carbonated drinks. For instance, PepsiCo Foodservice’s bubly Fountain is a four-head unit designed to offer the most popular flavors of its bubly sparkling water, which has no artificial flavors or sweeteners and zero calories. The expo halls at the 2018 National Restaurant Association Show and the 2018 NACS Show also featured a variety of branded and unbranded fountain units for aguas frescas, which are popular in Mexico and have begun surging in U.S. popularity in recent years. Lewis believes the future of dispensed beverages is a future with even more options for customers. “Consumers today want and expect more choice,” he said. “That’s why we’ve developed a new equipment option on the FS9100 that enables the addition of eight drink categories, including teas, juice drinks, lemonades, enhanced waters, sparkling water, flavored waters and sports drinks. We look forward to seeing how consumers respond to these expanded offerings. You might even find a cold-brew iced coffee on Freestyle someday.” CSN






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Beverage Bonanza With packaged beverage options at an all-time high, follow these tips to find the right mix By Renée M. Covino FROM NEW READY-TO-DRINK (RTD) coffees to infused teas to sparkling waters, packaged beverage options are at an all-time high, driven by innovation and consumer demand for variety.

“New products made up about 10 percent of overall category sales in 2018,” cited Peter Keaney, business analyst at Cadent Consulting Group, based in Connecticut. “We expect continued SKU proliferation and more niche items.” Beverage manufacturers have recognized that having diversity in their offering is critical. “Culturally, we’ve become so accustomed to having more choices than ever and from a consumer’s standpoint, beverages are low investment, low commitment,” explained Satoru Wakeshima, chief engagement officer at New York-based branding agency CBX. “It’s not a major decision and people like to try new things.” Wakeshima predicts 2019 will see more of the rising beverage trends and new product explosion seen in 2017 and 2018, but with greater blurring of product types — more hybrids. “Our expectations are higher than ever, and the bar continues to rise,” he said. How can convenience store operators manage the packaged beverages category in a way that capitalizes on new and emerging opportunities, but maintains efficiency?

Keaney and Wakeshima, along with other beverage experts, offer the following tips:

Allocate Intelligently Because the category cannot expand infinitely, especially within the limited confines of the convenience store format, space needs to be allocated intelligently, which includes scaling back in some areas. It’s a simple concept that is not always executed. “Reducing space for declining or slow-moving segments to make room for innovative or higher-velocity segments that attract shoppers to the store is the key to success,” Keaney told Convenience Store News. An example would be to reduce space for milk, where sales have been declining, to make space for more sparkling waters. The flip side of this strategy is to make packaged beverage displays available in unexpected places, such as outside the cooler doors, to sell limited case packs of warm beverages to attract shoppers and build basket ring.

Rotate Offerings With Marketing Support “People want to discover new beverages, but they also want to be reassured that they’re making a good choice,” said Wakeshima. “Educating customers at retail, mobile or online to aid the deselection process becomes the expectation.” Becoming the retailer known for carrying the newest innovative beverages is an opportunity, even if it’s in a smaller footprint, he advised.

Think Like Consumers Thinking like consumers means in terms of “need states” rather than subcategories, as this is how consumers shop, according to Keaney. Moving forward, the plethora of packaged beverage options could be rearranged in the cooler by needs. The NPD Group has identified four macro consumer needs: fueling, wellness, connecting and gratifying. These fundamental needs can then be broken down into more specific behaviors, known as need states. Examples of need states under fueling include “easy on-the-go” and “staying awake.” Meanwhile, need states under gratifying include “nostalgic drinks” and “morning drink favorites.”

Transform the Convenience Space Keaney highlights Pennsylvania-based convenience store chain Wawa Inc. as a great example of transformation in the convenience channel with its cleaner stores, stocking on-trend products and creating a destination for high-quality

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A Year of Innovation: Non-Alcoholic Beverage Launches in 2018

The Most Innovation-Driven Beverage Categories in 2018

# of new innovations by month

Categories with the most innovations in 2018

As of Dec. 8, 2018 Source: Nielsen Innovation Measurement Activity

Source: Nielsen Innovation Measurement Profiler

products, while improving its innovative loyalty program. “Packaged beverages should be a part of this transformation,” he said.

Think Ahead The pace of beverage change over the next several years is going to be even stronger, according to Keaney. This will be driven by strong performance in targeted segments, as well as new entrants. C-stores should be strategizing years out, as well as months. Wakeshima recalls how things quickly changed in 2017 when the energy drink market became oversaturated — resulting in the “really interesting” part of the category today: hybrids. Retailers need to adapt to up-to-the-minute trends as they forecast. “The hybrid drinks that have emerged in the past year crossover all different segments of beverages,” Wakeshima stated. “They’re able to offer consumers familiar flavor profiles, nutritional and/or functional benefits and fewer calories — and in many cases, provide these things naturally.”

like nitro cold brewed coffee. We’ll have to see how high CBD-infused beverages can fly.” Imbibe, a beverage development company, put CBD on its list of top beverage trend predictions for 2019. CBD, short for the cannabis plant extract cannabidiol, 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.

Accelerate the Shift Consumers are demanding more from their beverages beyond just refreshment; they are looking for functional benefits, too, noted Val Stalowir, CEO at Reed’s Inc., maker of Reed’s Ginger Beer and Virgil’s Handcrafted Sodas. Healthier, natural alternatives that appeal to the typical “Whole Foods Mom” are an opportunity for c-stores. Another convenience channel opportunity is the evolution of sustainability.

Keep Abreast of Beverage Trends

“It is growing more and more important in the minds of consumers, and I think it will continue to drive growth in the [beverage] category for c-stores that are on it,” said Jeff Farris, co-founder and co-CEO of Teazzers, which is working to leverage its new SmartBrew technology and institute some type of reusable container to show consumers how they can take a dispensed beverage product on the go — sustainably.

In addition to staying on top of the latest packaged beverage trends, retailers also should watch what’s trending outside the category, since trends often spill from one category into another eventually.

The younger millennial crowd is consciously moving away from RTD products because of the environmental footprint they leave behind, according to Farris.

The fastest-growing packaged beverage segments currently are sparkling water, energy drinks and RTD coffee, all which are up by double-digits recently, according to Keaney.

At a recent beverage industry conference, Bonnie Herzog, beverage analyst for Wells Fargo Securities LLC, observed that environmental sustainability was a key takeaway.

Still and sparkling water continue to be big as consumers seek alternatives to carbonated soft drinks, he added. “In addition, plant-based and probiotic beverages are driving sales, as well as functional beverages and innovations

“We were encouraged to see many beverage companies proactively addressing future governmental regulation and shifting consumer preferences by investing in sustainable packaging,” she said. CSN

C-store retailers need to think ahead alongside manufacturers as critical change is happening.

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Four Growing Candy Trends You Should Know About Sweetly profitable opportunities exist for c-store operators willing to evolve with consumers By Danielle Romano IF THERE’S ONE CONSIDERATION convenience

store retailers should make when it comes to their in-store confectionery offer, it’s that candy is no longer a onesize-fits-all category. Even though today’s consumers are indulging their sweet tooth with candy at a rate of two to three times a week, their product preferences are evolving. Factors such as enticement, leveraging the checkout, clear and simple signage, and promotions are no longer nice-to-haves when it comes to optimizing the candy category, but rather must-haves. Sweetly profitable opportunities exist for c-store operators who are willing to understand, evolve and guide consumers on their new in-store confectionery journey. For retailers, that journey begins by knowing the four hot growth trends in candy today:

1.Healthier Candy

Consumers’ growing demand for clean labels and transparency is not only affecting packaged foods, but also the snacking industry and candy market. While labels like these are subjective and vary in priority from consumer to consumer, according to Rockville, Md.based market research firm Packaged Facts, these labels generally mean: • Seeking out natural/organic and minimally processed products; • Avoiding artificial or GMO ingredients, controversial ingredients such as high fructose corn syrup, or specific allergens such as gluten or soy; • Demanding information on ingredient sourcing and processing, such as whether or not made in the United States; and • Addressing eco-consciousness and sustainability concerns. Healthy snack brands, including non-chocolate candy products, are growing well and often disproportionately to the overall market. However, these products still remain niche. “Non-chocolate candy is about indulgence and a sugar rush, and disproportionately appeals to children and younger adults. But there’s also plenty of opportunity to reach older adults as well,” said David Sprinkle, research director for Packaged Facts. “These consumers are increasingly looking for healthier, more nutritious indulgences and better-for-you candies and snacks that still taste good,” he continued. “As a result, we’re seeing greater focus placed on the creation of healthier candies that feature nutritious ingredients or inclusions such at nuts, seeds, botanicals and fruit.”

2.Chewy Candy

Product innovation has helped the chewy candy category see sales growth over the past six years, despite the fact that some consumers are eating less candy. Total U.S. sales of non-chocolate confectionery are estimated to have grown 15 percent since 2012, reaching an estimated $8 billion in 2018, driven by chewy candy — the fastest-growing segment, according to Chicago-based market research firm Mintel. Sales of chewy candy are estimated to have reached $4.3 billion in 2018, a 36-percent increase since 2012. New product development has helped the chewy candy segment see sales rise, as new product launches of chewy candy in the United States grew 83 percent over the last five years, according to Mintel’s Global New Products Database.


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“Chewy candy specifically has sugar-coated the category’s slowed growth as a result of strong innovation efforts from brands in the segment,” said Beth Bloom, associate director of food and drink, Mintel. “To increase consumption, non-chocolate confectionery brands should focus efforts on encouraging permissible indulgence through sugar reduction and adding premium offerings, such as new flavors and textures, to their product lineup.”

3.Premium Candy

As is true for most categories these days, consumers are seeking premium products and willing to pay more for them. Mintel found that more than three-quarters of chocolate buyers (76 percent) say it’s worth it to pay a little more money for premium chocolate. So, convenience store retailers need to up

their ante when it comes to premium offers. Among the top types of chocolate products buyers would like to see more of are: unique sweet flavors (31 percent); savory flavors (29 percent); and those with functional benefits, such as truffles with good fats (30 percent) and added protein (18 percent). And chocolate isn’t the only indulgence consumers are willing to pay a premium for. According to Mintel, non-chocolate confectionery eaters are more than twice as likely to say it’s important for non-chocolate candy to look indulgent (33 percent) than for it is for it to be low in sugar or contain no sugar (14 percent). What’s more: Less than one in five candy eaters (18 percent) say they read the nutritional information on non-chocolate confectionery. Because of this premiumization movement, the U.S. chocolate candy market is mature yet growing. Packaged Facts estimates that total retail dollar sales in the U.S. chocolate candy market

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reached $23 billion in 2018, with sales increasing at a compound annual growth rate (CAGR) of more than 2 percent between 2013 and 2018. “The chocolate market is indisputably dynamic with a strong pace of innovation, an influx of creative new players and a steady flow of new products that engage diverse groups of consumers,” said Sprinkle. “There remains consumer devotion to confectionery products and the role of chocolate candy in particular as an accessible luxury, creating many opportunities to trade consumers up to premium products.”

4.Bite-Sized Candy

Consumers are looking to indulge, while remaining committed to their health and wellness goals. Recent research from Mintel revealed that nine out of 10 chocolate buyers agree it’s OK to indulge occasionally in a sweet treat vs. 63 percent who say it’s important to limit chocolate consumption. The solution? Bite-sized varieties. Three-quarters of consumers say that single-serving or bite-sized chocolate is a good way to cut back on the sweet stuff. Mintel predicts that demand for more chocolate in mini-sized bars and

bites will continue to rise in the future. “Chocolate confectionery is available in nearly infinite forms, flavors and combinations, but many chocolate purchasers gravitate to what they know. While bite-sized chocolate may get credit for being a good way to limit consumption, the munchability and shareability of mini-sized products might actually make the form a good way to drive increased consumption with consumers reaching for an extra handful,” noted Mintel Senior Food and Drink Analyst John Owen. “Chocolate’s continued sales growth signals that consumers remain open to small treats, even as they strive to eat healthier overall. Its status as a permissible indulgence and unique craveability give chocolate ample room for further growth and premiumization,” he added. CSN


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ARE YOU LEVERAGING THE LOYALTY GOLD MINE? C-store retailers can dig deeper into their program data for insights to drive more traffic and sales By Renée M. Covino ARMED WITH LOYALTY PROGRAMS, convenience store retailers are collecting more data on their customers than ever before and the reasoning behind it is clear to data experts.

“It’s imperative to use loyalty data to retain customers since it’s seven times more expensive to acquire a new customer than it is to encourage a visit from an existing customer,” said Zach Goldstein, CEO of digital customer engagement platform Thanx. Collecting data, though, is just the first step. The real results come when retailers dig deep into their loyalty program data and uncover insights to drive more traffic and sales. Loyalty data such as date of purchase, items purchased, location of purchase and customer loyalty ID should be enriched with demographic data, weather data and category-specific data sets, “so any data mining or analytics efforts deliver rounded and well-defined insights,” advised Scott Jennings, director of market development, retail and services sector for Qlik, a data analytics company. “This can be a particular challenge for convenience store chains that have grown rapidly through acquisition, which typically implies the valuable customer shopping patterns

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and preferences are stored across many disparate legacy systems,” he noted. Forward-thinking c-store operators engage the entire organization in the data mining process. “Chains can leverage customer shopping patterns to better understand many different aspects of their business, including modernization efforts like new fresh food offerings or store refacing initiatives,” stated Jennings. “Too many retailers forget to use the data as a common foundation of strategy across the organization.” Jennings points to MAPCO Express Inc. as a great example of a convenience store chain that leverages customer buying behavior to improve the customer experience. “Understanding buying behavior allows us to see where we need to market and find a way to bring customers into stores,” said Wade Sims, senior developer for BI (business intelligence) at MAPCO, which was recently acquired by Chile-based COPEC. “We can look at customers who bought competing products, for example, and target them with a coupon online for one of our private label products,” Sims added. “This allows

us to provide our customers a better value and overall experience, while improving our store performance.” Retailers who want to stay on top of data mining need data and analytics platforms that allow for data capture across all applicable channels — point-of-sale (POS), e-commerce, mobile app, social media, etc. — and have the capability to collect data “for all consumer-tracked actions, not just customer purchases,” according to Mona Patel, director of product strategy at Birst, a cloud BI tool and business analytics software platform. “The latest customer data being collected is around customer engagement, which includes customer preferences and data metrics that help define a customer’s emotional sentiment,” Patel told Convenience Store News. One of the best ways to drive more traffic and sales is by using loyalty data for predictive actions, she believes. “A common example is using predictive capabilities to determine when customer attrition is about to occur,” she said. “With this prediction, retailers can send targeted, personalized communications and offers to different customer segments, based on their past purchase cycles and frequency.”

Getting Personal Personalization is at the heart of loyalty programs today. C-store loyalty programs are taking “massive strides from mere earn and burn, one-size-fits-all to more personalized and feedback-driven programs,” said Phani Meduri, director of product management for Riversand, a data sciences research team and provider of data management solutions. “They are leveraging customer analytics to identify the high-value customers with the highest propensity of churn and driving personalized engagements.” Meduri offers up NOCO Express, operator of 39 convenience stores throughout western New York, as a prime

example of this. Using data collected through its loyalty program, NOCO recently launched a campaign where 700 gas-only customers were offered a free bottle of water. “The chain saw a 40-percent redemption rate,” Meduri reported. “Segmentation as an end” is another trending data mining strategy that c-stores may want to consider. The old catchphrase, “Start with the data,” is actually a good recipe for analysis paralysis, cautioned Joshua Feng, director of strategy and analytics at SessionM, which offers a full suite of technology for a customized loyalty marketing solution. “Instead, a more effective approach is to first understand your context — such as goals, market dynamics, existing knowledge within the organization — then develop hypotheses, and use data to validate or invalidate those hypotheses,” he told CSNews. “If you don’t know where you want to end up, it’s highly unlikely you’ll end up there in an efficient manner.” Unlike traditional segmentation (means to an end), segmentation as an end is the idea that segments are not predetermined, but rather based on optimized outcomes. “For example, we have four offers that are available to send to customers. Instead of creating segments based on, say, purchase frequency and assigning one of the offers to each segment, we could forecast which offers would generate the most impact (e.g., incremental revenue) on a per-customer level and assign the best offer to each customer,” Feng explained. The resulting division in Feng’s example would be four segments: those who get offer No. 1, those who get offer No. 2, and so on. “We call this ‘segmentation as an end’ because the segments are already aligned with the correct action to take for that segment,” he said.


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THE DOS & DON’TS OF DATA Zach Goldstein, CEO of digital customer engagement platform Thanx, outlines what a forward-thinking convenience store retailer should do and not do when utilizing loyalty data insights to drive more traffic and sales.

DO: Identify VIP customers by capturing loyal customer data to attract high lifetime value. Make it effortless — use a phone number or email as a “loyalty card” because customers frequently forget plastic reward cards, causing retailers to lose valuable customer insights and data. Alternatively, use the credit or debit card as a “loyalty card,” removing all the hurdles by linking the entire loyalty experience to any credit or debit card. Retain customers by marketing effectively through tailored campaigns and knowing how your customers prefer to engage at the right time — i.e., through SMS offers vs. email offers. Ask for feedback — when retailers solicit and respond to customer feedback, the consumer is more likely to return. The feedback also provides valuable insights. Incentivize customers to return to drive a high customer lifetime value.

Action-oriented analysis with the end goal in mind is likewise touted by Don Stuart, managing partner at Cadent Consulting Group, based in Wilton, Conn. Incentivizing customers to buy more of the same item in an expandable consumption category, such as beverages, is the “end goal” example he offers. Conversely, he warns retailers against searching for a needle in a haystack.

“Understanding buying behavior allows us to see where we need to market and find a way to bring customers into stores.”

Use a holistic platform that allows brands to seamlessly interact with shoppers while assessing a wide range of data from the initial contact to point of purchase.

— Wade Sims, MAPCO

Use cost-efficient A/B testing to see what campaigns resonate with customers and deliver the best return on investment.

“Databases are enormous; the amount of data collected by basket, by household over time can get huge and retailers can get lost in the analysis,” Stuart said. “They have to begin with the end in mind.”

Be transparent by telling customers that you are using their data to deliver better products and deals based on their specific interests.

DON’T: Make your loyalty system overly complicated by asking for too much detailed information from customers (or else you risk fewer users signing up). Use generic marketing; it will be a wasted effort of both time and money that will not grab the attention of today’s customers. Rely only on rewards and incentives; instead, engage with customers through every touchpoint available (i.e., social media, email, SMS, in-person). Use click rates as a true measurement for the success of a loyalty program; measure success by the most important metric — dollars spent. Offer rewards that are unattainable within a reasonable amount of time.

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The Future of Data Mining What do the experts think the future of loyalty program data mining will look like? Patel of Birst predicts that machine learning and other artificial intelligence (AI) disciplines will play a big role in loyalty programs of the future. This will enable better-timed and more personalized triggers to customers as they move through their engagement cycle, she said, noting that platforms that combine machine learning capabilities with loyalty functioning can start to incorporate non-loyalty data, which can help determine customer sentiment. “For example, overlaying historical weather data with the purchase history will help predict which future promotions and offers will work with the two-week weather forecast,” Patel told CSNews.

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in choosing their own rewards.” Similarly, Goldstein of Thanx believes that data science, machine learning, natural language processing and more advanced technologies are “lowering the burden for personalization and relevance.” Pointing out that these were previously the exclusive purview of national brands such as Starbucks, Goldstein sees the future moving away from generic, blanket promotions and toward deep personalization — even for smaller businesses and retailers. Another change likely to occur in the future will be in the format of the offer. “Customers may prefer different forms of rewards or incentives at different times,” said Patel. “Machine learning can help predict which form best suits the customer’s current sentiment, and more flexible loyalty capabilities may even allow customers to participate

“The outcome is good for consumers, who demand far more relevance in their brand interactions, and good for merchants, who can expect higher engagement and, as a result, greater incremental revenue,” Goldstein stated. “In many ways, this evolution is just mirroring what we have seen from e-commerce companies over the last decade as online advertising has used previous purchasing information and increasingly accessible demographic or psychographic

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data to send the right message to the right person at the right time. Offline businesses are now able to catch up thanks to these modern technologies and their mainstream availability within market-leading customer engagement, CRM and marketing automation platforms.” Along these same lines, Feng expects traditional marketing calendars — those planned out a year in advance — to be replaced in the future with more flexible calendars that adapt with the learnings generated from previously run campaigns.

Privacy Matters With so much focus on data collection and analysis, c-store retailers should be aware that issues around customer data/ privacy could become a bigger challenge for U.S. retailers. Loyalty programs need personally identifiable information (PII), raising issues of various PII regulations. The issues roughly break down to: consent to collect the data (most/all loyalty programs are opt-in); and how the data can be processed (what can be done with the data once it is collected.) For most forms of consent, you need to declare at consent time what the data will be used for. The European Union (EU) and various U.S. state regulations also have requirements to be able to see the data collected, change it if wrong and have it deleted if you no longer wish to participate. The best way to deal with the myriad regulations, according to Patel, is to assume the General Data Protection Regulation (GDPR), implemented in the EU in May 2018, as the baseline. “Make sure your privacy programs meet the requirements of GDPR. The biggest challenge is that customers want a personal relationship with retailers, but they don’t want it to be intrusive,” she said, adding that the line between personalized and intrusive is different for each customer and doesn’t always align with the letter of the law. So, while the U.S. may currently have different privacy laws than Europe, the “fundamental human response to our age of

data is the same,” Patel concluded. “Retailers need to ensure they always operate within the letter and spirit of the laws of the lands where they operate, but are best-advised to always keep the customer’s interest in mind while collecting data.” CSN




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Convenience on the Go The Hy-Vee Fast & Fresh convenience store-grocery hybrid caters to customers on the move By Danielle Romano The new concept is similar to a traditional c-store, but unique in that it also functions as a smaller-scale grocery store.

Grocery and convenience store retailer Hy-Vee Inc. combined elements of what it knows best — supermarkets and c-stores — to introduce its newest concept: Hy-Vee Fast & Fresh. Making its debut in Davenport, Iowa, in December, Hy-Vee Fast & Fresh is similar to a c-store in that it has fuel pumps and grab-and-go items, but it is unique because it also functions as a smaller-scale grocery store, according to Hy-Vee Director of Public Relations Christina Gayman.

At a Glance

Hy-Vee Fast & Fresh Location: 3200 East Kimberly Road, Davenport, Iowa Size: 10,000 square feet Unique features: Grocery items, Hy-Vee Mealtime Kits, 14 fuel pumps, a drive-thru Starbucks, Hy-Vee Aisles Online Click-and-Collect Lockers

“Hy-Vee Fast & Fresh stores are a new concept intended to serve the busy customer who needs a more convenient grocery and meal experience while on the go,” Gayman explained.

Fresh Food Focused Plans for Hy-Vee’s Fast & Fresh concept began taking shape in fall 2017 as the Iowa-based retailer looked to bring more fresh food offerings across its eight-state operating region. Hy-Vee set its sights on two locations in the Des Moines metropolitan area, where the company is headquartered. Its plans called for 10,000-square-foot-plus convenience stores offering grocery items, fresh prepared food, a coffee shop and fuel station.

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More than a year later, on Dec. 11, 2018, the first Hy-Vee Fast & Fresh store began welcoming customers. Open Monday through Sunday, from 5 a.m. to 11 p.m., the Davenport location offers grocery products, including pantry items and frozen items, as well as a selection of fresh produce, dairy, meat and bakery goods such as doughnuts. For customers who are on the move, the concept store provides made-to-order meals for carryout or dine-in, take-and-heat meal options, and Hy-Vee Mealtime Kits that include fresh ingredients and simple instructions so shoppers can make chefinspired meals at home. Nori Sushi and Mia Pizza are also available. The latter enables Hy-Vee Fast & Fresh customers to create their own pizza that is quickly prepared and heated in a woodfire oven. Looking at the beverage side of the business, Hy-Vee Fast & Fresh features a fountain drink wall, wine and spirits section, and a growler craft beer station offering 12 varieties. “We look for unique, local brews that customers can’t purchase in a bottle or can,” Gayman said of the growler station.

Among the store’s hybrid offerings are Mealtime Kits, a wine and spirits section, a fountain drink wall and a full-size Starbucks coffee shop.

Other amenities include 14 fuel pumps and a full-size Starbucks. The quick-service coffee shop measures 1,200 square feet, is open Monday through Sunday from 5 a.m. to 9 p.m., and features a drive-thru. Furthering its commitment to deliver convenience on the go, the Davenport Hy-Vee Fast & Fresh is equipped with Hy-Vee Aisles Online Click-and-Collect Lockers. Providing the convenience of online shopping with the product selection and service of a Hy-Vee store, the lockers are secure, self-service kiosks that allow for grocery pickup at a time that best works for the customer. According to Gayman, ordering and pickup is easy: • Customers visit the Hy-Vee Aisles Online website to place their order. If they do not have an account, they can easily create one; • Customers select the Davenport Fast & Fresh locker location for pickup; • Once the checkout process is completed, customers are emailed an access code; and • When customers are ready to pick up their order, they enter that code using the computer terminal at the lockers and their assigned locker doors open.

Future in Sight A second Hy-Vee Fast & Fresh store is slated to open this year in Altoona, Iowa. This location will also measure 10,000 square feet. Gayman confirmed to Convenience Store News that Hy-Vee intends to open additional Fast & Fresh stores, but said she could not confirm their size or locations.

“Hy-Vee Fast & Fresh stores are a new concept intended to serve the busy customer who needs a more convenient grocery and meal experience while on the go.” — Christina Gayman, Hy-Vee Inc.

Hy-Vee currently operates 249 supermarkets and 150 convenience stores in Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, South Dakota and Wisconsin. CSN


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Jenny Bullard, Conexxus The 2015 TWIC Woman of the Year has found that respect comes from listening and learning By Linda Lisanti NOW IN ITS SIXTH YEAR,

the Convenience Store News Top Women in Convenience (TWIC) awards program has recognized more than 200 of the best and brightest women making a positive impact on not only the companies they work for, but also the entire convenience retail channel.

TWIC is the only program that recognizes exceptional female leaders, rising stars and mentors among retailer, supplier and distributor firms in the convenience store industry, from the C-suite to the store level to the independent entrepreneur. In TWIC Talk, our bimonthly Q&A series, we interview a past TWIC winner about what it’s like to be a female leader in the convenience store industry today — the opportunities, the challenges — and get their words of wisdom for up-and-comers seeking to blaze their own trail.

were store-level employees who are at the heart of making a difference in the profitability and success of a company. As I attend the Convenient Store News TWIC recognition reception each year, I am grateful and excited to see more and more store-level management women being honored. Along your career path, did you personally experience gender bias or inequality? If so, how did you overcome? Working for many years in this industry, I was one of the first females in our company to be part of the executive team, which at that time was predominately male. This executive team represented all departments in the company — marketing, finance, operations, etc. To overcome and earn the group’s respect, my goal was to gain knowledge about all aspects of the company and be able to contribute to each department’s goals. This became a path of understanding that ran both ways. By listening and learning from other executives at the table, I was able to gain their respect as a contributor to the overall success of our company and along the way, it became a mutual understanding and respect from me to learn and understand the challenges that each of them faced in their positions.

This month’s TWIC Talk subject is Jenny Bullard, former chief information officer at Flash Foods and now manager of member engagement at Conexxus, a nonprofit organization dedicated to standards, technology innovation and advocacy for the convenience industry. In 2015, Bullard was one of the five women celebrated by TWIC as Women of the Year. How would you describe the current state of affairs for gender equality in the convenience store industry? How does this compare to 10 years ago? As I attend conferences around our industry, the equality of men to women attending these events is much closer. As more women become part of this industry, they have been challenged and excited about what they can accomplish for their companies. Seeing examples of women in the retail segment who have been able to grow and be recognized makes the challenge worthwhile and attainable. What is the most positive change you have personally witnessed? Positive change has been the recognition of women at all levels in the c-store industry. In my career, I have had the privilege to work alongside some remarkable women. Many of those

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What barriers to advancement do you see still existing in the c-store industry? Today, no barriers. If you have the passion to learn and accept the challenge of working in the retail environment, the advancement for career opportunities will be there. What is your advice for other industry women looking to rise to higher ranks? Perseverance — this has been my “go-to state of mind” in my career. Certainly don’t give up, learn from the experiences good or bad, and continue to contribute your best to the job at hand and the future. Most importantly, find a mentor in your company or the industry to share your thoughts and experiences. The encouragement from this mentor will give you the courage and grit needed to be successful and excel in your career. CSN

Caetlyn Roberts Giant Food

Great companies need great women


ntry and mid-level women are leaving our industry at nearly twice the rate of men — senior-level women are leaving at nearly four times the rate of men.* NEW provides solutions that retain and develop great women leaders. Our learning programs, career development, conferences and local events help tens of thousands of women advance each year. Our insights, best practices and advocacy help transform organizations and create a better industry workplace for all. Join our movement today at newonline.org. * Download our report

The Female Leadership Crisis Why women are leaving (and what we can do about it) newonline.org/crisis

Advancing all women. It’s just good business.


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Pet Treats




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Grab N Go Chocolates

General Merchandise

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Gourmet Pet Treats

Age Verifier

Flavored Cone Leaf


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Credit Card Processing / Merchant Services


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Air Vacs

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Credit Card Processing / Merchant Services


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Air Vacs

General Merchandise

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Health and Beauty Care


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C-Store Recruiters

E- Cig Accesorries

Coffee and Tea Services







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Credit Card Processors

Age Verifier


Help Wanted


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Equipment / Supplies

Equipment / Supplies


Equipment / Supplies

Wholesale Refrigeration

ADINDEX ADD Systems ......................................................... 13 Altria Group Distribution ..................................... 2-3 Autofry/MTI Inc. ..................................................... 53 Blu E-Cigs ................................................................. 35 Calico Brands ........................................................... 61 Cheyenne International ...................................... 43 Cookies United ........................................................ 9 E-Alternative Solutions ....................................... 45 Forte Products ........................................................ 54 GT’s Foods ................................................................ 57 Harris Tea ................................................................. 15 Hughes Network Systems ................................. 5 Imageworks Display & Marketing Group ....... 11 ITG Brands ................................................................ 55 John Middleton Company ................................. 27 JUUL Labs ................................................................. Back Cover Liggett Vector Brands ........................................... 49 National Confectioners Association ................ 60 Premier Manufacturing ....................................... 41, 47 Paytronix .................................................................. 19-22 Procter & Gamble Distributing Company ...... 7 Swedish Match North America LLC ................. 29, 39, 87 Swisher International ........................................... 33, 51 Uline ............................................................................. 67 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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What Do C-store Shoppers Think About Enhanced Convenience? Consumers were asked to provide feedback on various “convenient” shopping options, from home delivery to frictionless checkout Just having a convenient location is not enough these days to attract or retain shoppers. “Enhanced convenience” is the next frontier. Think home delivery, curbside pickup, drive-thru, frictionless checkout, mobile payment and more. EIQ Research Solutions, sister company of Convenience Store News, surveyed 1,000-plus convenience store shoppers in January 2019 to determine their interest and likelihood to use different shopping options when frequenting convenience stores, and explore differences in competitive retail channels.

How does behavior vary by store type when trying experiences that are intended to make shopping more convenient? % of Shoppers Who Have Tried at Least Once

Store Types Where Most Frequently Tried (%)

Key Takeaway Ironically, convenience store shoppers are experiencing items intended to improve “convenience” at other store types. The only item where c-store is at parity is in use of mobile payment apps. Mass merchandisers appear to be leading the way in providing shoppers with opportunities to shop beyond the traditional in-store register.

Trial is one thing, but how satisfied are shoppers when they experience these “convenient” services in different retail channels? Top 2 Box Satisfaction With Experience by Store Type (% Very Satisfied/Satisfied)

Key Takeaway Not only do Mass, Grocery and Fast Food lead in offering services, shoppers indicate higher satisfaction with their experiences in these channels. However, it’s a small gap, for the most part, that c-stores can close by optimizing delivery of these services and ensuring that technology platforms and staff are trained to consistently execute.

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.

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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 1,000-plus convenience store shoppers in January 2019

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FRESHLY BAKED F O R M O R E I N F O R M AT I O N CO N TAC T YO U R SW E D I S H M ATC H R E P R E S E N TAT I V E 8 0 0 -3 67- 3 67 7 • C U STO M E R S E RV I C E @ S M N A .CO M

G A M E C I G A R S .CO M © 2018 SMCI Holding, Inc.

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

SOUTHERN TOBACCO Designed for adult smokers. Not for sale to minors. NOT FOR SALE TO MINORS: This is an age-restricted product and age verification is required at sale. CALIFORNIA PROPOSITION 65 WARNING: This product contains chemicals known to the State of California to cause cancer and birth defects or other reproductive harm. © 2018 JUUL Labs, Inc. All rights reserved.

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