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

2 Great Tropical Flavors ©2020 Living Essentials Marketing, LLC. All rights reserved.

FEBRUARY 2020|CSNEWS.COM


3 Great Displays

Order today! Shoppers will be encouraged to try both flavors and vote for a chance to win a trip to the tropics. Offer ends 7/31/20. Terms apply. See www.5HEwin.com for details. Advertising support runs from February to May 2020. Availability ends June 15, 2020.

www.5hourenergy.com/trade100 • email: trade@fivehour.com


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

AN UNCERTAIN

FUTURE With new regulations pushing some vapor products out of the market, the convenience channel must adjust to a new normal.

ARE YOU EMV READY AT THE PUMP?

FEBRUARY 2020 CSNEWS.COM


The future of our industry is about innovation, products with the potential to reduce harm and adult consumer choice. Through our companies and strategic partners, we’ve invested in the most compelling portfolio of non-combustible products. We strive to give adult consumers the choices they want today — and invest and develop products for tomorrow.

Servicing: Servicing: Philip Morris Philip USA Morris USA U.S. Smokeless U.S. Smokeless TobaccoTobacco Company Company John Middleton John Middleton Nu MarkNu Mark Nat Sherman Nat Sherman

©2020 Altria Group Distribution Company | For Trade Purposes Only

3144_ReducingRisk_ExpandingChoiceAd_City_CSNews_MECH.indd 1

12/9/19 10:21 AM


VIEWPOINT

Under the Thumb More government regulation likely in 2020, especially for the tobacco category EVEN FOR A RETAIL CHANNEL beset with probably the highest degree of government regulation of any other retailer, the amount of federal, state and local interference in the way convenience stores sell tobacco products has reached an all-time high. That’s not to say the heat is off such issues as labor, energy, alcohol and food regulation. But, of the top 10 legislative and regulatory articles last year on CSNews.com, eight were about tobacco, e-cigarette or vape product regulation.

And our just completed 2020 Forecast Study (published in our January 2020 issue) reported that c-store retailers anticipate tobacco and e-cigarette regulation having the second biggest impact on their sales and profits this year, after motor fuel prices. While the Trump administration has been a breath of fresh air when it comes to reducing federal regulation on most businesses (it’s been reported that approximately five regulations have been eliminated for every one new regulation created), this anti-regulation trend hasn’t applied to the tobacco industry. Just last month, the Food and Drug Administration announced a ban on flavored e-cigarette and vapor cartridges, with the exception of menthol and tobacco flavored products. President Trump also signed a new spending package that prohibits the sale of cigarettes and e-cigarettes to anyone under the age of 21. No wonder c-store retailers are concerned about the future of the highest sales-producing category within their stores. Cigarettes and other tobacco products

(including e-cigs and vape) represent more than a third of in-store sales, according to the 2019 Convenience Store News Industry Report. A Gallup poll conducted late last year found that Americans are expressing slightly greater support for a more activist government. Since 2010, the percentage of Americans saying government should do more to solve the country’s problems has increased 11 percentage points, to 47 percent, and the percentage wanting government to take active steps to improve people’s lives is up eight points, to 42 percent. So, the momentum is clearly in favor of more regulation at the federal, state and local levels. A degree of government regulation is needed and expected, especially for a product with the health risks associated with tobacco and cigarettes. Unfortunately, our government and media are portraying e-cigarettes and vape products as a health crisis based on a relatively low number of health incidents. E-cigs let people consume nicotine without burning tobacco. They aren’t without their risks, but scientists say they are far less harmful than smoking. If more smokers switched to e-cigs, millions of lives would be saved. This is a message convenience industry retailers need to tell to their federal, state and local government representatives. For comments, please contact Don Longo, Editorial Director, at (201) 855-7606 or dlongo@ensembleiq.com.

EDITORIAL EXCELLENCE AWARDS (2013-2020)

EDITORIAL ADVISORY BOARD Brett Atherton Bolla Management

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

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

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

Rick Crawford Green Valley Grocery Edward Davidson ER Davidson & Associates (7-Eleven Inc., retired) Jim Hachtel Eby-Brown Co. Chris Hartman Rutter’s Ray Johnson Speedee Mart

2015 American Society of Business Press Editors, National Azbee Awards Silver, Best Profile (long form), February 2014

Ruth Ann Lilly GPM Investments Danielle Mattiussi Maverik Inc. Vito Maurici McLane Co. Inc. Jonathan Polonsky Plaid Pantries Inc. Greg Scriver Kwik Trip Inc. Bill Stein Core-Mark Roy Strasburger StrasGlobal

Jack Lewis GPM Midwest

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

Laura Aufleger OnCue Express

Joe Lewis ExtraMile Convenience Stores

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

F E B RUARY

20 20

Convenience Store News

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CONTENTS FEB 20

VOLUME 56 N UMB ER 2

32

28 66

FEATURES

DEPARTMENTS

TWIC TRAILBLAZERS

COVER STORY

VIEWPOINT

32 An Uncertain Future With new regulations pushing some vapor products out of the market, the convenience channel must adjust to a new normal.

3 Under the Thumb More government regulation likely in 2020, especially for the tobacco category.

64 A Corporate Champion Casey’s General Stores is honored for advancing gender parity in the boardroom.

SPECIAL SERIES ON MOBILE ORDERING

19 The Digitization of Dining Mobile ordering and delivery are making c-store foodservice more convenient, especially for tech-savvy young adults.

10 CSNews Online OUT & ABOUT

23 Overcoming Challenges With Technology NRF 2020 Vision: Retail’s Big Show & Expo highlighted solutions for hotbutton issues.

STORE SPOTLIGHT

66 Hometown Homage Wawa’s newest Philadelphia store is a food-focused destination for on-the-go customers. INSIDE THE CONSUMER MIND

82 Finding Favor With Younger Consumers Millennials and members of Generation Z bring unique shopping perspectives.

26 New Products SMALL OPERATOR

28 Great Training: The Best Defense to Getting Busted Inform and empower your store team to make the right decisions around restricted products.

26 4 Convenience Store News C S N E W S . c o m

23


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CONTENTS FEB 20

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12

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

Don Longo dlongo@ensembleiq.com

Editor-in-Chief (201) 855-7608

Linda Lisanti llisanti@ensembleiq.com

Senior News Editor (201) 855-7618

Melissa Kress mkress@ensembleiq.com

Associate Editor (201) 855-7619

INDUSTRY ROUNDUP 12 Wawa Reports Massive Data Breach 14 Federal Tobacco Purchasing Age Increases to 21 14 Fast Facts 16 Eye on Growth 16 Seen on Social Media 18 Retailer Tidbits 18 Supplier Tidbits HOW TO 46 Get Foot Traffic Flowing Again Foot traffic at convenience stores has been largely stagnant for the past five years.

46

CATEGORY MANAGEMENT FOODSERVICE

54 Trendspotting for 2020 It’s time to dive into the next era of trends. FOODSERVICE

55 Pouring Out Profits The latest innovations in dispensed beverage equipment help c-stores cater to consumer tastes while keeping operations efficient.

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

Ron Lowy rlowy@ensembleiq.com

Associate Publisher & Midwest Sales Manager Kelly Fischer (773) 992-4464 kfischer@ensembleiq.com Account Executive & Classified Advertising Terry Kanganis (201) 855-7615 tkanganis@ensembleiq.com Classified Production Manager Mary Beth Medley (856) 809-0050 marybeth@marybethmedley.com EVENTS

PACKAGED BEVERAGES

58 Beverages With Benefits Various factors are contributing to the boom of functional beverages.

Executive Vice President, Events & Conferences Ed Several (860) 830-8321 eseveral@ensembleiq.com AUDIENCE List Rental (847) 492-1350 ext.318

MeritDirect Elizabeth Jackson

Subscriber Services/Single-Copy Purchases Omeda (847) 564-1468 CVN@Omeda.com

TECHNOLOGY

PROJECT MANAGEMENT/PRODUCTION/ART

61 Achieving EMV Compliance The deadline for compliance at the pump is looming and while some retailers won’t make it in time, there are options to mitigate liability.

Creative Director (973) 607-1320

Vice President, Production (877) 687-7321

Derek Estey destey@ensembleiq.com Colette Magliaro cmagliaro@ensembleiq.com

Advertising/Production Manager (773) 992-4418

Ed Ward eward@ensembleiq.com

Art Director (973) 607-1321

Lauren DiMeo ldimeo@ensembleiq.com

CORPORATE OFFICERS Chief Executive Officer Jennifer Litterick Chief Financial Officer Dan McCarthy Chief Innovation Officer Tanner Van Dusen Chief Human Resources Officer Ann Jadown Executive Vice President, Events & Conferences Ed Several

CONVENIENCE STORE NEWS AFFILIATIONS Premier Trade Press Exhibitor

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

Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by EnsembleIQ, 8550 W. Bryn Mawr Ave., Ste. 200, Chicago, IL 60631. Subscription rates: $125 for U.S. addresses; $190 for Canadian addresses; $275 for all other addresses. Single copies (pre-paid only): $20 in the U.S. Foreign single copy sales (pre-paid only): $85.00. Periodical postage paid at Chicago, IL 60631, and additional mailing addresses. Copyright 2020 by EnsembleIQ. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or information storage and retrieval system, without permission in writing from the publisher. Reprints, permissions and licensing, please contact Wright’s Media at ensembleiq@wrightsmedia.com or (877) 652-5295. POSTMASTER: send address changes to Convenience Store News, PO Box 3200, Northbrook IL 60065-3200.

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


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2 Great Tropical Flavors Strawberry Banana & Tropical Burst ORDER TODAY! Shoppers will be encouraged to try both flavors and vote for a chance to win a trip to the tropics. Offer ends 7/31/20. Terms apply. See www.5hewin.com for details.

Advertising support runs from February to May 2020. Availability ends June 15, 2020.

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2. Keep displays full and clean looking. Out of stocks on any flavor have a huge negative impact on sales. 3. Clearly advertised pricing and multi-unit discounts.

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www.5hourenergy.com/trade100 • email: trade@fivehour.com Individual results may vary. See www.5hourenergy.com for more details. Regular Strength 5-hour ENERGY® shots contain caffeine comparable to a cup of the leading premium coffee. Extra Strength 5-hour ENERGY® shots contain caffeine comparable to 12 ounces of the leading premium coffee. Limit caffeine products to avoid nervousness, sleeplessness, and occasional rapid heartbeat. ©2020 Living Essentials Marketing, LLC. All rights reserved.


CSNEWS ONLINE

TOP VIEWED STORIES

1

Dollar General to Accelerate Store Count Growth in 2020

Dollar General Corp. plans to open 1,000 stores in 2020, up from 975 in 2019. It also will undertake 1,500 mature store remodels and 80 store relocations. The retailer announced its expansion plans during its third-quarter earnings call, during which it also reported its best quarterly same-store sales rise in nearly five years.

2

GPM to Expand Into 10 New States by Acquiring Empire Petroleum Partners

The transaction will add more than 225 controlled locations, including 77 retail-operated sites, and expand GPM’s operations into 10 more states. The combined entity will distribute 2.5 billion gallons of fuel annually across more than 2,800 sites in 33 states and Washington, D.C.

3

7-Eleven Debuts New Proprietary Brand for 200-Plus Nonfood Items

4

Nielsen Crowns 2019’s Top 25 Innovative New Products

7-Eleven Inc. is launching a line of 200-plus nonfood items under a new 24/7 LIFE by 7-Eleven proprietary brand name. The line spans electronic accessories, over-the-counter medications, health and beauty aids, cleaning supplies, paper goods, office supplies, wine accessories, travel-size toiletries and more.

Nielsen Global Connect honored a variety of consumer packaged goods (CPGs) as its Top 25 Breakthrough Innovation winners for 2019. The year’s list, which recognizes innovation and global success within the CPG space, demonstrated the steady growth and diversification that mirrors the shifting tides of today’s consumer landscape, according to Nielsen.

5

2020 Ushers In Minimum Wage Increases Across the U.S.

The new year brought with it a slew of minimum wage increases across the United States. Twenty-six states implemented $1 or more increases as they rang in 2020.

EXPERT VIEWPOINT: Overcoming Common C-store Waste Management Challenges For busy convenience store operators, developing and executing an effective waste management strategy can be overwhelming. Whether you’re running a few convenience stores or have locations nationwide, you have a great deal of responsibility to keep your operations running smoothly, writes Michael Hess, founder, president and CEO of Waste Harmonics. While it may not always fall at the top of the priority list, waste management is a critical component of your business. Working with a managed waste service provider can save you time, money and stress by identifying waste needs, boosting efficiencies and using the latest technology to help you have a clear snapshot of your waste management program, no matter how many locations you have.

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

ONLINE EXCLUSIVE

VIDEO: Hear From the 2019 Foodservice Innovators of the Year Innovation is a focus shared by all of the convenience store retailers selected as winners in Convenience Store News’ 2019 Foodservice Innovators Awards program. Honorees are recognized for raising the bar on quality, service and innovation in the fast-growing and critically important foodservice category in the convenience channel. In an exclusive video, the year’s five winners talk innovation, the importance of foodservice, and serving customers. For more exclusive stories, visit the Special Features section of csnews.com.

MOST VIEWED NEW PRODUCT

Kronos Advanced People Analytics

Kronos Inc. introduced Advanced People Analytics for its human capital management (HCM) fullsuite solutions. Powered by the award-winning AIMEE artificial intelligence engine, Advanced People Analytics applies machine learning to real-time data available across the entire employee lifecycle to provide personalized and proactive people-centric insights, predictions and recommendations. According to the company, organizations can gain access to three powerful, intuitive data science tools that any manager can use to replace anecdotal decisions with unbiased, evidence-based actions.

Kronos Inc. Lowell, Mass. (978) 250-9800 kronos.com


Bite into BIGGER SNACK SALES Fun, nostalgic snacks, along with healthy options, lift c-store opportunities

Everyone’s snacking…all day 386 billion ready-to-eat snacks were enjoyed last year1 Snacking is now an all-day habit, from morning to midnight.2 81409 — Supreme Stuffers® Sausage Egg & Cheese Breakfast Stick

Craving Healthy Options

Giving oneself “permission” to enjoy indulgent foods and beverages once in a while is still popular.

C-store customers also seek balance in snacks Healthy snacks are on the rise, too.5 40613 — Corazonas® HEARTBAR™ Cranberry Flax Oatmeal Square

Snack Destination: C-Stores Noshing on Nostalgia 72526 — Pretzel Fillers® Individually Wrapped Cheddar Cheese Stuffed Soft Pretzel

4530 — The Funnel Cake Factory® Funnel Cake Fries

Consumers hold tight to familiar, nostalgic flavors, including salty snacks like soft pretzels.3 ®

3772—LUIGI’S Real Italian Ice Lemon Cup

58%

of consumers like to order desserts they enjoyed as a child.4 Sources: 1. NPD, “Future of Snacking” report, January 2019 2. Innova Market Insights report, November 2019 3. Kerry, U.S. Taste Charts, 2019 4. Olson Communications, Culinary Visions “Global Indulgence Study,” 2018 5. NPD, “Future of Snacking” report, January 2019 6. National Association of Convenience Stores research 7. National Association of Convenience Stores report, May 2019

C-stores had record in-store sales last year, with total sales topping $654.3 billion.6

Get in on the fun and satisfy customer cravings J&J Snack Foods brings the fun to all-day snacking with positive feelings and flavors, including nostalgic favorites, deliciously indulgent snacks and healthier options.

Foodservice sales comprise 23% of sales at c-stores, up 3% over the past five years.7

From crave-worthy snack offerings to the displays and equipment you need to succeed, we can help! #funservedhere

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INDUSTRY ROUNDUP

Wawa Reports Massive Data Breach Malware affected payment card information used at potentially all locations a data breach that potentially affected all of the convenience store retailer’s locations during the bulk of 2019.

WAWA INC. EXPERIENCED

In an open letter to customers, Wawa CEO Chris Gheysens reported that malware affected payment card information used at potentially all Wawa locations beginning at different points in time after March 4, 2019 until it was contained on Dec. 12. “At this time, we believe this malware no longer poses a risk to Wawa customers using payment cards at Wawa, and this malware never posed a risk to our ATM cash machines,” he said. Although the dates may vary and some Wawa locations may not have been affected at all, the malware was present on most store systems by approximately April 22, 2019, according to the company. The retailer’s information security team identified the malware on Dec. 10 and by Dec. 12, it had blocked and contained it. “We also immediately initiated an 12 Convenience Store News C S N E W S . c o m

investigation, notified law enforcement and payment card companies, and engaged a leading external forensics firm to support our response efforts,” Gheysens explained in his letter. “Because of the immediate steps we took after discovering this malware, we believe that as of Dec. 12, 2019, this malware no longer poses a risk to customers using payment cards at Wawa.” Based on the investigation, the malware affected payment card information, including credit and debit card numbers, expiration dates, and cardholder names on payment cards. Information not accessed by the malware includes: debit card PIN numbers, credit card CVV2 numbers, other PIN numbers, and driver’s license information used to verify age-restricted purchases. Wawa continues to work with law enforcement and is taking steps to enhance the security of its systems, according to Gheysens. “I apologize deeply to all of you, our friends and neighbors, for this incident. You are my top priority and are critically important to all of the nearly 37,000 associates at Wawa,” he said. “We take this special relationship with you and the protection of your information very seriously.” Based in Pennsylvania, Wawa operates more than 870 stores, with 600-plus offering fuel, in Pennsylvania, New Jersey, Delaware, Maryland, Virginia, Florida and Washington, D.C.


INDUSTRY ROUNDUP

FAST FACTS

26 states

Twenty-six states and Washington, D.C. implemented minimum wage increases of $1 or more as they rang in 2020. — Wolters Kluwer

Nearly all new 2020 autos are approved to use E15 fuel; however, automakers are offering fewer model year 2020 flex-fuel vehicles that are capable of running on E85. — Renewable Fuels Association

2.75

$

billion

The U.S. hemp-based CBD market could jump from a $2.25-billion to a $2.75-billion industry in 2020, despite potential speed bumps. — Nielsen

115%

Bottled wine makes up the majority of wine orders from convenience delivery service goPuff, but the retailer saw a 115% increase in boxed and canned wine orders in 2019. — goPuff, Off the Shelf Report

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

Federal Tobacco Purchasing Age Increases to 21 FDA says retailers are expected to follow the new law during transition period as the year drew to a close, President Donald Trump signed a federal Tobacco 21 measure into law as part of a package of spending bills, raising the minimum legal age to buy tobacco products from 18 to 21 across the United States.

ON DEC. 20,

Although the Food and Drug Administration (FDA) has six months to finalize the new law, the agency posted a notice on its website within days that the change was effective immediately. “On Dec. 20, 2019, the president signed legislation to amend the Federal Food, Drug and Cosmetic Act, and raise the federal minimum age of sale of tobacco products from 18 to 21 years. It is now illegal for a retailer to sell any tobacco product — including cigarettes, cigars and e-cigarettes — to anyone under 21. FDA will provide additional details on this issue as they become available,” the agency stated in its notice. Convenience and fuel retailing association NACS joined with several other retail groups to press the FDA for clarification and direction. According to NACS, the new federal law contemplates a regulation to provide retailers with clear direction on the new rules, including a requirement to verify the age of any purchaser under the age of 30. However, the law does not include any delay in the shift to age 21. The FDA subsequently said it recognizes that both the agency and some retailers need to update current practices to implement this new law. In addition, the agency needs time to do outreach and education to retailers, and update the agency’s programmatic work to reflect the change. “During this period of transition, the FDA expects retailers to follow the law and take measures to ensure an individual purchasing a tobacco product is 21 or older, including manually checking IDs when needed,” the agency said on Jan. 15. “However, during this ramp-up period, FDA will continue to only use minors under the age of 18 in its compliance check program.”


Convenient 10ct Size! White Ice Mint & Fruit Chill Gum

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7 OUT OF 10 USERS SAY NICORETTE GUM TASTES BETTER THAN STORE BRAND* *Overall taste preference between coated gum flavors based on initial taste (1 minute of use). Behavioral support program increases chances of success. Read and follow label directions. ©2018 GSK group of companies or its licensor. All rights reserved.


INDUSTRY ROUNDUP

Eye on Growth

Loop Neighborhood Market kicked off the new year with the opening of an autonomous convenience store and gas station in Silicon Valley. The retailer plans to partner with AiFi to open more NanoStores in the future. Nouria Energy Corp. entered southeastern Massachusetts with the acquisition of five New England Farms convenience stores. The transaction also included one car wash.

Love’s Travel Stops & Country Stores began serving customers at new travel stops in Obetz, Ohio, and Malvern, Ark., in mid-December. The locations add a combined 143 more truck parking spaces to the company’s network.

Sheetz Inc. opened its 600th convenience store in mid-December. The milestone store is located in Shaler Township, Pa.

Stewart’s Shops rang in 2020 with two grand openings on one day. On Jan. 10, the chain cut the ribbon on new stores in Hudson and Feura Bush, both in New York. These openings brought Thorntons LLC the company’s number of welcomed customers new stores in 2019 to nine. at its 199th and 200th stores on Dec. 19. The locations are both travel center sites in the Chicago area.

The Spinx Co. celebrated the opening of its newest store on Dec. 12. The Summerville, S.C., Spinx store features a full-service kitchen. A Ride ‘N Shine Tunnel Wash on the site is set to open in early 2020.

Seen on Social Media

Enmarket Savannah, Ga. We’re so excited to introduce our new rewards program! By being an enjoyrewards customer you can now earn points every time you visit the pump & shop in-store. Redeem those points for gas discounts! Visit enmarket.com/ enjoyrewards to learn more about the fun perks of being a member & to register!

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

Casey’s General Stores Ankeny, Iowa What a way to ring in 2020! Today, the Casey’s team, including President and CEO Darren Rebelez, rang the Nasdaq opening bell to gear up for an amazing 2020 — we’re planning to add more stores and sell more slices of our famous pizza than ever!

Yesway Des Moines, Iowa Thanks to all of our Season Of Giving contest participants, and congratulations to all the winners. Be sure to keep an eye out in 2020 for more chances to win awesome Yesway prizes. Our first contest of the year is coming up soon!


FDA-COMPLIANT FRESH FOOD LABELING FOR C-STORES. BOHA! makes it possible.

BOHA! ™ stands for back-of-house automation. If you’re getting into t fresh food, the law says you need FDA-compliant food labels. Nutrition and ingredient guidelines are now even stricter – are you prepared? Printing accurate, clear, FDA-compliant food labels is one of the c-store tasks BOHA! does best. And the BOHA! Labeling g app a makes it possible. Don’t risk i hefty fines. Learn how to add BOHA! Labeling to your operation. Stat. Call us today to arrange a demo.

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INDUSTRY ROUNDUP

Retailer Tidbits

Circle K will initially implement the solution at 2,350 sites in Europe. ExtraMile Convenience Stores LLC tapped KickBack Rewards Systems to enhance its Extras rewards program to include franchisees. The move will allow franchisees to participate in and offer vendor-sponsored discounts. Casey’s General Stores Inc. debuted its first loyalty program, Casey’s Rewards. Members can earn points on purchases and redeem them for Casey’s Cash or fuel discounts, or donate points to local schools. Nouria Energy Corp. is adding 22 formerly leased properties to its portfolio. The company is purchasing the gas station properties that it has been operating since buying the businesses from F.L. Roberts in 2016.

Love’s Travel Stops & Country Stores will bring the Bojangles’ brand to four states through a national franchise development agreement. The deal includes 40 Bojangles’ restaurants at locations in Illinois, Oklahoma, Arkansas and Mississippi. High’s is adding mobile debit payment and personalized rewards to its loyalty program. High’s partnered with ZipLine to launch the new platform.

The retailer will then roll out the technology to 5,000 sites across North America, including more than 1,000 sites in Canada.

Circle K will deploy Leighton O’Brien’s Wetstock Live software to minimize fuel losses throughout its retail fuel network.

Tiger Fuel Co. is investing more than $300,000 per year in wages for its The Market c-store chain. Approximately 170 employees are receiving an 11-percent pay increase, on average.

Supplier Tidbits AMCON Distributing Co. made a strategic investment in Team Sledd. Robert Sincavich and Randy Emanuelson, co-owners of Team Sledd, will continue in their roles as president and vice president, respectively.

The new facility provided 225 jobs in 2019 and is expected to add another 150 jobs by the end of 2020.

Anheuser-Busch is buying the remaining shares of Craft Brew Alliance (CBA) it does not already own for $16.50 per share, in cash. The majority of CBA’s brands are already distributed through its network of independent wholesalers. Alto-Shaam rolled out a new mobile equipment lab. A truck brings its complete kitchen solution directly to operators, dealers and consultants to experience. 18 Convenience Store News C S N E W S . c o m

Ferrero opened a new distribution center in Jonestown, Pa. The 730,000-square-foot facility features lithium-powered lifts, an energy-saving HVAC system, and zero-waste-to-landfill practices.

Global sports and nutrition brand Grenade expanded in the United States through pacts with c-store chains such as Speedway, Royal Farms, Dash In, GetGo and Wawa. Chipita S.A., owner of the 7DAYS brand and a Greecebased multinational leader in bakery snacks, acquired a majority stake in EPTA America LLC. EPTA America is the North American distributor of 7DAYS products.


SPECIAL SERIES ON MOBILE ORDERING

Sponsored by

The Digitization of Dining Mobile ordering and delivery are making c-store foodservice more convenient, especially for tech-savvy young adults By Debby Garbato MOBILE ORDERING and

delivery represent the next wave of growth in the $661-billion convenience store industry. While the number of c-store chains offering these perks is still limited, major players have been ramping up services and technology in this hotly competitive space, especially centered on the foodservice category. Pioneers 7-Eleven Inc., Wawa Inc. and QuikTrip Corp. have some of the most well-developed mobile programs. Entering the mobile ordering/delivery space in 2017, their mobile initiatives now rival those of the myriad quick-service restaurants (QSRs) and fast-casual chains with which they compete. Their proprietary apps — along with those of QuickChek Corp., Sheetz Inc., Pilot Co., Family Express Corp., Kum & Go LC and Casey’s General Stores Inc. — seamlessly transmit orders in real time. The apps are tied to mobile payment and loyalty programs, allowing shoppers to accrue points and offers, while the retailers collect valuable data. Most c-store operators, however, have not reached this level. “Mobile ordering and delivery are becoming essential to c-stores because of the ‘want it now’ environment,” said Tom Cook, principal at retail consultancy King-Casey. “Big guys like 7-Eleven and Casey’s are really advanced and are best practices among c-stores. But the industry is way behind. We work with many QSRs and fast casuals, for whom mobile payment, ordering and delivery apps are priorities.” Andrew Robbins, CEO/co-founder of Paytronix, a provider of loyalty programs and customer engagement solutions, estimates that just 10 percent of c-store chains currently offer mobile ordering and/ or delivery. The channel, though, is well positioned to surpass that percentage. Mobile ordering and delivery are most popular among young adults — c-stores’ core shoppers. Millennials placed 622 million app-based orders

for mobile ordering/delivery in 2019, according to The NPD Group. Among those aged 19 to 39, 54 percent regularly frequent c-stores, and 16 percent of millennials visit daily, indicated Koupon Media’s 2018 State of the Industry report. “C-stores provide Gen Z and millennials with immediacy, convenience and breadth of offering,” said Jimmy Fleming, category manager for Pilot Co. “They grew up with technology and mobile convenience. They’re comfortable ordering from the palm of their hand, and have unique needs c-stores can fulfill better than other foodservice channels.” C-stores offering these services are seeing results. Over the past six years, researcher AlixPartners cited 11 percent year-over-year growth in c-store mobile ordering/delivery. Fleming shared that Pilot and Flying J’s mobile orders are three to four times larger than its traditional in-store purchases, involving hot food, beverages, salty snacks and candy. The ability to add nonfood categories, such as health and beauty care, alcohol and tobacco (where allowed), gives c-stores an advantage over restaurants. Mobile ordering and delivery also attract new customers. But restaurants are still miles ahead. Starbucks leads with 44.2 million app customers, followed by Chick-fil-A, Dunkin’ and Panera, which have about half that number, according to a recent consumer survey by Cornerstone Advisors. McDonald’s, which has offered delivery since 2017, estimated it would generate an additional $4 billion from 36,000 orders in 2019. Despite myriad players, there is room for more. Allied Market Research said the global food delivery mobile app market could hit $16.6 billion by 2023 at a compound annual growth rate (CAGR) of 27.9 percent. By 2023, King-Casey predicts more than half of c-stores will offer mobile ordering/delivery.

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“C-stores are like restaurants three years ago, when McDonald’s did zero in mobile ordering/delivery,” said Robbins “If we project that onto c-stores, they’ll do the same.” C-stores’ ongoing success with foodservice should help accelerate the trend. “Consumers are interested in c-stores, where foodservice has been at 14 percent CAGR for several years,” said John Benson, director of AlixPartners. “Everyone knows QSRs and fast casuals. C-stores are still kind of a burgeoning newcomer. But they’re in a good position to play.”

Movers & Shakers Starbucks launched mobile ordering in 2015. Today, it is the mobile ordering/delivery benchmark for both c-stores and restaurants. Its app lets customers pre-order, and rewards members can place custom orders and reorder favorites through Google Assistant. Launched in 2018, delivery is available in 16 major cities through Uber Eats. It will soon expand nationally. In November, Starbucks opened the first Starbucks Pickup store in Manhattan’s Penn Plaza. Targeting commuters, the store’s customers mainly use Starbucks Mobile Order & Pay. Upon arrival, customers can track their order on a digital board.

NUMBER OF MOBILE APP CUSTOMERS (IN MILLIONS)

52.1

Uber

44.2

Starbucks

28.2

CVS

24.1

Kohl’s

23.4

Chick-fil-A

21.6

Dunkin’

18.7

Panera

15.1

Wendy’s

Source: Cornerstone Advisors, Q2 2019 survey of 2,506 U.S. consumers

CONVENIENCE STORE SHOPPERS BY AGE 32%

Proprietary vs. Third-Party Apps For most retailers, proprietary apps are the most effective ordering platform, letting shoppers personalize orders, save favorites and check prices. Retailers can tie apps to loyalty offers and accrue valuable shopper data. NPD’s Delivering Digital Convenience Report found that 70 percent of digital foodservice orders come through companies’ own apps or websites.

54.4

Amazon

In the convenience channel, 7-Eleven has been a trailblazer. It facilitates ordering/delivery of thousands of SKUs 24/7, including hot food, snacks, beverages, household items, electronics, beer, wine and, in some areas, tobacco. The 2019 addition of 7NOW Pins technology to the 7-Eleven app expanded delivery to parks and other public places. Shoppers receive orders in 30 minutes or less. In November, 7-Eleven added 7Voice, which uses Google Home and Amazon Echo systems. Voice control lets customers order while driving. Wawa is another convenience channel leader. It serves select cities via Grubhub, Uber Eats and DoorDash. App users prepay with Wawa gift cards tied to Wawa accounts, or pay upon order pickup. Location services track order progress. In January 2020, Wawa opened a 3,000-square-foot Philadephia store with a pickup window dedicated to digital orders.

58.5

Walmart

22%

16% of millennials visit a convenience store daily 22%

19% 5%

“Your own app can drive loyalty and clienteling, let shoppers customize orders, view loyalty points and copy previous orders,” said Jim Barnes, CEO of Envista Corp. “Uber Eats won’t do that.” Under 18 Proprietary apps also can provide added perks. QuikTrip’s app lets customers check fuel prices. With Pilot

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

19-29

30-39

40-49

Source: Koupon Media, 2018 State of the Industry

50-Plus


and Flying J’s app, truckers can reserve showers and parking spaces and start diesel pumps. Pilot and Flying J also benefit from third-party ordering apps, which help accrue new customers. “A retailer’s app gives customers access to various offerings,” said Fleming. “Third-party apps let us reach new guests, who may not have been seeking us. We entered this space quickly and have gained valuable knowledge through third-party partners.” For retailers without proprietary ordering apps, thirdparty apps can facilitate entry into mobile ordering, noted Dusty Lutz, vice president and general manager at NCR Corp. But for proficiency, orders should be fed directly into kitchens and point-of-sale (POS) systems. Some retailers’ POS systems do not accept prepaid orders, so they use a tablet computer to accrue them. “Somebody must watch it, which isn’t efficient since they may not notice orders immediately,” Lutz explained. For third-party mobile delivery, retailers need an application program interface to initiate communication between the c-store and the delivery service, said Barnes. “Providers are out of the box. This is the minimum information you need to shake hands.”

“A retailer’s app gives customers access to various offerings. Third-party apps let us reach new guests, who may not have been seeking us.” — Jimmy Fleming, Pilot Co.

Ideally, retailers’ backend technology should bid out orders to third parties based on customers’ delivery time frames. “They ask DoorDash or Drizly: ‘Can you deliver to 1 Main St. at this time?’” said Robbins. Delivery companies, added Barnes, can often meet retailers’ technology needs at multiple levels. “The limitation is often on the c-store. Last-mile delivery companies are fairly advanced.” Grubhub and NCR, for example, joined forces in 2018 to enhance third-party delivery through the Aloha POS system, said Lutz. Part of NCR’s Order Service technology, Aloha integrates orders and menus, enabling real time, automated communication between foodservice providers and Grubhub. The seamless order flow maximizes efficiency. A few retailers operate their own delivery services. Casey’s drivers use their own vehicles to deliver pizza for the country’s fifth largest pizza chain. One driver made a video about his experience, saying they receive $2 per delivery plus an hourly wage and tips. When not delivering, they perform in-store tasks. Indiana chain Family Express has its own delivery vehicles and employs drivers. The regional operator wants direct control to ensure that the “last mile” runs smoothly and that beer and tobacco deliveries follow legal protocols. Both models incur costs, as does third-party delivery. Representing 20-25 percent of an order, third-party delivery fees are often split between retailers and consumers, said King-Casey’s Cook. “Some people say third-party deliveries are incremental volume; others believe customers would have purchased anyway. They’ll figure it out.” Some major retailers do mobile ordering, but don’t offer delivery, including QuickChek. Its mobile ordering focuses on its robust breakfast business. “Their biggest bang for the buck is people pre-ordering and picking up breakfast en route to work, saving 10 minutes,” Robbins said. “They want this to be as frictionless as possible to better compete with Starbucks and Dunkin’ for morning customers.” The number of c-stores offering ordering and delivery should continue rising, along with the number delivering alcohol and nonfood products. Some are now using Drizly and other third-party mobile specialists for alcohol ordering/delivery. Voice-activated ordering and other app-based perks should also grow as retailers and consumers become more sophisticated. The sky may be the limit. But what ultimately works should be determined by some simple criteria. “Millennials are very price sensitive, demand high quality, and aren’t brand loyal,” said Benson. “It comes down to two things: what the consumer wants and what competitors are doing.” CSN

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SPECIAL SERIES ON MOBILE ORDERING

Sponsored by

Digital Ordering: The Key to Foodservice Sales Growth and delivery are rapidly becoming must-haves for 21st century convenience stores. By allowing retailers to better serve their core customer cadre of tech savvy young adults, they gain a competitive edge against traditional food service providers.

MOBILE ORDERING

In 2019, millennials placed 622 million app-based orders for Tim Ridgely mobile food service and delivery, said NPD Group. Most business went to QSRs and fast casual chains, with c-stores just beginning to embrace this lucrative segment. But by 2023, King-Casey predicts more than half of c-stores will offer mobile ordering and delivery. To be efficient, c-stores need the right technology, particularly when it comes to implementing order and delivery systems, integrating ordering functions with loyalty programs, and adding newer perks like voice activation and facial recognition.

Consequently, foodservice purveyors risk competition from the same aggregators that service their off-premise businesses. By implementing their own order and delivery systems, retailers control branding, guest relationships and data, while providing a convenient guest experience.

CSNEWS: Why are mobile ordering and delivery

CSNEWS: How can a retailer’s mobile ordering/delivery

becoming essential to c-stores? RIDGELY: C-stores must meet customers wherever they are. Their mobile phone is a constant companion. Ensuring that the mobile experience is intuitive and simple is critical for a successful order-and-delivery platform, with more than half of online orders coming through mobile. But getting the order isn’t enough; many guests also want delivery. Progressive c-stores like Wawa are meeting these needs. In addition to delivering to many markets, Wawa opened a smaller-footprint Philadelphia store this month that is centered around a mobile pickup window. CSNEWS: More than half of c-store shoppers are ages

19 to 39. Why does this make mobile ordering and delivery particularly important to c-stores? RIDGELY: For Gen Zers, food delivery and ordering play a large role. In fact, 29 percent of Gen Zers said they ordered food to satisfy a craving, with 11 percent ordering five times weekly. They are focused on convenience and spontaneity, with an attention span of about eight seconds. Any ordering friction leads to cart abandonment. A streamlined mobile ordering solution lets c-stores effectively reach this technology-enabled, convenience-oriented demographic. CSNEWS: How does a retailer benefit from installing

an order and delivery system? and delivery satisfy a key customer demand, yet third-party aggregators dominate. Aggregators are amassing an unprecedented amount of consumer data and quickly learning how to monetize it. Some are establishing ghost kitchens, which supply food in specific locations based on geotargeting and customer demand.

RIDGELY: Order

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

functions and loyalty program be complementary? in-store experience must match the in-app experience, and loyalty programs are central to that. When rewards are displayed up front in the app, guests often redeem them. They may even add items since the order is already discounted. If the experience is poorly executed, guests may locate rewards after ordering and become frustrated. Seamless integration with a loyalty or CRM provider keeps the guest experience consistent regardless of how orders are placed.

RIDGELY: The

CSNEWS: What role can AI and machine learning play

in upselling and cross-selling relevant offers? enables true frictionless commerce through both facial recognition and loyalty. AI-driven facial recognition is the future, affording fast, transparent interaction with the app. Just looking at the phone prompts loading of personal preferences, establishing a tailored, streamlined experience. AI also lets c-stores better utilize customer data to deliver relevant offers and cross-sell messages at key times in the buying process. This focus on individual actions will become integral to guest engagement, helping brands increase sales, guest satisfaction and loyalty.

RIDGELY: AI

Tim Ridgely leads Paytronix Systems’ Order & Delivery team. He began developing technology solutions at age 12. For 10 years, Ridgely has worked in the restaurant technology industry. An entrepreneur and specialist in off-premise food service, his accomplishments include creating Open Dining Network, an online restaurant ordering solution acquired by Paytronix in August.


OUT & ABOUT

Overcoming Challenges With Technology NRF 2020 Vision: Retail’s Big Show & Expo highlighted solutions for hot-button issues By Don Longo & Melissa Kress TECHNOLOGY LEADERS gathered in New York in January to learn best practices from one another and see what’s coming up next in retail technology innovation.

While the attendees on hand at NRF 2020 Vision: Retail’s Big Show & Expo spanned all retail channels, the convenience store industry executives spotted on the show floor told Convenience Store News that their priorities at this year’s event were centered on data security, EMV certification and backoffice issues, particularly overcoming the challenge of connectivity and adaptability of new technologies with legacy platforms. Data security, particularly in the wake of the recent revelation of a data breach that affected payment card information at potentially all Wawa locations from March to December 2019, is a hot-button issue that many believe will attract additional legislative attention. At this year’s Big Show, the National Retail Federation (NRF) announced the launch of a new Center for Consumer Privacy and Innovation, a retailer-led initiative intended to promote and protect innovation in the retail customer experience.

“Retailers recognize the importance of and value the trust placed in their hands by their customers,” said NRF President and CEO Matthew Shay. “The Center for Consumer Privacy and Innovation will provide insight and policy expertise to educate lawmakers as they strive to properly balance consumer protections with retail innovation.” The center will produce research, track privacy legislation, and educate the public and policymakers about the benefits, convenience and value they derive from the technology that retailers develop. The effort aims to ensure that government regulation does not harm innovative aspects of the retail economy.

Employee Engagement Labor has been a challenging issue for convenience store retailers for several years, particularly as municipalities approve minimum wage hikes and unemployment remains low. However, as retailers have invested much of their technology dollars in consumerfacing technology, they have forgotten that their employees are also users of technology. Focusing on employee-facing technology can go a long way in reducing turnover — and improving the overall guest experience, according to exhibitors at the event. As Gen Z begins to join millennials in the workplace, retailers are looking for new ways to communicate

NRF 2020 Vision: Retail’s Big Show aimed to bring together visionary talent with visionary technology.

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OUT & ABOUT

just have a mobile strategy to connect with their employees; they must keep in mind that the user experience matters to this new era of associates. “Millennials are mobile pioneers and Gen Z are mobile natives,” Patrontasch said. Today’s workforce has very little attention span. As the Shyft CEO noted, Gen Z’s attention span is the shortest, at 8 seconds. Millennials’ attention span isn’t much longer, at 12 seconds. “The user experience is key to engaging with Gen Z and millennials,” he advised. To that end, Patrontasch offered up the following pointers:

More than 800 exhibitors took part in the expo portion of the event.

with their associates. Brett Patrontasch, CEO of Shyft, pointed out that being able to connect with your workforce via mobile is a hot topic right now. Seattle-based Shyft is a mobile workforce management platform and its goal is to help employees ensure “no shift is missed again,” Patrontasch explained during a presentation entitled, “Gen Z and Millennials: How to Engage Your Future Workforce.” At this time, members of Gen Z are between seven and 22 years old, while millennials currently range between 23 and 38 years old. Taken together, 48 percent of the U.S. workforce composition is Gen Z and millennial employees, Patrontasch cited, adding that 98 percent of Gen Z and 93 percent of millennials have a smartphone. He offered up two other compelling figures from Shyft’s research on mobile matters: 25 percent of Gen Z had a smartphone before they were 10 years old, and 57 percent of Gen Z feel more insecure without their phone than their wallet. Although these generations span different age groups, they have something important in common: both grew up as connected generations. Millennials and Gen Z grew up with computers, video games, mobile phones and the Internet, noted Patrontasch. Yet, it is not enough for retailers to

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

• Create a BYOD, Bring Your Own Device, policy with guidelines; • Promote healthy use of smartphones for work, including sanctioned activities; • Offer a mobile solution as a voluntary opt-in benefit; and • Provide other options such as company tablets or kiosks.

One-to-One Loyalty In terms of connecting and communicating with customers, loyalty programs are a space retailers want to play in, as more are joining every day. Key to a successful loyalty program, though, is recognizing that not all customers are the same, so their rewards should not be the same either. Presenting at NRF Vision 2020, Christian SelchauHansen, CEO of San Francisco-based artificial intelligence company Formation, said there are three stages of loyalty program offers: all, many (tailored to five or six segments), and one to one. “One to one has always been the aspiration of marketers,” Selchau-Hansen said during his session entitled, “I Hate To Break It to You, Your Offers Aren’t Cutting It.” To reach the level of personalized one-to-one offers, the tech executive told showgoers they need to utilize machine learning and artificial intelligence (AI) to get to “the personal level.” Tapping into machine learning and AI can be a game changer, he said, because it can: • Enable retailers to analyze each customer more deeply; • Use that learning to build stronger bonds with each customer; and • Reinforce journeys and build mutually beneficial behaviors. NRF 2020 Vision took place Jan. 11-14 at the Jacob K. Javits Center. CSN


HOW DO YOU A multibillion-dollar industry is ready to erupt across the c-store landscape. Are you prepared? Get informed, and learn some of the basics before ordering your top-selling CBD products.

HOW DO YOU CHOOSE CBD: Product Mix

Full-Spectrum or Isolate FULL-SPECTRUM

• Full-Spectrum CBD products contain all compounds found in the original hemp plant.

• Offer an assortment of form factors like topicals, ingestibles, tinctures, and more to cater to the various lifestyles of your shoppers.

CBN CBG

THCA CBD

• Isolate CBD products only contain the CBD cannabinoid.

THC CBC

ISOLATE

• Full Spectrum may provide a higher chance for a wider synergistic benefit.

CBD CBD

CBD

CBD CBD

CBD

• Check your state’s regulations to determine what form factors of CBD products you can legally sell.

CBD

HOW DO YOU MARKET CBD: No Therapeutic Claims • CBD products cannot be marketed as intended to diagnose, treat, cure, or prevent any disease. Don’t fall for unproven medical and health claims, and be wary of any brand that makes them.

HOW DO YOU TRUST CBD: Rigorous Testing & Product Labeling • Certificates of Analysis (third-party records that certify product contents) are absolutely necessary. Savvy customers may demand access to them.

mg

• Visit every CBD brand’s website and carefully look at their advertising to vet responsible brands and partners.

Forth™ CBD products deliver on these promises, leading the way in educating retailers and consumers. Don’t miss the boat! Welcome a new flow of shoppers to your store with a variety of high-quality CBD products from a responsible and proven industry leader.

• Look for products that feature simple and transparent labeling information on use instructions and milligrams of CBD per use where available. This allows consumers to make more informed product decisions and encourages customer loyalty.

©2020 EAS.

NOT FOR SALE TO MINORS

EAS-CSN-Feb-2020Dosand Donts.indd 1

For more information, visit ForthCBD.com 1/28/20 5:26 PM


NEW PRODUCTS

3 1

4

2

1. Pepsi Café Set to debut in the U.S. in April 2020, Pepsi Café blends the taste of deep flavorful coffee with the refreshing, crisp taste of a Pepsi cola. Pepsi Café will be available in two varieties: original and vanilla flavor. Both new beverages are balanced with the right touch of roasted Arabica coffee to add a delightful combination of flavors to one’s caffeine routine, according to the maker. Pepsi Café has nearly twice the amount of caffeine as a regular Pepsi cola. It comes in slim 12-ounce cans for an easy pick-me-up. PepsiCo Inc. Purchase, N.Y. pepsico.com

2. Sun-Maid Chocolate Raisin Mashups Created to delight the taste buds of chocolate lovers, three new varieties join the Sun-Maid Chocolate Raisins line. Chocolate ‘n Peanut Butter Covered Raisins, Dark Cocoa Dusted Chocolate Covered Raisins, and Milk Chocolate ‘n Almond Crunch Covered Raisins join the brand’s classic Milk Chocolate Raisins. All four varieties come in a range of package sizes, including 2-ounce single-serve tubes, 3.5ounce movie boxes, and 7-ounce resealable stand-up bags. Suggested retail prices range from $1.99 to $5.79.

3. Jack Link’s Meat Bars

4. Aqua Kefir Probiotic Drinks

Jack Link’s is extending its current meat bar lineup with the addition of Sweet Habanero and Blackberry Barbecue varieties. In addition to adding these new flavors to its 100-percent beef bar set, the brand is bringing 100-percent chicken bars to the market. The chicken bars provide a familiar format, but cater to consumers who prefer alternatives to beef. They are available in Rotisserie Chicken and Spicy Chicken varieties.

Aqua Kefir is a new line of sparkling probiotic drinks from GT’s Living Foods. Fermented with non-dairy kefir cultures, the beverages are lightly flavored to offer bright, crisp refreshment with probiotic benefits. The Aqua Kefir line is available nationwide in four varieties: Coconut Lime, Peach Pineapple, Pear Ginger, and Pomegranate. All of the beverages are unpasteurized, vegan, caffeine free and gluten free.

Jack Link’s Minong, Wis. jacklinks.com

The Promotion In Motion Cos. Inc. Allendale, N.J. (800) 369-7391 mail@promotioninmotion.com promotioninmotion.com

5. Bistro Slider & Reuben Salads Ready Pac Foods adds two new varieties to its Bistro salad line: Slider and Reuben. These salads combine America’s beloved comfort food classics with 5 the convenience and freshness of the Bistro brand to create an irresistible meal, according to the company. The Slider Salad features mini charbroiled burger patties sitting on a bed of crisp iceberg and romaine lettuce, topped with grape tomatoes, cheddar cheese, dill pickle-flavored croutons and Thousand Island dressing. The Reuben Salad contains uncured corned beef, shredded Swiss cheese and sauerkraut-flavored pumpernickel rye croutons served with red cabbage, iceberg and romaine lettuce, and Thousand Island dressing. Ready Pac Foods Irwindale, Calif. readypac.com 26 Convenience Store News C S N E W S . c o m

GT’s Living Foods Beverly Hills, Calif. gtslivingfoods.com


6

8

7 9

6. Unicorn Glitter Berry Baby Bottle Pop

7. Muffin Town Half-Sheet Cornbread

Bazooka Candy Brands, a division of The Topps Co. Inc., introduces a new variety to its Baby Bottle Pop line: Unicorn Glitter Berry. Delivering a sweet red berry taste, the lollipop features a wildly twisted pink and purple swirl design for consumers to dip into the glittery candy powder. Unicorn Glitter Berry joins the Baby Bottle Pop family alongside the brand’s four classic flavors: Strawberry, Blue Raspberry, Berry Blast and Watermelon.

“America’s Favorite Cornbread” is available in a new half-sheet size for foodservice retailers, Muffin Town announced. Each four-pound sheet comes pre-scored for custom cutting into 30 uniform squares, providing end users the appearance of freshly baked and handsliced cornbread. The product is pre-baked, frozen, and comes ready to thaw and serve. The new half-sheet cornbread adds to the Muffin Town line, which already includes authentic and jalapeño cornbread offerings.

The Topps Co. Inc. New York candymania.com

Muffin Town Inc. Chelsea, Mass. (617) 846-1565 muffintown.com

8. Smart50 Popcorn Smart50 is the latest readyto-eat popcorn innovation from the Smartfood brand. Smart50 popcorn is air popped, contains 50 calories per cup or less, and is available in White Cheddar and Sea Salt varieties. Featuring a sleek new packaging design, Smart50 is made from 100 percent whole-grain popcorn and promises an enjoyable snacking moment that is free of artificial flavors and preservatives. Smart50 comes in 5-ounce and 6-ounce bags for a suggested retail price of $3.99. Frito-Lay North America Plano, Texas smartfood.com

9. Mood33 Herbal Teas Mood33 Herbal Teas were developed through a partnership between Evo Hemp and Mood33. The teas are infused with Evo Hemp’s organic, U.S.-grown hemp extract and made with premium botanicals and real fruit juices. Each bottle contains 33 milligrams of full-spectrum hemp. Six mood-specific varieties offer a unique blend of herbs, botanicals and Evo Hemp CBD: Joy (peach and yerba mate), Energy (raspberry lemon, guayusa and green tea), Peace (watermelon, mint and basil), Wellbeing (blueberries, reishi shrooms and hops), Calm (lavender and chamomile), and Passion (passion fruit, hibiscus and lime). All of the teas are vegan, Non-GMO Project verified and free of preservatives, artificial sweeteners and colors. Mood33 New York mood33.com

10. Johnsonville Digital Roller Grill Merchandiser

10

New from Johnsonville, the roller grill station digital merchandiser features an eye-catching and modern digital screen that can be used to display menu items, build suggestions, topping ideas, special promotions, flavor descriptions, photos and nutritional information. The merchandiser comes preloaded with content for core roller grill flavors that retailers can use to leverage the Johnsonville name straight out of the box, along with a flash drive that has additional content to make customization easy, according to the supplier. Johnsonville LLC Sheboygan Falls, Wis. cstore.johnsonville.com

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SMALL OPERATOR

S

Great Training: The Best Defense to Getting Busted

UE

C-

TO

RE RES

C

Inform and empower your store team to make the right decisions around restricted products I MAY HAVE saved

By Roy Strasburger, President, StrasGlobal

a life.

A few months ago, I was running the register at one of our stores. (I admit this is a rare occurrence and something that our operations team gets very concerned about. All sorts of things can happen on the sales report when I’m ringing people up). While I was helping to take care of the rush of customers, a young man came up to the counter with a bag of chips, a large fountain drink, and a six-pack of beer. To me, he looked like he was in his late twenties, but our company policy is to check the ID of anyone who we think looks under the age of 45. I asked for his ID. He immediately handed me a Michigan driver’s license. I took it and studied it. It looked like a legitimate card. The birthdate indicated that he was over 21. However, the photo resembled him but was not him. I asked him to tell me the address on the license. He got the city right but the street wrong. I refused the sale. In exchange, I received a few expletives and had to restock the product he left on the counter. Bottom line is that I did the right thing.

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

The world is controlled by laws. All of them are designed to provide some type of greater good to the public. Some of them actually accomplish it. Every day brings a new rule or law that affects a class of people or introduces a change to an existing law (in order to make it more effective, no doubt). There are laws designed to let us do things and ones that expressly prohibit certain actions. Regulations change so often and obscurely that it is very difficult to keep up with the latest ones. To quote the Five Man Electrical Band’s 1971 hit song “Signs”: Sign, sign, everywhere a sign Blockin’ out the scenery, breakin’ my mind Do this, don’t do that, can’t you read the sign? Whatever happened to those guys? It seems to me that the group impacted by most of the changes is us — the local retailer. A large percentage of regulations relate to what you can or cannot sell, or who can or cannot buy something. This


can range from health permit requirements to agerestricted products such as alcohol, tobacco and lottery. If you own or operate a store, you are responsible for keeping up with all of the new laws — whether they are federal, state or local — and making sure they are obeyed and implemented. Let’s take one example — vaping. Originally introduced as a “safer” tobacco delivery system than combustible cigarettes, vaping has recently been the subject of health concerns and accusations of inappropriate marketing. Federal, state and local governments have been trying to address what to do about the situation. Changes that have been introduced include raising the legal age of purchase, reducing the range of flavor cartridges that can be sold, and banning the complete sale of vaping products. Do you know if any of these restrictions apply to you? The first defense is to follow the news. Publications such as Convenience Store News and associations such as NACS will keep you informed about what is happening on the national/federal level. Your local media outlets and trade associations will keep you informed about state and local laws. As the old adage goes, “forewarned is forearmed.”

If you own or operate a store, you are responsible for keeping up with all the new laws — whether they are federal, state or local. Once you know what is required, you then need to train your staff to act appropriately. While federal, state and local governments can provide you with training materials (or put you in touch with private providers who they have approved), it is up to you to make sure your employees are properly trained. We often focus on employee training for its operational and customer service benefits. More important is having a properly trained team that knows what they need to do and implement it every day on every sale. You can’t rely on just your managers. It is also up to the person working the graveyard shift to make the correct decision every time. Having someone violate

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the law by selling restricted products to the wrong person (underaged or intoxicated) can cost you a fine and you could lose your ability to sell those products. How will that affect your profitability? We operate retail sites across the country. Part of our job is to keep up with all of the regulations that affect each site. Our clients depend upon us to do it right. The authorities depend upon us to do it right. Our customers depend on us to do it right (more on this later). For each store, we have a customized training program that communicates our operating procedures and standards to our team members. We have to make sure our training is complete, consistent, and reaches every person who works in the store. The training has to be supervised and monitored to ensure it is done. We have to track which employees have received the training and when they are due for follow-up sessions. As I’ve discussed before, training is not a one-and-done process. For the best results, we need to train, re-train, reinforce and follow up. We use commercial alcohol and food safety training programs to make sure the information we are conveying is up to date. These training sessions need to be supervised and monitored to ensure everyone has completed the course. In many states, having a stateapproved training program can reduce your company’s liability in the event there is a violation at the store. However, you need to keep track of who has taken the training program and when the training occurred if you want to take advantage of this protection. Age-restricted product regulations are the most difficult to enforce. By their very design, the law is committed to keeping someone from obtaining a product they want and, in some cases, want badly. It is also a conflict situation that is open to the average human response to be sympathetic and help someone out. No one wants to play the bad guy. Age-restricted products get even more complicated when you have someone legally selling the product who is not old enough to use it or an employee who has recently become “of age” and can still remember the desire for acquiring a product and the frustration of not being able to obtain it. There is a cognitive dissonance between knowing what the law requires and sympathizing with someone “just to do them a favor.” The factors that influence the employee’s behavior cannot be limited to what the employee themselves would like to do or the imposition of fines and penalties if the rules are violated. More important is the realization

that by selling restricted products inappropriately, people can be harmed and, in some cases, killed. And it’s not only about the person who the restricted product is sold to — such as a smoker getting lung cancer — it can be innocent people randomly involved in a situation. For example, a drunk driver who hits another car, killing its occupants. Does our employee want to be responsible for those types of consequences? As with all training, the key component is for the employee to understand and internalize not only what they need to do, but also why they need to do it. It is about doing the right thing under the law, for the good of the company, and to keep our customers safe. It is part of what our customers depend upon us to do — to be a good community citizen that helps make the world a better place and does its bit to protect their loved ones from harm, whether that is preventing a childhood addiction to nicotine or not overserving an intoxicated person who may harm himself or herself and others. Every employee knows what the law requires. Providing that employee with the information as to how and why to implement the law gives them a better understanding of what they need to do and increases their confidence to be able to “just say no.” When you have informed and empowered your store team to make the right decisions, then you have fortified your most important defense against restricted product violations. You will be doing your community, and yourself, a favor. CSN

Roy Strasburger is president of StrasGlobal, a privately held retail consulting, operations and management provider serving the small-format retail industry nationwide. StrasGlobal operates retail locations for companies that don’t have the desire, expertise or infrastructure to operate them. Learn more at strasglobal.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.

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


COVER STORY

AN UNCERTAIN FUTURE

With new regulations pushing some vapor products out of the market, the convenience channel must adjust to a new normal A Convenience Store News Staff Report

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


and windy road for the tobacco category since the Food and Drug Administration (FDA) received the authority to regulate tobacco products under The Family Smoking Prevention and Tobacco Control Act of 2009.

IT'S BEEN A LONG

It got a bit more confusing when electronic cigarettes — and nextgeneration vapor products — came on the scene roughly a decade ago. The industry wondered whether the FDA would regulate electronic cigarettes and if so, how. The answers ended up being: yes, and as tobacco products, as the agency announced in April 2011. Slow to act, though, the FDA did not release its final deeming rule detailing its regulatory approach to e-cigarettes and vapor products until May 2016. As retailers, wholesalers and suppliers awaited those regulations, many anticipated the agency would ban flavors. After all, flavored cigarettes were among the first go under the 2009 Tobacco Control Act. But, to the industry's surprise, the FDA left flavored e-cigarettes and vapor products alone.

That is, until now. In early January 2020, the FDA released a new policy banning the manufacturing, distribution and sale of unauthorized flavored cartridge-based e-cigarettes — other than tobacco or menthol. The policy shift came after months of discussions around flavored tobacco products and concern about underage use of the products. The new policy, which goes into effect Feb. 6, does not affect e-liquid flavors used in open vaping systems or in disposable, single-use products. While many call this a temporary ban since it removes “unauthorized products,” the FDA has yet to approve any premarket tobacco applications (PMTA) for e-cigarette or vapor products. With a May 12, 2020 deadline looming for PMTA applications, it remains to be seen if the FDA will approve any applications for flavored products.

Trouble on the Local Front Across the United States, officials in local municipalities have not been content to sit idly by and wait for action at the federal level. Many have adopted their own ordinances restricting — or outright prohibiting — the sale of all flavored vapor products. Taking a page from local municipalities, things at the state level have really heated up as well over the past few months, as reports of vaping-related illnesses swept the country in late summer 2019. The Centers for Disease Control and Prevention has since said most of those patients reported using THC-containing products. Still, the damage was done.

MARCH 2019

JULY 2019

Then-FDA Commissioner Scott Gottlieb unveils draft rules restricting flavored e-cigarette and vapor sales.

Judge Paul Grimm of the U.S. District Court for the District of Maryland sets a May 12, 2020 deadline for companies to submit PMTAs to the FDA.

MARCH

J U LY JUNE

JUNE 2019

The FDA proposes moving up the Aug. 8, 2022 deadline for e-cigarette and vapor companies to submit premarket tobacco applications (PMTA).

JUNE 2019

The San Francisco Board of Supervisors approves legislation prohibiting the sale of electronic cigarettes within the city.

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Governors in several states, including New York and Michigan, called for temporary bans on the sale of e-cigarette and vapor products. However, those efforts hit legal roadblocks.

stringent action. On Nov. 27, Baker signed “An Act Modernizing Tobacco Control” into law. The measure makes the ban permanent and goes even further by banning the sale of menthol and mint traditional tobacco products such as cigarettes, effective June 1, 2020.

Not surprisingly, Massachusetts — which has long been a hotbed for tobacco regulation — voiced opposition to the sale of all vapor products. On Sept. 24, Massachusetts Gov. Charlie Baker called for a temporary four-month statewide ban on the sale of all electronic cigarettes and vapor products, both flavored and non-flavored. The directive also included cannabis vaping products and devices.

According to Jon Shaer, executive director of The New England Convenience Store & Energy Marketers Association (NECSEMA), Massachusetts is the only state to take such action thus far.

New England neighbor Rhode Island followed suit the very next day. On Sept. 25, Gov. Gina Raimondo signed an executive order directing the Rhode Island Department of Health to establish emergency regulations prohibiting the sale of flavored e-cigarettes. To date, Rhode Island's temporary ban is still in place, and the Department of Public Health has proposed making it permanent. Massachusetts has since taken more

SEPTEMBER 2019

The FDA and the Centers for Disease Control and Prevention team up with state and local health officials to investigate as states report cases of vaping-related illnesses.

SEPT

"Massachusetts is unfortunately at the forefront of flavored tobacco bans," he said. The moves in Massachusetts have led to an uptick in sales of flavored products in neighboring states, particularly New Hampshire and Connecticut. "A lot of those vape sales have gone over the border. One NECSEMA member who has stores in both Massachusetts and New Hampshire has only seen a slight vape sales decline despite the vast majority of their stores operating in Massachusetts," Shaer noted. “That's remarkable.” NECSEMA members also have started to see a consumer migration back to traditional cigarettes. "For a category that had been stagnant and shrinking, for the first time in years, we saw growth," he pointed out. "Certainly, the

OCTOBER 2019

Juul Labs Inc. suspends the sale of its non-tobacco, non-menthol-based flavors — Mango, Creme, Fruit and Cucumber — in the United States, pending FDA review.

O CT S E PT U.S. Health and Human Services Secretary Alex Azar announces the FDA will make removing unauthorized non-tobacco-flavored e-cigarettes from the market a priority.

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

NOVEMBER 2019 Juul pulls its mint-flavored pods from the market.

N OV NACS joins President Trump for a meeting on the administration's vaping policy.

N OV Massachusetts Gov. Charles Baker signs into law a statewide ban on the sale of flavored tobacco and vapor products — including menthol cigarettes.


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COVER STORY

latter is a bad development for public health. These public health officials are foolish in thinking bans are going to work." Another challenge is that flavored e-cigarettes and vapor products are readily available online. "The move to [age] 21, I think, will be very helpful because it helps that delta between a high school senior and a 21-year-old — that three-year gap should make a difference,” Shaer said. “But these bans are just not working. There are too many access points that don't get checked off, so really what it ultimately does is impacts those responsible retailers that are selling these products and [impacts] adult access to legal product.” When it comes to banning menthol cigarettes, a product disproportionately popular among communities of color, the issue gets on the wrong side of racism and racial inequity, according to Shaer. There is one benefit, though, to Massachusetts and Rhode Island going

DECEMBER 2019

it alone: NECSEMA was able to derive some data as to what is going to happen. "The real test will be on June 1 when the menthol and mint traditional tobacco gets banned in Massachusetts. I know there are other states that are considering the same policy. Connecticut is going to have a bill that will do something similar. Maine looked at it last year and is going to look at it again this year. I expect Rhode Island may consider it as well," he said. New Hampshire is not considering statewide action against flavored e-cigarette and vapor products. But on Jan. 1, the state implemented a vape tax so that as New Hampshire retailers are picking up additional foot traffic, the state is collecting an excise tax.

Effects at Retail While larger convenience store chains with multi-state operations may come out even, small operators who do business in just one state do not have that advantage. "They are in real jeopardy, for sure,” Shaer said. “Unlike many sophisticated chains, they don't have the foodservice programs. They don't have the loyalty programs. They don't have the volume or the footprint to offset these expenses. Until they develop replacement categories for the tobacco revenue, they are in real trouble."

JAN. 2, 2020

The Massachusetts Public Health Council approves new rules restricting the sale of nicotine vapor, and flavored vapor and tobacco products.

The FDA bans the manufacturing, distribution and sale of unauthorized flavored cartridge-based e-cigarettes other than tobacco or menthol, starting a 30-day countdown on enforcement.

DEC

JAN D EC President Trump signs a federal Tobacco 21 measure into law.

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

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COVER STORY

Retailers in more urban markets are also likely to get hit hard. The nearly 800 convenience stores in Boston, for example, ring up a lot of tobacco and vapor sales. When the June 1 mint and menthol ban takes effect, those retailers could see a noticeable drop in business. "That's the real 'day of reckoning' moment for these guys. The share of menthol in urban settings is significantly higher," Shaer pointed out. "There is no easy answer. Just like any business experiencing a loss of revenue, you are forced to find ways to either cut back or grow promising categories. "Something else that doesn't please me — but when it is a matter of survival and desperation — [is that] some may have a tendency to act dishonorably. Unfortunately, this can create a bad image for the entire industry," he continued.

The Big Squeeze Further down the East Coast, New York retailers are facing the loss of all flavored

vaping products by April or sooner, as proposed legislation winds its way through the state capitol. Whether any state-level ban might allow for future FDAapproved flavored products to be reintroduced in the marketplace remains to be seen, according to Jim Calvin, president of the New York Association of Convenience Stores (NYACS). The association is hearing lots of concerns from its members. "The explosive growth in flavored e-cigarettes helped many retailers offset a precipitous drop in traditional cigarette sales. Meanwhile, their costs are being driven higher by Gov. [Andrew] Cuomo's $15 minimum wage initiative and other government mandates," Calvin said. "And New York is losing population faster than any other state, meaning fewer c-store customers. Retailers are being squeezed." The patchwork of tobacco regulation at the local level is hurting business, too. "For starters, it has created confusion. It's hard enough to keep track of what the FDA and New York State are doing. Nassau County's partial ban on flavored vaping

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 products began Jan. 1, 2020. New York City's total ban becomes effective July 1, 2020. Several other counties have proposed but tabled local bans," Calvin explained.

Surviving Prohibition Only time will tell what effect the FDA’s new formal policy for flavored vapor products will have on the convenience channel, and the tobacco category overall. "Tobacco-flavored e-cigarettes will no doubt survive, but it's hard to imagine a thriving market for them,� Calvin said. “A black market for flavored vaping products may emerge, thwarting the public policy."

RICH. BOLD. FLAVOR.

Terry Gallagher, president of Boulder, Colo.-based tobacco retailer Smoker Friendly International, believes the threat to e-cigarettes and vapor products is real. While he doesn't envision a future where none of these products will be sold in convenience stores, he does foresee consumers taking illegal means to get the exact product they want. "I don't think the industry will be regulated to the extent that c-stores can't sell e-cigs, both pod and disposable. And frankly, those who want to get in or stay in the open systems business of selling either hardware or liquids, or both, can and will determine a way to do so," Gallagher explained. "There is no question that this policy/law will reduce sales in legitimate retail when the opportunity for purchasing black-market products is available to any consumer who has a computer or smartphone." As legislation and regulation continues to shake up the tobacco business, the opportunity presents itself for consumers to become dual users. However, there isn't enough data available yet to say consumers will switch back to combustibles, Gallagher said. "I'm bullish on the tobacco and nicotine category, and where we sit at Smoker Friendly. I think further innovation will be accepted by many of the more than 50 million adults who choose to consume tobacco and nicotine and the new iterations that are coming to market — think Zyn and IQOS and other nicotine delivery systems," he continued. Preparing for all possibilities, Smoker Friendly — which operates 103 retail outlets with a mix of tobacco stores, cigar lounges, liquor stores, convenience stores and gas stations in six states — is taking multiple steps wherever possible, including: • Being the beta-test retailer for manufacturers with new and alternative products; • Displaying products and implementing programs as they are designed by manufacturing partners; • Implementing intense training programs for store associates, so they know and understand the products; and • Taking a sales-based approach to the category, as opposed to a transaction-based approach, giving associates the time to explain and review items with consumers, so they have the knowledge when they complete the transaction. CSN

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Let Your Voice Be Heard

Industry associations NACS and NATO urge retailers to speak out against tobacco proposals A Convenience Store News Staff Report

trade association representing the convenience and fuel retailing industry, is pleased that the Food and Drug Administration’s (FDA) final guidance policy maintains a level playing field among retailers selling tobacco products. NACS was a vocal advocate against the initial proposal by the FDA to permit sales of flavored e-cigarettes solely in retail stores that are considered "adult-only."

March. This type of policy creates an unlevel playing field and picks winners and losers in the marketplace. It also pushes minors to stores that have the worst track record for checking IDs," said Anna Ready Blom, director of government relations at NACS.

"We oppose any effort to ban the products in c-stores while carving out 'adult-only' stores, like vape shops and tobacco shops, which was proposed by the Food and Drug Administration in

Blom pointed to a study from the American Journal of Health Promotion, which found that 22.3 percent of adolescents reported purchasing an e-cigarette device from a vape shop and 16.4 percent reported purchasing an e-cigarette from a tobacco specialty store, while

NACS, THE INTERNATIONAL

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

In late November, NACS President and CEO Henry Armour met with President Donald Trump during a vaping roundtable held at the White House where he advocated for the c-store industry's role in selling agerestricted products responsibly.




"We are the most effective industry at checking IDs and check more IDs a day than the Transportation Security Administration." — Anna Ready Blom, NACS only 5.6 percent reported purchasing an e-cigarette from a convenience store. Given that there are approximately 153,000 convenience stores nationwide and approximately 10,000 vape shops/tobacco stores, this means that the average adult-only store was more than 100 times more likely to sell an e-cigarette to an underage kid than the average convenience store, she noted. "Convenience stores have been selling age-restricted products responsibly for decades. We are the most effective industry at checking IDs and check more IDs a day than the Transportation Security Administration," Blom asserted. NACS also supports pending legislation that targets Internet sales to minors. Today, the No. 1 retail source of e-cigarette sales to minors is the Internet, according to Blom. Congress is actively considering legislation to correct this loophole. In October, the House passed the Preventing Online Sales of E-Cigarettes to Children Act (H.R. 3942) by a voice vote. The Senate currently has a companion bill by the same name (S. 1253), which has 28 bipartisan sponsors and co-sponsors. "The Senate should pass that bill so that there are in-person ID checks when e-cigarettes are purchased over the Internet," said Blom.

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Government officials, regulators and public health policymakers all point to underage use of vapor F E B RUARY

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Convenience Store News 43


COVER STORY

products as they move to ban flavors from the tobacco category. However, these products were never intended to be used by youths, noted Thomas Briant, executive director of the National Association of Tobacco Outlets (NATO), a trade association that works to enhance the common business interests of all tobacco retailers. "Electronic cigarettes and vaping products are meant for adults only and with the new federal legal age law of 21, retailers are required to only sell these products to persons who are 21 and older," said Briant. As part of a package of bills signed by President Trump on Dec. 20, the federal minimum legal age to buy tobacco products increased from 18 to 21. The change went into effect immediately.

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"The threat of additional local or state restrictions on electronic nicotine products is very real," he explained. "Many localities have proposed total sales bans on vapor products, and several states have already introduced bills this year to prohibit the sale of vapor products." While the FDA's final guidance on flavored e-cigarettes focuses on the products themselves rather than the stores that can sell these products, convenience stores


 still face significant threats at the state and local government levels, where flavor bans and adult-only store carve-outs are being pushed through. The federal guidance is "merely a floor," according to Blom. NACS strongly encourages c-store retailers across the country to get engaged and push back on policies carving-out adult-only stores. It is the association's position that such policies will only result in an increase in the number of minors purchasing those products, leading to additional public health risks, as well as the need for more aggressive policy changes to deal with those increased health risks.

"Convenience store operators need to know that contacting their elected officials is critically important to educate these lawmakers on the impact of product bans."

  

— Thomas Briant, NATO "Attend a county or city council meeting and get to know your representatives," Blom urged. "It's often at the local level that ill-considered public policy can be adopted with little notice to the community. At the state level, we encourage you to contact your local state association to get involved." The NACS Government Relations Team can provide resources and data supporting the convenience industry's role in responsibly selling legal products, she added. "Adult-only carve-outs set a dangerous precedent. While it's e-cigarettes today, it could be any other product that raises health concerns in the future, which is why NACS has worked diligently to protect the industry's role in selling legal products," Blom said. Briant offers similar advice: "Convenience store operators need to know that contacting their elected officials is critically important to educate these lawmakers on the impact of product bans and the unintended consequences to retailers and their employees." Elected officials are generally very open to hearing from local businesses, he added, so it is important for retailers to reach out and establish a relationship with both their city council members and state legislators.

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"The more that lawmakers know how retail businesses will be affected by restrictions and bans, the greater the likelihood that reasonable, rather than prohibitionary, [restrictions] will be considered,� he said. CSN F E B RUARY

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Get Foot Traffic Flowing Again Foot traffic at convenience stores has been largely stagnant for the past five years By Renée M. Covino

convenience stores in recent years have been finding it more challenging to get consumers onto their lots and into their stores.

LONG THE KING OF CORNERS,

In 2014, total transactions in the channel (pump and in-store) were 40,711 per month/per store. In 2018 — the latest data available — total transactions were nearly unchanged at 40,774 per month/per store, according to industry association NACS. If you take pump transactions out of the equation, it’s likely c-stores are experiencing declining foot traffic, as 74 percent of shoppers get gas and never enter the store, recent research unveiled by NACS and the Coca-Cola Retailing Research Council (CCRRC) found. When asked why they didn’t enter the store in the CCRRC/NACS study, 74 percent of respondents said it was because they didn’t need anything inside. This opens up a world of opportunity for c-stores to boost traffic, according to industry experts, with ideas ranging from simple signage and cleanliness, to more complex cloud-based and mobile solutions. “It’s about adapting to change,” Jeff Hoover, c-store

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

data strategist for Paytronix, a loyalty and mobile marketing provider, told Convenience Store News. “I wouldn’t say that foot traffic at all c-stores is down over the recent history. However, the ones feeling the impact the most are those that have not met changing consumer needs and expectations by improving the in-store experience and product offerings.” Two recent research reports from PDI Software also show that the rise of online shopping has resulted in a decline in c-store traffic. In PDI’s 2019 C-Store Shopper Report, retailers ranked “decreasing store visits” as their top external challenge, which they attributed to the popularity of online shopping. A related study released in December 2019, PDI’s 2019 Road to Rewards Report, reinforced this finding, as it revealed that 40 percent of U.S. retailers (including grocers, c-store operators and CPG brands) consider “decreasing store visits due to the rise of the digital consumer” as their most significant external challenge. Other drivers in declining foot traffic, affecting all types of brick-and-mortar retailers, are competition from e-commerce (especially the growing availability of same-day delivery), a change in eating habits of millennials and younger consumers, and the rising


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number of relatively inexpensive delivery services, according to Ravi Panjwani, vice president of product management and marketing for Brother Mobile Solutions. Additionally, and specific to c-stores, “not only do consumers continue to be less eager to pop into the store for soda or cigarettes when they gas up, but they are refueling less frequently thanks to improved fuel efficiency — assuming they haven’t switched over to an electric vehicle and stopped fueling up entirely,” noted Panjwani. Hoover echoed that most consumers today don’t need gas more than once a week, and he pointed out that a decline in tobacco usage is also having a significant impact on traffic, as many c-stores have historically depended on these frequently visiting customers to drive transactions. Tobacco transactions can represent 30-40 percent or more of in-store sales, he cited.

Traffic Boosters The good news for convenience store operators is that there is no shortage of avenues to boost traffic. Industry insiders believe those who truly want to attract more in-store shoppers should check off not one, but all of these traffic-boosting tips: Start With Pump Signage Remember those 74 percent of customers who said they didn’t enter the store because they didn’t need anything inside? Additional Coca-Cola research shows that 31 percent of shoppers decide whether to enter the store while standing at the gas pump, and 47 percent of shoppers read signage at the pump while filling up their vehicles.

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

Therefore, c-stores should be using messaging and imagery at the pump to show the needs that can be met inside the store, according to the conclusions of the Coca-Cola/MFour Convenience Retail Lot to Visit Conversion research. The study further found that fuel discounts and promotions are the most motivating pump messages: 63 percent of shoppers would make a purchase inside the store to get a discount on that trip’s fuel purchase, 64 percent would like to earn a discount to redeem later for a fuel purchase, and 55 percent would respond to a promotion for a beverage. Lead Them Toward Clean If you want fuel customers to venture inside the store, ensure you have good lighting, clean restrooms, rewards and an overall inviting atmosphere. The top purchase motivator named by shoppers, according to Coca-Cola/NACS research, is overall store appearance — lighting, cleanliness, maintenance (68 percent) — followed by rewards for food and drink purchases (62 percent), and indoor restrooms (56 percent). Go Foodie on Them C-stores that don’t have a foot-traffic problem probably don’t have a food problem either. In other words, one consistent area of focus for c-stores doing well with in-store shopper traffic is foodservice offerings that are fresh and appetizing, as well as convenient. “Brands like Wawa and Sheetz have placed a lot of focus on foodservice platforms that are more similar to quick-serve or fast-casual restaurants,” noted Paytronix’s Hoover. Panjwani agrees that the perception of improved food quality and variety has increased over the past five


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years and big draws now include “highly portable foods and healthier snacks — in particular, refrigerated ones that customers perceive as fresher — along with a variety of beverages, from premium coffee to infused water to energy drinks.” Leverage Loyalty Programs All kinds of retailers are using loyalty and rewards programs to engage their guests and learn more about their behavior. Some of the most successful c-store loyalty programs have participation rates of nearly 50 percent, according to Hoover. “While value-driving merchandising will always have a place to lure customers into the store, loyalty programs enable a new level of intimacy that can be used to target your best customers with relevant personalized offers that can drive more visits and spend, but with less chance of subsidizing their existing behavior,” he told CSNews. While the published components of a loyalty program are critical to drive participation, c-stores “can truly differentiate and drive more profits by focusing on customer segmentation and targeted offers.” According to PDI’s 2019 C-Store Shopper Report, 73 percent of c-stores in the U.S. participate in a loyalty program of some kind. “C-store operators will benefit from a loyalty program that turns casual shoppers into frequent customers,” said Brandon Logsdon, president and general manager, Marketing Cloud Solutions at PDI. “And what motivates consumers to join a loyalty program? For 55 percent of loyalty members, it’s fuel savings, earning rewards they can redeem for fuel savings.”

“C-stores have always served up convenience, but in the decade ahead, their continued success will depend on their adaptability.” — Brandon Logsdon, PDI

Be Free With Free Services Complimentary services like free ATMs and free air can drive traffic in certain circumstances. If cost is a deterrent for making such services available to all customers, offer them as a loyalty member benefit, Hoover suggested. Move Them In With Mobile Wawa is one c-store chain that’s tapped into mobile ordering with limited grab-and-go items. Mobile apps that enable customers to order food ahead of time for pickup are becoming more mainstream. Loyalty programs can be paired with these apps and data analytics to provide the vehicle for delivering customized coupons and discounts, Panjwani explained. “Mobile techniques, such as geofence messaging and targeted push notifications for personalized offers, are another clear way for retailers to differentiate, especially with the younger consumers,” Hoover added. “Imagine hitting

Industry research has found that 47 percent of shoppers read signage at the pump while filling up their vehicles.

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customers with a text message to remind them of a fuel discount or other reward when they’re in a one- to twomile radius from your store, or a push notification when a typical gas-only customer is at the pump for a free drink.”

and age-restricted items delivered, in addition to your dinner. Some companies, such as goPuff, are building their entire business model on order and delivery for items that had traditionally come from c-stores.”

PDI’s Logsdon agrees that consumers want a convenient and faster way to track and redeem rewards. “That’s why 52 percent of loyalty members prefer using a mobile app for tracking and redemption,” he said. He advises c-store operators to invest in a “robust mobile app with easy-to-use features and streamline the entire redemption process. Better yet, they should leverage omnichannel marketing for real-time message delivery that will connect them with members and customers wherever — mobile app, website, social media — they are.”

This isn’t to say that the brick-and-mortar aspect of c-stores is in jeopardy. “While Amazon and many other online retailers are changing the retail landscape, I believe physical stores still offer a convenient on-the-go offering,” Hoover maintained. “The majority of consumers still commute and travel by car, so they will always need a rest stop. And if they can get quality food and drink on their way to and from work at a value, it will compel them to keep coming back.”

Get in the Delivery Game Experts see no reason why both mobile ordering and delivery can’t be executed more widely in the c-store industry. Currently, it’s focused on foodservice offerings, but “c-stores may have an advantage over food operators and restaurants by being able to offer other merchandise via this avenue as well,” Hoover noted. “Just think if you could have your candy, snacks

Analyze the Data C-stores should understand their own purchasing data, as this enables them to identify trip-driving products and categories by segment, and then use this knowledge to develop relevant traffic-driving marketing programs, advised Hoover. Logsdon suggests that c-stores leverage the customer data they collect through their loyalty program to gain insight into the consumer’s idea of convenience, whether in terms of rewards, foodservice, or increased automation with in-store transactions. “Data-driven insights can help operators adapt on a store level, whether to offer charging stations for electric vehicles in some sites or healthy, high-quality and even gourmet food in specific locations,” Logsdon said. “C-stores have always served up convenience, but in the decade ahead, their continued success will depend on their adaptability.”

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In a similar conclusion, Panjwani believes convenience stores are going to have to work smarter and strive to understand the changing consumer in order to keep traffic flowing. “This means moving to a technology-driven business model that increases productivity and efficiency for the customer and employee, as well as delivering a food and beverage selection that’s better aligned with the younger demographic. The goal should always be for an improved customer experience overall.” CSN


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FOODSERVICE

FOOD I NSIGHT P O W E R E D B Y DATA S S E N T I A L

Trendspotting for 2020 It’s time to dive into the next era of trends 2010-2019 DELIVERED TECHNOLOGICAL growth and evolution throughout the food industry. At the turn of the decade, who would have imagined that White Castle would have an Impossible Slider? But here we are. Now, it’s time to dive into the next era of trends and uncover what’s next courtesy of Datassential’s latest FoodBytes report.

Here is a sneak peek at some of the 2020 trends predicted to shape the year (and years) ahead: 1. Macro Trend: Trends with the potential to impact the wider industry and society Plant-Based Finds Its Identity The initial plant-based rush has come and gone. From an Impossible Whopper to a Beyond Burrito Bowl, brands have embraced the potential of plant-based. The next phase is about refining offerings and determining the future and identity of offerings. Plantbased menu mentions are predicted to grow 81 percent over the next four years. It’s up to brands to create their plant-forward future — Is it adding a patty swap in a burger? Embracing veggies? Or maybe even building a whole platform to make the most of the momentum of this far-reaching trend? 2. Micro Trend: Trends that target specific applications Breakfast, Brunch, Brinner, Blurred All-day breakfast is officially part of the new normal, and reinvigorating breakfast options will be critical in keeping menus and offerings fresh. Key to the success of brunch has been its ability to embrace the blurring of category lines. Fried chicken has firmly become a breakfast staple and brunch burgers (like ampm’s) score well with consumers. With “brunch” mentions predicted to grow 15 percent in the next four years, how are you planning for the brunch blur? 3. Flavor Trend: Flavors and ingredients to watch Pepper On With Ajvar It started with sriracha, then it was gochujang. What’s next? Consumers’ appetite for peppers continues to expand with a global approach. Sriracha’s prominence is here to stay with 83 percent growth on menus in the last four years. And the latest entrant, gochujang, a Korean chili paste, has experienced nearly 300 percent growth. As part of Datassential’s 10 Flavors & Ingredients to Watch research, we’re keeping our eyes on ajvar, a roasted red pepper condiment that hails from the Balkans. CSN

93

57%

definitely or probably would buy

unbranded PI

97

87

96

versus other c-stores’ items

versus other burgers

versus other items from ampm

98

63%

definitely or probably would buy

branded PI

--

--

98

versus other c-stores’ items

versus other burgers

versus other items from ampm

61

40%

extremely or very unique

uniqueness

73

53

84

versus other c-stores’ items

versus other burgers

versus other items from ampm

87

23%

would order the item all the time

frequency

89

87

86

versus other c-stores’ items

versus other burgers

versus other items from ampm

96

53%

would visit somewhere just for this item

draw

100

95

99

versus other c-stores’ items

versus other burgers

versus other items from ampm

89

61%

excellent or good value for the dollar

value

73

88

47

versus other c-stores’ items

versus other burgers

versus other items from ampm

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.

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FOODSERVICE

Pouring Out Profits The latest innovations in dispensed beverage equipment help c-stores cater to consumer tastes while keeping operations efficient By Angela Hanson CONVENIENCE STORES are a beverage destination for thirsty customers who just want to grab a drink to go, commuters who need their daily cup of joe, and hungry people who want something to drink with their prepared food purchase. To help retailers improve their dispensed beverage offerings and stay ahead of the competition, equipment manufacturers are offering more innovative and technologically advanced units than ever before.

Hot Dispensed Beverages Throughout 2019, a flurry of activity occurred in the hot dispensed segment as equipment manufacturers unveiled their latest innovations, many of which involve more efficient coffee units. Bean-to-cup technology, in particular, is growing in popularity, with companies like Bunn, Franke Coffee, Schaerer and others showing off bean-to-cup units of varying sizes. The built-in grinder and automatic coffee dispensing allow operators to enhance their coffee programs by offering visibly fresh brews. Common customization options make it easier for customers to get exactly what they want with the push of a few buttons. In addition to the extra customer appeal, beanto-cup coffee equipment has practical advantages for c-stores. "I think it is the future of coffee, primarily due to reducing waste. So much coffee is made and thrown away," said Paul Servais, foodservice director at La Crosse, Wis.-based Kwik Trip Inc., which operates 560-plus stores. "As coffee-growing regions of the world shrink and coffee beans become more scarce, it only makes sense to stop throwing so much away. We have started down the path a little bit." The breadth of bean-to-cup equipment options means retailers can select units based on their available space and level of foot traffic. However, they should carefully consider whether the system’s characteristics will make bean-to-cup a hindrance in any way. The nature of grinding beans and preparing a fresh cup of coffee, even when the process is automated, means that bean-to-cup can't keep pace with traditional units that already have coffee prepared in the urn. For stores with more space, that might not be a drawback. Smaller locations, though, may not find it worth adding to wait times if they have to choose between one or the other. Retailers may also want to consider the impact on human interaction. F E B RUARY

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FOODSERVICE

"We currently have a coffee host program that allows us to have a specified coffee person at the station during our peak times," said Chad White, category supervisor at York, Pa.-based Rutter's. "If we utilize these machines to reduce labor, do we lose the customer/employee interaction?" While cold brew coffee has reached the mainstream, retailers don't necessarily recommend making significant investments in cold brew-specific equipment, as the cold brew customer base tends to be loyal but smaller, and numerous ready-to-drink options exist. When it comes to nitro coffee, an even more niche type of coffee, the retailer consensus is that the expense of the equipment is still too high to make it a promising investment. "While I have seen advances in the equipment in nitro, I still see this as a niche item," White said. "I believe this still has a lot of ground to gain in customer appeal before customers start expecting it in the convenience channel."

Cold Dispensed Beverages Choice and customization are the watchwords for the cold dispensed segment, and retailers have a variety of ways to deliver these aspects to customers. Both The CocaCola Co. and PepsiCo Inc. have continued to streamline the customization process through their respective Freestyle and Spire units, which dispense their top beverage brands mixed with various flavorings. At the 2019 National Restaurant Association Show, Coca-Cola showed off its Freestyle 9100, which alerts employees to the need for flavor cartridge refills via an app and lets customers save and repurchase their personal blends. In 2020, the company expects to launch the Freestyle 7100 countertop unit, which will offer approximately 80 flavor choices in a small-footprint model. Still, convenient and versatile as these units can be, they come with a downside. "The challenge with using these machines is it forces you to limit your options to one brand," White noted. "We like to allow our customers the options to choose the brand of their choice. When you look at the top SKUs of fountain, it is always the core flavors of each brand that drive the overall volume. The ability to have each brand’s

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

The Coca-Cola Co. continues to introduce new models of its Freestyle fountain machine.

core flavors is more valuable than the option to customize, as the core is the majority of the volume." Rutter's has found the best solution for its stores is fountain units that feature the top soda varieties across brands, with a few flavor shots available. Kwik Trip, meanwhile, sees the future of fountain moving in other directions. "I think Freestyle and Spire were the last-ditch effort to grow fountain soda," Servais said. "Just like 20-ounce [bottles], fountain soda is dying and the next generations are drinking other beverages. The future of fountain is tea, energy drinks, etc." C-stores looking to offer more non-carbonated dispensed beverages may want to consider equipment such as PepsiCo's Mobile-Enabled Hydration Platform, which uses a water dispenser, a companion smartphone app and a personalized QR code sticker for reusable bottles, appealing to consumers who care about sustainability. For dispensed tea, equipment such as Teazzers' SmartBrew machine, created in partnership with NewCo, enables effective category management by tracking brews, performing self-diagnostics, and uploading information to the cloud.

Frozen Dispensed Beverages Recent data suggests that although frozen dispensed beverages make up a smaller percentage of the sales volume at convenience stores, the segment is performing well and showing growth, which may prompt retailers to invest in it more. Equipment like f'real milkshake and smoothie machines and the automated Fresh Blends smoothie machine offer more frozen treats without requiring more labor. "The summer months were amazing," Servais said of Kwik Trip's first year offering Fresh Blends smoothies chainwide. "We could not keep up in the stores and by next summer, over 300 stores will have two machines to make it easier."


At the same time, such units are not necessarily a replacement for handmade frozen beverages. "If a store has labor issues or limited foodservice, then an automated machine can do a huge amount to drive business. However, if you have robust foodservice and enough staff, then LTOs [limited-time offers] and creative drinks are the way to go," White said. "With equipment, you are limited to what the equipment can do. With creative drinks, you are only limited to what the staff can execute." Regardless of whether a piece of equipment is for hot, cold or frozen drinks, retailers agree that the increased data-collecting abilities seen in many of the latest models are very useful to c-store operators. Realtime, detailed information helps operators make the right changes based on consumer response. The more detailed the analytics, the more they can optimize. "I use the [Fresh Blends] data for determining flavors that sell best by time of

Bean-to-cup machines, like these units from Bunn, are growing in popularity within the convenience channel.

year and what sizes are most important," Servais said. The collected data also includes detailed information should something go wrong with a machine. "Our repair technicians can dial in to a machine from our support center, determine what is wrong and walk the store through the repair or dispatch service. It is awesome!� he added. “We are currently partnering with an oven manufacturer to do something similar." CSN

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PACKAGED BEVERAGES

Beverages With Benefits Various factors are contributing to the boom of functional beverages By Renée M. Covino

ORGANIC KOMBUCHA with shelf stability, sports drinks with micronutrients, coffee drinks with vitamins, teas with turmeric, energy drinks with electrolytes, and waters with magnesium, zinc and potassium — these pairings are all part of the current boom of functional beverages, and consumers can’t seem to get enough of them.

Along with added benefits, the subtraction of unwanted ingredients is also part of this trend, as consumers today are mindful about what they put into their bodies. “Getting the nutrients your body needs to feel your best, while cutting out dyes, fillers, added sugar and excess sodium shouldn’t be hard. But in the current marketplace, it is,” Dana Beck, CEO of Drink Nutrient, maker of functional sports drink and coffee options, told Convenience Store News. “Consumers deserve better.”

In a recent study, convenience store shoppers were asked if, compared to five years ago, they have moved toward healthier drink options, such as sparkling water and drinks with vitamins and electrolytes (considered functional beverages), over traditional soft drinks. Forty-four percent of respondents in the 2019 C-Store Beverage Study by GasBuddy said they have. GasBuddy is a crowdsourcing platform for fuel prices and c-store data.

44% of c-store shoppers say they’ve moved toward healthier drink options compared to five years ago. — 2019 C-store Beverage Study, GasBuddy Another recent beverage study showed that ingredients consisting of nutrition-packed superfoods experienced significant menu growth in recent years. Specifically, use of turmeric and charcoal increased by 200 percent, particularly in coffees and teas, according to S&D Coffee & Tea’s How to Deliver a Better Beverage Experience white paper. Forward-thinking convenience store operators who believe their customers want — and deserve — better drink options are keeping up with the functional beverage trend. “Efficiency is paramount in today’s society, and convenience stores are providing the desired ease and choice of options for an evolving customer,” said Frank Beard, a convenience retail analyst at GasBuddy. “C-stores are also responding to a growing desire for healthier options.” Some convenience store chains are responding by making enhancements to their own proprietary beverage brands. This summer, 7-Eleven Inc. introduced Quake, its own energy drink with electrolytes, creatine, COQ10 and branched-chain amino acids.

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“Health-forward ingredients such as turmeric and charcoal pack nutritional properties, unique flavors and brilliant colors.” — Helen Griffith, S&D Coffee & Tea Tim Cogil, 7-Eleven’s senior director of private brands, said that understanding the needs of its customer is “critical” to the success of the chain’s private brands program. “Customers were telling us they want an energy drink that provides more benefits than the traditional energy drink brands offered today,” he explained, noting that Quake was developed based on customer feedback and created with a mix of ingredients that make it unique in the energy drink space. As for superfoods, c-store operators are encouraged to leverage them in the form of limited-time offers that can create buzz or are crave-worthy, according to Helen Griffith, vice president of marketing for S&D Coffee & Tea, a subsidiary of Cott Corp. The Concord, N.C.-based company’s thinking is that health-forward ingredients such as turmeric and charcoal not only pack nutritional properties, unique flavors and brilliant colors, but they also “play well on social media, leading to a surge

in trending Instagram posts featuring charcoal lattes, turmeric teas and more.”

Unique Attributes Being unique is a big part of the functional beverage game. Both mainstream and niche players are competing based on product attributes that make them different. For instance, new waters from Nestlé Waters this year include Poland Spring Energy Water, a canned sparkling water that reportedly contains the same amount of caffeine as a cup of coffee, but uses green tea extract as its caffeine source. In addition, Nestle Pure Life Plus, a functional water, is launching this month in three varieties: magnesium, zinc and potassium. Unlike traditional sports drinks, Nestle Pure Life Plus waters do not contain any artificial sweeteners or sugar, according to the company. Talking Rain Beverage Co. also recognizes that consumers are looking for healthier alternatives to energy drinks. And so, the company has developed a new line under its Talking Rain brand. TRE (Talking Rain Elevate) is a naturally flavored water with caffeine, electrolytes, zero sugar and functional ingredients. Designed to “enhance everyday performance,” it comes in three flavors: Mango Fusion, Power Punch and Triple Berry. TRE debuted at the 2019 NACS Show and is launching in the Denver, Arizona, Seattle/Portland and Los Angeles markets during the first quarter of this year. “To be marketed effectively, functional drinks should be easy and convenient to use,” said Beck of Drink Nutrient. The company believes its Liquid Nutrient product, which comes in single-serve sticks, delivers on both those points. Consumers simply tear open one of the sticks and add it to their own drinking vessel filled with water.

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PACKAGED BEVERAGES

plastic of ready-to-drink options. The future is everyone having their own reusable bottle. Get your nutrients without the waste,” said Beck. This packaging trend was recently validated by market researcher The NPD Group, which reported that singleuse bottled water growth is slowing, and the fastestgrowing water category is now tap or filtered water because consumers are turning to reusable bottles out of growing concern about the environmental impact of single-use plastic. Other packaging trends for functional beverages in c-stores include the 12-ounce aluminum slim can, which contributes to easier stocking and on-the-go carrying. This option is supported by companies such as Stratus Beverage Group, with its Koe Organic Kombucha, part of the functional beverage subsegment that focuses on probiotics. The Koe brand also touts shelf stability with a 12-month shelf life that “opens up an entirely new world of offshelf display opportunities where real estate is a premium,” said Louisa Lawless, chief strategy officer at Stratus. “And kombucha consumption is on the rise, with the growth outpacing the traditional tea category,” she told CSNews.

The Future of Functional Beyond packaging innovation, functional beverage companies identify ingredient omission and transparency as the next wave of the category’s future.

Functional beverage companies identify ingredient omission and transparency as the next wave of the category’s future. Liquid Nutrient contains high-quality, potassium-heavy electrolytes for rapid hydration, tyrosine for better focus, and BCAAs (branched-chain amino acids) for muscle repair. As a result, the company touts that its product covers two distinct categories that have formed in the functional sports drink area: items designed for hydration, and items with micronutrients designed for specific performance-enhancing purposes. “You should be able to grab your vitamins and hydration and enjoy them on the go in single-serving options without the bulk or 60 Convenience Store News C S N E W S . c o m

“We researched and identified nine of the top inflammatory ingredients in the most popular sports, hydration and caffeinated drinks on the market,” Beck explained. “We call them the ‘Naughty Nine’ and vowed to never include them in any of our products.” This includes dyes, fillers, added sugar and excess sodium. Meanwhile, Koe recently unveiled a new kombucha formula with fewer calories (just 35) and less sugar (8 grams) per 12-ounce can. The product also features the official Non-GMO Project verified seal. Big brands are following suit, too. In December, Ocean Spray unveiled three unsweetened juices with “superfruits,” being distributed at Walmart stores for starters. Ocean Spray Pure fruit juices contain no added sugars, artificial flavors or preservatives and are nonGMO. In addition to Pure Cranberry, the unsweetened juices are available in Pure Tart Cherry, Pure White Grapefruit, and Pure Concord Grape. By extending its portfolio, Ocean Spray is “demonstrating its commitment to deliver a wide variety of juices that have incredible health benefits of the cranberry and other superfruits,” according to Chris O’Connor, vice president of marketing. He said the company will continue to develop “innovative options that expand awareness of cranberries and exemplify our dedication to health and wellness.” CSN


TECHNOLOGY

ACHIEVING EMV COMPLIANCE The deadline for compliance at the pump is looming and while some retailers won’t make it in time, there are options to mitigate liability By Tammy Mastroberte

multiple times, but the deadline for retailers to be EMV compliant at the pump is set for October 2020, and it doesn’t look like it will be pushed back again.

IT’S BEEN PUSHED BACK

“The Merchant Advisory Group reached out to Visa and Mastercard directly to ask for a delay and they were told ‘no,’” Linda Toth, director of standards at technology nonprofit organization Conexxus, told Convenience Store News. What actually happens on Oct. 1, 2020? The liability for fraudulent transactions shifts from the credit card companies to the retailers. There are two types of fraud: counterfeit, and lost and stolen. The credit card companies have been accepting liability for the counterfeit, which is 90 percent of the fraud out there now, Toth explained. If a retailer is EMV compliant, they will not be responsible for that counterfeit fraud or lost and stolen. However, if they are not compliant, they will be liable for it come October 2020. “We reached out to the card brands to try and understand the potential fraud, and three out of the major four gave us data for 2018 and 2019,” Toth said. “In 2018, the fraud was $299 million annually just for automated fuel dispensers. We are looking at a 23 percent year-over-year increase in fraud at

the pump. That means by 2020, it will be $451 million annually and if a retailer is not compliant, they will share a piece of that.” Some retailers who may be in remote, less populated areas of the country and feel they don’t experience fraud must realize that it’s only a matter of time, she cautioned. Fraudsters will find new ways to steal, including going to sites that are not EMV enabled. Just because today there is no fraud, that doesn’t mean they won’t be hit tomorrow. “All it takes is one time for a retailer to be hit for a lot of fuel on counterfeit cards and they are looking at a huge liability. By that point, it’s too late, and they will be responsible for all those chargebacks,” Toth said. And fraudsters today are specifically targeting convenience stores, in part, because other retailers have already become EMV compliant. Experts recommend retailers contact their card processors of fuel brands to find out how much fraud is actually affecting their sites now so that they can understand the liability they will face. “Retailers don’t have current visibility into their levels of fraud,” said Terry Mahoney, a consultant at W. Capra Consulting Group, based in Chicago. “I’ve seen statistics where one retailer had $50 a month in fraud and another had $6,000 a month. Retailers may not realize how much fraud they will get hit with, so engaging with the fuel brands and credit card companies to check can help them make an informed decision.”

Roadblocks to Compliance There are multiple reasons some retailers won’t make the October 2020 deadline.

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TECHNOLOGY

In a recent survey done by Conexxus, the top challenge cited by respondents was lack of available software (52 percent). This means it’s either not available or not yet certified, according to Toth. And when it comes to certification, that is a whole other roadblock itself. “One of the challenges in petroleum is certification is required end to end from the acquirer, and there is a huge back log,” Toth said, explaining that certification is needed for each part of the process — from the pump dispenser to the EPS and point-of-sale (POS) — and for some multi-store operations, these configurations can differ per store. “You have to get certification for each configuration of equipment.” There are many equipment and software combinations that are not yet certified. However, the other issue is the upgrades need to be done by certified technicians, and there are not enough of them to go around, Mahoney noted. When you take the average number of fuel dispensers and multiply it by the number of fuel locations in the United States, it is nearly one million pay points. “Retailers often need to install new hardware, new software, upgrade the communications between their store controller and the dispensers, and there are not enough technicians to do it all,” Mahoney explained. Everyone is sharing the same pool of certified technicians, and with the winter coming in the northern states, technicians won’t be able to install hardware, so there is

bound to be a backup even once solutions are available and certified, Toth said. “By October 2020, I suspect there still won’t be solutions ready for some combinations, and even once a retailer has the certification, they still need to install a beta site, test it to make sure everything is working, plan to roll out, and send technicians to install the software,” she said. Additionally, small operators and singlestore owners often find themselves struggling to justify the cost of the upgrades, or they simply can’t afford it. The price tag for a single gas station to upgrade could be $25,000, and not every business is able to shell that much out, according to Rafael Lourenco, executive vice president and partner at ClearSafe, a provider of fraud detection and prevention services. “In large corporations, making the change will be easier. But there are so many small and medium-sized companies that will not necessarily have the money to get all new POS systems or pump dispensers,” Lourenco noted. “They can buy them or rent them, but it will likely be costs they were not expecting.” In the recent Conexxus survey, retailers who are not 100 percent compliant were asked if they are going to deploy new solutions, and 17 percent said they were undecided, while another small percentage said no. The reasons cited were either the cost, or the risk not justifying the expense. “The biggest message I have for merchants on the fence is that the risk is real, and as more and more stations become compliant, the bigger piece of that fraud pool you will be responsible for, and that cost will become huge — and may be more than the operating profit,” Toth pointed out. “It’s something retailers really need to take a look at now.”

Alternative Options If the October 2020 EMV compliance deadline is approaching faster than a chain or a single store can get tested, certified, installed and complaint, there are still options for retailers to research and enact in order to mitigate their loss. Visa has an Automated Fuel Dispenser (AFD) Fraud Prevention Best Practices document available online with suggestions, including routinely inspecting AFDs to ensure skimming devices or other software/

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


hardware is not present, as well as monitoring suspicious activity. “There is common-sense stuff when it comes to skimming, like if someone pulls up and is at the pump for a long period of time, then something is probably going on,” Toth said. “We have had reports of big trucks or vans with a bladder tank that will sit there and go through a bunch of counterfeit cards on an island that the cashier can’t see. They fill up a 500-gallon tank and a retailer would be out that money.” Visa’s guidelines advise watching for: • • • • •

A single customer activating multiple dispensers; Filling up multiple vehicles from one dispenser; Filling up large, non-vehicle containers; Card testing (swiping or inserting without pumping); and Island surfing (individuals walk around offering to pump fuel for other customers with their card in exchange for cash).

“Retailers can put in countermeasures at the pump, like hiring someone to keep an eye on the pumps to prevent fraud,” noted Randy Vanderhoof, director of the U.S. Payments Forum, based in West Windsor Township, N.J. There is also software that can be purchased to encrypt magnetic stripe data at the pump so that even if someone does break in, they won’t be able to get the account data; they’ll only get an encrypted version of it, Vanderhoof pointed out. “There are workarounds, but they all have their own costs and limitations,” he said. “Retailers could also choose not to accept payment at the pump via credit card, asking people to go inside and pay, or have an employee at the pump with a portable reader to accept payment for them and manually activate the pump.” For small operators or single stores, upgrading at least one pump and disabling payment at the others is another option. There are also companies on the market today offering EMV as a service and charging a monthly fee. “That could be more expensive in the long-term, but it could make the transition easier,” ClearSafe’s Lourenco said. Since the initial deadline given for compliance in 2012, there has been tremendous progress in the industry, and there is still many months to go before the deadline hits. Looking back to when the industry had to meet the EMV compliance deadline for inside the store in 2015, the final year saw many retailers working overtime to meet the deadline, Vanderhoof recalled. He expects to see similar activity over the next 12 to 18 months, even moving into a short time after the liability shift takes place. “Nobody has expectations that everyone will be ready, but it’s pretty well known that fraudsters will be ahead of this and will know what stores are vulnerable,” he said. “We already witnessed in general retail how the fraud balloon gets squeezed and as known targets get their systems up and running, fraudsters will focus on those who are falling behind. These retailers might see fraud rates higher than ever before.” CSN

If You Are on Hold… In order to become EMV compliant at the pump, retailers need to install an EMV-capable dispenser or a retrofit kit, install software on their EPS and pointof-sale, and this all needs to be done by government-certified technicians before everything can be tested and turned on. Many retailers in the midst of the process are finding themselves waiting in line for their software and hardware combinations to be certified, and then waiting in line for a technician to install. “There is a queue that is building up to go through the certification process, so there is a segment of retailers that have done all they need to do by working with manufacturers, buying the proper components and receiving software from vendors, but are now waiting on their processor to test their particular configuration. And that is different for nearly every retailer,” said Randy Vanderhoof, director of the U.S. Payments Forum. So, what can a retailer who is on hold do to meet the October 2020 deadline? There are some recommendations and best practices from experts on how retailers can try and speed up the queue for Level 3 testing and certification. This includes preliminary testing and obtaining approvals before installing hardware, so once the software comes for the upgraded hardware, they will have already gone through Level 3, Vanderhoof explained. Some payment brands also have offered self-testing options because everyone is trying to streamline things as much as possible to help retailers get through this, he noted. “Ultimately, it depends on the individual retailer’s setup and system, and how much work they have done in advance before getting to the end of the timeline in October, where any fraud that occurs gets charged back to the retailer,” he concluded.

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TWIC TRAILBLAZERS

A Corporate Champion Casey’s General Stores is honored for advancing gender parity in the boardroom By Linda Lisanti NOW IN ITS SEVENTH YEAR, the Convenience Store News Top Women in Convenience (TWIC) awards program has recognized nearly 300 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 Trailblazers, our new quarterly feature, we spotlight a c-store industry retailer, supplier or distributor company that is leading the way in championing gender parity. Our inaugural subject is Casey’s General Stores Inc., the Ankeny, Iowa-based chain of more than 2,100 convenience stores across 16 states, which was recently honored by The Women’s Forum of New York during its biennial Breakfast of Corporate Champions. Casey’s was recognized for advancing gender parity in the

boardroom, where women occupy 55 percent of the seats on its corporate board, far exceeding the national average of 23.4 percent. Casey’s current board of directors includes five women: Diane Bridgewater, executive vice president and chief financial and administrative officer of LCS; Cara Heiden, retired co-president of Wells Fargo Home Mortgage; Larree Renda, retired executive vice president of Safeway Inc.; Judy Schmeling, former chief operations officer of HSN Inc. and former president of Cornerstone Brands; and Allison Wing, chief consumer officer of Bright Health. CSNews recently chatted with Katie Petru, Casey’s director of communications, about the honor. CSNews: How does Casey’s feel about this recognition? Petru: We are honored to be part of an outstanding group of organizations that are reshaping the makeup of America’s boardrooms. Additionally, we are proud to have women represented across our

THE 2020 CONVENIENCE STORE NEWS TOP WOMEN IN CONVENIENCE PROGRAM IS SPONSORED BY: Founding & Presenting Sponsor

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Platinum Sponsors

Gold Sponsors


LegaL Notice

If you bought butter or cheese directly from a National Milk Producers Federation Cooperatives Working Together Program Member between December 6, 2008 and July 31, 2013, you could receive a payment from a $220 million settlement.

broader organization, as women make up approximately 65 percent of our total team members. We also recognize that there is still work to be done and we challenge leaders to continue championing gender parity throughout their organizations. CSNews: What are some of the ways Casey’s has been able to achieve having women occupy 55 percent of the seats on its corporate board? Petru: We are focused on casting a wide net for diverse leaders who have the experience and background to help us be a better retailer. Our board recruitment process is first focused on the right professionals to provide the oversight we need, along with a diverse perspective. CSNews: Are there any new initiatives planned for 2020 around gender parity? Petru: At Casey’s, we are committed to being an inclusive and diverse workplace. There are a few great examples to help demonstrate this. Women Inspired to Lift and Lead (iWILL) is one of our employee resource groups that focuses on educating, inspiring and encouraging women to set goals, strive to move higher in the organization, become more active in the community, and foster healthy work relationships. We regularly hold professional development events and offer philanthropic opportunities. For example, later this month, we’re hosting an event on financial literacy. In addition, our talent management team has strategic relationships with groups like Women in Technology to help identify and attract talent from different backgrounds. CSN

Is your company leading the way in championing gender parity? If so, we want to hear about your efforts. Contact Editor-in-Chief Linda Lisanti at llisanti@ensembleiq.com.

What is the lawsuit about? A $220 million settlement has been reached in a class action lawsuit brought against National Milk Producers Federation, Agri-Mark, Inc., Dairy Farmers of America, Inc., and Land O’Lakes, Inc. (collectively “Defendants”). The lawsuit claimed that an effort known as Cooperatives Working Together (CWT) operated a Herd Retirement Program that was a conspiracy to reduce milk output that violated the law. The Defendants deny doing anything wrong. The Court has not decided who is right. Who is included? The Court decided that the Class includes all persons and entities in the United States that purchased butter and/or cheese directly from one or more Members of Defendant, Cooperatives Working Together and/or their subsidiaries, during the period from December 6, 2008 to July 31, 2013 who did not timely opt-out of the Class. Those that are included are called “Class Members.” To be a Class Member who could be eligible for a payment, you must have purchased butter or cheese made by a CWT Member. If you are a consumer, you must have purchased butter or cheese made by a CWT Member at one of the dairy co-op stores. Go to the website for a list of CWT Members along with their store names and locations. What does the settlement provide? The settlement provides that payments to Class Members will be allocated: 37% to the Butter Sub-Class, and 63% to the Cheese Sub-Class. Total payments will be $220 million plus interest, minus: attorneys’ fees and expenses; payments to the Named Plaintiffs; notice and administration costs; and taxes. What are your options? If you are a Class Member who received emailed or mailed Notice, you do not need to do anything at this time to be eligible to receive a payment. Once the Court has approved the Claim Form, a deadline will be set for Class Members to submit claims. If you received a Notice in the mail, you will be mailed a Claim Form automatically. If you did not receive a Notice in the mail, and you think you are a potential Class Member, please identify yourself or your company to the Settlement Administrator as a potential Class Member by letter to the following address: Butter and Cheese Class Action, PO Box 4290, Portland, OR 97208-4290, email to: info@butterandcheeseclassaction.com, or register on the website, so you can obtain a Claim Form, once it is available. As a Class Member, you will be bound by all orders and judgments of the Court. Unless you want to object to the settlement, YOU DO NOT HAVE TO DO ANYTHING NOW. Instructions for objecting can be found at the website or by calling the toll-free number below. You must mail your objection postmarked by March 17, 2020. The Court will hold a Fairness Hearing on April 27, 2020, to decide whether to approve the Settlement and any requests for fees and expenses. If there are objections, the Court will consider them at the hearing. You do not need to attend the hearing. If you wish to appear at the hearing, you must file a “Notice of Intention to Appear” with the Court and you may hire your own attorney to appear in Court for you at your own expense. Detailed information is available at the website and toll-free number listed below.

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STORE SPOTLIGHT

Hometown Homage Wawa’s newest Philadelphia store is a food-focused destination for on-the-go customers By Danielle Romano

known for its cheesesteaks and the role it played in the American Revolutionary War. It is also recognized as the birthplace of Wawa Inc., which kickstarted 2020 by opening its first store of the new decade: an innovative food-focused destination for customers on the go, located in the heart of the City of Brotherly Love.

PHILADELPHIA IS A CITY

At a Glance Wawa Location: 33 S. 16th Street, Philadelphia Size: 3,000 square feet Unique features: Small format; a PickUp Window for mobile orders and online ordering; new line of “Good to Go” food offers; self-serve hot tea bar; environmentally conscious products

Situated at 33 S. 16th St. and clocking in at a mere 3,000 square feet — half the size of a standard Wawa store — the first-of-its-kind format began welcoming customers on Friday, Jan. 10. The concept is designed to continue the retailer’s commitment of “Fulfilling Lives.” “At Wawa, we strive to accommodate our customers in multiple ways and this new store design is geared toward meeting the needs of our local community members who require quick food options without sacrificing fresh and quality ingredients to fuel their daily routine,” said David Simonetti, senior director of store operations for Wawa. To accommodate on-the-go customers, the new format includes several firsts, including: Philadelphia’s first-ever PickUp Window for mobile orders and online ordering to expedite service; a new expanded line of “Good to Go” hot

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

and cold express food items; and a self-serve hot tea bar featuring Revolution Tea. In an effort to reduce its footprint, the environmentally conscious convenience store offers compostable straws, reusable bags, and an option to purchase a reusable mug for coffee and other hot beverages.

Giving Back to the Community A grand-opening event was held Jan. 10 at 8 a.m., followed by an official ribboncutting ceremony at 10 a.m., which included Wawa’s mascot, Wally Goose. The celebration docket also featured a free T-shirt giveaway to the first 100 visitors, and free coffee through Jan. 13. In addition, city officials and Welcome America festival leadership commemorated Wawa’s longstanding title sponsorship of the annual event, and publicly announced the retailer’s commitment as title sponsor through 2024. Also as part of the grand opening, Wawa announced it is joining forces with founding members from PA Convention Center, PREIT and others to support PHL Cares, an initiative aimed at providing permanent supportive housing units for 100 homeless people.


“At Wawa, we strive to accommodate our customers in multiple ways and this new store design is geared toward meeting the needs of our local community members who require quick food options without sacrificing fresh and quality ingredients to fuel their daily routine.” — David Simonetti, Wawa Inc.

The grand opening concluded with Wawa’s signature “Hoagies for Heroes” hoagie-building competition, where teams from the Philadelphia Police Department and Philadelphia Fire Department faced off to see who could build the most hoagies in three minutes in the traditional Wawa way. Wawa presented $1,000 checks to the charities of their choice. Wawa operates more than 880 convenience stores (with more than 600 offering fuel) across Pennsylvania, New Jersey, Delaware, Maryland, Virginia, Florida and Washington, D.C. CSN

The store’s grand opening featured giveaways, a hoagie-building competition, and community partnership announcements.

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HOT PRODUCTS SPECIAL ADVERTISING SECTION

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General Merchandise

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Gourmet Pet Treats

Age Verifier

86

%

of retailers

who read Convenience Store News do so because they want to find out about new products. Reach those important hard to reach retailers by advertising here in the Hot Products Section of Convenience Store News by contacting:

Terry Kanganis EnsembleIQ at:

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Air Vacs

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General Merchandise

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CLASSIFIEDS

ATM’s

Coffee and Tea Services

FOR ALL YOUR NEW PRODUCTS AND SERVICES ADVERTISE IN

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TERRY KANGANIS

201.855.7615

Sunglasses

Services

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For Sale

Wholesale Refrigeration

FOR ALL YOUR NEW PRODUCTS AND SERVICES ADVERTISE IN

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TERRY KANGANIS

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Looking for ideas to promote your product or services? Need help creating an ad that fits your needs without spending a fortune with an advertising agency?

We are here to help, whether it be in the classified ad section, an ad in the main pages, or online. Call or email with any questions or for pricing. We can handle all aspects of your ad from conception to print in a fraction of the cost that agences charge!

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CLASSIFIEDS

Age Verifier

Foodservice Program

ADINDEX Altria Group Distribution..................................2

Kinter.......................................................................44

Avanti Cigar...........................................................40

Liggett Vector Brands.......................................51

Calico Brands........................................................42

Living Essentials..................................................1, 8–9

Cheyenne International.....................................31

National Confectioners Association............29

E-Alternative Solutions.....................................25

Premier Manufacturing.....................................39, 41, 43,

Epiq Systems........................................................65

45

Forte Products.....................................................57

Reynolds American............................................84

GlaxoSmithKline..................................................15

Swedish Match North America LLC.............7, 49, 83

ImageWorks Display & Marketing Group...13

Swisher International.........................................47

ITG Brands.............................................................35

TransAct Technologies......................................17

J & J Snack Foods..............................................11

Uline.........................................................................52

Jack Links Beef Jerky........................................5

Universal Merchants...........................................Outsert

JUUL Labs..............................................................36–37

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INSIDE THE CONSUMER MIND

Finding Favor With Younger Consumers Millennials and members of Generation Z bring unique shopping perspectives Retailers in every segment are striving to gain the favor of younger consumers, but this group is not an easy one to capture. Millennials and members of Generation Z are diverse, demanding and seemingly ever-evolving. Here are some of the latest insights on what resonates with them:

Younger consumers regard c-stores as the perfect grounds for expanding their tastes: 63% of those aged 18-34 say they like to try new items when purchasing food at c-stores.

76

%

Source: Y-Pulse

83

%

Younger consumers enjoy foodservice venues that allow them to make meals their own: 83% are willing to wait for a customized sandwich instead of buying a packaged one.

More than three-quarters of consumers aged 18-34 (76%) agree that they should not have to try too hard to eat healthy, and 86% expect healthy food to taste delicious.

86

%

Two-thirds of younger consumers (66%) don’t mind paying extra for a snack if it’s healthy.

Source: Y-Pulse

Millennials show a preference for shopping at retailers that offer rewards programs. Millennial men seek a balance between immediate rewards and long-term value, as 30% prioritize the former and 30% consider the latter to be most important. Millennial women also most want immediate rewards, followed by exclusive perks. Source: ZipLine, Payment Trends in the United States

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40%

Millennial shoppers indicate spending the largest percentage of their grocery budget online (40%). This compares to 37% of Gen Z, 32% of Gen X, and 20% of baby boomers.

The majority of millennials who are online grocery shoppers say they utilize pickup services once a week or multiple times a week (50%). Source: Acosta, Online Grocery Pickup Accelerates Omnichannel Sales


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