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
Convenience Store News February 2022
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
DRIVING TRAFFIC THROUGH DIGITAL ENGAGEMENT
BACKBAR OF THE FUTURE WHAT WILL THE NEXT DECADE HOLD FOR ONE OF THE CONVENIENCE STORE INDUSTRY’S MOST IMPORTANT — AND CHALLENGING — PRODUCT CATEGORIES?
Volume 58, Number 2
1/11/22 11:45 AM
Is Uncertainty the New Normal? Adaptability is the cure for convenience store retailers NATIONAL RETAIL FEDERATION (NRF)
screenings and events in Park City, Utah.
Chief Economist Jack Kleinhenz last month declared that retailers can expect the COVID-19 omicron variant to cause “another very challenging year of substantial uncertainty.”
In the trade show space, PLMA’s annual January Private Label Trade Show in Chicago was cancelled, but NATSO Connect 2022 planned as of press time to welcome truck stop and travel plaza operators to Orlando later this month.
Is the pandemic near its end? Will supply chain issues be resolved? How high will inflation go, and how long will it last? Those are the big questions that remain unanswered for 2022, according to Kleinhenz. “Even with the experience of the past two years, there is no model that can predict how the economy responds to a pandemic. What we have learned is that each successive variant has slowed down the economy, but the degree of slowdown has been less,” he said on the eve of the opening of NRF’s Big Show convention at the Javits Center in New York City, which took place in spite of the spread of omicron, but featured some virtual elements, too. Meanwhile, across the country, the 64th annual Grammy Awards, which were to be held in late January in Los Angeles, were postponed, and the Sundance Film Festival cancelled in-person
Despite the uncertainty of omicron’s impact on retail spending, I believe most people are sick of COVID hysteria. Nearly two years after “flattening the curve,” I’m over it. I’ve stayed at home a lot, but I also went out every day for my morning coffee at my local convenience store. I got my first two vaccines as soon as I could, and I got the booster shot when I was eligible for it. My wife and I ate at restaurants, both inside and outside. We traveled, both on business and for pleasure, and even internationally. We still take precautions. Wear our masks in close quarters with strangers. But, like most Americans, we want to be free to live our lives to the fullest. It may turn out that inflation will be a bigger negative for retailers this year than even the virus. And supply chain shortages continue to plague retailers. But whatever obstacles arise this year, the convenience store industry has time and again demonstrated its ability to adapt to changing market conditions. I’ve no doubt that it will continue to adapt in 2022. For comments, please contact Don Longo, Editorial Director, at (201) 855-7606 or firstname.lastname@example.org.
EDITORIAL EXCELLENCE AWARDS (2013-2022)
EDITORIAL ADVISORY BOARD
2021 Jesse H. Neal National Business Journalism Award Finalist, Best Infographics, June 2021
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
2020 Eddie Award, Folio: magazine Business to Business, Retail, Series of Articles, September 2019 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 Award, 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
2016 American Society of Business Press Editors, National Azbee Awards Gold, Best How-To Article, March 2015 Bronze, Best Original Research, June 2015 2016 American Society of Business Press Editors, Midwest Regional Azbee Awards Gold, Best How-To Article, March 2015 Silver, Best Original Research, June 2015
2015 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Single Article, February 2014 2014 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2013 Business to Business, Retail, Single Article, February 2013 2013 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2012
Laura Aufleger OnCue Express
Ray Johnson Speedee Mart
Chad Beck Core-Mark
Ruth Ann Lilly GPM Investments LLC
Edward Davidson Ed Davidson & Associates (7-Eleven Inc., retired) Robert Falciani ExtraMile Convenience Stores Jim Hachtel Eby-Brown Co. Chris Hartman Rutter’s
Vito Maurici McLane Co. Inc. Matt Paduano Lakeport Markets Jonathan Polansky Plaid Pantries Inc. Greg Scriver Kwik Trip Inc. Roy Strasburger StrasGlobal
2015 American Society of Business Press Editors, National Azbee Awards Silver, Best Profile (long form), February 2014 2015 American Society of Business Press Editors, Midwest Regional Azbee Awards Gold, Best Special Supplement, November 2014 Silver, Best Profile (long form), February 2014 2013 American Society of Business Press Editors, Midwest Regional Azbee Awards Bronze, Best Editorial/Commentary, July 2012
2020 Trade Association Business Publications Intl. Tabbie Awards Honorable Mention, Best Single Issue, September 2019 2016 Trade Association Business Publications Intl. Tabbie Awards Silver, Front Cover Illustration, June 2015
F E BRUARY
Convenience Store News 3
CONTENTS FEB 22
VO LUME 58 N UMB ER 2
3 Is Uncertainty the New Normal? Adaptability is the cure for convenience store retailers.
64 Readying for the Future Huck’s Market unveils a modern design and extensive foodservice offers in 6,000 square feet.
8 CSNews Online
INSIDE THE CONSUMER MIND
26 The Backbar of the Future What will the next decade hold for one of the convenience store industry’s most important — and challenging — product categories? FEATURE
36 Pain in the Supply Chain The immediate bumps in the supply chain may be temporary, but lingering issues will force c-store retailers to rethink their strategies. FEATURE
40 How to Get Into the Private Label Business Store brands can deliver big margins and brand strength to c-store retailers.
4 Convenience Store News C S N E W S . c o m
16 New Products SMALL OPERATOR
20 Some Rules Are Not Meant to Be Broken We must keep the welfare of others in mind when we are making our daily decisions. NEW HORIZONS
62 Supporting Women- & People of Color-Owned Businesses Contributing to another’s success won’t ever dampen yours.
84 Dining Out, But In Food delivery aggregator platforms are very popular among the highestspending, highest-frequency restaurant customers.
CONTENTS FEB 22
VO LUME 58 N UMB ER 2
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10 Financing Moves Signal Growth for the C-store Industry
11 New Year Ushers in Minimum Wage Hikes 15 Retailer Tidbits 15 Supplier Tidbits 15 Eye on Growth TECHNOLOGY
46 Feeding Off the Power of Loyalty The real-time data and consumer insights provided by loyalty programs can boost marketing efforts and improve foodservice category sales. PACKAGED BEVERAGES
52 A Healthy State of Beverages Drinks packed with energy, nutrients and probiotics are resonating with consumers.
58 Driving Traffic With Digital Mobile apps, digital signage, text messaging and more is how consumers expect to be engaged in today’s retail world.
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Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by EnsembleIQ, 8550 W. Bryn Mawr Ave., Ste. 200, Chicago, IL 60631. Subscription rates: Subscription rate in the United States: $125 one year; $230 two year; $14 single issue copy; Canada and Mexico: $150 one year; $270 two year; $16 single issue copy; Foreign: $170 one year; $325 two year; $16 single issue copy; Digital One year, digital $87; two year, $161. Periodical postage paid at Chicago, IL 60631, and additional mailing addresses. Copyright 2021 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 email@example.com or (877) 652-5295. POSTMASTER: send address changes to Convenience Store News, 8550 W. Bryn Mawr Ave. Ste. 200, Chicago, IL 60631.
6 Convenience Store News C S N E W S . c o m
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TOP VIEWED STORIES
Wawa Closes More Stores Due to Operational Challenges
Wawa permanently shuttered its convenience store at the corner of 13th and Chestnut streets in Philadelphia’s Center City neighborhood less than four years after it opened. Wawa also closed its store at Ninth and South streets in the fall, and recently closed a North Philadelphia location on East Erie Avenue.
Tobacco Companies Hike Cigarette List Prices
Casey’s Makes Strides in Its Strategic Plan Initiatives
Ten Reasons Why C-store Foodservice Is Poised for a Record Year
Altria Group Inc. announced a 15-cent-per-pack increase on its Marlboro, Chesterfield, L&M and Basic Simple Tobacco brands, as well as a 20-cent-per-pack increase on Basic, Benson & Hedges, Benson & Hedges Menthol Green, Merit, Nat’s, Parliament, and Virginia Slims. British American Tobacco, the parent company of R.J. Reynolds Tobacco Co., also raised its cigarette list prices by 14 cents per pack.
Despite the global pandemic and the challenges it has brought, Casey’s General Stores Inc. continues to move the needle on its strategic plan. Launched in January 2020, the three pillars of the retailer’s strategic plan are to reinvent the guest experience, create capacities through efficiencies, and be where the guest is through unit growth.
Convenience stores should feel optimistic about the future of foodservice, according to Joyce Baird, strategic account manager at research and consulting firm Foodservice IP. Positive factors affecting the current convenience foodservice market include: the fact that prepared and delivered food is thriving; c-store foodservice is positioned to fight for share of stomach; and flexible organizations thrive in uncertainty.
Pic Quik Sells Its Portfolio of Stores to Couche-Tard
Pic Quik unloaded its 19 convenience stores and two non-operating properties to Alimentation Couche-Tard Inc. The deal for the company-owned and -operated sites closed on Dec. 17. According to Couche-Tard, the transaction includes high-quality, well-run sites predominantly in southern New Mexico that are a strategic fit for its existing network.
Are Convenience Stores a Dying Breed? Nathan Griffis, a principal at Cuhaci & Peterson Architects, Engineers & Planners, was recently asked: “Is convenience dying yet?” He firmly believes it is not. In fact, he says it is repositioning itself for future growth based on three key reasons. Firstly, we are creatures of habit, and our need states dictate how we form those habits. Secondly, food offerings are expanding and continuing to blur the lines between grocery, quick-serve restaurants, and convenience stores. Thirdly, you can’t talk about the convenience store without talking about, well, convenience. 8 Convenience Store News C S N E W S . c o m
Convenience Store News held its sixth-annual Convenience Foodservice Exchange (CFX), and the first in-person version of the event in two years, on Nov. 9-10 in Charlotte, N.C. Approximately 40 retailers, suppliers and industry experts gathered to share insights, discuss challenges, enjoy unique food experiences, and explore the ways that the convenience channel is reviving foodservice sales in the new normal. This year’s CFX featured presentations on curbside pickup, safety protocols, emerging foodservice trends, and the reasons why convenience foodservice is set to have a record year, as well as on-stage panel discussions about the challenging labor environment and how food-forward c-stores are meeting the needs of the evolving consumer. For more exclusive content, visit the Special Features section of csnews.com.
MOST VIEWED NEW PRODUCT
Petrosoft SmartPOS Tablet Edition Petrosoft unveiled a tablet edition of its SmartPOS, adding more functionality to Petrosoft’s retail automation platform, which currently offers back-office, pointof-sale, foodservice, loss prevention, and analytic solutions. The SmartPOS Tablet Edition meets a convenience store operator’s need for flexibility to satisfy customer demand during peak traffic periods, whether they occur daily or seasonally, according to the company. The cloud-connected solution enables multi-unit operators to quickly and easily transfer the unit between locations.
Petrosoft Inc. Pittsburgh (412) 306-0640 petrosoftinc.com
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Financing Moves Signal Growth for the C-store Industry Refuel gets a $511-million capital infusion, while Foxtrot receives $100 million industry is grabbing the attention of the investor community.
THE CONVENIENCE STORE
Charleston, S.C.-based Refuel Operating Co. LLC received a $511-million capital infusion as the operator of more than 175 convenience stores in North Carolina, South Carolina, Texas, Mississippi and Arkansas continues its growth strategy. First Reserve, a middle-market private equity firm focused on the energy and industrials sectors, tapped Sixpoint Partners to close the transaction, named the First Reserve Refuel Fund. Refuel entered into a partnership with First Reserve in April 2018 to form FR Refuel and bring enhanced capitalization to support an aggressive, acquisition-based growth strategy. The First Reserve Refuel Fund acquired Refuel from a legacy First Reserve fund. The new fund also provides additional “dry powder” for Refuel to continue pursuing its growth strategy. “Given the increasing selectivity we are seeing in the market around single-asset transactions, we view robust demand for the fund as a testament to First Reserve’s reputation and the strength of the underlying Refuel platform,” said Shawn Schestag, partner and head of capital solutions for Sixpoint Partners.
10 Convenience Store News C S N E W S . c o m
In addition, Chicago-based Foxtrot Market announced $100 million in new Series C funding led by D1 Capital Partners. This brings the company’s total funding to date to $160 million, which Foxtrot will use to open 25 new stores in 2022. The new locations will include its entrance into Boston’s Back Bay neighborhood; its debut in Austin, Texas, with two stores on South First and The Drag; plus notable openings in Chicago’s iconic Willis Tower, Tribune Tower and near Wrigley Field. In 2023 and beyond, Foxtrot plans to continue expanding into additional markets, such as New York City, Nashville and Miami, while simultaneously expanding its presence in existing areas of operation. The retailer first expanded to the East Coast in March 2021. With the new funding, Foxtrot also will focus on scaling its merchandising model, which seeks to meld the best of local artisans with core pantry essentials, favorite treats, and handpicked wines, spirits and local beers. Driven by customer demand, Foxtrot is investing in a deeper private label assortment around mealtimes, doubling down on its core offerings of coffee, ready-to-eat cafe meals and wine — all optimized for both delivery and pickup.
New Year Ushers in Minimum Wage Hikes More than half of U.S. states will increase their hourly wage in 2022 new minimum wage rules in several states and cities across the United States. Twenty-six states will hike their minimum wage in 2022, according to Wolters Kluwer Legal & Regulatory U.S. The lion’s share — 22 — implemented the change on Jan. 1.
THE NEW YEAR BRINGS
“These minimum wage increases indicate moves toward ensuring a living wage for people across the country,” said Deirdre Kennedy, senior payroll analyst at Wolters Kluwer Legal & Regulatory U.S. “In addition to previously approved incremental increases, the change in presidential administration earlier this year and the ongoing coronavirus pandemic have also contributed to these changes.” The firm’s analysis of state minimum wage changes found several key takeaways. Notably, West Hollywood, Calif., now has the highest minimum wage rate in the country at $17.64
per hour for hotel workers. The change went into effect Jan. 1. In addition, California has the highest state minimum wage at $15 per hour. Parts of New York, including New York City and Nassau, Suffolk and Westchester counties, also have a $15 rate. Close behind are Oregon’s Portland metropolitan area at $14.75, effective July 1, and Washington State at $14.49, effective Jan. 1. Washington, D.C.’s minimum wage is $15.20. Ten more states have scheduled incremental increases that will bring their minimum wages to $15 per hour within the next few years. These states include Connecticut and Massachusetts by 2023; New Jersey by 2024; Delaware, Illinois, Maryland (large employers) and Rhode Island by 2025; and Florida and Maryland (small employers) by 2026. Pennsylvania will also reach $15 per hour for employees under the governor’s jurisdiction by 2024.
F E BRUARY
Convenience Store News 1 1
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Wawa Inc. launched its first hiring campaign of 2022 with a focus on Florida. The company seeks to add 2,000 new associates to more than 230 stores within the state. Alimentation Couche-Tard Inc. is franchising several locations in Louisiana. Roughly a dozen stores currently carrying the Circle K banner will change to franchised Kangaroo Express locations.
The companies worked to develop the program with the U.S. Department of Agriculture Food and Nutrition Service for more than a year.
7-Eleven Hawaii became the first U.S. convenience store retailer to launch online EBT food stamp payments.
Shell Oil Co. and PDI, the management software company that oversees the Fuel Rewards program, added American Airlines’ loyalty program to the platform. AAdvantage is the first Fuel Rewards airline partner.
Following its recent growth, NCD unveiled a new online platform that brings together its four divisions.
National Convenience Distributors LLC (NCD) acquired Century Distributors Inc. The Mid-Atlantic wholesale distributor joins NCD as a newly created division. The Coca-Cola Co. took full ownership of BODYARMOR in a $5.6-billion transaction.
Eye on Growth
The move is powered by a partnership with third-party delivery service Vroom Delivery. GPM Investments LLC brought back skill gaming at 65 Virginia convenience stores. The retailer introduced the terminals in 2019, but hit the pause button due to evolving legislation. Sheetz Inc. is partnering with Penn Highlands Community College to offer its employees education benefits and tuition discounts. The collaboration includes a 5-percent tuition reduction on credit classes and annual tuition reimbursement.
The beverage giant acquired an initial 15-percent stake in BODYARMOR in 2018. The Hershey Co. wrapped up its purchase of Dot’s Pretzels. The final price was $1.2 billion, or approximately $1 billion of investment net of expected future tax benefits. National Carwash Solutions (NCS) formed a strategic partnership with Mondo Products Co. Together, they will operate the largest direct car wash installation and service company in North America, powered by NCS. Old Trapper is now the official beef jerky of the Big Ten Conference. The new partnership includes the Big Ten football, men’s and women’s basketball, and hockey seasons.
Out! Markets, and the company’s petroleum marketing and wholesale fuel divisions. S&G Stores LLC acquired the Barney’s Convenience Stores chain in the Toledo, Ohio, market. Of the 12 stores, 11 are branded BP and one is branded Amoco.
These new locations are expected to add 3,000 jobs.
Love’s Travel Stops plans to open more than 40 locations and add more than 3,000 truck parking spaces in 2022. Its agenda also includes opening more than 20 Love’s Truck Care and Speedco sites. Majors Management LLC inked an agreement to acquire Haywood Oil Co. Inc. dba Peak Energy. The deal includes Time
Kwik Trip Inc. grew its network to 800 stores when it opened a new location in Holmen, Wis., on Dec. 30. The retailer doubled its store count in eight years. An affiliate of Monfort Cos. picked up eight Jack’s Convenience Stores, one Jack’s Lube & Wash oil change, and one car wash in west Texas. Four of the c-stores offer Exxon-branded fuel, while four sell Jack’s branded fuel.
F E B RUARY
Convenience Store News
2 1 3
1. Pillsbury BelgianStyle Waffle Carrier
2. Fairlife On-the-Go Milk
Designed with the needs of convenience stores in mind, the Pillsbury BelgianStyle Waffle Carrier is available pre-sliced in a thaw-and-serve format. The 2.8-ounce waffle carrier is made for sandwiches, with one side featuring a traditional waffle texture and the other side flat for easy assembly. Made with maple syrup and crisp pearl sugar, the waffle carrier has a slightly sweet flavor profile, and contains no high fructose corn syrup, artificial colors, flavors or preservatives. The case count is optimized for c-stores, containing 36 sandwiches/72 sides per case.
Beginning in January 2022, fairlife LLC started rolling out 14-ounce, on-the-go bottles of its lactosefree ultra-filtered milk. Varieties available in the new package size include Chocolate, Strawberry, Whole White, Cookies N’ Creme, and 2 Percent Reduced Fat. Fairlife milk is made without artificial growth hormones and contains no lactose. The brand’s products are prepared using a patented cold-filtration process that removes some natural sugars while concentrating the protein and calcium naturally found in real cows’ milk.
General Mills Convenience & Foodservice Minneapolis generalmillscf.com
fairlife LLC Chicago fairlife.com
3. BIC Special Edition Indulgent Lighter Series BIC’s newest special edition lighter series is the perfect treat for consumers with a sweet tooth, according to the company. The “mouthwatering designs” in the series range from rich brownies to creamy milkshakes. The new lighters may be sold in the convenience, drug, mass and grocery channels. They have a suggested retail price of $2.09 per lighter. All BIC Maxi Lighters are long-lasting, reliable, and 100 percent quality inspected. BIC Shelton, Conn. us.bic.com/en_us/lightersnew-inquiry
5. March Networks Mobile Order Pickup Solution March Networks introduces a mobile order pickup solution that alerts retailers in real-time to customers arriving for curbside pickup. The solution uses an artificial intelligence-powered analytic available in March Networks’ ME6 Series IP Cameras to detect vehicles arriving for pickup. When paired with its Searchlight for Retail software, the solution also allows businesses to capture data analytics on curbside deliveries. Retailers can now easily access Searchlight data on their smartphone or tablet with the company’s Command Mobile Plus app. March Networks Ottawa, Ontario marchnetworks.com 16 Convenience Store News C S N E W S . c o m
4. JAVAPERKS Coffee & Tea Program JAVAPERKS is McLane Co. Inc.’s newest foodservice-at-retail program that offers customers a premium coffee and tea solution. Retailers can provide a branded coffee-bar service to patrons, with minimal expense. Through JAVAPERKS, retailers are able to access a range of products fit for a coffeehouse, including coffee, cappuccino, iced coffee and tea. Retailers can also customize graphics for their coffee bar, countertop units and walls to highlight the JAVAPERKS brand within the store. McLane Co. Inc. Temple, Texas mclaneco.com
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6. Doritos Flamin’ Hot Cool Ranch
7. AHA Fuji Apple + White Tea
8. GummiShot Energy Gummies
9. Mango Habanero Macadamia Nuts
The Doritos brand expands its popular Flamin’ Hot line with the launch of Doritos Flamin’ Hot Cool Ranch, an all-new mashup that combines the classic Cool Ranch flavor with a spicy, bold crunch. The new variety injects a spicy edge into the legacy flavor that has been beloved for generations, according to the maker. Doritos Flamin’ Hot Cool Ranch marks the third Flamin’ Hot Doritos variety. The new product is available in a 9.25-ounce bag for a suggested retail price of $4.79, and a 2.75-ounce bag for a suggested price of $2.19.
The AHA sparkling water brand debuts its newest variety, AHA Fuji Apple + White Tea. Hitting shelves in March 2022, each 16-ounce can has 40 milligrams of caffeine, providing for a small morning or afternoon pick-me-up, according to the maker. Described as “boldly refreshing,” AHA Fuji Apple + White Tea is sugar free, calorie free and sodium free.
GummiShot is seeking to revitalize the energy category with the release of GummiShot Energy Gummies. The new product line includes three flavors made from real fruit: Elderberry, Valencia Orange, and Tropical. Featuring simple labels with easy-to-read ingredients, each pouch holds three plant-based energy gummies that contain 75 milligrams of natural caffeine each, which is roughly equivalent to a cup of coffee.
With heat and spice growing in popularity, Royal Hawaiian Orchards believes this is the perfect time to introduce something new into its roasted collection. Available in 4-ounce bags, its new Mango Habanero Seasoned Macadamia Nuts are packed with sweet heat from a combination of natural mango and habanero flavors. Royal Hawaiian Orchards launched a virtual consumer poll featuring three potential new products, with Mango Habanero besting the competing seasonings.
The Coca-Cola Co. Atlanta drinkaha.com
GummiShot Santa Cruz, Calif. gummishot.com
Frito-Lay North America Plano, Texas doritos.com
10. VM Express Analytics Platform VideoMining’s new platform, VM Express, is designed for rapid in-store testing and shopper research. The prescriptive analytics platform utilizes advanced sensing and artificial intelligence to enable consumer packaged goods retailers and manufacturers to quickly uncover opportunities for improving shopper conversion, or evaluate the effectiveness of innovations. Proprietary IoT sensors combine an active camera with a wireless connection to enable easy installation in any site with a limited footprint. VideoMining Corp. State College, Pa. videomining.com
18 Convenience Store News C S N E W S . c o m
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Some Rules Are Not Meant to Be Broken
We must keep the welfare of others in mind when we are making our daily decisions to take the gift wrap off 2022, I hope that your new year is still shiny and bright and that you have not lost the instruction manual.
AS WE CONTINUE
By Roy Strasburger, CEO, StrasGlobal
Like many, my family ended up experiencing a COVID Christmas at the end of 2021. Three of my four daughters traveled to Austin, Texas, to join us for the holiday celebrations. One came from the UK, one from Washington, D.C., and one, with her boyfriend, drove down from Denver. My fourth daughter and her boyfriend were already with us. We planned, and were looking forward to, a family Christmas — all gathered around the table sharing stories and experiences. Because of the spike in the omicron variant during the runup to Christmas, our kids had decided to quarantine, separately, for three days before they arrived at our house. Throughout the pandemic, our household has done its best to observe the rules and guidelines issued by the CDC to avoid being infected with COVID — and so far, we have been fortunate not to have had it. We’ve been careful because we don’t want to get sick, we don’t know how
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having COVID will affect us, and frankly from a work point of view, we can’t afford to be out of commission for two or more weeks. In addition, we don’t want to spread it to our friends, family or any strangers we have been around. Our concern is not just about us, but the impact on others that we might unknowingly affect. At the end of the Christmas quarantine periods, each of my kids took a PCR or home test to make sure they did not have COVID. My wife and I took one, too. Three of the four visitors tested negative. My daughter’s boyfriend — the one coming from Colorado — tested positive. That meant the two of them would not be able to spend Christmas with us. Obviously, this was very disappointing and put our family plans into disarray. The positive test also set off several rounds of discussion amongst the rest of us as to what we were going to do. Did we really need to enforce the isolation, especially considering the boyfriend’s symptoms were negligible and omicron is not as dangerous as other variants? Would it be OK for us to get together if we were socially distanced and wearing
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The $80 Billion Combustible Tobacco Cigarette Category is About to be Disrupted FDA Gives Green Light for VLN as the First Combustible Modified Risk Tobacco Product Tobacco is a major traffic generator for C-Stores that builds incremental sales across the entire store. But the category faces impending FDA regulations that will impact the $80 billion market such as regulation around Menthol products, or capped Nicotine content. However, opportunities to maintain the category drivers at convenience stores are coming through the development of “MRTP’s;” products that have secured a Modified Risk Tobacco Product or Modified Exposure status from the FDA. The FDA reviews the product science and considers: › The relative health risks to individuals. › The likelihood that existing users of tobacco products would switch to the product. › Whether users who do not currently use tobacco products would use the product. › The potential benefits and risks from the use of the product in comparison to products existing on the market. › Comments, data and information submitted by the product creator and general public. At the forefront of innovation in the cigarette category is 22nd Century Group, Inc. (NASDAQ: XXII), a leading plant biotechnology company that is focused on technologies that alter the level of nicotine in tobacco plants and the level of cannabinoids in hemp/cannabis plants through genetic engineering, gene editing, and modern plant breeding. Supported by over $100 Million in rigorous science-based research conducted by major universities and public health agencies, the evidence validates that XXII’s reduced nicotine content cigarettes indeed “Help You Smoke Less.” In December of last year, the VLN product became the first combustible tobacco product to receive an exposure modification order for its MRTP from the FDA, a huge achievement for any company. The landmark decision by the FDA allows the company’s VLN King, and VLN Menthol King to add the claim “Helps You Smoke Less” on every pack and carton of cigarettes to help educate adult smokers about the products benefit. The first pre-launch cartons just rolled off the line at the company’s North Carolina manufacturing factory as part of its build toward the pilot launch program.
CSNews talked with 22nd Century’s president and chief operating officer Michael J. Zercher to learn what c-store operators need to know to benefit from this emerging category as C- Stores prepare to shift from Cigarettes, OTP (Other Tobacco Products) and ITP (Innovative Tobacco Products) to a new shelf space exclusively for Modified Risk Tobacco Products. CSNews: What should c-store operators know about the potential of reduced nicotine products, specifically your brands VLN King and VLN Menthol King? Michael Zercher: About 70% of adult smokers want to quit smoking for a variety of reasons from their health to the costs. VLN is a cigarette with 95% less nicotine than conventional cigarettes and has been proven to help smokers smoke less, increase quit attempts and increase the number of days they go without smoking. MRTP products fulfill a need not addressed by options such as OTP or ITP, because the products in the market today are based upon continuing to deliver nicotine, usually at highly addictive levels. VLN cigarettes smoke, taste and smell like a conventional cigarette. Unlike “light” cigarettes, these products don’t result in compensatory smoking, and are not designed to create or sustain addiction. More than 60% of adult smokers in our research have told us they are likely to buy VLN. We believe Modified Risk Tobacco Products are the next frontier because they enhance margin opportunity and provide a benefit to the C-Store’s adult tobacco customers. CSNews: From a business standpoint, why would C-Store operators want to help smokers smoke less? M.Z.: First, it is the right thing to do. Second, the FDA has clearly laid out their intentions to reduce the harm from tobacco consumption. And third, financially it’s an opportunity to improve the profit margins of the category, while also providing a pathway for retailers willing to pioneer the premium priced MRTP product set with the ability to continue earning profits
from consumption of tobacco and tobacco related products. The FDA is moving forward with tobacco regulations. The agency plans to reduce the nicotine of all cigarettes sold in the U.S. which means at that point our VLN would likely be the only cigarette product on the market. Also, as the FDA looks to ban menthol in highly addictive cigarettes, we expect the FDA will allow our VLN Menthol cigarettes to remain on the market. Retailers who get out ahead of the regulations and introduce the MRTP product set as a strategic partner of 22nd Century Group will be positioned well to be able to continue to deliver products to their customers in the category. The C-Store operator that we have selected for our impending Pilot Market launch wants to take ownership of the MRTP product category at retail. We believe this is because Big Tobacco has literally owned the shelves for years that their tobacco products are sold on, dictating unfair trade terms, preventing retailers from helping their customers to reduce their consumption, and increasing their profitability of the segment overall. If you can help your customers, and benefit your bottom line at the same time, the only entity that stands to lose is Big Tobacco.
For more information on 22nd Century visit www.xxiicentury.com and for more information about its VLN brand visit www.tryvln.com.
masks? Could we take the risk of being around them for a short period of time just so that we could be together? Since my daughter was not positive, only her boyfriend, could we have her test daily, wear a mask, and keep socially distanced from us? It was emotionally difficult, and ultimately very tough coming to a decision. We decided, however, that we needed to follow the CDC rules to keep everyone safe, so my daughter and her boyfriend remained in isolation throughout the Christmas holiday. We did go by to visit them, with us standing masked outside 30 or more feet away from their second-story balcony so that we could exchange Christmas greetings and have a toast. Frankly, I was very disappointed and in a bit of a funk throughout the holiday. Being together with my wife and children is very important to me and I look forward to all of our gatherings. I will have to admit that it was very tempting to try to come up with a shortcut or rationalize a workaround to make life easier and get what we wanted. But in doing so, we could have become infected with COVID, passed it on to other people, and have become sick ourselves with the possibility of dying or killing someone else. The reason I share the story is to acknowledge that, sometimes, hard decisions have to be made. It is important that you consider the big picture when it’s time to make any difficult choice. Of course, we knew one of our kids being infected was a possibility when we planned our gathering — they all live and work in areas where they interact with other people. But when faced with the facts, we had to accommodate the reality, even though it was a difficult and sad decision to make. Now, I do not know what the COVID status is at the time you’re reading this. Cases are rising across the globe as I am writing this in late December 2021. None of us have a crystal ball, but I think it is safe to assume that 2022 will be very similar to 2021. We will have many of the same issues that we have dealt with during 2021. My fervent hope is that COVID is no longer an issue. But even if COVID no longer exists, we need to remember that we have to keep the welfare of others in mind when we are making our daily decisions. And this applies to your business. Allowing an employee to work, even when they’re not feeling well, could have ramifications in making the rest of your team sick or infecting your customers. If more of your team becomes sick, that’s fewer people you will have to work at your store, which will make life even more difficult. The more customers who become sick, the less business you will have. Life is complicated. The real world is often a choice
Having clear rules and guidelines removes the stress of your team members having to decide what they should do or what they can do. between taking the path of least resistance or making an informed decision and biting the bullet despite the difficulties. For example, with COVID, the decision of letting someone work who is not feeling well or has been exposed to the virus is much easier to make than the hard decision of making them stay at home and you being shorthanded or having to put in extra hours. But in my experience, the easiest decision is most often not the right decision. You have to keep the big picture in mind. How does your decision affect the people who depend on you — your family, your team and your customers? You could literally be putting someone’s life in danger. Making the hard choice, and sticking to it, has benefits, though. Anyone with children knows that if you set rules, you must be consistent in following and enforcing them. Once you start breaking the rules you have established for your team, why should your team abide by them? Keep in mind that you originally created the rules for a good reason based upon some type of fact, research or guidance. Did the underlying basis for the rules change? If the requirements you put into place no longer make sense or if the facts have changed and the rules should no longer be followed, then they should be abolished; not circumvented. Whatever you are doing, you should create a framework of rules and guidelines that abides by the law, follows any applicable science or research, makes sense, and is easy to implement. Putting requirements into place that your team aren’t going to follow doesn’t make sense and is only setting you up for failure. Ultimately, the objective is to have everyone know what is expected of them so that they can do their job to the best of their ability. Having clear rules and guidelines removes the stress of your team members having to decide what they should do or what they can do. Clear rules give everyone a solid foundation for them to perform their duties, and it removes the stress of having to make decisions about implementing them. Remember, the hard choice is often the right decision — for everyone involved. CSN
Roy Strasburger is CEO 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. 24 Convenience Store News C S N E W S . c o m
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BACKBAR OF THE
FUTURE WHAT WILL THE NEXT DECADE HOLD FOR ONE OF THE CONVENIENCE STORE INDUSTRY’S MOST IMPORTANT — AND CHALLENGING — PRODUCT CATEGORIES? By Renée M. Covino THIS PAST SUMMER, Philip Morris International CEO Jacek Olczak said the company will “absolutely” end the sale of traditional cigarettes within the U.K. This aligns with a government plan that calls for the United Kingdom to go smokefree by 2030.
“We can see the world without cigarettes,” Olczak stated at the time. “And actually, the sooner it happens, the better it is for everyone. With the right regulation and information, it can happen 10 years from now in some countries.” In September, Swedish Match initiated preparations for a separation of its cigar business, announcing it was looking to exit the manufacturing of combustible tobacco products so that it can focus on smokefree lines, such as nicotine pouches and snus. “This announcement is another milestone toward achievement of our aspiration to become an entirely smokefree organization with a clear leadership position in oral reduced risk products, including ZYN,” said Swedish Match President and CEO Lars Dahlgren. With more and more tobacco manufacturers shifting focus away from combustibles, the convenience store tobacco business of the future can be a fuzzy picture for retailers. To help sharpen their vision, Convenience Store News recently consulted with industry
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experts about what the next decade will hold for one of the convenience channel’s most important — and challenging — product categories. The experts we spoke to relay some caution — but also positivity and opportunity — for the c-store backbar a decade into the future, provided that retailers stay on the pulse of what’s already happening. Here are some of their key 2032 predictions:
Combustibles Will Not Be Extinct “Old habits don’t die, they slowly rust out,” quipped Cadent Consulting Group Managing Director Don Stuart, who added, more seriously, that his Wilton, Conn.-based firm projects combustibles will still represent 50 percent of tobacco sales for c-stores 10 years from now. “While traditional cigarettes will not approach extinction over the next 10 years, there will be a dramatic falloff in unit sales,” he acknowledged. “Related categories, such as pipe tobacco and cigars, will also continue to decline.” Don Burke, senior vice president of Management Science Associates Inc. (MSA), a Pittsburgh-based company focused on analytics and informatics, forecasts that traditional cigarettes will represent about 30-40 percent of the tobacco category in unit sales come 2032, roughly half of the current level. Nevertheless, cigarettes “will remain a strong component of a c-store’s tobacco business,” according to Burke. “Obviously, cigarette sales have been in decline for decades, but the fact is that during this period, cigarettes have remained an important part of c-store profits and margins. It is not unrealistic to expect the cigarette space to continue to contract; however, there is still a significant demand that will not be going away overnight,” echoed Karen Saber, vice president of business analytics for Jacksonville, Fla.-based Swisher, a manufacturer of cigars, moist tobacco, oral nicotine products, and more. Saber pointed out that the tobacco space is constantly transforming and diversifying into new segments, which she expects will continue 10 years out.
Wild Visions Convenience Store News asked tobacco industry experts to give their wildest visions for the tobacco backbar of 2032. Here are a few of the most out-there outlooks: “One of the wildest advancements I see involves the development of a non-habit-forming nicotine that still maintains the benefits consumers experience currently. This would open the nicotine section to a whole new group of consumers, and possibly return the category to growth.” — Don Burke, Management Science Associates Inc. “There will not be a combustible cigarette in sight. Buds will blossom, and edibles will expand. There will be a patina of health and wellness across the entire section.” — Don Stuart, Cadent Consulting Group As technology continues its evolution, it will further integrate with products in the tobacco sector. There will be “a plethora of nicotine delivery devices that convey multisensory experiences” with “tobacco becoming more interactive with our lifestyles, offering a variety of ways to enjoy.” — Karen Saber, Swisher
Non-Combustible Options Will Ignite About 10 years ago, Goldman Sachs Managing Director Bonnie Herzog forecasted that consumption of reduced risk tobacco products would surpass combustible cigarettes within the next decade. Today, she admits that she was “a little off on my timing,” but Herzog still maintains that she is not off in her prediction. “I continue to think consumption for reduced risk products will surpass combustible cigarettes,” she told CSNews, noting that she foresees combustibles continuing to decelerate “similar to the declines we’ve seen in the category for decades.” With advanced public health goals and industry innovation, Herzog envisions “much more backbar space allocated to reduced risk products” a decade from now. These products, such as modern oral nicotine, e-cigarettes/e-vapor and heat-not-burn products, are already
“It won’t be primarily combustibles, but it may be both tobacco-derived nicotine and synthetic nicotine-based products that serve both real and perceived benefits for consumers.” — DON STUART, CADENT CONSULTING GROUP
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C-Store News FEB 2022_Visual Marketing_Full Page Bleed_OL.pdf
embraced by consumers for different times and occasions, and are already replicating and replacing combustible cigarettes, she said. From a retailer perspective, the positive for reduced risk items is that the margin profile is higher and more attractive, so “it’s a smart business decision as well,” said Herzog, who views the future of the backbar as a delicate balancing act, whereby c-store retailers start allocating more space to tobacco alternatives now.
A More Near-Term Perspective Looking to the much nearer future, a Reynolds American Inc. spokesperson provided Convenience Store News with the company’s 2022 snapshot of tobacco category priorities, trends and concerns for the year ahead:
They are going to have to be “flexible and bold,” she said. Expressing a similar viewpoint, Burke foresees a 2032 backbar where nicotine items not containing anything from the tobacco leaf, except possibly the nicotine, generate the greatest share of tobacco sales. He believes the c-store backbar a decade from now will become “the location for many often-purchased, regulated consumer products: tobacco; nicotine with no tobacco; cannabis, CBD and other cannabinoids; and possibly, mushroom products and other ‘herbacueticals.’” U.S. retailers need to start thinking today about how their backbar will evolve 10 years from now, Stuart urged. “It won’t be primarily combustibles, but it may be both tobaccoderived nicotine and synthetic nicotine-based products that serve both real and perceived benefits for consumers,” he said.
Legal Cannabis Will Become a Convenience Sector Staple
PRIORITIES: Providing consumer choice is at the core of Reynolds’ 2022 strategy. “We want to provide adult tobacco and nicotine users alternatives to their traditional combustible tobacco products,” the spokesperson shared. TRENDS: “As we come out of the period of disruption caused by the pandemic, we see previously unimaginable transformation and progress underway — changes in how consumers pay, how they shop, and how purchases are delivered, with drive-thru and curbside pickup becoming part of normal routines,” the spokesperson explained. Reynolds has found a new resiliency and, in many ways, “accelerated our transformation as a company, equipped with better capabilities and commercial agility.” CONCERNS: “We continue to evaluate the role synthetic nicotine may play in providing alternatives to adult smokers who are disinterested in quitting. We are concerned that the proliferation of products without appropriate regulatory oversight could lead to unknown or illicit additives, or other adulteration of synthetic nicotine products. We are also concerned about the various synthetic nicotine products marketed in a way that may appeal to children, an alarming reminder of youth-oriented names and flavors which led to the spike in youth vapor usage in 2018, resulting in FDA enforcement action.”
Provided there is federal legalization, and manufacturers can deliver a soothing and legal
“My greatest fear of the future is that regulation will inhibit the development of equally satisfying and less-harmful tobacco items so that this category, enjoyed by so many consumers, is not able to evolve successfully.” — DON BURKE, MANAGEMENT SCIENCE ASSOCIATES INC.
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experience, cannabis has tremendous potential in the convenience sector, experts agree. “C-stores could enter the cannabis business with bud, vaping and edibles,” stated Stuart, who added that edibles may also offer a new way to consume nicotine and related products. Currently, edibles are very popular with THC, and could continue to grow as nicotine offers perceived focus and relaxation benefits, he added. and selections will be “overwhelming,” according to Swisher’s Saber. With proper regulation, Herzog also foresees cannabis playing a bigger behindthe-counter role. And Burke, too, envisions “cannabis and other herbal items” being part of the c-store backbar offering of 2032.
Expect a More Visually Captivating Backbar Category management will be more important than ever in 2032 as offerings
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“Optimization, strategic planograms, creative and engaging POS [point of sale], and true partnerships will define success,” she said. “Retailers will have to leverage data and insights in constructing planograms and merchandising structures.” The tobacco spaces of the future will need to be both modern and captivating to successfully communicate the various evolving products and offerings. “A planogram is technically a visual merchandising tool and as technology and store layouts change, so will the need for fresh and engaging tobacco sets,” Saber noted.
“I continue to think consumption for reduced risk products will surpass combustible cigarettes.” — BONNIE HERZOG, GOLDMAN SACHS
C-store operators will need to strike the correct balance in terms of form vs. function. These two components have always been at the forefront of capturing adult consumer awareness, but even more so in the future, convenience stores will need to help the tobacco consumer cut through the “noise.” “The key will be to provide your consumers with an engaging experience that speaks to them,” Saber told CSNews. “As technology evolves, there will be a variety of ways to incorporate this in terms of digital communication and visualization, holograms, multisensory experiences, etc. The days of plain cardboard signage will be history.” Stuart agrees that there will be “more technology” in merchandising and marketing, but warns that there will also be “more plain packages and warning labels” come 2032.
The Future Will Be Led by Both Large & Small Manufacturers It’s of no doubt to Burke that the Big Tobacco organizations will continue to play “a large role” in the c-store backbar business through the next decade. He even envisions these companies providing a broad range of products in addition to tobacco, such as “CBD and other cannabinoids, cannabis, and other herbal items.” Smaller tobacco manufacturers, Burke said, will continue to play a role, too, providing items with regional preference, and possibly contributing to product innovation that is outside of tobacco, yet still part of the behind-the-counter business of the future. Cadent Consulting’s Stuart points out that Philip Morris International has been “a key spokesperson” and is committed to deriving 50 percent of its sales from noncombustibles by 2025, while pulling out of combustibles completely in the U.K. market over the next 10 years. “Keep in mind, this is more of a test, as the U.K. represents less than 1 percent of the 1.2 billion adult smokers worldwide,” Stuart said. “Big Tobacco, in combination with innovative startups including Puff Bar, developing natural and synthetic products and new delivery methods to satisfy the needs of tomorrow’s consumers — as well as those that follow — will set the stage for the backbar of the future.” It is Saber’s hope that the climate continues to allow for all levels of competition within the tobacco space. She is cautiously optimistic that this will be the case; however, she acknowledges that it is becoming more and more challenging to compete given legislative requirements and guidelines. F E BRUARY
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A future scenario that just allowed for Big Tobacco “would limit inventiveness and diversification which, in turn, would benefit no one,” Saber reasoned, noting that she’s hopeful this message will fall on legislative ears.
Any wins the industry has over the next decade, such as menthol perhaps being allowed to stay on the market, should help keep hope alive, she said.
Unfair Legislation Will Still Be the Major Hurdle
“Every year, new localities introduce proposals and constraints upon retailers, distributors and manufacturers alike. The impact to retailers is of particular concern,” she said. “We need to partner together to better understand and monitor these changes so that we can ensure a more equitable business environment for the future.”
Unfortunately, the same fears expressed today regarding unfair legislation are part of the future tobacco picture envisioned for the convenience channel. “My greatest fear of the future is that regulation will inhibit the development of equally satisfying and less-harmful tobacco items so that this category, enjoyed by so many consumers, is not able to evolve successfully,” Burke said. Regulation of the nicotine industry and actions by the Food and Drug Administration (FDA) will continue to be one of the greatest unknowns for the backbar of the future, according to Herzog.
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The way Saber sees it, unfair taxation and legislation have become “an expected part of doing business,” and will indeed be part of the future picture as well.
Competition Will Heat Up To date, the convenience channel has done well maintaining its tobacco business despite the product category being added at many dollar stores, according to Burke. Some of this success is due to the superior convenience of c-store locations compared to dollar stores, as well as the greater product selection offered at convenience stores. In the future, these advantages will likely be more difficult to maintain given that it’s probable there will be ubiquitous near-immediate product delivery available to home and work for Americans. “The challenge for c-store operators will be to figure out how to be more convenient than a shopper picking up the phone and ordering tobacco items for delivery,” Burke said.
He sees drive-thru product pickup, mobile solutions and meaningful loyalty incentives all being “necessary tools” for convenience retailers to maintain a strong tobacco business in 2032 and even sooner. Destination trips, whether brick-and-mortar or online, will become the greatest threat to the convenience channel, according to Stuart. “No longer will tobacco or related purchases simply be an afterthought or a convenience trip. Consumers will stock up. Online merchants will develop ways to ensure that all products are legally purchased by adults,” he said. Out of necessity, c-stores largely will be invested in omnichannel solutions, such as curbside pickup, by 2032, Stuart believes. He points out that these solutions are already popular at cannabis dispensaries. “We anticipate seeing more marketing on app-based ordering platforms, which will allow for a full on-premise experience remotely,” he told CSNews. “C-stores will need to be stringent on age restrictions, of course.”
Global Influences Will Foster Diversification European tobacco companies are seen as the thought leaders in terms of the global tobacco market and their influence will surely be felt in the future, industry experts say. “They are known for driving scientific advancements, innovation, and sustainability within manufacturing practices,” Saber explained. She pointed out that it is clear European tobacco companies have a mission to migrate adult cigarette consumers to new products with their innovation portfolio. “These initiatives will only further foster diversification, growth and development of the overall category,” she told CSNews.
Still, the U.S. Will Be the One to Watch At the same time, Herzog believes it will be the U.S. market that will shape more advancement in modified risk products. And there are many eyes on future regulation in the United States. Recognizing that nearly all the major tobacco firms will have a global presence into the future, Burke agrees with Herzog’s outlook. “The U.S. market will remain unique and will not likely be as impacted by global influences as other countries given the pervasiveness of federal, state and local tobacco regulations,” he said. The U.S. is made up of 50 different major markets (at least), all of which have varying product restrictions, taxation levels that strongly influence pricing, etc., according to Burke. So, the ability of any organization to bring a global strategy to the U.S. is, and will be, somewhat minimized by this range of regulation, he concluded. CSN
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PAIN IN THE SUPPLY CHAIN The immediate bumps in the supply chain may be temporary, but lingering issues will force c-store retailers to rethink their strategies By Melissa Kress
consumers are finding an unwelcome sight in stores today: empty shelves, or shelves filled with unfamiliar brands. The reason? A supply chain that continues to face headwinds, which only seem to be holding steady instead of improving as the United States and the world near the second anniversary of the COVID-19 pandemic.
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For nearly 24 months, there has been an ongoing level of supply chain disruption on a global scale. More recently, incremental to that, there’s been additional effects from the holidays, weather issues, and some absenteeism around the omicron surge, according to Jess Dankert, vice president of supply chain at the Retail Industry Leaders Association (RILA). “At this point, retailers have learned to deal with the disruption on a baseline level — the disruption we have been seeing throughout the pandemic. They already have that playbook in place. Some of the shortages we see in pockets now is really due to the acute impact around the holiday, the surge and weather, but those will begin to tail off as we get away from them and retailers have a chance to recover, restock and replenish the shelves,” Dankert said.
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While the challenges that have popped up since late winter and early spring 2020 have been fueled by the pandemic, the health crisis also shined a spotlight on existing issues. “Looking back at the early pandemic, you see those outages and you can see the consumer psychology around the need to stock up. But the ongoing level of disruption that we see on a global scale is exacerbating the existing systemic challenges in the supply chain, particularly domestically,” Dankert explained, pointing to outdated port and freight infrastructure across the U.S. “The pandemic hit and that really shined a light on the need for modernizing the infrastructure, especially in the ports,” she said. It also shined a light on end-to-end visibility — the data infrastructure piece — and the need to have a better understanding of the supply chain, the movement of goods through the supply chain, and better identify and address bottlenecks when they happen, according to Dankert.
The Domino Effect Consumer demand has certainly played a role in the challenges retailers have faced keeping their
shelves stocked, but that’s only one piece of a complicated puzzle. “The factors impacting supply chains begin with the increase in consumer demand throughout the pandemic, blowing past forecasts for raw material production, which has led to an imbalance of ships and the cargo needing transport,” explained Jake Bolling, CEO of Skupos, a data analytics provider to the convenience retail industry. “The issue continues to compound at major ports, where we are seeing legacy regulation impact the ability to quickly unload ships and move cargo.” Add into the mix a truck shortage, and the ongoing labor shortage that touches each of these areas of the economy, and you have a recipe for struggles on every side of the equation. “This domino effect has created a challenging environment for convenience retailers. As an example, three-quarters of convenience retailers surveyed by Goldman Sachs recently cited out-of-stocks in the non-alcoholic and alcoholic beverage categories as ‘bad or very bad,’” Bolling cited. “When convenience retailers are unable to keep vital items on the shelves for consumer demand, they see an impact in per-store sales. This challenge impacts all product categories, not just the cooler.”
Less Bottleneck Ahead? Is there light at the end of the tunnel, temporary challenges aside? “Temporary is the exact word for the out-of-stocks people are seeing, particularly in grocery and food areas. They are working themselves out now,” Dankert said. “Those goods are in the supply chain and it is just taking time to catch up.” However, moving past the immediate hiccups, the supply chain will continue to see congestion in the ports, and tight capacity on ocean and domestic truck and rail, according to the RILA executive. In addition, higher-than-pre-pandemic rates and costs will endure. “I think we can see that congestion continue through 2022,” she pointed out. “The good news is having to deal with the last 20-plus months, retailers and their partners in the supply chain have learned to deal with this and find the workaround to navigate the disruptions that we now think of as normal.” Case in point: Leading up to the holidays, there was concern about the availability of presents to buy but, in the end, that did not materialize. “The shelves were full and we had a record holiday in retail,” Dankert noted. “That really illustrates that retailers are able to — particularly with a longer runway — plan ahead, move shipments forward, readjust, react to these situations, and still get product to where it needs to go.” There is concern, however, that once the supply chain rights itself, retailers may face a new problem: too much inventory. Dankert, though, does not see
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“The ongoing level of disruption that we see on a global scale is exacerbating the existing systemic challenges in the supply chain, particularly domestically.” — Jess Dankert, Retail Industry Leaders Association
their shopping expectations. A new global research report commissioned by SOTI, a provider of mobile and IoT device management solutions, found that supply chain frustration is driving consumers to shop online vs. in-store. However, to avoid shipping delays, many U.S. consumers are choosing to buy online and pickup in-store. According to the From Clicks to Ships: Navigating the Global Supply Chain Crisis 2022 report: • 72 percent of consumers say they will continue to buy online for either pickup or delivery; • 54 percent will opt to shop in-store, with purchases either taken or delivered; and
this as a certainty because there has been an evolution in retailers’ inventory strategies. For years, they were operating on a lean, just-in-time approach to inventory. Now, they are trying to build up inventory. Retailers are more sophisticated with their inventory strategies today than even five years ago driven by access to new tools such as artificial intelligence and machine learning, allowing them to make smarter decisions around placement and more quickly deploy inventory to where it is needed. Behind the scenes, retailers from all classes of trade are having conversations involving their distribution centers, store locations and overall network. They’re asking themselves: How are they using all the parts of their network to best execute on getting products to the customer and having the best experience out there? How are they using their stores? Are they becoming more of a distribution point for that digital consumer journey? While temporary, the exact timing for supply chain improvement is the big unknown. According to Bolling, recent regulatory changes should lessen the impact of port regulation and trucker shortages, but it’s unclear how quickly these changes will move through the supply chain. In addition, recent job reports from December 2021 send mixed messages about the future labor market, with only 199,000 jobs added during the month (half of what economists had forecasted) despite unemployment dropping to 3.9 percent. “As many supply chain businesses look to meet demand, labor serves as a large pressure release valve on current supply chain woes. A continuation of these market conditions could make for a challenging 2022 for supply chains,” Bolling said.
Consumer Thinking At the center of the retailer-supplier equation is the consumer. While many Americans have changed their shopping behaviors due to the pandemic, they have not changed
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• 59 percent will opt for purchases picked up in-store, whether bought in-store or online. “Retailers need to find a way to accelerate innovation and implement technology to communicate with consumers and partners, while also taking into consideration the fact that we’re still very much in a state of flux. This places a premium on the need for flexibility and scalability,” said Shash Anand, vice president of product strategy at SOTI.
Necessity & Innovation Consumers are warming to the idea of delivery, by any method. The SOTI research found that nearly three-quarters of consumers are open to delivery to a designated drop-off point, and nearly 60 percent say they would consider delivery via autonomous vehicles or drones. “Mobile technology can help the retail supply chain improve communications and customer experiences across the entire consumer journey. However, this requires significant backend infrastructure and mobile tracking to create a seamless experience,” Anand said. “By investing in mobile technology, brands and retailers can not only diagnose problems quickly and adapt to the evolving retail ecosystem, but also ensure they remain on top of consumer needs, support employees out in the field, and remain profitable,” he continued. Convenience store retailers are also looking in their existing toolboxes for inspiration. According to Bolling, the channel’s retailers are turning to data to understand how to outfit their square footage with the highest-performing SKUs that they can access. “Although retailers may be unable to get order fulfillment on the entirety of their planogram, using data to inform switching decisions enables them to maximize sales in what would otherwise be a challenging situation,” he said. “Furthermore, retailers are utilizing technology solutions like self-checkout to combat labor shortages in their locations.” CSN
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HOW TO GET INTO THE PRIVATE LABEL BUSINESS Store brands can deliver big margins and brand strength to c-store retailers By Renée M. Covino PRIVATE LABEL PRODUCTS have come a long way since the no-frills days when they mostly stood for “cheap.” Today, they are a sign of retail value and commitment, and can often be the reason why a shopper frequents a particular store.
“Private brands are now a significant driver of trust and trip satisfaction in a retailer,” said Shelley Balanko, Ph.D., senior vice president of The Hartman Group, a consumer research firm that recently released a report entitled “Brand Ambition: Food and Beverage Private Brands & Beyond.” Polling consumers about their perceptions of private label, the report revealed that: • 91 percent of consumers agree that a good experience with store brand products makes them trust the store more; • 74 percent shop at a store specifically because of
its store brands; and • 63 percent trust store brand products more than national brand products because store brands stand behind their products. The research also uncovered that consumers today shop less on brands and more on product attributes, and they are less dependent on national brands now that they have “so much information at their disposal,” Balanko noted. Delivering consistency around “a constellation of attributes” and offering “truly innovative” items are two of the biggest opportunities she sees currently for retailers that want to set themselves apart and build margins through store brands. Developing a private brand assortment that’s rooted in a commitment to quality drives customer traffic through the door and keeps it there. More than 71 percent of
7-Eleven collaborated with influencer Kerwin Frost to create the ultimate snacking uniform for the retailer's 7-Select products.
40 Convenience Store News C S N E W S . c o m
Promoting Store Brands consumers shop at best-in-class retailers specifically for their private brands, cited Nicole Simonds, senior manager of integrated marketing strategy at Daymon, a private brand solution provider.
Just as convenience store operators use social media to promote their banner and national brand products, they should also utilize social media as a key lever to promote their store brands.
“Convenience stores need to have a strong private brand program in order to differentiate their assortment and continue maximizing consumer loyalty,” Simonds told Convenience Store News. “As there is a 98-percent overlap of national brand offerings at retailers, private brands represent the perfect lever to help retailers stand out among the competition and keep consumers coming back for the unique offerings they can only get at their stores.”
“Content should be developed that will not only educate shoppers on private brands and the assortment within categories, but it should also be created to incent trial and purchase, as well as create engagement across platforms with shoppers,” advised Nicole Simonds, senior manager of integrated marketing strategy at Daymon, a private brand solution provider. “That engagement can come through content that drives conversation, as well as encourages commenting and sharing through social platforms with usergenerated content.”
Getting Started Launching a private brand program starts with knowing who your shoppers are, understanding which categories are driving the highest sales, and identifying the categories that could best differentiate your store from competitors, Simonds said. Acknowledging that it is easier for a chain, with larger buying clout, to accelerate a store brand offering vs. an independent convenience store, Alex Morrison, a business analyst with Cadent Consulting Group, suggests the following steps: • Identify where private label can improve your product assortment, profitability and overall store image the most; • Start small in an area where you can be sure to add value; for instance, a more localized private label assortment of jerky would be perfect in a state like Texas; • Intensely vet your private label offerings to ensure they compete with the national brands and don’t just undercut on price; • Determine how private label branding fits into your long-term strategy and invest in marketing and promotion to build customer loyalty; and • Envision how private label can enhance the overall image of your stores and help them reposition post-COVID. Technology can be a powerful tool to assist retailers in understanding their market. “Today’s technology allows us to create insight into consumers’ buying patterns, from which we can map gaps and trends in dietary, sustainability, ethical and economic choices. This enables retailers to plan their assortment and identify potential private brand ranges to capitalize on specific trends,” said Paul Woodward, senior director of Oracle Retail Brand Solutions. The company’s Oracle Retail Brand Compliance cloud service is used by grocery retailers to manage more than one million private brand items a year involving 250,000-plus suppliers. “Many of the world’s most successful private brands 42 Convenience Store News C S N E W S . c o m
In addition to social media, all forms of digital labeling, marketing and promotion are now crucial to reach all consumer touchpoints, according to Paul Woodward, senior director of Oracle Retail Brand Solutions. “Consistency in the messaging and data are key to the success of these methods,” he said. “Consumer trust in the marketing material, product quality and claims are essential to ensuring the digital media landscape does not turn on the private brand.” Mobile marketing is also seen as an important tool to reach today’s consumers about private label offerings, before they even enter the store. This can be executed through an app or with SMS/text marketing, retargeting ads, geotargeting ads, and more. “These tactics should support the integrated marketing strategy and incorporate unique offers that should be tracked to measure performance and support private label sales growth,” Simonds advised. “Incorporating mobile marketing into a marketing mix can support special promotions, new brand or item launches, as well as a customer loyalty program that incents repeat purchases and drives sales of top customers.” Alex Morrison, a business analyst with Cadent Consulting Group, believes the best example of a convenience store retailer utilizing mobile marketing and social media to promote a private label program is 7-Eleven Inc. 7-Eleven began its 7-Select private brand line in 2008. At the end of 2019, the nation’s largest convenience store chain launched its second private brand line — 24/7 Life by 7-Eleven — to mark a clear delineation between 7-Eleven’s nonfood private brand products and the packaged foods found under the 7-Select brand. 7-Eleven uses its mobile app to promote both its 7-Select and 24/7 Life store brands. “Developing trust and word of mouth is perhaps the best way to spread the message for private label in a local environment,” Morrison said.
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Four Reasons to Make the Jump Into Private Label 1. It can help reverse declining convenience store trips The pandemic saw c-stores taking hits in several categories where private label can make a difference, including tobacco, beer, nonalcoholic beverages, salty snacks, and candy.
2. It can be part of a larger rebrand post-COVID Differentiation is the name of the game, and private label can help a c-store business distinguish itself from its competition.
3. It can build on the changing nature of the c-store shopper Attracting more and different c-store shoppers was the result of necessity shopping during the pandemic. Building on that momentum can be a role for private label. Store brands also attract more millennial and Gen Z shoppers.
4. It can provide better brand positioning Consumers’ increased focus on health has been dramatic since the pandemic. Private label can help c-stores reposition toward health and wellness, particularly in the snacks category.
Source: Cadent Consulting Group
have originated from health or dietary initiatives that also support and promote the retailer’s values and brand promises,” Woodward added. In the convenience channel, there are certain product categories that lend themselves well to store brands. Tobacco is one of them, according to Don Stuart, managing director of Cadent Consulting Group. “Tobacco can be a winner if the private brand successfully undercuts branded products, especially given the high price and taxes,” Stuart explained. He also sees non-alcoholic beverages from water to tea (but excluding carbonated soft drinks) as a strong fit for store brands, as well as salty snacks (in niche areas), candy, paper products, and over-the-counter medications. While Simonds believes a robust private brand assortment entails having store brands represented across all areas of the store, she agrees that c-store retailers would be wise to start out by focusing on a core assortment within mainstay categories such as salty snacks, candy, fresh food, and water.
The Store Brand Customer The consumer who buys private label products is shifting to younger generations, according to Cadent Consulting’s 7-Eleven is constantly innovating within its private brand product assortment to meet customers' changing needs. 44 Convenience Store News C S N E W S . c o m
Morrison. He says this is largely because they have lessdeveloped brand loyalty than previous generations. In fact, a recent Cadent Consulting Group study revealed that 54 percent of millennials say their choice of retailer is influenced by the availability of a store brand. “Millennials and Gen Z will become the majority of shoppers and they are predisposed to private label vs. older generations,” Morrison said. Moving forward, Oracle’s Woodward believes sustainability and climate pledges will be a key focus for private brands. “From simply reducing plastics to fully assessing the eco-footprint of each product and assortment, we are seeing private brands meet and support global causes and consumer demands,” he observed, adding that he also sees transparency, traceability and compliance as vital to how a private brand is perceived by shoppers. “Consumers are demanding greater transparency into supply chain ethics, sustainability and safety, which could be daunting for a new private brand,” he cautioned. Private brands are now being established as “true brands,” Woodward summarized, leaving behind the economy persona of private label. “All indications suggest that private brands will strongly compete with CPG brands going forward,” he said. The same outlook is shared by Simonds, who says private brands are well-positioned to continue supporting consumer behavior and driving preferences across the store. “Consumers trust private brands and with the right innovation strategy, they have the power to lead categories and drive store choice,” she said. “With 92 percent of consumers expressing that private brands fit their lifestyle just as much or more than national brands, now is the time to innovate within categories and establish new favorite offerings.” CSN
Feeding Off the Power of Loyalty The real-time data and consumer insights provided by loyalty programs can boost marketing efforts and improve foodservice category sales By Angela Hanson
the convenience store industry has shifted from an early interest in mobile ordering to a widespread adoption of digital services. Many c-store retailers are scrambling to catch up — but as they do, it is critical that they not overlook the advantages of a not-so-new concept: loyalty programs.
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When paired with new investments in technology, loyalty programs can do a lot to help c-store operators move the needle, particularly when it comes to foodservice category sales. One of the key benefits is their ability to incentivize trial of new items. “Pilot Flying J is always innovating our foodservice program to expand our menu offerings and provide our guests with fresh, seasonal flavors. As we continue to introduce new foods, the myRewards Plus app and our loyalty program provide an opportunity to feature those products and encourage trial through in-app offers or redemption of points,” said Steven Root, director of loyalty CRM for Knoxville, Tenn.-based Pilot Co., which operates more than 750 travel centers in 44 states. The success rate of such offers improves even further when programs take individual customer data into account. The true value of loyalty comes from analyzing a customer’s purchasing history through integrated point-of-sale data —
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right down to individual SKUs, according to Lori Stout, vice president of marketing at customer loyalty and engagement solutions provider Punchh. “As you aggregate data and build a more complete view of the customer, you can then use AI [artificial intelligence] to make predictions about future buying behaviors,” Stout said. “This is especially helpful for the foodservice category, as it becomes much easier to pinpoint and deliver offers that will resonate with that customer.” Examples include sending a new breakfast burrito offer to a customer who regularly purchases breakfast burritos, or sending a pizza-and-breadsticks combo deal to a customer who may not be a regular pizza buyer but always stops to buy fuel on Fridays. “Once you connect loyalty to the various touchpoints where your customer interacts with you, the possibilities are virtually endless when it comes to creating personalized, timely foodservice offers that will resonate,” Stout added. This data, however, is only as good and usable as retailers set it up to be. Many legacy loyalty programs lack connection to the point-of-sale (POS) system, fuel pumps and other relevant systems. In the c-store ecosystem, everything affects everything else. Stout recommends that retailers just beginning their
digital loyalty journey start with one integrated touchpoint, such as the POS, and then use that touchpoint to begin analyzing the purchasing history and behavioral patterns of certain guest segments. “Do you have a group of customers that purchase a cup of coffee every morning? Send that segment an offer for a bakery item,” she suggests. “Do you know, from receipt tagging data, that a certain customer purchases only vegetarian options? Send them an offer for your new plantbased breakfast sandwich.” The key is to plan carefully beyond the data-gathering stage. “For most retailers, the issue isn’t having enough data; it’s knowing what to do with the data they have. This is where thoughtful segmentation and integration to key touchpoints turn that data into a competitive differentiator for the brand and a better experience for the customer,” she explained. “Choose a loyalty provider that can help design and scale a loyalty strategy that reflects the unique goals and KPIs of the brand.”
“In addition to fresh, hot, quality and craveable food, customers expect personalized, relevant offers from an efficient loyalty program, which goes beyond transactional rewards.” — Raghu Mahadevan, 7-Eleven Inc.
Making Loyalty Programs More Effective C-store retailers must keep in mind that the loyalty program itself may need to evolve alongside consumer demands and changes in technology. In spring 2021, Pilot launched the revamped myRewards Plus app to make the experience more seamless as consumers increasingly move to digital. The company still offers a legacy program, but a physical card is no longer required. 48 Convenience Store News C S N E W S . c o m
Customers who use the 7-Eleven app shop two more times per month than those who don’t.
Catering to specific larger customer segments can achieve dividends. For instance, Pilot’s loyalty program caters to both regular drivers who may just be passing through, and professional drivers who eat most of their meals on the road. “Guests can also switch [app] profiles as they travel based upon their mode of transportation, changing to an RV profile, for example, if they are needing to find RV-friendly stops and amenities,” Root said. “Once ‘inside’ the app, guests are delivered tailored features and rewards that matter to their experience and needs. As an example, professional drivers are able to earn points with tiered rewards, which they can spend in-store on food, beverages and merchandise. We are also able to customize special promotions for our customer segments, such as offers just for professional drivers during Driver Appreciation Month in September.” For 7-Eleven Inc., its 7Rewards loyalty program launched in 2015 as a way for customers to earn free beverages. Today, it touches nearly everything the Irving, Texas-based retailer does from a digital perspective — mobile checkout, 7-Eleven Wallet, fuel loyalty, and the 7NOW delivery program. “We see the 7Rewards loyalty program as a win-win for both customers and for the stores,” said Raghu Mahadevan, senior vice president and chief digital officer. “When customers participate in 7Rewards, we learn more about what they want. That means we can personalize their experiences and reward them with contextual, relevant offers that are meaningful to them.” As a result, 7-Eleven has found that customers who use the 7-Eleven app — which includes the 7Rewards program, the digital wallet, and mobile checkout — shop two more times per month than those who don’t. The benefits offered through a loyalty program can range from banked points to BOGO deals and beyond. Which reward structures make the best fit for a c-store brand can vary, but there’s one thing operators must include if they want to give their foodservice program the biggest boost possible: customization.
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“Today’s consumer doesn’t just appreciate customization, they expect it,” Stout said. “One-size-fits-all loyalty programs are antiquated and ineffective.”
The Right Reward for the Right Customer It isn’t the size of the reward that matters as much as how well the reward fits into the customer’s purchase preferences. “In addition to fresh, hot, quality and craveable food, customers expect personalized, relevant offers from an efficient loyalty program, which goes beyond transactional rewards,” said Mahadevan. “Customers engage with brands on a variety of platforms, devices and channels — and they expect each one of them to work together seamlessly.” Many loyalty program members want to be able to share their rewards with family and friends, or use their rewards to participate in social causes. According to Mahadevan, loyalty was a key aspect of 7-Eleven’s recent campaign with the nonprofit Feeding America. Driven through the 7-Eleven app and 7Rewards program, the campaign helped provide millions of meals to families facing hunger. “The promotion drove positive reactions from our customers and directly impacted their shopping behavior. Over two-thirds of polled 7Rewards members stated they took incremental action to participate in the promotion, including over a third which shopped more frequently and bought more items to participate,” he said. “During the promotion period, the number of customers using our loyalty app and scanning it at checkout increased from the prior period to the highest levels in over a year. Loyalty transactions also increased as a percentage of total transactions despite overall traffic levels increasing in our stores.” Loyalty programs should vary in structure based on the strategic goals of a company. At Pilot, myRewards Plus members benefit from a tiered points program that gives them more value for the more fuel they purchase. This system could also be applied to frequent customers who stop in regularly for coffee, snacks or meal purchases. “We’ve received a ton of positive feedback since launching our new program in the myRewards Plus app,” Root said. “More pro drivers are activating the tiered points 50 Convenience Store News C S N E W S . c o m
“As we continue to introduce new foods, the myRewards Plus app and our loyalty program provide an opportunity to feature those products and encourage trial through in-app offers or redemption of points.” — Steven Root, Pilot Co.
program in the app every month and are seeing how much more value they get after fueling only six times.” Many retailers assume that an effective loyalty program requires heavy discounts, but that isn’t the case, according to Stout. Consumers enjoy and respond to “surprise and delight” offers. It’s also important to them that the brand knows and understands them. “Segmentation is the foundation for more effective and personalized marketing opportunities that drive higher lifetime loyalty and value with the customer, but that don’t erode the profitability of the brand,” she said. “As more brands are exploring expanded foodservice options, they are also realizing the value of using loyalty as the centerpiece of a digital ecosystem that connects consumer information across a variety of ordering, delivery and payment options.” If a c-store retailer hasn’t yet launched a loyalty program, they shouldn’t waste any more time, as competition is growing and includes operators beyond the convenience channel. Earning and retaining customer loyalty has never been more important, Stout stressed. “The concept of a loyalty program itself is no longer unique. Most brands have some sort of incentive in place to attempt to keep customers coming back,” she said. “The brands that will rise to the top, however, recognize the importance of personalized, 1:1 loyalty that integrates with every touchpoint to evolve alongside the customer and their changing preferences.” CSN
A Healthy State of Beverages Drinks packed with energy, nutrients and probiotics are resonating with consumers By Renée M. Covino SURE, THE FOUNTAIN OF YOUTH would be nice, but these days, the fountain of wellness is taking precedence. Beverages providing energy, calm, nutrients, vitamins, probiotics and more are playing an increasing role in Americans’ everyday lives.
Consumers are taking a more proactive approach to managing wellbeing with functional nutrition, close-to-nature ingredients, and foods and beverages that signal self-care, according to ADM, an agricultural origination and processing company.
McGillis, principal at Ontario, Canada-based Jackman Reinvents, a customer engagement firm. The firm’s Human Insights Study, released in May 2021, revealed that for 54 percent of consumers, taking care of their physical health has become more important since the start of 2020. Furthermore, taking care of their mental health has become more important to 51 percent of the consumers surveyed. “We’ve seen this increased interest in health and wellness show up in food trends, such as plant-based diets, flexitarian and interest in functional ingredients, so it’s no surprise we’re seeing the same with beverages,” McGillis told Convenience Store News.
“Health and wellness remain at the forefront of the global conversation,” said June Lin, vice president of global marketing, health and wellness at ADM. “The pandemic has transformed how consumers perceive holistic health and wellbeing. It’s impacting how we live and increasing the importance of the foods, beverages and supplements we choose, presenting new opportunities for our industry to meet their needs.”
People are increasingly aware of the impact their environment has on their personal health, and this includes what they put into their body. As a result, there’s been a surge in interest in wellness through nutrition, according to Anders
The “food/beverages as medicine” viewpoint is also shared by Sherry Frey, vice president of total wellness at Nielsen IQ. “Beyond the traditional realm of vitamins and supplements to boost immunity, shoppers are opting for beverages that offer immunity-boosting benefits to get their daily dose of protective nourishment,”
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He has observed a shift toward people wanting beverages to “do more” for them. “Those highly engaged in the wellness category are constantly looking for ways to optimize their health and wellbeing, so they view any eating or drinking occasion as a way to do so,” he added.
she noted. “Companies around the world are taking notice and tapping into this growing consumer priority.” For example, Frey highlighted that in the U.S. market, “immunity tea” is among the top searched terms related to immunity, and sales of beverages that support immune-system health are growing by 46 percent year over year.
ADM has observed a proactive perspective on immunity in general as well. With 65 percent of global consumers more concerned about immunity since the onset of COVID-19, they are shifting from a defensive approach against illness to one that is more proactive and holistic, the firm said. Consumers are looking for ways to incorporate function-supporting solutions, such as probiotics and vitamins C and D, into their daily lives. In Japan, “postbiotics” are gaining ground, building off the popularity of probiotics and prebiotics, and this is expected to take hold in the United States soon.
Additionally, enhancements such as added vitamins and minerals are continuing to grow. Frey pointed out that 84 percent of sports drinks are now enhanced with minerals. “We anticipate this to continue with new areas like adaptogenics beginning to emerge,” she stated.
“Healthy drinks don’t just mean less sugar anymore. The emergence of kombucha and juice cleanses indicates that many consumers [have] started seeking health benefits from their choice of drinks,” Ryosuke Kimura, a spokesperson for Koso, a Japanese postbiotic drink and cleanse, told CSNews.
Other rising beverage trends observed by Frey include:
Postbiotics, as she defines them, are beneficial chemicals secreted by the good live probiotic bacteria after feeding on prebiotics. “Essentially, that’s what people need out of probiotic bacteria,” Kimura said. “In recent months, we have seen huge growth.”
• Caffeine: Consumer interest in having a jolt in beverages is almost as much as avoiding it in beverages; sales of free from caffeine beverages are up 15.8 percent, while contains caffeine beverages are up 17 percent. • Unadulterated sweet: Free from added sugar drinks are up 22 percent in sales. • Low-calorie: Beverages lower in calories are outpacing the category.
“We’ve seen this increased interest in health and wellness show up in food trends, such as plant-based diets, flexitarian and interest in functional ingredients, so it’s no surprise we’re seeing the same with beverages.” — Anders McGillis, Jackman Reinvents
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Permissible Indulgence As part of consumers’ increased interest in health and wellness these days, indulgence is also getting a revamp. The way ADM sees it, “purposeful indulgence” is the new “permissible indulgence” — and this applies to beverages, as well as food items. During the pandemic, consumers gave themselves permission to consume indulgent food and beverages as a form of self-care. In fact, 56 percent of global consumers say they have regularly purchased comfort food as a result of the pandemic. “Consumers are recognizing as long as these are purposeful — and not impulsive — choices, indulgence has a role in a positive relationship with food,” ADM stated.
Cold Vault Callouts According to consumer market researcher Packaged Facts, the functional beverage benefits that today’s consumers perceive as most important to them are: • • • • • • • •
Increased energy Enhanced hydration Boosts in cognitive function/brain activity Better sleep/relaxation Immunity boost Increased gut health Meal replacement/weight management Sports performance improvement
As such, the firm foresees new opportunities for beverages, snacks and confectionery products that deliver functional benefits with delicious flavor. Beverages as meal replacements is another “permissible indulgence” trend, according to Lily Badger, head of marketing for HOP WTR, a calorie-free, hop-filled sparkling water crafted with stress-busting adaptogens and nootropics. Tied in with this is that consumers are looking for a more “layered” beverage experience, according to Badger. “When you add flavor and functional ingredients, you end up with four layers rather than two, and people want this in their beverages,” she said. “People are wondering what’s another way to get their vitamins. How can they improve their immune health? How can they improve their gut health? They want more robustness and uniqueness in beverages that are packed with good-for-you ingredients.”
The Convenience Angle Keeping a finger on the pulse of emerging beverage trends is a must for the convenience channel. However, it can be a challenge to know which trends have staying power. “In terms of which beverage trends to 56 Convenience Store News C S N E W S . c o m
act on, convenience stores need to consider the role they want to play in all this,” said McGillis of Jackman Reinvents. “Consider what your strategy is: Are you the forward-thinking, innovative convenience store? Are you trying to support the wellness enthusiast’s on-the-go lifestyle with healthy options? Consider how your strategy impacts how you source and merchandise beverages.” He cautions retailers not to go after every new beverage trend, in order to avoid a very haphazard, disconnected customer experience. On the flip side, ignoring the latest trends is to ignore the shifting consumer values taking place since the pandemic. Just as people have reprioritized what truly matters in their lives, c-store operators need to reprioritize what matters most to their customers. “Rather than focusing on the beverage trend, focus on the consumer trend driving it,” McGillis advises. For a c-store, this may mean acknowledging that health and wellness matters a lot more to customers today than it did before the pandemic. “We’re seeing the reprioritization, particularly as it relates to personal health, show up in consumers’ purchase behaviors, agnostic of category or channel,” he said. And because convenience stores became a go-to channel for many shoppers during the pandemic, the “typical” c-store customer of today has expanded. “The beauty of a c-store these days is that you have a less price-sensitive consumer who’s more willing to try. They’re in trial mode when they walk into a c-store,” said Badger. “Unlike when they walk into a grocery store with a list, a c-store has a better chance to disrupt them and give them options they wouldn’t otherwise choose in a different channel.” CSN
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Driving Traffic With Digital Mobile apps, digital signage, text messaging and more is how consumers expect to be engaged in today’s retail world By Tammy Mastroberte IN TODAY’S WORLD, people live digitally — from smartphones and apps to voice-enabled devices, social media and online shopping. This has changed the way retailers interact with and meet the needs of their customers. It’s also changed the way they boost their bottom line.
“Digital engagement is more important now than ever because that is the way people live,” Art Sebastian, vice president of digital experiences at Ankeny, Iowa-based Casey’s General Stores Inc., operator of more than 2,300 convenience
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stores, told Convenience Store News. “People expect to digitally engage with restaurants, c-stores and grocery stores, and as a channel, we can’t be left out of that.” Digital engagement for the c-store space is not just about getting customers onto the lot, but also getting them into the store and influencing their purchases once they’re there. It includes digital signage at the forecourt, digital signage in the store — such as cooler screens and foodservice menuboards — mobile apps, mobile marketing, loyalty programs and more. “To be successful with digital, c-stores need to think more holistically about consumer experiences and avoid the shiny object of the week,” advises Kevin Rice, chief marketing officer at San Luis Obispo, Calif.-based Hathway, a digital growth partner for convenience stores.
Digital properties include websites, apps and digital signage, as well as channels such as email, SMS, push notifications, and in-app messaging. And it all needs to connect seamlessly with loyalty and marketing technology, so everything works together, Rice explained. “Everything has to work consistently and seamlessly across every interaction and touchpoint for your digital strategy to be effective,” he said. “The industry is convenience, but it’s also the expectation of the customer, and this needs to be part of the digital strategy.”
Digital Tools to Engage When it comes to getting customers into the store, utilizing their mobile phones is where most retailers across all industries are focused right now, and this includes mobile apps tied to loyalty programs. “This might sound too simple, but our loyalty program is really doing the job for us,” said Sebastian. “We have 4.3 million members and if they use it, they have the mobile app, so we can send push notifications. This has become the leading driver of in-store conversions.” The Casey’s Rewards program is on the Punchh platform. For email, app messaging and all marketing automation, the chain uses Salesforce. Casey’s has been collecting data through its loyalty program long enough that it can now Push notifications through its loyalty program have become the leading driver of in-store conversions for Casey's.
send personalized offers to individuals based on their past behavior, the time of day they typically shop the store, and other metrics. The chain can also track if those offers are opened and redeemed. “We now have enough data on members that we know X customer typically buys a whole pizza every week, so we can app push at day 6 to close the gap on the purchase,” Sebastian explained. “Also, on Saturday at 10 a.m., I can push an offer for a $1 medium coffee to be redeemed that day and we can track the conversion rate of all customers who received the app push to see who buys.” Many c-stores offering pay at the pump via a mobile app can utilize this type of push notification to also get customers from the forecourt into the store. Once in-store, it often results in them purchasing more than just the deal offered, according to Rice. “When filling up the gas tank, customers are a captive audience, so give them a free cup of coffee to get them into the store, or offer a car wash coupon, or anything else you might have available to them,” he said. “Give them something to get into the door and they will probably buy something else as well.” The same goes for digital engagement once a customer is in the store. With consumers spending so much time on their mobile phones these days, utilizing this to communicate to them allows retailers to create a personal connection. When someone is logged into an app, the c-store retailer can know they are there if using geolocation, and many have access to past purchase history and preferences, so they can send a relevant push notification to entice them to buy. Casey’s uses Salesforce’s Einstein artificial intelligence (AI) product to turn its sales data into business insights, and the chain is optimizing message send times using AI. Casey’s is also segmenting loyalty members by a variety of metrics, such as when they open messages, to maximize open rates, Sebastian noted. “We do messaging as an app push, an in-app message in the app mailbox, SMS for those who signed up, and email — all depending on what a person responds best to,” he shared. Many retailers are also focusing on digital signage and menuboards to engage customers and encourage more sales. This has become more than simply flashing products or promotions on a screen. With today’s technology, c-stores can cater the promotions they display to time of day or seasonality — and this includes kiosks. “Kiosks when done well have great guest satisfaction and tend to drive higher basket sizes,” Rice said. A major area of focus for Casey’s is making sure its in-store digital screens and menuboards are personalized and showing the most relevant content at the right time. Sebastian’s goal is to be even more personalized in this area, targeting what audience they are talking to, what day of the week, etc. “We have digital menuboards, but there is work to do to personalize them and make them more relevant as well,” he acknowledged.
Taking Engagement Up a Notch One of the biggest benefits of interacting digitally with consumers is the data that can be captured, which can then help c-store operators
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How Casey’s Engages via QR Codes For a while, Casey’s General Stores Inc. has been using QR codes at the pump to encourage people to join its loyalty program. In September 2021, the convenience store chain decided to test QR codes inside the stores to engage customers and drive interest around its new coffee and breakfast launch.
make decisions on products, merchandising and marketing. Capturing and analyzing this data must be part of an overall digital strategy. “For us, when you engage with a customer digitally, you are building data and that is one of the most powerful aspects we have at the moment,” Sebastian said. Using this data is one of the greatest tools c-stores have at their disposal to understand customer preferences and behaviors, and keep customers engaged in the midst of a noisy digital world. However, many are still falling short in this important aspect, according to research from Hathway. While 83 percent of customers surveyed said they would use an app from a c-store, the research showed many of the current apps are not keeping them engaged. “We saw there was intent to use digital experiences in the c-store industry by customers, but there are very few people actively using mobile apps or websites from c-stores because they are not meeting the expectations,” Rice said. “Right now, it’s the lack of integrated capabilities and poor user experience that is causing a gap in consumer expectation.”
The chain posted three QR codes in the stores where customers make their coffee, in front of the foodservice warmer, and on the checkout counter mat. When customers scanned the QR code, they were prompted to play a game and if they won, they would get an instant offer around the new breakfast options. “Customers were already in the store, so they would scan the code, subscribe to our email channel, and then play the game,” said Art Sebastian, vice president of digital experiences at Casey’s. “When they won, then we would have a repeat purchase because they have to come back.” Casey’s launched the initiative the day after Labor Day to support its new breakfast sandwiches, and purposely put the codes in “dwell times” where people would be standing in the store.
Data can help c-stores address this by uncovering customer preferences. This includes declared data, which people volunteer about themselves, such as a favorite product or location, and how they want to be communicated to. There’s also observed data, which includes a behavior like opening an app or looking at certain products, and transactional data based on what they buy. All of this can be analyzed and used to drive more engagement, more traffic and more sales. “You can run a fun campaign to get people to declare if they are a night owl or a morning person, and now you know when to engage with them,” Rice suggested. “You can even give them an incentive for participating.” Since the COVID-19 pandemic began, competition for consumer attention has drastically changed. Now more than ever, c-stores are competing against quick-service restaurants, according to Patrick Thomas Raycroft, a partner at Chicagobased W. Capra Consulting Group.
Customers found it fun to play the game and although they didn’t need the Casey’s app to play, the chain did see a significant jump in app downloads because of the promotion, Sebastian said. The retailer also tracked redemptions of the offers.
When a c-store app is next to the Domino’s, Starbucks or Dunkin’ apps — which are advanced in their mobile offerings and take customers on an engagement journey — it’s harder to grab attention and this is forcing c-store players to up their game, said Raycroft.
“We are thrilled with the results and are going to do it again,” he shared.
“The convenience store industry as a whole drastically under-engages its consumers,”
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he observed. “In some cases, the convenience and fuel retailing industry has fallen victim to thinking about digital experience first and not the engagement tools like messaging platforms, analytics platforms, and attribution.” Hathway conducted an analysis of 100 convenience stores and found that more than half didn’t have any digital experiences, such as digital loyalty or online ordering. Between 20-30 percent were in the early stages and using white label apps vs. custom apps. White label apps make it harder to have the connected experience, according to Rice, who noted that 7-Eleven Inc., Casey’s and Wawa Inc. are c-store chains doing well with digital because they are making the big investments that are necessary. “With white label, you wind up with one software provider who does loyalty,
another for online ordering, and then another for fuel payments,” he explained. “Then, you have all these different white label apps. Customers don’t want different logins.” C-stores need to make it easy for customers to engage digitally, starting with signing up for the loyalty program or app. Most people don’t want to type into a mobile keyboard, so offering the ability to create an account by signing in with Google or Facebook, where they only need to do a couple of clicks, is a good idea, Rice pointed out. “Then, allow them to add a few things to their basket and use Apple Pay to check out, so it’s a seamless experience rather than a lengthy process to create an account, then go to their email to confirm, and then pull out a credit card. Consumers don’t have the time or patience for that,” he continued. It all boils down to having a strong digital experience that combines loyalty, ordering, fuel, car wash and any other services offered by the c-store, and then allowing customers to interact with it all using their mobile device — which is their preferred way in today’s world. “I think what is really on the horizon for the convenience market is to become more competitive to attract the attention span of consumers, and eventually do what Starbucks and others who are best-in-class are doing,” said Raycroft. CSN 21_2787_Convenience_Store_News_FEB Mod: January 7, 2022 4:25 PM Print: 01/20/22 9:26:13 AM page 1 v7
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Supporting Women- & People of Color-Owned Businesses Contributing to another’s success won’t ever dampen yours TRANSFORMING THE SHAPE of
the corporate world means change at every level — and that includes buying. Supporting women- and people of color- (POC) owned businesses makes our communities stronger and promotes equality.
By Sarah Alter, President & CEO, Network of Executive Women
owners received just 2.6 percent of venture capital funding in 2020. If VC funding is not an option, how do these businesses flourish?
With only 38.2 percent of businesses owned by women and people of color, the support of a large organization can make or break their success and the positive impact they bring.
By relying mostly on consumers to keep their doors open. Because most VC funding is provided to Caucasian men, buying with these businesses not only keeps them up and running, but also provides jobs for women and BIPOC.
The Issue: Lack of Funding
Women- and POC-owned businesses are less likely to receive venture capital (VC) funding compared to their counterparts. According to a study by Crunchbase, the percentage of venture capital funding received by women business owners fell from 2.8 percent to 2.3 percent in 2019. Additionally, Black and Latinx business
Major brands and personalities are already advocating for more support, and bringing the lack of funding these businesses face into the public eye. Serena Williams, a recent guest at NEW’s 2021 Leadership Summit, created an early-stage venture capital fund, Serena Ventures, and has provided funding for
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Businesses built by under-represented groups offer unique goods and services created from fresh perspectives.
Convenience Store News is pleased to continue this series of educational columns by the Network of Executive Women (NEW), coinciding with the annual CSNews Top Women in Convenience awards given out each fall. Seventy-four female managers, executives and directors who work in the convenience store industry were honored in our 2021 program. In addition to being a presentation sponsor for the Top Women in Convenience program, NEW and CSNews have partnered to develop this series of columns directed at helping corporate leaders drive more inclusive company cultures. 2022 SPONSORS Founding & Presenting Sponsor:
women- and minority-owned businesses. Her organization has funded more than 50 companies in a multitude of industries. Rihanna and H.E.R have provided funding for Partake Foods, a vegan cookie company owned by Denise Woodard. According to Forbes, “Woodard is the first woman of color to raise $1 million for a food startup, and her business is scaling quickly.”
And designer Tory Burch created the Tory Burch Foundation to help female entrepreneurs succeed. The foundation has already granted roughly $25 million to woman-owned startups.
The Benefits Are Clear
Businesses built by under-represented groups offer unique goods and services created from fresh perspectives. But supporting women- and POC-owned businesses means so much more than a unique business opportunity — it means doing the right thing, and building a thriving network of diverse businesses around the country that offer fresh opportunities to these communities. CSN
Sarah Alter is president and CEO of the Network of Executive Women, a learning and leadership community representing more than 14,000 members in 22 regional groups in the United States and Canada. Learn more at newonline.org.
Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News.
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Readying for the Future Huck’s Market unveils a modern design and extensive foodservice offers in 6,000 square feet By Danielle Romano
At a Glance Huck’s Market Location: 7322 Oak Grove Road, Newburgh, Ind. Size: 6,000 square feet Unique features: First-ever store of this size; a warm, inviting and comfortable look and feel; the Huck’s Kitchen concept, including Godfather’s Pizza, Cluck’s Chicken, Bigg Bakery, Bigg Breakfast, and Bigg Fresh; Skip the Line technology; self-checkout units
IN 2019, Huck’s and retail services provider GSP came together to help the convenience store operator achieve its goal of shifting to a fresh, new look and feel that would resonate with both existing and new customers. Thus, the Huck’s Market concept was born, ushering in an exciting new brand that impacts the entire store from forecourt to foodservice.
city of Newburgh is significant for several reasons. For starters, the city possesses a suburban-rural mix with ample opportunity for new development. Newburgh is also home to one of the top-performing Huck’s Market locations, and is part of the larger metropolitan area of Evansville, where the retailer has several stores.
Fast forward to September 2021, and Huck’s and GSP again joined forces to bring the retailer’s latest new-to-industry site in Newburgh, Ind., to fruition. Boasting 6,000 square feet, the latest Huck’s Market is the first of its size for the company.
“This location marks the beginning and has helped us establish where the Huck’s brand and image is headed in the future. We have been able to see the benefits of the larger square footage almost immediately, and our new programs in the kitchen took off with a bang,” Huck’s Vice President of Marketing Brittany Bayley told Convenience Store News. “There were several benefits [of] adding more retail space, making our stores more efficient for our associates and more spread out for our customers. We couldn’t be more pleased.”
“We participated in many working meetings. The Huck’s team was — and always is — extremely positive and excited through the ideation process. We presented their team with several concepts that offered a positive nod to the past and looking forward to the future,” said GSP Vice President of Business Development Craig Neuhoff, Chief Creative Officer Steven Cohen and Vice President of Design Services Margaret Sotrop. “We took a very close look at the Huck’s existing voice and messaging and how they wanted to speak with their customers.” Opening a store of this caliber in the
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Foodservice Focused With overall aesthetics that deliver a warm, friendly, inviting and comfortable look and feel, the design of the Newburgh Huck’s Market is intended to entice and highlight the retailer’s extensive foodservice offerings. When it comes to the company’s long-
Huck’s maintains five focal points to position it as the best foodservice choice in the markets it serves.
term strategic goals for foodservice, Huck’s has five focal points to position it as the best food choice in the markets it serves. According to Dave Grimes, vice president of foodservice, these value propositions include:
products using current cooking methods to ensure the company can produce the quality it desires. “We also tweak current practices to ensure all cooking methods used ensure the highest-quality levels possible. Our goal is to continue to leverage our test kitchen to ensure we regularly improve the quality of our offers.”
1. Variety: Utilizing its test kitchen, Huck’s will aggressively pursue new product offers. “We will continue developing our Huck’s Kitchen concept, which includes Godfather’s Pizza, Cluck’s Chicken, Bigg Bakery, Bigg Breakfast, and Bigg Fresh. The goals of the varieties offered here are to address all dayparts, a variety of flavor cravings, and healthy eating concerns.”
4. Consistency: The retailer’s field foodservice leadership team works every day in-store to ensure consistency in operations. “Our goals here include regular corporate training in our test kitchen to ensure we are consistent with our operations in terms of food preparation.”
2. Value: Intelligent buying and effective category management enables Huck’s to offer the highest-quality goods at extremely competitive prices. “Moving forward, our plan is to leverage current relations by treating vendors as business partners and developing new relationships to build new partnerships and ensure that current vendors remain competitive.” 3. Quality: Huck’s recently constructed a test kitchen to aggressively test new
5. Convenience: The goal is to not only live Huck’s tagline of “Fresh • Fast • Friendly,” but also to be convenient. Where available, Huck’s offers several third-party delivery platforms, including Grubhub, DoorDash, Uber Eats and Godfather’s. “We are also selling time to our customers. Place the order and it comes to your doorstep. No need to go out in the cold or buckle all of the kids in the car.” These value propositions come to life at the Newburgh Huck’s Market through a number of foodservice options that span all dayparts. In the morning, the store offers Bigg Breakfast, including the choice of biscuit, croissant or bagel sandwiches and breakfast burritos. Breakfast orders can be completed by Ronnoco premium coffee served from bean-to-cup
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A wide variety of dispensed and packaged beverages are available to complement food purchases.
machines that ensure freshness, in addition to Stok Cold Coffee and a variety of cappuccino flavors. Lunch and dinner options include Godfather’s Pizza and Cluck’s Famous Fried Chicken. Also on the menu are rotisserie chicken, salads, burgers, and chicken and tenderloin sandwiches. In-between-meal fillers and snacks are provided by the retailer’s Bigg Bakery and include such fare as doughnuts, turnovers, croissants, muffins, cookies and brownies. Also available are fresh jumbo pretzels; the Nutty Bavarian, a selection of candy-coated almonds, cashews and pecans; Fresh Blends frozen beverages; and f’real milkshakes. Additional amenities available at the latest Huck’s Market are: • 16 fueling stations; • Huck’s Bucks Bigg Rewards program; • Skip the Line technology, whereby customers can pay via their mobile phones; • Two self-checkout units; and • Outdoor seating.
An Evergreen Evolution From new builds to legacy travel centers, GSP has worked with Huck’s on its entire portfolio of stores. Each project is an evolution of the brand, according to the executives at GSP. The design approach for Huck’s is
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“evergreen,” meaning it will continue to look great five to 10 years from now. “It’s important to note, however, that once a brand is in place, you must allow it to breathe and evolve while always following those set brand standards,” the executives told CSNews. In the meantime, Huck’s and GSP will monitor the new 6,000-square-foot concept and work together to make any necessary changes to better accommodate guests and employees. The pair is also exploring pointof-purchase solutions to support a total remodel strategy. “We are pleased with the locations’ efficiencies, but are always looking at ways to make things better. No idea or creativity gets shot down here at Huck’s — no matter how crazy the idea may be,” Bayley expressed. “We are always working together as a team to make our stores and our business the best it can be. We are truly thankful for our Huck’s team, our vendors, partners and our people. They are the ones that make the Huck’s Market culture and brand what it is today. The future is bright for Huck’s Market!” Carmi, Ill.-based Huck’s currently operates more than 120 convenience stores in Illinois, Indiana, Missouri, Kentucky and Tennessee. The retailer was slated to kick off the new year with a grand-opening celebration for a new store in Hannibal, Mo. CSN
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INSIDE THE CONSUMER MIND
Dining Out, But In Food delivery aggregator platforms are very popular among the highest-spending, highest-frequency restaurant customers Consumers turned to multiplatform aggregators such as DoorDash and Uber Eats during the COVID-19 pandemic, but even as restaurants have reopened, the convenience and time-savings offered by these platforms remain attractive, according to a new research report released by Paytronix Systems Inc. and PYMNTS. The report is based on a survey of 2,000-plus U.S. restaurant customers — defined as those who purchase food from restaurants at least once a month — that asked about their spending and ordering preferences. The findings include:
ONE-QUARTER of all restaurant patrons fall into the high-spending, high-frequency category, defined as those who purchase food from restaurants at least once a week and spend more than $40 per purchase on average.
HIGH-SPENDING, HIGH-FREQUENCY CUSTOMERS REPRESENT THE RESTAURANT SECTOR’S MOST IMPORTANT CUSTOMER SEGMENT.
HIGH-SPENDING, HIGH-FREQUENCY CUSTOMERS ARE MUCH MORE LIKELY THAN OTHERS TO USE FOOD DELIVERY AGGREGATOR PLATFORMS. These customers accounted for 36% of those who ordered delivery from a quick-service restaurant via an aggregator in the past three months, and 44% of those who ordered delivery from a table-service restaurant via an aggregator.
of high-spending, high-frequency customers used DoorDash in the past 15 months — the most-used platform among all respondents. Runners-up were Uber Eats and Grubhub.
Larger shares of high-spending, high-frequency
CUSTOMERS CARE ABOUT ACCESSING DEALS, DISCOUNTS AND LOYALTY PROGRAMS WHEN ORDERING DELIVERY vs. those in other groups, whether placing their order via an aggregator or directly from a restaurant. “The Digital Divide, Aggregators and High-Value Restaurant Customers,” a Paytronix and PYMNTS collaboration, examines the spending habits of U.S. restaurant customers, focusing specifically on the critical high-spending, high-frequency customer segment.
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