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
IS THE PARTY OVER? After four years of record profits, the convenience store industry’s remarkable run may be running out of gas.
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VIEWPOINT
How to Handle a Disappointing Report Card Results in the Convenience Store News 2018 Industry Report didn’t measure up to past grades WHAT DO YOU DO WHEN YOU BRING HOME A DISAPPOINTING REPORT CARD?
That’s pretty much my quandary in reporting on this year’s Convenience Store News Industry Report. The past couple of years, I felt like a proud son showing his parents his Honor Roll grades. The convenience store industry scored high marks across the board in nearly all key performance areas, from sales and profit growth, to foodservice gains and store count. This year’s report card doesn’t quite match the results of the previous two years. If this were a school report card that you had to show your parents, experts would advise: • Don’t put it off; • Highlight a good achievement or task; • Be honest and upfront about your bad grades; and • Propose solutions. So, I’m not going to put it off. The industry should have done much, much better than it did in 2017 — especially with in-store sales, which increased only 2.1 percent. There is good news. After four years of declines, total sales rose last year. And both gross and pretax profits were up again, although operational costs continue to rise
at an ever-increasing rate. But let’s be completely honest about the bad news. There’s no sugar-coating the comparatively paltry 3.6-percent increase in foodservice sales — the lowest percentage increase for the critical foodservice category in more than a decade. What happened? Retailers cited higher gas prices than the year before, the economic struggles of lower-income households, rising online sales, a political climate causing fear among Hispanic consumers, and more aggressive competitive tactics by competitors, especially quick-service resturants. Let’s end on a more positive note and propose some solutions. Even though we can’t change last year’s results, we can do our best to make sure we see improved performance in 2018. My humble suggestion: invest in your frontline employees. View them as assets, not costs. I can’t think of too many more important things you can do as a retailer defending your turf from competitors, both online and offline, than creating a more positive store experience for your customers through a truly engaged and empowered workforce. For comments, please contact Don Longo, Editorial Director, at (201) 855-7606 or dlongo@ensembleiq.com.
EDITORIAL EXCELLENCE AWARDS (2013-2018)
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
EDITORIAL ADVISORY BOARD
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
2013 American Society of Business Press Editors, Midwest Regional Azbee Awards Bronze, Best Editorial/Commentary, July 2012
2017 Eddie Awards, Folio: magazine Winner, Business to Business, Retail, Single/Series of Articles, May 2017 Honorable Mention, Business to Business, Retail, Single/Series of Articles, June 2016
2015 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Single Article, February 2014
4 Convenience Store News C S N E W S . c o m
Jon Bratta Core-Mark International Inc.
Danielle Mattiussi Maverik Inc.
Rick Crawford Green Valley Grocery Edward Davidson ER Davidson & Associates (7-Eleven Inc., retired)
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 Trade Association Business Publications Intl. Tabbie Awards Silver, Front Cover Illustration, June 2015
Jack Lewis GPM Midwest
Finalist, Best Profile, August 2012
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
Brett Atherton Bolla Management
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
Jim Hachtel Eby-Brown Co. Ray Johnson Speedee Mart Kirk Leff McLane Co. Inc.
Kyle McKeen Alon Brands Inc. Richard Mione GPM Southeast Jonathan Polonsky Plaid Pantries Inc. Greg Scriver Kwik Trip Inc. Roy Strasburger Strasburger
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CONTENTS JUN 18
VO LU M E 54 N UMB ER 06
88
28
38 FEATURES
DEPARTMENTS
COVER STORY
VIEWPOINT
38 Is the Party Over? After four years of record profits, the convenience store industry’s remarkable run may be running out of gas.
4 How to Handle a Disappointing Report Card Results in the Convenience Store News 2018 Industry Report didn’t measure up to past grades.
64 Turning Eyesores Into State-of-the-Art C-stores Gas Land Petroleum remediates and transforms contaminated properties in New York State.
12 CSNews Online OUT & ABOUT
26 Technology Talks Trending topics at the 2018 Conexxus Annual Conference ranged from blockchain to IoT.
OUT & ABOUT
STORE SPOTLIGHT
28 Serving Up Technology & Trends A key theme of the 2018 National Restaurant Association Show was planning for the future.
88 The Next Generation of Cumberland Farms The retailer’s new store model enhances the customer experience through upgrades in design, equipment and food offering.
OUT & ABOUT
30 Welcome to the Latest & Greatest The 2018 Sweets & Snacks Expo unwrapped new innovations in confections and snacks. 32 New Products
92 Danielle Mattiussi, Maverik Inc. The 2016 TWIC Woman of the Year encourages others to create opportunities to shine. GETTING TO THE CORE
SMALL OPERATOR
36 Searching for Answers The seven things that are keeping this single-store owner up at night. 6 Convenience Store News C S N E W S . c o m
TWIC TALK
110 How Much Does Fuel Brand Really Matter? New consumer research analyzes both brand familiarity and perception.
CONTENTS JUN 18
VO LU ME 54 N UMB ER 06 8550 W. Bryn Mawr Ave., Ste. 200, Chicago, IL 60631 (773) 992-4450 Fax: (773) 992-4455 www.csnews.com
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Direct Mailing Address for Convenience Store News: 11-43 Raymond Plaza West, 16th floor, Newark, NJ 07102 BRAND MANAGEMENT Vice President/Group Brand Director Paula Lashinsky (917) 446-4117 plashinsky@ensembleiq.com EDITORIAL Editorial Director (201) 855-7606
Don Longo dlongo@ensembleiq.com
Editor-in-Chief (201) 855-7608
Linda Lisanti llisanti@ensembleiq.com
Senior News Editor (201) 855-7618
Melissa Kress mkress@ensembleiq.com
Associate Editor (201) 855-7619
Angela Hanson ahanson@ensembleiq.com
Associate Managing Editor (201) 855-7604
Danielle Romano dromano@ensembleiq.com
Assistant Editor (201) 855-7614
INDUSTRY ROUNDUP
CATEGORY MANAGEMENT
16 Federal Menu Labeling Law Now a Reality 16 Fast Facts 18 Eye on Growth 18 Retailer Tidbits 20 In the Public Eye
Contributing Editor (303) 741-3377
Renée M. Covino reneek@aol.com
Contributing Editor (201) 280-2614
Tammy Mastroberte tmastroberte@gmail.com
ADVERTISING SALES & BUSINESS
FOODSERVICE
14 Marathon & Andeavor to Unite in Latest Mega-Merger
Chelsea Regan cregan@ensembleiq.com
80 What’s Hot on C-store Menus? QuickChek plays it simple and scores with Salt & Pepper Fries.
Associate Brand Director & Northeast Sales Manager (508) 385-2524
Rachel McGaffigan rmcgaffigan@ensembleiq.com
Associate Brand Director & Western Sales Manager (330) 840-9557
Ron Lowy rlowy@ensembleiq.com
Associate Publisher & Midwest Sales Manager Kelly Fischer (773) 992-4464 kfischer@ensembleiq.com
FOODSERVICE
82 Doing Good With Good Food The 2018 Convenience Store News Foodservice Summit inspired c-store retailers to consider what more they could be doing to serve their communities.
Account Executive, Southeast (803) 315-0694
Cindy DeBerry cdeberry@ensembleiq.com
Account Executive & Classified Advertising Terry Kanganis (201) 855-7615 tkanganis@ensembleiq.com Classified Production Manager Mary Beth Medley (856) 809-0050 marybeth@marybethmedley.com EVENTS Vice President, Events (647) 557-5094, X1001
Michael Cronin mcronin@ensembleiq.com
AUDIENCE ENGAGEMENT Director of Audience Engagement Gail Reboletti (224) 632-8214 greboletti@ensembleiq.com
HOW TO
Audience Engagement Manager (215) 301-0593
70 Catch Some Zs Don’t fall asleep on the upand-coming consumer powerhouse, Generation Z.
Shelly Patton spatton@ensembleiq.com
List Rental (847) 492-1350 ext.318
MeritDirect Elizabeth Jackson
Subscriber Services/Single-Copy Purchases (978) 671-0449 EnsembleIQ@e-circ.net PROJECT MANAGEMENT/PRODUCTION/ART
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Vice President, Production (973) 358-4875 Creative Director (973) 607-1320
Kathryn Homenick khomenick@ensembleiq.com Colette Magliaro cmagliaro@ensembleiq.com
Custom Project Manager (224) 632-8244
Kathy Colwell kcolwell@ensembleiq.com
Custom Project Manager (973) 607-1368
Judi Lam jlam@ensembleiq.com
Advertising/Production Manager (773) 992-4418 Art Director (224) 632-8245
Ed Ward eward@ensembleiq.com Michael Escobedo mescobedo@ensembleiq.com
CORPORATE OFFICERS Executive Chairman Alan Glass Chief Executive Officer David Shanker Chief Operating Officer & Chief Financial Officer Rich Rivera Chief Brand Officer Korry Stagnito President, Enterprise Solutions Terese Herbig Chief Digital Officer Joel Hughes Chief Human Resources Officer Jennifer Turner Senior Vice President, Innovation Tanner Van Dusen CONVENIENCE STORE NEWS AFFILIATIONS Premier Trade Press Exhibitor
The contents of this publication may not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for product claims and representations. Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by EnsembleIQ, 8550 W. Bryn Mawr Ave., Ste. 200, Chicago, IL 60631. Copyright © 2018 by EnsembleIQ. All rights reserved. Subscriptions: One year, $93; two years, $152. One year, Canada, $110; two years, Canada, $175. One year, foreign, $150. Payable in advance with a bank draft drawn on a U.S. bank in U.S. funds. Single copies, $10, except foreign, where postage will be added. Printed in U.S.A. Periodicals postage paid at Chicago, IL, and at additional mailing offices. POSTMASTER: Send address changes to Convenience Store News, P.O. Box 1842, Lowell, MA 01853.
8 Convenience Store News C S N E W S . c o m
THESE CANS WILL BE JUMPINÕ OFF THE SHELF Grizzly’s latest cans are designed to match our guys’ favorite sportfish. And that buzz you hear is customers talking up Grizzly’s best-in-class packaging. So stock up and reel ‘em in. Available for a limited time only.
WARNING: This product can cause gum disease and tooth loss. © 2018 American Snuff Company, LLC. (2Q)
MOIST SNUFF
EMERGINGBEER BEER EMERGING TRENDSMAKE MAKEWAVES WAVES TRENDS INC-STORES C-STORES IN brands, convenience stores seeing brands, convenience stores areare seeing expanding sales opportunities when expanding sales opportunities when they leverage these top trends. they leverage these top trends.
number emerging trends AA number ofof emerging trends within alcohol space within thethe alcohol space areare making major inroads into making major inroads into thethe category, thanks growing and category, thanks toto growing and evolving customer demand. From evolving customer demand. From the fl avor malt beverage (FMB) the flavor malt beverage (FMB) segment’s rapid increases segment’s rapid increases to to healthier ingredients in established healthier ingredients in established
FLAVOR MALT BEVERAGES SOAR FLAVOR MALT BEVERAGES SOAR e FMB category now provides ThTh e FMB category now provides thethe highest gross margin percentage highest gross margin percentage onon average across all beer subcategories average across all beer subcategories
BEERBY BYSUBCATEGORY SUBCATEGORY BEER Subcategory Subcategory Premium Premium
Monthy Sales Monthy Sales $7,758 $7,758
Monthly GP$ Monthly GP$ $1,316 $1,316
GM% GM% 16.96% 16.96%
Imports Imports Flavored Malt Flavored Malt
$2,848 $2,848 $1,414 $1,414
$580 $580 $410 $410
20.37% 20.37% 29.00% 29.00%
Budget Budget Popular Popular
$1,378 $1,378 $1,303 $1,303
$239 $239 $234 $234
17.34% 17.34% 17.96% 17.96%
Super-Premium Super-Premium Micro Micro
$952 $952 $908 $908
196196 $227 $227
20.59% 20.59% 25.00% 25.00%
Malt Liquor Malt Liquor Non-Alcoholic Non-Alcoholic
$330 $330 $9$9
$78$78 $2$2
23.64% 23.64% 22.22% 22.22%
$16,901 $16,901
$3,853 $3,853
22.80% 22.80%
Total Total Total YoY Change Total YoY %% Change
1.1% 1.1%
0.6% (0.11) (0.11) 0.6% ptspts
SOURCE: CSXNIELSEN SOURCE: CSXNIELSEN
Dollarsales salesgrowth growthininc-store c-storechannel channel Dollar
+5.0%% +5.0 Saltysnacks snacks Salty
+3.0%% +2.9%% +3.0 +2.9 Energy Energy
SOURCE: NIELSEN, WEEKS ENDING MARCH 2018 SOURCE: NIELSEN, 5252 WEEKS ENDING MARCH 24,24, 2018
Cigarettes Cigarettes
Thesuper-premium super-premiumbeer beer segment SUPER- The segment is is upup SUPER23.7percent percentininsales salesand and 23.1 percent units PREMIUM 23.7 23.1 percent inin units PREMIUM throughthe theend endofofthe the first quarter 2018 SUPER through first quarter ofof 2018 SUPER acrossthe theconvenience convenience store channel. store channel. STARS across STARS at roughly percent, at roughly 29 29 percent, according to research data according to research data from CSX/Nielsen and from CSX/Nielsen and NACS. e segment NACS. ThTh e segment hashas quickly grown 3.6 percent quickly grown 3.6 percent in in sales percent in units sales andand 4.94.9 percent in units through of the through thethe endend of the firstfirst quarter of 2018 across quarter of 2018 across thethe convenience store channel. convenience store channel. FMB products are FMB products are pri-primarily produced in singles marily produced in singles packages, which already packages, which areare already a a natural purchase at c-stores: natural purchase at c-stores: Sixty-four percent of beer Sixty-four percent of beer units sold in the beer cateunits sold in the beer category at c-stores are in singles gory at c-stores are in singles packs. addition, twopacks. In In addition, twothirds of new trial purchases thirds of new trial purchases within beer segment within thethe beer segment either 6-packs singles areare either 6-packs or or singles packs, off ering another packs, offering another ad-advantage FMB products. vantage forfor FMB products.
egory as they across egory justjust as they areare across of the CPG landthethe restrest of the CPG landscape, making health scape, making health andand wellness another important wellness another important emerging trend within emerging trend within thethe alcohol space. conalcohol space. ThTh eseese consumers want higher-quality sumers want higher-quality ingredients that also proingredients that also provide fewer calories even vide fewer calories andand even functional benefi ts. functional benefits. Transparency traceTransparency andand traceability play a major ability willwill play a major role in consumers’ choices, role in consumers’ choices, according to Mintel’s Global according to Mintel’s Global Food & Drink Trends 2018 Food & Drink Trends 2018 report. And consumers’ need report. And consumers’ need reassurance about forfor reassurance about thethe safety and trustworthiness safety and trustworthiness of food drinks of food andand drinks hashas ledled to increased of natural, to increased useuse of natural, ethical and environmental ethical and environmental claims in global food claims in global food andand drink launches. Global drink launches. Global HEALTH AND organic food beverages, HEALTH AND organic food andand beverages, WELLNESS DEMANDS example, projected WELLNESS DEMANDS forfor example, areare projected Alcohol consumers are to climb 16.4 percent (comAlcohol consumers are to climb 16.4 percent (comlooking better-for-you pound pound annual growth rate) looking forfor better-for-you annual growth rate) options within beer from 2014 to 2022. options within thethe beer cat-cat- from 2014 to 2022.
® ®
PUREGOLD GOLD PURE MD AED W E IW MA T IHT H O R G A N I C GARI A ORGANIC GR NISN S ® ®
GOINGFOR FOR GOING THEGOLD GOLD THE Michelob Ultra, a brand already Michelob Ultra, a brand thatthat already has the No. 1 share gains in the has the No. 1 share gains in the beerbeer industry, introduced anothindustry, perper IRI,IRI, justjust introduced another breakthrough it continues to help er breakthrough as itascontinues to help shape industry: Michelob leadlead andand shape thethe industry: Michelob Ultra Pure Gold. It’s the perfect example Ultra Pure Gold. It’s the perfect example of ingredient transparency, made of ingredient transparency, made withwith organic grains providing a pure, organic grains andand providing a pure, refreshing taste with 85 calories refreshing taste with onlyonly 85 calories grams of carbs. andand 2.5 2.5 grams of carbs. e Michelob Ultra brand TheTh Michelob Ultra brand also has seen signifi cant growth also has seen significant growth of +21.2 percent at predominantly of +21.2 percent at predominantly Hispanic convenience stores. With Hispanic convenience stores. With this premium new product line’s this premium new product line’s price parity to the Mexican import price parity to the Mexican import segment, c-stores maximize sales segment, c-stores cancan maximize sales by placing Pure Gold next to these by placing Pure Gold next to these imports. imports.
+0.4%% -3.4 +0.4 -3.4%% Beer-FMBBeer-FMBCider Cider
Carbonated Carbonated softdrinks drinks soft SPONSORED CONTENT SPONSORED CONTENT
CSNEWS ONLINE
ONLINE EXCLUSIVE
TOP 5 DAILY NEWS HEADLINES
1
7-Eleven Transforms Stores Into ‘Deadpool 2’ Headquarters
Nationwide, the convenience store retailer launched exclusive Deadpool-themed products, sweepstakes promotions, and its first-ever augmented reality (AR) in-store experience that brings Deadpool into the store. All AR activities can be accessed through the 7-Eleven mobile app.
2
Industry Reacts to FDA’s Vapor Marketing Enforcement Plan
The Food and Drug Administration’s move to step up efforts to keep electronic cigarettes and vapor products out of the hands of underage consumers has the support of the industry. Companies such as Altria Group and JUUL Labs released statements supporting the agency’s recent actions.
3
Beverages & Snacks Dominate 2017’s Most Successful C-store New Products
The top 10 most successful new products in the convenience channel in 2017 included eight beverages and two snack products, according to IRI’s 2017 New Product Pacesetters report, an annual benchmark analysis of first-year new product sales success. In the c-store arena, median yearone sales across the top 10 New Product Pacesetters were $31.7 million, demonstrating the power behind consumers’ ongoing quests for indulgent, on-the-go experiences.
4
Circle K & Cheetos Collaborate on New Frozen Beverage Flavor
Circle K Stores Inc. and PepsiCo/Frito-Lay’s Cheetos brand joined forces to launch Sweetos Cinnamon Sugar, a Froster flavor inspired by the brand’s Sweetos cinnamon sugar puffs. The convenience store retailer regularly teams up with Frito-Lay for exclusive product launches and promotions.
5
7-Eleven Celebrates Public Servants With Free Pizza & Doughnuts
Representatives of the convenience store chain delivered 5,000 pizzas and 15,000 doughnuts to police, sheriff and fire departments, emergency rooms, DMVs and post offices nationwide on April 16.
EXPERT VIEWPOINT: The ICE-Men Cometh For convenience store owners and operators, there should be no lack of clarity about the enforcement environment in which we currently find ourselves, according to Joe Kefauver, managing partner of Align Public Strategies. The conversation at the Immigration & Customs Enforcement Agency, or ICE, is not about visa quotas, not about high-tech brain drain, and not handwringing over I-9s. It’s about fulfilling the promises the president has made to his political base about being tough on illegal immigrants and punitive to those businesses that employ them. Operators need to realize that the c-store raids earlier this year in 24 states were not a one-time deal.
12 Convenience Store News C S N E W S . c o m
Pilot Flying J to Soar to New Heights This Year If Pilot Flying J was flying high in 2017, it is soaring to new heights this year with the continuation of its Facility Enhancement Plan (FEP), which is meant to surprise and delight guests with an upstanding environment centered on retail and foodservice. “Our goal each and every day is to connect people and places with comfort, care and a smile at every stop of their journey,” said Pilot Flying J Chief Merchant Brian Ferguson. Introduced at the start of 2017, FEP is Pilot Flying J’s commitment to investing nearly $500 million to renovate existing locations over the next five years. Last year, the travel center operator set a goal of reimaging 45 sites, but instead completed projects at 50 locations. Now in phase two, the retailer’s plan is to target an additional 50 locations in 2018. For more exclusive stories, visit the Special Features section of www.csnews.com.
MOST VIEWED NEW PRODUCT
Ice Breakers Ice Cubes Glitter Gum Ice Breakers is adding some sparkle to the gum aisle with the release of Ice Cubes Glitter Gum, billed as the first-ofits-kind, glitter-sprinkled gum in the United States. Made with edible glitter, Ice Breakers Ice Cubes Glitter Gum Summer Snow Cone boasts an icy, cherry snow cone flavor. Each cube is covered with a dusting of edible glitter. The gum hit shelves nationwide April 15 with a suggested retail price of $3.69. It will only be available this summer while supplies last. The Hershey Co. Hershey, Pa. (800) 468-1714 www.hersheys.com
INDUSTRY ROUNDUP
Marathon & Andeavor to Unite in Latest Mega-Merger The $23.3-billion deal will create a powerhouse of 4,000 company-owned and -operated locations and 7,800 branded sites By Melissa Kress
pending acquisition of Andeavor will solidify the soon-to-be combined company as a nationwide player in convenience and fuel retailing.
MARATHON PETROLEUM CORP.’S (MPC)
In a deal announced April 30, MPC is acquiring all of Andeavor’s outstanding shares, representing a total equity value of $23.3 billion and a total enterprise value of $35.6 billion. MPC and Andeavor shareholders will own approximately 66 percent and 34 percent of the combined company, respectively. “We are very enthusiastic to announce the powerful combination of two great companies, Marathon Petroleum and Andeavor. The combination ... creates a leading, nationwide, integrated energy company with an initial enterprise value greater than $90 billion and based on its scale, national footprint and quality businesses, it is well positioned for long-term growth and shareholder value creation,” said Gary R. Heminger, chairman and CEO of MPC. This merger will expand Marathon’s operations across key markets nationwide, combining the strong position it has historically enjoyed east of the Mississippi with the western U.S. presence that Andeavor has built over time, according to Heminger. Retail and marketing opportunities are significantly expanded as well. Pro forma, MPC will have a nationwide retail and marketing
14 Convenience Store News C S N E W S . c o m
business of approximately 4,000 company-owned and -operated locations and approximately 7,800 branded locations. “At company-owned stores, we plan to leverage Speedway’s fully integrated home office, back-office and point-of-sale platforms to drive earnings growth. We see potential for significant synergies through combined best practices and economies of scale throughout our entire retail network, which becomes nationwide in scope,” the chief executive said. “On the marketing side, strong, recognized, regional brands provide nationwide coverage for our consumers and create additional channels to better serve our jobber, dealer and wholesale customers,” he continued. “We think substantial opportunities exist to capitalize on the footprints both companies have built over time.” Looking at the financials, Marathon and Andeavor expect to realize approximately $210 million in synergies across Andeavor’s retail network of approximately 1,100 company-owned or -controlled stores, in line with the synergies Marathon realized with its acquisition of the Hess Corp. retail network in 2014. Speedway’s customer loyalty program will play a big role in capturing synergies at retail. Andeavor’s portfolio will benefit from the Speedway convenience store banner, according to Greg Goff, chairman and CEO of Andeavor. The newly combined company will bring together several fuel brands: Marathon on the MPC side and ARCO, SuperAmerica, Shell, Exxon, Mobil, Tesoro, USA Gasoline and Giant on the Andeavor side. At this time, no decision has been made on the future of the fuel brands, according to Heminger.
INDUSTRY ROUNDUP
FAST FACTS Nearly half of consumers aged 18-34 prefer to use kiosks or touchscreens to order because it’s quicker, compared to 32 percent of those aged 35-54. — Culinary Visions Panel’s Mindful Dining Initiative
Federal Menu Labeling Law Now a Reality The Food and Drug Administration will use the first year for education, not enforcement AFTER YEARS OF BACK AND FORTH at the federal level,
menu labeling regulations have officially arrived in the convenience channel. The Food and Drug Administration’s (FDA) menu labeling rule went into effect May 7. Under the rule, retailers that share a store name with at least 19 other locations and serve substantially similar menus must label the caloric content of all food and beverages prepared in their stores, including fountain drinks and self-serve coffee. They are not responsible for labeling packaged food and beverages. Now that the May 7 implementation date has passed, the FDA can start to sanction food outlets not complying with the rule. However, the agency previously stated that
it intends to use the first year for education, not enforcement, and will not cite retailers for violations. Cities and states that passed their own virtually identical regulations are not obligated to follow the FDA’s schedule. Convenience store operators are not giving up their fight against menu labeling, however. The government relations staff at NACS, the Association for Convenience & Fuel Retailing, is continuing to work with the FDA and congressional representatives to ease the burden on c-store operators. The Common Sense Nutrition Disclosure Act of 2017 (H.R. 772) passed the House of Representatives with a bipartisan vote of 266 to 157 in February, but the legislation has not made progress in the Senate. In the meantime, NACS teamed up with Douglas Kantor, partner at Steptoe & J ohnson LLP, to offer convenience store-specific advice on menu labeling via a recent webinar and maintains a Menu Labeling Compliance page on its website.
16 Convenience Store News C S N E W S . c o m
Bad weather took its toll on beverage sales in the first quarter of 2018: Sales of nonalcoholic beverages were up 3.4 percent, while alcoholic beverage sales were up only 2 percent. — Wells Fargo Securities LLC’s Beverage Buzz Survey
Value consumers make up the greatest share of c-store shoppers (at 43.25 percent), followed by Price (26.4 percent), Convenience (16.8 percent) and Health (13.55 percent). — TrendSource’s 2018 Convenience Store Report
Forty-four percent of millennial parents report only shopping brands that reflect their social or political values. — National Retail Federation’s Quarterly Consumer View
Caetlyn Roberts Giant Food
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INDUSTRY ROUNDUP
Eye on Growth
Global Partners LP is buying the retail fuel and convenience store assets of Vermont-based Champlain Oil Co. Inc. The deal includes Also part of the acquisition are roughly 24 37 companyfuel sites that are either operated gas stations owned or leased. with Jiffy Martbranded convenience stores in Vermont and New Hampshire. Circle K rolled out Top Tier Circle K fuel to more than 20 locations across Florida. Sites introducing “Circle K fuel with miles” gasoline are primarily located in the Tampa and Orlando markets. In the first quarter of 2018, Murphy USA
Retailer Tidbits
On June 1, Tanner Krause, the fourth generation of the Krause family, assumed the role of president at Kum & Go LC. His father, Kyle Krause, transitioned to chairman and CEO. Kwik Trip/Kwik Star’s new loyalty program hit the 1-million-member mark, three months after launching. To celebrate, the retailer is giving registered Kwik Rewards members the chance to win free fuel for a year. 7-Eleven Inc. brought the first self-chilling can to U.S. store shelves with its proprietary Fizzics Sparkling Cold Brew Coffee. The can is being tested at 15 participating 7-Eleven locations across Los Angeles. Wawa Inc. is using Rainforest Alliance Certified beans for 100 percent of the espresso products served in its stores. The shift was made chainwide by the end of March.
18 Convenience Store News C S N E W S . c o m
Inc. opened two new stores, ending the quarter with 1,448 stores. Construction is underway at 22 locations, including 12 raze-and-rebuild kiosks that will return to operation as 1,220-square-foot stores. Choice Market entered into an agreement with venture capital firm M3 Ventures to support the retailer’s expansion, starting with the opening of a second storefront. The new location will open on the ground floor of the new Denver Housing Authority headquarters in Mariposa, Colo. Yesway hosted a monthlong “Yesway Grand Opening Event Tour” of its recently opened convenience stores in Texas. The tour stopped at stores in Abilene, Baird, Coleman, Hawley, Snyder, Sweetwater and Winters.
NOCO Express refreshed its Friends & Family program, nine years after introducing the loyalty initiative. The program featured more than 25 prizes during the first month. Maverik Inc. is the latest convenience store chain to join the nonprofit Partnership for a Healthier America. The retailer announced a three-year partnership on May 1.
Maverik is the first partner to commit to expanding healthier beverages in both the cold vault and at the fountain.
Rutter’s rolled out premium green packaging for all its to-go food packaging. The packaging became available in all Rutter’s stores as of this spring. Aloha Petroleum Ltd. received a Kukulu Hale Award from NAIOP Hawaii for its transformation of former warehouses into a retail development. The $6.2-million project was Aloha’s first venture into a master development as the developer.
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INDUSTRY ROUNDUP
In the Public Eye
Andeavor, San Antonio Andeavor reported first-quarter 2018 earnings from continuing operations of $164 million, compared to $50 million a year ago. Consolidated net earnings were $237 million, compared to $87 million for the same period last year. EBITDA was $680 million vs. $432 million a year ago. Delek US Holdings Inc., Brentwood, Tenn. As of March, Delek US Holdings captured $104 million of synergies on an annualized basis from its acquisition of Alon USA Energy Inc., which closed July 1, 2017. On the earnings front, net
sales for Delek US’ retail segment were $209.6 million and contribution margin was $11.9 million during Q1 2018. The company’s retail segment saw merchandise sales of approximately $80.5 million with an average margin of 30.2 percent. Global Partners LP, Waltham, Mass. Global Partners’ product margin in the first quarter of 2018 increased by $3.7 million to $166.1 million. Looking specifically at its gasoline distribution and stations segment and comparing the first quarter of 2018 to the same period in 2017, product margin increased $7.6 million to $113.6 million. The gasoline distribution contribution to product margin was up $3 million to $70.1 million, reflecting its Honey Farms acquisition, as well as an increase in fuel volume and fuel margin.
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P E R F E C T PAIRINGS FOR C-STORE PROFITS
Grab-and-go and foodservice in convenience retail are expected to grow 36% by 2020*. Take advantage by partnering with Coca-Cola preferred brands. Talk to your Coca-Cola representative or visit CokeSolutions.com/retail to learn more.
*Foodservice in convenience retail is expected to grow 36% from 2015-2020. Mintel. Š 2017 The Coca-Cola Company
INDUSTRY ROUNDUP
In the Public Eye
Murphy USA Inc., El Dorado, Ark. For the first quarter of 2018, Murphy USA reported revenue of $3.2 billion vs. $3 billion in the same period last year. This was largely attributable to higher product prices and, to a lesser extent, higher merchandise sales. Average retail gasoline prices during the quarter were $2.34 per gallon vs $2.11 in 2017. Merchandise contribution dollars grew 3 percent during the quarter to $91.5 million on average unit margins of 16.1 percent, vs. 15.7 percent unit margins in the prior-year quarter. Sunoco LP, Dallas Sunoco LP recorded a net loss of $315 million in Q1 2018, compared to a $1-million gain a year ago. The loss included a $204-million income tax
expense, largely attributable to the gain on the sale of the majority of its retail assets to 7-Eleven Inc., and a $129-million loss extinguishing debt and preferred securities related to a balance-sheet restructuring. TravelCenters of America LLC, Westlake, Ohio TravelCenters of America saw Q1 2018 site-level gross margin for its c-store segment decrease by 8.4 percent, largely due to the effects of increased competition. Fuel sales volume decreased by 1 million gallons, or 1.8 percent, during the quarter compared to the same period in 2017. In addition, fuel gross margin decreased by 0.9 percent to $11.1 million. In-store, nonfuel revenues decreased by $2.3 million, or 3.8 percent, compared to the 2017 first quarter.
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OUT & ABOUT
Technology Talks Trending topics at the 2018 Conexxus Annual Conference ranged from blockchain to IoT By Chelsea Regan THE CONEXXUS ANNUAL CONFERENCE centers on new technologies and standards to help those in the convenience and fuel retailing industry improve business processes, reduce costs and increase profitability. This year’s attendees were able to participate in keynote addresses, general sessions, and Conexxus business and technical committee meetings to dive into all things retail technology.
digitization has accelerated everything and change is happening faster than ever, he advises retailers to:
Delivering the first keynote address at the 2018 event — which took place April 29-May 3 at the Lowes Chicago O’Hare — was Jeffrey “Skunk” Baxter, who is best known as a rock guitarist, but in more recent years, has become a well-regarded national security expert, using insights gleaned from his music career to provide outside-the-box thinking. Baxter advises top military and civilian groups on, among other things, next-generation technologies and unconventional strategies.
This year’s conference also provided insight into how retailers can take advantage of blockchain. Jennifer O’Rourke, co-founder and president of Attest, a blockchain-based digital identity company, sees blockchain as a problem-solving technology of the fourth Industrial Revolution that is likely to have a major impact on the retail industry.
Accenture Consulting Managing Director Vish Ganapathy addressed how technology is shaping the future of retail.
Providing an explanation for his aptitude on the subject of missiles, Baxter said, “I know a lot about space, man. I was in the Doobie Brothers. I’ve spent a lot of time in space.” Accenture Consulting Managing Director Vish Ganapathy delivered the second keynote, addressing how technology is shaping the future of retail. He framed the pace of change in history, pointing to the agricultural, industrial and information revolutions of generations past. “Decisions can no longer be made on gut,” Ganapathy said. “They must be made with data.” To compete in today’s atmosphere, where
26 Convenience Store News C S N E W S . c o m
• Imagine new ways of working, how work gets done by whom or what; • Utilize human-inspired strategies to drive competitive difference; • Access intelligence to drive insights; and • Execute with automation and scale.
Among the c-store specific use cases of blockchain, O’Rourke listed loyalty rewards, identity-sales restriction, perishable product provenance, and digital offers and coupons. The changing regulatory landscape of data security was a hot topic as well. Simon Stocks, chairman of the International Forecourt Standards Forum, warned conference attendees that the General Data Protection Regulation (GDPR) that is going into effect in the European Union will not only affect how they handle the personal data of citizens, but could be a prelude to what the United States might eventually adopt. Also weighing in on the regulatory landscape was Paige Anderson, director of government relations for NACS, the Association for Convenience & Fuel Retailing. Anderson explained that part of the reason why movement has been slow on data security breach prevention is because NACS and other retailer communities want to find a solution to the whole issue of security — but Congress has been reluctant. For changes to be made, Anderson believes it will take the public becoming outraged enough about data breaches and letting their members of Congress know. Conexxus wrapped up its annual conference with a Hall of Fame ceremony, where Lisa Stewart, president and co-owner of Impact 21, was inducted. Stewart was celebrated for exemplifying the long-term vision and dedication of the Conexxus mission, both personally and through her work with Impact 21. In particular, she was cited for her focus on growing relationships with retailers, suppliers, manufacturers and solution providers to help build business infrastructure and leveraging returns on investment for corporate and store-level technologies. Conexxus is a nonprofit, member-driven technology organization dedicated to the development and implementation of standards, technologies innovation and advocacy for the industry. CSN
OUT & ABOUT
Serving Up Technology & Trends A key theme of the 2018 National Restaurant Association Show was planning for the future By Angela Hanson WORKING IN A RESTAURANT may
be very different from working on Capitol Hill, but a career in foodservice has more in common with the needs of the United States than is immediately obvious, according to Condoleezza Rice, former U.S. Secretary of State and keynote speaker at the 2018 National Restaurant Association (NRA) Show.
cations for the future of foodservice in a session titled “The Power of Foodservice at Retail.” Primarily, shoppers want items that are convenient and already prepared. This can include grab-and-go lines, made-to-order meals, and customizable purchases like pizza. Among the most popular foodservice items purchased at retail are fried or rotisserie chicken, sandwiches, coffee drinks pizza, and salad bar bowls.
Calling the crisis in getting from kindergarten to grade 12 “the greatest national security crisis we have,” Rice pointed out that education doesn’t necessarily mean formalized higher education. “Not everybody has to go to college,” she said. “Everyone has to have a job.”
The most popular purchase drivers are try-before-you-buy samples (40 percent), daily specials (39 percent), and having a place to eat inside the store (20 percent), according to Mintel’s research. If in-store dining is put into place, it shouldn’t be an afterthought. Rather than hastily installed near the checkout, it should be designed as a place to enjoy spending time. Although Mintel’s research focused on food prepared onsite by store employees or a branded partnership at supermarkets and other locations where consumers buy groceries, the competitive overlap with convenience stores makes the insights relevant to c-store operators as well. In the NRA Show’s exhibit hall, the most significant trend seen was innovative foodservice technology that can help retailers step up their offerings or just do better with what they already have:
The most significant trend seen on the 2018 NRA Show floor was innovative foodservice technology.
The foodservice industry is something that can provide skills, training and a sense of self-worth, not just a paycheck. While Rice acknowledged that many of the serious problems the country is grappling with are not easily solved, she expressed confidence that the U.S. has the tools to solve them. This year’s NRA Show, which took place May 19-22 at Chicago’s McCormick Place, also featured numerous education sessions and discussion panels on how to succeed in the future. Mintel’s Amanda Topper, associate director of foodservice research, discussed the shifting U.S. retail landscape and impli-
28 Convenience Store News C S N E W S . c o m
• The Coca-Cola Co. debuted the next generation of its Freestyle dispenser series with the Coca-Cola Freestyle 9100, which features a new user interface capable of displaying full video on the front of the unit. Built-in microphones, speakers and optical sensors also enable future developments around creating interactive user experiences. Following extensive consumer research, the company redesigned the Freestyle’s touchscreen menu to provide the faster navigation consumers asked for. • Wilbur Curtis Co. featured its recently launched GemX IntelliFresh Coffee Brewing System. FreshTrac sensors monitor the time and volume of coffee as it moves through the unit and prompts new brews via an LED system. High-volume locations can move coffee to connected satellite units that can be placed separately from the main brewer. • Rational spotlighted its SelfCookingCenter XS, which offers extreme precision in temperature control and humidity and lets retailers temporarily add or remove menu items that the store has run out of. • NCR demoed its Pulse Mobile Management Solution, which takes complicated data normally found in an expansive spreadsheet and simplifies its presentation in an app. Store operators can zoom in to view the stats for an individual store or zoom out to see the whole network. CSN
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OUT & ABOUT
Welcome to the Latest & Greatest The 2018 Sweets & Snacks Expo unwrapped new innovations in confections and snacks By Danielle Romano A RESOUNDING “WELCOME TO CANDY AND SNACKS” echoed in the expo halls of Chicago’s McCormick Place West as the National Confectioners Association’s (NCA) 2018 Sweets & Snacks Expo welcomed candy and snacks professionals from around the world.
At this year’s expo, which took place May 22-24, nearly 18,000 candy and snack professionals filled two expo halls — the main show floor and Skyline Hall’s Innovation Avenue — to experience the latest and greatest innovations in chocolate, candy, gum, mints, and sweet and savory snack products belonging to more than 850 exhibitors. On the show floor, confectioners and snack manufacturers from more than 90 countries showcased the latest trends in treating and snacking, like caramel and coconut flavors regaining momentum, the rise of white chocolate, the continued focus on health and wellness with products made from non-GMO vegetables, and brand extensions. The second year of the “Always a Treat Initiative” was also celebrated at the Sweets & Snacks Expo. Last year, leading confectionery companies — Mars Wrigley Confectionery, Lindt, Ghirardelli, Russell Stover, Ferrero USA and Ferrara Candy Co. — made a five-year commitment to provide consumers with information, options and support as they enjoy their favorite treats. The initiative is made up three elements:
Nearly 18,000 candy and snack professionals from around the world attended the 2018 Sweets & Snacks Expo.
• Information with calorie labels on the front of packaging; • Options that give consumers choices in smaller packaging; and • Support to provide consumers with informed choices. “Our industry is committed to helping consumers manage their sugar intake while still enjoying their favorite treats,” said NCA President and CEO John Downs. “Much of the confectionery industry is moving toward offering consumers more transparency, portion guidance, options and education. Whether that’s a wider variety of product sizes to choose from, simple ingredient lists, or clear calorie labels on the front of packaging, the industry is empowering consumers to make informed choices.”
A Sweet Victory The Sweets & Snacks Expo also brought the reveal of the 2018 Most Innovative New Product Awards winners, presented by IRI. A judging panel tested and evaluated more than 300 submissions — of which, 51 were chocolate, 20 were made with artisanal salt, 21 featured caramel, and 20 featured coconut. Category finalists and winners were determined by taste, innovation, packaging, and go-to-market ability. The year’s Most Innovative New Product Awards winners were: • Chocolate: Hershey’s Gold Standard Bar, The Hershey Co. • Non-Chocolate: Big Chewy Nerds, Nestlé USA Inc./ Ferrara Candy Co. Inc. • Sweet Snacks: Organic White Chocolate Mini Peanut Butter Cups, Justin’s • Salty Snacks: Tangerine Vanilla Cashew-Macadamia Glazed Mix, Sahale Snacks • Savory Snacks: Trail Mix Crackers, Alli & Rose • Novelty/Licensed: Warheads Dippin’ Ring, Impact Confections Inc. • Seasonal: Rocher Golden Heart for You & Me, Ferrero USA • Gourmet/Premium: ParmCrisps Trios Original, That’s How We Roll • Gum & Mints: Tic Tac Gum Cool Tropical, Ferrero USA • Best in Show: Bakery Petites Double Chocolate Cake Delights, Hostess Brands LLC • Small Business Innovator Award: Wild Ophelia Hazelnut Cocoa Toast, Vosges Haut-Chocolat The inaugural Ruby Award for Supplier Innovation was also introduced to this year’s Most Innovative New Product Awards and presented to Barry Callebaut A.G. USA LLC for its Ruby chocolate. The chocolate is made from the Ruby cocoa bean and, through a unique process, unlocks the flavor and color tone naturally present. No berries, berry flavor or color is added. It is the fourth flavor in the Barry Callebaut line of chocolates, which also includes White, Dark and Milk varieties. “Ruby Chocolate stood out in a new way and is the definition of innovation,” Downs said, explaining that the product was the inspiration for the Ruby Award, which honors breakthrough developments that advance confectionery manufacturing. CSN
30 Convenience Store News C S N E W S . c o m
NEW PRODUCTS
1
2
3
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1. State Fair Crispitos 2. White Owl Summer Sampler State Fair Crispitos filled
3. M&M’S Chocolate Cookie Sandwich
4. Tecate Light 7-Ounce Bottle Pack
tortillas, formerly offered under the Tyson Crispitos brand, are a delicious, fun, on-the-go offering with versatile quick-prep options, according to the maker. The transition of Crispitos from the Tyson brand to the State Fair brand includes a change in brand code, but the product formulation, case specifications, UPC and GTIN numbers, order fulfillment process, and manufacturing and production facilities will all stay the same. State Fair Crispitos filled tortillas are now available in three new, on-trend flavors: Sriracha, Korean BBQ and Chicken Bacon Ranch. They can be baked, fried or microwaved, and are offered with branded serving sleeves.
Mars Wrigley Confectionery’s latest addition to the M&M’S Ice Cream line is the M&M’S Chocolate Cookie Sandwich. The frozen treat features reduced-fat chocolate ice cream surrounded by two homestyle chocolate cookies with M&M’S Minis. The combination of the iconic M&M’S Minis, paired with chocolate ice cream, makes the M&M’S Chocolate Cookie Sandwich a first-of-its-kind treat, with double the chocolate from the inside out, according to the company. The M&M’S Chocolate Cookie Sandwich has a suggested retail price of $1.99 for one 4-ounce bar, or $4.99 for a six-pack box.
Tecate Light is adding a 7-ounce bottle 20-pack to its range of premium imported beer package options this summer. Consumers can beat the heat with the 7-ounce bottle that offers just the right amount of crisp and refreshing Tecate Light, according to the brand. Launching in June 2018, the 20-pack will be available to consumers in Arizona, Texas, New Mexico and select areas of California. The launch will be supported by displays, dynamic point-of-sale in both English and Spanish, on-premise sampling events, and halo support from television advertising.
Mars Wrigley Confectionery McLean, Va. (973) 691-3536 mars.com
Heineken USA White Plains, N.Y. (914) 681-4100 heinekenusa.com
White Owl’s new Foilfresh Summer Sampler of cigarillos has hit store shelves. The sampler pack features a trio of the fruits of summer, delivering a flavor-filled variety of big, bright-tasting, slow-burn cigarillos, according to maker Swedish Match North America. Each pack includes three individually wrapped cigarillos: Blue Raspberry, White Peach and White Grape flavored. The White Owl Summer Sampler comes in a “3 for $1.49” price format. The limited-edition offering began shipping in April. Swedish Match North America Richmond, Va. (804) 787-5100 swedishmatch.com
Tyson Foods Springdale, Ark. (800) 233-6332 tysonfoods.com
5. Royal Cup Coffee & Tea RTD Cold Brew Royal Cup Coffee & Tea, an importer, roaster and distributor of premium and specialty coffees and teas, has a new line of shelf-stable, ready-to-drink (RTD) cold brew coffees. The new line, an addition to Royal Cup’s Signature Brand, includes three varieties: French Roast, French Roast Lightly Sweetened and Rain Forest Bold, a Rainforest Alliance Certified cold brew. Each flavor profile was selected through extensive research and testing of multiple blends and competitive products, the company noted. In the coming months, Royal Cup also expects to announce the launch date of a new line of shelf-stable, ready-to-drink teas in sweetened, unsweetened and peach varieties. Royal Cup Birmingham, Ala. (800) 366-5836 webjava@royalcupcoffee.com royalcupcoffee.com 32 Convenience Store News C S N E W S . c o m
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NEW PRODUCTS
6
8 9
7
6. SONIC Drive-In Frozen Novelties
7. Peach Perrier Sparkling Water
8. Match-Ems Gummies
SONIC Drive-In’s popular beverage flavors like Cherry Limeade and Ocean Water are coming to graband-go products, including freezer bars, frozen ice pops, gelatins, puddings, lollipops and hard candy. Now, fans can experience their favorite SONIC flavors at home in new and fun ways. The products will be available in retail stores nationwide starting in spring 2018 through licensing partners, including: Jel Sert Co. (gelatin, pudding mixes, and shelf-stable freezer bars), Ziegenfelder (frozen ice pops), and Quality Candy (lollipops and hard candy). These partnerships were brokered by SONIC’s licensing agency, Brand Central.
Perrier introduces a new variety to its expanding selection of flavored carbonated mineral waters: Perrier Peach. This bold, peach-flavored beverage is sugar-free, with zero calories and no sweeteners. It presents a delicious alternative to soft drinks and other sugary beverages, according to the company. Perrier Peach is available in 8.45-ounce slim cans and 16.9-ounce PET bottles. Other varieties in the line include: Lime, Strawberry, Watermelon, L’Orange, Pink Grapefruit and Original.
Bazooka Candy Brands, a division of The Topps Co. Inc., introduces Match-Ems, interlocking fruit-flavored gummy treats that offer a customizable flavor experience. Every MatchEms bag is filled with a mix of eight flavors that can be paired together to create up to 28 combinations. The mix includes three sour flavors (Blue Raspberry, Green Apple and Watermelon) and five sweet flavors (Banana, Cherry, Pear, Orange and Strawberry). Each flavor comes in two interlocking shapes, so consumers can easily pair two different flavors to create their own surprising combination. Match-Ems are available in a 3.8-ounce Share Pack or an 8-ounce resealable stand-up pouch.
Nestle Waters Stamford, Conn. (888) 747-7437 nestle-waters.com
Brand Central Los Angeles (310) 268-1231 info@brandcentralgroup.com brandcentralgroup.com
Bazooka Candy Brands New York (212) 376-0300 candymania.com
9. Big League Chew Big Rally Blue Raspberry The newest member of Big League Chew’s bubble gum family is Big Rally Blue Raspberry. Last summer, Big League Chew asked fans on social media to help name the new blue raspberry flavor. Big League Chew inventor Rob Nelson selected the final name, Big Rally Blue Raspberry, from more than 300 entries. The new flavor will be available at retailers nationwide later this summer. Other flavors of Big League Chew shredded bubble gum include: Outta Here Original, Ground Ball Grape, Swingin’ Sour Apple, Wild Pitch Watermelon, Slammin’ Strawberry and Curveball Cotton Candy. Ford Gum Akron, N.Y. (716) 542-4561 bigleaguechew.com
10. Taco Bell Tortilla Chips Taco Bell Tortilla Chips began rolling out to convenience and grocery stores in May 2018. Available in Fire and Mild sauce packet flavors, as well as Classic, the brand’s latest launch gives fans the chance to enjoy the taste of Taco Bell in tortilla chip form. The Classic tortilla chips are salted and crispy, while the Mild tortilla chips are seasoned with the flavor of Taco Bell’s Mild sauce, and the Fire tortilla chips have the flavor of Taco Bell’s Fire sauce. The Fire and Mild flavors are sold in 1-ounce, 3.5-ounce, 11-ounce and 30-ounce bags, while the Classic chips are sold in 1-ounce, 3.5-ounce, 13-ounce and 30-ounce bags. Fans will notice the familiar Taco Bell sauce packet designs and “saucy wisdoms” on the products’ packaging. Taco Bell Irvine, Calif. (949) 863-8423 tacobell.com 34 Convenience Store News C S N E W S . c o m
10
POWERFUL BRAND. HOMETOWN FEEL.
RUNNING YOUR BUSINESS YOUR WAY. POWERED LOCALLY.
We know that the true power behind the Cenex® brand comes from our locally-owned retailers – valued partners who are invested in their customers and community. That’s why we’re committed to your success and helping you build your business from the moment you become a Cenex® retailer. From flexible brand conversion and marketing, to convenient payment processing and training programs, we can provide your business with the support it needs to help you grow.
© 2017 CHS Inc.
A name your customers trust, a brand you can count on – visit cenex.com/businessopportunities to learn more.
SMALL OPERATOR
Searching for Answers The seven things that are keeping this single-store owner up at night THESE DAYS, EVERYONE IS LOOKING FOR NEW ANSWERS TO OLD QUESTIONS.
Here are a few of the questions and concerns that are currently weighing on my mind: 1. Everyone is looking for the best possible employees. Twenty years ago, all you had to do was place an ad in the classified Help Wanted section of your local newspaper and the interviews came rolling By Taylor Lilley, in. While today, we have places like President, Michelin Indeed.com and Monster.com, they Properties target a higher level of employee: management, accountants, etc. Websites like Craigslist.com bring a more unusual and unpredictable level of employee. The pursuit of a website for cashier-type employees would be welcome. 2. Profit margins are becoming more of an issue than ever before. Monopolies in the beer and cigarette categories are the reason for this issue. Legislative ideas should be on the table for these types of concerns. While it seems like a good idea to be the lowest price in the area, we are stabbing each other in the back, instead of making all of us more profits. It seems like every time the big cigarette and beer companies visit, we get price increases that bring our margins down. Our margins are getting so low that we need to be pushing high volumes just to pay the bills. Soon, we will just be warehousing products for the large companies that sell them. This needs to change. We need to push back! 3. We need to learn about more efficient ways to reduce waste and theft by purchasing the best state-of-the-art surveillance system at a lower cost. This could result in less customer theft and eliminate the opportunity for employees to steal. The use of new technology can be a great tool. Surveillance systems can be purchased at a lower cost and allow for live viewing from your phone, and video records to the cloud. I believe employees should be aware that managers and owners can monitor their activities right from their living room any time of day. It keeps them on their toes and
36 Convenience Store News C S N E W S . c o m
makes them think twice about making a poor decision. 4. I believe vendors should be more responsible in identifying outdated product, especially in the cooler. The reps are only accountable during times of company audits. It’s time we have some conversations about accountability at all times; not just when their boss is monitoring their route. 5. The health department is becoming more of a challenge. Agents are being sent out with little on-the-job training. One agent wants things done one way and another wants it differently, making it harder and more costly to comply with the current regulations. 6. Fuel contracts can seem complex and leave you thinking you need a team of lawyers to interpret. It’s important to understand what your fuel volume is and know where you stand in level of importance with the fuel company, as well as the jobber. Fuel companies will shell out quite a lot of cash when it comes time to sign a new contract, so make sure you are well-educated on the market and that you are speaking with the most aggressive fuel company in order to get the most bang for your buck. 7. Regulation is another time-consuming and costly challenge. It seems more frequent changes to existing regulations and the addition of new policies make business more complicated. Change is good, but also costly. It’s important to identify which changes are an actual necessity for your business — this means, which changes are going to make you more money. I am hoping with the new “tax breaks,” we are all able to update our storefronts, equipment and software, and are able to compete more effectively with the big companies. The new leadership in the White House is proving to have a positive impact on my business. I hope it is doing the same for you! CSN Taylor Lilley is president of Michelin Properties LLC, a commercial real estate development firm in Las Vegas. He and his family also operate the Korner Store II convenience store in Las Vegas. They have been in the convenience store industry for more than 35 years. Lilley has been in a leadership role for 10-plus years. Editor’s note: The opinions expressed in this article are the author’s and do not necessarily reflect the views of Convenience Store News.
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COVER STORY
38 Convenience Store News C S N E W S . c o m
IS THE PARTY OVER? After four years of record profits, the convenience store industry’s remarkable run may be running out of gas By Angela Hanson & Don Longo
THE REMARKABLE FINANCIAL SUCCESS OF THE CONVENIENCE STORE INDUSTRY hit a snag last year as in-store sales rose only 2.1
percent after two years of solid gains of close to 4 percent and even 5 percent. Perhaps more surprisingly, though, foodservice sales increased at about half the growth rate of two years ago. Total convenience store industry sales did rise 9.1 percent last year to $616.3 billion, but that dollar growth was mainly driven by a 12.4-percent increase in the average price of gas in the United States, according to the 43rd annual Convenience Store News Industry Report, the longest-running, continuously published annual report on the health and performance of the convenience retail channel. Last year’s in-store sales gain paled in comparison to the 3.8-percent and 4.9-percent increases registered in 2016 and 2015, respectively. In terms of store count, the industry added 423 stores year over year, while the proportion of single stores to chains remained at 37 percent for chains and 63 percent for single stores, according to Nielsen/TDLinx. Motor fuel volume stalled last year at about 154 billion gallons consumed by U.S. drivers, but dollar sales grew 13.6 percent due to rising gas prices. Gross margin cents per gallon increased
J UN
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Convenience Store News
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COVER STORY
3.5 percent to 23.7 cents per gallon.
Total Convenience Store Sales (in billions) Total
Motor Fuels
In-Store
$616.3 9.1% 2017
$390.4
13.6%
$225.9 2.1% $564.9 -6.3% 2016
$343.7 -11.3%
Industry gross profits were up 5.8 percent last year to $101.73 billion, while pretax profits were up 1.8 percent to $9.26 billion.
$221.2 3.8% $602.9 -14.4% 2015
$389.9
-22.2%
$213.0 4.9% Source: Convenience Store News Market Research, 2018
Store Growth Analysis Total Store Count
Single Stores
154,958 37.0%
63.0% 154,535
2016
36.9%
63.1% 154,195
2015
36.9%
63.1% 152,794
2014
37.0%
63.0%
Source: Nielsen TDLinx; Convenience Store News Market Research, 2018
Motor Fuel Volume 2016
2015
2014
154.3
154.7
151.3
147.0
GALLONS (billions)
GALLONS (billions)
GALLONS (billions)
GALLONS (billions)
% CHANGE
-0.3%
In-store sales per unit were a record high of $1,473,386 per store, but the 1.5-percent increase was less than half of that Fuel volume achieved in was flat last year each of the previous as prices rose two years.
and consumers
Chains
2017
2017
The increase in the retail price of gasoline from $2.25 per gallon in 2016 to an average of $2.53 per gallon in 2017 had a number of impacts. The higher gas prices probably suppressed driving mileage somewhat and reduced trips to the store. Once in the store, consumers also had less disposable dollars to spend on merchandise, food and drink.
% CHANGE
2.2%
Source: Convenience Store News Market Research, 2018
40 Convenience Store News C S N E W S . c o m
% CHANGE
2.9%
% CHANGE
2.6%
Foodservice drove less. sales (including prepared food and hot, cold and frozen dispensed beverages) increased only 3.6 percent — the lowest increase in many years. Foodservice sales had grown by 6.6 percent in 2016 and 7.1 percent in 2015. Prior to that, there were several years of double-digit percentage sales growth for the foodservice category at convenience stores. Despite the slowdown in growth, foodservice still gained as a percentage of total in-store sales. Foodservice comprised 16.38 percent of in-store sales last year, up from 16.14 percent in 2016. The highest percentage of in-store sales still comes from the cigarettes category. Cigarettes represented 29.82 percent of U.S. c-store sales last year, down slightly from 30.11 percent. However, rising taxes and manufacturer price increases combined to hide the annual 2-3 percent drop in volume the category has experienced for the past decade. Packaged beverages, the third-highest grossing in-store category (after cigarettes and foodservice), also had a relatively difficult year in 2017. This category — dominated for years in size by carbonated soft drinks and driven by growth in the energy drinks segment — saw its share of in-store sales dip from 12.74 percent in
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COVER STORY
Industry Sales Mix 2017
2016 to 12.5 percent last year.
2016
2015
2014
IN-STORE
IN-STORE
IN-STORE
IN-STORE
36.7%
39.2%
35.3%
28.8%
MOTOR FUELS
MOTOR FUELS
63.3%
MOTOR FUELS
60.8%
MOTOR FUELS
64.7%
71.2%
Source: Convenience Store News Market Research, 2018
In terms of percentage sales gains, the fastest-growing categories last year were other tobacco products (up 10.8 percent per store), wine and liquor (up 5.4 percent per store), and prepared food (up 4 percent per store). Categories that had the biggest percentage declines were ice cream (down 3.1 percent), publications (down 2.8 percent), and non-edible grocery (down 1.4 percent).
WHAT HAPPENED?
Gross Profit Dollar Mix 2017
2016
2015
2014
IN-STORE
IN-STORE
IN-STORE
IN-STORE
60.8%
62.6%
61.9%
60.8%
MOTOR FUELS
MOTOR FUELS
39.2%
MOTOR FUELS
37.4%
38.1%
MOTOR FUELS
39.2%
Source: Convenience Store News Market Research, 2018
Industry Gross Profit 2017 $ BILLIONS
In-Store Motor Fuels TOTAL
$61.85 $39.88 $101.73
2016 $ BILLIONS
% CHANGE
$60.18 $35.93 $96.11
2.8% 11.0% 5.8%
Source: Convenience Store News Market Research, 2018
Pretax Profits TOTAL INDUSTRY PRETAX PROFIT (in billions)
2017 2016 2015
% CHANGE
$9.26 $9.10 $9.28
1.8% -1.9% 3.5%
PRETAX PROFIT PER STORE
$60,410 $58,886 $61,277
% CHANGE
2.6% -3.9% 2.3%
Source: Convenience Store News Market Research, 2018
In-Store Sales per Store SALES
$1,473,386
2016
$1,451,682
2014 Source: Convenience Store News Market Research, 2018
42 Convenience Store News C S N E W S . c o m
$1,406,866 $1,356,301 1.6%
Wells Fargo Securities convenience channel analyst Bonnie Herzog now views the c-store industry’s outlook more cautiously due to declining c-store trips/traffic, labor shortages/staffing needs and rising wages, a struggling low-income consumer, aggressive tactics from quick-service restaurants (QSRs), the emergence of delivery/eat-in alternatives, and ecommerce. “Overall, while we continue to view c-stores’ participation in the broader fuel-supply chain as an advantage, we came away from the [NACS State of the Industry Summit] event incrementally more concerned about the growing threats facing the industry and its ability to navigate a rapidly evolving consumer landscape,” Herzog wrote in a recent report. Convenience channel growth in 2018 is still expected to exceed all other channels Nielsen tracks, except for the value channel (dollar stores) and only by slightly, noted Elliott.
% CHANGE
2017
2015
“Yes, convenience did not grow as fast as the prior year,” said Carl Elliott III, director of the Nielsen Convenience Channel. “Considering food deflation, less gallons consumed, and that ecommerce is taking automobiles off the road, thus reducing trips, the year was still good for convenience, compared with other [brick-andmortar] retail channels.”
1.5% 3.2%
3.7%
“The future for convenience is very bright for those who differentiate themselves from the old model of gas-sodas-smokes,” said the Nielsen analyst. Convenience will be impacted by millennial and Generation Z cohorts who are digital natives. Elliott believes convenience retailers will need to invest in technology — loyalty, apps, mobile order and pay, tech-enabled delivery, etc. — to attract
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COVER STORY
Total Merchandise & Foodservice Sales (in billions) Total
Merchandise
Foodservice
$225.9 2.1% $188.9 1.8%
2017
$37.0 3.6% $221.2 3.8% $185.5 3.3%
2016
$35.7 6.6%
In-store sales rose only 2.1% after two years of solid gains, but perhaps more surprising foodservice sales increased at about half the growth rate of two years ago.
$213.0 4.9% $179.5 4.5%
2015
$33.5 7.1% Source: Convenience Store News Market Research, 2018
In-Store Sales by Category PERCENT OF IN-STORE SALES 2017 2016
MERCHANDISE Cigarettes Packaged beverages Beer/malt beverages Other tobacco products Edible grocery General merchandise Candy Salty snacks Non-edible grocery Fluid milk products Wine & liquor Alternative snacks Ice cream & frozen novelties Health & beauty care Ice Publications Packaged sweet snacks All other merchandise Merchandise subtotal FOODSERVICE Prepared food
(prepared on- or off-site)
Hot dispensed beverages Cold dispensed beverages Frozen dispensed beverages Foodservice subtotal TOTAL IN-STORE
SALES PER STORE 2017 % CHANGE
TOTAL INDUSTRY SALES (in millions) 2017 % CHANGE
29.82% 12.50 9.41 5.62 4.85 3.62 3.17 2.81 1.66 1.58 1.40 1.10 0.91 0.70 0.49 0.46 0.30 3.22 83.62%
30.11% 12.74 9.56 5.16 4.98 3.53 3.19 2.74 1.71 1.58 1.35 1.11 0.95 0.71 0.50 0.48 0.30 3.17 83.86%
$439,340 184,212 138,615 82,866 71,482 53,279 46,756 41,361 24,461 23,277 20,683 16,218 13,339 10,386 7,176 6,781 4,449 47,470 $1,232,151
0.5% -0.4 -0.1 10.8 -1.2 4.0 1.0 3.8 -1.4 1.5 5.4 0.8 -3.1 1.0 -0.8 -2.8 2.7 3.2 1.2%
$67,345 28,237 21,248 12,702 10,957 8,167 7,167 6,341 3,750 3,568 3,170 2,486 2,045 1,592 1,100 1,039 682 7,276 $188,872
1.1% 0.2 0.5 11.4 -0.6 4.6 1.6 4.5 -0.8 2.1 6.1 1.4 -2.5 1.6 -0.2 -2.2 3.3 3.8 1.8%
11.15% 3.37 1.33 0.53 16.38% 100.00%
10.87% 3.38 1.35 0.54 16.14% 100.00%
$164,131 49,652 19,663 7,789 $241,235 $1,473,386
4.0% 1.1 0.5 -0.7 3.0% 1.5%
$25,159 7,611 3,014 1,194 $36,978 $225,850
4.6% 1.7 1.1 -0.1 3.6% 2.1%
Source: Convenience Store News Market Research, 2018
44 Convenience Store News C S N E W S . c o m
COVER STORY
these up-and-coming generations. “Foodservice is also a differentiator for those who embrace it. Quality foodservice will drive loyalty with shoppers,” he said.
OPERATIONS A lot of retailer concern today is centered on the decline in store trips. This is a phenomenon that has affected brickand-mortar retailers in virtually all trade channels. According to Nielsen Homescan, trips per shopper declined 1 percent at drugstores, 2.4 percent in conventional grocery,
Direct-Store Operating Expenses DOLLARS PER STORE 2017 2016
Wages Payroll taxes Workers compensation Health insurance Other benefits Labor subtotal Credit card fees All other direct-store operating expenses TOTAL
% CHANGE
$311,284 16,664 12,653 29,331 5,457 $375,389 76,150
$285,320 16,163 12,320 27,058 5,361 $356,222 71,704
9.1% 3.1 2.7 8.4 1.8 5.4% 6.2
162,285 $613,824
155,000 $582,926
4.7 5.3%
Five-Year Trend: Wages (dollars per store)
$285,320
2017
$264,185 $246,394 $229,275
2016
2015
2014
According to the 2018 CSNews Industry Report, in-store transactions per week declined 1.2 percent at convenience retailers last year. Meanwhile, the average in-store transaction (excluding fuel) rose 1.7 percent to $8.60.
Most retailers attribute the slowdown in in-store sales growth to a decline in store traffic.
Industry experts pointed to factors such as higher fuel prices, growth in ecommerce, low-income households being left behind, the political climate for Hispanics, and aggressive tactics from QSRs as influencing the overall trip count. Generational change was also an issue.
Source: Convenience Store News Market Research, 2018
$311,284
1.6 percent in premier fresh grocery, and 1.4 percent at warehouse clubs. Trips were flat in the dollar store channel.
2013
Andy Jones, president and CEO of Sprint Food Stores, reflected on the decline in trips at the 2018 NACS State of the Industry (SOI) Summit. “Why did trips decline? The reality is the total number of household trips are declining; they are down three trips on average,” Jones said. “Millennials are fundamentally shopping differently.” In 2017, millennials made five fewer trips than they did in 2014, according to Jones.
Source: Convenience Store News Market Research, 2018
Transactions 2017
In-store transactions per week Motor fuel transactions per week Average in-store transaction Average motor fuel transaction Average gallons per transaction
3,290 2,350 $8.60 $26.35 8.9
% CHANGE
-1.2% -0.8% 1.7% 10.4% -4.0%
Source: Convenience Store News Market Research, 2018
C-Store Square Footage 2017
Sales area Non-sales area Total store size Total property size
2,340 810 3,150 27,600
Source: Convenience Store News Market Research, 2018
46 Convenience Store News C S N E W S . c o m
2016
% CHANGE
2,420 825 3,245 27,750
-3.3% -1.8% -2.9% -0.5%
“While traffic to the overall convenience and gas channel may be declining, we know than the retail footprint for conventional convenience stores has grown,” Nielsen wrote in its Total Consumer Report, released in March 2018. “In addition to this, consumer behavior highlights areas of opportunity within this grab-and-go channel. Shoppers are spending 2 percent more per trip on FMCG (food, mass, convenience, grocery) categories within the convenience and gas channel than they were a year ago.” Another major area of concern for retailers is how rising costs are adversely affecting their bottom lines. Total direct-store operating expenses rose 5.3 percent last year to $613,824 per store. The biggest increases were in wages (up 9.1 percent) and health insurance costs (up 8.4 percent).
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COVER STORY
Motor Fuels Sales & Margins 2017
Dollar sales (in billions) Gallons sold (in billions) Gross margin cents per gallon Average sales price per gallon*
$390.4 154.3 23.7 $2.53
2016
% CHANGE
$343.7 154.7 22.9 $2.25
13.6% -0.3% 3.5% 12.4%
*Weighted average, all grades and diesel Source: Convenience Store News Market Research, 2018
Retail Gasoline Prices (per gallon)
$2.53
$2.25
$2.57
$3.44
$3.57
2017
2016
2015
2014
2013
Prices include dollars per gallon for all grades, all formulations Source: U.S. Department of Energy/Energy Information Administration
Salary costs are being driven upwards by myriad higher minimum wage laws across states and municipalities around the country, as well as the current low unemployment rate. Credit card transaction fees, a longtime burr for convenience retailers, were up 6.2 percent last year — a figure considered unacceptably high by most companies in the retailing industry, who feel further legislative reform is needed to curb the fees charged by banks and card companies. Despite some c-store chains debuting prototype stores with larger square footage, the sales area, non-sales area and total store size of convenience stores declined in 2017. The total average property size also saw a very slight drop of 0.5 percent.
MOTOR FUELS The average price of a gallon of gas rose by 28 cents, but volume was flat. The nearly 14-percent increase in motor fuel
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48 Convenience Store News C S N E W S . c o m
COVER STORY
Five-Year Trend: Motor Fuels 2017
Dollar sales (in billions) Gallons sold (in billions)
$390.4 154.3
2016
343.7 154.7
2015
389.9 151.3
2014
501.4 147.0
2013
509.6 143.3
Source: Convenience Store News Market Research, 2018
Stores Selling Motor Fuels (Percent of stores that sell motor fuel)
2017
79.1%
2016
80.1%
revenue came after declines of almost 12 percent and more than 22 percent the previous two years. Gross profits from motor fuels rose 11 percent. Numerous factors contributed to the decline in gallons consumed last year, including the spike in gas prices, vehicles with better gas mileage, and younger consumers, particularly in urban areas, driving less than previous generations. Although the average price for a gallon of gas rose in 2017, fuel prices were still far below the wallet-draining prices seen in 2014 and 2013. In fact, 2017 was the third year in a row that the average price per gallon fell below the $3 benchmark. It also remained below the average of $2.57 seen in 2015, the first year in the last five that the average was beneath the benchmark. Additionally, it was more than a dollar less than the five-year high of $3.57, seen in 2013. The percentage of U.S. convenience
Source: Nielsen TDLinx, December 2017
50 Convenience Store News C S N E W S . c o m
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COVER STORY
Category Analysis: Cigarettes AVERAGE SALES PER STORE 2017
INDUSTRY TOTAL (IN MILLIONS)
% CHANGE
Premium $355,597 Branded discount 69,029 Subgeneric/private label 13,137 Fourth tier 1,561 Imports 16 TOTAL $439,340
2017
0.9% -2.8 9 -10.9 20.4 0.5%
% CHANGE
$54,509 10,581 2,014 239 2 $67,345
1.5% -2.2 9.6 -10.3 21.0 1.1%
Source: Convenience Store News Market Research, 2018
Five-Year Trend: Cigarettes 2017
Percent change in total sales 1.1% Margin percentage 14.82% Share of in-store sales 29.82%
2016
2015
1.4% 15.20% 30.11%
3.9% 13.36% 30.84%
2014
2013
0.1% 13.60% 31.10%
-0.3% 13.80% 32.10%
Source: Convenience Store News Market Research, 2018
Category Analysis: Other Tobacco Products AVERAGE SALES PER STORE
Smokeless Cigars Electronic cigarettes Papers Pipe/cigarette tobacco TOTAL
INDUSTRY TOTAL (IN MILLIONS)
2017
% CHANGE
2017
% CHANGE
$47,291 23,810 9,539 1,592 634 $82,866
4.4% 13.9 50.9 -2.9 -6.4 10.8%
$7,249 3,650 1,462 244 97 $12,702
5.0% 14.6 51.8 -2.4 -5.8 11.4%
Source: Convenience Store News Market Research, 2018
Five-Year Trend: Other Tobacco Products 2017
Percent change in total sales 11.4% Margin percentage 27.65% Share of in-store sales 5.62%
2016
2015
2014
9.0% 28.06% 5.16%
5.4% 24.34% 4.91%
4.3% 24.20% 4.89%
2013
8.4% 24.71% 4.83%
Source: Convenience Store News Market Research, 2018
Over the last five years, total cigarette sales have trended flat and the category as a percentage of in-store sales has fallen from 32.1 percent in 2013 to 29.82 percent in 2017. Still, cigarettes are the single highest-grossing category for convenience stores. What is having the biggest impact on cigarette sales? State tax changes, according to Alan Beach, former senior vice president of merchandising at 7-Eleven Inc., who spoke at the NACS SOI Summit. He predicted retailers that haven’t experienced a tax change in the last 10 years are likely to see one soon. Additional factors impacting cigarettes are heat-not-burn tobacco products, the Food and Drug Administration’s shift in favor of less harmful tobacco products, and consumers switching to the other tobacco products (OTP) category. Beach cautioned retailers not to turn their attention away from the cigarette category. “You can’t ignore this. We need to protect this; it is what got us here,” he said. Consumers choosing OTP over cigarettes contributed to a 10.8-percent increase in average OTP sales per store in 2017. Electronic cigarettes led the way in growth, increasing 50.9 percent in sales per store. Cigar sales also rose, increasing 13.9 percent in sales per store. Smokeless increased 4.4 percent per store, but generates the most revenue in OTP. Vapor is the main driver of the “off-thecharts” growth of e-cigarettes, according to Beach.
stores selling motor fuels has remained steady, at close to 80 percent, for the past several years.
Over a five-year period, OTP’s share of in-store sales has increased by nearly 1 percentage point, while sales growth has consistently risen since 2014.
TOBACCO
FOODSERVICE
Cigarette sales were flat in 2017, posting sales gains of 0.5 percent in average sales per store and 1.1 percent for the total industry.
Foodservice sales increased 3.6 percent across the industry in 2017, continuing a five-year trend of growth. While that rate of growth was a slowdown from the 6.6-percent growth seen in 2016, foodservice as a percentage of in-store sales continues to rise steadily, reaching 16.38 percent last year.
Premium cigarettes, though flat at 0.9-percent growth in average sales per store, was the highest-grossing segment by far. No. 2, branded discount, saw average per-store sales drop 2.8 percent. Subgeneric/private label had a more impressive 9-percent increase in sales per store, making it the third-largest class of cigarettes. Fourth tier, coincidentally in the No. 4 spot, fell 10.9 percent in sales per store — the largest percentage decline in the category. Dollar sales for imports were the lowest within cigarettes, but imports also saw the greatest percentage increase at 20.4 percent in average sales per store due to the small size of the segment.
52 Convenience Store News C S N E W S . c o m
The category is benefitting from a narrowing gap between those who eat out and those who stay at home, as well as consumers’ increased embrace of value-focused quick-service restaurants, which many c-stores already compete with.
COVER STORY
tion. We can add this on,” Beach said.
Category Analysis: Foodservice AVERAGE SALES PER STORE 2017
Prepared food
(prepared on- or off-site)
Hot dispensed beverages Cold dispensed beverages Frozen dispensed beverages TOTAL
INDUSTRY TOTAL (IN MILLIONS)
% CHANGE
$164,131 49,652 19,663 7,789 $241,235
2017
4.0% 1.1 0.5 -0.7 3.0%
% CHANGE
$25,159 7,611 3,014 1,194 $36,978
4.6% 1.7 1.1 -0.1 3.6%
Source: Convenience Store News Market Research, 2018
Five-Year Trend: Foodservice 2017
Percent change in total sales 3.6% Margin percentage 43.85% Share of in-store sales 16.38%
2016
2015
2014
6.6% 43.70% 16.14%
7.1% 43.72% 15.71%
6.3% 44.13% 15.38%
2013
6.5% 44.64% 14.93%
Source: Convenience Store News Market Research, 2018
Category Analysis: Packaged Beverages AVERAGE SALES PER STORE 2017
INDUSTRY TOTAL (IN MILLIONS)
% CHANGE
Carbonated soft drinks $54,381 Energy/alternative drinks 49,548 Bottled water 21,224 Sports drinks 17,838 Juice/juice drinks 14,338 Iced tea (ready-to-drink) 10,840 Enhanced water 4,704 All other packaged beverages 11,339 TOTAL $184,212
2017
-4.0% 3.6 2.3 -4.4 -4.7 3.4 4.5 2.9 -0.4%
% CHANGE
$8,336 7,595 3,253 2,734 2,198 1,662 721 1,738 $28,237
-3.4% 4.2 2.9 -3.8 -4.1 4.0 5.1 3.5 0.2%
Source: Convenience Store News Market Research, 2018
Five-Year Trend: Packaged Beverages 2017
Percent change in total sales Margin percentage Share of in-store sales
0.2% 41.45% 12.50%
2016
4.2% 41.40% 12.74%
2015
7.3% 32.80% 12.69%
2014
2013
5.1% 32.67% 12.41%
4.0% 32.91% 12.18%
Source: Convenience Store News Market Research, 2018
The beverage side of foodservice, however, struggled in 2017. Only hot dispensed beverages grew sales by more than 1 percent for both the industry total and the per-store average: the industry total increased 1.7 percent, while sales per store increased 1.1 percent. Despite being an obvious paired item for prepared food, cold dispensed beverages only rose 0.5 percent in average sales per store. Frozen dispensed beverages dipped slightly, declining by 0.7 percent per store — something Beach noted “should not have happened.” As a category, foodservice continues to do well, but that is not enough to allow retailers to rest assured of its success, rather than actively seek out success. “We need to be more relevant and faster to implement change in offer, flavors and packaging,” Beach said. “We don’t need to be first. We don’t need to set the trend. However, we better be a fast second.”
COLD VAULT Packaged beverages held steady at 12.5 percent of in-store sales in 2017, the third-highest grossing category. However, significant sales declines in multiple segments resulted in flat growth of just 0.2 percent for the total industry and a decline of 0.4 percent in sales per store. Carbonated soft drinks, which make up the largest percentage of packaged beverage sales, had another challenging year, falling 4 percent in sales per store. Other segments that saw per-store negative growth were sports drinks, down 4.4 percent, and juice/ juice drinks, down 4.7 percent.
“Foodservice is our biggest opportunity to drive the business and differentiate,” said Beach. “We can own food and immediate beverage consumption.” Prepared food remains the primary driver of the convenience foodservice category. The segment’s average sales per store increased 4 percent last year to $164,131. As regular snacking overtakes regular meals, and food on the go becomes increasingly popular, c-stores are in a good position to leverage their prepared food offerings.
Total convenience store industry sales rose 9.1% last year to $616.3 billion. However, the dollar growth was driven by higher fuel prices, not in-store sales.
“We are already good at immediate beverage consump-
54 Convenience Store News C S N E W S . c o m
COVER STORY
Category Analysis: Beer/Malt Beverages AVERAGE SALES PER STORE 2017
Premium Imports Flavored malt beverages Budget Popular Super premium Microbrews/craft Malt liquor Non-alcoholic TOTAL
INDUSTRY TOTAL (IN MILLIONS)
% CHANGE
$63,607 23,346 11,608 11,321 10,678 7,807 7,479 2,702 $67 $138,615
2017
-5.0% 9.7 3.1 -3.8 -2.3 22.4 3.7 -5.1 2.1 -0.1%
% CHANGE
$9,751 3,579 1,779 1,735 1,637 1,197 1,146 414 10 $21,248
-4.5% 10.3 3.7 -3.2 -1.8 23.2 4.3 -4.5 2.8 0.5%
Source: Convenience Store News Market Research, 2018
Five-Year Trend: Beer/Malt Beverages Percent change in total sales Margin percentage Share of in-store sales
2017
2016
2015
0.5% 19.01% 9.41%
4.4% 19.10% 9.56%
3.1% 18.71% 9.51%
“Convenience has more locations than any other retail channel. Thus, they are closer to the consumer. There will be an opportunity to expand product offerings based on technology and location in the future.” — Carl Elliot III, Nielsen Convenience Channel
2014
3.0% 18.57% 9.67%
2013
1.8% 18.17% 9.69%
Source: Convenience Store News Market Research, 2018
Some packaged beverage segments did see growth, including enhanced water (up 4.5 percent in average sales per store), energy/alternative drinks (up 3.6 percent), ready-to-drink iced tea (up 3.4 percent), and bottled water (up 2.3 percent).
ing for total industry category sales growth of 0.5 percent and a decline of 0.1 percent in average sales per store. Super-premium beer led the way with a whopping 22.4-percent growth in average sales per store, followed by imports (up 9.7 percent), microbrews/craft (up 3.7 percent), flavored malt beverages (up 3.1 percent) and non-alcoholic (up 2.1 percent).
Soda may still be the king of total unit volume, but Beach pointed elsewhere for growth. “Better-for-you will drive the business and expand share,” he said.
Segments that saw sales drop included malt liquor (declined 5.1 percent in average sales per store), premium (down 5 percent), budget (down 3.8 percent) and popular (down 2.3 percent).
Looking at the five-year trend, the flatness of packaged beverage sales in 2017 was a significant departure, as the category saw strong sales growth from 2013-2015, and slowing but still positive growth from 2015-2016. Sales in 2018 may determine whether the sharp drop experienced last year is an anomaly or the beginning of a negative trend.
Beach noted that while premium beer makes up a significant percentage of the category’s sales, the segment is slipping. “We need to move where the customer is going,” he said.
Sales of beer and malt beverages were similarly flat in 2017, with considerable range in segments’ performance combin-
Stores Selling Beer 2017
Percent of stores selling beer Percent of in-store sales For stores selling beer: Average sales per store Percent of in-store sales
2016
75.0% 12.5%
75.3% 12.6%
$179,320 12.2%
$179,291 12.4%
Similar to packaged beverages, the flatness of sales for beer/malt beverages in 2017 was a noticeable change after multiple years of increasing growth. The category has ranged from 1.8-percent growth in total industry sales in 2013 to 4.4-percent growth in 2016. The overall number of U.S. convenience stores that sell beer stayed relatively stable, from 75.3 percent in 2016 to 75 percent in 2017.
CANDY & SNACKS
Source: Convenience Store News Market Research, 2018
56 Convenience Store News C S N E W S . c o m
Although candy is a classic impulse purchase at the c-store checkout counter, the category rose just 1 percent in average sales per store in 2017.
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COVER STORY
Category Analysis: Candy AVERAGE SALES PER STORE 2017
INDUSTRY TOTAL (IN MILLIONS)
% CHANGE
Bagged/repackaged peg candy $17,949 Chocolate bars/packs 11,212 Gum 7,258 Novelties/seasonal 6,022 Candy rolls, mints, drops 2,516 Non-chocolate bars/packs 1,799 TOTAL $46,756
2017
6.7% -5.9 -2.9 8.1 -5.4 -3.8 1.0%
% CHANGE
$2,750 1,719 1,113 923 386 276 $7,167
7.4% -5.3 -2.3 8.8 -4.8 -3.2 1.6%
Source: Convenience Store News Market Research, 2018
Five-Year Trend: Candy 2017
Percent change in total sales 1.6% Margin percentage 48.26% Share of in-store sales 3.17%
2016
2015
2.8% 47.00% 3.19%
3.5% 42.49% 3.22%
2014
3.2% 41.20% 3.26%
Only bagged/repackaged peg candy and novelties/seasonal candy saw positive growth of 6.7 percent and 8.1 percent, respectively in average sales per store, providing a small lift to the category and incentive for retailers to offer more candy themed around the four major candy-selling holidays: Valentine’s Day, Easter, Halloween and Christmas. All of the category’s other segments posted sales declines, with chocolate bars/packs and candy rolls/mints/drops seeing the biggest declines at 5.9 percent and 5.4 percent in average sales per store, respectively.
2013
3.2% 41.05% 3.26%
While candy is holding steady in its percentage of in-store sales and has grown in margin percentage over the last five years, total sales have fallen since 2015.
Source: Convenience Store News Market Research, 2018
More positive news could be found in the salty snacks category last year. It saw better improvement, increasing average sales per
58 Convenience Store News C S N E W S . c o m
LegaL Notice
If you bought butter or cheese directly from a cooperative that was a member of CWT between December 6, 2008 and July 31, 2013, a class action lawsuit may affect your rights. What is the lawsuit about? The lawsuit claims that National Milk Producers Federation, Cooperatives Working Together (CWT), Dairy Farmers of America, Inc., Land O’Lakes, Inc. and Agri-Mark, Inc. (“collectively Defendants”) violated the law by entering into a conspiracy to reduce milk output through a “herd retirement program,” where farmers who bid to participate in the program sent their herds of milking cows to slaughter in exchange for payment, allegedly limiting the production of raw milk and driving up prices for butter and cheese. The Defendants deny that they did anything wrong. The Court has not decided who is right. Who is included? The Court decided that the Class includes all persons and entities in the United States that purchased butter and/or cheese directly from one or more Members of Defendant, Cooperatives Working Together and/or their subsidiaries, during the period from December 6, 2008 to July 31, 2013. Those that are included are called “Class Members.” A list of all the Members of Cooperatives Working Together and their subsidiaries can be found at www.ButterandCheeseClassAction.com. What are your options? If you are a Class Member, you must choose whether to stay in the Class. If you stay in the Class, and money or benefits are obtained, you will be notified about how you can participate. You will be bound by all orders and judgments of the Court, whether favorable or not, and you won’t be able to sue the Defendants on your own for the claims at issue in this case. If you want to stay in the Class, YOU DO NOT HAVE TO DO ANYTHING NOW. To exclude yourself from the lawsuit, you must send a letter asking to be excluded. Instructions for making this request can be found at the website or by calling the tollfree number below. You must mail your exclusion request postmarked on or before July 30, 2018. If you exclude yourself, you cannot get any money or benefits from this lawsuit, and you will not be bound by any orders or judgments in this case. If you do not request exclusion, you may (but do not have to) enter an appearance in the Court through your own counsel. Detailed information is available at the website and toll-free number listed below.
1-855-804-8574 www.ButterandCheeseClassAction.com 60 Convenience Store News C S N E W S . c o m
COVER STORY
store by 3.8 percent and total industry sales by 4.5 percent. For the second year in a row, puffed cheese led the way with a 9.1-percent increase in sales per store — an improvement from 2016, when it also came out on top. With one exception, all other salty snack segments saw positive growth as well. Potato chips increased sales per store by 6.1 percent, followed by other salty snacks (up 5.1 percent), tortilla/corn chips (up 4.8 percent) and ready-toeat popcorn (up 4.2 percent). Over the past five years, sales of salty snacks have alternately risen, fallen and remained flat, but the category’s share of in-store sales has slightly increased and its margin percentage rose from 29.93 percent in 2013 to 37.86 percent in 2017. 2017 was a rockier year for alternative snacks, which saw only 0.8-percent growth in average sales per store. Meat snacks were No. 1 in terms of both dollar sales and percentage increase, rising 3.5 percent in sales per store. Granola/yogurt bars, meanwhile, saw the largest decline at 7.6 percent. Health/energy bars and other alternative snacks saw smaller drops. Last year marked a significant slowdown in the growth of alternative snacks. The 1.4-percent increase was the least growth the category has seen over the last five years. For both salty snacks and alternative snacks, experts
2017 Report Card at a Glance Total Sales After four years of declines, sales rose last year due to higher gas prices.
In-Store Sales A 2.1-percent increase is disappointing, but still outpaced most other retail channels.
Motor Fuels Business Dollar and profit growth was impressive, but the decline in volume is worrisome.
Store Count The industry added 423 net new stores, even as big chains drive consolidation.
Profits Both gross and pretax profits were up again last year, but operators are concerned about rising costs.
Foodservice Sales The 3.6-percent gain is only about half the growth rate of the previous two years.
98%
I NFO G RA M | J UN E 2018
Nationwide, roughly
230,000
of consumers believe ingredients are an important consideration in the food products they buy.
restaurants fall under the new menu labeling law that is now in effect. SOURCE: NATIONAL RESTAURANT ASSOCIATION
95%
of restaurant owners believe technology improves efďŹ ciency.
SOURCE: 2017 LABEL INSIGHT SHOPPER TRENDS STUDY
UTS
&O S N I E TH
NG I L E B A L D O O F OF SPONSORED BY
of adults agree that the government should require nutrition information labels on all packaged foods sold in grocery stores.
want similar requirements for restaurants.
Every year, roughly one in six Americans becomes sick, 128,000 are hospitalized and 3,000 die due to foodborne diseases.
EMERGING TECHNOLOGIES RESTAURANTS ARE EXPLORING
84%
64% 44% 60%
SOURCE: THIRD ANNUAL RESTAURANT TECHNOLOGY INDUSTRY REPORT, 2017, TOAST INC.
SOURCE: CENTERS FOR DISEASE CONTROL AND PREVENTION
CONSUMER OPINIONS ON NUTRITION LABELS
SOURCE: 2017 LABEL INSIGHT SHOPPER TRENDS STUDY
of consumers say food allergies, intolerances or sensitivities affect the way they shop.
IoT (connected devices)
64%
Artificial Intelligence (voice)
48%
Automation
33%
Wearables
21%
SOURCE: 2018 RESTAURANT TECHNOLOGY STUDY: INSIGHT ENABLED INNOVATION, HOSPITALITY TECHNOLOGY
of consumers who read package labels want information about sugar, calories, salt and fat content.
LESS THAN HALF would pay more for foods that are organic, grass-fed or contain no added sugars or genetically-engineered ingredients.
57%
would consider paying more for locally grown food.
SOURCE:REUTERS/IPSOS OPINION POLL, 2017
COVER STORY
point to innovation as an important attribute for the future of these categories as suppliers explore better-for-you choices, new flavors and sizes, premiumization, and a small batch/craft approach.
WHAT’S NEXT? Last year’s headwinds are expected to continue in 2018. Ecommerce will continue to negatively impact store trips, gallons consumed will be flat and, if gas prices continue to rise, discretionary income will be adversely affected, particularly hurting lower-income households. Still, Nielsen’s Elliott feels the longer term outlook for the convenience channel is very positive — for those retailers that innovate. “Convenience has more locations than any other retail channel,” he said. “Thus, they are closer to the consumer. There will be an opportunity to expand product offerings based on technology and location in the future.” CSN
METHODOLOGY The 43rd annual Convenience Store News Industry Report features data from a variety of sources in order to provide a complete picture of the financial health of the convenience store industry. Store census data was provided by Nielsen/TDLinx, which maintains a national count of c-store locations based on NACS’ definition of a convenience store. Dollar sales and unit volume data for most categories was provided by The Nielsen Co. from its Convenience Track retail measurement service, which is based on UPC sales and other methods that are counted through the use of point-of-sale scan data, as well as from data captured via electronic invoice and sales audits. Additionally, non-UPC coded merchandise, including prepared food and hot, cold and frozen dispensed beverages, is provided by retailer surveys conducted by Convenience Store News. Government sources include the Census Bureau, Bureau of Labor Statistics, Department of Energy, and Federal Tax Administration. Special thanks to Mitchiyoshi Uyeda of EIQ Research Solutions for trafficking the product category data from Nielsen.
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FEATURE
Turning Eyesores Into State-of-the-Art C-stores Gas Land Petroleum remediates and transforms contaminated properties in New York State By Danielle Romano GAS LAND PETROLEUM — known today as one the largest independent wholesale petroleum distributors in New York’s mid-Hudson Valley region — is entering new territory. Dilapidated, contaminated territory, that is.
Rather than building new sites on virgin land, Kingston, N.Y.-based Gas Land recently began shifting its focus to remediating contaminated properties that stand as eyesores and transforming them into modern, state-of-the-art facilities to the community’s benefit. Seeing as commercial properties are scarce in the southern region of New York, Gas Land decided to go this route as a way to acquire new properties and expand its business by revitalizing existing, albeit contaminated, lands. The company also seeks to benefit the communities in which it does business by eliminating environmental hazards and cleaning up eyesores that decrease property values and create a host of other issues in these communities. “Our experience as builders and designers of gas stations, and our understanding of environmental compliance issues not known to the general public, give us the advantage of being able to carry out these plans efficiently and seamlessly,” said Gas Land Vice
64 Convenience Store News C S N E W S . c o m
President Zeidan Nesheiwat.
From the (Under)Ground Up Gas Land’s remediation strategy got its start after federal regulations surfaced in 1998 that required existing underground steel storage tanks to be upgraded to double-wall fiberglass. The company complied with these regulations and used them as a jumping-off point to expand the renovations already occurring at those gas stations. “Although Gas Land was able to comply with the remediation requirements and then some, other station owners and operators found them too burdensome and ended up abandoning their properties instead. My dad [Gas Land President and CEO Mitch Nesheiwat] saw these properties as an open market that held great opportunity for growth and so he began purchasing the sites, remediating them, and converting them into new and modern facilities that were both environmentally compliant and great additions to their communities,” Zeidan explained. For Gas Land, there is no set protocol when it comes to finding a site to remediate. Because the company doesn’t have a real estate team whose sole purpose is to survey an area, Gas Land executives always keep an eye out for open properties — especially those that are underdeveloped. Once a site is spotted, the company assesses and determines whether or not the location has the potential for success, or if it’s beyond repair. To make this determination, Gas Land collects six key pieces of information on a site when assessing its viability:
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FEATURE
Before Depending on the severity of the site, the construction process can take anywhere from six to 15 months.
After 1. Current status of environmental conditions; 2. Future anticipated cleanup actions; 3. Current or future restrictions on the use of the site; 4. Compatibility between anticipated use and the cleanup or restrictions on use; 5. Liability protections that are available; and 6. Liens associated with the cleanup work. “Ironically, the riskiest parts of rehabilitation aren’t the toxins, it’s the site plan review process associated with the project,” Zeidan shared. “It’s not a matter of whether the municipality desires the site to be remediated; it’s a matter of what zoning currently permits, and whether there are other existing community issues within the vicinity of the site that the municipality is seeking to address.” Prior to redeveloping a site, a thorough zoning analysis is performed to bring to light any significant issues that may exist, such as acquiring variances, approvals and/or zoning changes, especially at older gas station sites where local zoning ordinances may have changed over the years.
66 Convenience Store News C S N E W S . c o m
In total, the zoning process, including site plan review, may take many months — even years — to complete and may involve substantial public input. Once a site has been selected and purchased, it undergoes the site plan review process within its respective municipality. Because most land in New York State is privately owned, municipalities have enacted zoning to regulate land development, which enables communities to regulate land uses and population densities based on comprehensive land development planning. Site development plans depict the intended layout, consisting of the arrangement and uses of the land to be improved, and describe the proposal’s physical, social and economic impacts on the community. Then, approval involves its own review process, including: submitting the initial application; responding to comments and site plan revisions; public hearings; and a written decision summarizing the components considered in reaching project approval or denial. If approved, the next step in the process is the actual site cleanup and redevelopment. This phase can be a “truly interdisciplinary effort,” as projects involve aspects of environmental science, land use planning, architectural design and public health, according to Zeidan. The remediation and renovation presents its own challenges, like: maintaining pedestrian and vehicle access while keeping open excavations; completing work within a short timeframe; and effectively handling existing and unknown conditions without negatively impacting the budget, schedule, staff, tenants or customers. Because the construction process can take anywhere from six to 15 months, Gas Land has developed a strategy to limit the impact to existing businesses: • Have a clear vision and objective for each project. • Define standards for the time, cost and quality of the project. • Outline and link scopes of work to the project’s objectives. • Develop a schedule that creates a seamless transition for c-store operations. • Present plans to tenants and staff to communicate the
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FEATURE
Before
After
Once sites are completed, they are leased to independent operators.
vision and intent of the renovation. • Hire qualified contractors who understand the undertaking and have viable resources and experience.
a sniper. I don’t buy stations just to say I bought them. I only go after properties that I know for sure are winners,’” Zeidan explained. “So, as long as the deal makes sense, the company does its best to close and make the deal.”
“The company philosophy recognizes that the most important project stakeholder is not Gas Land, but rather the members of the community who we serve,” Zeidan expressed. “Based upon the review process and company philosophy, stations and stores are therefore designed individually to cater to the needs of a particular community without a company brand. Instead, locations are designed by the architectural standards of the community and branded by the fuel.”
With a number of successful redevelopment projects completed, Gas Land has witnessed the “significant and enduring” economic, environmental and social benefits that remediation and redevelopment can provide, according to Zeidan. Just some of the ways remediation projects help communities are local job creation, an increase in property values, reduced threats to public health, and neighborhood revitalization, he pointed out.
Gas Land’s store designs have earned accolades, including several consecutive wins in the annual Convenience Store News Store Design Contest.
While Gas Land also distributes fuels to New Jersey and Connecticut, the company intends to continue playing its home field advantage in New York State, for the time being.
The most sites Gas Land Petroleum has ever purchased to rehabilitate at once was a package from Bottini Fuels, which included 11 sites.
Home Field Advantage At the end of the day, Gas Land is attracted to good businesses and focuses less on the size of the purchase and number of stations involved, and more on the viability and quality of the sites. “Though we may cast a wide net, we tend to limit our targets to stations that Mitch firmly believes will be profitable. In his words, ‘I’m
68 Convenience Store News C S N E W S . c o m
Once sites are completed, they are leased to independent operators. However, Gas Land does have a hand in what is offered at each location. During the design process of remediated sites, the company sits down with potential operators and shares with them its plans and vision for the locations. For example, Gas Land will share if it recognizes a need in that community for a cozy coffeehouse aesthetic with indoor seating, or fresh options like deli foods and a salad bar. “We explain to the operators our vision and products we want to serve. The operator will understand what we are doing, and we work together to accomplish our goals,” said Zeidan.
“Here in the Hudson Valley, we know the demographic of the community, the roads and traffic patterns, the value of the property, and the codes, etc. This background knowledge protects us from overpaying or purchasing properties that are not conducive to gas stations,” Zeidan said. “Our decisions to build or purchase properties aren’t based on traffic numbers that normally make a property attractive for a developer — they’re based on our seasoned, personal knowledge. So, while we remain open to exploring expansion, it would have to be an incredible deal for us to venture into the unknown.” CSN
Catch Some Zs
Don’t fall asleep on the up-and-coming consumer powerhouse, Generation Z By Renée M. Covino
IF YOU REALLY WANT TO CATCH SOME ZS,
you’ll need to
product at a higher quality.
wake up, and wake up fast. The generation after millennials, Generation Z — made up of those born from the mid-1990s to the early 2000s — currently accounts for 25 percent of the U.S. population, making it a larger cohort than baby boomers or millennials. Gen Z, or Pivotals as consumer trends consultancy FutureCast also calls them, range in age from pre-tween to 21, and they already claim more than $40 billion in buying power. Forward-thinking convenience store operators would be wise to gain the loyalty of these consumers now, especially considering that Gen Z prefers to shop in physical stores. That was one of the unexpected findings by San Diegobased Interactions in its recent Next Generation of Retail study. Some other trends it uncovered were: • Gen Z consumers are very price-conscious (89 percent) and prefer to spend money on experiences vs. material items. • Gen Z is not brand loyal — 81 percent are willing to switch from their favorite brand if they find a similar
70 Convenience Store News C S N E W S . c o m
• 64 percent of Gen Z prefers to use cash vs. credit or debit cards. • 64 percent prefer shopping in-store vs. online. • Three-quarters of Gen Z respondents said they prefer to shop at retailers that provide an engaging in-store experience. • Almost two-thirds of Gen Z (63 percent) expects retailers to have a social media presence, and 82 percent say the opinions of others on social media have influenced them to shop at a retailer they’ve never shopped at before. “Generation Z is constantly connected to technology, which retailers may find intimidating to overcome when it comes to in-store engagement. However, our study found that this group is longing for retailers to provide an engaging in-store experience. In fact, when given the choice, the majority prefer shopping in-store vs. online,” said Interactions President Bharat Rupani. Similar research findings were also recently shared by FutureCast, a division of the Barkley advertising agency in Kansas City, Mo. Its report, titled Marketing to Gen Z: The
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Call to Action l First off, treat this consumer group like valued customers despite their young age. Go after low-hanging fruit like free Wi-Fi and clerks who greet them. l Creating engaging in-store experiences is a good way to hook Gen Z. Think along the lines of snacks they can’t find anywhere else. l Bolster your business with Gen Z by creating newsworthy pop-culture events around a wide variety of ethnic and international foods; Gen Z is a very diverse group. l Leverage technology in ways that appeal to Gen Z, such as the availability of Apple Pay at the counter. The idea is to create a journey whereby they can get in and out without looking up much from their phones. l Promote and advertise through social media; work with “influencers” as part of the strategy. Don’t waste time on TV advertising as they’re not really watching. l Present the very best mobile shopping experience possible; pay attention to content and image guidelines from outsourced professionals, if necessary. l Brace yourself and your store for 2020 when the Zs are predicted to be the driving force of the consumer world.
Rule for Reaching This Vast — and Very Different — Generation of Influencers, cited that 77 percent of Gen Z prefers unique products over popular ones; and 79 percent say their preference is for a quality product, not necessarily a name-brand item (very similar to the data released from the Interactions study). “Gen Z consumers are looking for adventurous experiences with food, and beverages, which is why brands like Lays will launch single-serve, multi-flavored, grab-and-go snacks — i.e., Biscuits and Gravy, Reuben, Truffle Fries — in the c-store market before taking them to mainstream grocers,” marketing expert Angie Read, coauthor of the FutureCast report, pointed out. Read suggests c-stores offer items that are hard to get other places. “Takis [rolled tortilla chips] are a huge hit right now and hard to find anywhere else but c-stores,” she noted. She also urges the convenience channel to consider that Gen Z consumers are collectors of experiences and often visit c-stores in groups. “Think of ways to offer share-worthy experiences in the store. Innovate the retail experience by incorporating technology that makes their shopping trip easier, faster, more personal. Free Wi-Fi is a no-brainer,” she said. “A clean store and friendly customer service are low-hanging fruit that shouldn’t be overlooked with this cohort. Treat them like valued customers despite their young age.”
Engage Gen Z With Food Food can be a big part of creating an experience that speaks to Gen Z in engaging ways, according to Todd Maute, partner at New York-based brand agency CBX. “Research shows Gen Z shoppers tend to like personalized, made-to-order items. They also want portability, possibly so that they can go back to playing ‘Fortnite’ on Xbox One,” he told Convenience Store News. Maute agrees with Read that convenience stores should strive to offer hard-to-find snacks as part of the Gen Z experience. “Sriracha-flavored cashew nuts in a wild-looking package will have much more Gen Z appeal than plain old [peanuts],” he said. “Back in the 1970s and ‘80s, kids were content to buy a cheap frozen hamburger with chips on the side. Gen Z is a bit more health-conscious and values novelty, uniqueness and personalization.”
72 Convenience Store News C S N E W S . c o m
Consider these new dining revelations about the Gen Z consumer, recently released by Chicago-based Y-Pulse, a division of Olson Communications, in its 2018 Kids Dining Study titled Understanding Tomorrow’s Tastemakers Today: • Gen Z enjoys contradicting food trends — 91 percent say they like ordering their favorite foods or those they are familiar with, while 71 percent say they like to try new dishes and flavors. • Much like their millennial predecessors, Gen Z consumers care very much about and recognize the importance of healthy eating. • Gen Z consumers crave independence in food, with 58 percent saying they like to cook for themselves. • Half of Gen Z consumers say they like to get snacks from a convenience store. Older Gen Z consumers are already c-store customers, to some degree, according to Shana Snyder, account director for Y-Pulse. “C-stores close to neighborhoods are usually the first stores that kids venture out to for the first time to make independent purchases,” she said. “Younger Gen Z consumers also frequent c-stores with their families, where they are allowed to have some input on purchases.” The 2018 Y-Pulse Kids Dining Study found that Gen Z consumers are beginning to take
a greater interest in c-stores as a food venue than consumers under the age of 18 in previous years’ studies, Snyder pointed out. “…The amount of kids ages 8-13 who loved convenience stores increased by more than 22 percent when compared to the same age group from our 2013 study,” she cited.
Fast-Forward Technology
Given this consumer group’s interest in quick ordering and grab-and-go foods, c-store retailers have an opportunity to grow a loyal customer base, observed Snyder. “Gen Z consumers may be the generation that continues to expand the grab-and-go food category in a significant way,” she said, adding that Gen Z consumers expect to have a variety of food choices when dining out.
“As digital natives, all Gen Z has ever known is instant gratification, which most directly correlates with the convenience shopping experience,” stated Yakir Gola, co-founder and CEO of goPuff, an on-demand convenience delivery service.
“One of the ways c-store operators can introduce variety and interest in their foodservice menus is by advertising limited-time offers and marketing seasonal offerings,” Snyder advised. “In-store merchandising can also help highlight new offerings and regional specials.” As for Gen Z’s interest in healthy eating, marketing healthier items as “fresh” on c-store menus can attract the interest of this demographic, she added. Pointing out that many food trends start with young consumers, Read recommends that c-stores get creative and delicious. “Bolster business, consumer relevance and brand love by creating newsworthy pop-culture events around new foods,” she recommended.
Get to Know Generation Z Gen Z consumers are very priceconscious and prefer to spend money on experiences vs. material items. Gen Z consumers are not brand loyal — 81 percent are willing to switch from their favorite brand if they find a similar product at a higher quality. More Gen Z consumers prefer shopping in-store vs. online. Gen Z consumers prefer to shop at retailers that provide an engaging in-store experience. More Gen Z consumers prefer to use cash vs. credit or debit cards. Source: Interactions, Next Generation of Retail, 2018
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Still, the in-store experience is just one part of the equation. In an effort to cater to the all-around “convenience” aspect of shopping today, many c-stores are exploring on-demand delivery services, especially those with locations near colleges and universities — the eventual homes of Gen Z.
More data from FutureCast highlights the importance of targeting this generation with retail mobile apps and mobile payment options: 75 percent of Gen Z checks a store’s app while they’re shopping for special offers before finalizing purchases; and the same percentage would rather shop at a retailer that accepts mobile payment than one that doesn’t. Gen Z is the first generation that has truly grown up in a purely technology-driven world. “While even the oldest were approaching their teens, smartphones were widely available,” noted Don Stuart, managing director of Wilton, Conn.-based Cadent Consulting Group. Accordingly, Gen Z — more so than any other generation — is primed to respond strongly to technology offerings. Tech is an important tool to gain and keep them. “C-stores need to be able to leverage technology in ways that appeal to younger consumers, from the digital screens running at the gas pump, to the availability of Apple Pay at the counter,” said Maute of CBX. “For the grab-and-go side of things, in other words, consider creating a journey in which Gen Z shoppers can get in and out without looking up all that much from their phones. Can you convey a sense of technological progress and innovation along the lines of Amazon Go?” Gen Z is also “all about social media,” according to Maute. He recommends c-stores put their brand out there in a way that is both meaningful and emotional to get Gen Z to respond. Working with “influencers” can be a part of the strategy. “In particular, video gamers’ fast-paced lifestyles dovetail very well with the offerings of c-stores,” he told CSNews. “Pro-gamers reach massive online audiences: L.A.-based gamer and YouTube star Mark Fischbach, for example, reportedly made more than $12 million last year. He now has more than 21 million subscribers. The right influencer collaborations certainly can bolster a c-store brand’s resonance with Gen Z.” Read agrees that the best way to capture this generation is to feature a social media influencer who is “their age, music and humor.”
What not to do? “Gen Z doesn’t watch television like older generations, so don’t waste advertising budgets on traditional TV ads,” she said. “They do, however, voraciously consume digital media and, while they skip traditional ads at nearly all cost, they will sit through ads they find entertaining. They have a short attention span — 8 seconds or less.” Convenience store operators should consider social media marketing, especially involving local marketing, to drive more Gen Zs into their store(s) and retain them, said Ashwim Ramesh, CEO of Synup, a provider of SaaSbased local marketing, search and growth solutions for retailers worldwide. “With technology playing such a crucial role in today’s scenario, store operators need to identify these customers and send out personalized offers based on past purchases,” he added.
Giving Back Is Big With Gen Z Green and local issues are part of the call to action for convenience store operators looking to gain business with Generation Z shoppers. In a recent research report titled Marketing to Gen Z: The Rule for Reaching This Vast — and Very Different — Generation of Influencers, FutureCast, a division of the Barkley advertising agency in Kansas City, Mo., highlighted that: • 47 percent of Gen Z has stopped purchasing their favorite brand after finding out the manufacturer didn’t produce environmentally friendly products; • 59 percent prefer to shop at local retailers over big-box retailers; and • 72 percent would be more willing to shop at national chains if they had more of a local presence in their community. While technology is the obvious call to action for Gen Z, they also are known to value diversity and giving back to their communities, according to Don Stuart, managing director of Wilton, Conn.-based Cadent Consulting Group. “The more that c-store retailers can give back and be perceived as living in harmony with the environment and their surroundings by focusing on local causes and social/environmental issues, the more they will win with the Zs,” said Stuart. “In a phrase, Generation Z is interested in both value and values.”
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Ramesh echoed that Gen Z consumers often make their purchases based on recommendations from friends, endorsers and other social media influencers. “Therefore, having social media content in the form of product testimonial videos to post on YouTube, or conducting influencer activities, is something that will help gain loyalty from these customers.”
Mobile Is a Must Over the next two to 10 years, as Gen Z consumers grow up and start to rent apartments and own homes, it is expected they will become more frequent convenience and grocery store shoppers. However, retailers must remember “this generation, even more so than millennials, has only known a mobile world,” stressed David Brewis, chief marketing officer at New York-based Amplience, a provider of ecommerce retail solutions. “While it’s no secret that traditional brick-and-mortar retailers are being pushed to embrace omnichannel models, they’re now going to have to capture this new generation of shoppers on mobile first,” he explained. If retailers want to connect with Gen Z shoppers, they need to “meet them where they’re at and create an engaging experience connecting physical and digital realms — namely, through the smartphones these consumers already carry with them,” added Davor Sutija, CEO of Thinfilm, a NFC mobile marketing solutions provider. Gen Z shoppers are becoming the trendsetters and tastemakers in society. “They’re increasingly looking for more interactive and personalized ways to shop, with online platforms like search engines, social media and ecommerce marketplaces changing the game for these digitally-savvy consumers and the retail world at large,” Sutija said. In the rush to get online, though, many retailers failed to optimize content for their mobile channel and the resulting shopping experience is often very poor, according to Brewis. “Specifically for convenience stores, when you view a product on the mobile screen, the product image is often very small compared to the rest of the screen, with typically two-thirds of the screen taken up with text, leaving little room for the consumer to find what they really need,” he said. “A generation brought up on mobile is going to expect the very best mobile shopping experience. One frustrating and negative experience with a retailer’s site could result in losing the customer forever.” Researchers at the University of Cambridge, in partnership with Unilever, developed a detailed set of what the industry calls “hero image guidelines,” which reportedly provides for a much better shopping experience for customers using mobile. According to these guidelines, ecommerce images should communicate: the brand, the type of
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product, the variant (subcategory of product), and the size. “Looking at results from retailers that have adopted these standards, it’s clear that ‘mobile ready hero images’ drive much higher conversions,” Brewis said. “Delivering a smooth and seamless mobile shopping experience is absolutely crucial if convenience stores are going to survive changes in behavioral trends with Gen Z. Mobile shoppers now require clear visual product information in order to make simple purchasing decisions.”
Thoughts on the Future Of course, one can’t know how Gen Z consumers will change as they age. “It will be at least 15 to 20 years before they surpass the buying power of millennials,” Stuart told CSNews. “While they are entering the workforce with the lowest unemployment rate in the past several decades, incomes are generally stagnant. However, we should not minimize the buying power influence that Zs wield, which is estimated to be north of $500 billion annually.” This cohort will make up more than 40 percent of buying power by the year 2020, according to Read, and will be the top consumer group in seven to 10 years. The rise of digital has already positioned Gen Z to be “the
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most vocal and influential generation yet,” added Gola of goPuff, whose on-demand convenience delivery service currently serves such cities as Philadelphia, Pittsburgh, Boston, Washington, D.C., Atlanta, Denver, Phoenix, Seattle and Portland. “While they may not be the ones funding their purchases, per se, their ability to influence what their friends and family might purchase is strong — almost viral,” he said. “By 2020, when Gen Zs have progressed in their careers and have their own disposable income, they will no doubt be the main force of the consumer world.” Gola also believes Gen Z is pushing brands to do better, in terms of how they treat and interact with consumers, both at the physical store-level and online. Gen Z is a great cohort for convenience stores moving forward because unlike millennials, they like a mix of both online and offline shopping experiences, said Synup’s Ramesh. He envisions the in-store experience will become increasingly robust with technologies like voice search, geofencing, artificial intelligence (AI) and more. “This is a very knowledgeable bunch with the energy to hop between retailers, snapping pictures as they go and leaving a trail of hashtags on their way,” said Ramesh. CSN
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FOODSERVICE
What’s Hot on C-store Menus? QuickChek plays it simple and scores with Salt & Pepper Fries SOMETIMES, THE SIMPLEST IDEAS HAVE THE BIGGEST IMPACT. QuickChek Corp.’s shoe-
string-style Salt & Pepper Fries are seasoned with nothing but salt and pepper. The product might be a very basic concept, but it has resonated well with consumers in multiple categories found in Datassential’s SCORES platform, which measures consumer sentiment in six key areas.
There’s No Frills Here OPERATOR: QuickChek ITEM TYPE: Limited-Time Offer DATE: April 2018 PRICE: $1.99 Hot, crispy, made-to-order shoestring fries perfectly seasoned with salt and pepper.
The strength of the QuickChek Salt & Pepper Fries lies in the product being a crave-worthy item with the most basic of ingredients that everybody knows, and it’s sold at an affordable price. According to the Datassential SCORES platform, the fries
reached the 99th percentile for Unbranded Purchase Intent, the 98th percentile for Branded Purchase Intent, and the 92nd percentile for Value (the fries sell for $1.99). The product also ranked well for Frequency, indicating consumers would keep coming back for more.
Reaches All Consumer Types QuickChek’s Salt & Pepper Fries are popular among almost all consumer types, scoring 90 or above among men and women, households with kids and no kids, and every generation. The only demographic where there was a lack of interest was among Asians (the product scored in the 63rd percentile among Asians).
CONCEPT SUMMARY
Datassential, a Chicago-based food and beverage industry research and consulting firm, brings clients real-world insights on flavor trends, foodservice and consumer packaged goods, globally.
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FOODSERVICE
Doing Good With Good Food The 2018 Convenience Store News Foodservice Summit inspired c-store retailers to consider what more they could be doing to serve their communities By Linda Lisanti FROM A SIMMERING POT OF JAMBALAYA to a plate of fresh-from-the-fryer beignets, New Orleans is a city where good food brings people together, making The Big Easy an ideal setting for the 2018 Convenience Store News Foodservice Summit.
Now in its seventh year, this annual event — held in partnership with Tyson Convenience — is designed to foster innovation and inspire growth in fresh foodservice in the convenience store industry. The theme of the 2018 event was “Doing Good With Good Food.” The two-day educational and experiential agenda focused on the role of food in a community. “The reason we chose this theme is because our stores are members of communities. Each of you knows how to run your businesses — the metrics, the standards, the processes; all those things we see inside our stores. But our goal this year is to start a conversation for our industry about looking outside, through our store windows, at the community around us. Who are we,
and what role can we play in the communities our stores serve?” CSNews Editorial Director Don Longo told the retailer attendees from leading food-forward U.S. convenience store chains. Participants in the event, held April 18-19, included top foodservice executives from 7-Eleven Inc., BP/ampm, Circle K Stores Inc., Country Fair Inc., Kum & Go LC, Kwik Trip Inc., Maverik Inc., RaceTrac Petroleum Inc., Rutter’s, Sheetz Inc. and Wawa Inc. While the usual culinary tour de force of the latest food and beverage trends — a mainstay of the Foodservice Summit — was served up again this year, it was supplemented by inspiring stories of local retailers in New Orleans and how they are serving the still-underserved communities, like the Lower Ninth Ward, devastated by Hurricane Katrina 13 years ago. The retailers were treated to visits to the Southern Food & Beverage Museum, The Goldring Center for Culinary Medicine, and Liberty’s Kitchen. The latter two organizations are utilizing food to do good in the community and as a platform to encourage healthier eating. The group was also introduced to Propeller, a nonprofit organization that supports entrepreneurs as they tackle social, economic and environmental disparities in New Orleans. Propeller’s Healthy Corner Store Collaborative strives to provide healthier food options to local neighborhoods. Through the program, Propeller partners with the city of New Orleans, Liberty’s Kitchen and Top Box Foods, and they work alongside local convenience store retailers to maximize their business stability and increase the amount of fresh, healthy food they offer in-store while making it more visible, affordable and attractive to customers. Propeller Food Program Manager Kristine Creveling, RD, shared several impactful statistics, including that one in three New Orleans adults is obese and only one in five consumes at least five servings of fruits and vegetables per day. While there are 152 corner stores in Orleans Parish alone, the food offerings in these stores are often limited and typically the majority of items stocked are “cheap, high-fat, high-sugar, processed foods,” she noted. Visits were made to two convenience stores that are part of the Healthy Corner Store Collaborative. At one store, Burnell Cotlon’s Lower Ninth Ward Market, the c-store foodservice executives were visibly moved by the New Orleans native’s tenacity and optimism in the face of
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FOODSERVICE
numerous post-Katrina obstacles. Cotlon explained that the Lower Ninth Ward has had a much slower recovery than most New Orleans neighborhoods. Population has decreased from approximately 14,000 before the hurricane to only about 3,000 today — with the highest percentage of African-Americans in the city living here. The retailers witnessed abandoned houses and torn-up roads, and were told the nearest full-service grocery store is three bus rides away from Cotlon’s small facility, which he rebuilt himself from a wrecked structure. To meet his community’s needs, he’s added a laundromat to the back of his store (the equipment was donated by TV host Ellen DeGeneres) and he’s currently working to set up an Internet café in an abandoned building next to his store.
The Whole Foods Story The 2018 CSNews Foodservice Summit wrapped up with an inspiring and insightful conversation with former Whole Foods Market co-CEO Walter Robb, who in his post-Whole Foods career strives to provide accessible, healthy products to consumers across the country.
“Do you know your customers? Are you collecting data on them and using that data to market to them?” Robb asked the retailers. “Your company culture is told through stories.” With trips down across retail, the former chief executive said retailers have to go to other channels to find growth — delivery, pickup, online, etc. “Go to the store” is not the future, according to Robb. Instead, he believes the future is home delivery in the form of a “Whole Foods Fridge” and a “Wawa Fridge” and so on. He pointed out that Amazon’s Prime home delivery service has been a “smashing success,” which means it is only going to expand more rapidly. Robb cautioned the c-store execs that Amazon is going to be a force to be reckoned with, including its Amazon Go concept. “Don’t let Amazon Go get ahead of you. Don’t put yourself in the position where you have to play catchup,” he advised. “Your capacity for change ensures your survival.” Three other key takeaways from Robb’s speech were:
Robb spoke about a wide variety of topics, including the growing issue of food waste, the importance of having a digital strategy, the food trends that will have the greatest impact on retailers, and what the Amazon-Whole Foods merger will mean for the food retailing industry. “Whole Foods was created to bring healthier food to the world,” Robb told the group, explaining that the chain set a new standard for quality in the food industry by committing from the very beginning to only selling products with no artificial flavors, colors or preservatives. Whole Foods’ message to consumers was: • Better for you; • Better for your families; and • Better for the planet.
1. Local is bigger than organic now. He spoke about how Whole Foods created a position in each of its 12 operating divisions focused solely on finding local products in that market. 2. If you’re looking for growth, look to the perimeter. Center-store is being hollowed out as consumers are buying less of those categories. Growth lies in the perimeter categories. 3. Plant-based food is not a passing fad. “We’re on the edge of times when people are saying, “I’m going to eat meat one less time a week,’” he said. Plant-based food is not a trend, it’s a shift that’s starting now, and it is going to have staying power. CSN
Our Foodservice Advisory Council DAVID BISHOP Managing Partner Balvor LLC JOSEPH BONA President Bona Design Lab LLC
TOM COOK Principal King-Casey JACK W. CUSHMAN Foodservice Director Circle K (retired)
ED BURCHER Vice President of Foodservice FriendShip Food Stores
CHAD DEWBERRY Category Manager McLane Co. Inc.
NANCY CALDAROLA General Manager The Food Training Group JOSEPH CHIOVERA President, Innovation & Design and Emerging Channels Buddy’s Kitchen Inc.
DEAN DIRKS CEO Dirks & Associates
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RYAN KREBS Director of Foodservice Rutter’s
MATHEW MANDELTORT Vice President, Foodservice Insights Eby-Brown Co. LLC LARRY MILLER President Miller Management & Consulting Services Inc. TIM POWELL Vice President/Senior Analyst Q1 Consulting WESLEY PRICE Category Supervisor, Fresh Foods and Beverages Murphy USA Inc.
FOODSERVICE
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Convenience Store News, in partnership with Tyson Convenience, hosted the seventh-annual Foodservice Summit in New Orleans in April. The two-day agenda included unique dining experiences at the Southern Food & Beverage Museum, The Goldring Center for Culinary Medicine, and various French Quarter establishments. The retailer attendees also took part in roundtable discussions, toured two New Orleans convenience stores that are part of a Healthy Corner Store Collaborative, and enjoyed a conversation with former Whole Foods Market co-CEO Walter Robb.
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STORE SPOTLIGHT
The Next Generation of Cumberland Farms The retailer’s new store model enhances the customer experience through upgrades in design, equipment and food offering By Danielle Romano
To date, Cumberland Farms has opened more than two dozen stores sporting this new design.
IF DAVID HEILBRONNER, director of brand strategy and advertising for Cumberland Farms Inc., had to describe the convenience store retailer’s “next-generation” store model in three words, they would be: friendly, simple and fast.
Westborough, Mass.-based Cumberland Farms debuted its next-gen store design in August 2017 with a 5,000-square-foot location at 4560 S. Washington Ave. in Titusville, Fla. The retailer has since opened more than two dozen stores sporting this model, which enhances customers’ convenience and offers an expanded menu that rivals fast-casual restaurants.
At a Glance
Cumberland Farms Location: 4560 S. Washington Ave., Titusville, Fla. Size: 5,000 square feet Unique features: Expanded foodservice options, new specialty drink choices, and a more leisurely shopping experience
When asked how Cumberland Farms arrived at the decision to conceptualize and implement a next-gen store model, Heilbronner explained that it is “critical to remain current and relevant in retail,” and this new design reflects the company’s latest thinking on how to serve its guests in the best way possible. “We are always looking for ways to innovate and, based on our experience and learning from the past eight years of updating our stores, the time was right to make the change to the next version of our stores,” Heilbronner told Convenience Store News. “It took about eight months from initial idea to the completion of the first store.”
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Amped-Up Offers The goal of the next-gen store model is to provide customers with “a wonderful shopping experience so that they want to return again and again,” according to Heilbronner. To accomplish this, Cumberland Farms amped up its food and beverage options with several new additions to the menu, all of which can be ordered quickly and easily via self-service ordering terminals. With the expansion of its foodservice options, the Titusville store’s hot food menu now includes specialty melts, pizza, frittatas, macaroni and cheese, and a roller grill. The cold food menu also has been enhanced, with ciabatta sandwiches being just one of the highlights.
STORE SPOTLIGHT
“We are always looking for ways to innovate and, based on our experience and learning from the past eight years of updating our stores, the time was right to make the change to the next version of our stores.” — David Heilbronner, Cumberland Farms Inc.
If Cumberland Farms’ guests seek a reprieve from the Florida heat, they can select from new cold beverage options like smoothies, frozen espresso drinks and milkshakes. If they prefer to stick to traditional java, there’s specialty hot drinks like espresso, cappuccinos and lattes. Other amenities offered at Cumberland Farms’ Titusville next-gen store are: • Indoor community counters; • Outdoor patio seating; • ATM; • Fuel; and • Florida lottery. To give guests a more leisurely shopping experience, Cumberland Farms widened and brightened the interior of the store, taking advantage of the abundance of natural light. Additionally, the retailer optimized the spacious floor plan with enhancements such as ordering terminals, a toppings bar, and a larger coffee prep area. Aside from these modifications, Heilbronner noted that the next-gen concept features the same look and feel from an architectural standpoint and store layout perspective as Cumberland Farms’ traditional convenience stores.
Clear Skies Ahead The new store model comes as the c-store operator continues extensive and aggressive remodeling and expansion initiatives in Florida. “We will continue to reinvent ourselves in the future to satisfy our customers and to stay competitive,” Heilbronner said. Today, Cumberland Farms operates more than 20 of these next-gen stores across the Northeast United States and Florida. Overall, the retailer has more than 600 locations in eight states. While Heilbronner told CSNews he could not disclose how many stores of this model the company plans to open and where, he did say space plays a key factor in deciding where Cumberland Farms opens new locations of this caliber, and he confirmed that “we will build the next-generation stores wherever timing and space allow us to.” CSN
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A more spacious floor plan allows for such enhancements as touchscreen ordering terminals, a toppings bar, and expanded beverage options.
FUNDAMENTALS THE TIME IS RIPE FOR NUTRITIOUS AND CONVENIENT FRESH PRODUCE Brands are playing an increasingly important role in the produce department, as consumer interest in fresh foods continues to grow. Between 2012 and 2016, the dollar share for branded produce grew by
Consumers are eating more fruits and vegetables than they did five years ago. Bananas are the top fruit.
7.7%
Fresh foods are now driving total store sales, with fresh produce emerging as a key factor driving store choice.
Global net sales for Fresh Del Monte Produce fresh-cut products climbed
In another notable leap, branded produce dollar sales jumped
18%
to $607.8 MILLION in 2017 Today’s younger consumers are much more interested in — and willing to pay premium prices for — food products they perceive as healthier.
8%
since Sept. 20, 2017. Six of the seven varieties of value- added vegetables increased
in both dollar and volume sales compared to 2016.
PRODUCE SPOTLIGHT Single-finger bananas and fresh-cut fruit/veggies are perfect examples of products that meet the needs of on-the-go Millennials
Millennials, who spend about $200 billion each year in the U.S., are leading the change in the food revolution including trends such as fast casual to farm-to-table Born between 1997 and the present, Generation Z is already impacting the food industry. Gen Z’s grew up understanding the purpose of food and how it fits into a welllived life. This tech-savvy generational group also seeks personalization, engagement, and fluidity, like portable foods, to meet the needs of their busy lives.
PACKAGE SPOTLIGHT Del Monte’s on-the-go line includes innovative features such as non-spill containers, re-sealable containers and packaging that fits in car cup holders.
SOURCES: “When It Comes to Branding, the Produce Department is Ripe with Opportunity”, November 2017 article, Nielsen; The Packer 2017 Fresh Trends, Produce Marketing Association; Food and Drink Shopper 2017 Report, Mintel; Nielsen FreshFacts, 52 weeks ended Sept. 30, 2017; Make It Happen for Gen Zs, The NPD Group, Inc.; Del Monte Fresh Produce; FreshFacts on Retail, Whole and Fresh Cut Produce Trends, Q4 2017, Nielsen Perishables Group FreshFacts, with United Fresh Produce Association; The Nielsen’s Global Health and Wellness Survey
Del Monte Fresh Produce N.A., Inc. is one of North America’s leading marketers and distributors of highquality fresh and fresh-cut fruit and vegetables. Del Monte Fresh Produce N.A., Inc. markets its products in North America under the Del Monte® brand (as well as other brands), a symbol of product innovation, quality, freshness and reliability for 125 years.
TWIC TALK
Danielle Mattiussi, Maverik Inc. The 2016 TWIC Woman of the Year encourages others to create opportunities to shine By Linda Lisanti women celebrated by TWIC as Women of the Year. CSNews: How would you describe the current state of affairs for gender equality in the convenience store industry? How does this compare to 10 years ago?
NOW IN ITS FIFTH YEAR, the Convenience Store News Top Women in Convenience (TWIC) awards program has recognized 200 of the best and brightest women making a positive impact on not only the companies they work for, but also the entire convenience retail channel.
TWIC is the only program that recognizes exceptional female leaders, rising stars and mentors among retailer, supplier and distributor firms in the convenience store industry, from the C-suite to the store level to the independent entrepreneur. In TWIC Talk, our new Q&A series, we interview a past TWIC winner about what it’s like to be a female leader in the convenience store industry today — the challenges, the opportunities — and get their words of wisdom for up-and-comers seeking to blaze their own trail. This month’s TWIC Talk subject is Danielle Mattiussi, vice president of retail operations at Maverik Inc., the Salt Lake City-based operator of more than 300 convenience stores. In 2016, Mattiussi was one of the five
Mattiussi: As I view the c-store industry, I see commitment to not only gender equality, but also equality in a much broader sense. Company leaders, industry media and partner vendors understand the importance of gender parity in terms of business benefits — they’re not only talking about it, but they’re taking action. It seems to be quite a balanced industry. The opportunities lie in ensuring that the contributions of women are realized in senior-level leadership positions — not solely entry- and midlevel — and are representative of the entire organization. CSNews: What is the most positive change you have personally witnessed? Mattiussi: I have personally witnessed how fast change can occur in the development of gender equality when there is commitment at the top. When the tone is set and expectations are communicated, leaders who make hiring decisions do get onboard in terms of how they assess and select talent, and they tend to think more thoroughly about the overall makeup of teams and strengths of individual contributors to those teams. The pace of this industry is fast. Sometimes people may just not notice and simply need the challenge to think differently. CSNews: Along your career path, did you personally experience gender bias or inequality? If so, how did you overcome? Mattiussi: I think biases live all around us. The question for me personally had been: Is this behavior representative of one person, or is this representative of the company I am working for? In a past experience, a belief that the company was committed to pursuing a balanced and diverse workplace made it easy for me to remain committed to the business. I grew more comfortable in choosing “my people” — those mentors (male and female) who could help me along the way. Now, in leading an organi-
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zation where there are hundreds of retail leaders responsible for living the corporate leadership values, I have a much deeper understanding of, and appreciation for, how one person’s treatment of others is seen as wholly representative of the entire company. One person who introduces bias into treatment of others or decision-making can have a profound impact — positive or negative — on many. The goal is that all employees get the company message, and all leaders work in concert to support it. CSNews: What barriers to advancement do you see still existing in the c-store industry? Mattiussi: I see the c-store industry overall as having limited barriers. The industry reflects an openness and commitment to diversity. As I look around and see key players in our industry, there is a great mix of highly qualified women leading companies, leading industry associations, leading as consultants, and contributing on panels. There is a huge population of phenomenal female leaders around the industry leading retail operations teams. The opportunities lie within the gaps, so it’s important to take a close look. I think “above store” leadership is an opportunity within the industry. Are the women rising through the store positions well-equipped to be successful at progressive levels of responsibility, including multi-unit leadership and 10 times to 100 times the fiscal responsibility? If not, how can we get them there? CSNews: What is your advice for other industry women looking to rise to higher ranks? Mattiussi: My advice is to create opportunities to shine. If you need to, seek out advice from mentors who can guide you in terms of what may provide great value to the company and increased visibility for your talent and skills. Know that there are opportunities to redefine positions based on the additional value you can bring to any role, so don’t be constrained by the job description as an absolute, or think you need to be a 100-percent match. Lastly, it’s important to have a mentor who sees the value you bring, is helpful in “putting you out there” to gain exposure and be seen by others, and is actively involved in helping you get to where you want to be. One day, you will be in a position to “pay it forward.” CSN
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The Convenience Store News’ Top Women in Convenience awards program recognizes the integral role women play in convenience retailing. Women will be honored from the retailer, wholesaler and supplier communities in four different categories:
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Pet Treats
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Gourmet Pet Treats
General Merchandise
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Car Wash
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FUR TAILS FROM $2-$15 DAVY CROCKETT HATS $5.00 Silver Fox tails are a good seller!
We have: Red Fox tails, Coyote tails, White tails, Racoon tails, etc.
Leopard Rabbit Skin
White rabbit skins for $4. Leopard rabbit prints and others for $8
Strips Inc. Tel.: (718) 786-3381 Fax: (718) 786-0203 https://stripsinc.wixsite.com/stripsinc STRIPSINC1@aol.com
ADINDEX Add Systems ............................................................................................................67 Advance Pierre Foods/Tyson, Inc. ...................................................................111 Altria Group Distribution .....................................................................................2–3 Anheuser-Busch Inc. .............................................................................................10–11 Autofry/MTI, Inc......................................................................................................51 Bake’n Joy Foods ...................................................................................................89 BIC USA Inc. .............................................................................................................65 Campbell Soup Company ...................................................................................41 Cash Depot Ltd. ......................................................................................................58 Cenex/CHS Inc. .......................................................................................................35 Cheyenne International ........................................................................................45 Coca-Cola NA ..........................................................................................................21 Cookies United ........................................................................................................53 Core-Mark International.......................................................................................69 DayMark .....................................................................................................................61 Del Monte Fresh Produce NA Inc.....................................................................13, 91 Dosal Tobacco Corp. .............................................................................................20 E-Alternative Solutions ........................................................................................63 E&J Gallo ...................................................................................................................73 Epiq .............................................................................................................................60 Ferrero USA Inc. .....................................................................................................43 Fini Sweets USA .....................................................................................................49 Florida Lottery ........................................................................................................17 Forte Products ........................................................................................................78 Gatorade ....................................................................................................................5 GinSan Industries ...................................................................................................50 GlaxoSmithKlein Consumer Health Care.......................................................57 Goya Foods Inc. ......................................................................................................71 Groceryshop.............................................................................................................112 Heineken USA Inc...................................................................................................23 Imageworks Display & Marketing Group Inc................................................85 Inline Plastics Corp ................................................................................................22 ITG Brands ................................................................................................................59 J&J Snack Foods Corp. .......................................................................................55 John Middleton Company...................................................................................37 Liggett Vector Brands ..........................................................................................75 Mars Chocolate NA/ Wrigley.............................................................................15 Mckee Foods Corp.................................................................................................77 National Tobacco Co.............................................................................................81 New Pig ......................................................................................................................62 Omega flex Inc. .......................................................................................................48 Perfetti Van Melle USA Inc..................................................................................19 Phillips 66 ..................................................................................................................93 Procter & Gamble Distributing Company .....................................................33 Reynolds American Trade Marketing Services ..........................................9 Sargento Foods, Inc. .............................................................................................29 Smoker Friendly Intl. .............................................................................................83 Subway.......................................................................................................................79 Swedish Match North America LLC ................................................................31 Swisher International ............................................................................................27 Tyson Foods .............................................................................................................7 U.S. Food and Drug Administration ................................................................24–25 Universal Merchant Services ..............................................................................Outsert White Castle Food Products LLC ....................................................................47
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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 Chicago, Il 60631. Copyright © 2018 by EnsembleIQ. All rights reserved. Subscriptions: One year, $93; two years, $152. One year, Canada, $110; two years, Canada, $175. One year, foreign, $150. Payable in advance with a bank draft drawn on a U.S. bank in U.S. funds. Single copies, $10, except foreign, where postage will be added. Printed in U.S.A. Periodicals postage paid at Deerfield, IL, and at additional mailing offices. POSTMASTER: Send address changes to Convenience Store News, P.O. Box 1842, Lowell, MA 01853.
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GETTING TO THE CORE
How Much Does Fuel Brand Really Matter? New consumer research analyzes both brand familiarity and perception
Will motorists drive out of their way to purchase a specific brand of fuel? Will they pay more for a certain brand? To find out the answers to these questions and more, EIQ Research Solutions, sister company of Convenience Store News, recently surveyed hundreds of consumers who regularly drive a vehicle. Among the findings: Motorists are more willing to drive out of their way for a preferred fuel brand than they are to pay more.
Which of the following fuel brands are you familiar with?
What is your perception of the following fuel brands? (percentage responding “very positive” or “positive”)
Shell Mobil Exxon BP Chevron Texaco CITGO Sunoco Phillips 66 Valero Amoco Marathon 76 Conoco ARCO Sinclair Getty Cenex Lukoil Tesoro
94.9% 89.0% 88.5% 82.4% 82.0% 78.8% 68.4% 66.0% 57.1% 54.8% 47.6% 46.1% 45.4% 42.3% 31.2% 29.3% 22.1% 9.1% 9.1% 8.5%
Shell Chevron Mobil Marathon BP Exxon Sunoco Valero Texaco Phillips 66 ARCO Cenex Sinclair CITGO Conoco Amoco 76 Getty Lukoil Tesoro
68.5% 60.9% 60.1% 53.0% 52.3% 52.0% 50.5% 48.8% 48.5% 48.3% 46.9% 46.5% 45.7% 44.4% 43.2% 42.4% 42.1% 31.7% 27.9% 27.5%
Base: 447 respondents familiar with these brands Source: EIQ Research Solutions
Base: 471 respondents who regularly drive a vehicle Source: EIQ Research Solutions
38.4%
The percentage of motorists who say they will pay more for a specific fuel brand.
43.1%
The percentage of motorists who say they will drive out of their way to purchase a specific fuel brand.
5 to 10 Minutes
The amount of time most of these motorists (60 percent) would drive out of their way.
Want to collaborate and share expertise with your peers? The Council of Retail Experts (CORE) is an exclusive network of convenience store retail leaders who do just that. For more information on how to join CORE, please visit www.cvcoreinsights.com.
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Survey respondents sourced via ProdegeMR, reinventing the market research process by taking a respondent first approach. Visit www.prodegemr.com for more info.
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