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

Forever Changed Convenience stores post strong 2019 in-store sales and profits, but the industry is now bracing for a new normal caused by COVID-19.

JUNE 2020 CSNEWS.COM


Thank You On On behalf behalf of of Altria’s Altria’s Operating Operating Companies, Companies, we we would would like like to to recognize recognize all all of of the the extra extra eff efforts orts you you are are making making to to keep keep your your business business operating operating safely safely and and continuing continuing to to serve serve your your communities communities and and customers, customers, including including adult adult tobacco tobacco consumers. consumers. We We thank thank you you and and admire admire your your ingenuity, ingenuity, bravery bravery and and dedication dedication to to navigating navigating the the challenge challenge of of delivering delivering world-class world-class convenience convenience in in our our great great country. country.


©2020 ©2020 Altria Altria Group Group Distribution Distribution Company Company || For For Trade Trade Purposes Purposes Only Only


VIEWPOINT

COVID-19 Casts Pale Over 2019 Industry Performance Managing the reopening of business is now the top priority IT’S IMPOSSIBLE FOR convenience store retailers to rejoice over their strong 2019 financial performance (see our Industry Report on page 26) while the current COVID-19 pandemic rages on. The lockdowns that began in March have wracked havoc on c-store retailers’ firsthalf 2020 sales and profits.

The initial boom driven by panic-buying of basic essentials faded quickly after nationwide sheltering restrictions destroyed demand for fuel and depressed customer traffic inside the store. Foodservice, including fresh prepared food, fresh baked goods and hot and cold dispensed beverages, have particularly suffered. There are small signs of optimism for the nation’s c-store retailers, however. According to Nielsen, c-store sales dollars rebounded sharply at the end of April. Beer, wine, liquor, cigarettes and other tobacco products, which performed strongly throughout the pandemic, were up even higher in sales for the week ended May 2. Struggling categories, like prepared food, salty snacks and candy, were still down for the week vs. a year ago, but all showed modest improvement as their weekly declines were not as much as in the previous four weeks. Across the country, governors are lifting restrictions. As the nation slowly starts reopening for business, fuel prices are beginning to rise. According to GasBuddy, an online fuel app, the most common gas price across the U.S. in mid-May was $1.89 per gallon, up 30 cents from the previous week. Demand continues to rebound

as more states reopen. While many states will continue to see fuel price increases as more people go out and drive around, it could still take months before prices return to where they were prior to the lockdown, GasBuddy reports. I personally see activity picking up, even in the downstate New York area that’s been the epicenter of the pandemic. There are more cars on the road and people on the street. Of course, caution is important — especially for the sick, elderly and other at-risk populations. But Americans need to carry on, even if that means wearing face masks and keeping a safe distance from others. From the beginning of the pandemic, c-store retailers have acted quickly and decisively to protect the health and welfare of their employees and customers. Staying open hasn’t been easy. Between supply chain shortages and shifting public health guidelines, it’s been a constant struggle to adapt to the changing circumstances. That struggle will continue. Convenience stores, and other essential businesses, have kept this country from descending into an even greater financial peril. Now, the focus must be on safely managing and coping with the new postpandemic normal.

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

EDITORIAL EXCELLENCE AWARDS (2013-2020)

EDITORIAL ADVISORY BOARD Brett Atherton Bolla Management

2018 Jesse H. Neal National Business Journalism Award Finalist, Best Editorial Use of Data, June 2017

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

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

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

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

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

Edward Davidson ER Davidson & Associates (7-Eleven Inc., retired) Jim Hachtel Eby-Brown Co. Chris Hartman Rutter’s

Jack Lewis GPM Midwest

2015 American Society of Business Press Editors, Midwest Regional Azbee Awards Gold, Best Special Supplement, November 2014 Silver, Best Profile (long form), February 2014

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

Rick Crawford Green Valley Grocery

Ray Johnson Speedee Mart

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

2013 American Society of Business Press Editors, Midwest Regional Azbee Awards Bronze, Best Editorial/Commentary, July 2012

Laura Aufleger OnCue Express

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

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


GSK is now the leader and your strategic partner for health and beauty care in Convenience.

Get all of your favorite brands from one familiar place! Contact your local GSK C-Store representative on how to order. Email: Scott.F.Breisinger@gsk.com


CONTENTS JUNE 20

VOLUME 56 N UMB ER 6

26 FEATURES

DEPARTMENTS

COVER STORY

VIEWPOINT

26 Forever Changed? Convenience stores post strong 2019 in-store sales and profits, but the industry is now bracing for a challenging future caused by COVID-19.

4 COVID-19 Casts Pale Over 2019 Industry Performance Managing the reopening of business is now the top priority.

44 The Future for Convenience Retail C-stores, as well as retailers of all kinds, are in hyperdrive to cater to new needs.

10 CSNews Online

HOW TO 50 Make Converts Out of Gas-Only Customers Compelling advertising and offers can drive fuel-only and infrequent store shoppers inside.

72

18 New Products SMALL OPERATOR

INSIDE THE CONSUMER MIND

22 Pushing Toward the Light Get ready to serve the new lifestyle that emerges from the COVID-19 pandemic.

90 What’s In Your Basket? Beer buying drives men to c-stores, while candy buying is a sweet spot for women.

TWIC TRAILBLAZERS

44

68 Advocating for Change Altria Group Distribution Co.’s Women in Sales Network helps create a more inclusive culture. STORE SPOTLIGHT

22 6 Convenience Store News C S N E W S . c o m

72 Big Offerings for the Big Apple 7-Eleven’s latest Evolution Store in New York City features high-quality, differentiated food options.

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CONTENTS JUNE 20

VOLUME 56 N UMB ER 6

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

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Associate Managing Editor (201) 855-7604

INDUSTRY ROUNDUP

CATEGORY MANAGEMENT

12 Major Financial Networks Agree to Push Back EMV Deadline

FOODSERVICE

13 Marathon Petroleum Unveils New Value Creation Strategy 14 In the Public Eye 14 Eye on Growth 15 Retailer Tidbits 16 Supplier Tidbits

56 The Next Phase Diners are ready to enjoy the foods they’ve missed most while at home. FOODSERVICE

58 A Shared Purpose Successful branded foodservice partnerships are mutually beneficial for all parties.

Danielle Romano dromano@ensembleiq.com

Contributing Editor (303) 741-3377

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TECHNOLOGY 62 Safeguarding Your Stores Data breaches bring financial loss, as well as loss of consumer trust, to affected retailers.

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CORPORATE OFFICERS Chief Executive Officer Jennifer Litterick Chief Financial Officer Jane Volland Chief Innovation Officer Tanner Van Dusen Chief Human Resources Officer Ann Jadown Executive Vice President, Events & Conferences Ed Several Senior Vice President, Content Joe Territo

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CONVENIENCE STORE NEWS AFFILIATIONS Premier Trade Press Exhibitor

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Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by EnsembleIQ, 8550 W. Bryn Mawr Ave., Ste. 200, Chicago, IL 60631. Subscription rates: Subscription rate in the United States: $125 one year; $230 two year; $14 single issue copy; Canada and Mexico: $150 one year; $270 two year; $16 single issue copy; Foreign: $170 one year; $325 two year; $16 single issue copy. Periodical postage paid at Chicago, IL 60631, and additional mailing addresses. Copyright 2020 by EnsembleIQ. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or information storage and retrieval system, without permission in writing from the publisher. Reprints, permissions and licensing, please contact Wright’s Media at ensembleiq@wrightsmedia.com or (877) 652-5295. POSTMASTER: send address changes to Convenience Store News, 8550 W. Bryn Mawr Ave. Ste. 200, Chicago, IL 60631.

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


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CSNEWS ONLINE

TOP VIEWED STORIES

1

Murphy USA Weathers Three Historic Events

During the company’s first-quarter 2020 earnings call, President and CEO Andrew Clyde reported that the convenience store retailer has been impacted by the combination of three “historic events”: the rapid and steep fall in crude oil prices, the global COVID-19 pandemic, and the large-scale government response and intervention.

2

Core-Mark Withdraws 2020 Guidance Amid Sales Volume Declines

The COVID-19 pandemic is impacting Core-Mark Holding Inc. Co.’s business, leading to several changes, including rightsizing its workforce. “As the COVID-19 crisis continues to evolve, our primary focus is on the health and safety of our employees, our customers and the communities in which we serve,” said Scott E. McPherson, president and CEO. “Given the level of uncertainty surrounding this crisis and its duration, we are withdrawing our 2020 guidance.”

3

Casey’s General Stores Plans Non-Fuel Store Format

4

FriendShip Food Stores Brings on New Foodservice Leader

Already well known for its pizza program, Casey’s General Stores Inc. is going all-in on food at a new store it plans to open in West Des Moines, Iowa. The store, which will not sell fuel, is expected to occupy approximately 2,800 square feet, or 40 percent smaller than a typical Casey’s store.

Kirk Matthews will oversee FriendShip Food Stores’ foodservice operations as vice president of foodservice and marketing upon his predecessor Ed Burcher’s retirement from full-time work. Matthews is an award-winning marketer and brings extensive experience in foodservice, marketing and operations to the role, according to the retailer.

5

Refuel Takes Ownership of Double Quick Convenience Stores

Refuel closed on its acquisition of the assets of Double Quick Inc. Based in Indianola, Miss., Double Quick directly operates 48 convenience store and gas station sites, five standalone quick-service restaurants, and offers proprietary foodservice or branded QSR concepts at 34 stores.

EXPERT VIEWPOINT

What Now? Five Tips for Petroleum Retailers to Navigate New EMV Deadline

As many consumers have likely noticed, most U.S. retailers have made the transition to chipenabled credit card payments — a change that Visa reports resulted in a 76 percent reduction in fraud between September of 2015 and the end of 2018. The one place, however, we are still swiping vs. inserting credit cards is at the gas pump, writes Dan Rasmussen, senior vice president of the Enterprise Business Unit for North America at Hughes Network Systems LLC. Although as many as 85 percent of fuel retailers have converted indoor payment to EMV standards, transitioning outdoor point-of-sale has been a bigger challenge. With the new April 17, 2021 deadline for EMV transition looming, retailer anxiety is growing — particularly in light of recent world events. 10 Convenience Store News C S N E W S . c o m

ONLINE EXCLUSIVE

Kwik Chek CEO Foresees Lasting Post-Pandemic Changes Now that he can see a light at the end of the tunnel, Kwik Chek Corp. CEO Kevin Smartt anticipates that many of the activities adopting during the global coronavirus pandemic will have staying power in the convenience store industry. “Contactless payment will be vastly accelerated. People will not want to touch as many things,” he predicts. “We’ll see an uptick in customers ordering via their mobile phones, as well as picking up their purchases curbside or at the dispenser. Operationally, sneeze guards will likely stay in place and distance markers to encourage continued social distancing.” Smartt also foresees the emergence of new technologies to reduce customer anxiety while shopping in-store, such as an app to activate a coffee machine from a customer’s mobile phone. For more exclusive stories, visit the Special Features section of csnews.com.

MOST VIEWED NEW PRODUCT

Guardiant Countertop Shield

The Guardiant Countertop Shield is designed to help reduce the spread of contagious, airborne germs commonly caused by coughing or sneezing. It provides a sense of security for employees, as well as customers. Currently offered in a trifold or single-screen configuration, the Guardiant Countertop Shield comes with window size options, allowing for the safe exchange of product, food or payment through an acrylic protective barrier. Items can be scanned through the plexiglass without the risk of germ transmission during product handoff at the checkout counter. The sturdy, no-tip solution also comes with counter mounting hardware, a one-year warranty, and is portable for collapsible storage when needed.

APG Cash Drawer Minneapolis (763) 571-5000 cashdrawer.com


INDUSTRY ROUNDUP

Major Financial Networks Agree to Push Back EMV Deadline Fuel retailers now have until April 2021 to upgrade their automated fuel dispensers received a six-month reprieve when it comes to EMV compliance at the forecourt. The major financial networks — American Express, Discover, Mastercard and Visa — agreed to push back the deadline for retailers to upgrade the payment terminals on their automated fuel dispensers (AFDs).

CONVENIENCE STORE OPERATORS

Due to challenges brought on by the COVID-19 pandemic, the deadline was shifted from October 2020 to April 2021. This delay gives operators more time to install new systems that enable contact chip transactions at AFDs before the liability shifts to the retailer. “With the current pandemic impacting merchants around the country, we looked at our mission to be a good partner and believe that moving this date will ease the concerns for gas stations as they look to update their automated fuel dispensers,” said Andrew Hopkins, senior vice president of global products and pricing at Discover.

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

“EMV has significantly reduced counterfeit fraud and we encourage our merchants to continue their efforts to migrate their fuel dispensers to EMV.” In April, industry association NACS banded together with several other groups to send letters to the four major financial networks urging them to rethink the October deadline, citing reasons related to the current public health crisis. The Merchant Advisory Group, Petroleum Marketers Association of America, NATSO and Society of Independent Gasoline Marketers of America joined in the request. “Our retailers’ top priority at this time is providing fuel and other products to the Americans who need it most and keeping its employees and customers safe and healthy. Given the significant impediments to many retailers getting AFDs and appropriate software that accept EMV payments developed, tested, certified and installed, we respectfully request that you delay the AFD liability shift and set a new, achievable date for that transition once the current crisis has abated,” the groups stated in the letters. Visa initially denied the request; however, it later changed course and became the first of the four networks to postpone the liability shift at the forecourt to April 17, 2021.


Marathon Petroleum Unveils New Value Creation Strategy The parent company of Speedway will focus on three key areas to increase profitability By Melissa Kress

MARATHON PETROLEUM CORP. (MPC)

President and CEO Mike Hennigan only took the helm in March, but he is already steering the company through a new value creation strategy. “Over the past decade, this company has grown to be one of the largest energy platforms in the country,” Hennigan said during the company’s first-quarter 2020 earnings call on May 5. “Although MPC has been successful in many areas, there’s also a strong case for change to drive increased profitability, stronger through-cycle earnings, and long-term value creation.” The company’s focus will be on three key areas initially: •S  trengthen the competitive position of MPC’s portfolio. This entails positioning its assets to be a leader in cost, operating and financial performance metrics. “MPC has always been focused on safety and operational excellence — and that will not change,” the chief executive explained. “However, we need to focus further on the contribution of each of our individual assets and ensure the financial performance in all cycles meets our expectations and contributes to shareholder returns.”

• I mprove commercial performance. “We are fortunate to have an extensive integrated footprint, but we have an opportunity to become more dynamic to capture higher margins across the value chain,” Hennigan said. • Lower its cost structure and be extremely disciplined in capital allocation. “This means lowering our costs in all aspects of our business and challenging ourselves to be incredibly disciplined in every expense dollar we spend across our organization,” he said. “It also means having a strict protocol on capital investment for the long term to focus on the highest-return projects, risk adjusting them, and assuring that we position the company to achieve these returns irrespective of the market environment.” By excelling in these areas and sharpening the company’s focus on execution across its refining, marketing and midstream platforms, MPC will deliver better results, create a higher level of through-cycle earnings, and provide a compelling value proposition to shareholders, according to the CEO. “It’s an appropriate time for change. I am excited about the opportunities ahead of us,” he said. Findlay, Ohio-based MPC is the parent company of Speedway LLC, which owns and operates retail convenience stores across the United States.

J UNE

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Convenience Store News

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INDUSTRY ROUNDUP

In the Public Eye

Marathon Petroleum Corp., Findlay, Ohio Marathon Petroleum Corp. (MPC) reported adjusted EBITDA of $1.9 billion for its 2020 first quarter, which was down approximately $1.3 billion from the fourth quarter of 2019. In its retail segment, the company reported first-quarter EBITDA of $644 million. Retail fuel margins were nearly 33 cents per gallon, but were partially offset by lower fuel volumes compared to the fourth quarter. Samestore merchandise sales increased year over year despite the fuel demand pressures. In addition, MPC converted 39 stores to the Speedway banner during the quarter before suspending activities due to the COVID-19 health crisis.

Eye on Growth

CrossAmerica Partners LP, Allentown, Pa. CrossAmerica reported $77.4 million in operating income and $72.1 million in net income for the first quarter of the year. Adjusted EBITDA was $25.3 million, representing an increase of 18 percent. According to the company, this was attributable to a 30-percent decline in overall operating expenses in its wholesale segment. Motor fuel gross profit declined by $1.1 million to $0.4 million during the quarter, due to a 34-percent decrease in volume driven by the divestiture of 17 company-operated sites in May 2019. TravelCenters of America Inc., Westlake, Ohio TravelCenters of America Inc. (TA) reported a net loss of $18.5 million during the first quarter of 2020, compared to a net loss of $12.7 million during Q1 2019. Adjusted EBITDA for the period was $10.3 million, compared to $11.4 million one year prior. Nonfuel revenues declined by 3.6 percent year over year. TA’s restaurant operations saw the greatest revenue drop, at 5.1 percent, followed by truck services (down 4.5 percent) and store and retail services (down 2 percent).

CrossAmerica Partners LP completed its purchase of retail operations at 169 sites, wholesale fuel distribution to 110 sites, and a leasehold interest in 62 sites. The aggregate purchase price for the assets was $36 million.

This agreement marks 7-Eleven’s entry into its 19th country.

7-Eleven Inc. signed a master franchise agreement with CP ALL (Cambodia) Co. Ltd. to develop and operate 7-Eleven stores in Cambodia. The first 7 Elevenbranded store in the country is expected to open in Phnom Penh in 2021.

Six new Love’s Truck Care and Speedco sites joined the Love’s network. The new Love’s Truck Care sites are in Washington, Virginia and Florida. The new Love’s Truck Care sites with an onsite Speedco are in Arkansas, Washington and Ohio.

Enmarket acquired a former Tiger Express store in Beaufort, S.C. The 4,475-square-foot convenience store brings the chain’s South Carolina store count to 50.

Casey’s General Stores Inc. acquired the Center Point Travel Plaza in Center Point, Iowa, from Petroleum Services Co. LLC. The travel plaza features McDonald’s and Subway quick-service restaurants.

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


Retailer Tidbits The CBD Wellness Store plans to hold Demo Days every Saturday.

Love’s Travel Stops & Country Stores extended its pay increase and sick pay related to the COVID-19 pandemic to June 2 and July 31, respectively. The retailer added a $200 bonus as well for employees who work the month of June. TravelCenters of America Inc. created a new hospitality department to oversee its convenience stores, restaurants and gaming. The company also formed a centralized procurement group to drive economies of scale. Choice Market launched a campaign to remove all single-use plastic water bottles from its stores by 2021. The retailer will install technologically advanced purification FloWater Refill Stations at its stores.

In partnership with Ceres Natural Remedies of Vermont, VERC Enterprises opened its first CBD Wellness Store inside an existing convenience store. The Plymouth, Mass., location is the first store-within-astore of its kind in the region. Stewart’s Shops made a $17.5 million contribution to its Employee Stock Ownership Plan. The contribution equates to about 17.5 percent of partners’ 2019 gross pay.

Yesway tapped Acumera to secure its store digital estate. A new end-to-end solution will provide the chain’s stores with a catalog of security, monitoring, analytics and PCI compliance tools. Pilot Co. unveiled the Axle Fuel Card, a fleet card that offers quick approvals, enhanced payment terms, money-back rewards and loyalty benefits for fleet drivers.

....._........ WWW.................. | 816.813.3337 J UNE

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Convenience Store News

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INDUSTRY ROUNDUP

On! oral nicotine pouches are available in seven flavors and five nicotine levels.

Supplier Tidbits

Molson Coors Beverage Co. and VEXO Corp. formed a joint venture to explore opportunities for hempderived CBD non-alcoholic beverages in Colorado. The joint venture will operate as a standalone entity.

Altria Client Services submitted 35 premarket tobacco applications (PMTAs) to the Food and Drug Administration for on! products. The filings were made on behalf of Helix Innovations LLC, an Altria joint venture.

Mondelez International Inc. acquired a significant majority interest in Give & Go, a producer of fully-finished, sweet baked goods. Mondelēz will operate Give & Go separately.

McLane Co. Inc. and EG America renewed their multiyear distribution partnership. The new contract period began April 18. EG America will continue to utilize McLane’s scale of 24 grocery distribution centers across the United States.

GetUpside is partnering with GasBuddy and Checkout 51 to make GetUpside’s personalized offers available to their users. With the new collaboration, more than 25 million monthly users now have access to the offers.

The Hershey Co. committed $1 million to acquire, install and staff a new manufacturing line dedicated to the production of face masks. The line is capable of producing up to 45,000 masks per day.

Standex Refrigerated Solutions Group reached a definitive agreement to sell its Master-Bilt and Nor-Lake refrigeration businesses to Ten Oaks Group. The closing is expected to occur this spring. CSN

Matchless Innovation Scripto® Hybrid ™ Perfect crossover of a multi-purpose lighter and a pocket lighter. Ideal for all indoor and outdoor lighting activities.

Scripto® Ultima® The newest premium pocket lighter

Torch Flame Wind Resistant Lighter

colors and features. Choose from a variety of unique designer wraps with an option for custom designs.

pocket lighter. Lights and stays lit in windy conditions. Great for handling everyday, outdoor and recreational activities with ease.

Calico Brands, Inc. • (800) 544-4837 • www.calicobrands.com

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


NEW PRODUCTS

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1. Tastykake Chocolate Swirls

2. Sol Chelada Limón y Sal

Tastykake’s new Chocolate Swirls offer the same swirl as its popular Pecan Swirls, but paired with a decadent chocolate flavor. The pastry rolls feature a chocolate smear filling and chocolate bits, offering an option for those who prefer snacks without nuts, according to the company. Tastykake Chocolate Swirls are available nationwide in a singleserve, two-count pack with a suggested retail price of $1.29, or in a six-count tray with a suggested price of $1.99.

Sol Chelada Limón y Sal, Mexico’s No. 1 lime and salt flavored chelada, is being released in the United States for the first time. It combines Sol’s signature lager with lime flavor and salt in 24-ounce single cans. Sol Chelada Limón y Sal uses the same beloved recipe used in Mexico, according to the brewer. It joins the original Sol Chelada and Sol lager to round out the brand’s portfolio in the U.S. The beer contains 3.5 percent alcohol by volume.

Tastykake Philadelphia (215) 221-8500 tastykake.com

Molson Coors Beverage Co. Chicago molsoncoors.com

3. Pixotine Unflavored Nicotine Toothpicks

For the first time, Planters is launching Pixotine Original Nicotine new varieties of its Toothpicks are unflavored popular ‘90s treat, and 100 percent tobacco Cheez Balls. The snack free, while being infused is now available in White with high-quality USP Cheddar and Nacho grade natural nicotine flavors. A third variety, extract. Designed to be compact and portable, the Blazin’ Hot, was slated to launch in May 2020, nicotine toothpicks are sold in packages of 15 that and a fourth new flavor, Jalapeno Cheddar, will feature a sleek patented be available nationally design that fits snugly in a pocket or wallet. At retail, later this year. they can merchandised The Kraft Heinz Co. at the front end with a Pittsburgh & Chicago three-tier tower counterplanters.com top display, or behind the counter. The suggested retail price per pack is $3.99. Pixotine Original Nicotine Toothpicks are FDA registered and compliant. Pixotine Products Inc. Jupiter, Fla. pixotine.com

5. Kronos Inc. Employee Contact Tracing Tool Kronos Inc. introduces an automated reporting capability for employee contact tracing to help organizations and their essential employees during the COVID-19 pandemic. It is available for Kronos Workforce Dimensions, Workforce Central, Workforce Ready and iSeries Central customers globally at no additional charge. The employee contact tracing tool allows employers to leverage data science to analyze labor records and time and attendance data, and generate a contact tracing report using only the afflicted employee’s ID number to identify potential contacts based on overlapping shifts. Kronos Inc. Lowell, Mass. kronos.com 18 Convenience Store News C S N E W S . c o m

4. Planters Cheez Balls

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NEW PRODUCTS

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6. Vita Coco Pressed Coconut Water Vita Coco is expanding its offering of nutrientrich coconut waters by adding two new flavors to its Pressed line: Coconut Mango and Coconut Strawberry Banana. The new fruit-forward flavors build on the traditional coconut taste of the Pressed line. Like all of the brand’s products, Vita Coco Pressed Coconut Waters help replenish electrolytes and provide vital nutrients, helping consumers recharge, recover and stay hydrated without artificial chemicals or scientific formulas. The new Pressed flavors come in 16.9-ounce bottles with a suggested retail price of $2.99. All Market Inc. New York vitacoco.com

7. HI-CHEW Fruit Combos

8. 7Days Mini Croissant Pouches

9. Premier Protein Shakes With Oats

HI-CHEW expands its portfolio of vibrant flavors with the launch of HI-CHEW Fruit Combos. Each chewlet offers two layers of mouthwatering tastes that, when bitten into, create one amazing fruit-forward experience, according to the company. Two varieties are available. Tropical Smoothie is created with an outer layer of Passion Fruit combined with a deliciously juicy Mango layer inside. For PiĂąa Colada, a Creamy Coconut outer layer surrounds a tangy Pineapple flavor within. HI-CHEW Fruit Combos are offered in 3-ounce peg bags for a suggested retail price of $2.59 per bag.

The 7Days brand of bakery products introduces its latest innovation: mini croissants in convenient grab-and-go pouches. The mini croissants are a smaller version of the widely available and fast-growing 7Days Soft Croissants. There are five mini croissants in each pouch. Three flavor varieties are available: Chocolate, Vanilla, and Cherry & Vanilla.

Premier Protein extends its line of protein shakes with the addition of creamy breakfast-inspired shakes with oats. The new product comes in three fan-favorite, oatmealinspired varieties: Apple Cinnamon, Blueberries & Cream, and Oats & Maple. The beverages can be enjoyed hot or cold. Premier Protein Shakes With Oats deliver 20 grams of protein, 7 grams of fiber, 8 grams of wholegrain oats, and 24 vitamins and minerals.

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Morinaga America Inc. Irvine, Calif. hi-chew.com

10. Vollrath Co. Social Distancing Offerings Vollrath Co. expanded its product offering to include an all-encompassing line of safety guards and mobile breath guards to shield against airborne threats. New items include freestanding, hanging and fixed acrylic guards. Hanging models save space on horizontal surfaces; mounted models provide a sturdy, semi-permanent fix; and freestanding models offer versatility. They come in a variety of sizes. In addition, countertop mobile breath guards feature a lightweight design that is durable and easy to transport with standard size options ranging from 24 to 60 inches. The 1/4-inch thick, clear acrylic panel is adjustable for heights between 14-1/4 and 25-1/4 inches. They are available with a base for easy movement, or durable posts for counter mounting. The Vollrath Co. LLC Sheboygan, Wis. vollrathfoodservice.com 20 Convenience Store News C S N E W S . c o m

10


SMALL OPERATOR

S

UE

C-

TO

RE RES

C

Pushing Toward the Light Get ready to serve the new lifestyle that emerges from the COVID-19 pandemic I THINK I MAY see a very faint light at the end of a long, dark tunnel.

As I write this, it is the end of April 2020. We have been in the COVID-19 crisis for about seven weeks. The states where we operate our convenience stores are all in some type of shelter-at-home situation. Our stores remain open as essential businesses. By Roy Strasburger, President, StrasGlobal

Every day, our store team members go to work to offer products and services to our customers. By doing so, they provide a service to their community, help first responders, and support their families. It takes a great amount of dedication and professionalism to go into the unknown every day. You know the story. No one expected, let alone planned, for the pandemic that hit our country. We had contingency plans for several different scenarios. Most of them dealt with natural disasters like hurricanes, tornadoes and flooding. Nothing prepared us to deal with a threat that we could not see nor anticipate. During the first week of March, we pulled our management team together to start

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

discussing the coronavirus situation and how we were going to respond. With that as a starting point, we created a task force to plan and implement our COVID-19 response. The task force met by phone several hours every day to discuss infection developments, health warnings, and strategy. We looked at what had happened, and was happening, in Asia and Europe. I firmly believe our team’s international experience helped us to recognize the potential of the threat. The main guiding principle we developed was that we were going to stay ahead of the COVID-19 developments. We were not going to wait to be told to do things; we were going to do them when necessity and reality dictated. We knew that we might get out too far ahead and be taking some extreme precautions that others might not implement, but we felt it was worth doing so to protect our team and our customers. We were one of the first companies to: implement plexiglass sneeze guards at pay points; place social distancing markers in the store; mandate the wearing of masks, gloves and aprons in the store; limit the number of people who could be


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in the store at one time; increase the frequency and depth of the cleaning program in our stores; and have people who were not feeling well or concerned about getting sick stay home without recrimination. We are incredibly proud of the men and women who work with us to operate our stores. They understood the necessity of our actions, followed through on the implementation, and maintained our standards — even with customers who did not see the need for such precautions. We also put into place several means of communication to help keep our team members informed about the situation and what we were doing through regular email newsletters, video, and information on our website. We started a morale survey that goes to each store twice a week to get feedback from our store managers as to how our team members and our customers are feeling, and to let us know what problems they may be having. Our district managers upped their telephone and video communications with our store managers to check in on them — both from a personal and a business pointof-view to let them know that we appreciate the effort they are putting in. All this was done while, at the same time, we were keeping the stores open, operating, and as fully stocked as possible during a very chaotic and unstable period. The fact that we were able to get through the first weeks of this crisis without a major disaster is a testament to the hard work of everyone on the StrasGlobal team. We are incredibly proud and thankful for the dedication and professionalism of our team members. Did we do everything right? Of course not. In hindsight, we could have done more at the beginning of the crisis to work with our suppliers to make sure we had sufficient quantities of essential products in the store, ordered our PPE earlier when it was still available and reasonably priced, strengthened our ability to communicate with our customers through email and social media, and done a better job of coaching our employees on how to handle customers who did not, and still do not, see the need to wear masks or follow social distancing rules. These are oversights that resulted from the uniqueness and speed of the pandemic.

We will be ready next time — and there will be a next time. It is often said that you see the real character of a person in difficult times. I think that is true for companies as well. I hope that we, as a company, are measuring up well. Our mission statement is: “To make life better — for our team, our customers, and our clients.” In retrospect, it is this philosophy that motivated our actions. Our first concern was for the health and safety of our team members, followed by the health and safety of our customers, followed by the protection of our clients’ businesses. One thing leads to the other with an outcome that benefits all. I mentioned at the beginning that I think I see a faint light at the end of the tunnel. I feel that we have finished phase one of this pandemic — the crisis response — and we are now moving into phase two — the transition phase. We are focusing on increasing sales and customer counts in our stores while, at the same time, maintaining our health and safety precautions on a daily basis. We know that the virus has not disappeared nor will it be going away anytime soon. We, as a country, may have to adjust our lifestyles to live with COVID-19. We, as a retailer, need to be ready to serve that new lifestyle. To be honest, I don’t know what that new lifestyle will be. I do know it will be the same in some ways as it was six months ago, but I’m not sure how it will be different. My expectation is that customers will start seeing us as a local market again rather than just a snack shop. Curbside delivery, home delivery and contactless payments will all be more important than they have in the past. The economy is going to go through a recession with high unemployment. Gasoline sales will stay low as more people work from home or are jobless. The emphasis on hygiene and infection safety will remain, either through government regulation or customer expectations. The competition with online ordering from the big technology companies, such as Amazon, will be stronger since people have become more reliant on using them, and they will travel less because they are working from home. We are currently working on our plans to meet the “new” reality. We are not sure what to expect, but we do know we will have to be as flexible and nimble as we were when we first entered the COVID-19 crisis. Now is the time to make the push toward the light at the end of the tunnel. CSN

Roy Strasburger is president of StrasGlobal, a privately held retail consulting, operations and management provider serving the small-format retail industry nationwide. StrasGlobal operates retail locations for companies that don’t have the desire, expertise or infrastructure to operate them. Learn more at strasglobal.com. Editor’s note: The opinions expressed in this article are the author’s and do not necessarily reflect the views of Convenience Store News. 24 Convenience Store News C S N E W S . c o m


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COVER STORY

Forever Changed Convenience stores post strong 2019 in-store sales and profits, but the industry is now bracing for a challenging future caused by COVID-19 BY DON LONGO & ANGELA HANSON

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


The pandemic of 2020 will test the convenience store industry’s reputation of being one of the most recession-proof retail channels in America. According to the 45th annual Convenience Store News Industry Report, total industry sales in 2019 fell by 1.9 percent to $648.8 billion, mostly due to lower fuel prices that caused a 4.3 percent drop in motor fuel revenue last year. However, it was a very good year for inside-the-store sales, which grew by 2.6 percent, beating the previous year’s growth rate by more than 1 percentage point. And foodservice sales improved impressively by 5.2 percent, representing the best growth rate for foodservice since 2016. On the bottom line, total industry pretax profits leapt by 7.8 percent to a record $10.58 billion last year, driven by higher fuel margins and a nearly $4 billion increase in in-store gross profits. That kind of stellar performance will be near-impossible to duplicate in 2020 as the industry deals with the near-total U.S. economic shutdown caused by the coronavirus pandemic. After an initial boom of sales driven by panic-buying of basic essentials like toilet paper, bottled water, milk, bread and center-store grocery items, business dropped precipitously as nationwide shelter-in-place regulations destroyed demand for fuel and led to dismal foot traffic numbers. Prepared food and fresh baked goods were particularly affected as many chains eliminated self-serve foodservice and

drinks. Other c-stores have found they were not as prepared as restaurants to pivot quickly to takeout or delivery. On the bright side, alcoholic beverages (beer, wine and liquor) and tobacco (both cigarettes and other tobacco products) sales have remained strong. Convenience store retailers have tightened and improved their cleaning, personal hygiene and sanitizing procedures. Several installed plexiglass barriers at their checkout counters and are requiring customers to keep a safe distance (6 feet) from one another within the stores. Many convenience retailers rightly committed to safeguarding and rewarding their frontline heroes — their store employees. In addition to hiring thousands of new employees to service customers during the COVID-19 crisis, several retailers showed their appreciation and support for their employees by giving both full- and part-time store workers raises of $2 to $3 per hour, bonuses, enhanced emergency sick leave, and paid time off. All of these efforts, though, are sure to increase directstore operating expenses (DSOE) in 2020, which already grew at an accelerated pace last year. DSOE rose by 6 percent in 2019, led by employee wages, which increased by 7.2 percent. As of press time, the mood of the nation’s convenience retailers appeared to be cautiously optimistic that the virus was slowing its deadly pace. Many feel the U.S. financial system is stable and consumers will unleash pent-up demand when restrictions are eased. However, no one expects business to return to normal until people can travel at will again and oil prices rise out of negative territory. J UNE

2020

Convenience Store News 27


COVER STORY

Total Convenience Store Sales (in billions)

Total

Motor Fuels

In-Store

$648.8 -1.9% $413.5 -4.3% $235.3 2.6%

2019

2018

Store Growth Analysis Total Store Count

2019

Chains

152,720

37.7% 62.3%

$661.4 7.3% $432.0 10.7% $229.4 1.6%

153,237 2018

37.7% 62.3%

$616.3 9.1% 2017

$390.4 13.6% $225.9 2.1%

154,958 2017

37.0% 63.0%

$564.9 -6.3% $343.7 -11.3%

2016

154,535 2016

36.9% 63.1%

$221.2 3.8% $602.9 -14.4% $389.9 -22.2% $213.0 4.9%

2015

154,195 2015

2018

2017

2016 154.7

154.1

154.3

GALLONS (billions)

GALLONS (billions)

GALLONS (billions)

% CHANGE

% CHANGE

153.7

-0.3%

-0.1%

% CHANGE

-0.3%

2015 151.3

GALLONS (billions)

GALLONS (billions)

% CHANGE

% CHANGE

2.2%

2.9%

“You can’t make much of a profit on $1-per-gallon gas,” one large chain retailer told CSNews.

THE 2019 NUMBERS

The number of convenience stores in the United States shrunk for a second year in a row. The industry operated 152,720 stores on average last year, down less than a percent from 153,237 stores in 2018. The mix between chain-operated and single stores remained the same, at 37.7 percent chain units and 62.3 percent single-store units. In raw numbers, chain stores were down by 180 units, while single stores declined more sharply, losing 337 stores. Motor fuel volume fell for the third year in a row, albeit the pace of decline has been less than 1 percentage point per year. However, the industry should brace for an unprecedented drop in fuel volume in 2020, as consumers continue to work from home and limit their outside activities. With the decline in motor fuel revenue, the industry’s sales mix last year swung to higher in-store sales, which made up 36.3 percent — up from 34.7 percent in 2018. 28 Convenience Store News C S N E W S . c o m

36.9% 63.1%

Motor Fuel Volume 2019

Single Stores

The gross profit dollar mix between fuel and in-store sales remained about the same: 60.2 percent for in-store; 39.8 percent for fuel. Total industry gross profit rose to $113.05 billion, up from the previous year’s record high of $106.71 billion. Meanwhile, pretax profit per store was up 8.6 percent to $69,894 per unit.

Operational Data

Employee wages, which increased by 7.2 percent, reached a record-high $354,271 per store. After wages, credit card interchange fees were the next largest direct-store operating expense. Credit card fees increased by 6.8 percent last year to $88,566 per store. Health insurance costs are the thirdlargest expense, climbing 5.4 percent to $32,306 per store. Workers’ compensation soared by 6.9 percent to $14,500 per store. Turnover increased to 136 percent for store employees (up from 132 percent in 2018), while store manager turnover rose to 35 percent, up from 26 percent the previous year. In-store transactions per week were up half a percent to 3,260 in 2019, while motor fuel transactions fell 1.4 percent to 2,294 per week. The average motor fuel transaction was $31.82, up 8.6 percent, while average gallons per transaction increased to 10.2, from 9.7 gallons in 2018. The average c-store comprises 2,425 square feet of selling space out of a total store average of 3,225 square feet. Both figures were up only slightly from 2018.

Motor Fuels

The $413.5 billion of fuel sold last year was below the


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COVER STORY

Gross Profit Dollar Mix

Industry Sales Mix

IN-STORE

IN-STORE

IN-STORE

IN-STORE

IN-STORE

IN-STORE

60.2%

60.0%

60.8%

MOTOR FUELS

MOTOR FUELS

MOTOR FUELS

36.3%

34.7%

36.7%

MOTOR FUELS

MOTOR FUELS

MOTOR FUELS

63.7%

65.3%

63.3%

39.8%

40.0%

39.2%

2019

2018

2017

2019

2018

2017

Industry Gross Profit

Pretax Profits

2019 $ BILLIONS

2018 $ BILLIONS

2017 $ BILLIONS

In-Store

$68.05

$64.08

$61.85

Motor Fuels

$45.00

$42.63

$39.88

TOTAL

$113.05

$106.71

$101.73

In-Store Sales per Store $1,554,276 3.2%

2019

$1,473,386 1.5%

2017

$1,451,682 3.2%

2016

$1,406,866

2015

3.7%

Total Merchandise & Foodservice Sales (in billions)

2018

2017

% CHANGE

PRETAX PROFIT PER STORE

% CHANGE

2019

$10.58

7.8%

$69,894

8.6%

2018

$9.81

5.9%

$64,371

6.6%

2017

$9.26

1.8%

$60,410

2.6%

2016

$9.10

-1.9%

$58,886

-3.9%

2015

$9.28

3.5%

$61,277

2.3%

$1,505,376 2.2%

2018

2019

TOTAL INDUSTRY PRETAX PROFIT (in billions)

Total

$432 billon sold in 2018, but more than the $343.7-billion to $390.4-billion range sold between 2015 and 2017. In volume, motor fuel gallons sold last year were down slightly to 153.7 billion gallons, from 154.1 billion in 2018. However, gross margin increased by more than 1 cent per gallon to an average of 26.6 cents. The average price per gallon for all grades and formulations fell to $2.69, from $2.80 in 2018 — a 3.9 percent decline.

As of April of this year, U.S. consumption of petroleum products had fallen to its lowest level in decades because of measures that limit travel and due to the general $235.3 2.6% economic slowdown caused by the mitigation efforts for COVID-19, according to the Energy Information $195.5 2.1% Administration (EIA). The EIA’s most recent report put total petroleum demand at its lowest level since $39.8 5.2% the early 1990s.

Merchandise

Foodservice

$37.9

$229.4 1.6% $191.5 1.4% 2.4%

$37.0

$225.9 2.1% $188.9 1.8% 3.6%

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

Overall Merchandise

Total merchandise sales were up 2.1 percent in 2019, while foodservice sales (prepared food and dispensed beverages) were up 5.2 percent. Both figures represent the best increases since 2016. Sales per store of merchandise and foodservice combined were up 3.2 percent to a record high of $1,554,276. Cigarettes remained No. 1 in share of in-store sales, though its share slipped to 27.38 percent, from 28.5 percent in 2018. Cigarette sales per store declined by less than 1 percent last year.


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COVER STORY

Foodservice stayed at No. 2 in share, and increased to 16.91 percent of in-store sales, from 16.5 percent in 2018. On a per-store basis, foodservice sales were up 5.8 percent. The third-largest share category once again was packaged beverages. This category increased

its share of in-store sales to 12.92 percent, compared to 12.71 percent the year before. Per-store sales of packaged beverages rose 5 percent in 2019. The fourth-largest in-store category was beer/malt beverages. This category was up 1.7 percent per store, but its share declined slightly to 9.2 percent, from 9.34 percent in 2018.

In-Store Sales by Category PERCENT OF IN-STORE SALES

SALES PER STORE

TOTAL INDUSTRY SALES (IN MILLIONS)

2019

2018

2019

% change

2019

% change

Cigarettes

27.38%

28.50%

$425,546

-0.8%

$64,416

-1.5%

Packaged beverages

12.92%

12.71%

$200,889

5.0%

$30,409

4.3%

Beer/malt beverages

9.20%

9.34%

$142,959

1.7%

$21,640

1.0%

Other tobacco products

7.74%

6.84%

$120,329

16.8%

$18,214

16.1%

Edible grocery

4.85%

4.78%

$75,327

4.6%

$11,402

3.9%

General merchandise

3.52%

3.69%

$54,723

-1.5%

$8,284

-2.1%

Candy

3.17%

3.13%

$49,296

4.7%

$7,462

4.0%

Salty snacks

2.87%

2.85%

$44,638

4.2%

$6,757

3.6%

Non-edible grocery

1.62%

1.60%

$25,108

4.5%

$3,801

3.8%

Wine & liquor

1.55%

1.47%

$24,154

9.2%

$3,656

8.5%

Fluid milk products

1.34%

1.46%

$20,825

-5.3%

$3,152

-5.9%

Alternative snacks

1.11%

1.10%

$17,198

3.5%

$2,603

2.8%

Ice cream & frozen novelties

0.85%

0.88%

$13,182

-0.8%

$1,995

-1.4%

Health & beauty care

0.67%

0.68%

$10,384

1.3%

$1,572

0.6%

Ice

0.50%

0.46%

$7,726

10.4%

$1,169

9.7%

Publications

0.31%

0.44%

$4,828

-26.4%

$731

-27.0%

Packaged sweet snacks

0.28%

0.28%

$4,344

1.4%

$658

0.8%

All other merchandise

3.21%

3.28%

$49,849

1.1%

$7,546

0.5%

83.09%

83.50%

$1,291,305

2.7%

$195,467

2.1%

Prepared food

(prepared on-site or off-site)

11.78%

11.49%

$183,129

5.9%

$27,721

5.2%

Hot dispensed beverages

3.24%

3.19%

$50,413

5.1%

$7,631

4.4%

Cold dispensed beverages

1.31%

1.29%

$20,378

4.6%

$3,085

3.9%

Frozen dispensed beverages

0.58%

0.53%

$9,051

12.5%

$1,370

11.8%

FOODSERVICE SUBTOTAL

16.91%

16.50%

$262,971

5.8%

$39,807

5.2%

100.00%

100.00%

$1,554,276

3.2%

$235,274

2.6%

MERCHANDISE

MERCHANDISE SUBTOTAL

FOODSERVICE

TOTAL IN-STORE

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


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COVER STORY

Direct-Store Operating Expenses (dollars per store) 2019

2018

% CHANGE

Wages

$354,271

$330,584

7.2%

Payroll taxes

$17,151

$16,847

1.8%

Workers’ compensation

$14,500

$13,564

6.9%

Health insurance

$32,306

$30,651

5.4%

Other benefits

$5,717

$5,578

2.5%

Labor subtotal

$423,944

$397,223

6.7%

Credit card fees

$88,566

$82,927

6.8%

All other direct-store operating expenses

$175,696

$169,101

3.9%

TOTAL

$688,206

$649,251

6.0%

Five-Year Trend: Wages (dollars per store) $354,271 2019

Other tobacco products (OTP), with a whopping 16.8 percent increase in per-store sales, represented the fifthlargest in-store category at 7.74 percent of in-store sales, up from 6.84 percent the previous year. After OTP, the biggest percentage sales increases were seen in frozen dispensed beverages (up 12.5 percent), ice (10.4 percent), wine and liquor (9.2 percent), and prepared food (5.9 percent).

$330,584 2018

$311,284 2017

$285,320 2016

$264,185 2015

Transactions 2019

% change

Tobacco

Cigarette sales dropped for the second straight year in 2019, but the rate of decline slowed from the previous year, with average sales per store falling 0.8 percent to $425,546. Total industry sales declined 1.5 percent. Within the cigarettes category, results varied significantly

In-store transactions per week

3,260

0.5% based on product type. Subgeneric/private label was

Motor fuel transactions per week

2,294

-1.4% the only segment to see positive growth, with average

Average in-store transaction

$9.02

Average motor fuel transaction

$31.82

2.1% relatively flat 2018. 8.6%

Average gallons per transaction

10.2

9.5% greatest drops, falling 11.8 percent and 7.4 percent

sales per store jumping more than 11 percent following a Fourth tier and branded discount cigarettes saw the

C-store Square Footage

respectively in average sales per store. Premium was flat in average per-store sales and saw a slight decline of 0.7 percent in total industry sales. However, premium continues to generate the most sales within the category by far at $349,283 per store.

2019

2018

Sales area

2,425

2,400

Non-sales area

800

Total store size

3,225

800 third consecutive year, falling less than one percentage 3,200 point to 14.12 percent. Cigarettes’ share of in-store sales

Total property size

27,900

Margin percentage for cigarettes saw a slight dip for the also dipped to 27.38 percent, marking five straight years

27,800 of decline.

OTP fared considerably better than cigarettes. While its rate of growth slowed from the previous year, 2019 saw average OTP sales per store rise 16.8 percent to $120,329.

Employee Turnover 2019

2018

Store associates

136%

132% Sales of cigars, papers and pipe/cigarette tobacco

Store managers

35%

26% controversies and regulatory issues didn’t stop the

fell, but e-cigarettes had another banner year. Health segment from growing 52.2 percent in average sales

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


Model VG


COVER STORY

Motor Fuel Sales & Margins 2019

2018

2017

Dollar sales (in billions)

$413.5

$432.0 $390.4

Gallons sold (in billions)

153.7

154.1

Gross margin cents per gallon

26.6

25.5

Average sales price per gallon* $2.69

$2.80

154.3

23.7 Although 2019 didn’t beat the 23.5 percent growth in

$2.53. total OTP sales that occurred in 2018, last year’s 16.8 percent increase was the second highest seen in the past five years.

*Weighted average, all grades and diesel

OTP margin percentage showed a slight uptick, rising from 29.15 percent in 2018 to 30.75 percent last year. OTP’s share of in-store sales rose, too, from 6.84 percent to 7.74 percent.

Retail Gasoline Prices (per gallon)

2.80

2.53

$

2.69

$

$

2018

2019

-3.9

2017

10.7

% CHANGE

12.4

% CHANGE

% CHANGE

2.25

2.57

$

$

2016

2015

-12.5

-25.3

% CHANGE

Five-Year Trend: Motor Fuels 2019

2018

2017

2016

2015

Dollar sales (in billions)

$413.5

$432.0

$390.4

$343.7

$389.9

Gallons sold (in billions)

153.7

154.1

154.3

154.7

151.3

Stores Selling Motor Fuels

79.9% 79.6% 2018

Foodservice

The COVID-19 pandemic has the potential to derail a positive trend for the foodservice category at c-stores, which saw every segment grow in 2019. Now a core component of many retailers’ strategic plans, average foodservice sales per store grew 5.8 percent to $262,971 last year, with the rate of growth nearly doubling from 2018. Prepared food continues to increase in popularity among shoppers, which could give food-focused convenience retailers an advantage when returning to normal operations in a post-COVID world. The segment grew 5.9 percent to reach $183,129 in average sales per store, and generated the most actual dollar sales by a comfortable margin.

% CHANGE

Price includes dollars per gallon for all grades, all formulations

2019

per store to reach $40,570 — only trailing the smokeless segment. Smokeless tobacco remains the top moneymaker and saw average sales per store increase 7.3 percent, up from the 2.8 percent growth it experienced in 2018.

79.1% 2017

Unlike 2018, which saw some individual segment declines, every foodservice segment grew last year. Frozen dispensed beverages, while still the smallest segment in the category, saw the highest growth rate, with average sales per store spiking 12.5 percent. Cold dispensed beverages showed the smallest increase in average sales per store at 4.6 percent. The foodservice category’s 5.2 percent growth in total industry sales last year was more than double the 2.4 percent growth it experienced in 2018, and marks the highest recent total sales growth since the 6.6 percent increase that occurred in 2016. Margin percentage (at 43.68 percent) and share of in-store sales (at 16.91 percent) remained essentially flat year over year.

Packaged Beverages

Packaged beverages saw solid growth in 2019, rising 5 percent in average sales per store to $200,889. However, the category’s solid overall performance hid significant differences in individual segment performance, which could be further exacerbated by the effects of the pandemic. Enhanced water turned in the strongest segment growth for a second straight year, growing 13.3 percent in average sales per store. Energy/alternative drinks also saw a double-digit increase, growing 11.2 percent 36 Convenience Store News C S N E W S . c o m


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Five-Year Trend: Cigarettes

Category Analysis: AVERAGE SALES PER STORE

INDUSTRY TOTAL (IN MILLIONS)

2019

% change

2019

% change

Premium

$349,283

0.0%

$52,872

-0.7%

Branded discount

$60,309

-7.4%

$9,129

-8.0%

Subgeneric/ private label

$14,903

11.7%

$2,256

11.0%

Fourth tier

$1,031

-11.8%

$156

-12.4%

Imports

$20

-1.6%

$3

-2.2%

TOTAL

$425,546

-0.8%

$64,416

-1.5%

Other Tobacco Products AVERAGE SALES PER STORE

INDUSTRY TOTAL (IN MILLIONS)

2019

2019

Electronic cigarettes

% change

% change

7.3%

$7,895

6.6%

$40,570

52.2%

$6,141

51.5%

Cigars

$25,553

-0.4%

$3,868

-1.1%

Papers

$1,493

-1.9%

$226

-2.5%

Pipe/cigarette tobacco

$555

-2.5%

$84

-3.1%

TOTAL

$120,329

16.8%

$18,214

16.1%

Five-Year Trend: Other Tobacco Products Percent change in total sales Margin percentage Share of in-store sales

2017

2016

2015

-1.5%

-2.9%

1.1%

1.4%

3.9%

Margin percentage

14.12%

14.63%

14.82%

15.20%

13.36%

Share of in-store sales

27.38%

28.50%

29.82%

30.11%

30.84%

in per-store sales. Both segments saw notable growth in total industry sales, too. Energy/alternative drinks’ solid performance allowed it to remain ahead of carbonated soft drinks (CSDs) in both average sales per store and total industry sales. Previously dominant in the cold vault, CSDs saw an increase of just 1.2 percent in average sales per store in 2019 and less than a percentage point increase in total industry sales. Sports drinks and all other packaged beverage sales also grew in 2019, but bottled water, juice/juice drinks and ready-to-drink iced tea sales fell year over year. Looking at the past five years, packaged beverages had its second highest percent change in total sales at 4.3 percent in 2019. This was up from 3.2 percent in 2018. Margin percentage (at 42.02 percent) and share of in-store sales (at 12.92 percent) saw slight increases.

Category Analysis:

$52,158

2018

Percent change in total sales

Cigarettes

Smokeless

2019

2019

2018

2017

2016

2015

16.1%

23.5%

11.4%

9.0%

5.4%

30.75%

29.15%

27.65%

28.06%

24.34%

7.74%

6.84%

5.62%

5.16%

4.91%

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

Alcoholic Beverages

Convenience stores that sell beer and malt beverages saw 1.7 percent growth in average sales per store in the category last year, reaching $142,959. This is up slightly from the 1.4 percent increase that occurred in 2018. Experts predict that 2020 may result in a boost for the category, as alcoholic beverages have been among the best-performing products during the pandemic. Super premium beer had another year of outstanding growth, with average sales per store jumping 17.6 percent. Imports (up 9.1 percent) and flavored malt beverages (up 4.4 percent) also turned in positive performances, while premium, budget, popular, malt liquor and non-alcoholic beer all declined. The microbrews/craft beer segment was flat in average sales per store, but dipped 0.6 percent in total industry sales, marking its second year in a row without growth. Total industry sales for beer/malt beverages rose 1 percent in 2019, a slight increase from 0.8 percent growth the previous year. Margin percentage remained essentially flat at 19.02 percent, while the segment’s share of in-store sales dipped slightly to 9.2 percent. The percentage of c-stores in the U.S. that sell beer and malt beverages held steady at 75.1 percent. Among just these stores, average sales per store were $190,358 and the percent of in-store sales fell less than one-half of a percentage point to 12.2 percent.


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Category Analysis:

Category Analysis:

Foodservice

Packaged Beverages AVERAGE SALES PER STORE

AVERAGE SALES PER STORE

INDUSTRY TOTAL (IN MILLIONS)

2019

% change

2019

% change

Prepared food (prepared on-site or off-site)

$183,129

5.9%

$27,721

5.2%

Energy/alternative drinks

Hot dispensed beverages

$50,413

5.1%

$7,631

4.4%

Cold dispensed beverages

$20,378

4.6%

$3,085

Frozen dispensed beverages

$9,051

12.5%

TOTAL

$262,971

5.8%

2019

INDUSTRY TOTAL (IN MILLIONS)

% change

2019

% change

$62,125

11.2%

$9,404

10.6%

Carbonated soft drinks

$53,200

1.2%

$8,053

0.6%

3.9%

Bottled water

$21,193

-1.0%

$3,208

-1.6%

$1,370

11.8%

Sports drinks

$19,746

7.7%

$2,989

7.1%

$39,807

5.2%

Juice/juice drinks

$13,113

-0.6%

$1,985

-1.3%

Iced tea (ready-to-drink)

$10,061

-2.2%

$1,523

-2.8%

Enhanced water

$9,348

13.3%

$1,415

12.6%

All other packaged beverages

$12,103

3.5%

$1,832

4.2%

TOTAL

$200,889

5.0%

$30,409

4.3%

Five-Year Trend: Foodservice 2019

2018

2017

2016

2015

5.2%

2.4%

3.6%

6.6%

7.1%

Margin percentage

43.68%

43.71%

43.85%

43.70%

43.72%

Share of in-store sales

16.91%

16.50%

16.38%

16.14%

15.71%

Percent change in total sales

Five-Year Trend: Packaged Beverages 2019

2018

2017

2016

2015

4.3%

3.2%

0.2%

4.2%

7.3%

Margin percentage

42.02%

41.58%

41.45%

41.40%

32.80%

Share of in-store sales

12.92%

12.71%

12.50%

12.74%

12.69%

Percent change in total sales

Category Analysis: Beer/Malt Beverages AVERAGE SALES PER STORE

INDUSTRY TOTAL (IN MILLIONS)

2019

% change

2019

% change

Premium

$61,418

-2.2%

$9,297

-2.8%

Imports

$28,579

9.1%

$4,326

8.5%

Percent change in total sales

Flavored malt beverage

$12,532

4.4%

$1,897

3.8%

Budget

$11,046

-1.1%

$1,672

-1.7%

Super premium

$10,425

17.6%

$1,578

16.9%

Popular

$9,533

-5.5%

$1,443

-6.1%

Microbrews/craft

$7,021

0.0%

$1,063

-0.6%

Malt liquor

$2,332

-5.0%

$353

-5.6%

Non-alcoholic

$73

-0.1%

$11

-0.8%

TOTAL

$142,959

1.7%

$21,640

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

1.0%

Five-Year Trend: Beer/Malt Beverages 2019

2018

2017

2016

2015

1.0%

0.8%

0.5%

4.3%

3.1%

Margin percentage

19.02%

19.08%

19.01%

19.10%

18.71%

Share of in-store sales

9.20%

9.34%

9.41%

9.56%

9.51%

STORES SELLING BEER 2019

Percent of stores selling beer 75.1% 9.20% Percent of in-store sales beer: For stores selling beer Average sales per store Percent of in-store sales

$190,358 12.20%

2018

75.1% 9.34%

$187,226 12.40%


WE ALSO HAVE Candy

Following a year of minimal growth in 2018, candy sales enjoyed a significant bump in 2019. Average sales per store rose 4.7 percent to $49,296, up from 0.7 percent growth in 2018.

RICH. BOLD. FLAVOR.

The best-performing segments were chocolate bars/packs (up 6.7 percent), bagged/repackaged peg candy (up 6.4 percent) and non-chocolate bars/packs (up 4.6 percent) in average sales per store. Gum and candy rolls/mints/drops saw more modest growth: up 1.5 percent for each. Novelties/seasonal candy grew just 0.3 percent in average sales per store, but saw total industry sales decline by 0.3 percent, making it the only candy segment to see a drop in that metric. Candy’s sweet year was also reflected in total industry sales growth of 4 percent, the category’s largest increase in the last five years. Margin percentage saw a slight uptick to 49.02 percent, while candy’s share of in-store sales remained virtually flat at 3.17 percent.

Snacks

Salty snacks also saw positive growth in 2019, with average sales per store increasing 4.2 percent to $44,638, up from the 3.6 percent growth that occurred in 2018. Puffed cheese led the segment for another year at 7.8 percent growth in average sales per store, followed by pretzels (up 7.2 percent), tortilla/corn chips (6.7 percent) and other salty snacks (6.2 percent). Sales growth for potato chips, ready-to-eat popcorn and mixed salty snacks was more modest, but potato chips remains the top moneymaker, ahead of No. 2 tortilla/corn chips. Crackers and nuts/seeds were the only segments of the salty snacks category to see declines last year, falling 2 percent and 0.3 percent in per-store sales, respectively. Salty snacks’ 3.6 percent growth in total industry sales was above the 2.9 percent growth seen in 2018, but marked the second lowest increase in the last five years. Margin percentage (at 38.05

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Category Analysis:

Category Analysis:

Salty Snacks

Candy AVERAGE SALES PER STORE

AVERAGE SALES PER STORE

INDUSTRY TOTAL (IN MILLIONS)

INDUSTRY TOTAL (IN MILLIONS)

2019

% change

2019

% change

Potato chips

$11,098

3.0%

$1,680

2.3%

6.0%

Tortilla/corn chips

$8,364

6.7%

$1,266

6.0%

$1,124

0.9%

Nuts/seeds

$5,344

-0.3%

$809

-0.9%

0.3%

$878

-0.3%

Puffed cheese

$4,552

7.8%

$689

7.1%

$2,391

1.5%

$362

0.8%

Mixed

$2,306

4.1%

$349

3.4%

Non-chocolate bars/ packs

$1,937

4.6%

$293

3.9%

Crackers

$1,889

-2.0%

$286

-2.6%

TOTAL

$49,296

4.7%

$7,462

4.0%

Pretzels

$1,718

7.2%

$260

6.5%

Popcorn (ready-to-eat)

$1,757

2.3%

$266

1.7%

Other salty snacks

$7,610

6.2%

$1,152

5.5%

TOTAL

$44,638

4.2%

$6,757

3.6%

2019

% change

2019

% change

Bagged/repackaged peg candy

$19,462

6.4%

$2,946

5.7%

Chocolate bars/packs

$12,281

6.7%

$1,859

Gum

$7,425

1.5%

Novelties/seasonal

$5,800

Candy rolls, mints, drops

Five-Year Trend: Candy Percent change in total sales Margin percentage Share of in-store sales

2019

2018

2017

2016

2015

4.0%

0.1%

1.60%

2.8%

3.5%

49.02%

48.62%

48.26%

47.00%

42.49%

3.17%

3.13%

3.17%

3.19%

3.22%

Category Analysis: AVERAGE SALES PER STORE

INDUSTRY TOTAL (IN MILLIONS)

2019

% change

2019

% change

Meat snacks

$10,730

5.2%

$1,624

4.5%

Health/energy bars

$4,532

0.1%

$686

-0.6%

Granola/yogurt bars

$1,315

6.5%

$199

5.9%

Other alternative snacks

$621

-5.3%

$94

-6.0%

TOTAL

$17,198

3.5%

$2,603

2.8%

Five-Year Trend: Alternative Snacks

Margin percentage Share of in-store sales

2019

2018

2017

2016

2015

Percent change in total sales

3.60%

2.9%

4.5%

4.4%

5.8%

Margin percentage

38.05%

38.30%

37.86%

36.60%

31.47%

2.87%

2.85%

2.81%

2.74%

2.73%

Share of in-store sales

Alternative Snacks

Percent change in total sales

Five-Year Trend: Salty Snacks

2019

2018

2017

2016

2015

2.8%

1.8%

1.4%

6.0%

8.4%

43.41%

43.43%

44.09%

43.70%

35.91%

1.11%

1.10%

1.10%

1.11%

1.09%

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

percent) and share of in-store sales (2.87 percent) were flat year over year. Alternative snacks turned in slightly lower growth, comparatively, with average sales per store increasing 3.5 percent to $17,198, up from 2.5 percent in 2018. Segment-wise, granola/yogurt bars continued their turnaround from a weak 2017, chalking up 6.5 percent growth in 2019 average sales per store. Meat snacks, which still generate the most dollar sales by a wide margin, had the second strongest growth at 5.2 percent. Average sales of health/energy bars were flat on a perstore basis, while total industry sales fell 0.6 percent. Other alternative snacks fell in both per-store sales and total industry sales. Alternative snacks’ 2.8 percent rise in total industry sales for 2019 marked a continuation of increasing sales growth in recent years, but still fell far below the 8.4 percent growth seen in 2015, the high point of the last five years. Both margin percentage (43.41 percent) and share of in-store sales (1.11 percent) were flat. CSN


AND THESE... 2020 REPORT CARD AT A GLANCE TOTAL SALES: After peaking at $661.4 billion in 2018, total industry sales dropped slightly to $648.8 billion last year, largely due to lower fuel prices. IN-STORE SALES: Inside-the-store sales achieved their best percentage gain last year since 2016, and helped offset the decline in fuel revenue. MOTOR FUEL BUSINESS: Although total fuel revenue declined, volume held steady and margins were the best in recent years. STORE COUNT: The total number of U.S. c-stores declined for the second year in a row, with single stores accounting for the brunt of the decline. PROFITS: Strong fuel margins and a resurgence of in-store sales propelled pretax profits to a record high for the second consecutive year. FOODSERVICE SALES: Foodservice sales improved impressively by 5.2 percent, representing the best growth rate for the category since 2016.

METHODOLOGY The 45th 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. Sales 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, was provided by a retailer survey conducted by Convenience Store News. Government sources include the Census Bureau of Labor Statistics, Department of Energy, and Federal Tax Administration.

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The Future for Convenience Retail C-stores, as well as retailers of all kinds, are in hyperdrive to cater to new needs By Renée M. Covino

a global pandemic can make — on everything.

OH, WHAT A DIFFERENCE

From a general retail perspective, the coronavirus pandemic has most obviously altered the way people shop, with in-store browsing all but ceased for most nonessential retailers. “With that, online shopping has increased well beyond predictions for 2030 already, which could have long-term implications on how retail brands interact with consumers moving forward,” said Randy Evins, industry advisor, food, drugstore and convenience, for retail software provider SAP. Even before the pandemic, retail was in the midst of a digital transformation, but now the industry is “in hyper-drive to cater to new needs,” Evins told Convenience Store News. Consumers who preferred the in-store experience are now buying products online and likely enjoying the convenience of it while, at the same time, they’re likely yearning for the day they can leisurely browse the shelves again. “Retailers that can provide a personalized 44 Convenience Store News C S N E W S . c o m

experience — both online and in-store — will come out ahead of their competitors,” Evins said. The COVID-19 crisis is also forcing operators to think of ways they can make themselves even more efficient, while ensuring consumer safety. Technological innovations are crucial now — not only for future success, but also to offset the negative implications of the current environment. While technology is moving fast, there’s a massive lack of control in existing online marketplaces, according to Nick Karapetian, cofounder and chairman of SABX, a private and secure platform for buyers and sellers. He believes retailers need to accelerate the process of moving online by embracing commerce powered by digital technology that gives them complete control of their pricing — and their data. Retailers of all types, but especially food retailers, are rethinking store layouts, the number of employees and customers allowed into their locations at one time, and how to help everyone safely navigate


AND OUR PIPE, TUBES, CIGARS the space. Health and safety will remain priority No. 1 for retailers and their consumers for the foreseeable future. Over the coming months, retailers will need to prepare for the continued, and probably even swifter, move to mobile. “Mobile wallet adoption was already on the rise before the crisis, with the potential to generate billions in the U.S. by 2021,” noted Brett Narlinger, senior vice president of global commerce for Blackhawk Network, which delivers branded payment programs. “Although there will still be a disconnect between digital payments and in-store point-of-sale at many retailers, I suspect adoption will increase at a much faster rate as we start to emerge from this crisis.”

FILTERED CIGARS

This means a “huge opportunity” for engagement and driving foot traffic to stores by leveraging omnichannel payment experiences and better acknowledging the digital shopper, Narlinger told CSNews. An increased demand for delivery is also part of the retail shift underway now. “As we see more and more consumers start to experiment with home delivery for items like groceries and home supplies out of necessity, we’re finding that they’re adjusting to it fast,” said Marc Gorlin, founder and CEO of crowdsource delivery service Roadie. “But if you think about it, it’s not that new of an idea; we used to have visits from the milkman, the ice man, the egg man — all of those items used to show up on our doorsteps. So, in a way, home grocery delivery is a return to our roots as much as it is something new and modern.” In terms of convenience stores specifically, industry experts offer the following perspectives on how the channel will forever be changed by COVID-19:

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TUBES

1. A Digital Transformation

Pre-pandemic, the c-store industry was slow to adopt digital practices, according to Evins. But now, convenience and safety are tied together as “musts,” driving convenience stores to offer new services such as home delivery, pumpside pickup, and more.

1839

WILDHORSE

Now that consumers know this is a possibility, it will be expected going forward. So, what should c-store retailers be doing to ready for this digital transformation? If they haven’t already done so, convenience stores must invest in bringing hands-free digital elements in-store — such as click-andcollect, contactless payment, and curbside pickup — to maintain their convenient edge

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2020

Convenience Store News

45


COVER STORY

in the new economy, advises Bobby Greenberg, senior vice president of strategy and analytics at Kobie, which designs and develops solutions to drive customer loyalty. “They need to focus on their digital transformation, from the customer experience to their supply chain operations,” Evins added. “An end-to-end digital strategy can increase operational flexibility and help minimize disruption from future crises.” C-store retailers in the U.S. may find it helpful to look to other markets like China and India to learn from the different phases of the pandemic. “You can benefit from assessing consumer reactions across the globe to determine your next move,” noted Greenberg.

2. Bridging the Physical & Digital Experiences

To make convenience stores even more convenient, expect an increase in mobile apps that help bridge the digital and physical experiences, such as an app that customers can use to get products delivered to their car while they are refueling, said John Nash, chief marketing and strategy officer at Redpoint Global, a CX software provider. He also foresees c-stores launching more advanced loyalty programs that incentivize visits by recognizing that consumers are engaging in new ways both digitally and physically. Data holds the key to convenience stores being able to respond to all of the changing consumer behaviors, according to Nash. “Retailers should be investing in Customer Data Platform (CDP) technology that can help them create a single view of customers and enable them to orchestrate seamless, personalized and realtime experiences,” he said. Having an always up-to-date, comprehensive record of each customer will ensure c-stores can provide timely and relevant suggestions, offers and communications.

“By delivering value at every interaction, retailers demonstrate that they understand each customer as an individual,” Nash stated. “Personalization will continue to be key to the customer experience, even more so during and following COVID-19. Implementing tools that will help deliver a dynamic customer journey is no longer an option; it’s a necessity.” The desire for customers to maintain their distance from other customers will drive the need for effective delivery and curbside pickup options at c-stores, including the consideration of drivethru windows, according to Jason Bettinger, head of retail at HERE Technologies, which provides mapping and location data/technology. “Existing and new store locations and their surrounding real estate will need to be evaluated to determine where necessary changes to the buildings and traffic flows can be accommodated,” he told CSNews. “This will impact site selection criteria.” Bettinger suggests c-store operators look to improve their online and mobile ordering capabilities, so they can provide accurate ETAs for when orders will be ready and ensure a customer’s arrival aligns with when their order is ready for pickup. Retailers also could direct a customer to the physical location that can most quickly fulfill their order.

3. A Serious Emphasis on Food Safety & Cleanliness

Food safety will be a lasting concern for all food retailers after the pandemic. For c-stores that offer fresh food options, they will be challenged even further to prove to consumers that food safety is a top priority for them, according to Mark Delaney, retail strategist for enterprise visibility and data capture solution provider Zebra Technologies. “Simple things such as coffee lids or condiments that sit in the open for consumers to pick from may have to go away,” Delaney told CSNews. “Convenience merchants will also need to ensure that self-service kiosks for ordering and payment are kept clean enough for consumers to feel comfortable using them.” C-stores should identify where they are most vulnerable now, closely examining foodservice preparation areas, self-service areas, ordering kiosks, etc.

4. Wanted: Healthy Options

Post-pandemic, consumers will still demand immediate consumption items, but it may be a different kind of immediate consumption — healthier, cleaner and local, according to Karapetian of SABX. 46 Convenience Store News C S N E W S . c o m


COVER STORY

“One idea [for c-stores] is to use technology platforms to uncover new local, healthy options online that they may not be able to get from existing distributors,” he advised. In addition to looking at digital ways to expand their business outreach to consumers, c-store operators should also look for ways to utilize technology internally. “Convenience store operators need to take control of their day-to-day interactions and transactions with their suppliers through digital solutions. … Now is the time to start pressuring your suppliers to interact and transact with you digitally, and use technology to create a safer working environment, increase productivity and efficiency,” Karapetian said.

5. Become an Even More Essential Shopping Option

As shoppers became concerned about the crowds at grocery and big-box retailers, some moved to, and will continue to utilize, convenience stores for items they typically purchased elsewhere before, according to Blackhawk Network’s Narlinger. Still, even as shoppers tap convenience stores for more items than they typically used to, they still want to limit their shopping time. “Convenience stores will need to update legacy hardware and POS systems to be able to remove the barriers they face in enabling consumers to quickly pay and move on with their day,” he said.

The Sticking Points There’s no doubt that the coronavirus is shaping new consumer behaviors. Here are several behaviors that retail experts believe will stick around for some time: • Consuming most/all food at home. • Ordering food/beverages/groceries online. • Seeking experiences that bridge the physical and digital channels such as BOPIS (buy online, pickup in store) and curbside pickup.

C-stores, too, have a runway of opportunity to become an even more essential shopping option for those who want to avoid the larger grocery and big-box stores. For instance, in Europe, many of the largest grocery retailers, such as Tesco, allow customers to place online grocery orders for pickup at their local convenience store.

•U  tilizing the growing number of home delivery services.

“In North America, there are only a few operators that could leverage this model, but as mergers and acquisitions occur (some in the face of COVID), this could lead to wider availability and thus, more c-store visits,” said Delaney of Zebra Technologies.

• Valuing frictionless interactions and services.

In preparing for the new normal, industry experts say the first order of business for c-stores is: Don’t panic. As the saying goes, cooler heads will prevail. “The art of warfare teaches great leaders not to panic during war or confrontation,” said Karapetian. “We are all in an economic warfare now, so leaders who remain calm and pivot to use this opportunity to make their business more efficient and productive will prevail.” CSN 48 Convenience Store News C S N E W S . c o m

•C  onsolidating/severely limiting trips to brick-and-mortar stores. •V  isiting large-format stores only when in need of 10 items or more.

•R  esponding to promotions through smartphones and other mobile devices. •E  xpecting “concierge-level” services online and through apps. • Washing hands constantly. •C  arrying PPE (personal protective equipment), such as hand sanitizer, disinfecting wipes and masks, as a matter of habit. •F  eeling increased love for one’s local community.


Make Converts Out of Gas-Only Customers Compelling advertising and offers can drive fuel-only and infrequent store shoppers inside By Tammy Mastroberte

EVERY CONVENIENCE STORE has them — customers who stop for fuel, yet never make it from the pump to the store. However, with in-store product margins blowing away fuel margins, selling merchandise — whether it’s a bag of chips, a candy bar or even better, a high-margin foodservice item — is essential to a booming bottom line.

The challenge is to grab a customer’s attention at the pump and give them a compelling reason to go inside. In today’s world, though, consumers are bombarded with marketing and messages, and are usually looking down and absorbed in their mobile phones. “It’s about breaking through the clutter with something that is relevant and valued,” said Kevin Struthers, digital commerce lead at W. Capra Consulting, a Chicago-based company focused on retail technology. “We are becoming blind to signage, with our nose in our phones, so retailers have to do something to grab that attention and hopefully get them into a digital channel so that you can track them and message them.” Research shows that when a customer is paying for their fuel, its an ideal time to let them know what

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

other problems the c-store can solve, or needs it can fill, according to Eric Sherman, senior vice president of insights and analytics at Detroit-based GSTV, which provides retailers with audio and video capabilities at the pump. Research conducted by GSTV and Mastercard found that immediately following a fuel transaction, people spend three times more money across a number of different categories. “People don’t just go get gas and then go home,” Sherman noted. “They get gas and then go do something else, so there is an opportunity to get their attention whether they have never been in the store or have not visited in a while. It’s about speaking to the customer with something relevant and saying it in a compelling way that also meets one of their needs.” While offering the right product in the right way is crucial, a store’s appearance also plays a role. Consumers want to be able to see into the store and specifically see the checkout because it offers a visual cue that they can get in and out quickly, Struthers noted, pointing to a survey done by Researchscape.


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“Twice Daily has big, glass-front double doors where you can see the checkout, and they also changed the design of the checkout where the cashier is not behind the counter,” he said of the Nashville, Tenn.based convenience store chain. “You can also see from outside that there is a backup cashier greeting people to make the customer service experience much better.”

Engaging at the Pump Getting a customer’s attention at the pump — whether it’s to offer them a discount on something, or alert them to a product or service they might not realize is in-store — is key to getting them inside. This is especially true for those customers who have never entered the store and are not part of the retailer’s loyalty program. But this is also important to drive repeat visits or bring in customers who have not been in the store for a while. While engaging signage showing a mouth-watering sandwich or an ice-cold soda may grab the attention of some, c-stores need to start thinking outside the box when it comes to advertising, said Michael Sansolo, research director for the Coca-Cola Retailing Research Council (CCRRC). A successful example of this, he believes, is wholesale club chain Costco. “Costco does an incredible job with sampling,” he said. “It’s about getting people to understand the store has these great-tasting items, and also communicating items they might not expect to find in a c-store. A store can have employees with a sample tray of smoothies or of a new food item available inside the store.” Another way to grab attention at the pump is to utilize audio and video. GSTV supplies both at more than 22,000 locations throughout the country — independents and large chains. GSTV offers news and other programming, works with vendors to promote products available in-store, and partners with c-store operators who want to promote their own proprietary products. The advertising can be segmented by region, individual store, daypart and more. “Bringing new customers in is about driving awareness of products and services not necessarily associated with c-stores; that go out of the norm of carbonated beverages, candy bars and a bag of chips,” explained Dan Trotzer, executive vice president of industry at GSTV. “Advertise fresh food or healthier options that would go beyond the standard CPG packaged program.” However, that doesn’t mean offering a deal on soda or candy won’t drive customers into the store. GSTV has worked with a beer brand whose video and audio advertising produced a 3 percent lift in sales, a soda

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

brand that saw a 7 percent lift, and executed a program for lottery purchases that resulted in a 31 percent lift. “The video uses full sound and motion, and we demand your attention,” Sherman said. “You have to look at the screen to get it started, and the mix of content and advertising is compelling. Research done with Nielsen shows 86 percent of the people at the pump watch or listen to our screens. It’s a real opportunity for retailers looking to persuade customers to change behaviors.”

What to Advertise Getting a customer’s attention is the first hurdle at the pump, but then how does a retailer know what to say or offer in order to get them to change their behavior and go inside the store? One place to start is highlighting something that makes the store or chain different, or something that the brand is known for, according to Struthers of W. Capra Consulting. “Know the value proposition for your store and use it,” he advises. “For example, Murphy USA has done very well with two-fers and tobacco and has become known for it. Twice Daily has a great coffee brand.” Twice Daily partners with NewsBreak Media Networks on forecourt and in-store shopper marketing media to inform and upsell fueling customers on its proprietary White Bison coffee brand, resulting in higher profit margins. Research shows today’s shoppers are looking for highquality food and coffee, cited Sansolo. They want a better-quality made-to-order sandwich and a better cup of coffee with different milk and cream options, so this would be something to highlight if the store has them.


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“It’s about creating the right hook to get them to come in,” he explained. “Look at what other retailers are doing with aromas as a sales tool. If you are roasting chicken, vent this out to where people are pumping gas. And the same with baking. You can employ all the senses.” In fact, CCRRC’s 2019 Embracing Modern Convenience Report examined shopper needs and where they tend to go to meet those needs. The convenience channel is often filling the needs of hunger, thirst and the desire for delight, according to the study’s findings. “You have to highlight and talk up the items inside the store and let customers know they are changing for the better, and also solving their problem,” said Sansolo. Knowing who is coming into the store and what they are looking for is key, too. This can be found by looking at data. Whether it’s point-of-sale (POS) data, loyalty program data or data from outside the store level, analysis can be very useful

in understanding consumer purchase behavior, according to GSTV’s Trotzer. “We are seeing more and more opportunities for the independent and single-store operators to get access to behavioral data today, and NACS is putting resources together for them that might have only been available to multisite operators,” he noted. Additionally, while many c-stores focus on offers, coupons and deals to convert customers from the pump to the store, they’re not the only things that make a difference. Communicating in a compelling way is crucial. In fact, the Advertising Research Foundation reports that 70 percent of an ad’s effectiveness is related to the creative alone. “Sometimes, you don’t need an offer, you just need a delicious-looking sandwich,” Sherman shared. “The best creative displays the product very clearly in a way that makes it look enticing and tells you where you can get it. On a hot day, a big, cold, deliciouslooking can of soda or, at lunch time, a video of a hamburger or hot dog tends to work well.” CSN

Using Social Media to Drive In-Store Sales When trying to lure fuel-only customers into the store, capturing their attention on social media, engaging them in conversation and showing them the products available in-store are avenues worth pursuing. And if a retailer can get the customer to join an email list, download an app or join a loyalty program, so they can market directly to them, that’s even better. “Invest 10 or 20 hours in learning the different types of social media, including Facebook ads, and use the social tools available,” Kevin Struthers, digital commerce lead at W. Capra Consulting based in Chicago, told Convenience Store News. In order to get consumers to like a Facebook page or download an app, it’s about more than just advertising products. It’s about engaging in “useful conversation with them,” said Michael Sansolo, research director for the Coca-Cola Retailing Research Council. “Simply saying, ‘We have X on sale,’ is not starting a conversation, but saying, ‘Looking for something for tonight’s dinner? Have you tried our fried chicken?’ is better,” he explained. “You have to have a social media strategy to make it useful to them.” Additionally, millennials are a big generation that’s starting to use c-stores, and they don’t have previous ideas about what a c-store was 30 years ago, so communicating with them is another opportunity. Just keep in mind, they are using other platforms besides Facebook. “They are not using Facebook. Boomers are using Facebook,” Sansolo said. “You have to be where their eyeballs are, and millennials are on Instagram and Snapchat.”

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


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FOODSERVICE

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

The Next Phase Diners are ready to enjoy the foods they’ve missed most while at home AS STATES CONTINUE onward with reopening measures across the United States, food and its emotional benefits will be critical in the march toward a sense of normalcy. In the meantime, operators continue to explore new launches, focusing on adjusted — and sometimes unexpected — consumer expectations.

As stay-at-home measures loosen across the U.S., diners are getting ready for the food they’ve missed the most while at home. When asked what they crave or miss the most from restaurants, Mexican food came out on top, with 36 percent of consumers reporting they miss Mexican food the most, followed by seafood (31 percent) and Asian food (30 percent).

study in adding an approachable moment of interest to a familiar favorite. By tossing its classic chicken strips in a sweet and tangy sesame glaze, this limited-time offer scores a strong 94 in Unbranded Purchase Intent, with a broad appeal across generations from baby boomers to millennials, regardless of its lower Uniqueness score of 69. CSN Datassential’s coronavirus research takes an exhaustive look at industry topics impacted by the COVID-19 crisis. For access to all of its coronavirus reports and resources for free, visit Datassential’s COVID-19 page at datassential.com/coronavirus.

INTEREST BY CONSUMER TYPE

UNBRANDED PURCHASE INTENT norms reflect comparison to all items

In the coming months, formats and flavors that embrace what consumers have missed the most will be fantastic targets for growth, according to Datassential’s coronavirus research. Diners go for what they know and love — 79 percent of consumers report that they’ll likely choose a familiar favorite the first time they go back to a dine-in restaurant. However, now is not the time for innovation to wane. As nervousness eases among diners, curiosity and exploration are expected to gain momentum through subsequent visits. Dairy Queen’s Sweet & Tangy Sesame Chicken Strip Basket offers a quick case

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94 unbranded PI

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


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FOODSERVICE

A Shared Purpose Successful branded foodservice partnerships are mutually beneficial for all parties By Renée M. Covino

full of well-known brands, and this doesn’t just apply to the packaged goods on their shelves and in their coolers. Partnerships with national and regional restaurant brands remain a core of convenience foodservice.

CONVENIENCE STORES ARE

The two business models fulfill a shared purpose: providing consumers with grab-and-go convenience. The joint partnership is also mutually beneficial as restaurant brands can offer the perception of tastier, healthier and fresher food for c-stores looking to push customer loyalty past fuel and cigarettes, while c-stores can offer a cost benefit for restaurant brands looking to expand into more areas of the country. Additionally, they both leverage each other’s brand power to differentiate and attract shoppers. Some new branded foodservice partnerships in the channel as of late include: •O  klahoma City-based Love’s Travel Stops & Country Stores brought the Charlotte, N.C.-based chicken and biscuit brand Bojangles’ to four new states late last year through a national franchise development agreement. The deal included 40 Bojangles’ restaurants inside Love’s locations in Illinois, Oklahoma, Arkansas and Mississippi. • TravelCenters of America Inc., based in Westlake,

Ohio, is partnering with IHOP Restaurants to open up to 94 IHOP locations over the next several years inside TA and Petro branded locations across the United States.

• TravelCenters of America also opened a Kentucky Fried Chicken (KFC) restaurant and a second Boston Market in different locations in the state of Louisiana. The KFC location has seating for 60 customers and features design elements connected to the brand’s heritage, while the Boston Market location features fresh, all-natural chicken and USDA prime rib cooked in rotisserie ovens, accompanied by an extensive selection of sides and made-fromscratch cornbread. • Savannah, Ga.-based Enmarket renovated and expanded one of its large travel plazas, situated at the gateway to Hilton Head Island in South Carolina, to include Mooz frozen yogurt and the retailer’s first Fuzzy’s Taco Shop franchise. “Partnerships with convenience operators is the future of QSRs [quick-service restaurants] and will play heavily in the growth of both channels,” said Jeff Wallace, vice president of operations for Scottsdale, Ariz.-based Blimpie. Blimpie has training teams dedicated to the convenience

Some restaurant brands, like Blimpie, have a team dedicated specifically to the convenience channel. 58 Convenience Store News C S N E W S . c o m


FOODSERVICE

Then in March, Eby-Brown Co. LLC debuted four new foodservice programs at its 2020 Eby-Expo East, the first of the company's two annual trade shows. Its new initiatives include fried chicken, barbecue and two pizza programs, all of which include training and dedicated support from the Naperville, Ill.-based distributor.

Loyalty Combos

Leveraging each other’s brand power to differentiate and attract shoppers can also include partnering up loyalty programs. When c-stores and foodservice brands join forces, it is logical for them to combine loyalty programs as long as the benefits are emphasized to customers and complexity is eliminated, industry experts maintain. Forty-three percent of shoppers who visit convenience stores belong to at least one “typical retail loyalty program,” according to Wilton, Conn.-based Cadent Consulting Group. The potential exists to bring that percentage and more to a dual program.

Convenience distributor Eby-Brown recently debuted four new foodservice programs, including the Delicious BBQ program.

channel, and emphasizes “freshly sliced” sub sandwiches of high quality that can be prepared in short periods of time. Another foodservice player that’s starting to pay special attention to the convenience channel is Lakewood, Colo.-based Bagel Brands (a.k.a. Einstein Bros. Bagels), which recently unveiled a scaled-down all-day breakfast kiosk model for c-stores. The kiosk includes the top five or six items that generate the most sales from its traditional restaurant model, but in about 130 square feet of space. “We see the small, flexible kiosk as the sweet spot now for c-stores looking to partner in foodservice,” Nicholas Schaefer, Bagel Brands’ senior vice president of development, told Convenience Store News. “It capitalizes on the labor and customer count you have in-store already, taking up the minimal amount of space.” Convenience distributors, diversifying their product mix, are also increasingly presenting new branded foodservice options to their convenience retailer partners. In late February, S. Abraham & Sons held its 2020 Vendor Exhibit & Trade Show where it highlighted a warmer merchandising program from The Jonny Almond Nut Co., Papa Primo's pizza from Orion Foodservice, David's Cookies, and much more. 60 Convenience Store News C S N E W S . c o m

Houston, Texas-based Shell Oil Co. and Canton, Mass.based Dunkin’ expanded their Northeast rewards program nationally in February. The “Sip Dunkin’, Save at Shell” program enables Shell Fuel Rewards members who have gold status in Dunkin’s DD Perks program to save 10 cents per gallon of fuel for every five beverages they purchase at a Dunkin’ location. The program is intended to run at least through this year. The key to this and other joint loyalty ventures is for both companies to view it as a revenue center, not a cost category, according to Blimpie’s Wallace. When managed correctly, joint loyalty ventures drive additional revenue for both the convenience partner and the foodservice partner, he explained. Bagel Brands’ Schaefer agrees that in order to be successful, both parties have to move past the old way of thinking about loyalty. “It goes far beyond offering deals to customers. It’s now like a lifeline that is being magnified by the COVID crisis, enabling us to reach our customers and have a digital relationship with them.” Bagel Brands has a loyalty app that it would like to see its convenience retailer partners adopt. “We have to figure out each partnership individually as to whose cash register hardware do you use, etc., but there’s technology that can help us get through all that,” Schaefer said. “What’s happened in the last 30-60 days has been a critical awakening that we really need to collect the data and understand our customers in our markets. We have to create this habit to be able to better serve them.”

Essential Businesses

In the face of the COVID-19 pandemic, with many businesses forced to shut down, branded foodservice partnerships have proven more vital than ever for both the convenience store operators and the restaurant brands. “Convenience stores and the foodservice brands that are within them are essential businesses to many

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different consumer groups and fulfill a great community need now,” stated Wallace. “First responders and other essential support personnel have very little time in the wake of this pandemic as they work to support others. Convenience stores are the natural choice for quick food options for these consumers.” One trend that Bagel Brands is witnessing amid the pandemic is that food made right in front of the customer is a lot more appealing these days. “Whether it’s a drive-thru or walk-up situation, being able to watch the preparation of your food has a lot more legs as we emerge from this crisis,” Schaefer told CSNews. “So, it’s making gas and convenience stores really want to up their food offering even more.” As these partnerships evolve into the future, Cadent Consulting Group predicts more convenience stores will aim to gain a “cult foodservice following” in the way that food-forward c-store chains like Wawa Inc. and Sheetz Inc. have. Overall, KinterCSN_PrintAdFINAL.pdf

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c-store foodservice is growing in popularity, especially among “online savvy millennials,” with about two-thirds purchasing a c-store meal at least once a month, according to the group. “Online takeout and delivery are likely to expand, and c-stores could play a role here — not just during COVID, but also in helping to transition to the ‘next normal,’” said Donald Stuart, managing partner at Cadent Consulting Group. The convenience store of the future will be able to provide its customers with enhancements that QSRs can’t on their own, added Wallace. Each will bring their own set of strengths and experiences to the table to enhance the other’s success. The level of convenience required is being amplified. Convenience store operators and their branded foodservice partners can help one another get there faster than if they were operating separately, according to Schaefer. “You pull up to get gas, order a sandwich from the car, you walk in and it’s ready. That level of convenience used to be nice to have; now, it’s table stakes,” he said. CSN


TECHNOLOGY

Safeguarding Your Stores Data breaches bring financial loss, as well as loss of consumer trust, to affected retailers By Melissa Kress

RETAILERS KNOW MORE about their customers today than ever before. Information captured through loyalty programs paints a clear picture of them: what they like to eat and drink, when they like to shop, and even if they have children in their household or not.

The bad news for convenience store retailers, though, is that they’re not the only ones interested in collecting information from their customers. Data thieves are, too. Reports of skimmers at the pump have been circulating for several years — not surprising considering a December 2019 Conexxus webcast noted that 70 percent of fuel retailers had not deployed EMV upgrades at their fuel dispensers. Late 2019 also brought the news that Wawa Inc., a popular c-store chain with locations in the Mid-Atlantic and Florida, experienced a data breach that potentially affected all of its locations. In an open letter to customers, Wawa CEO Chris Gheysens said malware affected payment card information used at potentially all Wawa locations beginning at different points in time after March 4, 2019 62 Convenience Store News C S N E W S . c o m

and until it was contained on Dec. 12, 2019. The malware was present on most store systems by approximately April 22, but wasn’t identified by the retailer's information security team until Dec. 10. Two months later, on Feb. 13, fellow Pennsylvaniabased convenience store chain Rutter's reported a similar breach. According to the company, a third party reported the possibility of unauthorized access to data from payment cards that were used at some Rutter's locations. Rutter's launched a subsequent investigation with the help of cybersecurity firms, and notified law enforcement. According to the retailer, the security breach timeframe varied by store location, but generally fell between Oct. 1, 2018 and May 29, 2019.

Too Convenient?

So, what is it about the convenience channel that makes it an attractive target for data thieves? As Marc Schultz, head of data privacy and security at Newton, Mass.-based customer engagement solutions provider Paytronix, sees it, there is a natural tension between the need for speed in the


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TECHNOLOGY

convenience channel and the need for security. "Convenience stores are about speed and convenience. Consumers don't often think of the low-value and high-frequency transactions found in convenience stores as high risk, until there is an issue, but bad actors consider those same factors in their favor," Schultz told Convenience Store News. "Large numbers of transactions generate a lot of valuable personal and financial data, including order history and credit card information." Additional risk factors include independent locations that are oftentimes staffed by a single employee, and real or perceived limited in-house security and technical resources. A high traffic count and a high employee turnover rate are also driving factors, according to Carl Mazzanti, president and co-founder of Hoboken, N.J.-based eMazzanti Technologies, a provider of cloud, information technology (IT) and network services.

expenses — what it costs to run a campaign, what it costs to find people to buy the stolen data, what it costs to run servers. They are running an organization that has expenses. If what they have to sell isn't worth as much, they may hold on to it like an asset and sell it later on," he said, explaining that the value of a card number can drop when there are more numbers for sale.

"It is difficult to deliver compliance or standardization. In the retail space, there are 16-year-olds to 100-year-old people working…,” Mazzanti explained. "In convenience stores, you usually have a lot of transient workers. It is difficult to deploy standards across all the stores without having a regional or district manager go by the stores on a regular basis."

Still, whether a security breach is detected immediately or nine months later, the impact on a convenience store operator is largely the same, according to industry experts.

Detection Delays

As evidenced by the incidents at Wawa and Rutter's, it could take several months for a retailer to detect a breach. Perpetrators may let a device — like in the case of skimmers at the pump — sit there for months before removing it and using the data for malicious activity. Mazzanti said there are several reasons for the lag in detection: "One, sometimes your payment gateway provider doesn't correlate the problem fast enough. Two, sometimes the FBI decides not to let anyone know it is occurring because they want to catch the perpetrators; the FBI lets the breach continue while it narrows down who the party is."

"The two immediate results are loss of consumer trust and financial losses, but perhaps the most painful and long-lasting impact comes in business disruption," Schultz said. "C-stores, like other retailers, must redirect scarce resources to short-term and immediate investigations and to longer-term additional reporting and control requirements."

Protection Efforts

Regionally, c-store operators on the East Coast and in California face increased risk of data theft, driven primarily by physical factors such as the location of the bad actors and the vulnerable endpoints, according to Schultz. “Bad actors go where the data is," he added. In general, though, the convenience channel presents a large number of attractive and potentially vulnerable endpoints. And in the online world, bad actors can reach across the global and infiltrate both corporate and store locations, he pointed out.

Other times, according to Mazzanti, the perpetrator may hold onto the stolen data for a while.

Inside the store, implementing EMV chip technology at the point-of-sale cuts down on data theft by making it harder for bad actors to steal card information. So, EMV upgrades at the forecourt — which have a new April 2021 deadline — should help ease problems at the pump.

"Bad people run a business. Revenue comes in, what they have stolen, and they have

"EMV at the pump has and will help, but it is unreasonable to think any single technology will eliminate all

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


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Committed to keep employees safe and supply chain operational through this challenging time.

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TECHNOLOGY

The reality is: safeguarding your store will force perpetrators to look elsewhere. threats. EMV has been effective as one part of a comprehensive set of security controls,” Schultz explained. "Beyond EMV, we'll see continued innovations in areas like mobile payments. So, we can't fall back on any specific technology to be the answer to all our ills." According to the Paytronix executive, there are five primary steps that cstore operators can take to protect consumer data: • Use trusted partners; • Minimize the amount of sensitive data collected; • Protect sensitive data collected by restricting and monitoring its access; • Securely delete data that is no longer needed; and • Apply security patches in a timely fashion. 66 Convenience Store News C S N E W S . c o m

The reality is: safeguarding your store will force perpetrators to look elsewhere. "Your convenience store has to be more complicated to go after than another one they can walk into," Mazzanti advised. For example, if a c-store has a camera posted on the ceiling, even if it doesn't record, a bad actor will think twice. Also, when people are greeted when they walk in, they are less likely to steal because they know someone is paying attention. IT firms have many tools available that retailers can use to make their stores “more complicated” for criminals, according to Mazzanti. "For not a lot of money, you can make it difficult for a bad person to take advantage [of your business]," he said. And one additional tip he offers is: The doer should never be the checker. "A mistake we have seen in convenience stores is they have the same firm doing the security audit and deployment for a long time. Because of that, there are no new fresh ideas coming in. The rotation of some of the vendors every number of years is a good idea," he said. CSN


TWIC TRAILBLAZERS

Advocating for Change Altria Group Distribution Co.’s Women in Sales Network helps create a more inclusive culture By Linda Lisanti NOW IN ITS seventh

year, the Convenience Store News Top Women in Convenience (TWIC) awards program has recognized nearly 300 of the best and brightest women making a positive impact on not only the companies they work for, but also the entire convenience retail channel. TWIC is the only program that recognizes exceptional female leaders, rising stars and mentors among retailer, supplier and distributor firms in the convenience store industry, from the C-suite to the store level to the independent entrepreneur. In TWIC Trailblazers, our new quarterly feature, we spotlight a c-store industry retailer, supplier or distributor company that is leading the way in championing gender parity. This month’s subject is Altria Group Distribution Co. (AGDC), the nation’s largest tobacco supplier with its products on the backbars of nearly every c-store retailer’s stores. AGDC promotes the advancement of female leaders through its Women in Sales Network (WSN), an employee resource group founded in 2013 that currently has 519 members, accounting for about 30 percent of its sales organization. Membership is 68.6 percent female and 31.4 percent male. CSNews recently chatted with members of the Women in Sales Network about its mission.

Altria’s Women in Sales Network is striving for 50/50 gender parity at the executive and director levels.

CSNews: Since its inception in April 2013, how has the Women in Sales Network evolved in its mission and tactics? WSN: When WSN started, we were focused on recruiting and advancing women. We set lofty goals (and met some of them) but, in talking with our members, realized that we were missing the mark. The change our members really needed in the organization was more cultural. Many women in AGDC want to feel a stronger sense of belonging. So in 2019, we refocused and unveiled our new vision: to drive a culture where women are included, valued, and Altria leverages her perspective to ensure continued success. The most effective tactic we use is sharing our members’ stories — divulging the real and unique challenges women face to the executive team. Stories have the power to transport you into someone else’s world;

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

Platinum Sponsors

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

Gold Sponsors

Silver Sponsor


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TWIC TRAILBLAZERS

per surrogacy or fertility-related procedure, like IVF. We also receive up to $10,000 for cryopreservation, which is long-term storage of reproductive genetic material. No medical diagnosis is required. • Infertility Treatment Assistance — Company support increased from $20,000 to an unlimited lifetime maximum with a medical diagnosis. • Adoption Assistance — Increased from $3,000 to $35,000 per child. • Breast Milk Shipping — Previously not a benefit, Altria now pays for new moms to ship breast milk home while on business travel. By the end of this year, Altria’s Women in Sales Network seeks to double its male membership.

experience another’s innermost doubts, fears, joys and pains; transform opinions and behaviors; and most importantly, create empathy. The muscle behind our stories is WSN’s two agile teams dedicated to shining a light on the actual environment so that we can work together toward a better future: • Sharing her experience — to change mindsets and build a more inclusive culture, leaders and the organization need to understand how she feels, what’s important to her, and what she’s been through. • The diversity of her — because what Asian, black, Hispanic and white women need to feel included and valued is unique. CSNews: What have been some of the most noteworthy results and achievements of the Women in Sales Network to date? WSN: WSN has achieved a lot over the years, but the most noteworthy resulted from surveying our members on what changes they’d like to see in Altria’s benefits. WSN then advocated for these changes to leadership, and the results were life-changing for both men and women at Altria. Among the changes: •P  aid Family & Medical Leave — The first benefit WSN advocated for was men’s leave. Now, women and men can both take parental leave, which increased from six weeks to 12. Parents can take this intermittently or all at once. This is in addition to the six to eight weeks of medical leave women receive after giving birth. • Surrogacy/Fertility Assistance — Previously not a benefit, Altria now reimburses employees up to $35,000 70 Convenience Store News C S N E W S . c o m

WSN leads Altria’s other employee resource groups (ERGs) by example, in creating a stronger relationship with leadership. Leaders depend on WSN and the other ERGs more now than in the past to advocate for members and bring the employee’s voice to the top. AGDC’s president and CEO chose to be WSN’s executive sponsor, making us a high priority and leaning on us to help create a more inclusive culture. Additionally, WSN launched national training for our 1,700-member salesforce on topics such as gender intelligence, coaching your inner critic, mentoring, negotiation, resilience and energy, emotional intelligence, and more. WSN created Women Executives Leading and Learning (WELL), a one-year learning series for about 30 highpotential women in senior management and director roles. This multifaceted developmental experience broadens participants’ exposure and interaction with senior Altria leaders; increases participants’ personal awareness, enterprise acumen, and ability to develop and leverage relationships; and changes the perception of female leaders. Alongside NACS, WSN also created the Women’s Leadership Program at Yale, which develops women at critical transition points so that they stay in otherwise leaky pipelines to the top. Participants build awareness of decision-making biases, learn how to create high-performing teams, negotiate winwin outcomes, manage crises, drive innovation, and create an authentic leadership style. Last year, the Network of Executive Women recognized one of our WSN members, Jacob Davidson, as the Male Advocate of the Year. CSNews: Are there any new initiatives at AGDC planned for 2020 around gender parity? WSN: Absolutely. Within WSN, we aim to double our male membership from 160 to 320 by the end of the year. Across Altria, we’re striving for 50/50 gender parity at the executive and director levels. WSN contributes to meeting this goal by holding leadership accountable. We advocate for visible scorecards and analytics of diversity breakdowns by role for senior-level leadership. CSN


SPONSORSHIPS ARE NOW AVAILABLE!

CONTACT:

W MEN IN CONVENIENCE PRESENTED BY CONVENIENCE STORE NEWS

The 2020 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:

Senior Level Leaders

Rising Stars

RON LOWY Associate Brand Director/West Coast 330-840-9557 rlowy@ensembleIQ.com RACHEL MCGAFFIGAN Associate Brand Director/Northeast 508-385-2524 rmcgaffigan@ensembleIQ.com KELLY FISCHER Associate Publisher/Midwest 847-894-8134 kfischer@ensembleIQ.com

AWARD CATEGORIES* Women of the Year

PAULA LASHINSKY Vice President and Brand Director 917-446-4117 plashinsky@ensembleIQ.com

Mentors

TERRY KANGANIS Account Executive/ Classified Advertising 201-855-7615 tkanganis@ensembleIQ.com

SPONSORSHIPS AVAILABLE! TWIC20 Sponsorships Open FP ad_Final.indd 1

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STORE SPOTLIGHT

Big Offerings for the Big Apple

7-Eleven’s latest Evolution Store in New York City features high-quality, differentiated food options By Danielle Romano A CITY KNOWN for its fast-paced lifestyles and ever-evolving landscape of innovation is home to 7-Eleven Inc.’s latest Evolution Store — the third of its kind for the convenience store retailer.

At a Glance 7-Eleven Evolution Store Location: 88 Greenwich St., Manhattan, N.Y. Size: 2,400 square feet Special features: Raise the Roost Chicken & Biscuits, a new Southern-inspired quick-serve food concept; made-to-order specialty drinks; novelty cold beverages on tap; a cold treats bar; Mobile Checkout; 7NOW Delivery; a store design that brings the spirit of Manhattan to life

Evolution Stores are real-time, real-life, experiential testing grounds where customers can try and buy the retailer’s latest innovations in revolutionary new store formats. They are also the first 7-Eleven stores to integrate restaurant concepts into the store design. 7-Eleven opened its first Evolution Store in Dallas in March 2019, followed by a second store in Washington D.C., in February 2020. Its latest Evolution Store, in New York City, made its debut this March. “Today’s customers expect even more than they did just a year ago when 7-Eleven opened its first Evolution Store in Dallas,” said Chris Tanco, 7-Eleven’s executive vice president and chief operating officer. “Consumer feedback — from that original store and the neighborhoods these new stores will serve — helped our store development team refine and design this next generation of the 7-Eleven shopping experience. We have raised the bar for convenience, and invite everyone to come experience it for themselves.”

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Customizable Cravings

Located at 88 Greenwich St. in Manhattan, the NYC Evolution Store follows in the footsteps of the Dallas and Washington, D.C. locations by featuring customized design elements and a product assortment that reflects the neighborhood and customers it serves. Particularly, this site brings the spirit of Manhattan to life with a neon Statue of Liberty and a video wall. The store introduces Raise the Roost Chicken & Biscuits, a new Southerninspired quick-serve food concept that serves up made-from-scratch, handbreaded fried chicken tenders. Billed as “Chicken Worth Crossing the Road For,” Raise the Roost offers a simple menu: made-from-scratch, handbreaded fried chicken tenders with signature sauces; bone-in and boneless wings; signature chicken sandwiches; and breakfast sandwiches. The in-store proprietary restaurant offers both madeto-order and grab-and-go options. “On-the-go customers are looking for high-quality, differentiated food options and 7-Eleven continues to explore new concepts that meet that demand,” said 7-Eleven President and CEO Joseph DePinto. “Raise the Roost offers craveable


“These new stores are invaluable learning labs, where new concepts are tailored to meet the needs of the communities they will serve from sunny Southern California to the fast-paced world of the East Coast.” — Chris Tanco, 7-Eleven Inc. food and generous portions at prices below what you’ll find at most fried chicken establishments.” Along with the Southern-inspired cuisine, this Evolution Store also offers: • Customizable, made-to-order specialty drinks, such as flavored lattes, mochas, smoothies, cold brew coffee, and more. • Self-serve bean-to-cup coffee with the addition of touchscreen machines that can brew custom hot and iced coffee in just seconds. • Novelty cold beverages on tap, including tea, kombucha, and nitro cold brew. • A cold treats bar offering both selfserve frozen yogurt and ice cream that can be swirled to create custom flavors with multiple toppings. • Mobile Checkout, whereby customers can skip the checkout counter and pay for their purchases via the 7-Eleven app and accompanying 7Rewards loyalty program. • 7NOW Delivery, 7-Eleven’s on-demand delivery app that allows customers to have convenience items delivered straight to their door.

More to Come

The Washington, D.C., and New York City stores are among six locales where 7-Eleven plans to open Evolution Stores in 2020. A San Diego store, at 3504 El Cajon Blvd., is next up on the docket. “These new stores are invaluable learning labs, where new concepts are tailored to meet the needs of the communities they will serve from sunny Southern California to the fast-paced world of the East Coast,” Tanco said. “We will continue to evolve based on customer feedback, and we look forward to creating the next generation of convenience together.” 74 Convenience Store News C S N E W S . c o m

Customizable, made-to-order specialty drinks and novelty cold beverages on tap are among the special features of this store.

Based in Irving, Texas, 7-Eleven operates, franchises and/or licenses more than 70,000 stores in 17 countries, including 11,800 in North America. CSN


Get treated like the big chains Attention independent store owners You already know that 5-hour ENERGY is one of the most profitable brands in your store. You want to sell more. That’s why you should sign up for the 5-hour ENERGY Retailer Rewards program. You’ll get the advantages enjoyed by the big chains – promotional programs, merchandising programs, and more – all designed to help you sell more 5-hour ENERGY and make you more money. Plus, you’ll get freebies! Who doesn’t love freebies? ®

®

®

Here’s what you’ll get: Communication: You’ll receive emails telling you about new flavors, displays, marketing programs, and promotion programs. That way you’ll know about them at the same time the big chains do, so you can compete on the same level. You’ll also get simple tips to help you sell more bottles of 5-hour ENERGY and make more money. ®

Freebies: Why should the big guys get all the good stuff? As a member of the 5-hour ENERGY Retailer Rewards program you’ll have access to freebies year-round. It might be a branded counter mat, or clock, or even something you can sell in your store. ®

Promotion programs: Periodically, you’ll receive information about money-saving promotions you can pass on to your customers. So, when the big chains offer 2 for $6, or buy-2-get-1-free, you can, too.

Marketing promotions: Every year 5-hour ENERGY launches multiple national marketing promotions, and we want you to participate! Being a member of the Retailer Rewards program gives you the chance to jump on board right away.

®

New displays: See the hottest trends in 5-hour ENERGY counter racks, end caps, power wings and floor displays. As soon as it’s available, you’ll know about it! ®

Get your free merchandising kit!

New flavors: When new flavors of 5-hour ENERGY are released, consumers buy them. As a member of the Retailer Rewards program you’ll find out about new flavors, release dates and availability at the same time the big chains do. ®

Sign up today at www.5HErewards.com Mailings and promo items are subject to change. You may opt out of mailings and messaging at anytime. ©2020 SI Online, LLC. All rights reserved. SI Online, LLC is an independent distributor of 5-hour ENERGY® products.


HOT PRODUCTS SPECIAL ADVERTISING SECTION

Beverages

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HOT PRODUCTS SPECIAL ADVERTISING SECTION

New Dietary Supplement

Car Wash Services

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General Merchandise

Gourmet Pet Treats

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General Merchandise

Age Verifier

86

%

of retailers

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

Terry Kanganis EnsembleIQ at:

. 201-855-7615 for more details J UNE

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Healthy Fruit Chillers Program

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ATMs

Air Vacs

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

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

Our ads get results! CALL TERRY KANGANIS TODAY-

201.855.7615

tkanganis@ensembleIQ.com

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CLASSIFIEDS

C-store Services

Foodservice Program

FOR ALL YOUR NEW PRODUCTS AND SERVICES ADVERTISE IN

CSN

HOT PRODUCTS

CALL

TERRY KANGANIS

201.855.7615

Petroleum/Equiment

Credit Card Processors

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CLASSIFIEDS

Equipment / Supplies

Business For Sale

Wholesale Refrigeration

Check Guarantee Services

IF YOU HAVE A ADVERTISE IT HERE!! Terry Kanganis: 201-855-7615

ADINDEX Altria Group Distribution............... 2, 3

Living Essentials LLC...................... 75

BIC USA Inc........................................ 23

Mars Wrigley Confectionery........ 17

Calico Brands..................................... 15

McLane Company............................ 80

Cheyenne International.................. 49

Molson Coors Beverage Co.......... 33

CoreMark International Corp....... 65

Perfetti Van Melle............................. 69

Del Monte Fresh Produce N.A..... 57 E-Alternative Solutions.................. 51

Premier Manufacturing.................. 39, 41, ........................................................... 43, 45

Forte Products.................................. 16

Procter & Gamble............................. 29

GlaxoSmithKline Consumer Health Care................... 5, 7, 9, 11

Reynolds American Trade Marketing Services.............. 31

Goya Foods Inc................................. 25 Imageworks Display & Marketing Group............................... 73

Ruiz Food Products........................ 59 Swedish Match ZYN........................ 37 Swisher International, Inc.............. 19, 55

ITG Brands.......................................... 47, 63

The Hershey Company................... 53

Kinter.................................................... 61

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

Krispy Krunchy Chicken................ 21 Lancer Corp........................................ 35 Liggett Vector Brands.................... 67

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

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INSIDE THE CONSUMER MIND

What’s In Your Basket? Beer buying drives men to c-stores, while candy buying is a sweet spot for women With convenience stores selling about 80 percent of the fuel purchased in the United States, it’s no surprise that fuel is the top product purchased by c-store shoppers. But what else compels consumers to visit the nation’s nearly 153,000 c-stores? The 2020 Convenience Store News Realities of the Aisle Study, which surveyed 1,500-plus consumers who shop a c-store at least once a month, revealed the following:

Aside from fuel, the top products purchased by c-store shoppers overall are: Canned/ bottled soda

Salty snacks

37%

38%

Sweet snacks

36%

Candy

41%

Milk

33%

Fountain drinks

35%

Snack packs

35%

Male c-store shoppers

are more likely than females to have in their baskets:

Female c-store shoppers are more likely than males to have in their baskets:

Lottery is also a strong driver of convenience store trips:

29%

of c-store shoppers overall said they have purchased a lottery ticket in the past month. Daily convenience store shoppers are more likely to be lottery players (37%) than weekly or monthly c-store shoppers (26%). More women than men purchase lottery tickets at c-stores:

33% VS. 24% Sports Drinks

Energy Drinks

Beer

Milk

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Sweet snacks

Salty snacks

Canned/ bottled soda

Fountain drinks

By age, baby boomers most like to try their luck: 40% picked up a lottery ticket in the past month vs. 30% of Generation X, 27% of millennials and 14% of Generation Z.


34th ANNUAL

SAVE THE DATE! 11.04.2020 | Savannah, Georgia

ANNOUNCING... From the most established brand in the convenience store retailer space comes one of the highest honors in the industry: the Convenience Store News Hall of Fame. This is a must-attend gala event with some of the most admired retailers and suppliers in the c-store industry in attendance, honoring some of the industry’s most influential retailer and supplier executives.

4 REASONS TO PARTICIPATE IN THE CSNEWS HALL OF FAME EVENT: • • • •

Strengthen and develop industry relationships Be known as a leader in the industry Gain visibility for your brand and products Reach retail and supplier executives and key decision-makers

Hall of Fame is an intimate awards gala reception, dinner and award ceremony celebrating the induction of outstanding men and women who have exhibited exceptional leadership and provided significant contributions to the convenience store industry.

2020 HONOREES

RETAILER HALL OF FAMER

SUPPLIER HALL OF FAMER

Greg Parker

Dave Onorato

Founder and CEO, Parker’s

Vice President, General Manager, Small Format Stores, The Hershey Co.

RETAILER EXECUTIVE OF THE YEAR

Darren Rebelez President and Chief Executive Officer, Casey’s General Stores

For more information please contact Paula Lashinsky, VP/Publisher, plashinsky@ensembleiq.com

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AND FEATURING OUR EXCLUSIVE

Join us as we help nurture and celebrate the exceptional leaders of tomorrow in the convenience store industry. The Convenience Store News Future Leaders in Convenience program celebrates and develops the next generation of convenience retail leaders by providing a forum for talented young business people to hone their leadership talent while recognizing the achievements of an emerging leaders under the age of 35 at the time of nomination. The CSNews Future Leaders in Convenience program provides a comprehensive workshop and networking program that teaches young convenience store managers and executives how to achieve their full potential as leaders in their organizations and the industry at large.

5/4/20 2:25 PM


EXTRAORDINARY CHALLENGES. REMARKABLE PEOPLE. IMMEASURABLE GRATITUDE. TOGETHER, WE WILL GET THROUGH THIS. McLane’s teammates are working diligently to do our part to keep our grocery and foodservice supply chain flowing, while prioritizing the health and safety of our teammates, customers, suppliers, and communities. We could not do it without all the unsung heroes that keep our industry moving, and we thank them for their hard work, bravery, and dedication. mclaneco.com

© 2020 McLane Company, Inc. All rights reserved.


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