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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

DISRUPTION Six technologies that will change convenience and fuel retailing.

GETTING INTO THE DELIVERY GAME SEPTEMBER 2018 CSNEWS.COM


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VIEWPOINT

Big Year Ahead for Technology Advances in the Convenience Store Industry The future is now for loyalty, mobile pay, frictionless checkout, connected car, omnichannel and other advanced capabilities NO LONGER ARE CONVENIENCE STORES laggards

in the retail technology revolution. Developments over the past year reveal that c-store retailers are battling for consumers’ hearts, minds and wallets, loaded with some of the most advanced technology available in the market today.

A year ago, we wrote about how the convenience store industry was moving beyond the basic requirements in their investment in technology. Our exclusive 2017 Technology Study showed c-stores were increasing their spending, especially on new customer-facing technology. In the past month alone, we’ve posted numerous stories on CSNews.com that illustrate how c-stores are moving into the cutting edge of new technology. Some examples are: • Ricker’s began implementing frictionless checkout technology — similar to the type of technology used by Amazon Go — at its 58 convenience stores. The technology includes mobile payment.

• Wawa rolled out a pilot test of new checkout kiosks on wheels to speed up customer service at busy times. These separate counters are outfitted with a barcode scanner, a credit card reader and a plastic bagging system, all in a total footprint no larger than a mailbox. • 7-Eleven said it will join the list of retailers accepting tap-to-pay payments via Apple Pay. Other c-stores currently accepting Apple Pay include Casey’s General Stores, Corner Store, ExtraMile and QuikTrip. Our cover story this month (see page 32) examines six technologies that we believe are changing the game for convenience store retailers. The consumer demand for personalization, engaging shoppers across multiple channels, voice ordering, frictionless commerce, the vehicle of the future and the Internet of Things are all disrupting traditional retail practices.

• Shell Oil partnered with General Motors on the auto industry’s first-ever embedded, in-dash fuel payment and loyalty experience. Available at Shell-branded gas stations in the United States, the platform allows customers to use Shell Pay & Save within GM Marketplace to pay for their fuel directly from their GM vehicles’ infotainment screen, and earn and redeem Fuel Rewards program savings.

C-stores are enhancing solutions to do more than just keep pace with the competition, defending their turf as the purveyors of “convenience” — even as the consumer perception of “convenience” continues to evolve.

• Yesway, Double Quick and Murphy USA all reached membership milestones with their loyalty rewards programs.

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

EDITORIAL EXCELLENCE AWARDS (2013-2018)

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

EDITORIAL ADVISORY BOARD

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

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

2013 Jesse H. Neal National Business Journalism Award

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

2017 Eddie Awards, Folio: magazine Winner, Business to Business, Retail, Single/Series of Articles, May 2017 Honorable Mention, Business to Business, Retail, Single/Series of Articles, June 2016

2015 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Single Article, February 2014

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

Jon Bratta Core-Mark International Inc.

Jack Lewis GPM Midwest

Rick Crawford Green Valley Grocery Edward Davidson ER Davidson & Associates (7-Eleven Inc., retired)

2016 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2015 Business to Business, Retail, Single/Series of Articles, August 2015

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

Vito Maurici McLane Co. Inc.

Finalist, Best Profile, August 2012

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

Brett Atherton Bolla Management

2014 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2013 Business to Business, Retail, Single Article, February 2013 2013 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2012

Jim Hachtel Eby-Brown Co. Ray Johnson Speedee Mart

Danielle Mattiussi Maverik Inc. Richard Mione GPM Southeast Jonathan Polonsky Plaid Pantries Inc. Greg Scriver Kwik Trip Inc. Roy Strasburger Strasburger Retail


CONTENTS SEPT 18

VO LUM E 54 N UMB ER 09

32 66 60 FEATURES COVER STORY

32 Disruption Six technologies that will change convenience and fuel retailing. 34 The Emergence of Omnichannel Consumers are now setting the terms of where, when and how when it comes to shopping. 38 Frictionless Checkout Gains Traction Convenience stores are seen as prime territory for autonomous shopping solutions. 44 Next-Level Loyalty Customer-specific offers, outside-the-box rewards and detailed data analytics are powering today’s most successful loyalty programs. 50 Voice Ordering: Should C-stores Be Listening? With Amazon and Google leading the way, consumers are beginning to embrace voice ordering, and savvy retailers are answering the call.

58 Making Connections With IoT The Internet of Things is becoming increasingly important for the convenience channel to understand and utilize. 60 Succeed Together Technology Leader of the Year Charles Jarrett of Cumberland Farms credits the company’s team values for its tech success. 70 Diving Into Delivery Thanks to third-party companies, getting into the delivery game is easier than ever — and quickly becoming an expectation of consumers. 74 “C” Is for Convenience & Compete The 2018 NACS Show will school the c-store industry on getting and keeping attention. CATEGORY MANAGEMENT FOODSERVICE

64 What’s Hot on C-store Menus? Two frozen treats show the power of co-branding. FOODSERVICE

54 Driving Into the Future Though still a minority on the road, alternative vehicles are increasing in popularity and convenience stores will have to adapt or get left behind.

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

66 Thinking Small Yields Big Results for Parker’s The 2018 Convenience Store News Foodservice Leader of the Year found success by focusing on its core offering and executing a well-thought-out plan.


GET A FRESH START ALL DAY

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CONTENTS SEPT 18

VO LU M E 54 N UMB ER 09

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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

Don Longo dlongo@ensembleiq.com

Editor-in-Chief (201) 855-7608

Linda Lisanti llisanti@ensembleiq.com

Senior News Editor (201) 855-7618

Melissa Kress mkress@ensembleiq.com

Associate Editor (201) 855-7619

Angela Hanson ahanson@ensembleiq.com

Associate Managing Editor (201) 855-7604

INDUSTRY ROUNDUP

DEPARTMENTS VIEWPOINT

4 Big Year Ahead for Technology Advances in the Convenience Store Industry The future is now for loyalty, mobile pay, frictionless checkout, connected car, omnichannel and other advanced capabilities.

12 Marathon-Andeavor Leadership Team Takes Shape 14 Summer Snapshots 16 Fast Facts 18 Eye on Growth 20 In the Public Eye

10 CSNews Online

Danielle Romano dromano@ensembleiq.com

Assistant Editor (201) 855-7614

Chelsea Regan cregan@ensembleiq.com

Contributing Editor (303) 741-3377

Renée M. Covino reneek@aol.com

Contributing Editor (201) 280-2614

Tammy Mastroberte tmastroberte@gmail.com

ADVERTISING SALES & BUSINESS Associate Brand Director & Northeast Sales Manager (508) 385-2524

Rachel McGaffigan rmcgaffigan@ensembleiq.com

Associate Brand Director & Western Sales Manager (330) 840-9557

Ron Lowy rlowy@ensembleiq.com

Associate Publisher & Midwest Sales Manager Kelly Fischer (773) 992-4464 kfischer@ensembleiq.com Account Executive, Southeast (803) 315-0694

Cindy DeBerry cdeberry@ensembleiq.com

Account Executive & Classified Advertising Terry Kanganis (201) 855-7615 tkanganis@ensembleiq.com Classified Production Manager Mary Beth Medley (856) 809-0050 marybeth@marybethmedley.com

22 New Products

EVENTS Vice President, Events (647) 557-5094 ext.1001

SMALL OPERATOR

24 Convenience With a View Former Nice N Easy Grocery Shoppes executive Matt Paduano taps into his 29 years of experience to open the family-run Lakeport Market. STORE SPOTLIGHT

Michael Cronin mcronin@ensembleiq.com

AUDIENCE ENGAGEMENT

24

78 Uniquely Texas Texas Best Smokehouse travel centers offer homestyle barbecue in a family setting.

Director of Audience Engagement Gail Reboletti (224) 632-8214 greboletti@ensembleiq.com Audience Engagement Manager (215) 301-0593 List Rental (847) 492-1350 ext.318

MeritDirect Elizabeth Jackson

Subscriber Services/Single-Copy Purchases (978) 671-0449 EnsembleIQ@e-circ.net PROJECT MANAGEMENT/PRODUCTION/ART Vice President, Production (973) 358-4875 Creative Director (973) 607-1320

NEW HORIZONS

Shelly Patton spatton@ensembleiq.com

Kathryn Homenick khomenick@ensembleiq.com Colette Magliaro cmagliaro@ensembleiq.com

Custom Project Manager (224) 632-8244

Kathy Colwell kcolwell@ensembleiq.com

Custom Project Manager (973) 607-1368

Judi Lam jlam@ensembleiq.com

81 Pay Parity Is Possible Starbucks shares its threestep solution for equal pay.

Advertising/Production Manager (773) 992-4418

GETTING TO THE CORE

CORPORATE OFFICERS

98 The Skinny on Baked Goods Convenience store shoppers prefer to purchase bakery products at other retail channels.

Executive Chairman Alan Glass Chief Executive Officer David Shanker Chief Operating Officer & Chief Financial Officer Rich Rivera Chief Brand Officer Korry Stagnito President, Enterprise Solutions Terese Herbig Chief Digital Officer Joel Hughes Chief Human Resources Officer Jennifer Turner Senior Vice President, Innovation Tanner Van Dusen

Art Director (224) 632-8245

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Ed Ward eward@ensembleiq.com Michael Escobedo mescobedo@ensembleiq.com

CONVENIENCE STORE NEWS AFFILIATIONS Premier Trade Press Exhibitor

The contents of this publication may not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for product claims and representations. Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by EnsembleIQ, 8550 W. Bryn Mawr Ave., Ste. 200, Chicago, IL 60631. Copyright © 2018 by EnsembleIQ. All rights reserved. Subscriptions: One year, $93; two years, $152. One year, Canada, $110; two years, Canada, $175. One year, foreign, $150. Payable in advance with a bank draft drawn on a U.S. bank in U.S. funds. Single copies, $10, except foreign, where postage will be added. Printed in U.S.A. Periodicals postage paid at Chicago, IL, and at additional mailing offices. POSTMASTER: Send address changes to Convenience Store News, P.O. Box 1842, Lowell, MA 01853.

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CSNEWS ONLINE

PHOTO GALLERY

TOP 5 DAILY NEWS HEADLINES

1

Pilot Flying J Details Key Milestones of 2018’s Second Quarter

The travel center operator released highlights from its second quarter, which included nine new store openings, expansion into five states, four new Service Centers, 294 new truck parking spaces, the creation of more than 500 new jobs, 57 new diesel lanes and 32 new showers.

2

Winston Brand Bringing New Entry to Premium Cigarettes Category

ITG Brands launched a new entry in the premium cigarettes category with the August debut of Winston Black, the newest edition of the Winston brand. The packaging, which features an embossed texture and a sleek honeycomb pattern, is designed to make Winston Black a standout.

3

7-Eleven Franchisees Unhappy With New Contract Terms

The National Coalition of Associations of 7-Eleven Franchisees (NCASEF) is asking parent company 7-Eleven Inc. to revise its 2019 Franchise Agreement, which approximately 19 percent of franchisees must sign by March 2019 and the majority within the next five years.

4

Dunkin’ Donuts Launches Menu Aimed at Snacking

Dunkin’ Donuts has long been a leader in the breakfast daypart, but now the coffee and doughnut chain wants to be more competitive later in the day. As part of its efforts to reach more consumers throughout the day, Dunkin’ is launching the Dunkin’ Run menu, which is aimed at take-out customers and offers a handful of items for the low price point of $2.

5

Jack Stout Named New 7-Eleven Chief Merchant

7-Eleven Inc. named company veteran Jack Stout as its new senior vice president, merchandising, marketing and demand chain. Stout replaces former Executive Vice President and Chief Merchandising Officer Jesus Delgado-Jenkins, who announced in June he was retiring.

EXPERT VIEWPOINT: Three Ways Digital Driver’s Licenses Could Revolutionize Retail Retailers who have tested Digital Driver’s Licenses (DDLs) point to a more streamlined, efficient checkout process, reduced human error, and increased reliability of information as major benefits of the technology, according to Gemalto’s Tiffany Conway. The coming shift to digital IDs might require some simple education and getting used to for you and your customers alike, but upgrading to a secure solution for ID verification will pay off, as DDLs stand to vastly improve consumers’ in-store experience and peace of mind.

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

Inside FriendShip’s Brand-New Store Concept FriendShip Kitchen, the brand-new convenience store concept from FriendShip Food Stores, the retail division of Beck Suppliers Inc., features many firsts for the retailer. The 5,500-square-foot store in Elyria, Ohio, which opened to the public July 26, includes the introduction of the FriendShip Fuel brand, and the unveiling of its proprietary FriendShip Kitchen restaurant. It is also the largest of the 25 stores the company operates along the shores of Lake Erie, from Toledo to Cleveland. For more exclusive stories, visit the Special Features section of www.csnews.com.

MOST VIEWED NEW PRODUCT

Swisher Sweets Coastal Cocktail Swisher Sweets Coastal Cocktail cigarillos pair the tropical tartness of kiwi with sweet peach for the ultimate taste of summer, according to the company. The limited-edition variety comes in a resealable twocount pouch with the “Sealed Fresh” guarantee. Price formats available are “2 for 99¢”, “Save on 2” and “2 for $1.49” options. Swisher Sweets Coastal Cocktail cigarillos are ready for shipment to stores nationwide. Swisher International Jacksonville, Fla. (800) 874-9720 www.swishersweets.com


INDUSTRY ROUNDUP

Marathon-Andeavor Leadership Team Takes Shape Anthony Kenney will remain at the helm of Speedway LLC after the merger By Melissa Kress MARATHON PETROLEUM CORP. (MPC) and Andeavor are getting their leadership ducks in a row as the companies move closer to a post-merger reality.

In April, MPC and Andeavor entered into a definitive merger agreement under which MPC will acquire all of Andeavor’s outstanding shares, representing a total equity value of $23.3 billion and a total enterprise value of $35.6 billion. Shareholders for both companies are slated to vote on the deal Sept. 24. Once the merger is completed, the newly combined company will move forward as one entity led by a mixed team of executives from both companies. The leadership team announced to date includes: • Gary H. Heminger, chairman and CEO. He currently serves as chairman and CEO of MPC. • Gregory J. Goff, executive vice chairman. He is currently chairman, president and CEO of Andeavor. • Donald C. Templin, president of refining, marketing and supply. He’s now president of MPC. • Anthony R. Kenney, president of Speedway LLC, a position he currently holds. • Michael J. Hennigan, president of MPLX LP,

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a position he currently holds. • Timothy T. Griffith, senior vice president and chief financial officer. He is currently senior vice president and CFO at MPC. • Suzanne Gagle, general counsel. She currently serves as MPC general counsel. • Fiona C. Laird, chief human resources officer. She now serves as Andeavor’s chief human resources officer. • David R. Sauber, senior vice president of labor relations, operations, health and administrative services. He is currently senior vice president of human resources, health and administrative services for MPC. • Kristina A. Kazarian, vice president of investor relations. She now serves as MPC vice president of investor relations. • Don J. Sorensen, president of Andeavor Logistics LP. He currently serves as senior vice president of ANDX. The top executives have also started building their teams, according to Heminger. “Our previously announced top executives have begun building teams of talented individuals who have tremendous depth of experience in the areas critical to our ongoing success,” Heminger said. “This group of leaders will be instrumental in unlocking the extraordinary potential of this combined entity.” In the retail network, Matthew L. Yoder, currently vice president of retail for Andeavor, will report to Kenney as Speedway’s senior vice president and chief commercial officer. In addition, Glenn M. Plumby, Speedway senior vice president and chief operating officer, and Beth A. Hunter, Speedway senior vice president and chief financial officer, will retain their current positions and titles.


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INDUSTRY ROUNDUP

Summer Snapshots Convenience Store News’ editors took in c-store industry sights during their travels

1

Convenience Store News Editor-in-Chief Linda Lisanti sought relief from the sweltering Florida heat with RaceTrac Petroleum’s Swirl World frozen yogurt offering.

2

During an unusual hot spell in San Diego, vacation for Convenience Store News Senior News Editor Melissa Kress included a stop for a cold drink at a 7-Eleven store in the city’s Gaslamp Quarter.

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Convenience stores in Florence, Italy, are efficient with their space and promote beer, wine and other beverages to thirsty tourists during the height of the Tuscan summer, as Convenience Store News Associate Editor Angela Hanson observed.

4

For Convenience Store News Associate Managing Editor Danielle Romano, a visit to New Milford, Pa., included a stop at this Flying J Travel Center that serves up the retailer’s PJ Fresh Marketplace hot food, like chicken tenders, meatloaf, mashed potatoes, and macaroni and cheese.

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While visiting Cape May, N.J., Kress discovered Exit Zero Filling Station, aptly named given its location off the last exit of the Garden State Parkway. The station features a convenience store and a full-service restaurant, with patio seating.

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While in London, Hanson popped into a Tesco Express location. These smaller-format stores serve city dwellers who need groceries, but don’t have a car to pack full of items.

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INDUSTRY ROUNDUP

FAST FACTS

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%

87 percent of Gen Z and millennials think about eating dessert one or more times a day. — The Hershey Co. & The Center for Generational Kinetics

Fridays at 5 p.m. were the most-trafficked time for fuel and convenience brands in the second quarter of 2018, followed by Fridays from noon to 4 p.m.

Roughly one in four consumers who are deterred from joining loyalty programs say brands ask for too much information or the enrollment process takes too long.

— GasBuddy, Second-Quarter 2018 Foot Traffic Study

— Kobie Marketing, Loyalty in the Age of the Connected Consumer

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

Geofence messaging provides a 30-percent lift in store visits and spend. — Paytronix


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INDUSTRY ROUNDUP

Eye on Growth International Buyers Come Knocking Parkland Fuel and Applegreen build up their presence in the U.S. market THE U.S. CONVENIENCE STORE MARKET continues

to be an

attractive proposition for international buyers. In August, Albert, Canada-based Parkland Fuel Corp. inked an agreement to acquire all of the issued and outstanding equity interests of Rhinehart Oil Co. Inc. The acquisition, which was expected to close by month’s end, comes through its U.S.-based subsidiary Parkland USA. Based in American Fork, Utah, Rhinehart and its affiliates operate retail, commercial and lubricant businesses in Utah, Colorado, Wyoming and New Mexico. “The Rhinehart acquisition represents a significant expansion for Parkland,” said Bob Espey, president and CEO of Parkland. “Rhinehart has an excellent business and asset base that will serve as a platform for growth in Utah, Colorado and neighboring states.” During the month of August, Ireland’s Applegreen plc also made further inroads into the United States, reaching a deal with Allentown, Pa.-based CrossAmerica Partners LP to operate 43 sites in Florida. The master fuel supply and

master lease agreements have an initial 10-year term with four five-year renewal options. “If you think about the industry, for a retail site to succeed, the consumer offer and operational execution need to drive customers in. While we at CrossAmerica can support the fuel offer and manage real estate efficiently, we need a strategic collaboration with the operator of the sites to execute the offer and to develop it, especially as it relates to the backcourt and ancillary services that consumers want,” CrossAmerica President and CEO Gerardo Valencia said, pointing out that Applegreen is a leader in Ireland and an excellent operator. “They understand consumers and this enables them to develop the site to appeal to the end consumers.” Applegreen additionally took ownership of seven S-Mart convenience stores in the Columbia, S.C., market from Carolina Convenience in mid-August. The sale allows Lexington, S.C.-based Carolina Convenience to focus on the operation of its Hardee’s restaurants and other business ventures.

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INDUSTRY ROUNDUP

In the Public Eye

Delek US Holdings Inc. In its second quarter of 2018, Delek US Holdings recorded net income of $79.1 million, compared to a net loss of $37.9 million in the same period last year. Adjusted EBITDA was $199.1 million vs. $4.2 million in the year-ago period. In its retail segment, merchandise sales were approximately $90.2 million, with an average margin of 31.7 percent, and approximately 54.1 million retail fuel gallons were sold at an average margin of 24 cents per gallon. Getty Realty Corp. For its second quarter, Getty Realty Corp. reported net income of $13.5 million and funds from operations of $17.6 million. Adjusted funds from operations came in

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

at $17.4 million, an increase of more than $2.5 million or more than 17 percent, over the prior year. During the quarter, Getty acquired 32 convenience, gas and auto-related properties for $55.3 million.

Marathon Petroleum Corp. Marathon Petroleum Corp.’s (MPC) Speedway LLC unit reported income from operations of $159 million in the second quarter. The retail chain’s gasoline and distillate margin decreased to 16.45 cents per gallon in Q2, compared to 18.35 cents per gallon in Q2 2017, and operating expenses increased $24 million year over year. As a whole, MPC reported second-quarter earnings of $1.06 billion and income from operations of $1.71 billion.


Murphy USA Inc. During its second quarter, Murphy USA opened six new c-stores and nine raze-andrebuild sites. Net income for the quarter was $51.8 million, compared to $55.5 million during Q2 2017, and total merchandise contribution rose 4.6 percent to $102.3 million. Since rolling out its Murphy Drive Rewards program two months ago, nearly 1 million customers have signed up. TravelCenters of America LLC Site-level gross margin at TravelCenters’ standalone convenience stores in excess of

Correction site-level operating expenses declined 1.9 percent year over year in the second quarter, compared to a decline of 8.4 percent in the prior-year period. Fuel sales volume decreased by 1.2 million gallons, or 1.9 percent, primarily due to increased competition. A change in product mix drove nonfuel gross margin percentage to 35.8 percent vs. 34.9 percent in Q2 2017.

S E P T

In the August issue cover story of Convenience Store News, it was incorrectly stated that Kathryn Dalton, senior category manager at BP Products North America, previously worked at Rotten Robbie’s. We apologize for this error.

20 1 8

Convenience Store News

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ProSource Bar represents the culmination of more than 20 years of experience in protein research and formulation, the maker states. By utilizing high-quality hydrolyzed whey and whey isolate proteins, ProSource Bar provides meaningful protein supplementation while maintaining a natural candy bar taste. The product is made without sugar alcohols, fillers or gelatins of any kind. It is available in Chocolate Peanut Butter, Double Chocolate Creme and French Toast Creme varieties. ProSource Manasquan, N.J. (732) 528-3265 webmaster@prosource.net prosource.com

The new Milky Way Fudge bar delivers a combination of rich fudge nougat covered with a layer of smooth caramel, enrobed in creamy milk chocolate. This limited-edition item is the richest flavor that Milky Way fans have tasted yet, according to the brand. The introduction of Milky Way Fudge marks the newest Milky Way variety since the release of Milky Way Simply Caramel in 2010. Milky Way Fudge is currently available at retailers nationwide and will be offered through the end of 2019. The share-size bars have a suggested retail price of $1.99, while the mini stand-up pouch has a suggested price of $2.99. Mars Wrigley Confectionery Hackettstown, N.J. mars.com

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3. Fitz Cold Brew Coffee

4. Xyience Energy Drink New Flavors

Red Diamond Coffee & Tea enters the bottled cold brew market with the debut of its single-serve, ready-todrink Fitz Cold Brew Coffee. Launched first in foodservice during the summer of 2017, the beans that make Fitz Cold Brew Coffee are purposely selected, blended, roasted, ground and steeped with cold brew in mind, the company noted. The bottled Fitz Cold Brew Coffee line comes in three varieties: Black, Dark Chocolate and Slightly Sweet. Each 12-ounce bottle contains approximately 250 milligrams of natural caffeine. The drinks are 100 percent cold brew coffee, made without the use of artificial ingredients, and must be refrigerated at all times. Red Diamond Coffee & Tea Moody, Ala. (800) 292-4651 reddiamond.com

Xyience, the energy drink with zero calories and no sugar, introduces two new flavors: Wild Grape and Fuji Apple. Like all other Xyience varieties, the new additions are made with all-natural flavors and colors. These are the first new flavors from Xyience since Big Red’s acquisition of the brand in 2014. Xyience Inc. Austin (512) 501-3890 xyience.com

5. Totino’s Pizza Rolls General Mills Convenience is bringing one of America’s favorite snack items — Totino’s Pizza Rolls — to the foodservice area of convenience stores. Totino’s Pizza Rolls are small bites of pepperoni pizza rolled in a snackable crust. New packaging, exclusive to 5 convenience stores, features two opening options for easy, on-the-go eating. Shipped frozen, Totino’s Pizza Rolls are easy for convenience store staff to prep and package in-store, according to the company. The frozen pizza rolls can be warmed in-house, packaged in the convenient grab-and-go container, and placed in a warmer or hot holding area. The suggested retail price is $1.99. General Mills is also offering a number of point-of-sale marketing materials, such as window clings and shelf tags. General Mills Convenience Minneapolis (888) 497-7552 generalmillscf.com 22 Convenience Store News C S N E W S . c o m


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Convenience With a View Former Nice N Easy Grocery Shoppes executive Matt Paduano taps into his 29 years of experience to open the family-run Lakeport Market By Melissa Kress AMONG THE MYRIAD OF THINGS Matt Paduano knows are upstate New York and convenience retailing. Combining the two, the industry veteran recently opened Lakeport Market on State Route 31 in Lakeport, N.Y., and he enlisted his family to join him.

Located halfway between Syracuse and Utica, Lakeport Market is nestled across from the south shore of the 22-mile Oneida Lake. As one may imagine, this is a rural community and was previously considered a food desert before the Paduano family arrived. Lakeport Market opened March 3 in Lakeport, N.Y.

months later, we took the sign down,” he recalled. Canastota, N.Y.-based Nice N Easy was subsequently acquired by CST Brands Inc., which had no interest in building a convenience store on the property, effectively putting an end to the idea. That is, until Paduano stepped up to the plate roughly six years later.

Going Out on His Own Paduano has a long history with the convenience store industry. He worked for two c-store companies over the course of his 29-year career, gaining the bulk of his experience at Nice N Easy. However, unfortunate circumstances and two acquisitions led him to go out on his own. “We had a good thing going with Nice N Easy for 35 years and with [MacDougall’s] passing, the company was sold to CST Brands,” Paduano explained. The San Antonio-based retailer started out aggressive and wanted to grow its presence in the New York market. With his familiarity of the area, Paduano became the company’s real estate contact in the market and worked with CST to line up a number of properties for new convenience stores. Everything came to a standstill, though, after shareholder unrest led to a strategic review of the company in early 2016 — followed by CST’s eventual sale to Laval, Quebecbased Alimentation Couche-Tard Inc. one year later. With all the changes, Paduano felt the time was right to explore other opportunities. He parted ways with Nice N Easy right before Labor Day weekend in 2017 and received approval from town officials for Lakeport Market the day after Labor Day.

“I tell people there is a 22-mile wall across the street from us. If you want to go from one side to the other, you have to go down this road,” Paduano said. “There are camps, year-round homes and good traffic flow. I saw a lot of opportunity here to be a destination for fuel, food, groceries, beverages, beer and snacks.” The idea for Lakeport Market actually began with late Nice N Easy Grocery Shoppes founder John MacDougall. He secured approval to build a Nice N Easy store on the lot; however, the plans met opposition from one local resident. Ensuing litigation dragged on for several years before the decision was ultimately made to back off the plan. As a long-time Nice N Easy executive, Paduano had a front-row seat to the process. “I actually put the sign up back in 2011, ‘Coming Soon: Nice N Easy.’ Then, seven or eight

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

With a slight shift in plans — MacDougall’s vision called for a 6,500-square-foot store with an adjacent bank — Paduano was on his way to becoming a single-store operator.

A Family Affair He didn’t make the decision lightly. “It’s something I had been thinking about for a while. My wife, Maureen, and I discussed this at length before even approaching our children,” he said. The couple has two daughters and one son. “I remember back in 1999, one of our franchisees had a site that they wanted to sublease. I spent hours working on a pro forma for that site and then approached [MacDougall] looking for his advice. He thought the site would have been a challenge, so he recommended that I not take the chance,” he recounted. Fast forward to early 2017, Paduano sat down with his daughters, Nicole Paduano Roth, now 28, and Alyssa Paduano, now 27, and told them of his idea. His son Anthony


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Paduano, now 23, was in college at the time. Lakeport Market would not become a reality without them. “I told them my plan and that they had an opportunity to be owners, that they would run their respective departments,” Paduano said. “I told them, if you’re in, I’ll do it. If you’re not in, I’m not going to do it. I wasn’t going to work 80 hours a week running the location on my own.” Lakeport Market opened in March. Today, as part owners of the store, all three of his children do the hiring, training, scheduling, ordering and merchandising. Nicole brings retail experience, Alyssa brings foodservice experience, and Anthony works as an assis-

tant manager between school. “My kids grew up in Nice N Easy. I started working for Nice N Easy when Nicole was five, Alyssa was four and Anthony wasn’t even one yet. I used to bring them into the office and to company activities,” Paduano pointed out. “They all interned through the office. My oldest started working for Nice N Easy when she was 14. She had 14 years in with Nice N Easy, of which the last five years involved managing stores until I stole her.” As for Paduano, he pitches in everywhere, from bagging ice and cleaning windows, to stocking and maintenance. Just don’t ask him to make food. “If you ask my kids, much of my day is spent standing around talking to the customers,” he joked.

A Little Help From His Friends Lakeport Market’s foodservice menu goes beyond the typical convenience store fare. The foodservice program includes fresh pizza, fresh subs, wraps, fried fish, chicken wings, quesadillas, melts, salads, fruit cups and cookies. “We took a lot of cues from what made Nice N Easy successful. If it works, why not?” Paduano explained, noting that everything is made in-house and there are no commissary items. Paduano picked the brains of his former co-workers. Glenn White, former senior director of foodservice at Nice N Easy, took his 50 years of foodservice business and turned it into a consulting career. Jack Cushman, former executive vice president of foodservice for Nice N Easy, helped with the kitchen design and layout. In addition, Paduano received assistance from numerous former colleagues with human resources, merchandising and marketing support. His general contractor and project manager designed 25-plus Nice N Easy locations, and former Nice N Easy franchisee Clifford Fuel provided foodservice training support. “The Nice N Easy food program was a good starting point for us, but our plans are to expand our offerings. We recently purchased a meat slicer that will allow us to offer better-quality cold cuts that will be sliced fresh every day,” he added. One thing Paduano did not need help with was the store’s design. “I have been doing this for a long time. I really didn’t need someone else telling me what to do,” he said. “I was involved in many Nice N Easy new store projects so, over the years, I saw what worked or what didn’t work in store designs.” With that in mind, Paduano sat down with his architect and discussed the basics.

Lakeport Market’s foodservice offering includes fresh pizza, fresh subs and wraps, fried fish, fried chicken, quesadillas, salads and more.

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

“The one thing I learned from my years at Nice N Easy is that the stores we built were never big enough. Store size


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Part of Lakeport Market’s business strategy is using as many local vendors and stocking as many local products as possible.

do something different than the typical convenience store, getting away from the bright colors and loud graphics normally found in c-stores. Maureen picked out the exterior and interior paint colors, all of the floor and wall tiles, cabinets, counters and furniture. “From the day we opened, customers have complimented us on the elements we used to design the store,” Paduano said.

Getting Down to Business Since a snowy March 3, Paduano’s daughters have been running the operation on their own. “I am very proud of how Nicole and Alyssa put countless hours in before we even opened and have worked long days since our opening to make sure that the operation runs smoothly,” Paduano said. “Even though we are a singlestore operator, we developed an employee handbook, rolled out computer-based training with 20-plus modules, designed dozens of branded labels for our packaged food items, developed a foodservice manual, and created a pricebook with 100 percent scanning, item-level inventory and computer-assisted ordering. All was done in-house.” Lakeport Market is just that — a market. The location has eight feet of pet food, 12 feet of paper and cleaning products, and 20 feet of edible items. The store also features a walk-in freezer with four doors of frozen food and a fourdoor, walk-in dairy cooler. “I don’t call it a convenience store. I call it a market,” Paduano said. “It’s what we tried to do at Nice N Easy. I know people aren’t going to come here to do all their shopping, but we have a few locals in here every day buying things so I am their grocery store.” If customers don’t find what they are looking for, all they have to do is ask. “We make sure we carry what the customers are looking for. We are always looking for suggestions. Customers are surprised when we bring the product in that they requested,” Paduano said. “They asked for it, but they don’t expect it. But they are dealing with me, the owner, and my three kids running this place. If it’s available and it makes sense, we’ll bring it in.” and layout were based on anticipated business for when we open. No one looked out into the future to see how much business we would be doing five, 10 or 20 years from now,” he explained. “This is something I took into account when planning our store. … I want the store to still be viable with the anticipated growth in sales throughout the years. I made sure the store had enough cooler, freezer and dry storage space to handle the business.” Joining in the store planning was his wife Maureen, who was in charge of the interior and exterior design. The couple wanted to

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

A Warm Welcome Part of the business strategy includes using as many local vendors and locally made products as possible. Among the locally connected products found in Lakeport Market are milk, ice cream, cheeses, meat products, maple syrup, produce and snacks. The store’s beer cave also has a separate section that merchandises only New York State craft beer brands. All of the pieces are falling into place. Since the “Coming Soon” sign went into the ground this past October, people were waiting for Lakeport Market to open its doors. Now, they come in thanking the Paduano family for opening the business.


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While he admits opening in early March, the day after Mother Nature delivered more than two feet of snow to the area, may not have been the best idea, Paduano was ready. “Opening up in March may not be the best time, but I would rather open March 3 than June 3. It gave us a few months to train our staff of all-new employees, get a feel for what’s moving, and get all the kinks worked out with a brand-new location,” he said. Today, Lakeport Market is humming along. In fact, the store already has garnered more than 50 five-star ratings on Facebook. Lakeport Market is a true family affair for the Paduano family. From left: Anthony, Alyssa, Nicole, Maureen and Matt.

“My wife and I built and moved into three homes in this town over the past 20 years. Our kids all went through the local school system, so we are truly a locally owned and locally operated family-run business,” Paduano said. “Even after being open five months, we still get lots of Thank Yous from our customers.”

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

“One of the best things about our new business is that I get to see the kids almost every day. I am impressed with the maturity, knowledge, dedication and leadership each of them has shown since we started this project last fall,” Paduano said. “If there is an opportunity for us to open up future locations, then I know I have the management team to handle the challenge.” CSN


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COVER STORY

DISRUPTION Six technologies that will change convenience and fuel retailing Disrupt: to break apart; to throw into disorder; to interrupt the normal course of unity. a lot these days in the retail industry. As technology continues to advance in all aspects of daily life and consumers get savvier using it, they are expecting the same level of sophistication in their shopping experiences.

“DISRUPTION” IS A TERM GETTING TOSSED AROUND

From no-touch commerce to touchpoints everywhere, emerging technologies are changing the game for convenience and fuel retailers, with even more transformation to come. “The old rules are out the window, and new ones are still being written. Businesses and their leaders will rise or fall based on their ability to anticipate and creatively respond to rapid change,” innovation expert Robert Tucker told a roomful of professionals in the convenience and fuel retailing industry at a recent conference. The brick-and-mortar store of old no longer cuts it. Brick-and-mortar stores still have a place in the retail landscape, but only if they embrace innovation. Consumers today want retailers to know who they are and provide them with personalized deals. They want retailers to give them the option to shop whenever and however they want: in-store, online, mobile, voice order, connected car, delivery, click-and-collect, frictionless, etc. 7-Eleven Inc. CEO Joseph DePinto, leader of the largest convenience store chain in the United States, says consumers are changing faster than he’s ever seen. They want now, simple, easy. “They’re completely redefining what ‘convenience’ is,” he said. DePinto rejects the idea that brick-and-mortar retail is dying. Rather, he believes the golden ticket lies in uniting brick-and-mortar with digital. 7-Eleven has been ramping up its digital team to be able to innovate faster — and it is not alone. The days of the wait-and-see approach are over; retailers must get onboard the transformation train now or they will get left behind. In this special report, Convenience Store News presents the six technologies we believe will disrupt the c-store industry. We have combed through our daily news stories, analyzed the latest research reports and talked with leading thought leaders to arrive at this final six. These are not the only technologies that will have an impact, but they are the ones we believe are most critical.

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COVER STORY

THE EMERGENCE OF OMNICHANNEL Consumers are now setting the terms of where, when and how when it comes to shopping By Melissa Kress CONVENIENCE STORE OPERATORS

have long been known for the personal service they provide. Your local c-store clerk knows your coffee order, knows the name of your grandchildren, and may even know what lottery numbers you faithfully play. In-person, personal service.

“Because it’s increasing in popularity, shoppers are more inclined to interact in new ways, whether that’s mobile apps or in-store technology. But it’s going to take some true innovation and disruptors to take the lead on creating true omnichannel shopping experiences in the convenience channel,” Hardy continued.

This is all changing, however, as consumers seek — or, more accurately, demand — a shopping experience when, where and how they want it. Enter the emerging channel of omnichannel.

In a channel that, for the most part, fills an immediate need, is embracing omnichannel really a necessity for convenience stores?

Defined as retail that integrates the various methods of shopping available to consumers, including online, in-store and mobile, the 360-degree omnichannel approach is an avenue consumer packaged goods retailers and suppliers are beginning to explore. “True omnichannel retail is still something retailers and brands are striving for, but doesn’t yet exist,” explained Mark Hardy, CEO of InContext Solutions, a global provider of enterprise mixed and virtual reality solutions focused on retail optimization and shopper engagement. “In general, though, the convenience channel seems to be making quite a few leaps and bounds when it comes to innovation.

Aaron McLean, chief operating officer at technology company Stuzo, says it is shortsighted for convenience stores to rely on the old cokes-and-smokes model. “Look at companies like goPuff. They saw an opportunity to basically invert the c-store model: you don’t need to go into the store,” he said, explaining that the startup is opening pop-up micro-warehouses in major metropolitan areas and college campus areas across the United States and teams with delivery to get the items to consumers in 10 to 15 minutes. “Why does the consumer need to drive 10 minutes to the store and drive back when they can have the product come right to them?” McLean asked. Stuzo is a digital product innovation company that offers retailers the ability to deliver and operate all of its digital services and experiences through a centralized location. Its Open Commerce product is aimed at convenience and fuel retailers. “We believe the true driver in the future is convenience, and I don’t mean convenience as the store,” McLean explained. “When we say convenience, we mean offering incredible, convenient service to the consumer where and when they want it.” Hardy agrees. “People are hybrid shoppers now, and they have a ton of options. People will always pop in places for things they need right now but, more than ever, they’re ordering online as well, often for in-store pickup,” he said. “So, convenience is less of an issue than it used to be. Wherever customers are shopping, the experience has to feel intuitive and comfortable — if it doesn’t, they’ll go somewhere else.” According to Hardy, omnichannel can be defined as understanding how the digital and physical experience can become more unified. Omnichannel

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


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COVER STORY

is targeting customers through every available channel — digital, brick-and-mortar, and even B2B collaboration. With its mixed reality software, InContext Solutions’ flagship platform, ShopperMX, lets retailers virtually visualize and test new in-store concepts, such as shelf arrangement; see how customers react; and share their insights with other stakeholders like product vendors.

Where to Start? Executing an omnichannel approach sounds like a no-brainer as long as a retailer has the resources — both financial and manpower. However, in an industry dominated by single-store and small operators, meeting all consumer touchpoints can be a challenge. Stuzo often suggests mobile as the starting strategy, but McLean acknowledged that each smaller operator needs to consider their shopper demographic and the types of programs that will work best for them and their consumers.

“With continued consolidation in the industry, smaller operators will be in a much better position in terms of their valuation during those exit opportunities if they have some kind of understanding of who their consumers are on an individual basis, and are able to communicate with them and do some kind of baseline business with them in digital. That could mean social, that could mean email, that could mean SMS text, or it could mean mobile,” he said. In addition to customer data, retailers need to rely on customer feedback as well. “The need for positive customer feedback is especially true in physical stores, where getting the in-store shopping experience right can translate to significantly higher revenues,” Hardy said. “The lines between channels are blurry; an online shopper might come to pick up an order and be enticed by a well-placed shelf display to buy something else. Consumers are embracing more fluid shopping experiences, and retailers need to acknowledge this to make it work for them.” According to McLean, the first step is the biggest, but the payoff opportunity is there. “It could be a digital loyalty program that is empowered by any of those channels,” he advised. “But it’s just that they have something and they get started.” C-store retailers must not overlook the behind-the-scenes work as well. They must prioritize streamlining go-tomarket strategies before trying to take on customerfacing improvements, Hardy cautioned.

Mixed reality software lets retailers virtually test new concepts and see how customers react.

“Demographics are different region to region, so it’s not a one-size-fits-all [strategy]. You can’t prescribe mobile as a solution for everybody,” he said. “We wouldn’t necessarily say mobile is the right solution if you had four stores and that’s your entire operation. The cost of deploying something like that is significant. You cannot spend twice your total margin for the year to get mobile up and running; it’s just not feasible.” A digital relationship is key, though, to give retailers a path to understanding their customers.

“Leveraging innovative technologies that can make planning more efficient while reducing costs and risk on the backend is a huge step forward for the retail industry,” he said. “For far too long, brands and retailers have relied on outdated practices that hemorrhage time and money that can be better spent elsewhere. By working smarter and leveraging deeper insights, stores can start focusing on creating that customized shopper experience.”

The Evolution Will Continue Retailers who are not already embracing omnichannel in some form are behind the eight ball, so to speak. However, further evolution is undoubtedly coming. “By the time you realize the wave of disruption hits you, it’s too late. By the time you start feeling the impact of that disruption, it’s already passed you by,” McLean warned.

“We typically recommend that smaller operators generate some kind of digital relationship with their consumers where they are able to collect some data and have some understanding on a baseline level of who their consumers are on an individual level, and do something baseline actionable on that data,” McLean explained. “That’s a great first step.”

As part of omnichannel, Hardy also believes there are still untapped opportunities and potential inside the store — pointing out that despite the rise of online retail, 80 percent to 90 percent of commerce still happens within physical stores.

Creating a digital relationship will also significantly increase a retailer’s valuation, he added, which is becoming increasingly important in today’s ramped-up era of acquisitions.

“The next retail innovation wave will focus on revamping the in-store customer experience that many shoppers prefer. Brick-and-mortar will continue to evolve, blending ecommerce and conventional retailing to create a brandnew take on commerce,” he predicted.

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


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FRICTIONLESS CHECKOUT GAINS TRACTION Convenience stores are seen as prime territory for autonomous shopping solutions By Linda Lisanti UNLIKE OMNICHANNEL,

which is all about connecting with customers through multiple touchpoints, frictionless checkout is about giving customers a seamless in-store shopping experience with little to no interaction — rivaling the speed and convenience of e-commerce. E-commerce giant Amazon is credited as being the first to bring frictionless checkout to the U.S. retail market with the January 2018 opening of its Amazon Go store in Seattle. The store’s “Just Walkout Technology” enables customers to grab items off the shelves and walk out without checking out. Customers merely need to scan their smartphone using the Amazon Go app upon entry, and are charged for the goods picked up during their shopping trip upon exiting.

A second Amazon Go store opened in Seattle in August. The concept will soon be expanding to two locations in Chicago, and the company is also reportedly eyeing San Francisco and Los Angeles for future store openings. “Certainly, pressure from Amazon is forcing retailers to pay attention and understand what shopping means to consumers going forward,” said Michael Suswal, co-founder and chief operating officer of Standard Cognition, a startup with its own artificial intelligence (AI) platform that allows buyers to grab what they want without having to go to a cashier. “Two of the biggest complaints most U.S. retailers receive from customers are long wait times in line and poor customer service. Eliminating the need for waiting in line allows retailers to put more resources toward enhancing the in-store customer experience.” While several grocery and mass retailers already offer scan-and-go shopping technology, where customers can use provided scanners or an app on their phone to scan items as they put them into their cart, Suswal believes such approaches are proving ineffective and the best option for retailers is to remove checkout entirely by moving to AIand machine vision-based solutions. So far this year, there has been much movement around frictionless checkout: • Santa Clara, Calif.-based upstart AiFi unveiled what it says is the first scalable checkout-free solution for stores, from small mom-and-pop convenience stores to major mega retailers. Using its AI technology, sensor and camera networks and system integration, AiFi’s platform will allow all stores to move toward a checkout-free future, according to the company. • Microsoft Corp. is currently working on technology that would eliminate cashiers and checkout lines from stores, challenging Amazon’s “Just Walk Out Technology” experience. Microsoft has reportedly shown sample technology to retailers around the world, and has spoken to Walmart Inc. about a potential collaboration. • Walmart’s startup incubator, Store No. 8, is said to be working on an initiative known as Project Kepler, which looks to reshape the in-store shopping experience with the help of technology. Sources familiar with the project say the goal is to create a physical store without a checkout line or cashiers. • Albertsons announced a pilot of “Amazon Go-like technology” that will be tailored for use with a limited

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


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E-commerce giant Amazon is credited as being the first to bring frictionless checkout to the U.S. retail market with the January 2018 opening of its Amazon Go store in Seattle.

set of products, such as meal kits. The company intends to test checkout-free technology at its gas pumps, too. That process, to be tested in Boise, Idaho, will use mobile devices to create a speedy touch-pump-go experience. • San Francisco-based technology startup Zippin launched a next-generation, checkout-free software platform for retailers and opened a concept store in San Francisco’s SOMA neighborhood that showcases the automated shopping technology in a real-life retail environment. • Convenience store chain Ricker’s announced it will roll out Skip, a hybrid of mobile pay and the Amazon Go concept, to its 58 stores throughout Indiana. Skip’s technology reduces the speed of checkout from an average of 60 seconds to an instant pay-and-go action controlled by the customer. Through a partnership with ACH debit provider Zipline, Skip also brings down transaction fees for retail businesses. According to Michael Jaszczyk, CEO of software company GK Software USA, cashierless checkout technology has been around since the early 2000s and has already gone through many iterations and (sometimes failed) pilots. He believes one of the factors driving the current momentum around frictionless checkout is that the technology is now mature. “And I do not mean that it is just available but, most importantly, it is also widely adopted by customers,” Jaszczyk told Convenience Store News. “The wide adoption of cashierless checkout gets the use of mobile devices for self-scanning out of the ‘Nerd Corner’ because almost every customer

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

today knows how to operate a smartphone.”

Frictionless in the Convenience Channel With c-store chain Ricker’s rollout of a mobile pay and Amazon Go concept hybrid, frictionless checkout has officially arrived in the convenience channel, and many industry insiders believe it’s only a matter of time before there’s an industrywide movement. “By adding Skip to our arsenal of customer service competencies, we expect to see higher frequency and volume of transactions simply from the competitive advantage this partnership will provide. Not to mention being able to convert frequent fuel purchasers into loyal in-store customers,” said Quinn Ricker, CEO and president of Anderson, Ind.-based Ricker’s. The convenience channel is where this technology can “shine” because it’s a fast-moving space, according to InContext Solutions Chief Technology Officer Tracey Wiedmeyer. InContext Solutions is a provider of enterprise mixed and virtual reality solutions focused on retail optimization and shopper engagement. “People are coming in and out constantly, and they’re choosing just a few items at a time, not an entire cartload full. It just enhances that convenience factor,” Wiedmeyer said. Suswal of Standard Cognition agrees. He says autonomous checkout can work in any kind of store, from a convenience store to a large supermarket to a designer apparel store.    “Most convenience stores are ideal retail environments for deploying autonomous checkout. On one hand, autonomous checkout allows convenience store operators to repurpose the valuable real estate that cash registers currently occupy. On the other hand, the relatively smaller store footprints typical of convenience stores allow for very efficient and quick deployments of autonomous checkout technology. A typical convenience store could be covered by fewer than 25 cameras, which can be installed in one to two days,” Suswal noted. With the rise of e-commerce competition, particularly from


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experience and improve profit margins for retailers,” he said. “We believe customers will seek out, and demand, experiences like this. With autonomous checkout, shoppers will, in the very near future, no longer be required to open their laptops or even their smartphones. The technology creates an opportunity for brick-and-mortar retailers to develop an in-store experience worth closing your laptops over. Autonomous checkout is here to stay.”

Many retail industry insiders see frictionless checkout being a long-lasting technology.

Wiedmeyer echoes that this is not a fad. He foresees this kind of technology only improving, becoming more efficient, and eventually one day being the norm. However, he cautions retailers to think before jumping in because it won’t be right for every store or every situation. Amazon, and retailers being forced to reinvent their stores, he sees frictionless checkout being a long-lasting technology. “It is inevitable for the survival of most retailers. Autonomous checkout technology will reduce labor costs, improve customer

“I don’t think AI will take over completely in the retail space,” he said. “People crave human interaction, and there will still be a need for people when it comes to answering questions and helping with more than just the checkout.”

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COVER STORY

NEXT-LEVEL LOYALTY

Customer-specific offers, outside-the-box rewards and detailed data analytics are powering today’s most successful loyalty programs By Tammy Mastroberte RETAILERS THROUGHOUT THE CONVENIENCE STORE INDUSTRY know loyalty programs are

an important part of the customer experience, from both a service and competitive perspective. But loyalty isn’t what it used to be, as many chains are revamping and relaunching their programs to better engage and influence their shoppers. Within the past six months, a number of c-store chains announced refreshes, including Birmingham, N.Y-based Mirabito, operating more than 100 stores, and Tonawanda, N.Y.-based NOCO Express, operating 39 locations. There also have been many new loyalty programs introduced, such as Savannah, Ga.-based Parker’s, with 53 locations; Kwik Trip Inc. in La Crosse, Wis., with nearly 600 locations; and Global Partners LP’s Alltown Markets, based in Waltham, Mass., operating more than 70 locations. “We decided to launch a loyalty program to

get a better understanding of our business at the customer level and understand how individual customers are shopping with us,” Amy Murphy-St. Laurent, loyalty manager for Alltown Markets, told Convenience Store News about the new Alltown Advantage program launched through Kickback Rewards and P97. “We developed a strategy that would offer value to the customer and accomplish our business goals.” One of the biggest advantages of offering a loyalty program is collecting customer data and then using that data to personalize offers based on customer behavior. With today’s business intelligence (BI) technology, customers can be segmented by their number of store visits, what they purchase, if they are a fuel-only customer and more. Retailers can push out coupons and offers relevant to their needs. “I believe the customer base is getting savvier by the minute, and they are bombarded by an incredible amount of content from social media and more,” Murphy-St. Laurent said. “If they are going to engage with retailers on a one-toone basis, they want the retailer to be relevant to them and respect them as a shopper and what their habits look like.” Kwik Trip just launched its first-ever loyalty program this year, built custom for the chain through third parties, including a new app. The retailer has an in-house BI team that runs collected data through a BI tool so that analysts from marketing and loyalty can find new segments that “might be worthwhile to target with specific offers,” explained David Jackson, digital marketing and loyalty manager at Kwik Trip. “Even beyond the ability to change customer behavior, it’s about knowing who is coming into our stores,” Jackson shared. “… Now, we can see the times our loyal guests are visiting us, their age ranges and other demographic information. It’s giving us a better idea of who our guests are, so we make better offerings as a whole.” Originally, Kwik Trip thought it would take a year of data collection before they could take actionable marketing steps with it. But, within the first couple months, they could identify coffee drinkers, fountain drink customers and other various segments, Jackson noted. Since launching earlier this year, the program already has 1.3 million members signed up and is expecting to reach 2 million by the end of 2018.

Creating Customer Benefits One of the key aspects of any loyalty program is offering attractive benefits so that customers will join and remain active participants.

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COVER STORY

NOCO Express refreshed its loyalty program to now include a monthly sweepstakes prize giveaway.

When designing Alltown Advantage, the chain opted for a points-based system using Kickback Rewards and P97 technology to offer customers the option of a card or app — and the app integrates a mobile payment option. Customers earn two points for every gallon of fuel purchased and two points for every dollar spent in-store. Points can be redeemed for a discount at the pump or in the store.

“Even beyond the ability to change customer behavior, it’s about knowing who is coming into our stores. … Now, we can see the times our loyal guests are visiting us, their age ranges and other demographic information.”

“Customers are earning points so they want to use the card or app, and that identifies them every time they shop,” Murphy-St. Laurent explained. “We collect that data and can analyze it to see customer frequency, the last time they shopped with us, and their monetary value. Then, we take that data and bring it into marketing.”

explaining that the chain partners with local businesses to give out prizes based on the season. Also, if a customer visits eight or more times during one month, they begin to earn two entries each time they swipe their card. “We have had some people with 400 entries, and 1,100 with between 90 and 200 entries.”

Alltown Advantage offers are communicated to customers via email, text and push notifications through the app, and the retailer can target them to specific customer segments, which it will be doing more of in the future. This past year, many companies that have been in the loyalty game for a while have rethought their old programs to be more competitive and offer unique and attractive benefits to customers. At NOCO Express, the chain had a loyalty program for nine years, but only had 7 percent activity from its members, so it traded in its point-based system. Now, while customers can still receive cents off fuel, there’s also a monthly sweepstakes giveaway and a new app powered by Paytronix. “Every time someone swipes their card, they get an entry into the monthly drawing,” said Jim DeFilippis, vice president and general manager at NOCO Express,

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— David Jackson, Kwik Trip

NOCO has given away a $1,300 picnic set, a $500 gift card for tires, a tour of Niagara Falls, a lawn mower, a grill, a kayak and a fire pit. In September, the retailer will give away a generator. The company negotiates with local businesses and can often purchase the item at cost, although some will offer it to the chain free of charge. The prizes are even featured in the stores to garner excitement. NOCO’s revamped program also offers member-only discounts inside the store, such as a deal on energy drinks or $3 off propane. There are also free items every month that can be redeemed through the app. In order to collect data, the chain requires customers to register their cards — and the incentive to do so is the in-store benefits aren’t activated until they register, according to DeFilippis. “They will only get the gas discount if they don’t activate it,” he shared. At Kwik Trip, the chain offers a combination of benefits to its loyalty customers, including discounts, digital coupons and sweepstakes entries. The retailer used to have physical punch cards for milk, but has now turned them into “digital punches” where members receive $1 off milk. The program offers similar rewards for bakery items and fountain drinks — changing it up every six months. “We recently introduced a new sweepstakes feature where guests can use their visits as entries. So, if I have 15 visits, I can spend them as 15 entries, for example,” Jackson explained. “The first couple prizes included gift cards and unique experiences through various NFL [National Football League] sponsorships.”

Targeted Offers Now that NOCO Express is collecting data on customers through the loyalty program, it will be targeting more offers to customer segments in order to personalize the experience. One example is a campaign sent out to 700 gas-only customers offering a free bottle of water. The chain saw a 40-percent redemption rate. “We also want to reward our best customers who come in two to three times a week, so we can offer an instant


COVER STORY

Kwik Trip launched its first-ever loyalty program this year.

reward like a free candy bar, and we will also be offering a birthday reward,” DeFilippis said. “Through Paytronix and our app, if I send you a birthday reward, like a free cake item, if you don’t use it by the end of the month, it will remind you.” At Kwik Trip, a general set of coupons goes out to members on the first of every month in order to keep people engaged and looking at the app. However, the chain is also starting to send out targeted offers based on customer behavior. For example, coffee drinkers will get a monthly coupon to come in between 3 p.m. and 7 p.m. and receive 50 percent off a premium cup of coffee, Jackson noted. “We also just finished a campaign where we target lower-frequency members and offer them a special incentive to visit more often,” he said. “So far, we’ve gotten 30 percent of those members to double their visits compared to prior months.” While some chains have personalized offers

down to a science, others are still working toward this goal — but it should definitely be a present focus and future goal of anyone with a loyalty program, Jackson advised. “Our biggest push is how to make the program more personalized and relevant to each member, and then utilize the loyalty program for other big projects down the line where it will help,” he said, noting the chain will be moving toward mobile payment and knowing who their customers are through the loyalty program will help with that. “Even things like curbside pickup in the future could leverage loyalty to make the experience more personalized.”

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COVER STORY

VOICE ORDERING: SHOULD C-STORES BE LISTENING? With Amazon and Google leading the way, consumers are beginning to embrace voice ordering, and savvy retailers are answering the call By Tammy Mastroberte IT DOESN’T SEEM THAT LONG AGO that mobile ordering and mobile apps were the new must-have technology for retailers. But now, with the lightning-fast movement of the tech industry, the latest trend to hit the market is voice ordering — and it’s growing fast.

The major players in the space are Amazon, with its Alexa and Amazon smart speaker devices, and Google with the Google Assistant on its Google Home products. Even Apple is getting into the game with its new HomePod, although it doesn’t have the capabilities of the others yet. Retailers in a variety of markets are beginning to integrate with these systems — Walmart, Domino’s and Starbucks, to name a few — allowing customers to use voice ordering for a variety of products. Even Altoona, Pa.-based Sheetz Inc. is offering voice ordering with Amazon in the convenience store space. “I think somewhere between five and 10 years from now we will laugh at how we used to open a browser to place orders,” Rob Rastovich, chief technology officer at ThingLogix, a provider of Internet of Things (IoT) solutions based in San Francisco, told Convenience Store News. Rastovich also runs a cattle ranch in Bend, Ore., that uses voice ordering with local pubs that order meat on a regular basis.

“People thought nobody would put their credit card on the Internet to buy something 20 years ago and now, it’s commonplace. If you are not online, then you are not in business, and it will be that way with voice ordering, too,” he said. In addition to partnering with Alexa, Starbucks has gone a step further and launched voice ordering through its own mobile app, using what the company calls “groundbreaking artificial intelligence” to understand what a customer is ordering through its app. With Alexa, customers simply say “Alexa, order my Starbucks” to get whatever their present order is set to. Currently, the most commonly ordered items using voice ordering are groceries, which represents 20 percent of all voice orders through home devices, according to new research by global firm OC&C Strategy Consultants, based in New York. Shopping via voice ordering is expected to increase from $2 billion today to $40 billion by 2022, with the number of smart speakers in homes expected to jump to 55 percent from only 13 percent today, according to OC&C. “In the last six months, both Amazon and Google stepped up the marketing of their smart speakers, and new versions are coming to the market,” said John Franklin, associate partner at OC&C. “It’s starting to grow and move past the early tech adopters and into mainstream.” Along with the penetration of smart home speakers increasing at such a rapid rate, consumers are becoming more comfortable with voice ordering. They’ve moved from using their speakers for alarms, trivia questions and listening to music to actually shopping, noted Franklin. “There is also a very tight link between smart speaker ownership and Amazon Prime membership,” he added. “It has been driving it 3-to-1, and Amazon Prime members are more likely to own a smart speaker. It’s becoming more integral to the Amazon ecosystem, so the rate of adoption will keep growing. Plus, we will see Google increase competition.”

What About the C-store? As convenience stores continue to become more sophisticated in their foodservice options, and with grocery being the top category for voice orders right now, should c-store operators be watching this technology trend to see where they can take action? Most experts say the answer to that question is yes.

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COVER STORY

“If this is what consumers are drifting to, c-store retailers will have to adjust accordingly,” said Bill Bishop, chief architect and co-founder of Brick Meets Click, based in Barrington, Ill. “We have a situation where these types of services are being increasingly demanded by customers and, over time, if you don’t have them, you won’t be able to protect your business.” The advantage of voice ordering is it’s a handsfree, low engagement interface that can be done “on the fly” and is actually more convenient, Bishop noted. It also lends itself to retailers who offer immediate-consumption and foodservice items. “Voice ordering dovetails really nicely with where c-store operations are going with immediate consumption,” he said. Sheetz, which has roughly 575 stores, was the first c-store operator to announce voice-ordering capabilities in December 2017 — specifically for its Made to Order food using Amazon’s Alexa. Customers with a Sheetz online ordering account and an Alexa-enabled device can enable the “Sheetz skill” on their device or the Alexa app, and start an order by saying “Alexa, start Sheetz” or “Alexa, order my favorite from Sheetz.” Then, they just follow the guided prompts to place an order for pickup at their local store. “There is clear opportunity here for those in the c-store market who embrace it, especially going down the routes of immediacy like foodservice or emergency groceries,” Franklin noted. “They could provide a niche position in the market and benefit from the advantage of delivery service if they offer it.”

Getting in the Game For c-store retailers looking to take the plunge into voice ordering, the first thing to set up, if it’s not already established, is a business process to take orders in advance, and a system to manage it all. If they have a delivery option, either in-house or through a third-party, this also needs to be considered as part of the equation, according to Bishop. The next step would be to create an Alexa skill or Google play to integrate with either company’s devices. This will “train Alexa or Google” on what a customer will ask for when ordering through the devices, explained Rastovich, whose company ThingLogix serves as middleware between a company’s systems and Amazon’s Alexa or Google Home. For his own cattle ranch business, for example, he had to set up an Alexa skill that would know as soon as someone said “barley beef” that the barley beef system would open on their end for the order. “Retailers need to develop the skill using Amazon language, so if I was Domino’s, I would develop a skill that allowed customers to say ‘Alexa, order me Domino’s,’ and that is the crux of how the technology works,” Franklin said. “Companies have to view this in terms of how the customer will order. Often, the consumer will not ask for a product

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Shopping via voice ordering is expected to increase from $2 billion today to $40 billion by 2022.

the way it’s currently branded. They will refer to it in the way they are familiar with it.” In other words, if your chain offers Texas Barbecue Pizza in a 16-inch size, odds are that is not the way a customer would order it. They might say they want a “large barbecue pizza,” so the Amazon skill and system need to be set up to accommodate this, according to Franklin. A company needs to think about consumer behavior when it comes to this aspect of voice ordering to know how the skills should be set up in advance. The next part of the equation is setting up Alexa to talk to a company’s own technology systems, such as a pointof-sale system. “Just as if someone went to your website, clicked and ordered something on mobile, it would look the same on your end coming from Alexa,” explained Franklin. Additionally, there is no fee for developing an Alexa skill, but there is a pay-as-you-go model for the infrastructure behind it, Rastovich said, explaining that in an effort to increase adoption, Amazon will offer incentives to large players. He has even seen them pay for the first year of service in some cases. Rastovich incorporated voice ordering into his cattle ranch business more than a year ago and has seen adoption slowly grow. Many people will send 10 or more test orders just to make sure the system is working properly but, once they see it actually works, they never go back to ordering the old way, he shared. “We use SMS so Alexa will confirm the order for you saying, ‘You want to order X to be delivered on X,’ and then you confirm saying ‘Yes.’ Then, Alexa tells you that you are confirmed and sends you a text,” Rastovich said. “You can also cancel your order using voice by saying, ‘Alexa, cancel my order for X date of X,’ and you will get a text confirming it’s been canceled.” With more and more retailers adopting voice ordering, and OC&C calling it the “next major disruptive force in retail,” voice ordering is not something to be ignored. And for those who are already offering online and mobile ordering for foodservice in the c-store space — and even delivery in some cases — voice ordering is the next logical step. “I can go onto Alexa today and say, ‘Alexa, order me pizza,’ and she will say, ‘Which pizza do you want? Domino’s, Pizza Hut,’ and will list the ones participating with Amazon,” said Rastovich. “There will not be a local pizza place on the list because he or she won’t have the money to be part of it. But the way this is moving, they will have to be.”


COVER STORY

DRIVING INTO THE FUTURE

Though still a minority on the road, alternative vehicles are increasing in popularity and convenience stores will have to adapt or get left behind By Angela Hanson DESPITE THE HEADLINES they’ve generated, alternative vehicles are not yet filling up the roads. Research presented at the Fuels Institute’s FUELS2018 event in May showed that electric vehicles (EVs) are a small portion of the total population on the road, with growth hampered by higher prices and limited availability. But slow growth isn’t no growth.

And today’s technology is evolving faster than expected. As electric cars and connected cars begin to enter the mainstream, and consumers shift their approach to vehicle transportation, convenience store and fuel retailers will need to adapt or get left behind. “In order to survive, the modern c-store must evolve from the low-cost leader category of fuel to address what will get customers to stop in the future,” said Michael Johnson, vice president of North America for TLM Technologies Inc., which works with convenience and fuel retailers to develop unique technologies and integrate the systems necessary to make smarter, more profitable decisions. The first challenge that vehicles of the future pose is a reduction in the number of gas-station visits consumers will make on average. If a driver who gets 30 miles per gallon (MPG) and fills up every two weeks purchases a 58 MPG hybrid, he or she will only need to buy gas every three

to four weeks — or half the number of annual visits they previously made, Johnson noted. “Unless other aspects of convenience stores, beyond fuel, are emphasized, consumers will have less reason to stop in, causing profits to erode,” he explained. A variety of other factors also will change the way consumers travel and why they visit c-stores, according to Gunter Pfau, founder and CEO of Stuzo, which offers connected commerce technology solutions and product strategy, design and engineering services. “This is a technology disruption powered by improved and lower-cost batteries, exponentially greater and less expensive computing power, and the advantage of car hailing services such as Uber and Lyft, which have already changed the behaviors of millions of consumers,” he said. Pfau also predicts that the eventual existence of autonomous car fleets will prompt consumption of transportation to shift from personal ownership to a subscription service, which is likely to be electric and based in central locations.

The Transformation Is Closer Than You Think Change is coming. As for how fast c-store operators should realistically expect their world to change, Pfau forecasts a window of opportunity for business transformation lasting three to five years. “Those that are not well along the transformation process by 2022 will face significant business challenges between 2022 and 2030,” he advised. What the “transformation process” will involve will vary by retailer, market and future technological developments. However, the first steps are already being taken. Convenience and fuel retailers like Sheetz Inc., Maverik Inc., OnCue Marketing, QuickChek Corp. and BP have already begun to add electric vehicle charging stations to their store locations and, in April, Walmart announced plans to become a leading charging station host by expanding its number of charging stations to more than 1,000 units across its 34-state footprint. John Eichberger, executive director of the Fuels Institute, recommends c-stores that want to move into

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COVER STORY

EV charging start with new builds instead of existing stores due to the lower cost, as well as explore partnerships with outlets such as Volkswagen’s Electrify America initiative, which offers financial incentives that may not exist in a few years. Other vehicle of the future concepts are more expansive. For instance, forecourt designers have begun to explore the possibility of a fundamental change to the classic layout of fuel pumps in front of the building, as the ratio of in-store sales to fuel sales grows more equal and customers’ reasons for visiting c-stores change. The evolution of vehicles could also prompt drastic shifts to store interiors. In partnership with Bank of America Merchant Services, Stuzo recently designed the “Urban Convenience 2025” store. It features an interactive, personalized experience, including a cashier-free point-of-sale and automated order pickup. Along with the slowdown in the number of daily visitors, and expected competition from new sources, “critical mass from a mix of technologies and consumers finding their way through the maze of future choices will require c-stores to really embrace the word ‘convenience’ as a verb and not a noun,” Johnson said. Retailers may be able to distinguish themselves by offering uncommon services that drivers of traditional and alternative vehicles alike can enjoy. Johnson suggests that full-service gas stations could make a comeback through extra conveniences such as attendants checking fluids and tires as they fuel up the car. Three chief ways he believes convenience and fuel retailers can evolve to emphasize convenience, customer service and brand trust are: Electric vehicle charging stations are increasing in number across the country.

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New payment systems and devices are seen as ways convenience and fuel retailers can evolve alongside consumers.

• Payment systems and devices. “Today, consumers are used to ordering from the Starbucks app, scanning a barcode and leaving with their order. This is in direct contrast to some stores trying to leverage antiquated systems to provide ‘convenience,’ requiring customers to get out of cars, find the items they need, wait in line to have them rung up, and transact payments,” he said. • Mobile and self-checkout. Consumers already expect stores will make it easy for them to get what they want. To give them a reason to buy, c-stores should consider mobile, self-checkout and more. This can include shopand-go apps, as well as loyalty and rewards programs. • Inventory and trends. How do you keep track of what is selling and what is not? Customer buying habits and trends? What your neighborhood is looking for? While larger chains are likely to have the resources necessary to adapt to changing technology, single-store owners and small operators will need to leverage their strengths in other areas. “Small operators have to build one-to-one relationships with their customers just as big operators do. This will increase the enterprise value of their businesses and enable them to exit to larger operators as the industry consolidates further,” Pfau said. “Small operators should consider partnering with other small operators on technology investments.”


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COVER STORY

MAKING CONNECTIONS

WITH IOT

The Internet of Things is becoming increasingly important for the convenience channel to understand and utilize By Chelsea Regan COMMONLY REFERRED TO BY ITS SHORTHAND IOT,

the Internet of Things is a shorthand in and of itself — a catchall term for connecting devices to the internet that, in turn, connect with each other. As both a concept and a practice, IoT has long been making headway in the retail space and is becoming increasingly important for convenience and fuel retailers to understand and use to their advantage. Connectivity through IoT makes it possible for retailers to more efficiently manage their sites, from revenue and security to fuel supply chain and food safety. It can provide real-time data, save energy, improve profitability and provide for a better customer experience. “The biggest threats to a c-store’s profitability are downtime and inefficiency,” Veeder-Root CEO Andrew Robinson told Convenience Store News. “In both cases, a connected system improves your visibility to operation status and allows that information to be routed quickly to individuals responsible for the overall health and maintenance of the facility.”

Robinson added, “The IoT-empowered retailer will have additional time to reinvest in the business and make better decisions, leading to incremental revenues and growth.” Ray Clopton, CEO of loyalty rewards program company Wilbur, believes IoT provides the vital capability of offering customers the personalization they’ve come to not only want, but expect. “The most important application of IoT for retailers, in an ideal world, is the ability to deliver personalized customer experiences that resonate with visitors and contextualize sales messages based on whether they are first- or longtime customers,” said Clopton. However, he cautions retailers against taking the possibilities of IoT too far, which could drive away the customers they want frequenting their stores. “It is equally important that retailers do not inadvertently create a world where customers feel like they are walking into a version of Aldous Huxley’s ‘Brave New World’ or Black Mirror’s ‘Fifteen Million Merits’ when they enter the online or brick-and-mortar store. Where everywhere they turn, they are attacked by inescapable sales messages telling them what to do, buy or consume,” Clopton warned. While being mindful of pushing customers too far into the future, new developments in the convenience channel demand a closer look at connectivity. Among them is the rising relevance of connected cars. These vehicles, through IoT, provide another touchpoint for retailers to make the fueling experience better for customers and encourage them to make in-store purchases.

IoT & Blockchain Blockchain, a newer buzzword in retail technology, has emerged as a way to manage loyalty programs — loyalty programs that can be engaged with via consumers’ connected cars and, of course, via their connected phones. A distributed ledger, blockchain is a tamperproof, problem-solving technology that enables distributed storage and timestamp entries. It can be used for loyalty reward transactions made between parties,

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as it functions as a type of digital currency like bitcoin. Real-time processing and saving money are among the potential benefits of blockchain. Robinson thinks blockchain is an “intriguing technology” because of the traceability that it provides in terms of understanding what actions or interactions have happened at every step of the journey of any piece of equipment or thing that might be out there. He highlights blockchain’s potential usefulness when it comes to monitoring perishables, fuel and fuel quality, traceability throughout the entire fuel supply chain and payment technologies, including those that work in tandem with retailer loyalty programs. “Given that there’s actual monetary value there, especially as we think of fuel discounts, I think blockchain has a very useful aspect to ensure that the points someone has accumulated are actually points they earned and accumulated and that they haven’t been tampered with in any way,” said Robinson. “And that’s helping to build greater trust in the system.”

IoT & Artificial Intelligence The jury is still out on whether the hype around blockchain and its applications in retail — in convenience stores particularly — is just hype. There’s more consensus around the applications of artificial intelligence (AI). As it falls under the IoT umbrella, relying on computer science and specifically how computers can simulate intelligent behaviors, AI can not only aid retailers when it comes to marketing and merchandising, but also with foodservice, supply chain and out-of-stocks. Charles Jarrett, senior vice president and chief information officer at Cumberland Farms Inc. and Convenience Store News’ 2018 Technology Leader of the Year, believes we’re “just scratching the surface of what it can do in the retail environment.” “I think AI could ‘crawl the web’ and help at the very localized level as events are occurring and forecast demand for this or that store and place a very accurate order for that store,” said Jarrett. “Weather forecasting. Demand in other towns. Regional and national events that can affect our stores. The promise of AI sounds like it’s right in the middle of the wheelhouse.” Veeder-Root’s Robinson echoes Jarrett’s belief in the importance of artificial intelligence, especially at it pertains to the future of fuel retailing. “[Forecasting] is something we’re using a lot of human brainpower to go after. I think artificial intelligence will allow us to extend the capability of our agents and analysts to make even more decisions like that and be able to help our customers even further,” Robinson said. “Those disruptions

and how we work around those disruptions and anticipate them allow us to maintain our consumer commitment of never running out of fuel, but also our retailers’ desire to minimize the level of inventory they have so that they can be as financially prudent as possible.”

Is There a Downside? With all of this added technology in-store and on the forecourt, there comes with it increased security concerns. There is the potential downside of data breaches, which could affect both the business and the customer. “Adding more internet connected devices is like adding more doors to your house — doors that you might forget to lock,” said Wilbur’s Clopton. “IoT hacks pose a wide range of security threats because of their interconnected and dual nature. Since the devices serve an ‘offline’ purpose, but are also connected to the internet, they can be compromised without impacting their original purpose, which makes the compromise much harder — if not impossible — to spot.” So, as with anything, with the great power of IoT, there also comes a great responsibility. Yet if the current state of technology in retail is anything to go by, retailers should be eager to take on the responsibility for the possibilities the power creates. CSN

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FEATURE

SUCCEED TOGETHER Technology Leader of the Year Charles Jarrett of Cumberland Farms credits the company’s team values for its tech success By Chelsea Regan CHARLES JARRETT JOINED Cumberland Farms Inc. two years ago when the Westborough, Mass.-based convenience store retailer found itself in need of a technology overhaul. As the chain’s senior vice president and chief information officer, he led a team that made that happen — and that’s one of the reasons he is Convenience Store News’ 2018 Technology Leader of the Year.

Thinking back on his time with Cumberland Farms, Jarrett is most proud of what “The Cumberland Team” managed to accomplish in the first year of his tenure. “Both our POS [point-of-sale] hardware and software were end of life; our legacy warehouse management system and retail accounting functions were running on a 100 percent customized mainframe platform for which support was to be unavailable after 2018,” Jarrett recalled. “The Cumberland Team rallied to implement these systems in about 12 months. It was really remarkable what the

various departments were able to accomplish together.”

The Value of Teamwork If not for the shared commitment of those around him to Cumberland Farms’ values — particularly “Succeed Together” and “Own It” — such successes wouldn’t have been possible, according to Jarrett. The culture at Cumberland Farms is something he believes makes for a unique experience that lends itself to the impressive accomplishments he’s overseen. “I’ve seen other organizations treat their values like window dressing; that’s not the case here at Cumberland,” he said. “Across the board, the teams have been phenomenal to work with. We acknowledged, collectively, what needed to be done, and everyone worked together toward that end. No question about it.” Cumberland Farms CEO Ari Haseotes also attests to the team-oriented mission of the company, as well as to Jarrett’s “servant leadership” style that makes him so deserving of recognition. “Charles demonstrates his servant leadership mindset in many ways, but one that stands out in particular are his Christmas Day road trips, where he sets out with his Santa hat to visit as many of our stores as possible, handing out gift cards just to extend his appreciation to our fellow store teammates who are serving our guests through the busy holiday,” Haseotes told CSNews. “Through this type of exemplary behavior, Charles has helped to set the tone for our organization and, while his impact upon our technology initiatives is profound, even more so is the impact he has had upon his fellow teammates,” the chief executive continued.

A Smart Play With SmartPay Cumberland Farms’ recent technology initiatives include the relaunch of its SmartPay application, which not only gives users 10 cents off every gallon of gas, but also enables them to earn credits toward free beverages, receive free offers, and join sandwich and pizza clubs. Although the retailer’s original loyalty program app had a high rate of consumer adoption, the reviews for it were less than stellar, and

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FEATURE

the “underlying platform had become less stable and the user interface a little stale,” Jarrett acknowledged. Following the SmartPay app relaunch in February of this year, which included new features and benefits, Cumberland Farms customers have been more than pleased with it. As of Aug. 1, the app had a 5-star rating on iTunes with more than 4,600 reviews.

Charles Jarrett joined Cumberland Farms two years ago and has since overseen a major technology overhaul throughout the company.

As Cumberland Farms’ “de facto loyalty program,” Jarrett wants to boost SmartPay’s popularity even more across its customer base. The goal is to quadruple the active user base in five years. More features are also in the app’s future. “We envision making SmartPay a function within a larger app. We have a three-phase launch planned beginning this winter through spring 2019,” Jarrett reported. “Some of the features will include parent/child accounts with allowances and category restrictions, mobile self-checkout — which we’re piloting in two stores today — and targeted offers.”

While Jarrett is keen to keep the SmartPay app and loyalty program simple, he also wants it to provide a way for customers to meaningfully interact with the brand. One idea is to have a “commercial-quality game that our guests could engage with us through.” Cumberland Farms even hosted a program in which high school students competed in a game design contest.

Technology Yesterday & Today Back when Jarrett was first starting out in the convenience and fuel retailing industry in the late 1990s, it would have been hard to imagine where retail technology is today. “Many of our team members in the stores didn’t know how to use a mouse,” said Jarrett, speaking of his time at Pilot as a programmer analyst. “None of us had cell phones and we passed an on-call beeper around each week for after-hours support. There were very few enterprise web applications; ecommerce wasn’t a thing and Amazon was a jungle.” Now, technology is front and center when it comes to making things easier and more convenient for convenience store customers. “Today, we are much more focused on consumer experience. We need to be as convenient as possible. Everything needs to be simple,” said Jarrett. “Kind of challenging, keeping things simple, when everything has gotten more complicated.” But Jarrett and The Cumberland Team are more than up for the challenge. CSN

The 2018 Convenience Store News Technology Leader of the Year award is sponsored by NCR Corp.

Cumberland Farms’ SmartPay loyalty app relaunched in February, ushering in new features and benefits.

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Save the Date! 11.15.2018 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.

2018 HONOREES

RETAILER HALL OF FAMER

SUPPLIER HALL OF FAMER

Jay Ricker

Rick Brindle

Chairman Ricker Oil Co.

Vice President of Industry Development Mondelez International Inc.

AND INTRODUCING...

RETAILER EXECUTIVE OF THE YEAR

Joseph S. Sheetz President and CEO Sheetz, Inc.

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.

SPONSORSHIPS AVAILABLE! Contact Paula Lashinsky, VP and Brand Director, plashinsky@ensembleIQ.com | 917-446-4117


FOODSERVICE

What’s Hot on C-store Menus? Two frozen treats show the power of co-branding Two menu items stand out for this month’s “What’s Hot” thanks to their co-branding and unique flavor profiles. One item features the flavors of a very recognizable candy brand, while the other is known for its customizable DIY milkshake machines.

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According to Datassential’s SCORES survey, consumers highly rated these items for Uniqueness and awarded notable marks in other key areas. Here’s a look at Wawa’s Jolly Rancher Cream Smoothie and Circle K’s f’real Cotton Candy Carnival Milkshake.

Wawa’s Jolly Rancher Cream Smoothie The Jolly Rancher name is instantly recognizable and with its flavors mixed into a smoothie, the item is seen by consumers as truly one-of-a-kind. This item scored in the 97th percentile for Uniqueness and scored in the upper half of all items for Branded Purchase Intent. It should be noted that Wawa included in the menu description that it came up

with the concept in conjunction with Jolly Rancher, marrying the two brands in this limited-time offer. The beverage, likely aimed at younger generations, scored particularly well with Gen Z and millennials.

Circle K’s f’real Cotton Candy Carnival Milkshake f’real has placed its milkshake and smoothie mixing machines throughout Circle K locations. The branding here shows strength as the product scored in the 82nd percentile for Branded Purchase Intent. It also earned a high Frequency score — consumers who like the product would order it all the time. With its fun, nostalgic cotton candy flavor, the shake scored in the 89th percentile for Uniqueness. (Cotton candy, used now as a flavor concept, is up 21 percent on restaurant menus over the past four years.) This product resonates the strongest with Gen Z. CSN

Jolly Rancher Cream Smoothie

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Datassential, a Chicago-based food and beverage industry research and consulting firm, brings clients real-world insights on flavor trends, foodservice and consumer packaged goods, globally.

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FOODSERVICE

Thinking Small Yields Big Results for Parker’s The 2018 Convenience Store News Foodservice Leader of the Year found success by focusing on its core offering and executing a well-thought-out plan By Angela Hanson LOCALS AND VISITORS to South Carolina and southeast Georgia know Parker’s Convenience Stores as a reputable chain of 53 locations where they can buy fresh, hot, Southern-inspired food, along with fuel and the usual convenience items.

growing into made-to-order and hot food cases. Its offering continually expanded before paring down the menu. The driver for that, he explained, was Parker’s growth into a more data-centric company that understood “being good at foodservice doesn’t mean you’re good at everything — it means you’re good at a few things.”

But, if it were possible to turn back the calendar, they’d see a single store with CEO Greg Parker in charge of all the food — and the cash register and car services, too.

In Parker’s case, that means fried chicken as its core product and the items people like eating with it. “We knew what Southern preferences were,” he noted.

Parker, the 2018 Convenience Store News Foodservice Leader of the Year, acknowledges that he wore “a lot of hats” when opening his first store in 1976, although he says the store wasn’t very busy in those early days. Still, he didn’t take a day off for more than three years. The hands-on experience he gained not only gave him direct knowledge of what his customers wanted, but it also helped set the course for the chain’s eventual foodservice evolution. More than 40 years ago, Parker’s didn’t even offer dispensed beverages because it couldn’t get a soda company to supply a fountain. Today, the retailer considers itself a fried chicken specialist and offers madefrom-scratch food at more than 30 stores.

Focusing on the Southern staple caters to Parker’s market, but it also sets up the c-store chain to compete directly with other chicken programs, including fast-food restaurants and locations outside the convenience channel. To differentiate itself, the retailer uses hormone-free, antibiotics-free, never-frozen, hand-selected chicken tenders cooked in premium oil with fryers that are filtered every fourth fry. Parker’s made a major investment in a fresh oil monitoring system that tracks the oil’s quality. “We’re really focused on quality; on cooking smaller amounts more often, rather than 48 tenders at a time,” Parker said, stressing the importance of the “first crunch” when biting into a chicken tender, which he says is easy to lose over time when cooking in large batches. “Consistency matters.”

“It really has been an evolution,” Parker told Convenience Store News.

When Parker’s conducted a blind taste test against seven competitors, the results were positive. “Our chicken was by far the preference. … It means we’re doing a good job,” Parker said.

Parker’s started out with fried food before

Along with improving its product, the company has gotten

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FOODSERVICE

All new Parker’s stores offer the Parker’s Kitchen program and it’s being added to existing stores where possible.

better at educating the consumer. The retailer is committed to its food program as it continues to grow in store count. All new Parker’s stores will offer Parker’s Kitchen, and it’s been added to existing stores where possible. Some of its highesttraffic stores are generating sales on par with many top fast-food competitors. This is good news for Parker’s, which sees a food-focused future for itself. “We want to be a foodservice company that sells convenience items, rather than vice versa,” Parker said. “There is an enormous, seismic shift going on in the world of retail.”

The Power of Data As the competitive landscape changes, Parker calls upon his experience from multiple terms as vice chairman of research for NACS, the Association for Convenience &

Fuel Retailing. That tenure gave him a deep appreciation for data and metrics. “Metrics give you a scorecard, a report card, so you can look and evaluate,” he said, adding that Parker’s is now “knee-deep” in a software solution that provides real-time data and analytics. “Before, we wanted to be everything to everyone.” Previously, removing an item from the menu might have caused customers to complain, and store managers might not have had an accurate understanding of how popular the item truly was. Now, however, real-time, up-to-date sales data provides the objective information that Parker’s needs, leading it toward the right decisions. Looking back, Parker can identify a number of mistakes the company made, such as venturing too far from its core product and operating as a Quiznos franchise, but he views these as important learning experiences. He also credits the “three legs of the stool” of his foodservice team for the chain’s success: Chief Marketing Officer Brandon Hoffman,

Our Foodservice Advisory Council DAVID BISHOP Managing Partner Balvor LLC

JOSEPH CHIOVERA President, Innovation & Design and Emerging Channels Buddy’s Kitchen Inc.

JOSEPH BONA President Bona Design Lab LLC

TOM COOK Principal King-Casey JACK W. CUSHMAN Foodservice Director Circle K (retired)

ED BURCHER Vice President of Foodservice FriendShip Food Stores

NANCY CALDAROLA General Manager The Food Training Group

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CHAD DEWBERRY Category Manager McLane Co. Inc. DEAN DIRKS CEO Dirks & Associates

RYAN KREBS Director of Foodservice Rutter’s MATHEW MANDELTORT Vice President, Foodservice Insights Eby-Brown Co. LLC

LARRY MILLER President Miller Management & Consulting Services Inc.   TIM POWELL Vice President/Senior Analyst Q1 Consulting 


Director of Foodservice Heather Davis, and Serena Davis, the company’s top foodservice training specialist.

satiated, never satisfied. We never think we’ve got it all right, even though our numbers are pretty extraordinary.”

“It really does take a team, and we have an extraordinary team,” he said. “Good foodservice is hard — it’s so different from typical c-stores.”

The insights Parker’s is gathering from its new focus on being data-centric, along with the efforts of its Chief Innovation Officer Eric Jones, will generate new initiatives for the Parker’s Kitchen program and beyond.

To take a foodservice program from good to great, Parker believes operators must “hyperfocus” on the consumer, understanding what their regional desires are. A focus on food quality is also integral to success, he said, as is upholding food safety standards.

To take a foodservice program from good to great, it requires a true team effort, according to Parker’s CEO Greg Parker.

Although Parker’s has come a long way from the single store with its do-everything owner, the company isn’t content to rest easy. As a foodservice leader, it remains hungry. “We have a culture of continuous improvement in our company,” Parker explained. “We’re never

For now, the chain is exploring things like drive-thrus — with which it has experienced limited success — and a future with delivery. C-stores used to be about the last mile, according to Parker, but “now, it’s like the last 10 yards.” Both home delivery and ordering for pickup via mobile app will be part of showing customers that Parker’s is a destination to get what they want, when they want it. “Speed is going to matter. We’re teaching consumers it’s OK to be impatient,” Parker said. “At Parker’s, we’re very focused on that — and on quality products delivered in a consistent, delicious way.” CSN

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S E P T

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DIVING INTO

DELIVERY

Thanks to third-party companies, getting into the delivery game is easier than ever — and quickly becoming an expectation of consumers By Tammy Mastroberte A FEW YEARS AGO, delivery from quickservice restaurants (QSRs) such as McDonalds’s or Kentucky Fried Chicken didn’t exist, and same-day delivery of any online item didn’t either. But times are changing, and they are changing fast.

With Amazon pioneering same-day delivery on a variety of items, and third-party delivery services partnering with restaurants and other retailers, consumer expectation of delivery is making its way into every market. And retailers — including convenience stores — are responding. In the past year, the number of retailers offering same-day delivery tripled, according to the 2017 Digital Marketing Survey from retail management consulting firm BRP, based in Boston. The survey included the top 500 American retailers, with 14 percent representing grocery, food and beverage. When asked about same-day delivery in 2016, only 16 percent of retailers were offering some type of it. In 2017, that number rose to 51 percent — with 65 percent planning to add the option in the next two years. “Third-party services like Uber Eats and Grubhub or Instacart for groceries, are making it easier for retailers to adopt delivery,” Jeff Neville, vice president at BRP told Convenience Store News, adding that third-party delivery services increased from 20 percent in 2016 to 32 percent in 2017. Convenience store chain Wawa Inc. began a pilot with Grubhub in September 2017, and then announced it was expanding the service to more locations in January 2018. Participating stores offer delivery through Grubhub for most of the chain’s foodservice items, along with a limited number of beverages, chips, candy and desserts. Another c-store player, QuikTrip Corp., began testing delivery in February 2017 through Uber Eats at 10 of its stores across Tulsa, Okla. Mike Thornbrugh, manager of public affairs at QuikTrip, said this is a way to test “the concept of delivery.” “It’s something we have never done before, and we didn’t really understand it, so working with Uber Eats gives us an opportunity to try it and see if it’s something we want to pursue,” Thornbrugh told CSNews, explaining that QuikTrip chose Uber Eats because of its accessibility in the area. “We are going to measure the growth and how it’s being accepted by customers. It’s brand-new so we are being patient.” The largest convenience store chain in the United States, 7-Eleven Inc., is testing proprietary delivery. It recently announced testing of on-demand ordering for both delivery and in-store pickup with its new 7NOW app at 20 stores in Dallas.

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Snacks, cosmetics, gift cards, home goods, beverages and more are available for purchase through the app. Retail consultancy King-Casey predicts that by 2023, more than half of c-store brands will offer digital ordering and delivery options. In fact, King-Casey principal and co-owner Howland Blackiston, said he doesn’t recall anything evolving this fast in the last 20 years. “It’s like a tidal wave, and I think if we have this conversation in even two years, we will be hard-pressed to find anyone who isn’t doing it,” he said. “With c-stores competing with QSRs, and both of them competing with grocery stores, everybody is trying to hop on the bandwagon. I don’t think it will take very long for it to become commonplace.”

Key Considerations The convenience store industry is built on convenience and immediate gratification, but competitors in grocery, big-box and QSRs continue to encroach on this space. With everyone hopping on the delivery train, industry experts believe it’s not a matter of “if” a c-store should offer delivery, but rather a matter of “when” it should.

“It’s like a tidal wave, and I think if we have this conversation in even two years, we will be hard-pressed to find anyone who isn’t doing it.” — Howland Blackiston, King-Casey “C-stores have to do something like this because how in the world are they going to compete when this train is roaring down the track? Unless they jump on it, they are going to get lost,” Blackiston said, advising that it would be wise for some chains to start by offering foodservice delivery before expanding to other items. “With foodservice, they can look at McDonald’s to see what they are doing and then shamelessly copy it,” he said. Uber Eats now delivers from nearly 7,000 McDonald’s locations in 20 different countries, according to media reports. “Third-party services make it so much easier. If a company has to sort it out on its own and

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Wawa began a pilot with third-party delivery service Grubhub in September 2017 and has since expanded its number of participating stores.

justify hiring people, that would put the brakes on delivery for many,” Blackiston continued. “But third-party is a no-brainer.” At QuikTrip, the chain watched as consumer interest in delivery increased. That’s why it decided to do the test with Uber Eats. Although the partnership is still new, the feedback so far shows customers like the option, Thornbrugh reported. “If the test is successful, then it’s another option for us and for the consumer,” he said. To get started, Blackiston suggests c-store operators research what delivery services are available in their area, and then compare the services in regards to pricing and what other companies they already work with. If a chain decides to offer delivery in-house, like Casey’s General Stores Inc. does with its pizza delivery, there also needs to be technology in place to handle ordering and logistics, and staff for delivery, he noted. Another key consideration before diving into delivery is packaging. Retailers must look at their current packaging for food and beverages and verify that the current options are appropriate for home delivery, Blackiston explained. “Will the food stay hot or cold? Will it spill or leak? Companies may have to source out different [delivery] packaging for their products that they might not otherwise have to do when people come into the store to purchase it,” he said. BRP advises retailers who are looking to offer delivery at their stores to also factor in where the food will get “staged, stored and picked up.” And if they are doing same-day delivery, they will need a queue and prioritization of space if doing it without a third-party, according to Neville. Labor is another issue — in cost, capability and understanding how the whole process of taking and filling orders will be executed. “Does the company have skilled resources to do delivery or will they be stealing resources from the front-of-house cashier?” Neville posed.


Attention to Technology a Must Technology is a big component in making delivery feasible — and successful. “Technology is evolving so fast now, and it’s making all of this possible,” said Blackiston. Technology for taking orders, navigating delivery and inventory management (depending on whether delivery will be in-house or not) are all pieces of the puzzle that need to fit together, Neville echoed. “Inventory management becomes important, [as does] having the insight into what is in stock and available, which is hard if it’s not in real time,” Neville noted. “There needs to be attention and focus on inventory management being accurate.” If delivery is happening at more than one store, the company needs to stay on top of processes and procedures at each location. Knowing how to measure service levels is an important component. For example, is the company responding to customer orders in a timely manner? Are customer service issues repeatedly popping up? Despite its many moving parts, delivery — especially same-

7-Eleven is testing on-demand delivery at 20 stores in Dallas. Customers use the new 7NOW app to place their orders.

day and on-demand — is becoming a necessity for retailers, and it continues to evolve with the introduction of new apps, third-party services and advanced technologies. There are already some pizza companies experimenting with robotic delivery and, in other countries, there are entire stores that are mobile. “There is Moby Mart in Shanghai and Robomart, along with others coming out of secret launch,” Neville noted. “Imagine an app where you can click on a vehicle and have it come to you, and a bus-size store like Amazon Go pulls up. It’s already here.” CSN

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“C” Is for Convenience & Compete The 2018 NACS Show will school the c-store industry on getting and keeping attention By Danielle Romano THE DEFINITION OF “CONVENIENCE”

isn’t the same as it

was even just yesterday. Today’s brick-and-mortar retailers are offering convenience across multiple platforms, including the ever-growing dollar store segment; smaller-format concepts like Walmart’s pilot of its version of a c-store; and technology-driven experiences like Amazon Go. That’s why it’s fitting that the overarching theme of the 2018 NACS Show, being held Oct. 7-10 at the Las Vegas Convention Center, is “Compete.” Through education and general sessions that address hot-button topics, to the latest industry insights and new solutions, the NACS Show will help c-store operators not only compete against everyone who is offering convenience today, but also compete for attention in the minds of shoppers. “Getting and keeping attention is the single most important objective for businesses today, especially with disruption to existing business models that previously existed for years, or even decades,” Jeff Lenard, vice president of strategic industry initiatives for NACS, the Association for Convenience & Fuel Retailing, told Convenience Store News. “When we compete as an industry, everyone grows

and everyone profits. Competition also fuels continuous improvement in the convenience industry. It gives us the edge and fuels the momentum we need to continue to deliver on the convenience promise,” he added.

Convenient Offers Now in its 45th year, the 2018 NACS Show will welcome nearly 25,000 attendees who will have access to an expo floor boasting 400,000 square feet, where they’ll discover thousands of the newest products and services that c-stores sell and use every day, spanning six categories: • Fuel equipment & services; • Food equipment & foodservice programs; • Candy/snacks; • Facility development & store operations; • Merchandise; and • Technology Lenard noted that while there are always new products, services, ideas and connections to find at the show, there are several convenient ways for attendees to enhance their experience: New Exhibitor Area: Featuring the more than 200 firsttime exhibitors expected at this year’s show, the New Exhibitor Area is the perfect opportunity for retailers to “see it first and stock it first,” according to Lenard. “This is a great opportunity to see emerging trends from companies that may not be regularly associated with our industry.” Cool New Products Preview Room: A show favorite for more than a decade, the Cool New Products Preview Room allows attendees to discover the latest, hottest and most cutting-edge products introduced in the past year. For this year’s show, NACS has enhanced the layout of the room, arranging it around the same six categories on the expo floor. Cool New Ideas: Special presentations will be made every day that share learnings from retail leaders who walked the expo floor and are reporting back with insights about the trends and specific hot ideas they spotted. The 2018 NACS Show lineup also includes more than 60 education sessions that cover

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FEATURE

NACS SHOW 2018 GENERAL SESSION LINEUP SUNDAY, Oct. 7 | 3:45-5 p.m. Bonin Bough is one of the foremost-awarded marketing executives in his field and has spearheaded some of the largest global marketing campaigns across digital, mobile, television, print and experiential. Host of the “Cleveland Hustles” television program and author of “Txt Me (646) 759-1837,” Bough wants to leave NACS Show attendees with one message: “Virtually everything you do in your c-store — from what merchandise you carry and where you place it to how your design your store — needs to be focused around answering one question: How’s it going to look in an Instagram post?” MONDAY, Oct. 8 | 10:30-11:45 a.m. Un-Marketing President Scott Stratten assists organizations in seeing their business through a new lens with his unconventional “un-marketing” views and a vanguard approach to building and maintaining real customer relationships. According to Stratten, how a c-store treats its customers is the only branding that matters. Named a top-five social media power influencer by Forbes.com, Stratten puts the focus on what matters most to current and potential buyers, including values, authenticity, relationships and service. TUESDAY, Oct. 9 | 10:30-11:45 a.m. NACS President and CEO Henry Armour will talk about how retail disruption is giving new meaning and opportunities to how the industry delivers time and convenience. His presentation will be followed by the 2018 NACS Ideas 2 Go program, which annually showcases the best practices and emerging concepts that redefine convenience, and provides quick takeaways for retailers to implement at their own stores. WEDNESDAY, Oct. 10 | 8-9 a.m. Executive producer and TV show host Mike Rowe will close out the 2018 NACS Show. Best known as the “dirtiest man on TV” from his hit series “Dirty Jobs,” Rowe is also founder of the mikeroweWORKS Foundation, dedicated to reinvigorating the skilled trades and advocating for closing the widening skills gap by addressing the aging workforce, high unemployment rate and the millions of unfilled jobs. Rowe can currently be found on Facebook’s groundbreaking series “Returning the Favor,” where he searches for remarkable people making a difference in their communities, or on his podcast, “The Way I Heard It,” a five-minute podcast for those with a curious mind but a short attention span.

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every aspect of the highly competitive, multibilliondollar convenience store industry, such as foodservice, technology and leadership operations. In addition, keynotes on this year’s agenda include presentations from marketing executive Bonin Bough; Un-Marketing President Scott Stratten; NACS President and CEO Henry Armour; and Mike Rowe, host of the hit television series “Dirty Jobs.”

Strategy & Execution Whether it’s someone’s first NACS Show or their 20th, there will be a lot to see and do during the event, not to mention after-hours networking. Lenard has three solid pieces of advice for all attendees: 1. Comfortable shoes are a must. 2. Keep a phone charger handy. 3. Plenty of business cards are useful. For first-time attendees, Lenard also suggests they plan ahead before arriving onsite to maximize their time and ensure they cover every valuable area of the show. “Focus on a few critical needs or focus areas and see how you can best solve them at the NACS Show,” he advised, noting that NACS’ My Show Planner, which acts as a personal show assistant, and the NACS Show Mobile App, which syncs to the My Show Planner agenda, are both useful tools to prepare for the event. NACS Show regulars, on the other hand, would benefit from having a more focused plan of attack in finding specific business solutions at the event. Still, there are plenty of new elements for them to consider in their planning, too. “Whether new education session topics or new exhibitors, try to find ways to work a little out of your comfort zone. And seek out those first-timers and others relatively new to the industry or NACS Show to expand your circle of contacts,” Lenard said. CSN


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STORE SPOTLIGHT

Uniquely Texas Texas Best Smokehouse travel centers offer homestyle barbecue in a family setting By Danielle Romano

Victron Energy wants to challenge the common misperceptions pertaining to travel centers with its Texas Best Smokehouse locations.

FOR TOO LONG, the nation’s travel centers have caught a bad rap for catering only to professional drivers and providing less-than-quality gas station food. Victron Energy Inc. is challenging that misperception in the form of Texas Best Smokehouse, its travel center and convenience store arm that serves up homemade barbecue, an assortment of award-winning exotic jerky, and private brand items like gourmet snacks and candy, all in a family-oriented setting.

With locations across the Dallas/east Texas area — most of which are situated on major interstates — Texas Best Smokehouse welcomed customers to one of its newest travel centers at 101 U.S. Highway 287 South in Henrietta, Texas, on April 21. It is the eighth location in the company’s portfolio.

At a Glance

Texas Best Smokehouse Location: 101 U.S. Highway 287 South, Henrietta, Texas Size: 17,000 square feet Unique features: Proprietary Texas Best BBQ; private brand jerky, fudge, candy and snacks

“Our goal is to give customers, travelers, commuters, truckers — whoever they may be — a memorable Texas experience, whether that’s greeting customers with, ‘Howdy, welcome to Texas Best,’ them tasting our delicious barbecue or our unique jerky, or buying some of our gift items. Whatever it is, we want to give people the feel and impression of what is uniquely Texas,” said Mohammed Sharaf, vice president of development. “We like to think that we take all of the elements and improve the offer and the experience that everyone can be happy with, without making any compromises,” he added.

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From Familiar to Exotic Offers The Texas Best Smokehouse brand debuted less than a decade ago as the brainchild of Mohammed’s father, Ali, who founded the concept with a single convenience store. Ali was born in Syria, where he worked as a civil engineer before moving to the United States in 1986. Upon his arrival, he worked as a cashier in a c-store in a rough area of Oak Cliff, Texas. For three years, he saved his money to eventually purchase that same store. At one point, Ali was approached by a man who wanted to lease the store, but he saw the location as a chance to create opportunity and wealth for himself and others, and envisioned a travel center that would not only appeal to truckers, but also really focus on family and commuters coming from out of state. More than anything, Ali wanted to provide a small, family-owned and -oriented feeling that is rare for a large, statewide company, according to Mohammed. Today, the Texas Best Smokehouse in Henrietta continues Ali’s mission that these locations be not just another convenience store, but rather a unique destination. With its facilities open 24 hours a day, seven days a week, the 17,000-square-foot travel center incorporates Texas flair with southern and western elements for an authentic feel.


The 17,000-square-foot travel center incorporates many western elements for an authentic Texas feel.

This particular location features four eating establishments — all open daily until 10 p.m. — that provide customers with options from the familiar, such as Steak ‘n Shake, Auntie Anne’s and Cinnabon, to homestyle with the company’s signature Texas Best BBQ program. “A lot of people expect it to be gas station barbecue, but you’ll find that we like to deliver a restaurant-level quality, whether you’re dining in or on the go,” Mohammed explained. “Often, people are coming in just to dine and enjoy the atmosphere, so we’re happy to offer that as well.” Another unique element of Texas Best Smokehouse’s offering is its awarding-winning jerky. The company has become known for its signature exotic jerky varieties, which span venison, bison, elk, python, kangaroo, rabbit, crocodile and crawfish. All of its jerky is produced in a facility the company owns and oversees in Italy, Texas. Other amenities available at Texas Best Smokehouse are: • Private brand fudge; • Gourmet candy, snacks, jams, nuts, wine and energy drinks; • Diesel gasoline; • Fresh coffee; • High-end trucker facilities; and • Souvenir gifts. Due to the demand for Texas Best Smokehouse’s private label specialty products, they are also available for purchase from an online store, www.texasbestshop.com. “We love to give our customers an experience where they can go somewhere and say, ‘Hey, I was traveling from Florida to California and I stopped at this Texas-style Smokehouse, a big, nice place on the interstate, and when I

“We want to have somewhere that the entire family can realize that we’re someplace they can stop at and know that the restrooms are always clean, the food is always fresh, and they’re going to have a great experience here.” — Mohammed Sharaf, Texas Best Smokehouse went in, they’ve got good barbecue, jams and meats.’ This is the experience we want to be able to give them,” Mohammed said.

Looking to the Past for the Future As for the future of Texas Best Smokehouse, Mohammed said his family has no intention to sell despite his father’s passing four years ago. Instead, they plan to continue growing the brand through new builds and acquisitions, and building upon his father’s legacy. “We want to have somewhere that the entire family can realize that we’re someplace they can stop at and know that the restrooms are always clean, the food is always fresh, and they’re going to have a great experience here,” Mohammed told Convenience Store News.

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the Lone Star State. That travel center will be the first Texas Best Smokehouse to have a patio surrounding the travel center, plus it will feature the company’s first tunnel car wash.

The goal of Texas Best Smokehouse travel centers is to give travelers, commuters and truckers a memorable experience.

Recently, Texas Best Smokehouse opened its ninth location in Dallas, and two additional sites are on the docket to be built within the next 18 months. One of the new-build travel centers will be in a popular location in Grapevine, Texas, situated near Great Wolf Lodge and Gaylord Texan, one of the largest hotels in

“We look to customers to tell us what they want in terms of merchandising and food options, so it’s not the same across all stores,” Mohammed said. “While the experience of Texas Best Smokehouse will always be the same, and guests know what to expect in terms of customer service and cleanliness, we absolutely cater to the locals and every store we build is different. We have no cookie-cutter model.” CSN

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NEW HORIZONS

Pay Parity Is Possible Starbucks shares its three-step solution for equal pay signed into law by President Kennedy, women earned 60 cents for every dollar men earned. Fiftyfive years later, women still make only 80 cents on the dollar. For women working full time in retail, that number is just 70 cents.

The Solution Is Simple

Progress has been glacial, with the gap closing by just 3 cents in the last decade. At the current rate, it will take 100 years to close the pay gap, according to The American Association of University Women.

Even so, a growing number of companies are tackling the problem head-on, and some, including NEW partners Intel, Microsoft and Starbucks, have succeeded.

WHEN THE EQUAL PAY ACT was

By Sarah Alter, President & CEO, Network of Executive Women

The solution to pay inequality is simple: Pay everyone doing the same work the same amount. Simple, but not easy to accomplish.

Meanwhile, the debate over the cause of the pay disparity rages on. Some point to motherhood or personal career choices. But there is no denying that systemic gender bias is at the root of pay inequality.

Intel reached gender pay parity for women in the United States in 2015. Early last year, the company accomplished pay and promotion parity for U.S. women, African-Americans, Hispanics and Native Americans, calling both “signals of the overall health of our company.”

“Economists try to analyze all the factors that we know: industry, education, how long you’ve been at work, hours,” Ariane Hegewisch of the Institute for Women’s Policy Research recently told CNBC. “What is leftover is what we can’t explain with anything that can be easily measured, and that’s basically the proxy for discrimination.”

Another tech company — our newest partner Microsoft — now pays 99.99 cents on the dollar to women at the same job title and level. Racial and ethnic minorities earn $1.005 for every $1 earned by their Caucasian counterparts. This spring, after 10 years of single-minded focus, analysis and new thinking, Starbucks reached its goal to end pay differences between women, men and underrepresented minorities in its U.S. operations. To help others achieve the same, the company is sharing its winning strategy, which it is now applying globally. Adhering to Starbucks’ three principles — equal footing, transparency and accountability — will allow employers of all kinds to address the systemic barriers to pay equality.

Equal Footing Starbucks doesn’t ask candidates about their salary history. Starting pay is based on the candidate’s skills, abilities and experience. Period. Plus, a position’s pay range is provided upon a candidate’s request. “One of the most important things to get right is starting pay,” according to Sara Bowen, an attorney who leads Starbucks’ Inclusion, Diversity, Equity and Accessibility Team.

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“If a woman comes into a company low, she tends to stay low. If a job candidate comes to Starbucks making 70 or 80 cents on the dollar, and we use that as the basis for her pay at Starbucks, we simply import gender inequality into our own system. Prior salary can be tainted and should not dictate how we pay our partners.” The company also removes caps on promotional increases. Its pledge: If you are promoted at Starbucks, your salary will not depend on what you made before.

Transparency Each year, Starbucks publishes its pay equity performance and provides updates on its efforts to achieve and maintain pay parity globally. A pay offer calculator is used to calculate the starting pay range for all store managers and district managers — and Starbucks will not retaliate or discriminate against employees for asking about or discussing wages.

Accountability The coffee retailer is conducting comprehensive compensation analyses — including base pay, bonuses, stocks and other rewards — to further its goal of pay equality for all partners. Raises and bonuses are statistically analyzed before they are finalized to ensure systemic bias doesn’t creep into the process. “We tried to create tools to help us approach pay in a consistent and objective way, and remove the kind of subjectivity that can lead to pay bias,” Bowen said. “These tools affect hundreds, if not thousands, of pay decisions every year. This is a complicated issue and it is not about one single moment, but about the ongoing work to make equity a reality.”

Convenience Store News is pleased to continue this series of exclusive educational columns by the Network of Executive Women (NEW), coinciding with the annual CSNews Top Women in Convenience awards given out each fall. Forty-five female managers, executives and directors who work in the convenience store industry will be honored in our 2018 program. In addition to being a presentation sponsor for the Top Women in Convenience program, NEW and CSNews have partnered to develop this series of columns directed at helping corporate leaders drive more inclusive company cultures. Founding & Presenting Sponsor:

It took a decade of determined effort for Starbucks to reach gender pay parity. But don’t let the magnitude of the challenge keep you from taking action or reaching out to others for help. At NEW, we encourage our partner companies to: • Conduct (and regularly repeat) an equal-pay analysis by job title, based on required knowledge, skill and experience. • Include pay adjustments in the budget. • Ensure all merit pay supports equal pay. • Never set salaries based on pay history. • Evaluate how maternity or disability leaves affect employees’ career paths and wage increases.

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Bowen compares achieving pay equity to making exercise a habit. “It’s a huge muscle to build,” she said recently. “And even when you reach a pay equity milestone, you have to keep working at it.”

Gold Sponsors:

It’s that continuous work — changing behaviors, overhauling compensation policies, creating equal career opportunities, constant monitoring — that will ensure women and men are paid the same amount for the same work. CSN Sarah Alter is president and CEO of the Network of Executive Women, a learning and leadership community representing nearly 11,000 members, more than 830 companies, 110 corporate partners and 21 regional groups in the United States and Canada. Learn more at newonline.org. Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News.

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ADINDEX ADD Systems ..............................................................................37 Altria Group Distribution - Phillip Morris...........................2–3 Anchor Packaging .....................................................................67 Autofry/MTI, Inc..........................................................................69 Bake’n Joy Foods .......................................................................53 Blu eCigs .....................................................................................35 Boston Beer/Samuel Adams Brewery Tour......................16 Campbell Soup Company .......................................................23 Cash Depot Ltd. ..........................................................................18 Church & Dwight Co. - Trojan Brands.................................17 Cookies United ............................................................................47 E-Alternative Solutions ............................................................29, 61 Forte Products ............................................................................30 GlaxoSmithKline Consumer Health Care...........................51, 99 Heartland Foods .........................................................................43 Home Market Foods..................................................................55 Hunt Brothers Pizza ..................................................................65 Hussman Corp. ............................................................................73 Inline Plastics ...............................................................................20–21 J&J Snack Foods Corp. ............................................................71 John Middleton Company.......................................................25 JUUL Labs ..................................................................................75 Krispy Krunchy Chicken...........................................................27 Liggett Vector Brands ..............................................................45 Living Essentials LLC ................................................................15 McLane Company ......................................................................49 New Pig .......................................................................................80 Omega flex Inc. ...........................................................................42 P2PX Expo ..................................................................................19 Perfetti Van Melle USA Inc......................................................31 Premier Manufacturing ............................................................39 Private Label Manufacturers Association .........................57 Procter & Gamble Distributing Company .........................7 Reynolds American Trade Marketing Services ..............9 Rich Products Corp. ..................................................................11 Shoptalk ......................................................................................100 Swedish Match North America LLC ....................................77 Swisher International ................................................................13, 41 Tyson Foods ..............................................................................5

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Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by EnsembleIQ, 8550 W, Bryn Mawr Chicago, Il 60631. Copyright © 2018 by EnsembleIQ. All rights reserved. Subscriptions: One year, $93; two years, $152. One year, Canada, $110; two years, Canada, $175. One year, foreign, $150. Payable in advance with a bank draft drawn on a U.S. bank in U.S. funds. Single copies, $10, except foreign, where postage will be added. Printed in U.S.A. Periodicals postage paid at Deerfield, IL, and at additional mailing offices. POSTMASTER: Send address changes to Convenience Store News, P.O. Box 1842, Lowell, MA 01853.

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GETTING TO THE CORE

The Skinny on Baked Goods Convenience store shoppers prefer to purchase bakery products at other retail channels

From doughnuts and cookies to bagels and croissants, convenience stores offer an array of baked goods — both fresh and packaged. However, the channel isn’t the first place c-store shoppers prefer to purchase such products. It’s actually the sixth, according to new research from EIQ Research Solutions, an EnsembleIQ sister company of Convenience Store News, which recently surveyed 500 consumers who shop a convenience store at least once a month to get the skinny on their baked goods buying habits. Among other findings: more than 60 percent of respondents say they would be more likely to shop their favorite c-store if it offered fresh baked goods.

Where would you say is your preferred place to purchase baked goods? Supermarket Bakery Mass merchandiser (e.g., Target, Walmart, etc.) Doughnut shop Coffee shop Significantly Convenience store more than any other age group, Club store (e.g., Costco, Sam’s Club, etc.) c-store shoppers aged 18-24 prefer Restaurant (any type) to purchase baked goods at Dollar store restaurants. Drug store Other

30.34% 23.27% 21.30% 8.06% 5.78% 4.96% 2.14% 1.73% 1.19% 0.24% 0.98%

79.4%

The percentage of c-store shoppers who said they also purchased a beverage the last time they purchased baked goods at a convenience store. The most popular baked good purchased by c-store shoppers within the channel is a doughnut. Snack cakes and cookies round out the top three.

Source: EIQ Research Solutions Base: 479 c-store shoppers who purchased baked goods in the past 30 days

The TOP 5 beverages c-store shoppers say they purchase with baked goods are: 1. HOT COFFEE 2. FOUNTAIN BEVERAGE 3. BOTTLED OR CANNED SOFT DRINK 4. WATER 5. JUICE

Want to collaborate and share expertise with your peers? The Council of Retail Experts (CORE) is an exclusive network of convenience store retail leaders who do just that. For more information on how to join CORE, please visit www.cvcoreinsights.com.

Survey respondents sourced via ProdegeMR, reinventing the market research process by taking a respondent first approach. Visit prodegemr.com/ensembleiq for more info.

Thinking about the baked goods you’ve purchased in the past 30 days, which have you purchased from a convenience store? Doughnut Snack cake Cookie Pastry

(e.g., coffee cake, danish, strudel, etc.)

Muffin Bagel Cinnamon roll Bread (e.g., sliced bread, rolls, buns, etc.) Brownie Hand pie (i.e., pocket pie, typically filled with fruit) Croissant Cake slice Traditional pie (i.e., individual round pie or slice) Ethnic baked good (e.g., baklava, churro, etc.) Source: EIQ Research Solutions

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Female shoppers turn to c-stores more for snack cakes, hand pies and ethnic baked goods vs. their male counterparts.

55.01% 40.92% 40.50% 30.47% 28.93% 18.73% 18.10% 17.64% 15.74% 9.61% 6.60% 4.99% 3.68% 2.39%


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