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VIEWPOINT By Don Longo, Editorial Director

What’s in a Name?

Silicon Valley techies run afoul of social media, but provide c-stores with food for thought

B

y now, you’ve probably heard about Bodega. No, not a bodega, the small convenience/grocery stores usually operated by immigrant families in urban markets. I’m talking about Bodega, the West Coast-based startup that is rolling out five-foot-wide high-tech vending machines containing a limited array of nonperishable food and sundry items. The Silicon Valley entrepreneurs behind the new vending concept never expected to get barraged with negative commentary on social media following a profile in Fast Company magazine about their innovative approach of melding artificial intelligence to mobile retailing. For comments, please contact Don Longo, Editorial Director, The founders have placed about at (201) 855-7606 or 50 of these vending units in apartdlongo@ensembleiq.com. ment buildings, offices, dorms and sports clubs in the San Francisco area. To use them, a person just needs to open an app on their phone and connect to the box’s smart technology, which will recognize the items selected and automatically charge the user’s credit card. The creators said they hope to install more than a thousand of these smart boxes across the United States by the end of 2018. In today’s politically correct culture, is it any wonder that social media exploded with negative reaction to the story, accusing the two techies of “misappropriating” the culture of the immigrant shopkeepers who

run real bodegas? Retail outlets in the convenience store industry already have their share of — shall we say — interesting names, such as Kum & Go, Terrible Herbst, Toot’n Totum, Loaf ‘N Jug and Handee Hugo’s. And what’s with the apparent preoccupation with animals? Kangaroo Express, Li’l Cricket, Roadrunner Market, Turkey Hill, etc. I wonder if people of Scottish descent ever accused Scotchman stores of misappropriating their culture. The founders of Bodega say they are rethinking the name, though I’m not sure there’s a crying need for these machines in the first place; not with so many more options for fresh food cropping up everywhere, including at easy-to-get-to convenience stores. The lessons in this story for c-store operators are twofold. First, don’t take cultural or ethnic considerations lightly when naming and launching new products, promotions or events. Indeed, ESPN recently reassigned an Asian-American college football announcer named Robert Lee from calling a game in Charlottesville, Va., because they were afraid his name would inflame tensions after the riots there over the removal of the Confederate general’s statue. Second, disruptors are everywhere. If it’s not vending machines, it’s going to be Amazon, or hybrid grocery or drugstore retailers, or someone else you haven’t even imagined yet. Everyone wants to play in the “convenience” pond. C-stores must stay atop their game and constantly innovate to stay relevant to their customers.

EDITORIAL EXCELLENCE AWARDS (2013-2017) 2016 American Society of Business Press Editors, National Azbee Awards Gold, Best How-To Article, March 2015 Bronze, Best Original Research, June 2015 2016 American Society of Business Press Editors, Midwest Regional Azbee Awards Gold, Best How-To Article, March 2015 Silver, Best Original Research, June 2015 2015 American Society of Business Press Editors, National Azbee Awards Silver, Best Profile (long form), February 2014 2015 American Society of Business Press Editors, Midwest Regional Azbee Awards Gold, Best Special Supplement, November 2014 Silver, Best Profile (long form), February 2014 2013 American Society of Business Press Editors, Midwest Regional Azbee Awards Bronze, Best Editorial/Commentary, July 2012 2016 Trade Association Business Publications Intl. Tabbie Awards Silver, Front Cover Illustration, June 2015

EDITORIAL ADVISORY BOARD

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

2016 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2015 Business to Business, Retail, Single/Series of Articles, August 2015 2015 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Single Article, February 2014 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

4 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

Brett Atherton Bolla Management Jon Bratta Core-Mark International Inc. Rick Crawford Green Valley Grocery Edward Davidson ER Davidson & Associates (7-Eleven Inc., retired) Jim Hachtel Eby-Brown Co. Ray Johnson Speedee Mart

Jack Lewis GPM Midwest

Kirk Leff McLane Co. Inc.

Roy Strasburger Convenience Management Services Inc.

Danielle Mattiussi Maverik Inc. Kyle McKeen Alon Brands Inc. Richard Mione GPM Southeast Jonathan Polonsky Plaid Pantries Inc. Greg Scriver Kwik Trip Inc.


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CONTENTS OCTOBER 2017

VOLUME 53/NUMBER 10

40 COVER STORY A High-Flying Experience

Pilot Flying J brings its network in a new direction with the debut of Store 411.

DEPARTMENTS VIEWPOINT

4 | What’s in a Name? Silicon Valley techies run afoul of social media, but provide c-stores with food for thought. 10 | CSNews Online 12 | Industry Roundup 26 | New Products: NACS Show Edition SMALL OPERATOR

30 | Tackling the Back-Office Trio Experts drill down into how small operators can best manage finances, inventory and loss. SMALL OPERATOR

36 | Pirates of the Convenience Channel L.A.’s Trimana seeks profits from pirating new customers from fast-food chains. EXPERT’S VIEW

148 | It’s Still Lonely at the Top for C-store Women How to address the isolation that plagues senior leaders. EXPERT’S VIEW

154 | Wake-Up Call These are the questions you should be asking to plot the future of your companies.

STORE SPOTLIGHT

160 | The Road to Healthy California’s ENroute Market aims to redefine convenience by nourishing consumers’ bodies while they’re on the move. GETTING TO THE CORE

186 | Conversing About Coffee C-store shoppers share their opinions on this very personal beverage.

FEATURES 52 | The Next Frontiers for Convenience C-stores are taking on mobile ordering, delivery and drive-thru to stay competitive. 60 | Capturing Consumers’ Attention Experts say convenience is one of the best retail environments for shopper marketing. 76 | The Evolution of Design This year’s CSNews Store Design Contest winners do much more than look good. TECHNOLOGY

130 | Business Driven Tom Colbert ensures Kwik Trip’s IT team is a partner for all the chain’s business units. TECHNOLOGY STUDY

134 | Beyond the Basics Tech spending plans include more than just replacements and required upgrades.

Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by EnsembleIQ, 570 Lake Cook Rd. Deerfield, IL 60015. Copyright © 2017 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.

6 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM


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CONTENTS FEATURES

continued

OPERATIONS

138 | What You Need to Know About the New Generation of Workers Millennials are not only transforming c-stores as customers, but also as employees. OPERATIONS

144 | Championing an Important Cause Altria’s Women in Sales Network promotes diversity in male-dominated industries.

CATEGORY MANAGEMENT FOODSERVICE

92 | The Cold Hard Truth What you need to know about cold brew and nitro coffee. 96 | Healthy, Wealthy & Wise The better-for-you trend is everywhere these days, even in fountain and frozen beverage. 102 | Powering the Day & Bottom Line With Breakfast Morning consumers are most concerned with fueling, wellness and gratifying. TOBACCO

106 | The Next Big Thing? Heat-not-burn could be the tobacco product to make combustible cigarettes quiver. COLD VAULT

112 | Optimizing Your Beer Assortment Collaborative study finds optimal assortment starts with “must-have” core items.

570 Lake Cook Road, Ste. 310, Deerfield, IL. 60015 (224) 632-8200 Fax: (224) 632-8266 www.csnews.com Direct Mailing Address for Convenience Store News: 111 Town Square Place, Suite 400, Jersey City, N.J. 07310

BRAND MANAGEMENT Vice President/Group Brand Director (917) 446-4117

Paula Lashinsky plashinsky@ensembleiq.com

EDITORIAL Editorial Director (201) 855-7606 Editor-in-Chief (201) 855-7608 Senior News Editor (201) 855-7618 Associate Editor (201) 855-7619 Associate Managing Editor (201) 855-7604 Assistant Editor (201) 855-7614 Contributing Editor (303) 741-3377 Contributing Editor (201) 280-2614

Don Longo dlongo@ensembleiq.com Linda Lisanti llisanti@ensembleiq.com Melissa Kress mkress@ensembleiq.com Angela Hanson ahanson@ensembleiq.com Danielle Romano dromano@ensembleiq.com Chelsea Regan cregan@ensembleiq.com Renée M. Covino reneek@aol.com Tammy Mastroberte tmastroberte@gmail.com

ADVERTISING SALES & BUSINESS Associate Brand Director & Northeast Sales Manager Rachel McGaffigan (508) 385-2524 rmcgaffigan@ensembleiq.com Associate Brand Director & Western Sales Manager Ron Lowy (330) 840-9557 rlowy@ensembleiq.com Associate Publisher & Midwest Sales Manager Kelly Fischer (773) 992-4464 kfischer@ensembleiq.com Southeast Sales Manager Erika Cann (330) 357-9207 ecann@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

CUSTOM MEDIA Vice President/Custom Media Division Pierce Hollingsworth (224) 632-8229 phollingsworth@ensembleiq.com General Manager, Custom Media Kathy Colwell (224) 632-8244 kcolwell@ensembleiq.com

MARKETING VP, Marketing & Communications (224) 632-8214

Bruce Hendrickson bhendrickson@ensembleiq.com

AUDIENCE DEVELOPMENT Director of Audience Development Gail Reboletti (224) 632-8214 greboletti@ensembleiq.com Audience Development Manager Shelly Patton (646) 217-1045 spatton@ensembleiq.com List Rental The Information Refinery (800) 529-9020 Brian Clotworthy Subscriber Services/Single-Copy Purchases (978) 671-0449 EnsembleIQ@e-circ.net

ART/PRODUCTION

CANDY & SNACKS

116 | The Wrap on Novelty & Seasonal Candy The convenience channel is significantly under-leveraged in this segment.

Director of Production (973) 358-4875 Advertising/Production Manager (314) 403-4753 Art Director (224) 632-8245

IN-STORE MERCHANDISING

CORPORATE OFFICERS

122 | Homing In on the HBC Opportunity More c-store retailers need to make this category a forethought. MOTOR FUELS

126 | Forging the Future of Fuels Lance Klatt has helped E15 and the Minnoco fuel brand thrive in the Minnesota market.

Kathryn Homenick khomenick@ensembleiq.com Roz Gilman rgilman@ensembleiq.com Michael Escobedo mescobedo@ensembleiq.com

Executive Chairman Alan Glass Chief Operating Officer & Chief Brand Officer Rich Rivera Chief Financial Officer Len Farrell Chief Business Development Officer & President, EnsembleIQ Canada Korry Stagnito Chief Customer Officer/President of Enterprise Solutions Ned Bardic Chief Digital Officer Joel Hughes Chief Human Resources Officer Greg Flores

CONVENIENCE STORE NEWS AFFILIATIONS

Premier Trade Press Exhibitor 8 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

Reprints, permissions and licensing, please contact Wright’s Media at ensembleiq@wrightsmedia.com or (877) 652-5295.


WARNING: Smokeless tobacco is addictive. © 2017 American Snuff Company, LLC. (4Q)

MOIST SNUFF


CSNEWS.COM TOP 5 Daily News Headlines The most viewed articles online.

1 | A&W Outlines C-store Growth Strategy The Lexington, Ky.-based restaurant chain had positive unitcount growth last year for the first time in five years, and it continues to view convenience stores as fertile partners to bolster that expansion. So far this year, A&W opened new restaurants with c-stores in Barron, Wis.; Tonkawa, Okla.; Dinuba, Calif.; Sigourney, Iowa; and Orbisonia, Pa. 2 | The Future of Convenience Foodservice: iGen Presenting the keynote at the 2017 Convenience Store News Convenience Foodservice & Beverage Exchange on Sept. 12, Mintel Senior Foodservice Analyst Caleb Bryant explained that the core c-store demographic skews male and iGen, which is also sometimes referred to as Gen Z. They are frequent snackers and key consumers for beverage programs. 3 | British American Tobacco Makes Moves to Meet Next-Gen Demand Upon the heels of acquiring Reynolds American Inc., British American Tobacco plc (BAT) is preparing for the next generation of tobacco products. The move to simplify its regional structure and to fully integrate its Next Generation Products business into the core operations of the group reflects “the outstanding growth of this part of our business to date and its long-term importance to the group’s future,” U.K.-based BAT said. 4 | What to Do If Your C-store Business Is Struggling Low in-store sales, high employee turnover and declining gross profit margins are just a few of the problems Roy Strasburger, president of Convenience Management Services Inc., may encounter when he and his team take over a convenience store and gas station. Strasburger sat down with CSNews and shared four key pieces of advice for struggling c-store retailers. 5 | Casey’s Steps Up New-Store Construction on Way to 2,000 When Casey’s General Stores Inc. opened its second distribution center, the convenience store retailer said the Terre Haute, Ind., facility would spur its expansion. A year and a half later, Casey’s continues to build on that growth promise.

ONLINE EXCLUSIVE NEW’s New Chief Looks to Guide Next Generation of Leaders Stepping into the role of president and CEO of the Network of Executive Women, Retail, Consumer Goods and Services (NEW) in June, Sarah Alter brings 30 years of experience in the business world. She’s held several key leadership roles where she built and rebuilt digital platforms, divisions, teams, channels and brands. “That experience has definitely made me well-versed in how to guide a company or an organization to navigate change and the need to grow,” Alter told Convenience Store News in an exclusive interview. “I am thrilled to be in this new role. I humbly appreciate that, as the new CEO, I need to be the voice and the champion behind advancing women and diverse leaders. I’ve always had a strong passion for helping women and diverse leaders throughout my career. I’ve been the first to raise my hand and say, ‘Absolutely, I will be a mentor.’” For more exclusive stories, visit the Special Features section of www.csnews.com.

PRODUCT HIGHLIGHT

The most viewed New Product online.

White Owl Strawberry Kiwi White Owl continues to expand upon its award-winning, limited-edition FoilFresh cigarillo franchise, which now includes a Strawberry Kiwi variety. The new offering features the flavors of sweet strawberries and tangy kiwis. White Owl Strawberry Kiwi Cigarillos are in season for a limited time, available in “2 for 99 cents,” “2 for 1.49,” and “Save on 2” formats. Swedish Match Richmond, Va. (804) 787-5100 www.swedishmatch.com

EXPERT VIEWPOINT: Revenge of the Cities Throughout the country, state legislatures have approved laws prohibiting local action on everything from minimum wage, to ride-hailing services, to marijuana use, to paid leave, to wireless phone service, to LGBTQ rights, to immigration, to short-term vacation rentals and, seemingly, everything in between. As one might imagine, the majority of these local preemption laws are backed by corporate interests seeking to leverage a kill-as-manybirds-as-possible-with-one-stone approach to policy advocacy, rather than working dozens (or possibly hundreds) of policy fights in city halls across the country. Now, it seems the “birds” are fighting back in an organized way, according to Joe Kefauver of Align Public Strategies.

10 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM


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INDUSTRYROUNDUP

Chevron’s ExtraMile Enters New Markets With Jacksons Food Stores Pact Joint venture will double the brand’s store count by 2027

E

xtraMile is going the extra mile. Chevron U.S.A. Inc. has formed a joint venture with Jacksons Food Stores Inc. to grow the ExtraMile convenience store brand and extend the brand into four new states. ExtraMile Convenience Stores LLC, as the coowned company will be called once the deal is complete in early 2018, will also extend the brand into additional areas of its existing footprint. The new co-owned company aims to double the number of ExtraMile sites by 2027. “We are honored to be part of this great opportunity to grow ExtraMile,” said John Jackson, CEO and president of Jacksons Food Stores. “We are committed to the long-term success of ExtraMile and will be rebranding all of our Jacksons/Chevron companyowned locations to ExtraMile. “We are looking forward to combining the entrepreneurial spirit of the franchisees with the ExtraMile brand and the capabilities of Jacksons

12 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

to become the leading convenience retailer in the West,” Jackson added. The ExtraMile brand has experienced steady growth and set new standards in c-store retailing since the first store opened more than 10 years ago, according to the company. “Jacksons Food Stores is a high-quality, industryrecognized c-store operator with expertise in all facets of c-store operations and distribution,” said Dale Walsh, president of Chevron Americas Products, a division of Chevron U.S.A. “We expect the newly formed venture to enable dramatic growth for the ExtraMile brand, while remaining exclusive to Chevron and Texaco stations.” Meridian, Idaho-based Jacksons Food Stores has more than 230 company-operated locations in Idaho, Nevada, Utah, Arizona, Oregon and Washington. Chevron U.S.A. is headquartered in San Ramon, Calif., and is one of the largest integrated energy companies in the world.


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* Source: Nielsen Strategic Planner (Grocery Outlets), Total U.S. (unit and dollar sales), 52 weeks ending 7/29/17


INDUSTRYROUNDUP FAST FACTS By 2021, the number of traditional supermarkets will decrease by 24.6 percent. Source: Inmar Willard Bishop Analytics

Estimated lost sales in the consumer/retail sector as a result of Hurricane Harvey, which made landfall in southeast Texas on Aug. 25, are $1 billion. Source: Planalytics

In terms of economic impact, legalized marijuana generated $6.7 billion in sales in 2016. Source: Nik Modi, managing director and analyst, RBC Capital Markets LLC

Consumers spend 37 percent more on sports drinks that are free of artificial sweeteners, and spend 19 percent more on items free of sugar in the five weeks surrounding the first days of school. Source: Nielsen Insights

Judge Rules Against Federal Overtime Rule

Change would have nearly doubled the current salary threshold to $47,476

N

ine months after issuing an injunction against proposed changes to the federal overtime salary threshold, a federal judge struck down the rule, which was handed down by the Obama Administration in mid-2016. The rule would have nearly doubled the current salary threshold from its current $23,360 to $47,476, under which virtually all workers would be eligible for mandatory time-and-a-half overtime pay. This change would make nearly 5 million currently exempt employees eligible nationwide. However, on Aug. 31, U.S. District Judge Amos Mazzant in the Eastern District of Texas said the

14 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

salary level was set so high that it could sweep in some management workers who are supposed to be exempt from overtime protections. The judge’s ruling came nine months after he granted an injunction just days before the new rule was set to take effect. The injunction was in response to a legal challenge filed by more than 20 states and a coalition of business groups, led by Nevada Attorney General Adam Laxalt. Mazzant’s latest decision invalidates the rule permanently. Days after the ruling, the U.S. Justice Department also said it will not defend a Labor Department rule from the Obama era that would extend overtime benefits.


INDUSTRYROUNDUP

eye on growth n Cumberland

Farms opened its first “next generation” convenience store in Titusville, Fla. The chain plans additional next-gen stores over the next year as it continues extensive and aggressive The 5,000-squarefoot location remodeling and expansion initia- features self-service ordering terminals. tives in Florida. n QuickChek

Corp. marked its 150th location with a new store design. New elements in the store include cellphone and laptop charging stations in the indoor seating area, and a fresh soup bar offering six varieties.

convenience store and rebuilding 10 existing locations. The projects are part of the retailer’s $50-million investment in 2017. n Fastrac Markets

LLC reached a major milestone with the opening of its 50th Fastrac Café. Located in Chili, N.Y., the new store expands the products and services the chain offers to the greater Rochester area. n Andeavor

opened the first ARCO gas station in Tijuana, Baja California, Mexico. This marks the start of its growth in Mexico, with an anticipated 200 to 400 ARCO stations in Sonora and Baja California planned over the next few years.

n Enmarket Stations

Inc. signed a letter of intent to acquire Glennville, Ga.-based Clyde’s Market Inc. Clyde’s Market has 36 locations throughout Southeast Georgia. n Yesway is adding

nine Mad Max stores in a deal that is expected to close Oct. 20. The locations in southeastern Wisconsin will bring Yesway into a new market. n Stewart’s

Shops Corp. was busy this summer adding one new-to-industry

n Love’s Travel Stops &

Country Stores is acquiring Speedco from its parent company Bridgestone Americas Inc. The deal will add 52 trucking service and lube locations to the Love’s portfolio. n Sheetz Inc.

opened its latest non-gas convenience store in late September. The store at the University of Virginia is the retailer’s fourth without gas. Like the other gasfree Sheetz Cafe stores, the site was selected for its high foot traffic and proximity to a university.


INDUSTRYROUNDUP SEEN on SOCIAL MEDIA

retailer tidbits n Alimentation

Couche-Tard Inc. is selling off more than 200 of its convenience stores. The non-core and surplus assets do not meet the company’s profitability standards. n MAPCO Express Inc. unwrapped

a new look at its Franklin, Tenn., location. The store features a simple and consistent layout to optimize the shopping experience. The retailer plans to roll out this fresh look to all its stores.

Casey’s General Stores, Ankeny, Iowa

Donate to @MDAnews during your next stop & help give kids the best week ever at #MDAsummercamp! Learn more here: goo.gl/rDA2Hx Sheetz Inc., Altoona, Pa.

ing an initiative to stop human trafficking. Convenience Stores Against CSAT is a program Trafficking (CSAT) of national nonprofplaces “Freedom it, In Our Backyard. Stickers,” which display the National Human Trafficking Hotline, in c-store bathrooms; and provides training on indicators of human trafficking and how to report it. n 7-Eleven Inc. launched a test of

a reduced emissions fuel program called “RENEW” at 95 sites. Working with the retailer,

n TravelCenters of America LLC

(TA) scored a legal victory against Comdata Inc. in a case over card processing fees. In a decision handed down by the Delaware Court of Chancery, Comdata must honor TA’s contract terms and reimburse TA for all excess amounts charged to the retailer since Feb. 1, plus interest.

Hey #GroveCity We are looking for Salespeople & Supervisors! #SheetzJobs #NowHiring Apply today!! Rutter’s Farm Stores, York, Pa.

n Alta Convenience Stores is lead-

n Cumberland Farms’

Congratulations to Craig! He is our third FREE Fuel for a Year WINNER! Rutter’s #SummerofFreedom

18 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

SmartPay program saw transaction volume increase by nearly 50 percent over the past 12 months. Since launching SmartPay in January 2013, Cumberland Farms has sold $2 billion of gas through the program.

GreenPrint will calculate tailpipe emissions from gas sales to determine the amount to invest in certified carbon-reduction projects. n Pilot Flying J sponsored the debut

of celebrity chef Tim Love’s proprietary YouTube channel, Love Bites, at the Music City Food + Wine Festival. The company also held cooking demos and competitions during the Nashville event. n Speedway

LLC installed no-surcharge ATMs at an additional 1,500 stores. All of its locations across 20 states now participate in the Allpoint surcharge-free ATM network.


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INDUSTRYROUNDUP

marketing moves n BP rolled out a texting-

based pilot program, BP Offers. Once enrolled, members receive personalized messages, interactive games, and disBP will primarily promote BP Offers count codes directly onsite using point-of-purchase signage. to their phone.

n Circle K debuted Ferrara

Candy Co.’s Trolli Sour Sippers blue raspberry-flavored edible candy straws. Circle K received an exclusive launch window for the product, which ran from July 1 through the end of August. n CITGO Petroleum Corp. is

n 7-Eleven Inc. will serve as

the official convenience store of the Ultimate Fighting Championship (UFC) in the United States and Canada. Under the terms of the partnership, 7-Eleven’s 8,400 stores in the United States and Canada will participate in UFC promotions.

running a “Fill Up On Fun Sweepstakes” from Sept. 13 through Nov. 21. One grandprize winner will receive a five-day/four-night trip for four to Florida. Other winners will receive free gas for a year, $50 for movie tickets, and a $50 CITGO gift card. n Rutter’s Farm Stores is now

n Alon Brands Inc. officially

became the holder of the Guinness World Record for the World’s Largest Gift Card. To mark the fete, Alon gave a randomly selected winner the gift card and $10,000 worth of ALON gas and merchandise.

the local sponsor of Fox43 Weather Kid Wednesday. Each child chosen to participate receives one pint of Rutter’s Chocolate Milk, a T-shirt, a drawstring bag, and a plush cow from Rutter’s. n Kwik Trip Inc. and Hy-Vee Inc.

n Pilot Flying J celebrated National

Truck Driver Appreciation Week over five weeks through its Pilot Flying J 100 Million myRewards Points Giveaway. Throughout the sweepstakes, Pilot Flying J rewarded more than 65,000 prizes to professional drivers.

made a deal to preserve the Fuel Saver + Perks fuel rewards program at 23 Madison, Wis.area PDQ convenience stores. Kwik Trip is acquiring PDQ and plans to transition the stores to its banner in October. n Town Pump Inc. has become

n Love’s Travel Stops & Country

Stores marked National Truck Driver Appreciation Week throughout September. Drivers had the chance to win 10,000 My Love Rewards points, and one grand-prize winner received 1 million My Love Rewards points.

the exclusive partner of the in-state rivalry, “Brawl of the Wild,” between Montana State University and the University of Montana. For the next three years, the retailer will serve as official game sponsor for the annual matchups between the schools’ football teams, and men’s and women’s basketball teams.

Correction In the September issue of Convenience Store News, the Store Spotlight article titled “Breaking the Mold” incorrectly referred to a partnership between Break Time’s new foodservice concept, Stackhouse Bar.B.Q., and restaurant chain Jack Stack Barbeque. The product served at Break Time stores is not Jack Stack Barbeque. We apologize for this error.

20 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM


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INDUSTRYROUNDUP

legislative corner

supplier tidbits

NYC Menu Labeling Rule Put on Back Burner

n Farmer Bros. Co. is acquir-

New York City agreed not to fine or sanction businesses for alleged non-compliance with calorie and nutrient information menu-labeling requirements prior to the Food and Drug Administration’s (FDA) established May 7, 2018 compliance date. The agreement settled a lawsuit brought against the city by NACS, the Association for Convenience & Fuel Retailing, the New York Association of Convenience Stores, the Food Marketing Institute, and the Restaurant Law Center. “This settlement with New York City is a clear victory for common sense. States and cities cannot enforce menu labeling rules until [FDA] rules are enforced. We’re pleased that New York City has agreed not to jump the gun,” said Lyle Beckwith, NACS’ senior vice president for government affairs. The city’s enforcement was set to go into effect Aug. 21.

ing substantially all the assets of Boyd Coffee Co. through a combination of cash and stock. The transition and integration of Boyd’s is expected to take place over the next 12 to 18 months. n PDI unveiled a

new corporate brand identity reflecting its growing global reach. As part of this transition, PDI rolled out a new website domain and introduced a new tagline: Enterprise Software Reimagined. n KeyMe, a

key duplication 7-Eleven Inc. was solution, closed one of the investors on a $25-million in KeyMe’s recent round of funding. Series D financing, bringing the company to more than $100 million in funding to date. The infusion of capital will enable the company to continue its expansion at retail. n GasBuddy Inc. is

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SYS-MAX4674F4CSN1017.indd 1 22 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

9/15/17 10:07 AM

launching mobile media solutions tailored for state lotteries. The GasBuddy app now allows users to search for locations with lottery, find winning numbers, and receive lottery push notifications. n Royal Buying Group (RBG)

signed an agreement with National Wholesale Fuels to establish the National Wholesale Fuels Buying Club. RBG Club Services will provide retailing services to all National Wholesale Fuels dealers for marketing programs, rebate administration, and promotion management.


INDUSTRYROUNDUP

competitive watch n Wal-Mart

n Target Corp. is

Stores Inc. brought its online grocery pickup service to the 995th through 1000th locations in Seattle. The retailer plans to expand it to more regions.

piloting a nextday essentials delivery service program, dubbed Target ReStock, in Target’s acquisition of its hometech company Grand town of Junction will help it Minneapolis. extend its delivery capaThe retailer is bilities to more markets. also testing a same-day delivery service in New York’s Tribeca neighborhood.

n Whole Foods

made good on its lower-price promise starting from the first day as an arm of ecommerce giant Amazon.com. Media outlets reported price cuts from as low as 10 percent to as high as more than 40 percent.

n McDonald’s relaunched its

McCafé specialty drink program, introducing a new look, new café-quality espresso bever-

ages, and expanded retail offerings. As part of its 2018 plans, McCafé will partner with The Coca-Cola Co. to introduce a line of ready-to-drink McCafé Frappé beverages. n Cargo, a

startup that serves as an in-vehicle general store, expanded into the Chicago market. Cargo came on the scene last year. It was one of three companies selected as Ford Motor Co.’s 2016 Techstars Mobility startups. n CVS

Pharmacy introduced automated retail vending machines. Through the end of October, the first 25 CVS Pharmacy vending machines will be unveiled throughout New England and New York. The retailer is considering an additional 50-plus vending machines throughout the country.

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n Two for-

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1-800-295-5510 24 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

OR HIPPING

mer Google employees started Bodega, a selfservice corner store. To date, there are 30 Bodega locations live in the San Francisco Bay area. According to the creators, the small, automated stores “are stocked with the essentials you need, right where you need them — whether it’s snacks at the gym or toiletries and household goods in your apartment’s lobby.”


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NEWPRODUCTS

EDITION

David Spicy Queso Sunflower Seeds

Coca-Cola Zero Sugar

Featuring a cheese flavor with a hint of tangy green chili, Spicy Queso is a special-edition variety created in partnership with Chicago Cubs shortstop Javy Baez, who chose the flavor as his favorite for the custom seed. The baseball player, who is serving as brand ambassador for David Seeds, will have his likeness featured on special packaging.

Coca-Cola Zero Sugar, introduced in August, is the new Coca-Cola Zero. In addition to the new name, it has a new look and a new recipe. According to the company, the zero-sugar and zero-calorie offering tastes just like a Coke. Coca-Cola’s latest zero-sugar product innovation is available packaged, as well as on fountain and in Coca-Cola Freestyle machines.

David Seeds Chicago (877) 266-2472 davidseeds.com

Booth 5718

Ultra Chewy Double Treat Bone Dog Treats Rush Direct Inc. is launching its Ultra Chewy Double Treat Bone dog treat this fall. Displays specially designed for convenience stores will make this a great opportunity for retailers to generate incremental sales that attract dog owners, despite limited space, according to the company. The Ultra Chewy brand already has other volume-producing items available through McLane and Core-Mark nationally. Rush Direct Wood Dale, Ill. (630) 595-4925 rushdirect.net

Booth 460

Coldin-3 Curved Lid Display Freezers New from Master-Bilt, the Coldin-3 Curved Lid Display Freezers feature a curved, tempered-glass sliding lid and use R290 natural refrigerant. They also have LED lighting for optimum product visibility, according to the company. Coldin-3 models are equipped with baskets, floor drains, external thermometers, and locks for added convenience. Master-Bilt New Albany, Miss. (800) 647-1284 ttodd@master-bilt.com master-bilt.com

Booth 6362

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The Coca-Cola Co. Atlanta (800) 438-2653 coca-colacompany.com

Booth 4602

Hershey’s & Reese’s Dipped Pretzels Hershey’s Dipped Pretzels feature bitesized pretzels dipped in milk chocolate and then drizzled with dark chocolate. Hershey’s Cookies ‘n’ Creme Dipped Pretzels are dipped in white crème and coated with cookie bits. Reese’s Dipped Pretzels are dipped in peanut butter candy and drizzled with milk chocolate. All three new products are available in 4.25-ounce pouches (suggested retail price of $2.99) and 8.5-ounce pouches (SRP $4.49). The Hershey Co. Derry Township, Pa. (800) 468-1714 thehersheycompany.com

Booth 4616

FlintLoc Technologies Know Control V4.W FlintLoc Technologies’ latest solution, Know Control V4.W, is designed to put a stop to fuel stealing and skimming. The solution uses wireless technology that sends a warning message as soon as a breach into the dispenser is detected. Know Control V4.W is the “brainchild” of the company’s robust Series 4 Solution and the ultimate weapon to no more skimming at the dispensers, according to FlintLoc Technologies. FlintLoc Technologies LLC Lampasas, Texas (855) 435-4685 flintloc.com

Booth 3675


NEWPRODUCTS

EDITION

Kombucha Wonder Drink

Gaea Veggie & Olive Snacks

Available in both bottles and cans, Kombucha Wonder Drink is looking to provide a modern take on traditional kombucha beverages. Using a proprietary process to pasteurize the kombucha to include all of the benefits while ensuring safety and alcohol compliance, Kombucha Wonder Drink aims to be the best-quality kombucha on the market and a leader in innovation, according to the maker. The probiotic line includes such flavor varieties as Thai Carrot, Strawberry Basil, and Honey Lavender. The brand also offers a prebiotic line in Traditional Kombucha, Green Tea & Lemon, Cherry & Black Currant, Asian Pear & Ginger, Apple & Juniper Mint, and Concord Grape varieties.

Gaea, specializing in authentic Mediterranean products, introduces a line of all-natural snacks including Veggie Snacks and Olive Snack Packs. According to the company, the Veggie Snacks are the first shelf-stable veggie snack on the market, offered in three unique varieties: Carrot, Cauliflower and Gherkin. The Olive Snack Packs, which contain 150 calories each, are available in multiple flavor varieties and come in resealable packaging.

Kombucha Wonder Drink Portland, Ore. (503) 224-7331 wonderdrink.com

Booth 7476

BIGS King-Size Seeds BIGS King-Size Seeds are the original in-shell sunflower seeds, but in a kingsize version. The larger seeds come packaged in 6-ounce gusseted bags, each of which contains 12 percent more seeds than the brand’s 5.35-ounce bags. BIGS KingSize Seeds contain no artificial flavors or preservatives, and deliver 6 grams of protein and 3 grams of fiber per serving. BIGS Seeds Boulder, Colo. (866) 558-7379 bigs.com

Booth 940

Duke’s Cajun-Style Andouille Smoked Shorty Sausages Inspired by the maker’s love of Cajun cuisine, Duke’s Cajun-Style Andouille Smoked Shorty Sausages start with fire-roasted red peppers, then add in a special blend of Cajun spices, and finish with a real hickory hardwood smoke for a “soul-warming” Southern flavor, according to the company. The product is available in 5-ounce bags. Duke’s Detroit, Mich. (866) 558-7379 duke@dukesmeats.com dukesmeats.com

Booth 940

28 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

Gaea Hollywood, Fla. (954) 923-7723 info@gaeaus.com gaeaus.com

Booth 6113

Slim Jim Premium Smoked Sticks The new Slim Jim Premium Smoked Sticks line features premium, high-quality cuts of single-sourced meat and contemporary flavors. Containing no artificial colors, flavors or MSG, these smaller-size protein sticks are made with grass-fed, 100 percent beef or 100 percent premium pork raised without hormones. The launch this fall includes three varieties: Smokehouse Original, Thai Style Chili, and Memphis Style BBQ. Each serving contains 10 grams of naturally-occurring protein. Slim Jim Chicago (877) 266-2472 slimjim.com

Booth 5718

NestFresh Hard Cooked Eggs National egg producer NestFresh introduces new hard cooked egg products. The new items include Hard Cooked Organic Eggs in a six-count pouch; and Hard Cooked Cage Free Eggs in a two-count pouch, six-count bag, eight-count box, and 12/2-count box. NestFresh Hard Cooked Eggs are an ideal way for consumers to reap the benefits of NestFresh’s sustainability and humane-treatment practices, and add a protein-packed snack to their day, the company noted. NestFresh Denver, Colo. (877) 241-8385 contact@nestfresh.com nestfresh.com

Booth 7987


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SMALLOPERATOR

Tackling the Back-Office Trio

Experts drill down into how small operators can best manage finances, inventory and loss By Renée M. Covino

A

re small operators in the convenience store industry at a disadvantage when tackling financial management, inventory management and loss prevention, compared to the larger chains in the industry that are backed by robust systems? The short answer is maybe, which leaves room for the more positive viewpoint of maybe not. It is true that “larger companies generally have access to information systems that help them manage these areas, while smaller operators might not,” acknowledged Steven Montgomery, president of b2b Solutions LLC, a Chicago-based consultancy specializing in convenience retail and fuel marketing. What’s more, larger chains have the departments and staffing to go hand-in-hand with the more robust systems, such as a chief financial officer, an inventory manager and a loss control manager, according to Mark Wells, president of LJT Management Services Inc., a San Diego-based consultancy specializing in retail petroleum and convenience store training. Both industry experts recognize, however, that a great deal of success depends on the individual operator and their approach to running the business. Wells knows of this firsthand as he was formerly a

30 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

small operator with three convenience stores for more than 20 years and as such, he wore many different hats. “I was the inventory manager and the financial guy, and I understood the cause and effect of the numbers, such as inventory shrinkage and inventory turns,” he explained. “I didn’t feel I was at a disadvantage to the big chains because I could make my own decisions and take action right away. I didn’t have to go through a chain of command when making changes.” THE SMALL ADVANTAGE

Of course, there are pros and cons to every situation, but “small operators can take advantage of making small changes in response to financials, such as running a promotion, adding a product, changing a vendor, etc.,” Wells said. “They can do these things as they see necessary, and they can do them pretty darn quick,” he noted. “That’s a real advantage a small operator has over larger chains.” System-wise, there are information systems on the market today that are designed specifically to assist smaller companies or single-site operators in better controlling their results, Montgomery relayed to Convenience Store News. He believes the issue is that many small operators either don’t see the value in such systems or they are unsure of the return on investment required. He points out that some smalloperator needs can be fulfilled by working with suppliers, who can provide “a great deal of information” based on purchases at the retailer. However, “this means being willing to commit to a primary distributor,” Montgomery said. Regardless of the route chosen, it’s all about letting go of “gut decisions.” Achieving optimum profitability with financial management, inventory management


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SMALLOPERATOR Proceed With Caution and loss prevention is dependent on the ability for a small operator to capture data and turn it into actionable information that is acted upon, according to the b2b Solutions executive. “When we didn’t have the data that we can have today, many decisions were made on gut feeling. Today, the data is there. It is a matter of being willing to make the necessary investment — which doesn’t have to be huge — and then taking the time to learn how to use it,” he explained. “We have worked with many clients who use Excel to guide much of the decision-making for each of the three areas.” MORE PRODUCTIVE INVENTORY

Still, it’s no secret that financial management and inventory management can be difficult for small operators. The two often “go hand-in hand with small operators wanting to reduce inventory to reduce COGs (cost of goods), thereby increasing margins,” according to Sue Nicholls, president of the Category “Achieving optimum Management Knowledge profitability with financial Group, based in Calgary, Canada. management, inventory She identifies the problem as this: Most management and loss presmall operators do not vention is dependent on the know or cannot easily ability for a small operator calculate their inventory turns, inventory days on to capture data and turn it hand, or GMROI (gross into actionable information margin return on investment), which would help that is acted upon.” them make better deci— Steven Montgomery, b2b Solutions LLC sions on inventory and ultimately affect their financial results. The way Nicholls see it, smaller operators need to continually plan and forecast to understand how much product is required to meet demand, and they need to rely on their suppliers/distributors to provide them with direction on shelf layouts. When they purchase product from suppliers, which can also be referred to as procurement, it needs to be delivered by the supplier directly to the store to ultimately end up on the shelves. Product has to be received and stocked on the shelves once it arrives at the store. Shelving planograms enable stores to set up their shelves, based on the store’s stocking schedules, to minimize out-of-stocks.

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DON’T FALL VICTIM TO “ABUSED” BUSINESS FORMULAS

Small operators are learning the importance of “having good financials,” as Mark Wells, president of LJT Management Services Inc., a San Diego-based consultancy specializing in retail petroleum and convenience store training, puts it. He believes there are eight key business formulas that smaller operators need to know and use on a daily, weekly or monthly basis. He often teaches these formulas in the training sessions he conducts. But he also cautions that there are “abused formulas out there” that he is crusading to set straight. One of the most abused is the selling price formula, according to Wells. Many operators “use markup, not margin, and when you use markup instead of margin, you’re going to be short on gross profit percentage,” he explained. “I see this so often.” The other formula that Wells says is most abused is cost of goods. “It’s one of the largest problems we have in our industry. They don’t take a monthly inventory, so there’s no possible way their financial statement is correct. If they’re not using the inventory method of accounting to determine true cost of goods, it’s a big problem, and I’ve seen this over and over,” he said. A lot of retailers think of inventory as an expense to their business, but it’s actually an investment, according to Wells, and must be treated as such.

“Inventory management isn’t just about storage; it’s about making inventory more productive,” Nicholls emphasized. MANAGING LOSS

Loss prevention used to be the most difficult discipline of the three, according to Montgomery. But the advent of camera systems and their transition from video tapes to digital storage has made loss prevention far more manageable. “There are IP-addressable camera systems that allow owners to remotely access their camera systems live and also have the ability to look back at their historic video,” he relayed. “Some are interfaced with the store’s POS [point-of-sale] devices and allow owners to review specific instances, such as open drawer operations, no sales, etc. This has helped all operators better control shrink.” The one area of loss prevention still often neglected by small operators is the periodic inventory of merchandise, Montgomery pointed out. Without taking


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SMALLOPERATOR periodic inventories, true gross margin or shrink cannot be determined. TECHNOLOGY ADVANCES

Camera systems, POS systems and backroom systems have all made great strides in the convenience channel in recent years. Convenience store operators can access their sales at the SKU level on a daily or even hourly basis. “This allows for better inventory management, especially in the foodservice area,” said Montgomery. “Many of the systems designed for smaller operators can interface with GL software such as QuickBooks, allowing the retailer to generate an accurate P&L, balance sheet, etc., without the need to run reports and manually enter the data.” Wells agrees and points out that even a one-store operation can have a back-office system “that allows them to do everything a large chain does.” “It’s better than it was five years ago and as things progress, it’s getting more and more affordable for a small operator to get into technology,” he added. In his experience, a good back-office system facilitates the analyzing of inventory turns and “Inventory management product movement isn’t just about storage; it’s to get to “item-level reporting, which is about making inventory where the future is.” Forecasting also has more productive.” become much more — Sue Nicholls, Category Management sophisticated, driven Knowledge Group by technologies that help operators predict short-term demand and forecast the inventory needs of the store(s) at the time the merchandise arrives, Nicholls pointed out. “The forecasting programs can optimize inventory levels for each item based on anticipated demand,” she said. In a nutshell, best-in-class small operators utilize technology to gather accurate data, analyze the data, and then develop an action plan and execute their plan, according to Wells. In addition, the smaller powerhouses have “grasped the use of technology to market and communicate with their stores through social media.” FUTURE FORWARD

Looking ahead, Montgomery believes the ability of small operators to effectively manage their inventory and finances will be influenced by the intensifying com-

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petition for the convenience customer. “Every channel seems to be seeking them out — from chain drug and dollar, to companies such as Target with its smaller-format stores or its larger new-format stores with separate entrances, one for their traditional customers and one [for those who want] to make a quick stop to pick up a few things,” he outlined for CSNews. From his stance, partnerships with suppliers will play a key role moving forward. “To compete, all c-store retailers will have to up their game,” Montgomery stated. “This will add additional pressure on the smaller operators to take advantage of the industry’s suppliers and their interest in providing them solutions to better manage their business.” The customer-experience equation will also be a factor in the evolving management issues of smaller operators, “especially how Gen X, millennials and Gen Y communicate and utilize technology,” according to Wells. “They tend to want it now and not wait. This will definitely impact inventory management, which, in turn, will impact the financial part of the business,” he said. The way he sees it, the management of inventory and finances will only continue to grow in importance for small operators as they forge forward. “With competition expanding and investing in new stores or upgrading existing stores, the importance of making gross profit dollars and gross profit margin from all revenue sources in a convenience store location is vital,” Wells advised. “Investing in the infrastructure of the business is going to be paramount, whether it is in capital expenditure, personnel, technology systems, foodservice, social media campaigns, the car wash, or an expansion of high-margin items with a reduction of slow-moving items.” Ultimately, small operators may have to change how they are currently managing things and, along with that, recognize that “change is uncomfortable,” he concluded. CSN


SMALLOPERATOR

Pirates of the Convenience Channel L.A.’s Trimana seeks profits from pirating new customers from fast-food chains By Don Longo

A

Trimana is designed to blur the line between restaurants and convenience stores.

36 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

new operation located in modern, high-rise office buildings in Los Angeles is the latest retailer to blur the line between restaurants and convenience stores. Called Trimana, the concept is the brainchild of Bijan Yadegar, founder of High Rise Goodies Restaurant Group Inc., owner, operator and franchisor of approximately 50 restaurants that serve a mixed cuisine of American, Mexican, Italian and Asian food. Yadegar currently operates three Trimana convenience stores in the Los Angeles market. All of Trimana’s growth has been, and will continue to be, funded with internally generated resources. Yadegar is planning to slowly expand the chain by adding three to five new locations annually. However, to accelerate the growth of Trimana’s hot food program, he hopes to partner with a major c-store chain and expand the system both nationwide and internationally. Because his restaurants specialize in high-rise office buildings with limited space, Yadegar developed a hot food commissary and distribution system to provide his three Trimana convenience store locations with proprietary foodservice for the breakfast, lunch and dinner dayparts. “Since many tenants needed some convenience items, we initially added a limited number of such items to the restaurants,” explained partner Robert Brasch, whose firm Pacific Partners specializes in strategic partnerships between U.S. and Japanese firms. “Based on this experience, we decided to create a fullsized standalone c-store that also served hot soup and


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SMALLOPERATOR sandwiches prepared onsite. This evolved to our present format of c-store plus a hot food program using the bestselling food items from our restaurants.” Utilizing just a 10-foot by 10-foot area, each foodservice operation inside Trimana stores serves a wide variety of fresh menu items, including breakfast sandwiches, burritos, quesadillas, melts, subs, pizza, and hot snacks. The stores overall measure 1,000 to 1,800 square feet. In addition to the proprietary foodservice, the stores sell cigarettes, bottled soft drinks, beer, wine, grocery items, general merchandise, milk, ice cream, candy and snacks.

TRIMANA CREATOR BIJAN YADEGAR IS PLANNING TO SLOWLY EXPAND THE CHAIN BY ADDING THREE TO FIVE NEW LOCATIONS ANNUALLY. The hot food items are prepared when ordered by customers. During slow periods, the staff prepares some hot food onsite, along with grab-and-go items and freshly-squeezed bottled orange and vegetable juices. The hot food program operates without the need for a costly exhaust hood system. The approximate cost for equipment and installation for the entire program is about $30,000, according to Brasch, who has extensive experience working with convenience store chains. The company recently presented the hot food program concept to a large c-store chain. “The Trimana fresh food program is designed to bring a new fresh dimension to existing sales, to add to the present items being sold, and to increase profits [by] pirating new customers from other fast-food chains,” said Brasch. “Fresh food customers will buy typical c-store items to complement their meal purchases at a c-store location.” The Trimana program is priced to compete with fast-food chains like McDonald’s, Pizza Hut, Dominos and Subway. “When your new customers are able to buy fresh food items at your c-store, they will increase the frequency of their shopping visits and increase the dollar amount of their purchases, while buying other c-store items,” added Brasch. CSN Trimana’s hot food program uses the bestselling items from its restaurants.

38 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM


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cover story

40 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM


B

y definition, a travel center — also known as a truck stop — is a commercial facility that provides fuel, parking and food to professional drivers and four-wheel drivers alike. That does not always conjure up the most exciting picture. But Pilot Flying J hopes to change that. In March, the Knoxville, Tenn.-based company created a new position: chief experience officer (CXO). With this move, Pilot Flying J’s goal is to enhance its commitment to guest experience as North America’s travel center leader. Taking the lead as newly named CXO is Whitney Haslam, whose previous position was vice president of brand and customer experience. In the new role, her primary focus is creating positive and memorable moments, while elevating the overall team member and guest experiences at Pilot Flying J. “I am truly excited about my role as chief experience officer of Pilot Flying J — a role that combines both my passions and professional responsibilities.

I love listening to our team members and guests, learning from them, and helping to improve their overall experience,” Haslam told Convenience Store News during a recent visit. “I want the Pilot Flying J experience to be consistent at every one of our locations, so the guest knows what to expect when they enter our stores: clean restrooms; friendly service; fresh food offerings with lots of variety; and a wide selection of products geared toward those on the go.” While wearing this new hat, Haslam continues to oversee a portfolio of responsibilities from her previous position, including advertising, media, public relations, directing sports and marketing sponsorships, and the rollout of new digital communication tools. She also continues to collaborate with company leaders to enhance philanthropic efforts that benefit communities across the United States where Pilot Flying J does business.

WWW.CSNEWS.COM | OCTOBER 2017 | Convenience Store News 41


story cover

ENHANCING ITS COMMITMENT

Pilot Flying J considers the cooler one of its most important businesses and has been working to localize the assortment per location.

42 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

High on Haslam’s long list of responsibilities is overseeing the rebranding and remodeling of all Pilot and Flying J locations — an initiative that got underway with the company’s newly reimaged Pilot Travel Center in Lebanon, Tenn., known as Store 411. “One of my personal passions is design, and I am thrilled we are investing in both new and existing stores to refresh our locations to be an inviting place to work and shop,” Haslam said. “As shown at Store 411, modernizing our locations will challenge some of the stereotypes of what some think a truck stop should look and feel like.” The Lebanon Pilot Travel Center, situated off Interstate 40, has been one of the company’s busiest stores for a long time, which was why the company’s leadership team selected it to be one of the first big improvement projects. Pilot Flying J kicked off 2017 with the announcement that it is going to invest nearly $500 million to renovate existing locations over the next five years. Dubbed the Facility Enhancement Plan, the company will reimage approximately 45 stores this year and 50 next year. “Then, we will see from there what the plan looks like, with the goal of adding an increased number of stores each year,” Haslam explained. The first phase of the multi-year initiative introduces a new logo and an updated appearance from a brand standpoint to all Pilot Flying J’s travel centers, which encompasses more than 750 Pilot Travel Centers and Flying J locations throughout North America. All stores will sport the new logo over the next two years. Phase two is the Facility Enhancement Plan. “We have stores that have been around a really long time. Plus, going back through our history, Pilot Flying J has done a lot of mergers and acquisitions, so we are trying to bring some unity to our guest experience as well as our food offering throughout our network,” she said. Building on recent improvements made to its restrooms and showers, Pilot Flying J is now looking to improve the overall facility, food and beverage experience, and provide new and improved offerings. “Our main focus has really been to enhance our food and beverage offering for our customers. That is everything from new beverages to Cinnabon to our hot and cold food offerings. And since we are focused on food, we wanted a place for our customers to sit, relax and hang out,” Haslam said, noting that locations will


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story cover

Store 411 is centered entirely around food and beverage.

What’s On the Menu? New coffee program and cutting-edge merchandise aside, it all circles back to food at Pilot Flying J these days — more precisely, hot, freshly prepared food. Chief Experience Officer Whitney Haslam said the team hears from drivers all the time that they want good, home-cooked meals. So, that is what Pilot Flying J is delivering. A sample of lunch-menu items includes pot roast, meatloaf, chicken, corn, soup, and chili. “In a lot of travel centers, the soup would be self-serve, but here the team will serve it to you and garnish it for you as well. Hot soup, made for you, garnished for you and served right to you — it makes it more personal,” Chief Merchant Brian Ferguson pointed out. Moving forward, Pilot Flying J plans to feature in its stores a core food offering of the best-selling items, plus limited-time offers. With the help of celebrity chef Tim Love, the chain recently kicked up its foodservice a notch with localized offerings. Love owns several restaurants in Texas and is working with Pilot Flying J to craft a menu in that region, but he will also work with the retailer to add local options to menuboards across its footprint. In addition, Pilot Flying J currently has Cinnabon in roughly 200 stores — with more on the horizon — and made-to-order coffee drinks, smoothies and lemonades. A variety of quick-service restaurants can likewise be found at the company’s locations.

44 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

feature areas with charging outlets in case customers want to work or charge their phone. FOOD FOCUS

Accompanied by Haslam and Pilot Flying J Chief Merchant Brian Ferguson, Convenience Store News got a close-up look at the finished product on a visit to Store 411 this summer, just days after the location debuted its new look. “We designed this whole store around food. When we were concepting this nine months ago — when we hired Shannon Johnson, [vice president of food innovation] — we said we want a dramatic food experience for the professional driver and all of our customers. It’s hot, fresh food. The whole store is centered around food and beverage,” explained Ferguson. Johnson joined the company in January and is now the driving force behind the continuous development of the chain’s PJ Fresh Marketplace brand. He and his team, according to Haslam, “are heavily focused on innovating. How can we continue to upgrade? To continue to have the best coffee on the interstate and not just stay the course with our core offerings?” While the new concept may only date back roughly nine months, the company has taken a step back over the past several years and asked: How do we bring our guest at the center of everything we do? How do we evolve the experience in our stores to make it the best we possibly can, not only for the professional driver but for the four-wheel customer? “Obviously, one of those things is making sure we have the best food and beverage offering along the interstate,” Haslam said. “A driver who may stop at our store three days a week needs variety. He needs


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choices. We are heavily focused on bringing initiatives that our guests are asking for to the forefront.” Balancing the needs of its two customer bases, professional drivers and four-wheel gas customers, is actually not that hard. Their fundamental needs are the same. “We all want good food and beverage, and we all want nice restrooms,” Haslam explained. “If you take it down a level to specific offerings, you may see some variables because the gas customer may want a quick in and out — grab a sandwich or soup and get back in their car — whereas a driver may want to sit down and enjoy a full meal. They may want the meatloaf, the green beans and corn, and to sit down and feel like they have a home-cooked meal.”

A key part of Pilot Flying J’s new foodservice focus is its bean-to-cup coffee program.

THE 4-1-1 ON STORE 411

Walking through the door at Store 411, there is no mistaking that this Pilot Travel Center is in the food retailing business. Food is the focal point of every aspect of the store — the fresh food; grab-and-go; seating area; and dispensed beverages, which is flanked by the cold vault. “You are dominated when you walk in [with the message that] this is going to be a great place to eat,” Ferguson said. “We designed all the features and set-ups, which are brand-new. It’s the next generation of what we are doing as a company. This store will serve as a prototype for a lot of the facility enhancement projects we are doing this year.” Moreover, because of its location and customer traffic, Pilot Flying J is using Store 411 as a testing ground. “[Customers] are going to quickly vote on what food they love, what retail they love. They have already started to share that with us,” Ferguson added.

Chief Experience Officer Whitney Haslam (left) and Chief Merchant Brian Ferguson gave CSNews an exclusive tour of Store 411.

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In all, the Store 411 building measures 17,000 square feet. The lower level — where the store itself sits — measures about 13,000 square feet. The site boasts clean lines, easy-to-maneuver-through spaces, and low sightlines across retail. As Ferguson detailed, there are pass-thrus so that customers can weave their way in and out. There’s also a lot of digital marketing, highlighting the store’s offerings and promotions. CATEGORY CLOSEUP

One key area of its new foodservice focus is Pilot Flying J’s new bean-to-cup concept in its coffee platform. According to Scott Stuart, senior category manager, the company installed the concept in its first stores in mid-April. Store 411 was the 10th store to get the option. “The concept is to deliver to the guests the most absolute freshest coffee possible. The platform is brew on demand,” Stuart explained. “The guests select the size of the cup, the coffee, and then the machine grinds the coffee, brews it and dispenses it. It works a lot like a French press.” It also does iced coffee, which he said is one of the coffee category drivers. “The coffee mix in the stores where we have the bean-to-cup concept really surprised me. We were shooting for about 25-30 percent and we thought that was really ambitious. But in this store [Store 411], it was 50 percent yesterday [June 28] and in the other nine test stores, we don’t have one that is less than 40 percent,” Stuart relayed.


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Store 411 is the company’s first to include a Bass Pro Shop.

Pilot Flying J’s promise to its customers includes clean restrooms, friendly service, and a variety of fresh-food offerings.

At first, the guest may find it a little intimidating, but once they try it, see how simple it is and have the experience with it, they are won over, he shared. In addition to hot dispensed beverages, the company is putting an emphasis on cold and frozen dispensed beverages with new machines that allow cus-

Technically Speaking Pilot Flying J recently brought on Chief Strategy and Information Officer Mike Rodgers, who brings a heavy emphasis on improving technology, especially from a customer standpoint “to make the experience for our drivers more efficient, easier and better,” according to Whitney Haslam, chief experience officer at Pilot Flying J. Pilot Flying J locations now include kiosks for drivers to print out receipts and look up loyalty information, among other features that allow them to skip lines. In addition, Pilot Flying J has updated its mobile app so professional drivers can store their fueling and billing card information. They can reserve a shower via the app, too. A refreshed website and an upgraded Wi-Fi network at all locations — inside and out — are some other moves on the technology front, along with the July 10th launch of myOffers, an in-app rewards program. Designed for both the professional driver and the four-wheel gas customer, the program allows users to get special rewards through the app. “The app is like your relationship with Pilot as a professional driver. It has everything you need, all the offers that matter to you, and all the things that matter to you. Time is the most valuable thing they have, so getting them through the fuel lanes quickly, getting them a shower quickly — anything that can save them time,” Chief Merchant Brian Ferguson explained. “For the four-wheel customer, you can plan your route. You can see where the next stop is, what is available, what restaurants are available, what has hot food,” he added. “You can plan it out and see where you want to go.”

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tomers to customize flavors. “Obviously in our world, fountain is a big deal,” Haslam said. The cold vault — or cooler, as Pilot Flying J refers to it — is also a focal point. Calling the cooler “one of our most important businesses,” Ferguson said the company’s velocity in packaged beverages is unbelievable. Over the past year, Pilot Flying J has worked to localize the assortment and offering in each cooler countrywide. “In the southeastern U.S., the customer prefers certain things vs. customers on the West Coast. We expanded a lot of the assortments. For example, we are now offering premium water, sparkling water, bottled coffees,” he explained. “This is our pride and joy.” In addition, the retailer is building beer caves where space allows. “The cooler is an emphasis in our Facility Enhancement Plan, to really make it an experience for the customer,” Ferguson stated. NOT THE SAME OL’ SAME OLD

The floor plan features typical merchandise found in a convenience store: candy, snacks, grocery, sweet treats, etc. However, standing alongside these items at Store 411 are two new merchandise concepts: a boosted technology department and a Bass Pro Shop. “[The merchandising area] is special to us because we’ve done a couple of things. We have a new learning center for consumer electronics,” Ferguson pointed out. “It gives the customer interactive displays to experience the products, to view them so they do not have to open up the packages or look them up online. Whether it be Target or Best Buy, we want to be equivalent to that with our offering and customer experience.” In Haslam’s opinion, this concept is one of “Pilot Flying J’s best-kept secrets.” The Lebanon store is also the first in the company


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to include a Bass Pro Shop. The two companies decided to team up on this “store-within-a-store” concept because they share a similar cross-section of customers. “We’ve always been inspired by the Bass Pro Shops brand, their product, their store experience. An unbelievable amount of time and effort goes into cultivating the Bass experience. So, we zoomed in on them and thought there was a good joint-effort we can make,” Ferguson explained. “We are looking to redefine some of our general merchandise — apparel, accessories, hats — and what better brand to serve as a central focal point for us than Bass Pro Shops.” He believes there is further opportunity to expand not only beyond apparel, accessories and hats, but also to more locations, and even additional joint ventures. “If it works out, we will have the opportunity to expand it to more stores. It really opens the doors to larger collaborations with other companies that share our values and our mission,” he said, crediting Bass Pro Shops with being an excellent partner and patient with Pilot Flying J as the two companies developed the concept. “This is all the design elements you would have

New Ownership for Pilot Flying J on the Horizon On Oct. 3, just as this issue was going off to press, it was announced that Warren Buffett’s Berkshire Hathaway Inc. made a significant minority investment in Pilot Travel Centers LLC, d.b.a. Pilot Flying J. Berkshire will acquire a 38.6 percent equity stake in Pilot Flying J, the largest operator of travel centers in North America. The Haslam family will continue to hold a majority interest with 50.1 percent ownership in the company, and FJ Management Inc., owned by the Maggelet family, will retain 11.3 percent ownership until 2023. In 2023, Berkshire will become the majority shareholder by acquiring an additional 41.4 percent equity stake. The Haslam family will retain 20 percent ownership and remain involved with Pilot Flying J. “Pilot Flying J is built on a longstanding tradition of excellence and an unrivaled commitment to serving North America’s drivers,” said Buffett, chairman, president and CEO of Berkshire Hathaway. “Jimmy Haslam and his team have created an industry leader and a key enabler of the nation’s economy. The company has a smart growth strategy in place and we look forward to a partnership that supports the trucking industry for years to come.” Berkshire and its subsidiaries engage in diverse business activities, including property and casualty insurance and reinsurance, utilities and energy, freight rail transportation, finance, manufacturing, retailing and services.

50 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

The History Wall, prominently displayed in the seating area, details the company’s timeline from its 1958 start to today.

in a Bass Pro Shop. We’re really proud of it. And it’s unexpected, which is important. We want to surprise and delight the customer,” said Ferguson. “Our drivers have a lot of choices. The four-wheel customer has a lot of choices as well. The surprise and delight factor is what we are looking for. “We are going to rotate products more frequently. We are going to try new things. We are going to bring in national brands like Bass Pro Shops into our organization,” he continued. “It’s great for us and it’s great for them.” THE WRITING’S ON THE WALL

As Pilot Flying J evolves into its next generation, it is not abandoning its roots. Prominently displayed in the seating area of Store 411 is the History Wall. The wall details the company’s timeline, from the first location in Gate City, Tenn., in 1958 to the first travel center in Corbin, Ky., in 1981 to the Flying J merger in 2010. The wall also features its mission statement: “Connecting people and places with a comfort, care and a smile at every stop.” “It is something we have wanted to do for a while. It is a way to tell our history and our story in all of our stores,” Haslam explained. While staying true to its roots, Pilot Flying J will move forward with new locations and upgraded sites. According to the CXO, the company plans 15 new stores this year and 45 upgraded stores. Going forward, Pilot Flying J is eyeing 15 to 25 new stores a year. The company is also preparing to launch a third brand this fall called Pilot Express. “Not all initiatives will go into all stores. That is one of our long-term goals. In the past, we’ve done all of our stores the same. Now with Pilot, Flying J and a third brand we are launching, Pilot Express, we will try to differentiate based on a lot of different variables,” Haslam said. CSN


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The Next Frontiers for Convenience

C-stores are taking on mobile ordering, delivery and drive-thru to stay competitive By Tammy Mastroberte

T

he retail industry is rapidly evolving to meet the needs of consumers, particularly around foodservice and the way food gets ordered and picked up. Carving out an increasing presence in today’s landscape are mobile ordering, delivery and drive-thru — where it’s all about convenience, a specialty of the convenience channel. “Online and mobile ordering has become popular because of the convenience of it,” said Heidi Chapnick, founder and CEO of Channalysis and retail consultant at FreshXperts, an advisory team for growth in fresh foods. “I want to sit on the beach, order a coffee and go pick it up without waiting on line. I want to know what is on the menu before I go to a store. People are mobile today, and they are taking their mobile phones with them.” Convenience store chains including Wawa Inc., QuikTrip Corp., QuickChek Corp. and Casey’s General Stores Inc. all offer mobile ordering for their locations. Meanwhile, Casey’s, Sheetz Inc. and 7-Eleven Inc. also offer delivery options. Casey’s launched its mobile app for ordering in January 2016, and out of its 1,950 locations, 550 offer pizza delivery, according to Bill Walljasper, senior vice president and chief financial officer at Casey’s, based in Ankeny, Iowa. “…Right now, roughly 13 percent of our pizza pie orders are running through that type of service,” Walljasper said of Casey’s online and mobile ordering. “We have over 700,000 downloads of the mobile app and growing. And typically, we see an increased basket ring when someone orders that way — about

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20 percent more, including more toppings or adding on complimentary items like breadsticks, wings or a soda.” Traditionally, the biggest segment for restaurant delivery has been pizza. This has been tracked by The NPD Group for years. But with third-party delivery companies cropping up, NPD began tracking other areas, too. Outside of pizza, food delivery has been growing by double-digit rates since 2012, cited Bonnie Riggs, NPD’s restaurant industry analyst. Still, the biggest opportunity for growth is online and mobile ordering, she said. “Digital ordering is still only 3 percent of the industry, but it represents 2 billion visits and $17 billion, and the growth is coming from mobile apps,” Riggs shared. “If you are going to play in the space, you have to go there.” Ordering from mobile apps has been growing for several years at a rate of 50 percent or more, according to Riggs. In December 2014, mobile app ordering was up 51 percent; in 2015, it rose 61 percent; and in 2016, it was up another 52 percent. Internet ordering for the same time period was up 12 percent, 10 percent and 2 percent, respectively. Additionally, internet ordering for pickup currently makes up 1 percent of the restaurant industry, and mobile app ordering for delivery accounts for another 1 percent. New Jersey-based convenience store chain QuickChek rolled out mobile ordering in March 2016, allowing customers to order breakfast items, subs and salads. It added the option as a result of


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consumer demand. So far this year, Oklahoma-based QuikTrip also responded to consumer demand with the addition of mobile ordering through its app in January, and Pennsylvania-based Wawa rolled out mobile ordering in February. “Our customers were asking for mobile ordering in the app, and it helped us to speed up the customer checkout process, so it was a win-win,” said Mike Thornbrugh, spokesman for QuikTrip, based in Tulsa, and operating just under 1,000 locations. “Customers can order, pay and pickup when they arrive at the store. They can even order in the morning for an afternoon or evening pickup.” At Casey’s, the addition of mobile ordering was an opportunity to reach a broader audience. The chain already recognized that some customers like to interact face-to-face; others prefer to interact online. Mobile provides yet another type of interaction. “Mobile ordering allows us to connect with customers we didn’t reach before, and we are very vertically integrated so it was a natural extension for us,” Walljasper said. DIVING INTO DELIVERY

With the rise of third-party delivery companies like Postmates, DoorDash, Grubhub and Eat24, more restaurant and c-store chains are looking at the option of delivery. While pizza still remains the most popular delivery item, consumers today are looking for more food options to be delivered, according to NPD’s Riggs. “If it’s priced right, the food can travel well, and it doesn’t reflect poorly on the brand, the delivery option will continue to grow outside of major metropolitan areas,” she said. “The forecast is for delivery to grow by 20 percent between 2016 and 2020.” In late 2016, Sheetz announced a partnership with OrderUp from Groupon to deliver in two college towns where a Sheetz store is located. Items include the store’s MTO made-to-order sandwiches, breakfasts, salads, burritos and snacks, including fries, gourmet pretzels, chicken stripz, tater totz, pizza and subs. QuikTrip responded to customer 7-Eleven has also been demand by adding mobile ordering to its app.

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Casey’s offers pizza delivery at 550 of its 1,950 locations.

providing delivery options in select states since 2015, working with DoorDash in New York, Los Angeles, Chicago, Washington, D.C., and Boston; and with Tapingo in five states, focused on college campuses. “With c-stores, you are usually going local, so delivery options are more tailored,” said Chapnick. “You don’t have to open up everything to everybody at once because then you can’t fulfill what you promise and the customer won’t come back. It’s better to start smaller and then branch out. Start with 10 zip codes and grow from there.”

“The initial tests have gone well, and we will continue to test. We potentially have the opportunity to expand to a wider base than we initially thought.” — Bill Walljasper, Casey’s General Stores Inc., discussing delivery

Whether using a third-party service or handling delivery in-house, it is important that the food travels well, so operators must ensure good packaging, according to Riggs. Cold food must stay cold and hot food must stay hot. “There have been people who tried going with third-party companies, but then took the delivery portion in-house because of the potential loss of brand image if things are not delivered the way they are consumed in the store,” Riggs cautioned. Casey’s offers delivery through an in-house team and recently accelerated the rollout of this amenity in the last quarter, including in smaller communities than the chain originally targeted as a test, explained Walljasper. “The initial tests have gone well, and we will continue to test. We potentially have the opportunity to expand to a wider base than we initially thought when targeting only larger communities that are over 5,000 in population,” he said.


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Casey’s hires its own delivery drivers, with the hours of delivery fluctuating depending on the community. At new stores, delivery hours run from 4:30 p.m. to 9:30 p.m. or 10:30 p.m. The days of the week for delivery also fluctuate. Customers can place their order through the mobile app and select delivery or carryout. In addition to pizza, the c-store chain delivers complimentary items including breadsticks, chicken wings, and 2-liter sodas. DRIVE-THRU DOLLARS

In the quick-service restaurant (QSR) industry, drivethru is an important part of the business. Tom Cook, principal at King-Casey, a retail consulting and design firm based in Westport, Conn., points to Starbucks. The coffeehouse chain added drive-thru awnings to shelter cars from the rain and sun, as well as a digital barista, where customers can see the barista on a screen and the barista can also see the customer. Drive-thru, however, is no longer the sole domain of QSRs. The option is becoming increasingly prevalent in the convenience channel, for one. In February 2016, Savannah, Ga.-based Parker’s Convenience Stores opened its first Parker’s store with drive-thru foodservice for its hot deli serving breakfast, lunch and dinner daily.

“It’s no different than taking care of the customer inside the store. We want to offer them the quickest and easiest checkout experience possible.” — Mike Thornbrugh, QuikTrip Corp., discussing drive-thru

QuikTrip also announced plans in 2016 to test its first drive-thru location for its QT Kitchens program, in Tulsa, Okla., after the store lease held by Wendy’s ran out. This location is still in a test phase, as the chain “continues to get operational learnings and customer feedback on how best to run a drive-thru,” Thornbrugh reported. “It’s no different than taking care of the customer inside the store,” he said. “We want to offer them the quickest and easiest checkout experience possible. Since we limit our drive-thru offer to only made-toorder food from our onsite kitchen, it does not currently take care of the needs for our other convenience store customers.” Overall, drive-thru service was up 4 percent in 2016, and it accounts for 21 percent of restaurant

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Customers care most about accuracy and speed when using drive-thrus.

industry visits, according to NPD tracking data. “It’s small, but that is where the opportunity and the growth is right now,” Riggs noted. During a drive-thru experience, customers look for order accuracy and speed, Cook said, so it’s important to get the operations right — including the order, putting it together and getting it out to the customer. When first getting into the drive-thru business, it is often necessary to change the layout of the store in the backend and in the kitchen for the right process and flow, according to the King-Casey executive. This includes where the equipment will be, the employee process, and packaging. There’s also “an art to communication” with the customer at the drive-thru, according to Cook. “It’s more than just a menuboard and a drive-up window. There is a whole art and science to menuboard optimization, and QSRs often spend an inordinate amount of time on this, from where you put the items, to how much space to give, and how many pictures relative to words,” he explained. The same is true for merchandising at the drivethru. Cook recommends staged zone merchandising, where customers can see messages about menu items and specials from the time they enter the drive-thru area to the point where they reach the menuboard. “There should also be wayfinding in terms of aiding the customer in finding the drive-thru, and visible signage that says drive-thru,” he said. “If you didn’t have one and then you open one, nobody will know unless there is clear signage.” King-Casey worked with Starbucks on wayfinding at its drive-thrus. The partners decided to do a green stripe throughout the drive-thru that customers can see on the ground and along the curb. Not only is this helpful with navigation, but it’s also a subliminal brand message because it’s the same green used by Starbucks, Cook noted. “The overall customer experience is where the rubber meets the road,” he said. “If you have a good customer experience, you will have a satisfied, loyal customer.” CSN


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Capturing Consumers’ Attention Experts say convenience is one of the best retail environments for shopper marketing By Renée M. Covino

D

o your convenience stores have the woo factor? Are techniques in play to turn convenience channel shoppers into convenience channel buyers? So many convenience store purchases are driven by impulse, with successful shopper marketing techniques said to provide that last bit of influence at the point-of-purchase, where many final buying decisions

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occur. Shopper marketing is not the only strategy for this — and it does not replace traditional marketing techniques for wooing consumers — but it is developing an attention-seeking reputation. “While online retailers like Amazon continue to grab market share within the retail industry, 71 percent of U.S. consumers say they still prefer to buy from physical stores even if the same products are available


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online, giving retailers the opportunity and challenge of capturing those valuable consumers,” Matt Talbot, CEO of inventory software company GoSpotCheck, told Convenience Store News. “As a result, retailers and sup-

pliers are testing marketing methods that aim to capture a consumer’s most valuable resource: their attention,” he explained. “Top retail brands like Whole Foods, Lowes Foods and Apple are leading the way by testing

C-STORE SHOPPER MARKETING IN ACTION CSNews sister company Path to Purchase Institute shares some noteworthy examples By Cyndi Loza & Nidhi Madhavan, Path to Purchase Institute

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he small store sizes of convenience store chains typically leave little room for large point-of-purchase materials. However, bigger is not necessarily better in shopper marketing. Here, we share some noteworthy examples of effective, or just plain cool, in-store activations in the convenience channel. We believe each example below executed the 4Cs of effective in-store and digital activation well: command attention, connect with the shopper, convey information, and close the sale. For more on each program, visit the Path to Purchase Institute at p2pi.org.

This is a great example of how shopper marketing can be a unique part of a marketing arsenal. In spring 2016, 7-Eleven stores carried an exclusive can from Coca-Cola Co.’s flagship brand that delivered account-specific content via augmented reality mobile application Blippar. Using the app, shoppers were able to scan the silhouette of a bottle depicted on the can to superimpose sunglasses, headphones and a play button over the SKU, which allowed users to play music from various artists such as Elle King, The Killers, Ellie Goulding and Beck. In stores, the cans were stocked on account-specific, motion-activated floorstands that spinned a record and played “Lean On Me” by Bill Withers or “All I Do Is Win” by DJ Khaled when shoppers walked near the display. The program worked because it encouraged shoppers to engage with Coke in a different, new way and it put the brand center stage on something that’s just simply cool and keeps it in the conversation.

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new tactics like virtual reality, social shopping, and robots to try and lure customers.” The way another expert sees it, shopper marketing should be viewed as a tactical approach to sway consumers who are open to being swayed. “The best shopper marketing understands the consumer dilemma at the moment of purchase,” said Rebecca Brooks, founder of Los Angeles-based Alter Agents, which has conducted nearly 100 shopper marketing studies across dozens of categories, including in the convenience channel for ampm. “For example, consumers might be weighing health against convenience and desire. A convenience store offers those choices starkly — you can get an apple or a health bar, but those Snickers look pretty darn good. A savvy marketer will be able to pull those levers and push the undecided to purchase.” Brooks further explained that shopper marketing has historically been about point-of-purchase, impulse purchasing. It has relied on


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A/B testing and psychology to determine the best place for displays or the most eye-catching graphics.

“Today’s smart shopper marketers are realizing that messaging is king. Traditional methods still

7-Eleven teamed with Ferrara Candy Co.’s Trolli earlier this year to launch the brand’s first-ever Slurpee flavor. The Trolli Pineapple-Lime flavor of 7-Eleven’s proprietary Slurpee beverage rolled out to stores in March, along with new Trolli Sour Brite Sloths gummies, which were available exclusively at 7-Eleven stores through April 30. Each pack of the SKU contained pineapple and lime, strawberry and grape, and blue raspberry and berry punch gummies shaped to resemble a sloth. In stores, the candy was stocked on floorstands depicting a sloth holding a Trolli Pineapple-Lime Slurpee. Positioned near Slurpee machines spotlighting the Slurpee flavor via translite signs, the colorful floorstands certainly commanded attention and nicely communicated the new candy and Slurpee flavor pairing.

Noting there was a cross-purchase behavior between chewy candy and Circle K’s Polar Pop beverages, Ferrara Candy launched Trolli Sour Sippers edible candy straws at the retailer to complement the beverage. Available in a blue raspberry flavor, the SKU launched at Circle K stores on July 1 and rolled out to other retailers across channels at the end of August. In stores, account-specific floorstands depicting a Polar Pop beverage stocked the candy straws, alongside Trolli Sour Brite Bites and Crawlers. The program was similar to the aforementioned Trolli campaign at 7-Eleven, aiming to both simultaneously increase Trolli SKU and Polar Pop sales. The floorstand also worked to communicate the combined price of a Polar Pop of any size and Trolli Sour Sippers, helping to close the sale.

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work, but savvy consumers are now looking for more information and messaging throughout the shopper experience,” she said. Whole Foods’ “story-oriented marketing” with chalkboard-like/artistic signage in cluster displays around different products throughout the store is one example. “Shopper marketing isn’t just appealing to our reptilian brains and base instincts. It is evolving into a conversation with the shopper,” Brooks stated. SELLING STORIES

Mike Anthony, global CEO of Engage Limited, which strategizes with both retailers and manufacturers on shopper marketing, cautions that “lots of things are called shopper marketing, but most of

them are just in-store activities branded as shopper marketing.” He thinks shopper marketing is beginning to evolve into being “more insight-based,” but there is still a long way to go. “Most of what is done in stores is generic, tactical, price-based,” he explained. “Best-practice shopper marketing works on a higher level: identifying opportunities to drive consumption, and using these opportunities to target specific shopper segments — those that


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can drive growth.” Others point out that shopper marketing has evolved from a weekly print ad and, in some cases, television to an integrated marketing communications strategy that requires social media, direct mail, email, mobile apps, as well as traditional media tools. Shopper marketing today is said to be as varied as retail. “It has to be. By its very nature,

“Convenience is one of the best retail environments for influencing consumers through shopper marketing — the purchases are low-risk and prone to shopper promiscuity, with shoppers willing to try new items.” — Rebecca Brooks, founder, Alter Agents

shopper marketing needs to be where the shoppers are. And where are shoppers? They’re

Energy-drink manufacturer Rockstar provided Speedway with an exclusive “Killer Grape” flavor of its Rockstar Revolt beverage line early this year. In stores, the exclusive beverage earned secondary merchandising space in dedicated, eye-catching coolers promising Speedy Rewards members 500 bonus points with the purchase of three SKUs for $5. The display’s design made it easily shoppable and its vibrant colors and graphics commanded significant stopping power. Online, the retailer used its “Speedy Scratcher” instant-win game — a recurring promotion frequently used to plug new products — to give away hundreds of free cans and coupons, which encouraged store trips.

Understanding its largely young, male consumer segment, Speedway teamed up with National Football League sponsor Anheuser-Busch InBev leading up to Super Bowl 2017 for a sweepstakes awarding one grand-prize trip to the big game. Signage on coolers and beer racks in stores depicted Bud Light and invited consumers to text a designated number to enter. The promotion also included a corresponding online instant-win game awarding hundreds of free music downloads and Bud Light paraphernalia. Social media activity built additional hype for the chance to win. The in-store signage served to attract sports-minded consumers and shoppers stocking up on beer leading up to game day.

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in-store, online, offline, on mobile, and on social,” noted Ryan Dee, creative director at Interactions, a Daymon Worldwide experiential marketing company that specializes in product demonstrations and sampling. “And the vehicles required to make an impact in each of these spaces are even more nuanced with POS [point-of-sale] collateral, experiential marketing, influencer marketing, social media content, advertising (print and digital), and direct marketing, among others. And then there are the analytics of each of these vehicles and the Big Data that can be leveraged to create predictive models to inform the next campaign. And the cycle continues.” The benefits to retailers of such an approach is that shopper marketing activities deliver growth long term, rather than just in the short term. Effective shopper marketing activities will help a retailer better meet the needs of its shoppers, and potentially help that retailer differentiate from its competitors. In some cases, manufacturers are also helping to provide a shopper marketing edge. “Big retailers, including convenience retailers, are looking for custom programs — developed by manufacturers with significant resources to better target and engage their shoppers — that build trips,” stated Carl Elliott, director of Nielsen’s convenience channel segment. “Shopper


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insights are a significant part of manufacturer selling stories as CPG [consumer packaged goods] sales are showing little to no growth.” Shopper marketing is also viewed as a critical way for retailers to prove their relevance. “Shoppers are inundated with so much these days, they’re looking for anything to help make their lives simpler and easier,” said Dee of Interactions. “To do shopper marketing correctly, the delivery must be targeted to a specific audience and convey — with simplicity — what need or want the product or service satisfies.” THE CONVENIENCE ADVANTAGE

So, what about shopper marketing in the convenience channel, specifically? What does shopper marketing look like there, and how does it differ from other channels? “Convenience is one of the best retail environments for influencing consumers through shopper marketing — the purchases are low-risk and prone to shopper promiscuity, with shoppers willing to try new items,” Alter Agents’ Brooks said. She noted that the convenience channel is coming around to the idea of more informative, message-driven shopper marketing, despite that it is still “very embedded


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in the whiz-bang approach to impulse purchasing.” Granted, convenience store shoppers aren’t browsing and soaking in the atmosphere the way they do at higher-end retailers, “but that doesn’t mean there isn’t a place for additional messaging, particularly as shop-

pers are looking for healthier alternatives or fun alternatives to the traditional convenience fare,” according to Brooks. The mobile factor is another potential marketing advantage for c-stores. “Convenience is, inherently, mobile. Whether it’s on foot or on wheels, shoppers are not considering the convenience occasion from the couch or home,” reasoned Elliott of Nielsen. “It’s on the bus, on foot, or behind the wheel.” Therefore, the convenience channel has a prime opportunity to participate in platforms that reach consumers on the go, and manufacturers have research and resources to reach into new modes of communication. Elliott emphasized that larger convenience store chains are the ones receiving custom programs based on manufacturer shopper marketing and shopper insights. “With the convenience channel being over 50 percent independent, the programs are usually only for larger chains with more scope, scale and reach,” he acknowledged.

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A challenge and opportunity for convenience stores lies in the different need states of shoppers, such as on-the-go consumption, stock-up needs, and take-home needs. Shopper marketing must reflect these different missions to create applicable behavior, according to Anthony of Engage Limited. Also, convenience stores in a residential area should play to different need states than those in a commercial district, with shopper-marketing techniques reflecting the difference as well. Furthermore, as ecommerce grows, the way convenience stores are utilized will change. Being on top of that “will be critical” to the practice of shopper marketing going forward, Anthony maintained. The “convenience” of the convenience channel, however, may present the greatest challenge and

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opportunity. Shopper marketing at convenience stores has an even higher hurdle to overcome due to the channel’s “quick fix” factor. “Most convenience shoppers have very specific shopping occasions. They aren’t typically browsers,” pointed out Dee. “Any shopper marketing needs to be even more precise than that of other retail channels, as shoppers give convenience retail even less time in and out of the store than they give to other retail channels.” BE A RISK-TAKER

In the shopper marketing equation, the key is to not get left behind or stuck in what Dee calls “analysis paralysis.” There’s something to be said for being bold and taking risks, like Amazon introducing frictionless in-store shopping, and Walmart filing a patent for a


warehouse blimp. “Not every idea is going to pan out, but retailers and suppliers need to take risks and not fear failure,” said Dee. “The benefits of the risks that pay off are selfevident, and the benefits from failures are just as valuable [because] they teach lessons that better prepare you for what’s next. In today’s climate, if you’re not changing, you’re dying.” Coupled with revolutionary risk, though, must be listening to your shoppers. “The simple truth is retailers and suppliers need to listen to their shoppers. Don’t give them what you think they want — it’s a losing proposition to presume to know their needs and wants better than they do,” said Dee. “Certainly, there is a place to offer solutions your shoppers may not have considered, but even those should serve to satisfy preexisting needs and wants.” Also in the simpler vein, Talbot of GoSpotCheck

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believes that in today’s competitive world of fastmoving consumer goods, monitoring out-of-stocks, promotions and marketing efforts is critical to increase sales volume. “While shopper marketing is a critical piece of the larger sales puzzle for both retailers and suppliers, those strategies are only good if the products are also available to the consumer at the point-of-sale,” he said. CSN


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This year’s CSNews Store Design Contest winners do much more than look good By Angela Hanson

H

aving an attractive, eye-catching convenience store is an advantage when it comes to drawing in customers, but the best designs go beyond the visuals. As the winners of the 2017 Convenience Store News Store Design Contest prove, design also means figuring out the best way to give consumers what they want and then executing it well. Many of this year’s winners and honorable mentions had to face the challenge of balancing a classic look and a legacy with the changing needs and updated technology available to today’s convenience market. Operators who must work with an existing structure rather than starting from scratch face an extra hurdle. Foodservice is also a major theme in this year’s top designs. Not only is it important to give customers the food and beverages they want, but the category is extremely visual, making its presentation another crucial design element. The 12th annual awards program honors new and rebuilt convenience stores whose designs excel in areas such as branding, interior layout, use and effectiveness of signage and logos, and exterior property and landscaping. Store construction or remodeling had to have taken place between January 2016 and April 2017. Winners were selected based on innovation, creativity, and the positive impact of the design and/or remodel on the retailer’s overall business. This year’s honorees, spanning seven categories, are:

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The Evolution of DESIGN

Best Original Design

Winner: American Natural, Cheswick, Pa. Designer: King-Casey American Natural was already experienced in the fuels arena, enjoying steady growth in Ohio and western Pennsylvania where it serves commercial drivers and regular consumers at 13 sites, when it decided to develop a new convenience store concept. Already offering drivers fuel choice in the form of gasoline, diesel and compressed natural gas, choice for human bodily fuel, the other half of the equation, was its next area of focus. “Our differentiation in this area wasn’t clear enough to our customers, which is why we called King-Casey,” said Andrea Feinstein, executive vice president, regulatory, and chief marketing officer, noting that King-Casey is known for its 3-D branding of retail environments. The retailer wanted its new concept to visually support American Natural’s vision for the future, which includes better food, better service, better choices, and a sense of community. “Somewhere along the way, convenience has come to mean a seemingly less human and unnatural existence. Our desire for convenient information has come at the price of a lack of human interaction,” Feinstein said. “American Natural was driven to create a

Best Original Design

Honorable Mention: Stan’s Restaurant, Columbia, Tenn. Designer: Paragon Solutions Balancing old and new was one of the biggest challenges facing store owner Bob Patel when he bought Stan’s Restaurant, which had been serving the community quality food, along with convenience items and gas, for more than 70 years. It was important to him to keep the store’s legacy as the obsolete site went through a facelift. The raze-and-rebuild process created a brand-new building, but significant portions of the original décor were preserved and brought to the new space, including the tree

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new culture of convenience. A more natural culture. An accessible culture built on the belief that despite your busy lives, you shouldn’t have to sacrifice what is important to you and your family.” The Eatery foodservice section offers several types of comfortable seating in a wide open area, signaling to customers that it’s fine to linger. Both the interior and exterior of the store use natural colors and wooden paneling, and the indoor signage emphasizes American Natural’s fresh, natural offerings.

that greets customers at the front of the diner, and the antique backbar behind the sales counter. Polished wood furniture and flooring give Stan’s a distinct look compared to many newer convenience foodservice concepts. And in the convenience store section, the numerous old-timey decorations and signs hanging overhead strongly reflect the lengthy history of the location without making it feel cluttered and cramped. Regional treats and store merchandise reinforce the store’s ties to the community, as does the “Together Since 1947” sign out front. “It is truly a unique store,” said designer Paragon Solutions.


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The Evolution of DESIGN

Best InterIor DesIgn

Winner: Sheetz, Morgantown, W. Va. Designer: Tesser The design team behind this next-generation Sheetz store had a more ambitious goal than simply introducing a new look at the Altoona, Pa.-based chain’s latest store. The objective was nothing less than to re-invent the Sheetz experience and shift the consumer perception of the brand from convenience store to convenience restaurant. To achieve this, Tesser created a new aesthetic look and feel for the location, including a full reconfiguration of the space that moved the dining area adjacent to the kitchen. This created a more cohesive, overt restaurant experience. Well known for its MTO made-to-order food, Sheetz wanted to demonstrate how it cares for its customers, offering them a comfortable environment. Key details of the final new interior design include high-quality and natural finishes; feature lighting that sets the dining area apart from the market section of the c-store; an open view of the kitchen that lets customers clearly see the fresh preparation of food and beverages; and the use of warm “wood” floors in the restaurant area that transition to bright “concrete” floors in the market, reflecting the duality of the store’s offering. Results of the redesign have been a streamlining of the cus-

tomer experience that reduces wait times and simplifies the order flow, as well as an approximately 20-percent lift in weekly food and beverage sales over the highest-performing Sheetz stores. Equally important, according to the designers, the store clearly signals Sheetz is a place for freshly prepared, quality food.

Best InterIor DesIgn

Honorable Mention: Dara’s Corner Market, Manhattan, Kan. Designer: Paragon Solutions For many convenience stores, space is at a premium, and that was the case when Dara’s Corner Market owner Chris Darrah embarked on a redesign. The biggest challenge was fitting everything the store needed into a small space, while not overbuilding the site. As a legacy store, the original Dara’s was doing well but had some issues. Darrah saw the potential of the location and opted to raze and rebuild with a new design. Located in the heartland of America, Manhattan, Kan., has a small-town feel where local businesses can thrive, and Paragon Solutions sought to reflect this with a small store that cares about offering local products and has a genuine, rustic, farm-to-market feel. The new interior features soft greens and browns, metal milk jugs, wood incorporated into the signage, and an efficient layout that offers customers exactly what they want. The new store isn’t too big or too small — it’s just right for the location, according to the designer.

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The Evolution of DESIGN

Best sky’s the LImIt remoDeL

Winner: Rusty Lantern Market, South Portland, Maine Designer: Paragon Solutions Old met new in the development of the newest Rusty Lantern Market. The convenience store needed to offer modern service and amenities, but the location had several non-negotiable restrictions. Located inside South Portland’s historic armory building, Rusty Lantern Market would be part of a high-profile town beautification project — but because it was a historical building, the armory exterior could not change, and the existing elevator and stairs had to remain. Despite the challenges of working through the historical building and the consequences of each change, it was an exciting historical project, according to the designer. “Nothing was insignificant, but by embracing the history, the results were amazing,” Paragon Solutions said. Renovations involved gutting the interior and rebuilding the roof. The historic brick exterior makes this Rusty Lantern Market location stand out compared to other convenience stores, while the spacious interior and bright lighting give it a contrasting, modern feel. Foodservice dominates the store with fresh, made-to-order offerings and grab-and-go items. Outdoor seating adds to the foodservice offering and gives the store a welcoming feel.

Best sky’s the LImIt remoDeL

Honorable Mention: Twinleaf Store, Akwesasne, N.Y. Designer: Paragon Solutions The remodeling of the Akwesasne Twinleaf Store was not prompted by a desire to evolve for the future, but by catastrophe when the former location burned to the ground. In the aftermath, store owner Bill Black chose to combine all his knowledge from operating the original store with the unrealized opportunity of the site, creating a new store design to better serve his community. Time was not on the store’s side, though. Weather challenges meant there was a limited window to get the new store up and running. As a result, the Paragon Solutions team was actually designing the store while it was already under construction, which required close coordination with contractors throughout the project. Once the dust settled, Twinleaf was bigger and better than ever. In place of the fairly neutral décor with relatively small signage that it had before the fire, the store now has a warm color scheme with a leaf motif that ties much of the store together. Playful signage easily directs customers to where they

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can quench their thirst or sate their hunger. The new 9,532-square-foot convenience store features an expanded deli, a huge beer cave, and a state-of-theart market that’s filled with fresh offerings along with traditional convenience items. Not only that, but it has a complete full-service restaurant in the Twinleaf Diner.


464


The Evolution of DESIGN

Best mID-BuDget remoDeL

Winner: Gas Land Taconic Shell, Pleasant Valley, N.Y. The 575-square-foot expansion of the existing 1,791-square-foot convenience store and gas station involved more than just building a larger store and adding a Dunkin’ Donuts. The remodel also upgraded the building’s facade and installed a drive-thru window and access aisle. It also made modifications to the driveway entrance and parking layout, and upgraded the subsurface drainage system. An added challenge came from the site’s close proximity to wetlands, which necessitated a new septic disposal system, and approval of a remediation effort by the New York State Department of Environmental Conservation due to a petroleum-related spill from a previous owner’s old steel tank. Furthermore, the c-store and gas station had to stay open during the construction process.

At the end of the remodel, the store emerged with a clean, easyto-navigate feel using natural-looking flooring and wall paneling. In-store sales are up 25 percent, with the Dunkin’ Donuts hitting projected sales forecasts, while fuel volume is up 30 percent and anticipated to keep climbing.

Best Low-Cost remoDeL Winner: Shay Oil Co., Yuma, Ariz. Designer: Paragon Solutions

What difference does 20 years make in the convenience store industry? For Craig Shay, it meant the remodeling process had to incorporate both a cosmetic redesign and a function redesign of program and profit centers, as two decades since his last significant remodel left a gap. With the help of Paragon Solutions, the family-owned and -operated chain of 19 c-stores incorporated a great deal of the Yuma community and history into the design, reflecting the Shays’ presence there since 1961, when founder Gene Shay opened his first Phillips 66 gas station after selling his previous service stations in South Dakota. It was decided that the railroad should have a noticeable presence, as the first rail crossing in Arizona came through Yuma in 1877, and the Union Pacific still has a major community presence

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today. Train-track signage provides a whimsical look to the relatively small space. As a result of the store’s new design, sales are up, and customers are happy with the new look and the chance to ride the “Refreshment Railroad” with a stop at the “Beer Oasis.”


The Evolution of DESIGN

Best traveL Center DesIgn

Winner: Hat Six Travel Center, Evansville, Wyo. Designer: Paragon Solutions The formerly named Eastgate Travel Plaza took a “long, hard look” at its profit centers prior to its remodel and rename, and realized it was old, tired and underperforming and its full-service restaurant was losing money. But all was not lost — the designers said it was “like a Phoenix rising” when the travel center became Hat Six Travel Center. Named after Hat Six Ranch, a local landmark in Casper, Wyo., the long-established family business took on a new look to go with its new name. Designed to have a classic, rustic aesthetic that reflects “everything Wyoming,” the plans for Hat Six placed an emphasis on reclaimed wood as a design material and all the offerings travelers could want. Framed images above the cold vault doors display classic images of the Cowboy State, and anyone in need of a spare pair of boots can visit the payment counter. Those looking for something to eat or drink can do so in Wyoming style at Hooch’s, the full-service bar, or The Cowboy Deli, a branded deli program. The unprofitable restaurant was replaced with trusted foodservice concepts, Moe’s Southwest Grill, Schlotzsky’s and Cinnabon. Other amenities include a dog

park outside and a variety of services for professional drivers, including showers, laundry and a lounge. In its second life, the travel center is thriving. While it was difficult to go in an entirely different direction, the store ownership embraced the changes, working hard to create a new culture that matches the new facility. As a result, Hat Six is a hit with locals and travelers alike.

Best traveL Center DesIgn Honorable Mention: Valley Country Store, Jerome, Idaho Designer: Paragon Solutions The merger of Valley Cooperative with Valleywide Cooperative spurred store management to continue evolving its retail presence. Previously, the store was known for feed and hardware, mixed with convenience and deli items. The updated location, however, has become more of a traditional travel plaza with a heavy focus on food. Instead of going with one prepared food concept, the designers created a spacious food court with four different options, three of which are proprietary to the store: BuildA-Burrito, Simply Salads & Subs, Valley Country Fresh, and Krispy Krunchy Chicken. The look of the travel center was designed to be bold and eclectic, with reclaimed, industrial touches incorpo-

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rated into the location. Signage reinforces “quality and commitment” as values of the cooperative. Outside, the travel center boasts a significant diesel presence to support local and regional truck traffic. The greatest challenge of the remodel was removing the single biggest profit center that the company had been known for, necessitating that other profit centers be revamped to reach sales objectives, according to the designers. Happily, taking a chance on change and putting the work in has yielded positive results. “The new look has been a tremendous success,” said Paragon Solutions.


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The Evolution of DESIGN

Best InternatIonaL DesIgn Winner: Listo!, Lima, Peru Designer: Studio A – Interbrand

With 105 locations operating in Peru, the Listo! brand is well known for its innovation, excellent service, and product assortment. When it came time to renew its image as a modern, innovative company, the primary objective was to “get away from the smell of fuel” and migrate from a traditional c-store format to a point of destination through Listo!’s fast food and coffee offerings. Larger spaces, comfortable furnishings and warmer colors are more inviting to customers who want a place to stop in for something to eat or drink. New digital displays also replaced conventional slate menuboards, making it easier to provide up-to-date and stylish menus. The food and beverage areas saw the greatest overhaul. The self-serve Coffee Zone now features a variety of brews from different regions of Peru, while the foodservice offering went from a grab-and-go section to an area of the store where customers can order sandwiches freshly prepared. By any standard, the company achieved its goal. Listo!’s coffee and fast food sales are up 30 percent at stores that have remodeled to the new look compared to 2016, while total sales are up 20 percent compared to last year.

Best InternatIonaL DesIgn Honorable Mention: ENOC Station, Dubai, United Arab Emirates

One of the Emirates National Oil Co.’s (ENOC) flagship sites, located in the Dubai Internet City information technology park, reopened earlier in 2017 after being remodeled as a cutting-edge convenience store where sustainable innovation meets smart design. ENOC sought to create a state-of-the-art location that launched a new standard in the region’s gas station category. Sustainability was a major part of this — today, the station runs entirely on solar power, with excess energy going back into the grid. An electronic billboard shows customers in real time the amount of energy being generated and the carbon footprint reduction. This brought

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with it a logistical challenge, as it took some effort to balance the right number and size of solar panels to power the location with a canopy that could support them. Other sustainability efforts, such as the use of LED lights, were enacted to keep power consumption to a minimum. The final canopy also provides a significant design element, according to the company, providing a recognizable look that offers both shade and aesthetic appeal. The flagship location also expanded the convenience store space within, as well as its food and beverage offerings, to ensure that customers spend more time onsite utilizing the services available, which include electric vehicle chargers, each capable of charging two vehicles at the same time. Other advanced technological offerings include all-digital signage using 48 digital wall displays, RFID-enabled nozzles, beacons for a variety of mobile payments, and sensors for fuel leak detection. CSN


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Talking with…

Chris Arbogast New Business Development, FGX International

Convenience Store News: FGX International is a leading supplier of non-prescription reading glasses and sunglasses. Tell us a little bit more about the products your company offers. Chris Arbogast: FGX offers sunglasses, optical frames and non-prescription reading glasses with a portfolio of established, highly recognized eyewear brands including Foster Grant® (the #1 brand in units sold in the U.S.), Magnivision®, Gargoyles® and Solar Shield®. FGX International also holds licenses for brands such as Levi’s®, Reebok®, Revlon®, Ironman®, Dockers®, Nine West®, and Panama Jack®. Through our partnership with Premier Accessory Group, we also offer mobile electronic accessories under the Energizer and Eveready brands. CSN: Convenience stores carry some of the best CPG brands in the world, but not so much in the General Merchandise category. Why should c-stores consider adding quality, branded sunglasses to their stores? CA: Good question. Consumer research tells us that a significant number of consumers do not buy sunglasses in a c-store based on the quality of the existing offering. That same research tells us that over 40% of those consumers are more likely to purchase a brand that they recognize—a brand like Foster Grant. We get selling information, by SKU, from more than 50,000 retail stores in North America. This gives us a significant advantage when it comes to putting together a sunglass assortment. CSN: Do you have any suggestions on how c-stores can merchandise and market eyewear in ways that will boost product sales? Does FGX offer any kind of help to retailers who might not know how to sell eyewear successfully? CA: Absolutely! FGX has established merchandising best practices based on learnings from multiple consumer research studies. The typical c-store consumer spends very little time in the store. Most sunglass displays are highly disorganized, making the shopping experience overwhelming. All of our displays are set to plan-o-gram and segregated by category (polarized, for example), making it faster and easier for the consumer to find the style they like. This is just one example of the research-based methodology we use when putting a program together. These merchandising best practices are supported, and overseen, by our own 3,500+ field service team members that service more than 69,000 stores in North America.


LEVERAGE THE ESTABLISHED EQUITY OF THESE BRANDS TO DRIVE SALES AND PROFITS.

FOSTER GRANT IS THE #1 UNIT SELLER OF SUNGLASSES IN THE U.S.* A significant share of C-Store shoppers report that finding a brand of sunglasses that they recognize has a direct impact on their decision to purchase. The latest styles for your shopper in both polarized and non-polarized options at affordable pricing. 3,500 field service reps (FGX Employees) merchandising 69K stores in North America.

RANKS IN THE TOP TIER OF CONSUMERS’ BROADER CONSIDERATION SETS FOR PORTABLE POWER NEEDS** Mobile device accessories /telecommunications hardwardware is expected to have an annual growth rate of 10.5% through 2017, growing to over $62 billion in sales! ***

*VISIONWATCH PLANO SUNGLASSES SALES, THE VISION COUNCIL, DEC 2015. **MILLWARD BROWN TRACKING STUDY, MARCH 2015 ***EBY-BROWN, FOCUS ON THE CORE SUB-CATEGORIES IN GM, CATEGORY INSIGHTS™.

BRAND NAME ONE SUPPLIER SOLUTION FGX & PREMIER PARTNER UP TO BRING YOU THE BRANDS YOUR CUSTOMERS TRUST!

CONTACT US 401-719-2106 OR EMAIL: CSTORES@FGXI.COM @2017 FGX International, Inc. FOSTER GRANT is a registered trademark of FGX International Inc. IRONMAN® and the “M-DOT” logo are registered trademarks of World Triathlon Corporation. Official Product of the IRONMAN TRIATHLON. Used here by permission. All other brand names are registered trademarks of their respective owners used here with permission. Energizer and certain graphic designs are trademarks and copyrights of Energizer Brands, LLC and related subsidiaries and are used under license by Premier Accessory Group, LLC. All other brand names are trademarks of their respective owners. Neither Premier Accessory Group, LLC nor Energizer Brands, LLC is affiliated with the respective owners of their trademarks.


FOODSERVICE

Prepared Food + Hot, Cold, Frozen Dispensed Beverages

The Cold Hard Truth

What you need to know about cold brew and nitro coffee By Renée M. Covino

T

here’s irony at the coffee bar: cold brew sales are on fire. And nitro coffee — created by adding nitrogen to cold brew coffee, resulting in a drink with a naturally creamy mouthfeel — is part of the explosion. Cold brew is not just for independent coffee shops anymore. The offering is cropping up in the convenience channel at an increasing pace. Among those joining the club: • QuickChek — In late August, Whitehouse Station, N.J.-based QuickChek sent out a teaser email: “Hot for iced coffee? Then you’ll love QuickChek Cold Brew.” The announcement touted its new cold brew coffee, made “from a custom blend of premium Guatemalan beans and slow-steeped in small batches.” QuickChek operates 145 convenience stores throughout New Jersey and New York’s Hudson Valley and Long Island. • Wawa — Cold brew coffee is now offered in all Wawa stores as part of the chain’s handcrafted specialty beverage program. Available in two flavors, Traditional Black or Sweet Cream, and two sizes, 16-ounce or 24-ounce, Wawa Cold Brew incorporates a slow-steeping process of its coffee beans. Pennsylvania-based Wawa operates more than 750 convenience stores in Pennsylvania, New Jersey, Maryland, Delaware, Virginia and Florida. • Rutter’s Farm Stores — Fellow Pennsylvania retailer Rutter’s added cold brew to its beverage lineup in mid-May. Rutter’s Cold Brew Coffee is made from Rainforest Alliance Certified, 100 percent Arabica beans and is fully customizable with the chain’s dairy products and syrups/sweeteners. Rutter’s is a family-owned convenience store chain operating more than 60 locations throughout central Pennsylvania. • Sheetz — Altoona, Pa.-based Sheetz was one of the first in the convenience channel to jump on cold brew, introducing its first offering in 2016. Sheetz recently upped the ante by adding a Cold Brew Float to its menu. The chain operates more than 500 c-stores throughout Pennsylvania, West Virginia,

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Virginia, Maryland, Ohio and North Carolina. The way one cold brew expert sees it, ready-todrink (RTD) brands and new dispensing equipment and packaging is facilitating the cold brew phenomenon by widening its popularity and making it more mainstream among consumers. Convenience Store News recently had a “cold conversation” with Randy Anderson, a Seattle-based cold brew coffee consultant and director of marketing for brewing/dispensing solution JoeTap. Here are his candid observations: COLD BREW & C-STORES

CSNews: An increasing number of c-stores are adding cold brew coffee to their beverage offering. Why do you think this is, and do you think c-stores are a good fit? Anderson: Cold brew coffee, and especially nitro cold brew, fits well in the movement among c-stores to offer healthier beverage choices, from energy drinks to CSD [carbonated soft drink] offerings. Cold brew is even more attractive since it is far less acidic than hot coffee. Just as with some other beverages, cold brew is enjoying rising popularity in RTD (both bottles and cans), as well as dispensed. Nitro dispensed is now possible using costeffective, bag-in-box (BiB) concentrates. COLD BREW CUSTOMERS

CSNews: Who, specifically, is the cold brew customer and how has he/she evolved? Are different types of coffee customers crossing over to cold brew?


FOODSERVICE

Prepared Food + Hot, Cold, Frozen Dispensed Beverages Anderson: The profile of the cold brew customer seems to be expanding beyond the typical demographic seen a few years ago. Artisanal, small-batch cold brew has kept cold brew inaccessible as a value beverage since the price point exceeds almost all non-alcoholic beverages. With entries by many of the largest beverage and foodservice companies, however, prices are dropping. This means that “premiumized” cold brew products, typically targeted to a higher income demographic, are being challenged by value brands that are more accessible, with lower prices, as well as value-based branding. This is true in RTD as well as dispensed. Top-of-mind brands like Starbucks and even Coca Cola — with its Gold Peak brand — have brought more value-based SKUs to the cold brew market, with many more on the way. COLD BREW EVALUATION

CSNews: How should c-stores add cold brew? What should they be looking at when evaluating a program? Anderson: Cold brew has had exciting launches with high conversion rates in pilot programs at many c-stores throughout North America, with plans for expansion into more markets in the coming year. While cold brew that is purely coffee and water may not fit everywhere, many adjuncts such as dairy, flavorings, sweeteners, and combinations of all three are selling well. Nitro cans are also gaining in popularity, so much so that they are fast-becoming the most popular packaging choice of cold brew that does not contain additives. Not every brand is having the same success, however, and it is important to understand issues of flavor stability before making the leap.

Not-So-Chilly Numbers • Cold brew sales jumped 580% between 2011 and 2016. They are expected to grow another 149% by 2018. (Source: Mintel) • Cold brew coffee sales increased by 80% in the 12 months prior to February 2017. (Source: Bloomberg) • 24% of consumers currently drink retail-purchased cold brew coffee. (Mintel) • Older millennials aged 21 to 38 (55%) and men (30%) stand out as the groups most likely to drink cold brew coffee. (Mintel) • Four out of five consumers now know what cold brew coffee is, even if only a third have tried it. (Mintel) • 79% of coffee purchasing decisions originate before the c-store is in sight. (Source: NACS, the Association for Convenience & Fuel Retailing) • Stores with excellent coffee ratings receive 12.5% more traffic between 5 a.m. and 10 a.m. than those with below-average ratings. (Source: GasBuddy)

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COLD BREW TAP VS. RTD

CSNews: What’s the best way to execute a cold brew offering? What are your thoughts about putting a dispensed vs. RTD program forward? Anderson: While there are customer recognition advantages to having a balanced mixture of cold brew offerings, cold brew on tap is more profitable for a store than RTD. Concentrates are available from most of the top foodservice and beverage providers in the U.S. Many of these concentrates are shelf-stable and can be post-mixed with nitrogen. Serving nitro cold brew on tap is now easy and profitable, as well as accessible. COLD BREW FORMULA

CSNews: Do you have a cold brew success formula for retailers? Anderson: As a cold brew consultant who is familiar with many methods of brewing and dispensing equipment, as well as RTD and concentrate packaging, I came up with a formula based on the four “E”s of cold brew success: Extraction, Efficiencies, Economics and Experience. My mantra is to excel in each of these to ensure success. COLD BREW EQUIPMENT

CSNews: How do you see cold brew evolving? What equipment trends will influence the future of cold brew? Anderson: Countertop units that offer nitro cold brew on tap are trending and, by far, easier to manage. At this year’s NACS Show, a new NSF-certified unit will be available that utilizes bag-in-box concentrates rather than heavy, messy kegs. A half-gallon BiB can serve hundreds of drinks per box, change out in seconds, and weighs only a few pounds. This is a gamechanger for the typical cold brew unit that requires kegs, which can easily weigh more than some c-store employees can manage. They have cleaning issues as well. The question is: Should it be in the coffee section or among cold drinks? I feel it belongs among cold drink dispensers, but a well-run pilot program should help each store determine what works best for them. COLD BREW EFFECT

CSNews: What effect is cold brew having on the “regular” coffee world? Anderson: There are huge advances being made in brewing. Many coffee extraction companies that have retooled to fit cold brew into their product offerings are, and will continue to be, challenged by up-and-comers who are doing a better job at extraction and efficiencies. CSN


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FOODSERVICE

Prepared Food + Hot, Cold, Frozen Dispensed Beverages

Healthy, Wealthy & Wise The better-for-you trend is everywhere these days, even in fountain and frozen beverages By Bob Phillips

B

esides gas and smokes, perhaps no category says “convenience store” as much as dispensed beverages. Cold or frozen, dispensed beverages draw shoppers into c-stores and provide a healthy profit center for operators. And the good news is: there’s even more untapped opportunity. “Consumers are looking for more variety within the dispensed beverage segment, especially better-for-you beverages with lower sugar, less calories and added health benefits,” said Tiffany Plemmons, category manager, dispensed beverages at RaceTrac Petroleum Inc. The Atlanta-based convenience store chain is prepared to meet these evolving consumer needs with new proprietary teas, aguas frescas, and enhanced waters. “We are very interested in any beverages that have isotonic or additional health benefits, and anything else that fits the need of the health-conscious consumer,” Plemmons explained. Mathew Mandeltort, vice president of foodservice insights at convenience distributor Eby-Brown Co. LLC, agrees that there is a huge opportunity for convenience stores to develop dispensed beverages that rely less on sugar and artificial flavors, and more on natural flavors and sweeteners. “Frozen coffee and cappuccino are a growth area, thanks primarily to their appeal among millennials,” Mandeltort added. “Like Huey Lewis said, ‘The heart of rock and roll is still beating,’ so don’t start throwing dirt on the category just yet.” Convenience Store News’ research shows that

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the popularity of dispensed beverages has not been affected by growing negative publicity around sugary beverages. Indeed, the fountain and frozen segments combined account for 11.5 percent of all c-store foodservice sales. “Though dispensed fountain beverages — CSDs [carbonated soft drinks], FCBs [frozen carbonated beverages] and FUBs [frozen uncarbonated beverages] — have come under criticism as being nothing more than empty, sugary calories, I think there remains opportunity for them,” Mandeltort said. “They offer virtually unparalleled refreshment.” Given the ongoing trend toward health-consciousness, one might logically assume c-store consumers are becoming increasingly interested in what they are consuming. Toward that end, might some form of nutritional labeling have an effect on sales at the dispensers? “By all means, nutritional labeling would have a definite impact,” Mandeltort continued, “because people tend to not consider the beverage calories when they are doing the calculus associated with calorie consumption — primarily because beverage consumption lacks the satiety factor associated with the consumption of solid food.” The influence of the “good-for-you” trend can also be seen in the types of frozen beverages gaining in popularity these days. “My research shows frozen all-natural fruit drinks are leading the way,” noted Paul Pierce, vice president, national sales at Eby-Brown. “Consumers have asked for this in the greatest numbers, followed


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FOODSERVICE

Prepared Food + Hot, Cold, Frozen Dispensed Beverages

VARIETY IN DEMAND

by frozen sports drinks, frozen energy drinks, frozen fruit-flavored teas, frozen coffee-flavored drinks, frozen sugar-free drinks, and frozen vitamin-enhanced drinks.” THE WEATHER OUTSIDE IS FRIGHTENING…

With the fall season here and winter coming, Jack Frost and colder months beckon in the northern portions of the United States. Selling cold or frozen dispensed beverages in Chicago in February is as challenging a proposition as selling sand in the desert. What, then, can be done to spur sales at the fountain and frozen dispensers during the frigid winter months? “That’s really a good question,” said Jack Cushman, Ph.D., director of foodservice for the Circle K chain of convenience stores. “It’s a real challenge to keep demand high enough so throughput keeps product fresh and equipment functioning properly.” Cushman suggests interesting flavor options, along with creative marketing programs and social media executions focused on driving impulse purchases, as remedies. Pierce agrees. “I haven’t been successful selling a lot of FCBs in the cold-climate areas during the winter months. It’s kind of like trying to sell worms and crickets when there isn’t a lake or fishing hole around for 200 miles,” he acknowledged. Instead, coffee and other hot dispensed beverages rule in the convenience channel in northern parts of the country during the winter. However, selling “health” could change that and spur cold and frozen dispensed beverage sales in the dead of winter, Pierce believes. “Consumers have said they would like a vitaminenhanced beverage,” Pierce continued. “So, consider carrying a few dispensed items that are enhanced with vitamin C and antioxidants. They might have some merit.”

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It’s a common adage that variety is the spice of life, but in the convenience foodservice environment, it’s much more than just a saying. Variety — particularly at the fountain and frozen dispensers — can mean the difference between profit and loss. “It’s well established that customer-driven customization across virtually all menu segments is important,” Mandeltort said. “That’s not by accident. The Coca-Cola Freestyle dispensing system allows for thousands of combinations and permutations.” C-stores would be well advised to observe some executions from quick-service restaurants (QSRs), according to the Eby-Brown executive. “Sonic likes to brag that it offers more than 168,000 drink combinations. Again, not by accident,” he continued. It is imperative for c-store operators to do their homework to determine what mix — CSDs, juices, energy drinks, iced tea, iced coffee, etc. — should occupy the valuable territory of their beverage dispensers. Although carbonated soft drink sales are in decline, and have been for the past decade, they are not to be counted out, cautions Tim Powell, vice president of Q1 Consulting, a Chicago-based foodservice consultancy. “CSDs, both diet and regular, packaged and dispensed, have been in dollar decline for at least 10 years,” Powell said, pointing to obesity, bottled water, nutrition standards and other packaged beverage choices as negative impacts on the segment. Still, he’s quick to add: “Don’t forget that dispensed CSDs are still nearly 60 percent of foodservice sales and draw traffic into stores.” Eby-Brown’s Mandeltort is a strong proponent of c-store operators adding energy drinks and iced coffee to their cold and frozen dispensed beverage offerings. “Given the data that suggests millennials are more likely to patronize c-stores than QSRs, combined with their affinity for both energy drinks and iced coffee (including cold brew and nitro), it would seem like a win-win scenario,” said Mandeltort. An additional motivator for c-store retailers to incorporate such offerings, he added, is the higher price points and margins that these beverage products can command. DOG EAT DOG

In addition to variety, another key to a c-store’s overall success with dispensed beverages is the promotional support received by their supplier partners.


“We rely heavily on our fountain and frozen partners to create compelling campaigns to drive units,” RaceTrac’s Plemmons explained. “We focus on hitting the right price point, directing consumers into the store through outside advertising efforts, and using market basket data to determine the best combos for success.” RaceTrac is currently involved in supplier promotional partnerships around its made-to-order food, roller grill, breakfast sandwiches, fresh sandwiches, fresh bakery and packaged pastry, designed to entice guests to purchase more items in every purchase. “We like to use dispensed beverages to entice guests to try our food products,” noted Plemmons. “We feature c-store standard items such as roller grill and breakfast products, as well as new proprietary offers like pizza, burgers and chicken sandwiches.”

How to Choose the “Right” Dispensing Equipment Determining what is the right dispensing equipment to use can be a key challenge in the profitability of a convenience store operator’s cold and frozen dispensed beverage programs. Key factors to consider are: • Available square footage • Complexity of beverage offerings • Beverage program positioning • Core customer(s) • Budget According to Tiffany Plemmons, category manager, dispensed beverages for RaceTrac Petroleum Inc., it is important to remember that your shoppers are looking for an experience — not just a beverage. Toward that end, the dispensing equipment you use should go a long way toward enhancing the customers’ shopping experience. “We love equipment that allows you to see the product, such as clear bowls, because guests drink with their eyes before making their selection. We love the idea of showcasing our products,” she said. Plemmons points to RaceTrac’s raspberry tea as a prime example. “It has a beautiful red hue that draws your eye to the product,” she explained. Ease of operation is another important component. “We love equipment that is simple to operate in stores, and easy to clean and care for,” Plemmons said. “Equipment that has too many pieces, cleaning steps, etc., won’t make it into our test kitchen.”


FOODSERVICE

Prepared Food + Hot, Cold, Frozen Dispensed Beverages

In dispensed beverages, competition is ruthless. Convenience stores must compete for customers’ dollars in an environment that includes not just other c-stores, but QSRs that offer the convenience of drive-thrus and have strong name-brand recognition. The $1-for-all-sizes executions currently popular throughout the retail landscape have made consumers price sensitive and created a massive challenge to keep the category profitable — particularly for single-store operators in the c-store industry. “While I understand the need to develop a value proposition as part of an overall menu pricing strategy, I think that commoditizing beverages (at the $1 level) ultimately creates a race to the bottom,” Mandeltort said. “H.L. Menken once wrote, ‘For every complex problem, there is an answer that is clear, simple and wrong. Setting pricing is a complex question. There are many variables that influence pricing, of which competitor pricing is only one.” Larry Miller, president of Miller Management & Consulting Services Inc., agrees that a variety of factors have come together to create price sensitivity in the dispensed beverages category. “We, as an industry, have unfortunately trained our customers to expect constant price promotions or oneprice-any-size promotions,” he said. To optimize profitability, the foodservice experts say it is imperative for each c-store operator to define who their target consumer is, who the competition is for that consumer, and what marketing strategies should

be employed to maximize profits. Mandeltort feels QSRs are the primary competition. Dispensed beverages were once the exclusive purview of c-stores, but today the channel faces enormous competition from QSRs such as McDonald’s with its frozen strawberry lemonade, and Sonic with its candy slushies. “They are trying to steal market share,” he said. “What makes this invasion even more insidious is the fact that QSRs are frequently top of mind for many meal occasions, while convenience stores struggle to be part of consumers’ dining decision set. For many QSRs, FCBs/FUBs and CSDs are simply another incremental menu offering that requires no particular expertise to execute.”

Our Foodservice Advisory Council DAVID BISHOP

TOM COOK

MATHEW MANDELTORT

Managing Partner Balvor Inc.

Principal King-Casey

Vice President, Foodservice Insights Eby-Brown Co. LLC

JOSEPH BONA

JACK W. CUSHMAN

LARRY MILLER

President Bona Design Lab LLC

Foodservice Director Circle K

President Miller Management & Consulting Services Inc.

ED BURCHER

CHAD DEWBERRY

MAURICE P. MINNO

Vice President of Foodservice Friendship Food Stores

Category Manager McLane Co. Inc.

Principal The MPM Consulting Group

NANCY CALDAROLA General Manager The Food Training Group

DEAN DIRKS

TIM POWELL

CEO Dirks & Associates

Vice President/Senior Analyst Q1 Consulting

JOSEPH CHIOVERA

RYAN KREBS

WESLEY PRICE

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

Director of Foodservice Rutter’s Farm Stores

Category Supervisor, Fresh Foods and Beverages Murphy USA Inc.

100 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM


Miller’s opinion is that while McDonald’s has made a big splash with its very successful McCafe execution, c-stores are their own biggest competition for the dispensed-beverage dollar. “We as an industry need to continue to look at new products, new dispensing equipment, and especially find what the individual-location customers want,” he said. “There may be stores that can use an expanded tea offering, or a store close to a recreation area for kids that could use more frozen products and promotions aimed at team sports.” Miller maintains that there is expanded competition within the convenience channel on account of all the beverages available in one store, including noncarbonated offerings, iced coffee, milkshake machines, enhanced waters, and alternative beverages in cooler doors. “These represent competition for a c-store’s traditional dispensed offerings,” he said. FUTURE SUCCESS

Customization at the store level is where Miller envisions future success. “As we have more customer data available, more product movement data and the benefit of industry research, it will become easier to merchandize individual stores toward their unique customer base,” he continued. “Companies that figure out how to accomplish that efficiently will be around for a long time.” Meanwhile, Mandeltort is a firm believer in differentiation. One way he says c-stores could differentiate is by partnering with a local micro CSD company to feature “craft sodas.” For Powell of Q1 Consulting, the overall strategy for success now and in the future is really quite simple: “Offer the right product to your guests at the right price.” “Ensuring you have the right product mix is key first and foremost,” he said, explaining that one risks losing customers if their favorite beverage isn’t available at the beverage dispenser, as they are unlikely to switch to another beverage choice. “You also have to ensure your pricing is competitive without giving up profit,” he added. Finally, c-stores also should use their dispensed beverage programs to drive traffic — and incremental sales — to the store. “Guests are already coming in to buy beverages,” Powell said. “Determine how you can get them to try your other products (foodservice, new packaged goods) in a simple and compelling way.” CSN


FOODSERVICE

Category Trends + Insights from

TRENDSIGHTS

Powering the Day & Bottom Line With Breakfast Morning consumers are most concerned with fueling, wellness and gratifying

U

.S. consumers have fully embreakfasts are eaten off-premise; both on- and offbraced the age-old wisdom that premise restaurant breakfasts have increased over breakfast is the most important recent years. meal of the day. The breakfast occa• More restaurant breakfasts are eaten in the car or sion, whether coming from home or at home as a result of the changing workforce. away, is a stable part of our routine 310 days per year. We’re skipping fewer WHAT’S DRIVING BREAKFAST FOOD breakfasts than we did a decade ago, CONSUMPTION? and with younger consumers like Gen It should come as no surprise that breakfast beverBy Bonnie Riggs Zs and millennials embracing breakfast, ages and foods are among the top-growing foods at Restaurant Industry Analyst, we forecast the occasion to grow by foodservice. Breakfast-oriented items represent about The NPD Group 10 percent over the www.npd.com next several years. While away-from-home breakfasts overall are Breakfast is also the only foodservice daypart that has consistently stable, those purchased at a foodservice outlet grown, and not only do consumers are at an all-time high enjoy breakfast foods in the morning, but they also like them all throughout the day. Suffice it to say, we like breakfast. Consider these numbers: • Visits to convenience stores at breakfast and AM snack time increased by 3 percent in the year ending June 2017 compared to the same period a year ago, according to NPD’s Source: The NPD Group/National Eating Trends and CREST CREST foodservice market research. This compares to only a 1-percent morning meal trafRestaurant Breakfasts — Where Eaten fic gain for total foodservice in the same period. • Morning meal represents 33 percent of all convenience store traffic. • The typical consumer uses a restaurant for breakfast five more times annually than he or she did 10 years ago. • Two out of three restaurant Source: The NPD Group/CREST

102 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM


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FOODSERVICE

Prepared Food + Hot, Cold, Frozen Dispensed Beverages

The breakfast sandwich is the top-growing

15 percent of all convenience store fooditem at restaurant breakfasts service orders. Among the top prepared breakfast beverages ordered are specialty coffee, regular coffee, bottled water, hot chocolate, and smoothies. Popular prepared breakfast foods are doughnuts, hash browns, bagels, and breakfast sandwiches. Breakfast-sandwich servings from convenience stores increased by 9 percent in the year ending June 2017 compared to a year ago, which amounts to 294 million breakfast servings in the period. Breakfast sandwiches are popuSource: The NPD Group/CREST lar because they hit all the key drivers of morning meal consumers, according to NPD’s is not the priority at this occasion, but consumers “Consumption Drivers: How Need Shapes Choices” know that eating something at breakfast is important. report. They promise the consumer a satiating, nutriWhen selecting breakfast foods, consumers are most ent-packed, protein-filled offering that requires little concerned with fueling, wellness and gratifying. They prep time and is portion-controlled, all of which are in want a simple, healthy start to their day that will give high demand during that daypart. them energy and provide a nutritious foundation for Morning is a busy time and spending time on food the day. CSN

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Heat-not-burn could be the tobacco product to make combustible cigarettes quiver By Melissa Kress

I

n June, global market research company Euromonitor International painted a gloomy future for combustible cigarettes. Its analysis found that in 2016, for the first time in decades, the value of the global cigarettes category as a proportion of total tobacco sales fell below 90 percent and by 2021, it will drop to 86 percent. Its data also predicts that the global cigarettes market will record a $7.7-billion loss by 2021. While combustible cigarette sales decline, the same research highlights growth in the use of vapor products and further changes to come within this segment. “The continued growth in vapor products and, in particular, the emergence of heated tobacco as a viable alternative mode of consumption represent the major element of disruption for the tobacco industry,” said Shane MacGuill, head of tobacco research at Euromonitor International. In fact, according to the firm’s research, the struggles of the global cigarettes category will be offset by $13.2-billion growth in heated-tobacco product sales by 2021. Heated tobacco will be the fastest-growing tobacco category in the next five years, reaching $15.4 billion in sales by 2021, up from $2 billion in 2016 — a 691-percent increase. “We believe that heated tobacco will gain a solid presence in at least 35 global markets by 2021, accounting for a share of 3.5 percent of total global cigarettes and heated tobacco value. Heated tobacco prospects are strong and strengthening. On this evidence, it is truly a coming force in global tobacco,” MacGuill explained.

PLANNING FOR THE FUTURE

As their name suggests, heat-not-burn products heat tobacco rather than burning it, which research has found significantly reduces both the number and the levels of harmful and potentially harmful constituents (HPHCs) generated by tobacco products. Several tobacco companies are already working toward what could be the new normal in the industry.

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Heated tobacco is expected to be the fastest-growing tobacco category in the next five years.

Earlier this year, Philip Morris International (PMI) reported that more than 1 million smokers have already converted to its iQOS heat-not-burn product. PMI also reaffirmed its commitment to a smoke-free future with a new website that discusses the company’s vision and how its new products can have a significant impact on adult smokers and society. “We’re optimistic about the future as we work to progressively transition PMI’s existing cigarette business to potentially less-harmful alternatives,” said Tony Snyder, vice president of communications for PMI. “There is tremendous opportunity to positively impact public health with the availability of better choices than continued smoking, and we can’t do it alone. Contributions from public-health experts, the scientific community and regulators will greatly accelerate switching from cigarettes to smoke-free products.” PMI has found success with iQOS on the international stage and is looking to build on that success by bringing the product to the United States. At the end of 2016, PMI filed a Modified Risk Tobacco Product application with the U.S. Food and Drug Administration (FDA). It followed that move with a Premarket Tobacco Product application in March.


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This spring, the FDA began its scientific review of PMI’s bid to bring its heat-not-burn product to this country. If approved, Altria Group Inc.’s operating company Philip Morris USA has an exclusive license to sell the iQOS product in the United States. Fellow tobacco company British American Tobacco (BAT) is likewise making inroads with its own heatnot-burn product, Glo. BAT, which closed on its acquisition of Reynolds American Inc. in July, plans to submit an application with the FDA to market the Glo product in the U.S. next year. The company is also making personnel and restructuring moves to prepare for the demand for next-generation products (NGP). “Now that we have built a successful NGP business, which is poised for substantial growth, we will be fully integrating NGP into our existing business infrastructure across the group — both within the functions and the regions — to leverage the scale and expertise of the whole group to drive growth in an area that is fast becoming a key part of our mainstream business,” BAT said.

British American Tobacco plans to submit an application with the FDA to market its Glo product in the U.S.

predicts. “We think the vapor space will continue to grow. There is a big chunk of the population that is looking for something that is a little different than just replicating cigarettes. What we are seeing with consumers who try vapor is that they start with tobacco [flavor] and then move on to try fruits or other flavors. That is something they cannot get from a cigarette.” D’Alessandris does not worry that heat-not-burn will take away from the vapor category or from Cue customers. “We think it is going to shake up the market; to convince combustible consumers that there are alternatives out there,” he said. LOOKING FOR ALTERNATIVES

"The current regulatory environment in the United States, with taxation and legislation at the local, state and federal levels, continues to point to the fact that something less risky needs to fill that space. I think the manufacturers see what is coming five, 10, 15, 20 years down the road and they are working toward that." — David Bishop, Balvor LLC

STILL ROOM FOR VAPOR?

While most agree heat-not-burn is going to have an effect on traditional combustible cigarettes, its effect on other segments in the backbar are less known. However, Jacopo D’Alessandris, CEO and president of E-Alternative Solutions (EAS), believes vapor may actually benefit. EAS, which is fully owned by Swisher International Inc., is the company behind Cue Vapor System. “You are going to see a combustible cigarette market that will accelerate its decline once heat-not-burn launches,” D’Alessandris said. “We know that heatnot-burn technology is the most similar to cigarettes.” Vapor, on the other hand, will be OK, D’Alessandris

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David Bishop, managing partner of Balvor LLC, a sales and marketing firm that provides analytic, consulting, research and sales support services to retailers, product suppliers and other organizations across foodservice and retail, agrees that alternative tobacco products is where the industry is headed. “I think inevitably you will continue to see the industry move in the direction of alternative tobacco products,” he said, adding that manufacturers will lead the way. The tobacco space saw this same kind of evolution 10-plus years ago with the move to smokeless tobacco, Bishop pointed out. It wasn’t that smokeless tobacco wasn’t around before, but the time came when the innovation in the product and how it was delivered made it more appealing and more “socially acceptable,” he recalled. The first example of this was the pouch smokeless tobacco product, and more recently the move toward snus, he said, noting, “Maybe it’s taking a little bit longer [for snus] to take off, but it’s an incremental innovation off the pouch.” Another chapter in the evolution of tobacco was the introduction of electronic cigarettes. “When e-cigarettes came out, there was an incredible rush to try them, and that rush to try the product really was a reflection or indication that those tobacco users were interested in trying to find an alternative to the


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traditional combustible cigarette,” he said. From a perception standpoint, the e-cigarette was originally thought of as a product that would likely, in the consumer’s mind, be less harmful to them while still allowing them to satisfy their ritual and cravings. However, it became clear that it was important the experience delivered the same level of satisfaction, which the early products were not delivering — leading adult tobacco consumers to return to combustible cigarettes, he explained. In late 2014, Reynolds American Inc. re-introduced a heat-not-burn product, Revo, which had previously been tested as Eclipse. Revo’s initial test was “a very short-lived test,” according to Bishop, but it “illustrated that there is a growing recognition within the industry that a high percentage of current smokers have a desire to quit smoking.” Younger adult smokers are more inclined to be interested in using alternative tobacco products and are less loyal to combustible cigarettes, he added. “The current regulatory environment in the United States, with taxation and legislation at the local, state and federal levels, continues to point to the fact that something less risky needs to fill that space,” Bishop said. “I think the manufacturers see what is coming five, 10, 15, 20 years down the road and they are working toward that.” NEW TECHNOLOGY

The heat-not-burn technology found globally, like in iQOS, has demonstrated that it is able to provide a viable alternative to combustible cigarettes, according to Bishop. “It enables a tobacco user to have a similar ritual, taste and experience,” he noted. So far, the response PMI has had internationally to iQOS has been positive, and Bishop said the company’s studies have shown that it “significantly lowers the harm profile across the known constituents that the FDA would typically look at.” In addition, PMI has demonstrated through its research that non-tobacco users — both youths and adults — would not be attracted to the product, he added. “From a business standpoint, they see where consumers are trying to move and they can see that there is an unmet demand because this product, at least from their perspective, has shown it can more effectively move consumption from combustible cigarettes to non-combustible than commercially available nicotine replacement therapies,” said Bishop.

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Philip Morris International has found success with its iQOS product internationally and now wants to bring it to the states.

He expects there to be a strong response to iQOS from current smokers when the product comes to the U.S., primarily because Altria has the distribution rights to it and the tobacco company has a strong and broad direct-marketing reach. “They [Altria] would be able to effectively communicate and educate consumers that are adult tobacco users as to the potential benefits, based on what they can and cannot say, and likely drive a lot of trial,” Bishop explained. And if Altria can deliver the same amount of trial as other electronic cigarettes, and the experience is similar to combustible cigarettes, “you will see, potentially, a significant shift relatively rapidly,” the Balvor executive said. Though, he does point out that the shift would depend upon availability — specifically in stores where combustible cigarettes are sold — accessibility, affordability and acceptability. IS THE U.S. READY?

Still, some question if U.S. consumers will be willing to make the switch to heat-not-burn. Nik Modi, managing director and analyst at RBC Capital Markets LLC, is not so sure. Speaking during an Aug. 29 Convenience Distribution Association webinar entitled “Tobacco Industry: State of the Union,” Modi noted that PMI is testing its iQOS heat-not-burn product in 20 countries, with two lead markets: Tokyo and Milan. However, he is not convinced yet that the product will be as successful in the U.S. as it is in other markets. He did note, though, that he is impressed that the FDA’s recently announced shift in tobacco policy includes an open commentary on reduced-risk products. “It was the first time there was a clear statement from the government on reduced risk,” Modi said. CSN


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COLD VAULT

Beer + Wine + CSDs + Energy + Water + Sports + Juice + Dairy

Optimizing Your Beer Assortment

Collaborative study finds optimal assortment starts with “must-have” core items By Don Longo

W

ithin a convenience store retail outlet, the cold vault space is the beachfront property in the store and, on average, there are typically five cold vault doors dedicated to beer. To help c-store retailers optimize their beer assortments within that valuable in-store real estate, Anheuser-Busch/InBev (ABI), IRI and the Category Management Association (CMA) partnered on a new

Beer Is a Critical Category to Total C-store Success

Source: IRI Total MULC; 52 weeks ending Sept. 4, 2016

Beer Is Good for the Total Basket

Source: Anheuser-Busch InBev Shopper Poll 2016, Infoscout 2016

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study — the results of which were released recently to Convenience Store News. “Anheuser-Busch wanted to better understand if there was a correlation between the SKU density and the top-quartile stores,” ABI’s David Vartanian, senior director, national category manager for convenience, package liquor and military, said in an interview with CSNews. “Our research suggests that having the optimal days of supply to meet consumer demand during peak in-store shopping timeframes is critical to the success in maximizing beer cold vaults.” This research, using IRI’s c-store data for the 52 weeks ending September 2016, provides the c-store industry with suggestions and solutions that present a fresh perspective on a category solution for assortment, according to Vartanian. The approach was designed to optimize the retailers’ alignment between the beer category and their store strategy, while offering a balanced assortment to meet the diverse needs of all beer shoppers. According to Gordon Wade, director of the CatMan 2.0 initiative for the Category Management Association, this joint research report follows the gold standard assortment approach developed by 20 thought-leading companies in CatMan 2.0. “ABI and IRI have, for the first time, combined all the new external syndicated data with their internal proprietary data and breakthrough analytical models to develop this Core Assortment presentation. It is gold standard,” said Wade. For ABI, this was the first study of its kind. “We added an additional layer into our research to help us with our understanding of the industry,” said Vartanian. “The store archetype is a new concept and approach, and we applied this into the optimal assortment process for more custom solutions.” With this approach, the researchers were able to move away from making blanket observations about the market, and instead approach from a more wellrounded and custom perspective.


COLD VAULT

Beer + Wine + CSDs + Energy + Water + Sports + Juice + Dairy Vartanian shared two of the most important takeaways from the study: • The c-store industry can see which archetype each store belongs in, whether it’s a highway hub, an upscale hotspot, a vacation station, a college town, etc. Shoppers behave very differently in each of the archetypes based on their demographics, trip mission, store location, and other factors. These insights can influence the assortment provided in each particular retail outlet and ensure the items on the shelf mirror the shopper needs. • The research also suggests that it is important to have the correct days of supply on the top-selling SKUs in the cold vault. Two major shopper occasions make up 67 percent of shoppers’ purchase decisions: “for me, for now” accounts for 41 percent, and the “social beer run” accounts for 26 percent of mission trips. Understanding these shop-

Assortment Selection Should Be Balanced Against Available Space

Source: ABI yBPA Analysis; 52 weeks ending July 31, 2016

Utilize Density Guard Rails to Guide Assortment Per Set

Source: IRI Total MULC; 52 weeks ending Sept. 4, 2016

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“Having an easier-to-shop shelf that provides a high amount of cold in-stock availability will allow for maximum sales within the cold vault.” — David Vartanian, Anheuser-Busch/InBev

per occasions can influence optimal assortment. For example, a retailer can meet the requirements of the “social beer run” by having the right assortment of multipacks, and meet the requirements of the “for me, for now” shopper by understanding the critical importance of an optimal assortment of singles. One of the most interesting data results, according to Vartanian, was around the fact that there is a clear correlation between top-quartile stores and bottom-quartile stores for each of the door set sizes. The top-quartile stores with a five-door set carry, on average, 115 SKUs. Third-quartile stores carry 130 SKUs, second-quartile stores have 133 SKUs, and bottom-quartile stores carry 140 SKUs. These findings were consistent across all door set sizes, from three to eight doors. “Having an easier-to-shop shelf that provides a high amount of cold in-stock availability will allow for maximum sales within the cold vault,” said Vartanian. The findings of the study provide retailers with a framework that will allow them to align their store strategy with their beer category, while offering a balanced assortment to meet the varying needs of all beer shoppers. This framework suggests that retailers begin by identifying the “must-have” core items available nationally, then add in regionally relevant and local items that provide incremental sales and variety. Following this strategy will lead to higher in-stock availability within the cold vault. “For us, it all comes down to understanding the role each SKU plays,” said Vartanian. “Our research suggests that focusing on top-selling SKUs can create an opportunity for reduced delivery issues, less point-of-sale costs, less inventory complexity, and higher days of supply.” The optimal assortment study also highlighted the implications of out-of-stocks, concluding with 95 percent certainty that when there are more than four outof-stocks in a store, the store experienced a decrease in share performance. For more information about the ABI/IRI/CMA report, contact David Vartanian at david.vartanian@anheuser-busch.com. CSN


SPONSORED CONTENT

Q&A

Talking with…

David Vartanian Sr. Director of National Category Management, Small Fomat, Anheuser-Busch

Convenience Store News: Why is it so important for convenience stores to allocate space to the premium beer category? David Vartanian: The premium segment is the largest segment within the beer category. It is absolutely critical that retailers allocate the appropriate space to sales when setting the planogram for their largest beer segment within the cold vault. With an average of 12% of all c-store revenue coming from the beer category, paying close attention to the assortment and days of supply for top selling items will pay dividends. The average grocery store stocks 266 SKU’s, while the average c-store stocks only 112 SKU’s within their store. More staggering is that on average the top 23 SKU’s produce 50% of the accounts’ sales. Though additional beer segments have made their way into the cold vault with increased assortment for the customer, the premium beer category is still the preferred segment of choice among all beer shoppers. CSN: Does the way customers identify themselves impact the kind of beer they buy? DV: When consumers identify themselves as a premium segment shopper, they buy premium beer 56.5% of the time. An interesting insight is that shoppers who identify themselves as craft drinkers buy craft 29.3% of the time, but buy premium beer 30.6% of the time—more than any other segment. No matter how customers classify themselves—premium, value, import, craft, premium plus, or FMB shopper—they are buying premium beer. Premium buyers are the most loyal across all segments and the top three when it comes to exclusive buyers who will only purchase premium segment products. The premium segment is the core of the beer category, so it should not come as a surprise that there are a few brands driving most sales within the category. Within a major national convenience store chain, the top two brands drove 37% of sales, the top 5 brands drove 60% of sales, and the top 14 brands drove 80% of the overall beer category sales.

CSN: Is it important for c-stores to stock cold premium product—or is it fine to have most of it on liquor department shelves? DV: Not having the proper days’ of supply on hand for the consumer when they are shopping the retail outlet is a very dangerous proposition—because the chain will ultimately lose customer foot traffic! A store that is out of stock on a core item three times for a particular customer’s shopping experience will lead to a 65% chance they will walk away from that retail outlet all together. They will not be confident that their favorite beer will be in stock, so they will shop elsewhere. In fact, there is a 35% chance of shoppers buying elsewhere on first out of stock and a 50% chance of shopper buying elsewhere on second out of stock. With roughly three out of every four purchases (76%) being consumed within four hours in the c-store channel, it is very important that the proper space is allocated to the premium category within the cold vault. CSN: Let’s talk about assortment and display… DV: The singles pack type over-indexes within the channel— nearly 60% of the units sold are singles. Simply having a Bud Light 25-oz. tall can cold and in distribution may not be enough—a retail outlet should look at the velocity in which this SKU performs on shelf and allocate the proper facings to the SKU. Red Bull is one company outside of the alcohol space that has done a very nice job of ensuring they have the proper amount of facings and space to meet customer demand. Taking some key learnings from their non-alcoholic brand and applying them to your store will help determine the proper inventory levels. CSN: Finally, is there a certain amount of product c-stores should have on hand? DV: The c-store channel is very time sensitive with customer purchases. Carrying four to five days’ worth of supply at any given time of the week is the optimal amount of product. The time becomes hypercritical within the retail outlet from 4 p.m. to 9 p.m. Thursday through Saturday. Those 15 cumulative hours can account for four to five days’ worth of supply being sold to customers who frequent the outlet for the “social beer run” occasion to pick up a multipack for the social gathering. Sources: Category Management Association & Internal Analysis; ABI yBPA Analysis 52 Weeks Ending July 31st 2016


CANDY & SNACKS

Chocolate + Non-Chocolate + Gum + Salty Snacks

The Wrap on Novelty & Seasonal Candy

The convenience channel is significantly under-leveraged in this segment By Danielle Romano

T

he way consumers look at seasonal confections is by products that are associated with the core four holidays. Think conversation hearts for Valentine’s Day, jelly beans in Easter baskets, candy corn spilling from trick-or-treat satchels on Halloween, and candy canes hanging from Christmas trees. Innovation and nostalgic consumers are the two main driving forces behind the continued growth seen in the novelty/seasonal candy segment over the past few years. “What’s fascinating is that seasonal candy has grown 5.5 percent, while the industry is only growing at a little less than 1.5 percent. That tells us that novelty/seasonal candy is winning the hearts and minds of consumers,” Larry Levine, executive vice president of market researcher IRI, told Convenience Store News. According to Levine, the disproportionate amount of growth can be attributed largely to the success of Easter candy sales, which were up 12 percent from one year ago. Halloween candy also experienced an 8-percent surge, and Christmas saw growth, albeit small, of 2.5 percent. “Holidays are able to outpace the general industry, so consumers still have a passion for fun themes associated with these different holidays,” Levine commented. Yet consumers, by nature, may

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not think of convenience stores as a go-to destination for seasonal/novelty confection purchases. Both retailers and manufacturers in the convenience channel are looking to change this common misconception. Here’s how: EVERYDAY CELEBRATIONS

When asked if novelty/seasonal confections will see continued growth in the foreseeable future, Levine assures it will. In fact, with the convenience channel significantly under-leveraged in seasonal sales, there are huge and plentiful opportunities for growth, he noted. One way is by taking advantage of celebrations outside of the core four seasons. “There are great opportunities for the industry and the c-store channel for a celebration each week. If you think about how many holidays Hallmark and American Greetings have created for us, that’s just a natural time for candy to be a part of that party,” Levine said. “I really believe that every week can be a holiday, and there’s always something to celebrate.” Because holidays are “waiting to happen,” he suggests c-store retailers generate buzz in their candy sections — and get away from the same old, same old — by co-promoting. For example, if a c-store sells even just a handful of greeting cards, Levine believes it is a great opportunity to remind consumers to buy a chocolate item to go along with it. SEASONAL GIFT-GIVING

Consumers are willing to spend extra money to find something special to share with their friends and family during the holidays. This is a niche c-stores can easily fill, according to Clark Taylor, vice president of CandyRific LLC, a novelty


CANDY & SNACKS

Chocolate + Non-Chocolate + Gum + Salty Snacks

confectionery manufacturer and supplier. one opportunity to drive the consumer,” “Retailers in the convenience side he explained. of the business are seeing this For c-stores to capture sales segment as all-plus business in this segment and keep a for them. Novelty is a bit competitive leg up over other The Star of the more labor intensive when retail channels, like drug and Candy Category it comes to timing of the grocery, it is important to Convenience store industry products, but the higher place secondary displays sales of novelty/seasonal profits in the segment in high-traffic locations candy grew nearly 9 percent are a great addition to a throughout the sales floor, in 2016, and the segment retailer’s overall bottom advises Mars’ Dodge. was up another nearly line,” Taylor expressed. “Shoppers move 7 percent in sales for the Because c-stores have a through the store and first half of 2017. great deal of foot traffic, and make buying decisions Source: Convenience Store News 2017 Midyear Report Card because the novelty/seasonal quickly, so by having second, candy segment is based on third and fourth interruption impulse, it is a “perfect match,” points, the c-store operator has he said, adding that offering novelty/ a big opportunity for a larger, seasonal items can increase the overall more profitable ring,” he said, noting sales volume of each transaction. key hot spots for secondary displays are Jim Dodge, vice president, c-store, sales for Mars near the register, cold vault, foodservice/deli, and founInc., agrees with this sentiment. “Seasonal gift giving — tain drink area. especially small gifts — has become more popular over Mars has found that 40 percent of overall seasonal the last few years. Gifts under $5 and no more than candy purchases are made on impulse, and the primary $10 have gained traction in the c-store channel and catalyst is seeing an item in an aisle or on display. become an impulsive purchase. Consumers are willing Most planned purchases, on the other hand, are made to spend more, and retailers will realize higher rings.” two to three weeks prior to the holiday. “There is a huge opportunity to increase incremental purchases by tapping into the c-store shoppers’ SWEET MERCHANDISING STRATEGIES quick-trip mentality and making it easy to find the A key element of a successful novelty/seasonal conright products,” Dodge said, stressing that shoppers fection selling strategy is merchandising; it is also a reach the confectionery aisle within 1-2 minutes, critical component for all candy segments, according to IRI’s Levine. During the holidays, especially, 50 per- regardless of their path through the store. With 86 percent of shoppers making purchases there, it’s essential cent of candy sales are driven by merchandising. “It’s important to spark that last-minute disruption. that they can easily locate the products they want. Other merchandising tips from Dodge include: comIf I come in thinking I want municating to consumers before they’re in-store; placBrand A, but Brand B has ing complementary products next to each other; and a display, then there’s just displaying bold, clear pricing. “Bold pricing statements on quality candy are critical to driving store choice, aisle navigation and impulse,” he pointed out. TIMING IS EVERYTHING

To execute a successful novelty/seasonal confection-selling strategy, c-store retailers need to be vigilant in planning ahead for the season. For instance, ampm — a retail division of BP America Inc. that operates nearly 1,000 franchised c-stores along the West Coast — will

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CANDY & SNACKS

Chocolate + Non-Chocolate + Gum + Salty Snacks Eas

en

ma s

nt

st

ine ’s D ay

These holidays are currently tops for novelty & seasonal candy sales.

ri

120 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

Hallowe

THE CORE FOUR

Ch

map out its seasonal selling mix six to eight months in advance. As of mid-August, the retailer had already made plans for Valentine’s Day 2018. “We try to get it planned as early as we can,” Scott West, senior category manger, center of store for ampm, shared with CSNews. Traditionally, ampm has brought in Halloween confections in late September/early October, giving its franchisees a month to sell through the products. However, in the last couple of years, the retailer has been bringing in Halloween products closer to Sept. 1 to allow franchisees a full 60 days to sell through the seasonal confections, Scott explained. ampm has also been conducting site-by-site orders to determine the exact number of cases of product needed for each individual store. This helps to prevent

ter

le Va

overstocks. In the event of leftover seasonal confections, franchisees are encouraged to showcase the candy at a discounted price, at the front counter for high visibility. CSN


IN-STORE MERCHANDISING Grocery + General Merchandise + HBC + Periodicals

Homing In on the HBC Opportunity

More c-store retailers need to make this category a forethought By Renée M. Covino

H

as your health and beauty care (HBC) set been repositioned as a forethought, instead of simply offered to customers as an afterthought? It should be, according to HBC experts, who say as health trends are rising, so is the opportunity for convenience stores to capture “healthier” dollars. Big-picture HBC category trends are certainly favorable. The Global OTC Pharmaceutical Market, which includes cough, cold and allergy, analgesics, gastrointestinal, dermatology, eye care, smoking cessation aids and more, has a bright 10-year outlook. The market is expected to grow at a compound annual growth rate (CAGR) of 6.5 percent in the first half of the forecast period, 2017-2027. The Global OTC Pharmaceutical Market is currently estimated to be at $127 billion, and is dominated by the cough, cold and allergy segment, which holds 23-percent share, according to the Market Reports Center. Within the United States, there is increasing awareness and importance being placed on health and wellness by consumers. “Health is in everything we do — the brands we shop, the items we buy,” said Carl Elliott, director of

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Nielsen Convenience Channel. Aging baby-boomer shoppers present an opportunity at one end of the demographic spectrum, while millennials represent an opportunity at the other, according to Elliott. With the rising cost of healthcare, c-store retailers can help provide consumers a path to health and wellness. Rolling out private label health and wellness products, in addition to prioritizing “healthier” food options and emphasizing “fresh,” are ways the convenience channel is doing its part. Retailers and suppliers taking these steps are seeing “significant sales translating from health and wellness,” Elliott explained. Convenience distributor McLane Co. Inc. recently expanded its private-label line of CVP (Convenience Value Products) Health items, including cough and cold remedies, and personal care items. Single-use packages such as Advil PM and Zantac also join other well-known health brand items in its HBC category portfolio. Kum & Go LC is one convenience store chain in on the HBC push. It named health and beauty supplier


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IN-STORE MERCHANDISING Grocery + General Merchandise + HBC + Periodicals

Lil’ Drug Store Products Inc. as its 2016 category manager of the year. The Cedar Rapids, Iowa-based supplier worked closely with Kum & Go Category Manager Richard Ginther to develop a solid growth plan. The collaboration led to several key updates to Kum & Go’s HBC category, including a prioritized placement of value sizes and more private-label choices. These moves led to significant category growth, whereby the West Des Moines, Iowa-based convenience store chain was reportedly trending five times above the industry average sales growth rate. Kum & Go operates more than 400 stores in 11 states. Convenience Store News recently caught up with Lil’ Drug Store’s Director of Marketing, Doug Marquardt, who offered some specific merchandising and marketing tips for other c-stores to consider for creating and positioning a more relevant HBC set: Optimize Cough/Cold Sales Do this with an assortment that includes national brands and private label, as well as trial and full-size products. Secondly, “Health is in promote the HBC category dureverything we do — ing the peak cough/cold season the brands we shop, by placing promotional displays on the retail floor. An example the items we buy.” is the Carmex BOGO display, — Carl Elliott, director, which features a Carmex tube Nielsen Convenience Channel purchase, including a free flavored stick of Carmex. “Placing the Carmex BOGO display in the store during November/December will ensure retailers capture the greatest share of purchases when the lip treatment category is at the peak of consumer need,” said Marquardt. “Retailers that have adopted the Carmex BOGO display have seen their category sales grow as much as 39 percent more than the total convenience channel.”

Satisfy Growing Demand for Value-Sized Products “More shoppers consider the convenience benefit as a top priority, so they are buying a wider range of products at convenience stores,” according to Marquardt. Lil’ Drug, for instance, is evolving its set to include a broader assortment of Lil’ Drug Store Products private-label HBC products that come in larger, valuesized packages. Align With Newer HBC Brand Partners Ricola is an example of a brand that is making a “big impact in convenience stores with larger count bags, which are driving dollar growth in the category,” Marquardt pointed out. Ricola bags are 23 percent larger this year vs. last year, and they benefit retailers with a higher dollar ring and profit margin, he said. Ricola also has had success with special “2 for” offers on Ricola sticks at shelf during the peak cough/cold season. Evolve HBC Planograms With a Variety of Pack Sizes Research shows 34 percent of c-store shoppers want the lowest price possible, 37 percent want the best value, and the remaining 29 percent have no preference, said Marquardt. “This insight creates opportunity for retailers to stock national brands in trial and full-size packs to meet the needs of all c-store shopper preferences for price,” he said. Be In Tune to Millennial Shoppers Millennials are shopping c-stores more frequently than any other consumer segment. This means a c-store retailer’s HBC set needs to stock more than traditional HBC products like pain relievers and cough/cold remedies, according to Marquardt. “For example, allergy products are leading growth in FDM [food/drug/mass] outlets, and consumer demand for allergy remedies is growing,” he told CSNews. “Carrying a broad assortment of top allergy brands will enable c-stores to best meet the needs of the millennial shopper, and other customers who turn to c-stores for convenience solutions.” CSN

124 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM


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MOTOR FUELS

LEADER OF THE YEAR

Gasoline + Diesel + Ethanol + LNG/CNG + Electric

Forging the Future of Fuels Lance Klatt has helped E15 and the Minnoco fuel brand thrive in the Minnesota market By Angela Hanson

T

hrough the efforts of the Minnesota Service Station & Convenience Store Association (MSSA) and its executive director Lance Klatt, among others, retailers and consumers alike are growing their adoption of E15, making it an increasingly important part of the future fuels landscape. While E15 fuel is relatively new, Klatt, the Convenience Store News 2017 Fuels Leader of the Year, has been connected to the industry from the beginning of his career. After starting out in 1994 as a sales representative for Wisconsin-based convenience food distributor Hub City Foods at age 20, Klatt turned what was a summer job into the pursuit of a full-time career. Since then, he’s held numerous roles in the industry, including director of marketing and director of category management for Oasis Markets; regional director of sales for Fox Packaging; and member of the NACS Legislative Committee. “Once you’re in this industry, it’s hard to get out of this industry. It’s almost like you’re destined to be here,” Klatt told CSNews. While MSSA offers its members everything from legislative opportunities to legal aid to marketing programs and more, Klatt’s biggest achievement may be the development of Minnoco — short for Minnesota Independent Oil Co. — a fuel brand developed by MSSA for its independent retail members. By becoming Minnoco stations, members can control their own brand of fuels while offering alternative fuels such as E15 and biodiesel, and flex-fuels like E85 and E30. Minnoco launched in 2013 as the first chain in its market to offer E15, a higher octane fuel consisting of 15 percent ethanol and 85 percent gasoline. Minnoco quickly grew, becoming the fastest-growing brand in Minnesota in 2016. Today, E15 represents 38 percent

126 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

Klatt got his start in the industry in 1994 as a sales representative.

of overall fuel sales at the 35 Minnoco stations that sell ethanol fuels (there are 37 Minnoco stations in total). While the growth of Minnoco is “a huge accomplishment,” Klatt says the chain would not be possible without the support of the retail members. “[They] said, ‘I’m going to spend the money to reimage, we’re going to put E15 in, we’re going to clean up infrastructure.’ They took a huge risk bringing this fuel to the marketplace.” Some of the funding for Minnoco’s infrastructure came from the ethanol industry itself after MSSA reached out to the membership of Growth Energy, which represents producers and supporters of ethanol and other alternative fuels. As a result, Minnoco’s success is also “a success story for the ethanol industry,” according to Klatt. “More importantly, it’s a success story for the consumer. We brought another choice of fuel to the marketplace,” he added. The desire for increased choice in what consumers can put in their vehicles is one of the factors driving the rise of alternative fuels, Klatt said. “People look


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MOTOR FUELS

Gasoline + Diesel + Ethanol + LNG/CNG + Electric

at opportunity, they look at choice, and those were new things,” he noted. “In particular, as retailers hew to the ‘adapt or die’ adage and cope with government regulations affecting major c-store categories such as tobacco, [they] need to find a better and more competitive way to reach out to a customer base. Bringing E15 to stores helps us increase the appetite for new products.” At the same time, Minnoco’s success comes not just from advances in the convenience and fuel retailing industry, but also from people. Klatt credits his mentors and more experienced peers for many of the skills and knowledge that have helped him lead MSSA. “All these people you touch along the way that give you opportunities…you learn from them,” he said. “You can’t do it all by yourself. What really helps is absorbing, being a sponge, and having an open mind and understanding what others are trying to accomplish.”

As retailers hew to the ‘adapt or die’ adage and cope with government regulations affecting major c-store categories such as tobacco, [they] need to find a better and more competitive way to reach out to a customer base. Bringing E15 to stores helps us increase the appetite for new products. — Lance Klatt, Minnoco

As Minnoco has grown, the brand has kept in touch with its independent, local roots. “Minnoco dealers do a great job of being community involved,” Klatt said, noting that the chain’s locations promote local products and help the local economy through ethanol purchases. Dealers also stay involved with the community through initiatives such as Minnoco’s annual Pink Out campaign. Last year, the campaign raised $14,662 for the Hope Chest for Breast Cancer charity, as Minnoco and Growth Energy donated two cents for every gallon of E15/Unleaded Plus sold from Sept. 16 through Oct. 31. Looking to the future, Klatt expects Minnoco to

128 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

Minnoco, short for Minnesota Independent Oil Co., is a fuel brand developed by the Minnesota Service Station & Convenience Store Association exclusively for its members.

continue expanding, with the goal being to reach 100 sites in the next five years. During that time, though, he expects competition to increase as more c-store chains begin to offer alternative fuels. “We knew for a few years we’d have a niche,” he said, explaining that MSSA was aware this edge would only last for a limited time. “We welcome the competition. We think that the more people that can promote E15 alongside us, even if they’re competitors … the testimony is that we made the right decision. Our retailers took the right risk. The ethanol industry took a big risk as well, but it just validates that what we tried to do, we accomplished together.” Along with that validation, increased competition in the alternative fuels landscape will raise the bar for everyone, giving consumers more reasons to trust in the Minnoco fuel brand and be willing to enter the stores. Klatt envisions a bright future for Minnoco and E15, yet that won’t stop the organization from doing its best to stay ahead of the game. “You can’t just think like you did 20 or 30 years ago,” Klatt said. “You’ve got to start thinking today, tomorrow and the next 20 years.” CSN


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TECHNOLOGY

Enterprise + POS + Digital + Payment Systems + Business Intelligence

LEADER OF THE YEAR

Business Driven

Tom Colbert ensures Kwik Trip’s IT team is a partner for all the chain’s business units By Chelsea Regan

T

om Colbert began his career as a developer at Kwik Trip Inc. 23 years ago, long before technology became the vital part of the convenience store industry that it is today. “I think we all thought technology would make things simpler, but for an IT department, it has become quite complicated with many more integrated parts and dependencies,” he said. “There are many days I miss the simplicity of the past, but the way technology continues to help all of the business units here at Kwik Trip and as their demand for technology grows, it is full steam ahead.” Colbert began his Kwik Trip career 23 years ago as a developer. Colbert, who has spent more than two decades improving Kwik good job of looking at how we can extend a proposed Trip’s IT Department from within, has been selected the 2017 Convenience Store News Technology Leader project or idea to other areas of the business, trying to take advantage of the resources — both people and of the Year. This annual award honors a convenience financial — that we have focused during that time.” store retailer — company or individual — who demFor instance, in the case of Wi-Fi in the stores, it onstrates exceptional vision and innovation in the was proposed for a single purpose and Colbert and development and utilization of technology solutions for the good of their own organization and the indus- his team immediately found four or five additional uses — some of which were implemented even prior try as a whole. to the original purpose. As director of IT at Kwik Trip, Colbert has mainColbert helped launch internal-facing Wi-Fi Access tained a focus on innovation, improving Kwik Trip Points in all of Kwik Trip’s stores in 2015, vetting through the IT Department with the adoption of potential vendors to find the right fit for the La Crosse, clearly defined change management and project manWis.-based convenience store chain that operates in agement. One of the key changes at Kwik Trip that Iowa, Minnesota and Wisconsin. During the installaColbert has implemented is to have projects be, as he tion of the Access Points, security and identity manputs it, “Business Driven, IT Enabled.” agement systems had to be selected and deployed, in “I am sure I stole that from someone along the addition to the delivery of software and devices, which way. But it really makes a difference to the success of included 1,200 iPads for Kwik Trip by July 2016. the project when the business units drive the projects Other technology improvements that have come instead of IT,” he explained to CSNews. “We do a

130 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM


TECHNOLOGY

Enterprise + POS + Digital + Payment Systems + Business Intelligence

under Colbert’s leadership in recent years are Kwik Trip’s expanding loyalty program, Kwik Club, and its first retail native mobile app that was deployed in March of this year. Colbert’s goal is to have 1 million loyalty member accounts at the one-year mark of the Kwik Club program. While Colbert’s tangible accomplishments in Kwik Trip’s IT Department One of Colbert’s and elsewhere in the company are goals is to reach undoubtedly impressive, the regard his 1 million loyalty coworkers have for him is perhaps even member accounts. more so. Kwik Trip’s IT management team, along with Vice President and Chief Financial Officer Jeff Wrobel, have lauded Colbert for his management style that “allows his coworkers to be creative” while being Department. These smart guys and gals do all of the “willing to make tough decisions” himself. real work, make IT successful here at Kwik Trip, and “[Tom’s] passion for excellence and strong work have earned the respect of the business units,” he said. ethic originally helped him achieve success within the “When the department or an individual gets a compliKwik Trip IT Department and now, as the leader of ment from the business, that’s when I know we are the department, these same traits have allowed him to doing our jobs right, and that is a great accomplishbe a key leader in Kwik Trip’s overall success,” Wrobel ment to share with the group.” told CSNews. “He has earned widespread respect from Ever eager for the next IT challenge ahead and leaders and coworkers throughout Kwik Trip while, at confident that the team he’s put together will be more the same time, earning similar respect among his peers than ready to tackle it, Colbert is keeping an eye on in the convenience store industry. what the future holds for Kwik Trip’s innovation and “I can honestly say that Tom is at the top of my evolution as a leading U.S. convenience store retailer. list of quality coworkers and people I have worked “We work for a great family and a great leader, with and interacted with during my 29 years at Kwik Don Zietlow, that encourages and challenges all areas Trip,” he added. of the business to grow and be the best,” he said. The respect and appreciation between Colbert and his “Innovation and technology will be at the forefront coworkers is mutual. When asked what he is most proud in all areas here at Kwik Trip, with the business units of accomplishing at Kwik Trip, he points to his team. leading the way and the IT Department being a part“I am most proud of the team that I have helped ner to help them accomplish their goals. Business assemble and continue to build upon in the IT Driven, IT Enabled!” CSN

I am most proud of the team that I have helped assemble and continue to build upon in the IT Department. These smart guys and gals do all of the real work, make IT successful here at Kwik Trip, and have earned the respect of the business units.” — Tom Colbert, Kwik Trip Inc.

132 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM


TECHNOLOGY

Enterprise + POS + Digital + Payment Systems + Business Intelligence

Beyond the Basics

Tech spending plans include more than just replacements and required upgrades By Don Longo

T

he advancement of technology has given retailers and customers unlimited opportunity to meaningfully connect, engage and communicate with one another, according to a recent report on “Convenience in 2030,” sponsored by the Australasian Association of Convenience Stores (AACS). However, the report also notes that the increasing rate of technology development is making the future extremely difficult to predict. “Given advancements (especially in mobile), the possible future will continue to be consistently in flux,” the report states. There are clear indications — even beyond the planned 12-percent increase in technology spending over last year — that investments in systems and technology are an important strategy for convenience store operators of all sizes, according to the findings of the exclusive

Spending on Technology/Automation

2016

91.4% 8.6 $1,568,000 $285,000

YEAR AGO

CURRENT

DOES YOUR COMPANY OFFER A LOYALTY PROGRAM? Yes

42.7%

No

38.8%

57.3%

61.2%

DESCRIPTION OF LOYALTY PROGRAM

2015

93.6% 6.4 $1,453,300 $280,000

Use of loyalty programs is pretty much flat, with about 60 percent of retailers having one.

Point/reward-based

There was a slight decrease in the percentage of retailers who said they spent on technology last year. However, the average spent per company rose to $1.57 million, up from $1.45 million in 2015. Spent Did not spend Average spent per company Median spent per company

Loyalty Programs

6.1%

Both

22.8%

27.0%

2014

96% 4.0 $1,876,380 $325,500

Credit card/payment option

66.9%

5.9%

71.3%

Source: Convenience Store News Market Research, 2017

TYPE OF LOYALTY PROGRAM Proprietary

Technology Investments: Headquarters vs. Store Level Investment spending between store and headquarters remained about the same as in previous years, with approximately 70 percent of spending directed toward store systems. Headquarters technology Store-level technology

2016

2015

2014

30.8% 69.2

31.2% 68.9

36.8% 63.2

Source: Convenience Store News Market Research, 2017

134 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

Tied to a major oil brand

22.4%

24.8% 26.9%

48.3%

Source: Convenience Store News Market Research, 2017

34.9%

Both

42.8%


Sponsored by

Convenience Store News 2017 Technology Study. Almost 50 percent of retailers responding to CSNews’ annual technology survey said they plan to add new equipment and replace technology this year, with an expected growth in capital expenditure spending of 8 percent more than in 2016. For an analysis of this year’s Technology Study results, CSNews turned to Ed Collupy, a former retail technology leader and current executive consultant for the W. Capra Consulting Group, a leading retail technology, payments, security and strategic implementation firm. “With per-store spending, according to the CSNews survey results, approaching $20,000 per store in 2016, one may argue this was to implement EMV inside the store,” said Collupy. “However, the expected growth in 2017 technology investments tells me that people see systems as a way to bring more to their business and are less driven by compliance mandates this year.”

EMV Compliance EMV compliance, as expected, is proceeding more rapidly inside the store than at the pump. Nearly seven out of 10 retailers report they are EMV compliant in-store, but less than three out of 10 are compliant at the pump. IS YOUR COMPANY EMV-COMPLIANT AT THE POS? Yes

No, but we have started the process

CURRENT

No, and we have not started yet YEAR AGO

12.9% 19.4%

67.7%

60.0%

40.0%

YEAR AGO

25.4% 31.8% 42.8% Source: Convenience Store News Market Research, 2017

35.0% 65.0%

Promotional/Sales Technology (percent of chains using each)

About 80 percent of retailers are investing in promotional/sales technology, down from about 90 percent a year ago. The biggest percentage are investing in video monitors in the store, followed by social media and automated loyalty programs. As far as future plans, merchandise ordering at the pump is the most-often cited. CURRENT IMPLEMENTED PLAN TO ADD

Any promotional sales/ technology (net)

YEAR AGO IMPLEMENTED

2015 IMPLEMENTED

78.8%

52.6%

91.9%

88.2%

58.8% 57.6% 43.8% 34.7% 34.6% 29.4% 28.2%

21.2% 15.3% 22.4% 25.9% 25.9% 17.6% 22.4%

58.3% 59.1% 45.0% 39.4% 47.2% 36.1% 40.0%

47.1% 52.9% 46.5% 35.3% 33.2% 28.7% 23.5%

30.2% 27.1% 2.4%

23.5% 20.0% 27.1%

40.6% 31.0% 7.5%

33.3% 31.6% 1.9%

IN STORE:

Video monitors Social media Automated loyalty programs Text messaging to customers Mobile apps Email marketing GPS/geolocation AT PUMP:

Video monitors Advertising/couponing Merchandise ordering

Source: Convenience Store News Market Research, 2017

Payment Systems Almost a third of retailers have implemented mobile payment, up from 26 percent a year ago. Another 21 percent plan to add some form of mobile payment in the year ahead. CURRENT IMPLEMENTED PLAN TO ADD

YEAR AGO 2015 IMPLEMENTED IMPLEMENTED

IN STORE:

IS YOUR COMPANY EMV-COMPLIANT AT THE PUMP? CURRENT

Over the last several years, the convenience store industry has been transforming itself with the addition of stronger foodservice offerings, and retailers have invested in preparation and display equipment, people,

Credit/debit Prepaid/stored value card Electronic benefits transfer (EBT) Electronic check verification Mobile payment RFID Self checkout Biometric payment technology

100.0% 70.8% 64.0% 54.7% 30.5% 16.2% 3.2% 2.1%

0.0% 14.6% 18.8% 10.4% 20.8% 18.8% 16.7% 18.8%

100.0% 68.3% 65.0% 48.6% 26.5% 15.0% 1.9% n/a

100.0% 70.6% 58.8% 52.9% 23.3% 17.6% 1.2% n/a

93.2% 35.6% 34.8% 32.6% 12.2% 10.4%

1.8% 16.8% 21.5% 12.2% 18.6% 14.4%

93.8% 38.3% 28.6% 33.3% 9.6% 8.1%

95.0% 31.6% 21.1% 31.6% 10.5% 5.3%

AT PUMP:

Credit Prepaid/stored value card Mobile payment Partial debit authorization RFID Cash acceptors

Source: Convenience Store News Market Research, 2017

WWW.CSNEWS.COM | OCTOBER 2017 | Convenience Store News 135


TECHNOLOGY

Enterprise + POS + Digital + Payment Systems + Business Intelligence

and remodeled stores. This year’s CSNews Technology Study indicates the realization that systems can further help grow this aspect of the business, noted Collupy. Foodservice ordering kiosks, both inside and outdoors, show continuing and significant growth over the past few years: more than 30 percent of survey responders indicate they’ve implemented or plan to implement these customer-experience technologies both in-store (12 percent in 2016 and 9 percent in 2015) and outside (6 percent in 2016 and 4 percent in 2015). The plumbing (i.e., network and security hosting, monitoring and management) of information technology (IT) in companies continues to shift to the “cloud.” Collupy explained that these technologies are often viewed as a necessity but not the best use of the time and resources of in-house IT professionals. Thus, management continues to outsource many of these activities. Sixty-four percent of respondents reported that their companies outsource IT functions. The study shows steady growth in this area, up from 50 percent in 2015 and 59 percent in 2016. “In my discussions with retailers, I hear that the main driver for this is to ‘let my people focus on systems that will bring added value to the business,’” said Collupy. One of those added-value areas appears to be social media. Social media has become an important marketing element for c-store operators, as almost three-quarters of respondents said they are using social media applications. This year’s CSNews Technology Study also revealed an increase in new products being introduced to customers via social media. “To me, a key aspect of this technology is creating a dialog with customers,” said Collupy. “Close to 46 percent of respondents use polling features available in social media apps. In addition, those companies reporting they have their own mobile app are also using it to create a more engaging customer experience.” As examples, Collupy noted that for the first time in the survey, almost 20 percent of respondents said games are now a feature of their mobile app, and more than 50 percent say they continue to use their app to receive customer feedback. On the EMV front, there was a significant jump to 87 percent in those saying they have completed or are active with projects bringing them to compliance inside the store. The study, though, also reveals continued confusion around what it means to be compliant, with just 30 percent of respondents saying they’re compliant with EMV at the pump. Likely, these companies may be EMV-ready, but

136 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

Social Media Nearly three-quarters of retailers have incorporated social media into their marketing plans, up from 65 percent a year ago. The topused social media platforms are Facebook, Twitter and Instagram, but the biggest year-over-year increase was Google Plus. Have you incorporated social media into your company’s marketing plans? Yes CURRENT

26.7% 73.3%

No

YEAR AGO

35.0%

2015

34.7% 65.0%

65.3%

Social Media Applications Used Facebook Twitter Instagram Pinterest Foursquare Google Plus Tumblr

CURRENT

YEAR AGO

100.0% 63.5% 40.2% 18.6% 15.8% 11.3% 5.1%

98.6% 68.7% 34.5% 12.2% 19.1% 6.0% 5.9%

Source: Convenience Store News Market Research, 2017

given where the point-of-sale and pump providers are with software and integration, only a very few retailer sites are fully EMV-enabled at the pump, noted Collupy. “The industry continues to need more education and guidance on what is involved with implementing EMV on the forecourt,” he added. While most companies participating in the study indicate the majority of their IT spending is at the store level (69 percent), the areas with the largest growth year over year include improving headquarters accounting systems (cited by 30 percent of respondents) and implementing business intelligence/ reporting systems (29 percent). Both inventory management and reducing shrink again show up in the top three areas where operators are looking for systems to provide benefit. Improving the speed of checkout ranked third this year, and it appears self-checkout will be one of the ways this is accomplished with almost 17 percent saying they plan to implement this type of technology in the coming year. CSN


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OPERATIONS

Store Ops + Labor + HR + Real Estate + Financial + Field Ops

What You Need to Know About the New Generation of Workers Millennials are not only transforming c-stores as customers, but also as employees By Chelsea Regan

M

uch is being said about millennials — from the businesses they have helped usher into obsolescence, to their preference for connecting via screens rather than face-to-face and, last but not least, what they’re really like as employees. If the generation’s most vocal detractors are to be believed, it would spell doom for just about every industry, as in just a few years’ time, millennials will make up more than 45 percent of the workforce. Fortunately for industries, including the convenience and fuel retailing

industry, millennials may very well possess many attributes that could wind up being a boon for the companies that have them in their employ. And it’s not only important for employers to know what millennial workers can offer them, but also what they will need to offer potential millennial workers. “Millennials don’t look at a large, established organization and think, ‘I wonder where I’ll fit in your complex picture.’ Rather, they look at an employer and think, ‘I wonder where you will fit in my life

138 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

story,’” author and business adviser Bruce Tulgan explains in his The Great Generation Shift Study, which points out that millennials currently make up a growing portion of the workforce in North America. Tulgan is internationally recognized as a leading expert on young people in the workplace. Matt Thornhill, the founder and managing partner of SIR’s Institute for Tomorrow, echoes Tulgan’s point. According to Thornhill, part of that aspirational life story is about doing something that matters. “[Millennials] want to work someplace they can make a difference. If you realize that and tap into their desire to make a difference, you can engage them at a different level than you would somebody who just wants a job, to earn an income,” he said. “If you’re not paying attention, if you’re not thinking, ‘How can I help this young person feel like they’re making a difference in their job every single day,’ you’re going to have a hard time keeping them.” The Institute for Tomorrow is SIR’s in-house generational think tank, designed to deliver insights on what’s coming down the road by thoroughly analyzing the latest research. SIR CEO and Managing Partner John Martin offers specific advice on how employers can use the knowledge about millennials’ desire to make a difference during the interview process. It’s not just about offering a job; it’s about offering them an opportunity to grow. “When you interview millennials, use language that appeals to them. Don’t talk about your company as a career, but rather as a place to help millennials grow — a great stop on their journey,” Martin advised. “Ask them about their ideal work environment and mentors, and try to align your comments to their expectations. Talk about how important your team is, and how the company tries to make an impact on the community.”

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“Millennials don’t look at a large, established organization and think, ‘I wonder where I’ll fit in your complex picture.’ Rather, they look at an employer and think, ‘I wonder where you will fit in my life story.’” — Bruce Tulgan, Rainmaker Thinking Inc.

COLLABORATION

Millennials’ interest in the community — in terms of both outreach and within a company — goes hand-inhand with their collaboration skills. One of the best attributes that millennials can bring to a company is their natural ability to collaborate, which is largely a byproduct of their upbringing, according to Martin. “When millennials’ parents told them ‘you are special,’ millennial kids heard ‘we’ are all special, no one is best,” he explained. “This was reinforced by hyperwiring them together via technology. Consequently, millennials’ Wonder Years created a new sense of self — the collective self. This group is all about we, together, us.” Not only do millennials’ collaboration skills, developed in part by countless group projects in their formative years, set them up to become positive members

of a team, but it could also make them skilled leaders of the future. “They crowdsource information all the time. They trust the wisdom of the crowd over the thoughts of a few experts,” said Martin’s colleague Thornhill. “They are wired to collaborate and want opinions from everybody to make decisions. As leaders, that’s a pretty good thing to have. Their collaborative leadership style will change companies.” Shama Hyder, millennial CEO of the Marketing Zen Group, one of the first social media marketing agencies in the world, agrees that her generation is poised to be uniquely effective leaders. “They aren’t afraid to think outside the box and be more open to doing things other than the conventional route,” she said. “Often, their methods are off the beaten path, but more effective.” TECHNOLOGY

The Workforce of Today & the Future

Pre-BB (pre-1946) BB First Wave (1946-1954) BB Second Wave (1955-1964) Generation X (1965-1977) Millennials First Wave (1978-1989) Millennials Second Wave (1955-1964) Post-Millennial

2017

2020

<1% 11% 16% 27% 27% 17% >1%

0% <6% 13% 26% 27% 24% >4%

Source: RainmakerThinking Inc., 2017

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Thinking outside the box in the modern retail age often involves technology, making tech-savvy millennials particularly attractive to potential employers. While older generations have adapted to the changing tides of technology, it’s second nature for millennials. “Technology is very much just woven into their lives. Their use of technology is very intuitive and pervasive in a way that is less the case for older generations,” said Retail Prophet founder and futurist Doug Stephens. “This is a huge asset for companies as they work to explore how technology can be used to reimagine their internal workflows and external customer experiences.” SIR’s Martin points out that millennials’ familiarity with technology can make them beneficial hires. However, it can also complicate the hiring process for companies with a poor digital presence. “You can count on prospective millennial employees to turn to several sources to check you out as a potential employer before signing on. This includes


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OPERATIONS

Store Ops + Labor + HR + Real Estate + Financial + Field Ops

your website, third-party rating sites like Glassdoor, and even their parents (a.k.a. best friend and coach),” said Martin, who recommends companies conduct a social media audit on how its organization is profiled across social media platforms. “What do people say about you? Is it mostly positive or negative sentiments? Who’s talking — women or men, young or old? You would be shocked at what we find when we do comprehensive social media sentiment audits. The corporate communications model has turned

“[Millennials] want to work someplace they can make a difference. … If you’re not paying attention, if you’re not thinking, ‘How can I help this young person feel like they’re making a difference in their job every single day,’ you’re going to have a hard time keeping them.” — Matt Thornhill, SIR’s Institute for Tomorrow

upside down where consumers now control the brand; even your brand as an employer of choice (or not).” THE EXPERIENCE

It goes without saying that millennials as employees are bound to have a natural advantage in trying to appeal to millennial consumers, who are looking for a great value and a great experience. As Hyder of the Marketing Zen Group points out, oftentimes marketing can feel like an afterthought and leave potential millennial customers underwhelmed and searching for

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a more engaging experience. “Marketing isn’t something that can just be sprinkled on top. For example, some c-stores have a ‘Like us on Facebook’ sign. That’s unlikely to work. How many people want to like their local c-store on Facebook — even if they DO like it in real life?” Hyder asks. “A much better approach is to look at how to make their experience more seamless, and how to integrate in-store promotions with what’s trending — for example, taking advantage of Pokemon Go when it was hot.” Futurist Stephens, drawing on feedback from his millennial daughter, agrees with Hyder’s assessment. “My daughter is a millennial and she often complains about brands attempting to ‘woo’ millennials with gimmicks and tricks. She wants to do business with brands that just honestly create great value, have awesome products, and/or design remarkable experiences,” he explained. “And I think that’s what it comes down to: brands need to create something remarkable in terms of positioning, products, and brand experience.” THE FUTURE

Perhaps millennials will be the key to helping today’s convenience store retailers reinvent the business as the times continue to change, especially with the idea of convenience evolving from pulling up to a local store to doorstep delivery. “Most people in the c-store industry are mystified, stymied and flummoxed over this coming sea change,” said Martin, referring to delivery services like Amazon Prime Now and GoPuff. “They shouldn’t be. The industry has time to prepare and reinvent itself.” As Hyder says, “Retail isn’t going away anytime soon. It does, however, need to evolve.” The new generation of workers just might bring with them the skills to make that happen. CSN


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OPERATIONS

Store Ops + Labor + HR + Real Estate + Financial + Field Ops

Championing an Important Cause

Altria’s Women in Sales Network promotes diversity in male-dominated industries By Don Longo

N

cofounded WSN with Keck, went to her first NEW Summit in 2012 and couldn’t believe Altria wasn’t already a member. “This is a fantastic organization that is championing this cause — and best of all, our customers are also members,” Drummond reported back to her company. Shortly thereafter, WSN was born and today is the largest of Altria’s nine ERGs. Other ERGs focus on women in manufacturing, veterans and specific ethnic groups. “I personally have grown as a result of having to build and lead this network,” Keck told Convenience Store News in an exclusive interview. “It has enhanced my D&I “It isn’t just women that have benefitted (diversity and inclusion) skills and made me a better leader.” … Males also benefit. All of our members Keck has taken on multiple new have increased their awareness on roles and said she’s gained a wider perspective on differences in people and challenges that women face. They have the advantages of diverse teams since developed faster, and flourished as a she took on the challenge of building result of the programming and leadership experiences the Women in Sales Network. “I have also helped other ERGs they have gained from the network.” overcome challenges as they have gotten started,” she added. “It has been — Danielle Keck, cofounder, Women in Sales Network personally rewarding to help other leaders as they forge new networks.” The mission of the Women in Sales Network is leaders. At the time, parent company Altria Group to be the catalyst for the development and advancehad a Women’s Employee Resource Group (ERG) ment of women at AGDC. It is founded on the folcalled the Altria Women’s Network consisting mostly lowing principles: of headquarters people in Richmond, Va., but felt • Developing Leaders opportunities were lacking for getting sales participa• Improving Connectivity tion because of the nationally far-flung sales network, • Fostering Inclusion explained Danielle Keck, AGDC’s senior director of • Providing Accessible and Relevant Programs sales infrastructure and cofounder of the company’s • Leverage Our Diverse Perspectives Women in Sales Network (WSN). • Advocating Change The idea for WSN started with exposure to the The focus is on fostering career growth through Network of Executive Women (NEW), the retail and professional development, collaboration and consumer goods organization dedicated to advancknowledge sharing, and identifying and addressing ing women in the workplace. April Drummond, who early every convenience store retailer is aware of Altria, the nation’s largest tobacco company with its products on the backbars of nearly every retailer’s stores. Fewer, though, are probably aware of the leading role the company plays in promoting the development and advancement of women in two very male-dominated businesses — tobacco and convenience retailing. In 2012, Altria Group Distribution Co.’s (AGDC) leadership team had an organization strategy session to discuss creating a more robust pipeline for women

144 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM


OPERATIONS

Store Ops + Labor + HR + Real Estate + Financial + Field Ops

issues impacting women in sales. Since being formally established in April 2013, WSN has grown to 849 total members, with an astounding 32 percent of them male. “It isn’t just women that have benefitted from WSN,” noted Keck. “Males also benefit. All of our members have increased their awareness on challenges that women face. They have developed faster, and flourished as a result of the programming and leadership experiences they have gained from the network.” She noted that male leader Blake Benefiel, director of trade and state relations, was an original member of the group’s steering committee. (Editor’s note: Benefiel was recently named this year’s supplier inductee into the CSNews Hall of Fame and will be honored at an awards dinner in Dallas in November.) Among the many accomplishments of WSN has been the development of programming on such topics as generational IQ, coaching your inner critic, mentoring, gender dynamics, and more. The group has also created 144 leadership opportunities for members on

various committees and as affiliate leads. WSN helped one woman member gain the confidence to find her voice and advocate for herself and achieve the career path she wanted. She was recently selected for a highly coveted position in Altria’s brand department. Perhaps most importantly, the group has been an advocate for positive change, helping to support a new parental leave policy that includes paternity leave, and the creation of a Parent Resource Center to help employees better balance work and life. More than 450 employees have utilized the parental leave benefit since it launched. Keck related a story about one of her employees whose wife was pregnant with a third child. “The gratitude that he expressed for being able to take six weeks to be with his family at this time was immeasurable. That time is precious,” she noted. For the future, Keck said the organization will further its partnership with NEW and with trade efforts, like being the premier sponsor of CSNews’ annual Top Women in Convenience awards program. CSN

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EXPERT’SVIEW NEW Horizons

It’s Still Lonely at the Top for C-store Women

How to address the isolation that plagues senior leaders

N

EW Communications Manager Barb Grondin Francella recalls attending a high-level convenience store conference early in her career when she worked as an editor for Convenience Store News. As she rushed through a crowd of men to pick up her badge, the woman at the registration desk By Sarah Alter, looked at Barb and didn’t miss a beat: Network of “Would you like to sign up for the spouse Executive Women shopping trip on Tuesday?” Since then, the c-store industry has hired and advanced more women at every level. More women are found in the executive ranks, too. The annual CSNews Top Women in Convenience awards program demonstrates the strides being made. But it is still true that when women are present at the highest levels, the other people in the room are still mostly male. Most senior executives — male and female — experience feelings of isolation. Half of the CEOs participating in a 2012 Harvard Business Review survey revealed that they experience feelings of loneliness in their role. Within that group, 61 percent said loneliness hindered their performance. First-time CEOs were particularly susceptible to those feelings; nearly 70

percent who said they experienced loneliness admitted it negatively affected their performance. The challenges posed by this isolation aren’t limited to the c-suite. Anyone moving up the ranks can be surprised by how isolating their new authority can be. But for women leaders, that challenge is often exacerbated by being the first woman in the role, conscious and unconscious gender bias, preconceptions of “what women leaders are like,” and the lack of female peers. The potential to feel “different” or “token” is even higher.

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. Fifty female managers, TOP WOMEN IN executives and directors who work CONVENIENCE in the convenience store industry will be honored in our 2017 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.

148 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

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EXPERT’SVIEW NEW Horizons

FLYING SOLO

Consider Jan Fields, who worked her way up from crewmember to the No. 2 role of president of McDonald’s USA, which she held until 2012 when she was fired after disagreeing with her boss about menu pricing strategy. Fields describes her experience at the top of the corporate ladder this way: “You’re the only woman. It’s very lonely,” she told The New York Times in July. “I was at a high level playing in a golf foursome with all high-level men. One said, ‘I didn’t know you knew how to play.’ I said, ‘You never asked me.’ I never drank with them. I never tried to be one of the guys. I spent more energy on performance.” Feelings of aloneness can be debilitating for some women leaders. A 2014 study by sociologists Tetyana Pudrovska of University of Texas-Austin and Amelia Karraker of Iowa State University found mid-career women who serve in leadership roles are more likely than men in the equivalent roles to suffer from chronic stress and symptoms of depression. “Years of social science research suggest that

Feelings of isolation are detrimental to job performance, career satisfaction and, I believe, play a key role in women’s decisions to fulfill their ambition.

women in authority positions deal with interpersonal tension, negative social interactions, negative stereotypes, prejudice, social isolation, as well as resistance from subordinates, colleagues and superiors,” Pudrovska told the UT News campus publication. This is just one study — and every woman experiences and handles stress and the challenges of her job differently. But feelings of isolation are detrimental to job performance, career satisfaction and, I believe, play a key role in women’s decisions to fulfill their ambition. Here are a few strategies women can take to reduce


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EXPERT’SVIEW NEW Horizons

feelings of isolation as they step into leadership roles: Re-think your network. In the words of Dorothy Day, “We have all known the long loneliness, and we have found that the answer is community.” Join a peer group and create a network of women at your career level who will relate to — and may have personal experience with — the day’s challenges and opportunities. Look outside your own company, where corporate politics may not support honest discussion about the challenges at the top. NEW members can tap into the NEW Member Community at newonline.org to create connections and start conversations with peers. Reconsider your expectations for workplace relationships. Meeting with team members or peers for feedback before making a key decision can reduce feelings of isolation and boost decision-making confidence. But employees want a leader with the power and integrity to act in their and the business’ best interests, one who’s transparent and authentic. They don’t expect — or

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want — to receive a Facebook friend request from the senior vice president or an “OMG! Did you watch ‘Game of Thrones’ last night?!” text from the CEO. Accept the reality of senior leadership. Sometimes you’ll have company knowledge that you can’t share. Not talking about a business development with a trusted ally is uncomfortable and feels unnatural. Practicing extreme discretion can be very stressful. I’ve had to learn to “file it at the door” and not bring that stress home to my family. As the very wise Theodor Geisel wrote in “Oh the Places You’ll Go,” his international bestseller on ambition and leadership, “All alone! Whether you like it or not, alone is something you’ll be quite a lot!” CSN Sarah Alter is president and CEO of the Network of Executive Women, Retail and Consumer Goods, a learning and leadership community representing more than 10,000 members, 950 companies, 100 corporate partners and 20 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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EXPERT’SVIEW

Wake-Up Call

These are the questions you should be asking to plot the future of your companies

“S

unoco LP’s shares soar after the announced sale of 1,100 convenience stores to 7-Eleven Inc.” That was the headline from CNBC after the company’s transaction was made public in April of this year. If you followed that story, then you know 7-Eleven Inc. entered into an agreement to purchase By John C. Flippen Jr. & John Sartory, Petroleum Capital and Real Estate LLC approximately 1,100 of Sunoco LP’s companyoperated convenience stores for $3.3 billion. After this acquisition closes, 7-Eleven’s retail network will feature 9,815 stores in the United States and Canada. Not to be topped by 7-Eleven, Alimentation Couche-Tard Inc. announced in July that it had reached an agreement with Holiday Stationstores Inc. to purchase the 522-store chain located in 10 states in the Midwest and West. After the company’s latest acquisition closes, Couche-Tard’s retail footprint will expand to 48 states and be the largest in the United States. These transactions, along with Tesoro Corp.’s June 1, 2017 acquisition of more than 3,000 gasoline service station and convenience store sites from Western Refining Inc., clearly show the market forces driving the major corporate consolidators have not abated, and these companies will continue to expand their retail footprints throughout the United States. These latest mega sales — and smaller acquisitions recently announced by Kwik Trip Inc., Applegreen Inc. and Stinker Inc. — are wake-up calls for any complacent operator still left in the industry to take the time to reflect on the various fundamental market conditions that will eventually impact every retailer.

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Listed below are some of the basic questions any operator or senior management team should be asking themselves as they plot the future of their companies: • How will the changing market dynamics and growing consolidation within the convenience and gas (C&G) industry impact my business in the short and long term? • Why did a company as large as Sunoco LP suddenly decide to sell its company-operated retail network? • What are my company’s long-term strategic objectives and how can I achieve these goals? • How can my company continue to grow, and what are its best growth opportunities? Should I decide to pursue an acquisition opportunity or grow organically? • How can I finance or fund my company’s growth plans? • What are my company’s competitive advantages? • Does my current management team have the skillset needed to achieve our company’s longterm objectives? • Is it time to sell my business and cash in on the still-favorable market conditions?


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EXPERT’SVIEW In the remaining sections of this article, we will highlight various issues any operator that is looking to expand should consider, vs. focusing on whether or not it’s time to exit the industry. We will leave that issue for another day. SETTING COMPANY-SPECIFIC GOALS

Are you trying to expand your network from 10 retail outlets to 20, from 100 to 200, or from 500 to who knows how many? On the Sunoco LP conference call discussing the sale to 7-Eleven, the company announced that it planned to lower its existing financial leverage from approximately 6.75x EBITDA to between 4.50x and 4.75x EBITDA. The company also stated that it planned to focus on a “capital-light” business model going forward. These statements to the investment community certainly show Sunoco LP has decided to revise its longterm operational strategy and concede that its prior growth strategies were no longer appropriate given the rapidly evolving state of the industry.

“Setting specific strategic goals, sourcing the correct capital provider(s), and understanding your finite resources will help prepare your company to invest in growth opportunities that provide above-average expected returns.” What is your company’s long-term operational strategy? Is your company’s strategic advantage in convenience store operations, operating quick-serve restaurants, wholesale supply, managing a dealer network, or rationalizing real estate, to name just a few? Are you really prepared to expand your business in the next few years? Should you bring in a strategic partner(s) to make your business more competitive? Do you need to buy out your existing partner(s) or

156 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

prepare for a generational change in your business? These are just a few of the strategic questions you should be asking yourself on a regular basis as our industry continues to consolidate and evolve at a rapidly increasing pace. At Petroleum Capital and Real Estate LLC (PetroCapRE), we continually see the various strategic initiatives that companies are undertaking to improve their competitive position within the industry. For example, our firm was involved in ArcLight Capital Partners LLC sale of the legacy Cumberland Farms dealeroperated retail network to Petroleum Marketing Group Inc. ArcLight’s longterm business model is focused on the wholesale supply and mid-upstream segments of the industry and the company did not want to be involved in the day-to-day operation of a dealer-run network. PetroCapRE was also recently involved in an acquisition in New England in which a leading convenience store operator was interested in expanding its geographic footprint and acquired the company-operated retail network of a regional competitor that decided to exit this segment of the industry. These are the types of strategic decisions large and small operators are being forced to face every day as they seek to remain competitive in our evolving industry. SOURCING THE CORRECT FINANCIAL PARTNER(S)

If pursuing a potential acquisition or a major organic growth initiative is the most effective and promising path to reach your long-term objectives, how will your company secure the required capital? Are your competitors financing their acquisition of petroleum assets in the same way? Will your financing options vary because of the size of your company? Why are there so many new types of capital providers (Wall Street banks, super regional banks, regional banks, community banks, asset-based lenders, equipment financing companies, sale leaseback, private equity, mezzanine, etc.) interested in our industry? Which source of capital is the best fit for your company? In order to implement your company’s long-term growth objectives, you need to understand the constraints and/or funding requirements of potential


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EXPERT’SVIEW capital partners to make sure your company picks the correct source of funding. Your company’s capital provider needs to fully understand your business plan and be ready to provide the support and resources needed to guarantee its success. UNDERSTANDING YOUR FINITE RESOURCES

Knowing how your company plans to grow is a great start, but you also need to prepare for that opportunity by acknowledging that no company has access to an unlimited amount of capital. Listed below are various funding issues an operator should consider before finalizing its plan: • Analyze your company’s financial condition, estimate the amount of cash or embedded equity that can be allocated to this initiative, and set a minimum return-on-investment threshold for all new investments. • Develop a business plan that includes at least a five-year EBITDA based model. • Create relationships with financial and opera-

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tional partners that understand and share your company’s long-term goals. • Analyze the different capital structures that can be utilized to meet your goals. • If possible, establish an acquisition line of credit that will provide the financial flexibility needed to continue to expand. In summary, setting specific strategic goals, sourcing the correct capital provider(s), and understanding your finite resources will help prepare your company to invest in growth opportunities that provide aboveaverage expected returns. CSN John C. Flippen Jr. and John Sartory are managing directors of Petroleum Capital and Real Estate LLC (PetroCapRE). They can be reached at jflippen@PetroCapRE.com and jsartory@PetroCapRE.com. The firm provides buy-side acquisition, refinancing, capital restructuring and select sell-side advisory services in the convenience and gas industry. PetroCapRE has assisted clients in completing transactions valued at more than $2 billion. For more information, go to www.PetroCapRE.com. Editor’s note: The opinions expressed in this article are the authors’ and do not necessarily reflect the views of Convenience Store News.


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STORESPOTLIGHT ENroute Market

The Road to Healthy

California’s ENroute Market aims to redefine convenience by nourishing consumers’ bodies while they’re on the move By Danielle Romano

E

Nroute Market founder and owner Heather McNeil is often posed with the same question from shoppers: Why didn’t this exist before now? Located at 7000 Sunne Lane in Walnut Creek, Calif., ENroute Market — which opened in late January — is McNeil’s brainchild. While at a baseball tournament with her sons a few years ago, she was given 15 minutes before the next game to grab something to eat. Upon walking into a 7-Eleven store — the closest option — she asked out loud, “Where is the convenience store for people who care what they put in their body?” “The moment the words left my lips, I had chills all over me. I thought, could this really not exist? I stayed up all night and Googled ‘healthy, upscale convenience store’ in every major city in the world. There wasn’t a brand in existence!” McNeil told Convenience Store News. “I immediately began writing my business plan, raised 100 percent of the money, and ENroute was born.” ENroute Market’s name stemmed from McNeil

The store’s artisanal baked goods and grab-and-go items are delivered fresh every morning.

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stepping into the mindset of her shoppers who would think, “I can get the healthiest version of whatever I’m craving on the way.” Hence, the name ENroute. The concept is designed to reach health and fitness conscious consumers, as well as always-on-the-go working parents and professionals. At 1,600 square feet, ENroute Market seeks to redefine convenience by being a healthy convenience store providing nourishment for life’s journey, according to its creator. Although ENroute Market carries most food items that a typical c-store would carry, it differentiates itself by offering products made without artificial ingredients and preservatives. The company stays true to this core value by being “extraordinarily” diligent about the products it carries so its guests don’t have to, McNeil explained. Before a product hits shelves, she tastes every item and investigates its ingredients to make sure it aligns with ENroute Market’s promise of no preservatives, artificial ingredients, corn syrups or hydrogenated oils. Going a step further, all of ENroute Market’s employees are knowledgeable about the food the store sells, therefore delivering a level of service previously unseen in the convenience channel, according to McNeil. This is something she takes great pride in. “We exist to improve the lives of busy people by nourishing them with delicious and healthy food conveniently,” she said. Another differentiator for ENroute Market is its grab-and-go menu, which was created by Chef Charles Ayers Jr., the former executive chef for Google Inc. Some of the chef-created meals spanning the breakfast, lunch and dinner dayparts include: Kale-Ifornia Nutrition, made with scrambled cage-free egg whites, roasted vegetables, sautéed kale and chimi-curry sauce; the Veggie-licious Sandwich that includes an array of roasted and grilled vegetables;


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STORESPOTLIGHT ENroute Market

Stand out with hot prepared foods

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and the Longevity Salad that is made up of arugula, red bell peppers, grilled marinated tri-tip and topped with a Vietnamese dressing. The grab-and-go items and the store’s artisanal baked goods are delivered fresh daily every morning. Whatever items aren’t sold by the end of the day are donated locally, meaning the food at ENroute Market is always fresh, noted McNeil. Other offerings shoppers can expect to find at ENroute Market are Italian coffee, cold-pressed juice, cheese and charcuterie, candy, snacks, cookies, ice cream, pizza, Kombucha on tap, and a plethora of local and specialty food products. Craft beer and restaurant wines are available for onsite consumption, and a small selection of sundries and gifts can be purchased. NEXT STOP: THE FUTURE

One of the most unexpected parts of the ENroute Market journey for McNeil has been the joy she feels in the process of day-to-day operations. This includes interacting with people who devote their


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STORESPOTLIGHT ENroute Market

tiple calls a week from developers who want ENroute lives to improving one product. To McNeil, this is in their suburban neighborhoods; however, my prefer“awe-inspiring.” ence is to open my second location in downtown San “I had a young man approach me with samples of Francisco to prove that the concept a barbecue sauce. I asked him why has legs in densely populated he decided to devote his life to mak“I’d like to see ENroutes also urban environments,” she explained. ing a barbecue sauce without corn syrup. He said he always wanted to in every major city in the “I’d like to see ENroutes in every major city in the country because do it, but was only able to after he country because healthier food options should be inherited some money from losing both his parents in a car accident. healthier food options available in a convenience format.” phrase surrounding the Every product has a story. Every should be available in a logoThe of ENroute Market reads, person who consumes that product is part of that story whether they convenience format.” “Nourishment for Life’s Journey.” McNeil hopes shoppers take this misknow it or not,” she said. — Heather McNeil, ENroute Market sion to heart as much as she does. When asked what ENroute “My hope is that the people who visit us feel nourMarket’s future holds, McNeil expressed to CSNews ished by the food but, in addition, I hope they are nourthat her goal is to reinvent the “convenience store,” ished by the love that went into making it and the conchange the way people view this segment of food, and nection to the people from which it came,” she said. “It make healthy food available to people on the go. To is a privilege to spend my days being a small part of the achieve this goal, one location isn’t enough. big picture in what I hope is the future of food.” CSN “I cannot do this with one location. I receive mul-

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2017 CSN new site HP ad.indd 1 164 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

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HOTPRODUCTS Special Advertising Section

166 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

Pet Treats


HOTPRODUCTS Snacks

Special Advertising Section

WWW.CSNEWS.COM | OCTOBER 2017 | Convenience Store News 167


HOTPRODUCTS Special Advertising Section

Liquid Dispensers

168 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM


HOTPRODUCTS Energy Drinks

Special Advertising Section

WWW.CSNEWS.COM | OCTOBER 2017 | Convenience Store News 169


HOTPRODUCTS Special Advertising Section

Beverages

170 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM


HOTPRODUCTS Special Advertising Section

Ice Packages

Ice Packages

WWW.CSNEWS.COM | OCTOBER 2017 | Convenience Store News 171


HOTPRODUCTS Special Advertising Section

Gourmet Pet Treats

Car Wash Solutions

172 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM


HOTPRODUCTS Special Advertising Section

Skimming Prevention

Pizza Equipment

WWW.CSNEWS.COM | OCTOBER 2017 | Convenience Store News 173


CLASSIFIED General Merchandise

ATMs

174 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM


CLASSIFIED Credit Card Processing / Merchant Services

WWW.CSNEWS.COM | OCTOBER 2017 | Convenience Store News 175


CLASSIFIED Cash Registers/Scanning Items

176 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM


CLASSIFIED Plastics

WWW.CSNEWS.COM | OCTOBER 2017 | Convenience Store News 177


CLASSIFIED C-Store Recruiters

General Merchandise

178 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM


CLASSIFIED ATMs

Air Vacs

WWW.CSNEWS.COM | OCTOBER 2017 | Convenience Store News 179


CLASSIFIED Air Vacs

Equipment / Supplies

180 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM


CLASSIFIED Petroleum/Equiment

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tkanganis@ensembleIQ.com WWW.CSNEWS.COM | OCTOBER 2017 | Convenience Store News 181


CLASSIFIED ATMâ&#x20AC;&#x2122;s

Financial Services

182 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

Services

Equipment / Supplies


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Sunglasses

Equipment / Supplies

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ADINDEX

Acosta ............................................................................................................145 Add Systems .................................................................................................45 Advance Pierre Foods ..................................................................................188 Altria Group Distribution Company ...........................................................2-3 American Licorice ........................................................................................120 Anchor Packaging ........................................................................................5 Anheuser Busch ...........................................................................................115 Autofry/MTI Products ..................................................................................162 BakenJoy .......................................................................................................105 BIC ................................................................................................................11 Blu ECigs .......................................................................................................153 Campbell’s ....................................................................................................15 Cash Depot....................................................................................................150 Cenex .............................................................................................................87 Chevron .........................................................................................................7 Cheyenne International ..............................................................................73 Chobani .........................................................................................................55 Coca Cola ......................................................................................................97 Cookies United .............................................................................................71 Del Monte Fresh Produce ............................................................................25 Dyla/Forto Coffee .........................................................................................101 E Alternative Solutions ................................................................................133 E & J Distillers ..............................................................................................99 Ferrero ...........................................................................................................63 FGX International .........................................................................................90-91 Fini Sweets Inc. LLC ....................................................................................121 Forte Products ...............................................................................................72 Gas Buddy .....................................................................................................125 GoodWest ......................................................................................................95 Goya ..............................................................................................................13 GSK Group ....................................................................................................69 Greencore USA .............................................................................................139 Hershey’s.......................................................................................................19 Home Market Foods .....................................................................................33 Honeywell .....................................................................................................22 Horizon/Ne-Mo’s Fine Bakery Products ....................................................147 Hughes Network System,LLC......................................................................137 Hunt Brothers Pizza .....................................................................................43 Hussmann .....................................................................................................85 Imageworks Tobacco Displays ...................................................................77 Industrial Vacuum Systems.........................................................................152 InLine Plastics...............................................................................................74 Kretek/Djarum ..............................................................................................57 J&J Snack Foods Corp..................................................................................27 Jelly Belly ......................................................................................................29 John Middleton.............................................................................................31 JTM Foods/JJS Bakery .................................................................................23 Kretek ............................................................................................................57

Krispy Krunchy Chicken..............................................................................103 Liggett Vector Brands ..................................................................................109 Living Essentials ..........................................................................................49 Loomis ...........................................................................................................123 Mars Wrigley Confectionery .......................................................................47,117,143 McKee/Little Debbie ....................................................................................37 McLane Co. ...................................................................................................39 Micro Matic ...................................................................................................146 Nat Sherman LLC .........................................................................................3 National Grid.................................................................................................149 National Tobacco ..........................................................................................35 Nestle Professional.......................................................................................93 NVE ................................................................................................................158 Omegaflex .....................................................................................................68 Paytronix .......................................................................................................81 Perfetti van Melle .........................................................................................119 PFS Brands ....................................................................................................16-17 Phillips 66 Company ...................................................................................127 Premier Manufacturing................................................................................155 Private Label Manufacturers Association..................................................75 Procter & Gamble .........................................................................................53,65 Renewable Energy ......................................................................................131 RJ Reynolds Tobacco Company .................................................................9 Save-A-Lot ....................................................................................................83 Smart Food ....................................................................................................161 Stout Beverage .............................................................................................113 Subway..........................................................................................................79 Swedish Match .............................................................................................67,111,141,163 Swisher .........................................................................................................51,107,151,159 Tillamook Country Smoker, Inc. .................................................................21 Tyson .............................................................................................................58,59,187 United Display ..............................................................................................61 Universal Merchant Services ......................................................................Outsert Uline...............................................................................................................24 Wayne Fueling Systems ..............................................................................129 Wenzel’s Farms ............................................................................................104 White Castle .................................................................................................89 ZipLine...........................................................................................................70

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Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by EnsembleIQ, 570 Lake Cook Rd. Deerfield, IL 60015. Copyright © 2017 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.

184 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM


Same C-store Channel. Different C-store Businesses.

DIRECTORY OF CONVENIENCE STORES Chains often take a more global view of things and look for products, services, and resources that impact their total enterprise.

DATABASE OF SINGLE STORE CONVENIENCE OWNERS Single store owners, along with their distribution partners, often don’t have the level of business support that chains bring to their stores. They’re always on the lookout for new products and solutions to compete in an increasingly complex market.

In C-store retailing, there is no “one size fits all” solution. Chains and single-store operators occupy the same channel, but they have very different challenges.

Reach All the Right Retailers in All the Right Ways Visit www.Retailbuyers.net, call 813-713-4301 or contact klopez@ensembleIQ.com for more information or product demonstrations. POWERED BY


GETTINGTOTHECORE

Conversing About Coffee C-store shoppers share their opinions on this very personal beverage

A

person’s coffee order is as unique as their personality, from the traditional black coffee drinker to the triple-shot frozen mocha latte with whipped cream drinker. EnsembleIQ Research, sister company of Convenience Store News, recently surveyed convenience store shoppers about multiple facets of their away-from-home coffee consumption — what they buy, when they buy it, how often they buy, etc. — as well as their thoughts on new, emerging coffee types like cold brew and nitro. Given that more than 50 percent of those surveyed find cold brew appealing, it’s no surprise more and more retailers are adding this option to their coffee offering.

How would you characterize the following types of coffee? COLD BREW COFFEE

Very appealing Somewhat appealing Neither appealing nor unappealing Somewhat unappealing Not at all appealing Not sure what it is

NITRO COFFEE

25.5% 25.8% 14.8% 7.6% 22.1% 4.2%

7.8% 11.5% 19.8% 7.3% 20.6% 33.1%

The percentage of convenience store shoppers who purchase coffee away from home (not necessarily from a c-store) for immediate consumption at least once a day.

15.6%

Among those who buy immediate-consumption coffee, a whopping eight in 10 (80%) make their purchase before 10 a.m. The second-ranked time slot is 10 a.m. to noon (27%).

How often do you purchase coffee for immediate consumption? Multiple times a day Once a day Multiple times a week Once a week A few times a month Once a month Less often than once a month Do not consume

6.4% 9.2% 13.6% 10.4% 16.8% 8.6% 11.8% 23.2%

Base: Consumers visiting a c-store at least once a month Source: Convenience Store News Market Research, 2017

Base: Consumers visiting a c-store at least once a month Source: Convenience Store News Market Research, 2017

Females find cold brew coffee far more appealing than males do, while older consumers are particularly unsure about what nitro coffee is.

Northeast consumers, more than any other region, seek a daily java jolt. A quarter of those surveyed in the Northeast purchase immediate-consumption coffee at least once a day, compared to 17.2% in the West, 13.3% Midwest, and 11.5% South.

Which of the following would you be most likely to purchase from a convenience store? TOTAL

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, a leading provider of data collection solutions for the research industry. Visit www.prodegemr.com for more info.

186 Convenience Store News | OCTOBER 2017 | WWW.CSNEWS.COM

MALE

FEMALE

Self-serve coffee from a glass pot or thermal dispenser/airpot

32.3%

39.1%

26.0%

A coffee drink prepared by a barista

29.2%

22.3%

35.5%

Self-serve coffee dispensed from a machine

28.6%

27.7%

29.5%

9.9%

10.9%

9.0%

A bottled or canned coffee drink

Base: Consumers visiting a c-store at least once a month who drink coffee at least occasionally Source: Convenience Store News Market Research, 2017

Men prefer their coffee from a glass pot or thermal dispenser, while women prefer theirs prepared by a barista.


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