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

GAME CHANGERS Eight developments that will redefine the future of U.S. convenience and fuel retailing

THE BEST NEW C-STORE PRODUCTS OF 2019

OCTOBER 2019 CSNEWS.COM

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The future of our industry is about innovation, products with the potential to reduce harm and adult consumer choice. Through our companies and strategic partners, we’ve invested in the most compelling portfolio of non-combustible products. We strive to give adult consumers the choices they want today — and invest and develop products for tomorrow.

Servicing: Philip Morris USA U.S. Smokeless Tobacco Company John Middleton Nu Mark Nat Sherman

©2019 Altria Group Distribution Company | For Trade Purposes Only

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VIEWPOINT

Are You Ready to Play a New Game? C-store retailers must keep up with a rapidly changing industry Convenience Store News’ editorial team presents eight developments we think will redefine the future of convenience and fuel retailing in the United States (see page 30).

IN THIS ISSUE,

But are c-store retailers ready to meet the challenges of these game changers? It appears that some are already trying to evolve. Nearly two-thirds of the c-store technology executives surveyed in the 2019 CSNews Technology Study said their technology budget spending increased in the past year (see the full study findings on page 68). In the past couple of months, we’ve posted numerous stories on CSNews.com about the lengths c-store retailers are going to in order to meet the challenges of the future. Some examples of how retailers are investing in technology in various ways include:

to empower its field employees and provide better insight to the company’s franchisees. The nation’s largest c-store chain is equipping field employees with Microsoft Surface devices to provide franchisees with insight from corporate into their store’s performance, purchase trends and other data. • Chevron Corp. continues to enhance its payment options. The Chevron and Texaco mobile apps now include the Chevron and Texaco eGift Card. This new digital payment solution enables consumers to pay for fuel and car washes at the dispenser with their mobile phones. They can also link physical Chevron and Texaco gift cards to their app user accounts. • Russell’s Convenience joined the growing bandwagon of c-store retailers implementing frictionless checkout. In late August, it began rolling out a “Scan & Go” mobile checkout app to all 19 of its Denver sites. The technology enables Russell’s to reach customers directly to inform them of deals and in-store promotions, improving both the satisfaction and frequency of shopping trips.

• Alimentation Couche-Tard has implemented new digital and loyalty solutions, including its Lift upselling program and newly launched Easy Pay rewards program. Easy Pay has been rolled out to all of its U.S. Circle K network with the exception of Holiday Stationstores, which are expected to come onboard shortly. Lift, the in-store upsell tool, is in almost 5,750 of its U.S. stores and is beginning to be deployed in Canada. The retailer is also piloting one-hour home delivery from more than 160 stores in the Houston area.

And there are so many more examples of c-store retailers investing to meet the challenges of the future. My only question is: What is the other one-third that didn’t increase their tech spending waiting for?

• Meanwhile, 7-Eleven is using modern workplace solutions, data services and devices from Microsoft

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

EDITORIAL EXCELLENCE AWARDS (2013-2019)

EDITORIAL ADVISORY BOARD Brett Atherton Bolla Management

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

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

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

Laura Aufleger OnCue Express

2018 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Website Business to Business, Retail, Full Issue, October 2017 Business to Business, Editorial Use of Data, June 2017 2017 Eddie Awards, Folio: magazine Winner, Business to Business, Retail, Single/Series of Articles, May 2017 Honorable Mention, Business to Business, Retail, Single/Series of Articles, June 2016 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

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

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

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

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

Chris Hartman Rutter’s Ray Johnson Speedee Mart

Danielle Mattiussi Maverik Inc. Vito Maurici McLane Co. Inc. Richard Mione GPM Southeast Jonathan Polonsky Plaid Pantries Inc. Greg Scriver Kwik Trip Inc. Bill Stein Core-Mark Roy Strasburger Strasburger Retail

Jack Lewis GPM Midwest

2015 American Society of Business Press Editors, Midwest Regional Azbee Awards Gold, Best Special Supplement, November 2014 Silver, Best Profile (long form), February 2014 2016 Trade Association Business Publications Intl. Tabbie Awards Silver, Front Cover Illustration, June 2015

OCT

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Edward Davidson ER Davidson & Associates (7-Eleven Inc., retired) Jim Hachtel Eby-Brown Co.

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

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

Rick Crawford Green Valley Grocery

Joe Lewis ExtraMile Convenience Stores

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CONTENTS OCT 19

VOLUME 55 N UMB ER 10

94

30 103 FEATURES

DEPARTMENTS

COVER STORY

VIEWPOINT

STORE SPOTLIGHT

30 Game Changers Eight developments that will redefine the future of U.S. convenience and fuel retailing.

3 Are You Ready to Play a New Game? C-store retailers must keep up with a rapidly changing industry.

103 Homegrown Convenience Enmarket’s one-of-a-kind store in Savannah, Ga., pays tribute to the retailer’s history.

10 CSNews Online

TWIC TALK

COVER STORY

64 The C-Store of the Future Leading industry executives share their future visions for convenience and fuel retailing. FEATURE

68 Better Technology to Better Serve Customers The top tech priorities of c-store operators include replacing aging POS systems, managing labor and becoming EMV compliant at the pump. FEATURE

94 New Products for the New Generations Our 23rd annual Best New Products Awards honor 29 innovative items new to c-store shelves.

OUT & ABOUT

19 Turning the Spotlight on Technology McLane unveiled a comprehensive back-office solution and more at its 2019 National Trade Show. 20 New Products SMALL OPERATOR

105 Line Aarnes, Alimentation Couche-Tard Inc./Circle K The 2018 TWIC Woman of the Year believes more effective sponsorship is needed. INSIDE THE CONSUMER MIND

122 The Meat of the Matter Plant-based alternatives are increasingly grabbing consumers’ attention and dollars.

24 Who Says Technology Is Just for the Big Guys? Small operators have the opportunity to compete on larger scales with some must-have solutions.

122

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THE OF THE CROP

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CONTENTS OCT 19

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12 14

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

Don Longo dlongo@ensembleiq.com

Editor-in-Chief (201) 855-7608

Linda Lisanti llisanti@ensembleiq.com

Senior News Editor (201) 855-7618

Melissa Kress mkress@ensembleiq.com

Associate Editor (201) 855-7619

HOW TO 80 Defend Against Dollar Stores C-stores can protect their turf against value retailers by focusing on strengths and differentiation. INDUSTRY ROUNDUP 12 Casey’s Gearing Up for More Growth 14 Federal Officials Move to Ban the Sale of Flavored E-Cigarettes 16 Eye on Growth 16 Competitive Watch 18 Retailer Tidbits 18 Supplier Tidbits

CATEGORY MANAGEMENT FOODSERVICE

83 What’s Hot on C-store Menus? Don’t be chicken to learn from quick-serve restaurants. FOODSERVICE

84 Chewing on the Present & Future of Convenience Foodservice The 2019 Convenience Store News Convenience Foodservice Exchange delved into the varied challenges and opportunities in the category.

Angela Hanson ahanson@ensembleiq.com

Associate Managing Editor (201) 855-7604

Danielle Romano dromano@ensembleiq.com

Contributing Editor (303) 741-3377

Renée M. Covino reneek@aol.com

Contributing Editor (201) 280-2614

Tammy Mastroberte tmastroberte@gmail.com

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

Rachel McGaffigan rmcgaffigan@ensembleiq.com

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

Ron Lowy rlowy@ensembleiq.com

Associate Publisher & Midwest Sales Manager Kelly Fischer (773) 992-4464 kfischer@ensembleiq.com Account Executive & Classified Advertising Terry Kanganis (201) 855-7615 tkanganis@ensembleiq.com Classified Production Manager Mary Beth Medley (856) 809-0050 marybeth@marybethmedley.com EVENTS Executive Vice President, Events & Conferences Ed Several (860) 830-8321 eseveral@ensembleiq.com

TOBACCO

88 The Next Big Thing? Oral nicotine is starting to take off as consumers embrace alternatives to traditional tobacco. GROCERY

92 Bagging a Grocery Turnaround Most segments in the edible and non-edible grocery categories are lackluster at best.

84

AUDIENCE List Rental (847) 492-1350 ext.318

MeritDirect Elizabeth Jackson

Subscriber Services/Single-Copy Purchases Omeda (847) 564-1468 CVN@Omeda.com PROJECT MANAGEMENT/PRODUCTION/ART Vice President, Production (877) 687-7321 Creative Director (973) 607-1320

Derek Estey destey@ensembleiq.com Colette Magliaro cmagliaro@ensembleiq.com

Advertising/Production Manager (773) 992-4418

Ed Ward eward@ensembleiq.com

Art Director (973) 607-1321

Lauren DiMeo ldimeo@ensembleiq.com

CORPORATE OFFICERS Chief Executive Officer Jennifer Litterick Chief Financial Officer Dan McCarthy Chief Operating Officer Joel Hughes Chief Innovation Officer Tanner Van Dusen Chief Human Resources Officer Ann Jadown Executive Vice President, Events & Conferences Ed Several

CONVENIENCE STORE NEWS AFFILIATIONS Premier Trade Press Exhibitor

The contents of this publication may not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for product claims and representations.

Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by EnsembleIQ, 8550 W. Bryn Mawr Ave., Ste. 200, Chicago, IL 60631. Subscription rates: $125 for U.S. addresses; $190 for Canadian addresses; $275 for all other addresses. Single copies (pre-paid only): $20 in the U.S. Foreign single copy sales (pre-paid only): $85.00. Periodical postage paid at Chicago, IL 60631, and additional mailing addresses. Copyright 2019 by EnsembleIQ. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or information storage and retrieval system, without permission in writing from the publisher. Reprints, permissions and licensing, please contact Wright’s Media at ensembleiq@wrightsmedia.com or (877) 652-5295. POSTMASTER: send address changes to Convenience Store News,, PO Box 3200, Northbrook IL 60065-3200.

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o

The Cl Ck is TiCking on Two Key C-STore

DeaDlineS onvenience store executives spend a lot of time focused on getting the customer in and out quickly.

c

But many have another clock to watch, the one ticking down toward some important industry changes:

The October 2020 Outdoor EMV Liability Shift The major card brands have set October 1, 2020, as the deadline to upgrade outdoor pumps to accept EMV chip cards to avoid full liability for fraud at the pump.

C th

The rapidly approaching End of Life for Verifone and Gilbarco hardware switches Verifone and Gilbarco plan to end direct support for outdoor switches that connect pumps to POS by late 2020. C-stores must move to a Managed Network Service Provider (MNSP) to achieve and maintain EMV at the pump.

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By tifi AV m

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Missing Cutoff Dates Brings Risk

So sh

MANy c-StoreS Are Not oN ScHedule to Avoid tHe eMv liABility SHiFt:

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Just 13% of retailers report their fuel islands are fully deployed with contact EMV, according to Conexxus.

Large chains have moved first, and look likely to comply on time, but every store can achieve success if they plan effectively and start now.

I

WIthout outdoor EMV or uPGrAdEd SWItchES, c-StorES INcrEASE thEIr rISkS:

Fraud Liability:

Loss of Support plus PcI compliance Liability:

• Merchants are currently protected from most pump fraud. After October 1, 2020, stores without outdoor EMV will become liable for 100% of the cost.

Once Verifone and Gilbarco end support for their hardware switches, c-stores that have not made the transition to MNSP support:

• Non-EMV fuel pumps will be targeted more frequently as more pumps are upgraded.

• Have no access to support for payment issues, software updates or security patches

In Florida, the number of skimmers on pumps tripled from 2015-2017, and rose another 27.6% from 2017-2018

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customer risk: As non-EMV gas pumps become greater targets for fraud, customers will gravitate to upgraded pumps. • 62% of U.S. adults are concerned with the security of their financial data when paying at fuel pumps and convenience stores.

• Fall out of PCI compliance • Are challenged to meet brand dual-path network requirements

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By


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Clocking In for the Challenge There is a silver lining in complying with these deadlines – the chance to reduce stores’ IT burden and implement more reliable, comprehensive network services to drive the business forward. By choosing a high quality, certified MNSP like Hughes, c-stores AVOID cost and risk and GAIN many benefits.

.

Avoid These 1. 2. 3. 4. 5. 6.

100% liability for fraud at the pump PLUS breach costs Loss of customers to stores with upgraded pumps PCI risk and penalties Non-compliance with brand dual-path requirements Increased security risks Becoming the easiest target

Gain These 1. 2. 3. 4. 5. 6. 7.

Access to network optimization Enhanced security/help with PCI Single point of contact for all support issues Ability to add new technologies Greater cost efficiency Support for safety and accreditation of pumps Reduced fraud and shrink

Time is Running Short Act Now to Secure HigH QuAlity upgrAde ServiceS

Key

FACTS:

Services only available from Gilbarcoor Verifone-certified MNSPs

Demand far outstrips supply, so waiting to make a move could mean significant delays

Some certified providers just do EMV upgrades. To truly enhance the business, c-stores should partner with a full service MNSP that offers comprehensive network solutions. Hughes offers these advantages:

e . Independently Validated, Best of Breed Solutions

Comprehensive Unified Threat Management (UTM)

PCI Compliance Services

Managed circuits with network optimization

Nationwide 24/7 Service and OnSite Support

me

UPGRADING POS SwITCHES AND ENABLING OUTDOOR EMV IS A chANcE to uPGrAdE thE NEtWork AND GroW thE buSINESS. By acting fast and choosing Hughes, c-stores can transform the upgrade into opportunity for: Full compliance

Greater infrastructure performance and efficiency

Offer new services to customers

More robust security

SPONSORED BY

SOURCES: 2019 Conexxus eMV surVey, WPTV, youGoV/ACI WorldWIde

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CSNEWS ONLINE

ONLINE EXCLUSIVE

TOP VIEWED STORIES

1

Allsup’s Stores in Texas Sold & Rebranded

2

Casey’s Cooks Up Midwest Mystery Pizza, Launches Naming Contest

3

Drugstore Chains Are Closing Stores, Slowing New Openings

4

Altria Confirms Merger Talks With Philip Morris International

Majors Management LLC purchased nine Allsup’s stores in Texas and is transitioning them to Hop-In locations. Based in Lawrenceville, Ga., Majors Management is a multi-brand fuel distributor and convenience store operator with more than 400 c-store sites in 11 states.

Casey’s General Stores Inc. unveiled a new Midwest Mystery Pizza, available for order starting Sept. 1. The specialty pie features a combination of Midwest-inspired ingredients, including pulled pork, bacon, Sweet Baby Ray’s barbecue sauce and fire-roasted corn.

There will be fewer new drugstores opening on corners across the United States. Walgreens will close 200 U.S. locations, while CVS is lowering its number of new sites per year.

Two major tobacco players are exploring the possibility of joining forces. Altria Group Inc. confirmed it is in discussions with Philip Morris International Inc. to merge the two companies. The talks center on a potential all-stock merger of equals.

5

How Love’s Spent This Summer: Growing

Far from taking a summer vacation, Love’s Travel Stops & Country Stores was busy opening new locations as travelers hit the road this summer. Since mid-July, the travel center operator has opened several new sites and a retread tire facility.

EXPERT VIEWPOINT: The Loyalty Program as a Relationship Builder Many U.S. convenience store retailers already have a loyalty program in place — 73 percent of them, says Brandon Logsdon, senior vice president of marketing cloud solutions for PDI Software. That’s because loyalty programs generate useful data and insights into customer behaviors, help retailers present the most relevant offers and rewards to their members and, importantly, encourage profitable repeat business. Most of all, a loyalty program is the ideal vehicle for c-stores to build longterm relationships with customers. Like any mutually beneficial relationship, a loyalty program requires ongoing dialogue and effective communication. Logsdon offers three ways c-store operators can bring in the “human element” to improve communications with their most dedicated customers.

Speedway Holds Pole Position in C-store Digital Scorecard

Competition between convenience store retailers continues to expand from brick-andmortar to online engagement with shoppers. A recent study by Ameex Technologies compares top c-store retailers based on website performance, site traffic analytics, and social media engagement. A composite score based on these factors allows for ranking retailers by overall online engagement. Comparing July 2019 metrics, Speedway LLC ranked No. 1 overall with solid scores for website performance, site traffic, and social media engagement. Sheetz Inc., QuikTrip Corp., Kwik Trip Inc. and Wawa Inc. rounded out the top five. For more exclusive stories, visit the Special Features section of csnews.com.

MOST VIEWED NEW PRODUCT

VELO Nicotine Pouches

R.J. Reynolds Vapor Co. expands its modern oral nicotine portfolio with VELO, a line of tobacco leaf-free and spit-free nicotine pouches. The new product is initially being offered in two flavors, mint and citrus, and two nicotine strengths, 2 milligrams and 4 milligrams. VELO pouches contain no tobacco leaf or other tobacco plant matter apart from the nicotine extracted from the tobacco plant. Made from high-quality ingredients, VELO is meant to address key adult tobacco consumer preferences for choice, convenience and consideration, while providing a flavorful and enjoyable experience, the maker noted. R.J. Reynolds Vapor Co. Winston-Salem, N.C. rjrvapor.com

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

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INDUSTRY ROUNDUP

Casey’s Gearing Up for More Growth The convenience store chain will break ground on a third distribution center this fall By Melissa Kress

CASEY’S GENERAL STORES INC. is finalizing plans to add a third distribution center to its network. This key agenda item comes as the convenience store retailer targets building 60 new stores and acquiring approximately 25 additional stores in its fiscal year 2020.

Moving toward that goal, Casey’s opened 15 new stores and acquired four stores during the first quarter of its 2020 fiscal year. The chain also has 11 additional stores under agreement to purchase, according to Casey’s President and CEO Darren Rebelez. “You should expect a relative even distribution of new store openings this fiscal year,” he said during the company’s first-quarter fiscal 2020 earnings call, held Sept. 10. “Currently, we have 107 sites in our pipeline, including 35 under construction — which positions us well for future growth.”

As Casey’s continues to grow its store network, the company remains focused on looking for ways to increase efficiency. This is driving the retailer to prepare for a new distribution center in the southwest portion of its territory. “We are in the final stages of evaluating a location and design for our third distribution center. As a result, we anticipate breaking ground on the new facility this fall,” Rebelez said. “This will alleviate the pressure off our current distribution centers, enabling our entire network to become more efficient. It will also allow us the ability to efficiently expand into new markets.” Plans for a third distribution center come just three years after Casey’s cut the ribbon on its second distribution center in spring 2016. That 250,000-squarefoot facility in Terre Haute, Ind., helped alleviate pressure off the retailer’s Ankeny, Iowa, distribution center and allowed Casey’s to explore expansion opportunities further east. As of April 30, Ankeny-based Casey’s operated 2,146 stores across 16 states.

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INDUSTRY ROUNDUP

Federal Officials Move to Ban the Sale of Flavored E-Cigarettes FDA action comes as states like New York and Michigan take matters into their own hands ON SEPT. 11, U.S. Health and Human Services Secretary Alex Azar announced that the Food and Drug Administration (FDA) would make removing unauthorized, non-tobacco flavored e-cigarettes from the market a priority. The policy will include all flavors, including mint and menthol.

A federal ban on flavored e-cigarettes and vapor products joins numerous measures and proposals at the local and state levels taking aim at these products.

“The Trump administration is making it clear that we intend to clear the market of flavored e-cigarettes to reverse the deeply concerning epidemic of youth e-cigarette use that is impacting children, families, schools and communities,” Azar said. “We will not stand idly by as these products become an on-ramp to combustible cigarettes or nicotine addiction for a generation of youth.”

On Sept. 18, New York became the first state to implement an executive action banning the sale of flavored e-cigarettes and vapor products. The state Department of Health gave retailers a roughly two-week grace period before conducting visits to enforce the ban.

Following the FDA’s 2016 deeming rule, which set regulations for e-cigarettes and vapor products among other tobacco products, all electronic nicotine delivery systems (ENDS) must file a Premarket Tobacco Application (PMTA) for FDA approval to remain on the market. To date, the agency has not approved any PMTAs for ENDS. The move toward a flavored e-cigarette ban comes amid a rising number of reports of vaping-related lung illnesses, which have led to several deaths across the United States. In early September, the FDA and Centers for Disease Control and Prevention joined forces with state and local health officials to investigate the cause of the illnesses.

FAST FACTS

81

%

Eighty-one percent of Americans say they never order groceries online, while 11 percent say they do so at least once a month. — Gallup’s annual Consumption Habits survey

New York Gov. Andrew Cuomo’s move followed Michigan Gov. Gretchen Whitmer’s order to the Michigan Department of Health and Human Services to issue emergency rules to ban the sale of flavored nicotine vaping products in retail stores and online. In addition, New Jersey Gov. Phil Murphy established the Electronic Smoking Device Task Force. He directed the 10-member panel to formulate a comprehensive strategy to protect New Jersey residents from the hazards of electronic cigarettes. And in California, Gov. Gavin Newsom signed an executive order directing the California Department of Public Health (CDPH) to launch a $20-million statewide digital and social media public awareness campaign about the health risks of vaping nicotine and cannabis products. He also tasked CDPH with developing recommendations to reduce smoking among young adults and teens by establishing warning signs with health risks where vaping products are sold, and on product advertisements.

58

%

Produce tops the list of items shoppers want to buy local, according to 58 percent of consumers, followed by bakery and foodservice offerings. — Nielsen

37

%

Only 37 percent of c-store retailers say their current IT system is “very prepared” to cope with consumer checkout demand during busy periods. — C-store Technology Insight Report, Censuswide on behalf of Zynstra

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INDUSTRY ROUNDUP

Eye on Growth

Alimentation Couche-Tard Inc. transferred 56 U.S. company-operated Circle K stores to CrossAmerica Partners LP. In exchange, CrossAmerica transferred the property for 19 U.S. company-operated convenience stores to Couche-Tard.

ExtraMile Convenience Stores LLC, a joint venture between Chevron U.S.A. Inc. and Jacksons Food Stores Inc., is expanding. The partners are converting 22 Jacksons Food Stores in the Treasure Valley region of Idaho to the ExtraMile brand. True North Energy LLC acquired 25 convenience stores from Schmuckal Oil Co. The deal also includes Schmuckal Oil’s small wholesaler fuel and transportation businesses. Global Partners LP opened the doors on its first Alltown Fresh store in Connecticut. The 4,780-square-foot store offers made-to-order meals focused on organic, glutenfree, vegan and locally sourced alternatives.

At 6,000 square feet, it will be double the size of many Casey’s stores.

Casey’s General Stores Inc.’s new c-store in Belton, Mo., will serve as the retailer’s new store prototype. It will feature a bigger full-service kitchen, expanded menu and more seating.

Boyett Petroleum is rebranding 10 of its Cruisers, Cruise In, Cruise Out locations to the 76 brand. All 10 stations are located in the Modesto, Calif., metro area and will undergo conversion during the fourth quarter of this year.

Competitive Watch print to 46 states with the construction of new stores in Washington and Wyoming, which are scheduled to open in early fiscal year 2020.

Walgreens and Wing Aviation LLC are partnering to pilot drone delivery in Christiansburg, Va., beginning in October. Eligible customers will have access to more than 100 products and six convenient “packs” via the Wing app. Dunkin’ unveiled a plant-based meat alternative at certain locations in New York through a new partnership with Beyond Meat. The restaurant brand plans to roll out The Beyond Sausage Breakfast Sandwich nationally at a future date. Dollar General Corp. is growing its foot-

Target is launching a new private grocery brand, Good & Gather. Once fully rolled out, it will be the retailer’s largest owned brand to date.

Target also plans to open 30 small-format locations this year, bringing its small-format network to more than 100 stores.

Citing the success of the format, Dollar Tree Inc. is increasing the number of new-model Family Dollar H2 store renovations it will complete in its 2019 fiscal year. The company plans to have approximately 1,150 H2 stores up and running within the fiscal year. KFC, in partnership with Beyond Meat, introduced Beyond Fried Chicken on Aug. 27 for a limited test run. The move made it the first national U.S. quick-service restaurant to introduce a plant-based chicken product.

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INDUSTRY ROUNDUP

Retailer Tidbits

7-Eleven Inc. introduced Mobile Checkout at participating convenience stores in New York. The launch follows a test of Scan & Pay, a mobile self-checkout platform, at 14 Dallas-area 7-Eleven stores in 2018. Rutter’s debuted the first of several planned video gaming terminals (VGTs) rooms. In conjunction with Marquee by Penn, a subsidiary of Penn National Gaming Inc., Rutter’s plans to open more than 10 VGTs rooms within its stores in 2019. Russell’s Convenience implemented frictionless checkout at its 19 locations. The chain is the first c-store retailer to use Skip’s back-office open application programming interfaces.

Supplier Tidbits

The station has the capacity to fill 50 heavygoods vehicles a day.

Circle K teamed up with Gas Networks Ireland to open Ireland’s first publicly accessible fast-fill compressed natural gas station. The station is at Circle K’s Dublin Port location. Wawa Inc. is working with SolareAmerica to install solar panels at 93 of its stores across New Jersey by the end of 2020. Installations are already completed on two stores’ canopies. Hy-Vee Inc. is rebranding Hy-Vee Gas locations in Kansas and Missouri to the new Hy-Vee Fast & Fresh Express banner. The renovated locations will include new foodservice offerings, new departments, and updated signage.

PepsiCo Inc. unveiled its first cashback loyalty program, PepCoin. The digital program rewards customers who purchase a single-serve PepsiCo beverage and a Frito-Lay snack together, both specially marked. Cash-Wa Distributing Co. is acquiring Food Services of America’s (FSA) distribution operation in Fargo, N.D. The existing executive team and all other FSAFargo employees will continue to operate the distribution center. The Hershey Co. made minority investments in emerging snacking businesses, FULFIL Holdings Limited and Blue Stripes LLC. C7 Ventures, Hershey’s venture model, provides the company with new avenues for growth through the deployment of small capital investments.

The RACS program also imposes automatic limits on the amount of product a legal-age customer can purchase.

Juul Labs is rolling out a new Retail Access Control Standards (RACS) program. RACS locks a pointof-sale system when a Juul product is scanned and remains locked until a retailer electronically scans a valid ID to verify the age and identification validity. Platform Beer Co., based in Cleveland, is the newest craft partner to join Anheuser-Busch’s Brewers Collective. Under the new partnership, Platform will operate in Cleveland, Cincinnati and Columbus, Ohio. Rich Products acquired Christie Cookie Co. The gourmet cookie maker has one manufacturing facility, two retail bakery shops in Nashville, Tenn., and a retail location in Bridgestone Arena, home of the Nashville Predators.

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OUT & ABOUT

Turning the Spotlight on Technology McLane unveiled a comprehensive back-office solution and more at its 2019 National Trade Show By Angela Hanson CONVENIENCE DISTRIBUTOR McLane

Co. Inc. kicked off its 2019 National Trade Show by highlighting the technology advances it has made over the past 10 years, as well as those that its customers can expect to see in the near future. With the goal of adding value year over year, the Temple, Texas-based company has achieved $376 million in savings through cost avoidance, vendor compliance, technology updates and operational costs, according to Deon Johnson, vice president of applications. “Our goal is to do whatever we can to save time and money,” Johnson said during his presentation at the event’s Technology Conference. “We’ve gone from a warehouse company that does technology to a technology company that does warehousing as an option.”

McLane’s 2019 National Trade Show highlighted several new technology offerings, as well as new private label brand products and more McLane Kitchen menu items.

numbers per store can register to receive the same notifications. Additionally, each notification includes a phone number that connects the retailer with a McLane representative if they need more information.

McLane’s biggest tech announcement at the show, held Aug. 21-22 at the Henry B González Convention Center in San Antonio, was the unveiling of its new back-office management solution for convenience store retailers, which serves as a one-stop shop for their technology needs. The solution uses the industry-standard language NAXML to share data and communicate with three of the largest point-of-sale hardware providers in the industry: NCR RPOS, Gilbarco Passport and Verifone Ruby2.

The trade show additionally featured the debut of a new tablet that was built with c-stores in mind. It features an integrated scanner, larger screen size, information storage for up to 25 stores, and both water resistance and the highest level of protection from dust.

Key benefits of the new solution include:

This year’s National Trade Show theme was “Sales Fiesta.” On the expo floor, McLane featured more than 40 new CVP private label brand products. The convenience distributor also previewed new CVP packaging with a more premium image.

• Centralized pricebook management; • The ability to set up and manage distributors, stores, groups, retails and costs; • Fuel setup and management; • Item mix-match, combos, promotions, bundling and happy hour specials; • Age verification; • Category management; • Back-office data can now be established with retailers directly from McLane instead of from third-party back-of-house companies, which can be difficult to obtain; • The ability to reduce back-office costs; and • A monthly lease for the solution. McLane also announced the addition of text message notifications to its Delivery Tracker application. Retailers can receive up-to-date delivery information via push notifications sent from the warehouse. Up to five phone

Looking ahead, McLane is gathering input from its customers to develop an e-commerce solution that retailers can host on their own websites, integrate with their loyalty programs and back-of-house solutions, and use to adapt to changing consumer expectations.

A Sales Fiesta

New McLane Kitchen offerings unveiled included turnkey soups, roller grill jalapeno western omelets, salads with protein, and custom parfaits. Its Fly Guys pizza brand marked its first anniversary and a year of positive reception, according to the company. While it can fit any-size retailer, Fly Guys is particularly well suited to c-stores with smaller footprints. And in recognition of a major trend spreading across the retail industry, McLane dedicated an entire aisle of this year’s show solely to CBD (cannabidiol) suppliers and their product offerings, which included ingestible gels and capsules, lotions and balms, transdermal patches and more. Some exhibitors displayed detailed packaging information and scanable QR codes to demonstrate full Food and Drug Administration compliance. CSN

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NEW PRODUCTS

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1. Pillsbury Stuffed Waffles

2. VOSS Flavored Sparkling Waters

3. Jelly Belly Candy Cupcakes

4. ALIVE Adaptogenic Teas

Sweet and maple-flavored, Pillsbury Stuffed Waffles come in two varieties: sausage, egg and cheese, and bacon, egg and cheese. They can be heated with multiple prep methods, including microwaves, speed cook ovens, convection ovens, rack ovens, conventional ovens or impingement ovens. The product has a hold time of up to four hours, and its sandwich format makes it a convenient grab-and-go breakfast item for busy customers, according to the maker. General Mills Convenience Minneapolis (800) 243-5687 generalmillscf.com

Strawberry Ginger and Raspberry Rose varieties join the VOSS Flavored Sparkling Waters lineup. Existing flavors include Tangerine Lemongrass, Lime Mint and Lemon Cucumber. Made from ultra-pure VOSS water, VOSS Flavored Sparkling Waters are all natural, and have zero calories and no sugar. They come in single 330-milliliter PET glass bottles and four-packs. VOSS Water New York vosswater.com

Jelly Belly Candy Co. introduces Jelly Belly Candy Cupcakes, an assortment of miniature cupcake replicas. The candy comes in five flavors: strawberry, blueberry, chocolate, French vanilla and banana. Each creamy-textured candy piece has a cupcake flavor base and a frosting flavor on top, and is completed by a bakeryperfect swirl. Jelly Belly Candy Cupcakes are available in three-ounce grab-and-go bags, as well as in bulk. Jelly Belly Candy Co. Fairfield, Calif. (800) 323-9380 jellybelly.com

GT’s Living Foods launched ALIVE, a line of adaptogenic teas inspired by Ayurvedic medicine. An infusion of three adaptogenic mushrooms — Reishi, Chaga and Turkey Tail — is combined with select varieties of invigorating teas and a touch of raw apple cider vinegar. The beverages are available in six varieties: Black Lemon, Cascara Spice, Matcha Vanilla, Guayusa Turmeric, Mate Mint and Pu-Erh Root. The ALIVE teas offer a crisper, revitalizing alternative to the brand’s signature Organic & Raw Kombucha, according to the company. The suggested retail price is $3.99 per bottle. GT’s Living Foods Beverly Hills, Calif. gtslivingfoods.com

5. Tyson Mini Chicken Corn Dogs Tyson Foodservice introduces a new product designed to meet the demands of today’s mindful eaters without compromising flavor. Tyson’s new Mini Chicken Corn Dogs feature a handheld format and crunchy, whole-grain batter with a hint of honey around ground chicken. The Mini Chicken Corn Dogs can be served as a shareable appetizer, portable snack, loaded entrée or a kids’ menu item. They are made from chickens raised with no antibiotics, and contain no artificial ingredients, nitrates, or nitrites added. Tyson Foodservice Springdale, Ark. tysonfoodservice.com

5

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NEW PRODUCTS

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6. Forth CBD Line Forth CBD is a line of hemp-derived, full-spectrum CBD products driven by consumer research. The franchise offerings were developed together with, and for, adult convenience store consumers with impulse-buy packaging sizes, as well as a variety of formats they’re already shopping for in a c-store environment — from disposable vapor options to tinctures, topicals and more. All Forth CBD products contain U.S.-grown, fullspectrum CBD. E-Alternative Solutions Darien, Conn. ealternativesolutions.com

7. Teavana Sparkling 8. Rich’s Farm Craft Iced Teas Rich Breaded Avocado Slices First launched regionally in

9. Nature Valley Crispy Creamy Wafer Bars

the Northeast and Midwest last year, Teavana Sparkling Craft Iced Teas are now available nationwide in three varieties: Sparkling Blackberry Lime Green Tea, Unsweetened Sparkling Peach Nectarine Green Tea, and new flavor Sparkling Blood Orange Mango White Tea. The ready-to-drink beverages are brewed from some of the finest Teavana teas and botanicals, and are free of artificial flavors. Each 14.5-ounce bottle has a suggested retail price of $2.39. Starbucks Corp. Seattle teavana.com/craft-iced-tea

General Mills Convenience adds to its Nature Valley line with the introduction of Nature Valley Crispy Creamy Wafer Bars. The 1.3-ounce bars feature a unique dual texture, combining layers of crispy wafers with creamy peanut butter. The new product comes in two varieties: Peanut Butter and Peanut Butter Chocolate. The bars contain no artificial colors, flavors or sweeteners, and have a suggested retail price of $1.49. General Mills Convenience Minneapolis (800) 243-5687 generalmillscf.com

Rich’s introduces Farm Rich Breaded Avocado Slices, cut from premium Hass avocados and coated with a crispy ancho chili pepper flavored breading. Avocados are surging in popularity, and now convenience stores can offer them to customers as a standalone snack with a ranch dipping sauce, as a topping to burgers and salads, or as a component in menu items like a breakfast burrito, the company noted. Available nationwide, Farm Rich Breaded Avocado Slices ship in a case of five two-pound packs of frozen avocado slices, ready to bake or fry. Rich’s Foodservice Buffalo, N.Y. richsfoodservice.com

10. Ne-Mo’s Treats Ne-Mo’s brings to market two new cake square varieties, as well as a new cake bread flavor. The Strawberry Cake Square is topped with a sweet cream cheese icing. The Classic Yellow Cake Square is complemented by a sweet chocolate buttercream icing. The new Peanut Butter & Jelly Bread is a classic flavor combination of a triple berry jam baked into a rich peanut butter batter, and then topped with sweet peanut butter chips. Horizon Food Group San Diego nemosbakery.com/treats.html

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SMALL OPERATOR

Who Says Technology Is Just for the Big Guys? Small operators have the opportunity to compete on larger scales with some must-have solutions By Danielle Romano IF THERE IS ONE COMMON denominator between the convenience store industry’s small operators and bigger players, it is people — customers and employees alike. By creating a technologically relevant experience that attracts customers and retains employees, small operators can be more competitive in the marketplace.

“While most small operators do not have budgets to allocate to technology investments at the same level as larger regional or national operators, technology investments still play a key role in defending and growing market share,” said Aaron McLean, chief operating officer at Stuzo, a commerce technology solutions provider. “As such, small operators cannot ignore key technology investments.” According to the 2019 Convenience Store News Technology Study, nearly twothirds of c-store IT executives surveyed said their tech budget increased in the last year. Of the money spent, about two-thirds went toward store-level technology (63.6 percent), including investments in hardware, software, cloud subscription fees, IT staff, store-level IT, service contracts and consulting services. The remaining 36.4 percent went to headquarters technology. The top two advantages that technology bolsters for small operators when

competing in today’s retail landscape are operational efficiency gains and frictionless experiences. With labor shortages and higher wages producing strong headwinds for the industry, it’s critical for small operators — defined as having one to 10 stores — to run a lean business operation, explained Bree Bergman, Zebra Technologies’ North America retail marketing lead. “Time is money. Technology, while it is an investment, will help improve operations and ultimately the bottom line,” Bergman told Convenience Store News. “Checkout and inventory management solutions that create a frictionless experience for both customers and employees create stronger loyalty — ultimately helping improve the top line.” Stuzo’s McLean echoes Bergman’s sentiment, adding that for small operators, technology investments typically need to provide a greater return on investment (ROI) per dollar spent and be hyperfocused on areas that have the highest probability of ROI within a short window of time. With the right investments, small operators can benefit from: • More store visits and more spending per visit; • An increase in bottom-line performance;

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• Capitalizing on new business model opportunities quicker; • Delivering a more seamless and convenient consumer experience; • Increased efficiency and productivity across supply chain/logistics, IT, marketing and store operations; and • Reduced security and business continuity risk. Smaller players should keep in mind that every retailer’s technology journey is different, and just because a certain technology is installed by a competitor, that doesn’t necessarily mean it’s the right answer for their business. Any technology change can appear daunting — especially when the technology landscape is extremely complex and rapidly evolving — so Bergman advises small operators to start first with identifying what business problems need to be solved and then asking themselves why each problem needs to be solved until they get to the root of the issue. “While this may seem like a trivial process, it will help narrow the focus when searching for what technology is needed today and desired for the future,” she said. “It’s important to take a step back, remove the blinders and really evaluate operational processes from an outside-in perspective. What tasks or processes take a long time to conduct? Which have several steps involved? Are there areas where pen and paper are being used?

Offering True Convenience Denver’s Choice Market takes an omnichannel approach to customer service Choice Market, the convenience-grocery store hybrid and brainchild of founder and CEO Mike Fogarty, takes an omnichannel approach when it comes to technology services offered. With the opening of its second location in early October, Choice Market will introduce a new format that offers consumers delivery and three payment options: autonomous checkout, order and pay ahead via the Choice mobile app, and traditional checkout. “There’s nothing more valuable than our customer’s time and we are really excited to offer this new format, which allows them to combine several different shopping occasions in one stop, while providing them the option to skip the checkout process all together,” said Fogarty. “If customers cannot make it to the store, we will deliver any of our products to their doorstep within 45 minutes. That is true convenience.” To enable the autonomous checkout, Choice has partnered with Ava Retail, which uses artificial intelligence, computer vision and IoT (internet of things) to track a customer’s purchases within the store. This platform uses less hardware and infrastructure than other competitors while still leveraging the powerful Microsoft Azure cloud, according to the company. Acknowledging that technology is a sizable investment, Fogarty suggests online ordering as an easy, low-cost option to add a digital component for customers, seeing as most point-of-sale (POS) solutions offer some sort of native online ordering platform, or the ability to integrate with partners. There are also great cloud-based POS and e-commerce solutions that require limited customization and can be a good starting point for small operators, he advised. “The costs for these technologies have decreased dramatically in the past several years, offering small operators a low barrier to entry,” Fogarty told Convenience Store News. “Meanwhile, larger brands with legacy systems will have a much longer and complex digital transformation. Move with speed and stay ahead of the curve!”

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“It’s very easy to become comfortable with processes that have been in place for years, but even though it may be a tried-and-true method, there may be a better, more efficient and more cost-effective way to accomplish the same end result,” she advised.

Must-Have Technologies While each small operator’s technology needs will be different, there are some must-have technologies that all smaller players should invest in, according to the experts. Point-of-sale (POS) remains a core, essential site system. A solid internal network infrastructure and stable, dependable internet connection are incredibly important, especially during times when fuel or convenience SKUs jet into high demand — for example, during extreme weather situations.

move. Or, if an operator is looking to better compete in foodservice and customer service as prepared foods become more attractive due to their higher margins, then he or she should consider an investment in a POS and kitchen management system. If taking this route, they shouldn’t forget to tack on inventory management and food safety/labeling solutions to ensure minimal waste and to keep customers safe. Over time, as technology evolves and improves, demand increases and the global supply chain is able to produce technology at lower costs — all referred to as “technology cost curves,” according to McLean. Newer technologies, which today are mainly accessible only to the largest operators, will become more accessible to smaller players. Two key examples are mobile commerce programs and frictionless commerce capabilities.

“If an operator is offline and cannot run their POS, or cannot accept credit card payments, then consumers will go down the street to the larger operator that is online,” McLean noted.

Another potential path available for small operators is RFID tags, which use smart barcodes to identify items. RFID tag prices have declined over the last few years, which makes it much more attractive and affordable now for small operators, according to Bergman.

If a retailer’s POS system already supports seamless integration of third-party loyalty programs, then a well-designed loyalty program could be a great next

“Try a crawl, walk, run approach and start with a handheld RFID reader first and you’ll be amazed at the time-savings,” she said. CSN

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COVER STORY

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GAME Eight developments that will redefine the future of U.S. convenience and fuel retailing A Convenience Store News Staff Report

s Greek philosopher Heraclitus said, “Change is the only constant in life.” Convenience store operators in the United States are keenly aware of this, as the industry is under increasing pressure to rapidly change in order to maintain its stake on “convenience.” Most retailers, regardless of channel, are going after the “convenience” shopping trip. With new innovative technologies and services being introduced almost daily, the very definition of “convenience” keeps changing and so, convenience stores must change along with it. C-store operators must meet the needs of customers today, while anticipating for tomorrow what they’ll want, when they’ll want it, where they’ll want it and how they’ll want it. Utilizing next-level business intelligence, embracing new forms of mobility, offering simpler and easier ways to shop in-store and remotely, and revolutionizing their product mix are just a few of the ways top-tier convenience channel players are proactively defending their turf. In this month’s cover story, Convenience Store News’ editorial team presents eight developments we think will redefine the future of convenience and fuel retailing in the U.S. With the c-store industry in such flux, it was hard to narrow it down to just eight, but we believe these are the developments that will prove to be true “game changers” in the years to come. OCT

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COVER STORY

Mobility Changes Course Electric vehicles and shared mobility services are poised to transform the fuels landscape By Linda Lisanti LAST YEAR, the U.S. convenience channel sold $432 billion worth of motor fuels, the industry’s highest fuel sales since 2014. Now, also consider that last year, there was a 75 percent increase in sales of plug-in electric vehicles (EVs) in the United States.

“The driver of an EV today was buying gasoline at your store yesterday,” noted John Eichberger, executive director of the Fuels Institute, a nonprofit organization founded by NACS that brings together diverse stakeholders to evaluate issues affecting the vehicles and fuels markets. More than 2 million electric vehicles were sold globally in 2018, up from just a few thousand in 2010, according to the 2019 Electric Vehicle Outlook prepared by analysts at Bloomberg New Energy Finance (BNEF). The annual long-term forecast looks at how electrification and shared mobility will impact road transportation from now to 2040. The outlook projects annual passenger EV sales will rise to 10 million in 2025, 28 million in 2030 and 56 million by 2040. By 2040, it’s projected that 57 percent of all passenger vehicle sales worldwide will be electric, as will 30 percent of the global passenger vehicle fleet. “Sales of internal combustion passenger vehicles have already peaked, and may never recover unless EV growth falters or major economies such as China invest in significant stimulus programs,” this year’s BNEF report stated. Greater EV adoption is being driven by, among other things: falling battery prices; improved price parity between EVs and internal combustion vehicles; tighter emissions regulations at both the local and national levels; and automakers launching new EV models into the market. Even though EVs are still a small percentage of all the vehicles on the road today — as of June 2019, 1.5 percent of all light-duty vehicles sold in the U.S. were battery-powered — they are growing at a fast rate, and convenience store retailers are taking notice, and action.

“Sales of internal combustion passenger vehicles have already peaked, and may never recover unless EV growth falters.” — Bloomberg New Energy Finance report

By the end of 2020, Wawa Inc., which operates more than 850 c-stores in Pennsylvania, New Jersey, Delaware, Maryland, Virginia, Florida and Washington, D.C., plans to double its number of stores that offer Tesla Superchargers. Wawa started offering Superchargers in 2017 after customers who were Tesla drivers began requesting them. Stores with the charging stations typically have eight Superchargers per site. A Supercharger allows Tesla drivers to add approximately 150 miles of driving time with 15 minutes of charging. Fellow Pennsylvania c-store chain Sheetz Inc. also has begun adding Tesla Superchargers to the forecourts at its stores. Sheetz began adding electric vehicle chargers to its portfolio in 2013. The retailer now has different types of chargers depending on the store

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location, including Electrify America charging stations at four stores. Other c-store industry players embracing the EV movement are: • Massachusetts-based Pride Stores, which included a charging station in its recently introduced store of the future in Springfield, Mass.; • Circle K parent Alimentation CoucheTard Inc., which is growing its network of charging stations in Europe. At these locations, the retailer redesigned the food offering and store layouts to drive more customers into the store and encourage larger basket purchases while they wait for their EV charging to be completed. Couche-Tard also has designated Norway as a laboratory for testing different approaches to the changing fuels market; and • Chevron Corp., which is partnering with EVgo to add fast charging to select Chevron-owned and -operated gas stations in California.

are advantages to being an early mover,” he said, explaining that resources are currently available to help retailers install EV chargers, but these same resources may not exist in five years. “So, you might want to look into opportunities now,” Eichberger advised. “The EV driver will likely plug in wherever they have the opportunity. If your competitor gives them that opportunity and you don’t, they’re going to your competitor.”

The Impact of Shared Mobility Services Electric vehicles are just one headwind facing the c-store fuels business. Another headwind is today’s young adults, who are said to be driving less (or not at all), increasingly moving into urban centers, and using ride-sharing services quite often. Shared mobility services, such as taxis, ride-sharing and car-sharing, today account for less than 5 percent of the total distance traveled annually by passenger vehicles, according to Bloomberg New Energy Finance. However, the use of these services is rising quickly and expected to keep growing, gradually reducing the demand for private vehicle ownership. According to the latest BNEF Electric Vehicle Outlook, shared mobility services are projected to rise to 19 percent of the total kilometers traveled by passenger vehicles by 2040. And shared mobility services will adopt electric vehicles faster than private owners — BNEF expects EVs to account for 80 percent of the shared mobility fleet by 2040. While Eichberger maintains that every situation around the change in mobility is being overstated, he does acknowledge that the younger generations are getting their driver’s licenses later, they are moving to urban areas, and they are using ride-sharing services more than older generations. He finds it difficult, though, to get his arms around some people’s predictions that in just 20 years, most individuals will choose to be completely carless and that autonomous ride-hailing services will be commonplace. While “intriguing” and “thoughtprovoking,” Eichberger doesn’t see these things as realistic in the timetable of the next two decades. Further out, perhaps.

Eichberger of the Fuels Institute notes that there’s still a ways to go before electric vehicles are a definitive “threat” to the c-store fuels business, but he adds, “EVs are coming.” He can see a scenario in 2040 or 2050 where the scale tips and 51 percent of the market becomes EVs. “It’s not necessarily a threat [right now], but it is an opportunity. There

“I can see applications in the near-term. I can see long-haul trucks that go across the country — Point A to Point B — being autonomous. I can see autonomous driving for retirement communities where the aging residents don’t drive anymore. I can see dedicated lanes on highways for autonomous vehicles only. … But something better might be discovered,” he pointed out. “You know, this isn’t a movie. The script hasn’t been written. We’ll keep asking: What is the best for reducing emissions and what is the best for the consumer?”

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Convenience to the Extreme From self-scanning to mobile checkout, frictionless will become a must-have By Danielle Romano WHAT BEGAN as one-click shopping is

today one of the most prominent, soughtafter, need-to-have customer experiences. Frictionless commerce is here to stay thanks to the digital transformation of retail that enables increasingly immediate gratification for consumers.

consumers seek a seamless in-store experience with little to no interaction. A recent study from Engine Insights, a marketing solutions firm headquartered in New York, found that a quarter or more of consumers would be willing to pay a premium to ensure the availability of human assistance in their future retail experience — with the exception of convenience stores.

E-commerce giant Amazon is credited as being the first to bring frictionless checkout to the U.S. brick-and-mortar retail market with the January 2018 debut of its Amazon Go store concept in Seattle. The store’s “just walkout technology” enables customers to grab items off the shelves and walk out without having to go through a traditional checkout. The process is simple: customers merely need to scan their smartphone using the Amazon Go app upon entry, and then are charged for the goods picked up during their shopping trip upon exiting.

The Appeal of Self-Scanning

Frictionless rivals the speed and convenience of e-commerce, as today’s

Self-scanning is just one barrier breaker of frictionless checkout and is a draw for both retailers and consumers. Beyond the speedy checkout,

A frictionless shopping experience also eliminates the seemingly ageless deterrent of long lines. U.S. consumers spend nearly 37 billion hours annually waiting in lines, according to technology provider Zippin. Additional findings from ZK Research reveal that 86 percent of shoppers avoid stores with habitually long lines and 74 percent will shop a competitor rather than a store whose checkout queues are usually long. Long lines can also make shoppers change their minds about completing a purchase (41 percent).

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self-scanning technology provides customers with additional benefits, like checking prices, locating products, tracking their spending while they shop, and viewing retailer/supplier videos. They also can access information unavailable on product labels, such as allergy interactions and traceability data. For retailers, self-scanning — which is usually linked to a retailer’s loyalty program — can be used to send consumers promotions while they shop based on their individual profiles. This capability piques consumers’ interest to buy with personalized offers, while providing a unified experience. Pioneering self-checkout in the convenience channel, Whitehouse Station, N.J.-based QuickChek Corp. implemented the technology as early as 2010 with “Fast Lanes.” After two years of studying the technology and visiting West Coast small-format supermarkets with it, QuickChek began rolling out selfcheckout stations from NCR Corp. in its c-stores. “Fast Lanes” allow each store to serve more customers during peak sales periods, while helping to reduce customer wait times and parking lot congestion, according to the retailer. Self-scanning strongly appeals to millennials, who seek personalized shopping experiences and like feeling in control and using technology. Brick & Clicks: Understanding the Omnichannel Landscape, a study from Acosta, found that almost half of millennials are “very interested” in self-scanning, while 36 percent are “interested” or “somewhat interested.” Among Generation X, 28.7 percent are very interested, 16.2 percent are interested and 23.3 percent are somewhat interested. Baby boomers are also attracted to self-scanning, with more than 20 percent indicating they are very interested/interested and 22.5 percent somewhat interested. A January 2019 Retail Transformation Study by IHL Group revealed that 19 percent of retailers in the United States plan to implement self-scanning over the next year, 23 percent within two years and 12 percent over the next three years.

Frictionless Checkout in the Convenience Channel With the rise of e-commerce competition, particularly from Amazon, and retailers being forced to reinvent the customer experience, frictionless checkout takes the convenience of self-scanning to

“By adding Skip to our arsenal of customer service competencies, we expect to see higher frequency and volume of transactions simply from the competitive advantage this partnership will provide.” — Quinn Ricker, Ricker’s

the next level and is being seen as a long-lasting technology for the c-store industry. In the race against time, many c-store retailers are approaching frictionless checkout by utilizing outside providers. One of the most popular is Skip, whose c-store package uses a simple process that requires minimal implementation and infrastructure, meaning less costs and a quicker turnaround. Skip is integrated with point-of-sale and loyalty providers and, unlike the technologies used in Amazon Go, Skip’s frictionless checkout app does not require users to scan their phone upon entering. They simply scan products and use their phone to checkout, paying with cash, credit, Google Pay or Apple Pay. Ricker’s, a chain of 58 c-stores in Indiana that was recently acquired by Giant Eagle, was among the first operators to implement Skip. The Ricker’s model has been described as a hybrid of mobile pay and Amazon Go’s “just walk out” experience. “By adding Skip to our arsenal of customer service competencies, we expect to see higher frequency and volume of transactions simply from the competitive advantage this partnership will provide. Not to mention being able to convert frequent fuel purchasers into loyal in-store customers,” said Quinn Ricker, CEO and president of Ricker’s. Other c-store retailers that have adopted Skip’s frictionless checkout technology include Cruizers, Domino c-stores, Enmarket, High’s, Jiffy Trip and Russell’s Convenience. On the other side of the equation, 7-Eleven Inc. is reportedly the first U.S. c-store chain to develop proprietary technology for a full frictionless payment experience. 7-Eleven’s “Mobile Checkout” was introduced at participating New York City stores this summer. The launch followed a test of “Scan & Pay,” a mobile self-checkout platform, at 14 Dallas-area stores in 2018. 7-Eleven’s Mobile Checkout is a frictionless shopping experience that lets customers skip the checkout and pay for their purchases using the 7-Eleven app. It is available for most 7-Eleven merchandise that has a barcode and works on both Android and iOS devices.

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COVER STORY

Service on Demand

Traditional delivery is now evolving into autonomous delivery vehicles and drones By Angela Hanson when the flexibility of online shopping and the speed of order shipping has forced retailers across all categories to change their business strategies or lose out to e-commerce, convenience stores have held strong because of the attribute in their very name.

AT A TIME

Conveniently located, often open 24/7 and able to offer a variety of products faster than consumers could get them from any online storefront, c-stores have maintained a place in today’s retail landscape. However, advances in technology are making service on demand an important area for the channel’s continued success. In practice, service on demand most frequently means delivery, giving customers full control over what they want and when through a method that may be faster, or at least easier, than making a stop at their local c-store. The most futuristic methods of delivery include items brought directly to the customer without the need for human assistance, and it’s already happening in some areas. After years of work on the project, Amazon announced in June that self-piloted drones would begin making deliveries to customers’ homes within months. The drone units use computer vision and machine learning to detect and avoid people or clotheslines in backyards during the landing process, and can fly up to 15 miles to deliver items weighing up to five pounds in 30 minutes. Additionally, Walgreens, FedEx and Google-owned Wing plan to begin exploratory drone deliveries in Christiansburg, Va., in October. The sky isn’t the only setting for experiments in autonomous delivery, either. In early 2019, Amazon launched the ground-based initiative, Amazon Scout. The six-vehicle test program uses autonomous electric vehicles that are the size of a small cooler and move at a walking pace to make deliveries five days a week in a Seattle-area neighborhood. While autonomous delivery on demand is a long way from making the traditional

“Customers in smaller cities and towns often have fewer convenient options available to them. These customers — just like those living in major cities — need more convenience in their lives.” — Daniel Folkman, goPuff

c-store obsolete, it could eventually do so if it reaches full-scale capacity, according to Ryan Webber, vice president of enterprise mobility for SOTI, a provider of mobile and IoT device management solutions. “Convenience stores therefore need to implement innovative in-store, self-service technology to maintain a competitive edge and stay in the game,” Webber said. “Considering that many singlestore and small-chain retailers might not have the financial resources to invest in autonomous delivery methods like the big-box retailers, they should still be exploring self-service technologies that can be provided in-store to meet new and evolving consumer preferences.”

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Traditional Delivery Services For now, experiments with cutting-edge technology are only glimpses of what lies ahead, but many companies are already hustling to gain loyal customers through the technology that is readily available today. Offering service on demand is a major competitive advantage. Digital convenience retailer goPuff launched in 2013 with the intention of disrupting the industry, allowing Philadelphia-area college students to order up to 50 basic products in 30 minutes or less for a $1.95 delivery fee. A year later, goPuff expanded into a full, on-demand convenience delivery service. These days, the company is in more than 90 markets, including major cities across the United States. Although goPuff delivers from centrally located warehouses, from the customer’s perspective, its storefront is located inside their mobile phone. The company’s strategy is shaped by the fundamental changes happening in how people shop, according to goPuff’s Daniel Folkman, vice president of business development. “Today’s consumer grew up in the age of digital impulse: they are trained to purchase products like clothes, books and electronics online rather than going to the store,” he said. According to Folkman, the traditional c-store industry hasn’t kept up with this shift, despite being an extremely impulsedriven channel. “With a rising demand for instant gratification, today’s consumer can now watch any movie with the click of a button, hail a ride in five minutes, and get new clothes delivered in a day. Why should they have to wait more than 30 minutes to get their convenience store items delivered?” he questioned. GoPuff started out in major metropolitan areas, but isn’t overlooking smaller municipalities. “We see just as much demand in small markets as we do in larger ones,” said Folkman. “Customers in smaller cities and towns often have fewer convenient options available to them. These customers — just like those living in major cities — need more convenience in their lives.”

Traditional c-store players are likewise looking to make a name for themselves through boosted convenience and speedy delivery. A variety of thirdparty partner companies that require less investment than developing an in-house delivery service stand ready to help. Letting customers order via mobile app is particularly worth considering for foodservice-focused convenience store chains, especially since many of their quick-service restaurant (QSR) competitors are already doing so. In late 2018, Subway announced partnerships with DoorDash, Grubhub, Postmates and Uber Eats, making it the first QSR to team up with four of the largest third-party delivery providers, according to the company. Starbucks launched its own partnership with Uber Eats to roll out Starbucks Delivers to nearly a quarter of its U.S. companyoperated stores. Within the convenience channel, well-known chains such as QuikTrip Inc. and Alimentation Couche-Tard Inc./Circle K are experimenting with delivery, while others like Wawa have committed to expanding the service within their footprints. Kwik Trip Inc. is among the most recent to expand delivery, going from two cities to seven, with more to come. “The response has been overwhelming from our loyal customers. And that meant one thing: We needed to expedite the launch of delivery at other Kwik Trip locations,” David Jackson, digital marketing and loyalty manager, said following the initial two-store pilot period. Delivery on demand isn’t just a store-to-home service, either. In June, 7-Eleven Inc. updated its 7NOW delivery app to include 7NOW Pins, which represent public spaces where customers can receive deliveries from participating 7-Eleven stores. This can include parks, beaches, sports fields, entertainment venues and other public locations that lack traditional addresses. “Our mission is to redefine convenience by becoming a customer obsessed, digitally enabled company,” said Gurmeet Singh, 7-Eleven’s chief digital, information and marketing officer.

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Your New Customer

Generation Z longs for retailers to provide engaging in-store experiences By Danielle Romano operators would be wise to gain the loyalty of Generation Z, now the largest generational cohort. Gen Z, the generation after millennials, is made up of those born from the mid-1990s to the early 2000s. This group currently accounts for 25 percent of the U.S. population, making it a larger cohort than baby boomers or millennials. Gen Z also claims more than $40 billion in buying power, and prefers to shop in physical stores, according to San Diego-based Interactions’ recent Next Generation Retail study.

CONVENIENCE STORE

Some other interesting insights the study uncovered about Gen Zers are: • 89 percent are very price-conscious and prefer to spend money on experiences vs. material items. • 81 percent are willing to switch from their favorite brand if they find a similar product at a higher quality.

• Three-quarters prefer to shop at retailers that provide an engaging in-store experience. • 63 percent expect retailers to have a social media presence. • 82 percent say the opinions of others on social media have influenced them to shop at a retailer they’ve never shopped at before. “Generation Z is constantly connected to technology, which retailers may find intimidating to overcome when it comes to in-store engagement. However, our study found that this group is longing for retailers to provide an engaging in-store experience. In fact, when given the choice, the majority prefer shopping in-store vs. online,” said Interactions President Bharat Rupani.

Connecting With Gen Z Foodservice can play a significant role in creating an engaging experience that speaks to Gen Zers. The latest Kids Dining Study from Chicago-based Y-Pulse, a division of Olson Communications, found that Gen Z consumers are beginning to take a greater interest in

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What About Millennials? The second-largest generation is still very valuable to the convenience channel c-stores as a food venue than consumers under the age of 18 in previous years’ studies. Given this group’s interest in quick ordering and grab-and-go foods, c-store retailers have an opportunity to secure a loyal customer base by injecting variety and interest into their foodservice menus with limited-time offers and seasonal items. Marketing healthier items as “fresh” on c-store menus can also go far in attracting the interest of this demographic. However, playing up the offer is just one part of the equation. The other half is the in-store experience. According to data from FutureCast, 75 percent of Gen Zers check a store’s app while they’re shopping for special offers before finalizing purchases, and the same percentage would rather shop at a retailer that accepts mobile payments than one that doesn’t. Gen Z is the first generation that has truly grown up in a purely technology-driven world, so targeting this demographic with mobile apps and mobile payment options is crucial. “As digital natives, all Gen Z has ever known is instant gratification, which most directly correlates with the convenience shopping experience,” noted Yakir Gola, co-founder and CEO of goPuff, an on-demand convenience delivery service.

Looking Ahead Gen Z consumers, who are currently age 22 at the oldest, are sure to evolve as they get older. It will be at least 15 to 20 years before they surpass the buying power of millennials, according to Don Stuart, managing director of Wilton, Conn.-based Cadent Consulting Group. “While they are entering the workforce with the lowest unemployment rate in the past several decades, incomes are generally stagnant. However, we should not minimize the buying power influence that Zs wield, which is estimated to be north of $500 billion annually,” Stuart said. Other forecasts for Generation Z include: • By 2020, this cohort will make up more than 40 percent of buying power, and it will be the top consumer group in seven to 10 years.

While convenience store operators should be pondering ways to start building loyalty among Generation Z, they must keep their focus on the millennial generation as well. Millennials, currently the second-largest cohort behind Gen Z, are the most educated generation; they’re making more money than previous generations; and they’re more socially and fiscally aware than their forebears, according to Marketing Zen Group CEO Shama Hyder. And what’s most important for retailers to understand is that millennials — those born between 1981 and 1996 (ages 23 to 38 today) — are after a great value. They want a great product, a great experience while getting that product, and a great price for the product. When it comes to appealing to millennials, here are a few tips for c-store and fuel retailers: Utilize multi-channel. According to Kimberly Otocki, content marketing specialist for loyalty provider Paytronix, millennials as shoppers are less likely to want to carry another card in their wallets and prefer to use their phones. So, multi-channel loyalty programs that not only have a card, but also a mobile app and a website are ideal. Make the offer relevant. Some messaging that works well with millennials is alerts that let them know they’ve achieved a new reward, and notifications when their rewards are about to expire. “The more you remind millennials with a message about a reward, the more likely they will return to your store and take advantage of it,” Otocki explained. Connect with mobile. On mobile devices, customers can be reached through SMS, responsive web pages and emails, social media, geofencing and surveys. Customers can also interact with brands through mobile wallets and online ordering, plus mobile payments can help retailers create a frictionless experience for millennials, who are particularly embracing this payment strategy because they can have everything they need to shop a store on their phones.

• The rise of digital has already positioned Gen Z to be “the most vocal and influential generation yet,” goPuff’s Gola stated. “While they may not be the ones funding their purchases, per se, their ability to influence what their friends and family might purchase is strong — almost viral,” he pointed out. • The in-store experience will become increasingly robust with technologies like voice search, geofencing and artificial intelligence (AI), as Gen Z demands a mix of both online and offline shopping experiences.

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The Consolidation Effect

The big will get bigger, with many c-store operators left to figure out where they fit in By Melissa Kress MERGERS AND ACQUISITIONS (M&A) continues to be a hot topic in the convenience store industry. It almost seems as the clock strikes midnight on Jan. 1 each year, speculation begins to swirl around the who, what and when of major deals that may be coming down the pike.

This year, Cumberland Farms raised quite a few eyebrows when news broke in the spring that the Westborough, Mass.-based retailer hired Bank of America to explore its options. The usual suspects were bantered about as possible buyers — Canada-based Alimentation Couche-Tard Inc. and Findlay, Ohio-based Marathon Petroleum Corp. (MPC) — but it was relative newcomer EG Group and its Cincinnati-based EG America arm that took the 600-store chain this summer. The CSNews.com story about the transaction drew more than 10,000 page views. Industry interest in M&A activity is not the exclusive realm of huge, headlinegrabbing deals, though. This summer, Majors Management LLC inked a smaller agreement with Allsup’s that garnered more than 15,000 page views on CSNews.com. The Lawrenceville, Ga.based multi-brand fuel distributor and convenience store operator purchased nine Allsup’s stores in Texas, with plans to rebrand the locations to Hop-In stores. Majors Management also acquired 17 Shop “N” Fill stores in early August when it acquired Bowden Oil Co. Inc., and the company will be transitioning those stores to the Hop-In banner as well. While all of this handshaking certainly piques the industry’s collective interest, the consolidation effect on the overall U.S. convenience channel is wide-reaching. And industry insiders expect continued consolidation activity for the foreseeable future. In a nutshell, the big will get bigger, the gap between high performers and low performers will widen, and many c-store operators will be left to figure out where they fit in.

Going, Going, Gone Consider the numbers: The U.S. convenience channel closed out 2018 with

Over the past few years, notable names in the industry have disappeared: The Pantry Inc., CST Brands Inc., Susser Holdings Corp. and Tesoro Corp. At the same time, new names have emerged. 153,237 stores — a decline of 1.1 percent year over year, according to the NACS/Nielsen industry store count. The top 10 chains operate 27 percent of the industry’s total stores, as Convenience Store News reported in its 2019 Top 100 report in July. The top three chains — Irving, Texas-based 7-Eleven Inc., Couche-Tard and MPC — alone operate 14 percent of the industry’s locations. Over the past few years, notable names in the industry have disappeared on account of the consolidation effect: The Pantry Inc., CST Brands Inc., Hess Corp., Susser Holdings Corp. and Tesoro Corp.

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(later Andeavor). At the same time, new names have emerged, including United Kingdom-based EG Group and its EG America subsidiary, Chile’s Compañía de Petróleos de Chile COPEC S.A., and Canada’s Parkland Fuel and its Parkland USA subsidiary.

Who’s Next? With more than 95,000 single-store locations in the industry, and retailers continually culling their real estate to have a portfolio that makes sense for them (both in regards to size and markets), consolidation will continue. It just remains to be seen at what pace. “Given that 63 percent of all convenience stores in the United States are owned by an individual operator, and that the largest c-store firms in the U.S. control less than a 5-percent market share, we do not believe that the c-store space is getting too top heavy,” Thomas Nicholas Trkla, chairman and CEO of Yesway, told Convenience Store News. “We do believe that merger and acquisition activity will continue.” Des Moines-based Yesway knows a thing or two about M&A moves. The company, which is operated by BW Gas & Convenience, an affiliate of Beverly, Mass.-based Brookwood Financial Partners, has been busy since entering the industry three years ago. Through a number of smaller transactions, Yesway found its way to No. 48 on this year’s Top 100, a jump of 25 spots. Industry experts have cautioned about potential M&A headwinds, including the cost of capital and the cost of labor. Still, the U.S. convenience and gas market remains attractive. “It has historically been true that the greater the EBITDA of a portfolio of convenience stores, the higher the sale multiple. This has been confirmed by every major recent acquisition in the industry with a high enterprise value,” Trkla said. “We believe that gas stations and convenience stores are compelling targets for a roll-up strategy due to the increased exit multiples of EBITDA for larger portfolios relative to those for smaller portfolios or individual stations.” Even the major oil companies have begun to look at direct store operations again after all but exiting this segment of the business earlier this decade. Those

“Given that 63 percent of all convenience stores in the United States are owned by an individual operator, and that the largest c-store firms in the U.S. control less than a 5-percent market share, we do not believe that the c-store space is getting too top heavy.” — Thomas Trkla, Yesway

players, according to Trkla, are not seeking small opportunities, but rather eyeing what big deals are still out there. “With crashing oil prices in 2014 making MOCs’ [major oil companies’] focus on upstream oil exploration and production unprofitable, attention has turned again downstream to gas stations and convenience stores over the past five years,” he explained. “With a fragmented market and renewed mergers and acquisitions interest, the industry has moved into an acquisitive consolidation phase, as evidenced by the increasing size and volume of recent precedent transactions,” Trkla continued. “Because there are few large players in this space — only seven companies control more than 1,000 stores each — it is not efficient for such MOCs or other strategic buyers to grow through the acquisition of individual stores or small portfolios.”

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Stores Get Smarter

With myriad applications, artificial intelligence will change retailing forever By Don Longo ARTIFICIAL INTELLIGENCE (AI) was cited as one of the top five technologies driving the retail digital transformation in EnsembleIQ’s recent white paper, “Digital Transformation 101: A Guide to the New Retail Revolution.”

AI-enabled machines or systems utilize complex algorithms to sort through myriad data points, according to the white paper produced by Convenience Store News’ parent company and sponsored by Aperion. AI is able to imitate human behavior in many ways — for example, allowing retailers to gather shopper insights in a predictive manner. In this way, retailers can evaluate and predict consumers’ next actions based on both their previous purchasing patterns and future responses to market trends. According to the white paper, retailers this year will increase AI spending on average by 7 percent, with leaders (retailers whose sales are growing at a rate of 5 percent or higher) increasing their AI spending by 20 percent or more. By 2022, the worldwide market for cognitive/AI software platforms is forecasted to approach $9.5 billion, a compound annual growth rate of 36.7 percent from 2018 to 2022. International Data Corp. (IDC) predicts that by the end of this year, AI will impact 25 percent of merchants, marketers, planners and store operations personnel in the United States, improving productivity by 30 percent and results by up to 20 percent.

By 2022, the worldwide market for cognitive/AI software platforms is forecasted to approach $9.5 billion, a compound annual growth rate of 36.7 percent from 2018 to 2020.

This game changer has the potential to alter the retail landscape in several ways:

operations behind the scenes, this deep machine learning can be put directly to use with store robots that use facial recognition to perceive shoppers’ emotions. This type of usage is just in its infancy, but SoftBank Mobile in Japan has already put small Pepper robots in 140 SoftBank Mobile stores to welcome, inform and amuse customers.

Anticipate Customer Needs

Improve Customer Service

The ability of machines to detect patterns from data and learn from experience is revolutionizing retail data, making it possible to provide frictionless commerce in new ways. It gives retailers the capacity to more accurately forecast what and how much should be stocked at each store, and to anticipate new items or types of products that meet shoppers’ needs before they ask for them. In addition to providing advantages to store

Chatbots — AI that can communicate in a way that simulates human conversation — are already helping online shoppers get immediate information they need. Most chatbots operate through a messaging app like Facebook Messenger or WhatsApp, but now they are making inroads into brick-and-mortar stores. Lowe’s, for example, is testing Lowebot, an in-aisle robot with a touchscreen that can answer shoppers’ questions or help them find products in the store. Meanwhile, a New York City liquor store is testing The Mars Agency’s Bottle Genius skill for

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Alexa. Customers can talk to an Amazon Alexa at a merchandiser in the whiskey aisle to learn about and find the perfect bottle of whiskey for them. In-aisle digital assistants improve customer service.

Better Store Planning & Demand Forecasting AI is already playing an important role in store planning and demand forecasting. By using mathematical relationships to highlight and explain shoppers’ purchasing behaviors, AI factors in external elements such as competitive responses to promotions, pricing and market demand to yield more precise forecasts than the traditional method of running sales numbers for individual SKUs to predict future demand.

which recently partnered with InContext Solutions to develop immersive virtual reality testing for AI-powered store planograms. “By virtualizing the process of category- and store-planogram design and testing, Symphony RetailAI and InContext Solutions are able to help retailers create agile store layouts that keep pace with rapidly changing market conditions. In addition to saving time and money building new store environments, retailers can see instant and measurable impact through improved category growth and customer outcomes, visualized by easy-to-use overlay analytics on performance.”

Optimize Pricing & Promotions The ability of AI to help retailers better understand shoppers’ desires, motivations and actions makes it particularly useful in creating more efficient personalized marketing and promotion campaigns. Natural and organic grocer Earth Fare has implemented a promotion optimization solution that uses AI to help it identify which products to promote in its weekly ads to increase shopping frequency and grow individual basket size. The company says the solution drives a meaningful lift in trips and basket size without more margin cost. Machine learning is also being used to automatically create predictive pricing models in real time. The models incorporate such elements as seasonality, economic conditions, inventory purchasing histories, product preferences, supply/demand and competitors’ prices. The resulting pricing engine sorts and compares competitors’ information with a retailer’s own information, factoring in the retailer’s goals around pricing, volume and other metrics.

Improve Labor Scheduling & Enhance Employee Training

For store planning, AI has the potential to optimize the amount of revenue from every square foot. A pet store chain in the United Kingdom, for instance, uses an AI-driven planning and optimization solution to optimize space in its 440 stores. The AI solution conducts a detailed SKU-level performance analysis in each store and recommends an optimal space allocation for each category, aisle and department. Combined with virtual reality (VR), AI also promises to significantly improve the traditional store planning process with better accuracy, speed and costeffectiveness. “Historically, retailers have found investment in store-layout optimization to be prohibitively expensive,” said Pallab Chatterjee, CEO of Symphony RetailAI,

At Reflexis Systems’ annual user conference in Dedham, Mass., retailers, including convenience store chain Cumberland Farms, showcased how they are using machine learning and AI to improve labor scheduling, accurately predict future staffing levels, and leverage associate skills. “Artificial intelligence has the potential to change industries, particularly retail, forever,” Michael Johnson, vice president of North America operations for TLM Technologies, wrote in a recent Expert Viewpoints column published on CSNews.com. “AI provides an opening for convenience and fuel retailers to augment their collective intellect by more effectively analyzing and asking better questions of their data,” Johnson continued. Business leaders say they believe AI will be fundamental in the future, and 72 percent say it is a business advantage, according to Price Waterhouse Coopers. In today’s increasingly competitive c-store landscape, AI promises to be a game changer.

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COVER STORY

The Backbar Revolution

New alternative tobacco products offer hope as cigarette volumes continue to decline By Melissa Kress retailers continue to find the cigarettes category under pressure as prices inch up, dollar stores slowly eat away at the tobacco business, and consumer preferences change.

CONVENIENCE STORE

Adult tobacco users are switching to alternatives like vapor products and oral nicotine pouches — using these other tobacco products (OTP) either exclusively or along with cigarettes. In light of this, c-stores are being forced to think outside the traditional backbar. “Combustibles will continue to trend down. This has been a prolonged trend as fewer members of the adult population smoke. Consumers are more educated than ever, so that will continue to lead many to seek less harmful ways to enjoy the nicotine they seek,” Derek Gaskins, senior vice president of merchandising and procurement for Yesway, told Convenience Store News. Des Moines-based Yesway is a convenience store chain operated by BW Gas & Convenience, an affiliate of Beverly, Mass.-based Brookwood Financial Partners. One key factor that could positively affect the cigarettes segment is the increased regulatory focus on electronic cigarettes and vapor products, according to Gaskins. “An unintended consequence of the recent e-cigarette and vape bans could result in a return of many consumers [to cigarettes]. That could spark some growth, but I believe the combination of science, manufacturer and retailer lobbying efforts, and continued innovation in tobacco products will continue to reduce the sales of combustibles over time,” he predicted.

Innovation Impact The tobacco companies’ innovation pipelines are churning, and this is leading to a backbar revolution that shows no signs of stopping. As more tobacco users look for alternative delivery vehicles for nicotine, the manufacturers are rising to meet the challenge. Notably, Altria Group Inc. and Philip

“Innovation in tobacco continues to create alternative mechanisms that consumers are gravitating toward. The new nicotine pouches and IQOS product seem to have tremendous potential.” — Derek Gaskins, Yesway

Morris International Inc. (PMI) have formed a strategic partnership to bring PMI’s heat-not-burn product IQOS to the United States. This spring, the Food and Drug Administration approved a premarket tobacco application for IQOS, paving the way for the product to hit U.S. stores. IQOS is an electronic device that heats tobacco-filled sticks wrapped in paper to generate a nicotine-containing aerosol. Under an exclusive licensing agreement with PMI, Philip Morris USA will commercialize IQOS in the U.S. via three Marlboro HeatStick varieties. In September, the first U.S. IQOS retail store debuted in Atlanta. Tobacco companies are also rolling out oral nicotine pouches, offering yet another option for nicotine delivery. In April, Swedish Match expanded its ZYN nicotine pouch to retail outlets nationwide; the product was previously available in a number of western states only. R.J. Reynolds Vapor Co. also

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COVER STORY

in July 2016,” said Jason Carignan, president of DRYFT Sciences. “Our initial sales and marketing efforts proved very successful with consumers and retailers, and we recognized the need to create a new company focused solely on realizing our vision of bringing innovative nicotine solutions to the broader market.” The newly formed company will execute a national rollout of DRYFT pouches through expanded production capacity, distribution and marketing efforts. “Innovation in tobacco continues to create alternative delivery mechanisms that consumers are gravitating toward. The new oral nicotine pouches and IQOS product both seem to have tremendous potential,” said Yesway’s Gaskins. “They focus on eliminating or reducing the most harmful aspects of the products they seek to replace, while also delivering the nicotine and flavor consumers seek.”

“We continue our significant expansion of backbars to more locations to not only display tobacco cigarettes, but also to make room for the tremendous amount of innovation we are seeing in the category.”

Don’t Count Tobacco Out Canada-based Alimentation Couche-Tard Inc. is seeing strength in alternative tobacco segments in the U.S., Canada, and in markets in Europe where the company is allowed to launch them. “…We continue our significant expansion of backbars to more locations to not only display tobacco cigarettes, but also to make room for the tremendous amount of innovation we are seeing in the category,” Couche-Tard President and CEO Brian Hannasch said during the company’s first-quarter fiscal year 2020 earnings call, which took place Sept. 5.

OTP continued to grow for Couche-Tard by strong double-digits in its latest quarter, despite the loss of flavors by Juul Labs Inc. (In November, Juul announced it was moving the sale of all its flavored vapor products online — with the exception of mint, — Brian Hannasch, Alimentation Couche-Tard Inc. menthol and tobacco.)

entered the oral nicotine space with its VELO product line and in June, Altria signed a definitive agreement to acquire 80 percent of certain companies of Burger Söhne Holding AG that will commercialize on! tobacco-derived nicotine pouches worldwide. In addition, Kretek International Inc. formed a new company, DRYFT Sciences LLC, to focus exclusively on its DRYFT nicotine pouch portfolio. “With changing consumer behaviors and retail trends, the oral nicotine category is growing rapidly around the world. We predicted the broad shift away from traditional tobacco products and launched DRYFT nicotine pouches

“There is lot of innovation in the space with other brands in the vaping space. You’ve got pouch growth in products like ZYN, and other products that continue to see growth,” Hannasch noted. “That story is becoming more diversified than really a Juul story.” When it comes to Juul, though, Casey’s General Stores Inc.’s Chief Financial Officer Bill Walljasper noted that the Ankeny, Iowa-based convenience store chain is experiencing sustained success with the brand. During the company’s first-quarter fiscal year 2020 earnings call on Sept. 10, Walljasper said Casey’s recently marked one year of its rollout of Juul products. “We weren’t sure that momentum would continue in the same trajectory that it did last fiscal year, and so we were certainly pleasantly surprised that the popularity of that product continues to be relatively robust,” Walljasper reported.

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COVER STORY

Cashing In on Cannabis

It’s very possible marijuana and CBD could be the next c-store “it” categories By Angela Hanson ALTHOUGH CANNABIS remains illegal federally, states have begun to legalize or decriminalize it, prompting numerous experts to declare their confidence that it will eventually become legal across the nation; it’s just a matter of how long that will take to occur. At the same time, cannabidiol (CBD) — which is derived from hemp and federally legal provided it does not contain more than 0.3 percent THC — is surging in popularity with consumers.

The current state of the CBD market “sounds counterintuitive” given that the Food and Drug Administration (FDA) is still studying CBD and evaluating the regulatory framework for such products, and consumers themselves aren’t yet certain of the best way to use CBD, according to Mike Luce, co-owner of market researcher High Yield Insights. However, consumers do believe that CBD is effective at boosting wellness in a variety of forms. “For convenience stores, all the forecasts and market sizing should matter less than the mindset of the c-store shopper,” Luce

C-store chains such as Kwik Trip and Sheetz have begun testing CBD products in select stores. However, the landscape for cannabis is rockier since it remains illegal on the federal level. told Convenience Store News. “Dovetail that mindset with the top two drivers for adoption — lower prices and easier access — and c-stores occupy a uniquely advantaged position.” A recent CBD survey shows that approximately 70 percent of retailers sell or plan to sell CBD products, primarily through adding incremental shelf space. Topicals, edibles, tinctures and vaporizers are the most popular CBD products; and retailers see the most CBD innovation in food and beverages, followed by beauty/ skin and nicotine, reported Bonnie Herzog, managing director of tobacco, beverage and convenience store research at Wells Fargo Securities LLC.

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COVER STORY

Momentum Around Marijuana The U.S. landscape for cannabis is rockier, since it remains illegal at the federal level. However, the legalization of cannabis in multiple states and in Canada are signs of an inevitable change that’s coming, according to many industry experts. In August, Canada-based convenience store operator Alimentation Couche-Tard Inc., which operates stores in the U.S. and globally, made a strategic investment in Fire & Flower Holdings Corp., an independent Canadian cannabis retailer. Convenience store chains such as Kwik Trip Inc. and Sheetz Inc. have begun testing CBD products in select stores. Convenience channel distributors also have begun highlighting them — at McLane Co.’s 2019 National Trade Show, attendees could visit an aisle devoted exclusively to CBD suppliers.

Also, consider that in December 2018, Maine saw the opening of Atlantic Farms, the state’s first combined convenience store and marijuana dispensary. “We really wanted to normalize the cannabis experience,” said Jackson McLeod, co-owner and spokesperson for the Portland, Maine, store.

Opening a retail store was the initial idea for the Atlantic Farms team. It was then decided that a The surge in consumer demand is drawing c-store and gas station would serve their purposes well because virtually everyone visits a gas station, many suppliers to look to get their share and there is no social stigma or concern over of CBD dollars, drawing comparisons someone seeing one’s car parked there. to the e-cigarette boom, which saw many companies spring up seemingly Today, the store’s customer base includes both overnight — many of which are no longer cannabis-only and convenience items-only buyers, as in business today. well as some crossover customers. “No one wants to see consolidation squash innovation, but there’s some truth Retailers that are considering offering cannabis to the Wild West analogy today, which isn’t products, where legal, need to be prepared for the challenge, according to McLeod. Along with all the necessarily a good thing for consumers,” usual issues that come with running a c-store, offering Luce said. “As consolidation accelerates — cannabis products requires “the highest level of and it is happening already — the value compliance” with regulations, he said. Local laws, chain should demand that the winners deliver quality and efficacy and not let scale municipal zoning and licensing are major factors as well. alone separate winners from losers.” “Convenience stores are really well equipped for agerestricted purchases,” he said, noting that it is already He recommends retailers interested in common for c-stores to have high security and large selling CBD products form long-term transaction volumes. relationships with reputable suppliers and look for signals such as current certificates of analysis, third-party testing McLeod expects to see more c-stores add cannabis products, “but it will be slow to begin with.” He results, and independent recognition believes small operators will have the advantage over from organizations such as the U.S. larger chains in this business. Hemp Authority. To educate customers, c-store operators may want to supply educational information about CBD near the cash registers, or make it available online. Packaging is also important, as clean and informative labels make a difference, according to Luce, who also noted c-store operators must keep a close eye on future moves by the FDA that could change how CBD is regulated.

The percentage of Americans who think cannabis should be legal is rising steadily. The popularity of CBD products may be contributing to the improved perception of cannabis by helping consumers make the connection between the original plant and the practical and medical uses of products derived from it, McLeod pointed out. “If that trend continues, I do think cannabis will be accepted as much as [alcohol],” he said. CSN

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COVER STORY

THE C-STORE OF THE FUTURE Leading industry executives share their future visions for convenience and fuel retailing “The future is going to be about delivering what the customer wants in the most seamless, frictionless, time-efficient way possible. We need to digitize operations as much as possible and have the best loyalty platform and the best technology that lets us know what the consumer wants even before they know what they want.”

GREG PARKER

Founder & CEO, Parker’s Corp. “Our industry has been defined by serving people where they are, whether at convenient locations on street corners or off highways. Our industry will continue to serve customers even as advances in new fuels, vehicle powertrains and evolving consumer trends in transportation and mobility change what it means to be a ‘convenient’ store. And there could be new definitions of convenience that go well beyond the technologies we see today, which I believe will radically redefine where the point of sale between the convenience store and the customer ultimately resides.”

HANK “HENRY” ARMOUR President & CEO, NACS

“[Customers are] buying healthier products, less sugar, foods with more benefits. Personalization is a big trend; they like things their way. Twenty years ago, there was just black coffee with milk. But convenience is about the time of day and type of product people want. The biggest opportunity moving forward is food and beverage. The second is technology, which can lead to last-mile delivery. The c-store of the future will be slightly bigger than what you see today. It will offer a last-mile solution for anything people want delivered.”

FRANK GLEESON

CEO & President, Aramark Northern Europe 64 Convenience Store News C S N E W S . c o m

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“There will continue to be an even greater need for women’s voices at the senior levels of the industry to better understand how to meet this consumer base that maybe in the past had been underrepresented. It is no longer an industry that does not cater to women. What I do see is a really dynamic industry that is changing rapidly and is full of opportunity.”

JAYNE RICE

Partner, Managing Director & Director of Institutional Sales, Marketing & Investor Relations, Yesway

“Digital has changed the way we live, the way we work and the way we play. We are all living digital lifestyles. Today, the pace of that change is faster than ever. … I believe we are uniquely positioned to grow and to disrupt what convenience, or what ‘making it easy,’ means to our customers and our employees.”

DEB HALL LEFEVRE

Chief Information Officer, Alimentation Couche-Tard Inc./Circle K “Consumers are redefining convenience with their shift toward ease and immediacy. Amenities such as delivery, curbside pickup and frictionless transactions will meet that demand in c-stores. Additionally, foodservice programs will be elevated, along with advances in customer-facing technology such as online/mobile ordering and loyalty apps that improve efficiency.”

VITO MAURICI

Senior Vice President of Sales, McLane Co. Inc. “I believe technology will continue to play a big part in how we shop, in particular with self-ordering, frictionless payment systems and app-based loyalty programs. Eating on the go will continue to grow and evolve with even more sophisticated menus, enhanced and healthier choices, customizable food and beverage options, and a store experience that is both genuine and authentic. Consumer expectations across all retail channels have been elevated to such a high degree that store design will play a bigger role in driving brand loyalty. More specifically, design will be about storytelling and creating ‘foodpressions’ that add credibility to being a food retailer that happens to be convenient vs. a convenience store that happens to sell food.”

JOSEPH BONA

Founding Partner & President, Bona Design Lab “The future of this industry is that convenience stores will continue to evolve into ‘Experience Stores.’ I always talk about creating an experience and about experiential design. It all boils down to giving the customer what they want, when they want it and where they want it. The next generations want everything to be an experience utilizing all the senses.”

MICHAEL LAWSHE

President & CEO, Paragon Solutions 66 Convenience Store News C S N E W S . c o m

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FEATURE

Better Technology to Better Serve Customers The top tech priorities of c-store operators include replacing aging POS systems, managing labor and becoming EMV compliant at the pump By Don Longo Change in Technology Budget 2019 vs. 2018

continue to increase their investment in technology to better serve their customers and improve the efficiency of their operations.

CONVENIENCE STORE OPERATORS

Nearly two-thirds of the c-store IT executives surveyed for the 2019 Convenience Store News Technology Study said their technology budget increased in the past year. Nearly a quarter said their spending increased by 10 percent or more, while another 14 percent said their spending was up between 5 percent and 10 percent. This spending includes all investments in hardware, software, cloud subscription fees, IT staff, store-level IT, service contracts and consulting services.

Increased 10% or more

Increased 5%–9.9%

24.1% 34.5%

No change

13.9% 27.6%

Increased 0.1%–4.9%

Source: 2019 Convenience Store News Technology Study

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FEATURE

What Tech Budget Was Used For Of the money spent in the past year, about two-thirds went toward storelevel technology (63.6 percent) vs. 36.4 percent toward the headquarters level. About 58 percent of the spending went toward replacing equipment, while 42 percent was spent on new equipment. Investment is likely to keep growing as six in 10 c-store retailers (56.9 percent) expect to spend more on technology in the coming year, while only 14.1 percent expect to spend less.

42.4% Replacing equipment

57.6%

Adding new equipment

Source: 2019 Convenience Store News Technology Study

Where Tech Investment Was Spent in 2019

Using technology to better manage store inventory is retailers' top spending priority in the year ahead.

36.4% Headquarters

63.6% Store-level

Source: 2019 Convenience Store News Technology Study

The study found that fewer retailers are outsourcing IT functions. Only 54 percent of this year’s respondents said they outsource IT functions vs. nearly 63 percent who said they did so a year ago. The most commonly outsourced functions are back-office, network management and security. To gauge where c-store retailers will be investing in the future, we asked the IT execs what they hope to accomplish with their technology investments. Using technology to better manage store inventory

Tech Spending Plans for 2020

Will spend the same

Will spend less than in 2019

29.0%

56.9%

Will spend more than in 2019

14.1%

Source: 2019 Convenience Store News Technology Study

Technology Priorities in the Year Ahead CURRENT RANK

YEAR-AGO RANK

NET CHANGE

Better management of store inventory revenue

1

1

0

Employee training

2

6

+4

Replacing aging POS technology

3

2

-1

Reduce theft/shrink

4

3

-1

Better management of store labor expense

5

5

0

Becoming EMV-compliant at pumps

6

8

+2

Social media

7

7

0

Provide better product/service info to customers

8

10

+2

Develop better business intelligence & reporting

9

n/a

n/a

Speed customer checkout process

10

4

-6

Source: 2019 Convenience Store News Technology Study

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

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FEATURE

continues to be the top priority, cited by 58 percent of respondents, up nearly 2 percentage points from a year ago. The biggest increase in focus, though, is for technology to enhance employee training, also cited by 58 percent of respondents, an increase of 35.5 percentage points vs. a year ago. Other areas of focus include replacing aging point-of-sale (POS) systems, reducing theft/shrink, better management of store labor/expenses, and becoming EMV compliant at the pump. All of these were mentioned as priorities by more than 40 percent of respondents. Also mentioned by at least 37 percent of retailers were technology investments in:

Does Your Company Outsource Any IT Functions? CURRENT

YEAR AGO

Yes

54.4%

62.9%

No

45.6%

37.1%

Source: 2019 Convenience Store News Technology Study

Is Your Company EMV-Compliant at the POS? CURRENT

YEAR AGO

Yes

82.4%

76.4%

No, but we’ve started the process

14.0%

16.5%

3.6%

7.1%

• Social media;

No, and we haven’t started

• Providing better product/service information to customers;

Source: 2019 Convenience Store News Technology Study

• Developing greater business intelligence and reporting capabilities; • Speeding the customer checkout process; • Increasing customer payment options; • Providing store managers with more decision tools; and • Food safety technology.

Is Your Company EMV-Compliant at the Pump? CURRENT

YEAR AGO

Yes

40.1%

27.6%

No, but we’ve started the process

40.2%

56.0%

The biggest increase in focus is for technology to enhance employee training, cited by 58 percent of respondents.

No, and we haven’t started

19.7%

16.4%

Payment Systems

20%

This year’s study asked a series of questions about payment systems, particularly retailers’ compliance with EMV (Europay, Mastercard and Visa’s global standard for cards equipped with computer chips and the technology used to authenticate chip-card transactions). It appears that the convenience channel is making some progress in becoming EMV compliant at the fuel pump, although there’s still more work to be

Source: 2019 Convenience Store News Technology Study

Does Your Company Utilize Any Consumer-Facing “Frictionless” Technology?

12% Yes

No, but plan to implement in next 1-2 years

68% No

Source: 2019 Convenience Store News Technology Study

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FEATURE

What Forms of Payment Do You Accept or Plan to Accept? IMPLEMENTED

PLAN TO ADD

In-Store: 100.0%

0.0%

Prepaid/stored value card

64.7%

23.1%

Electronic benefits transfer (EBT)

63.5%

25.2%

Mobile payment (Apple Pay, Google Pay, PayPal, etc.)

50.1%

32.6%

Electronic check verification

45.6%

20.6%

RFID

36.4%

25.2%

Self-checkout

11.1%

33.0%

Biometric payment technology

6.7%

31.2%

93.7%

0.5%

Credit/debit

At Forecourt: Credit Prepaid/stored value card

41.0%

12.9%

Partial debit authorization

39.3%

16.6%

Mobile payment (Apple Pay, Google Pay, PayPal, etc.)

36.9%

31.3%

RFID

13.8%

8.1%

Cash acceptors

24.9%

24.4%

Source: 2019 Convenience Store News Technology Study

done for the industry to be fully compliant by the upcoming October 2020 deadline. Forty percent of respondents said their companies are 100 percent EMV compliant at their pumps, and another 40 percent said they’ve started the process. That’s a big improvement over the 28 percent of retailers who said they were compliant a year ago. However, it’s still troubling that 20 percent said they have not yet started the process of becoming EMV compliant at their forecourt. Many experts predict gas stations will fall short of the stated deadline when liability will shift from the card companies to the retailers who are not compliant.

It's still troubling that 20 percent of retailers said they have not yet started the process of becoming EMV-compliant at the forecourt. by 11 percent of the industry’s retailers, but 33 percent said they are planning to add this customer-service technology in the near future.

When it comes to EMV compliance inside the store, the story is much better. More than 80 percent said they are EMV compliant at the POS and another 14 percent said they’ve at least started the process. Less than 4 percent are not onboard with getting compliant inside their stores.

When it comes to “frictionless” payment technology, similar to the type pioneered by Amazon Go, slightly more than one in 10 retailers are utilizing some form of consumer-facing frictionless technology that allows customers to avoid a physical checkout. Twice that many (20 percent), though, expect to implement frictionless technology in the next 12 to 24 months.

Going deeper into payment systems, the study found that half of c-store retailers are now accepting mobile payments, such as Apple Pay, Google Pay and PayPal, at their POS, while 37 percent of retailers are accepting these mobile payments at the pump.

Promotional & Sales Technology

Self-checkout is currently being offered

Eighty-four percent of c-store retailers have implemented some form of promotional or sales technology, up 2 percentage points from a year ago. The most commonly implemented promotional or sales technology is in-store video monitors, used by 66 percent of those surveyed, followed by digital loyalty programs, used by 46.5 percent of respondents.

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FEATURE

At the forecourt, the most-cited promotional or sales technology is video monitors at the pumps (used by 43.8 percent) and advertisements or coupons at the pump (used by 30.2 percent). A small percentage are offering merchandise ordering at the pump.

Facebook is still the most prevelant social media platform used for marketing by c-store retailers, followed by Twitter and Instagram.

In terms of future plans, retailers said they intend to look into adding text messaging to customers (cited by 35.5 percent), merchandise ordering at the pumps (35.2 percent), advertising/couponing at the pumps (32.5 percent) and digital loyalty programs (29.3 percent).

Four out of 10 retailers said they’ve also incorporated mobile payment in their apps, while about 14 percent have added advanced ordering and about 7 percent said consumers can place orders for home delivery through their mobile apps.

Loyalty Programs & Apps

Social Media

About half of the c-store industry retailers surveyed offer some kind of loyalty program for their customers. Of those that do, about half are proprietary programs, while a third are tied to a major oil company brand. Roughly 17 percent of respondents said they offer both proprietary and major oil branded loyalty programs.

More than eight out of 10 c-store retailers incorporate social media postings into their marketing plans, up four percentage points from a year ago. Facebook is still the most prevalent social media platform used for marketing by c-store retailers — it is utilized by 97 percent of retailers, followed by Twitter at 56 percent and Instagram at 44 percent.

This year, there is a slight uptick in the number of retailers reporting that they have a mobile app for consumers (49 percent vs. 46 percent the previous year). The must-have feature on all retailers’ mobile apps is a store locator (100 percent). Other popular features include fuel price comparisons (60 percent), coupons (59 percent), limited-time offers (55 percent) and customer feedback (55 percent).

After the big three platforms, retailers turn to Google+ (14.3 percent) and Pinterest (12.8 percent) for their social media needs. Foursquare dropped for the second year in a row, down from 8.8 percent to 8.2 percent, while Snapchat burst onto the scene with 9.5 percent of retailers citing use this year. Waze, the GPS driving app that provides geolocation advertising opportunities, is currently being used by 14.3 percent of c-store retailers. Information about store promotions (89 percent) and upcoming events (77 percent) are the top two types of content provided by c-store retailers on their social networking sites. The use of contests declined over the past year (now 57 percent), while new product information increased to 58 percent. Polling questions for

Involvement in Promotional/Sales Technology Any promotional sales/technology

IMPLEMENTED

PLAN TO ADD

84.1%

63.5%

Promotional/Sales Technology (General) Video monitors in-store

65.8%

19.9%

Digital loyalty programs

46.6%

29.3%

Mobile apps

41.5%

26.5%

GPS/geolocation

41.3%

22.9%

Email marketing

32.2%

28.9%

Text messaging to customers

30.0%

35.5%

Video monitors at pump

43.8%

25.7%

Advertising/couponing at pump

30.2%

32.5%

3.2%

35.2%

Promotional/Sales Technology (Forecourt)

Merchandise ordering at pump Source: 2019 Convenience Store News Technology Study

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FEATURE

Involvement in Digital Kiosks IMPLEMENTED

PLAN TO ADD

Car wash kiosks with automated payment systems

27.1%

18.4%

Advertising/couponing through ATMs

18.1%

31.8%

Foodservice ordering kiosks in-store

17.8%

35.5%

Prepaid card kiosks

11.3%

27.6%

Job application kiosks

9.2%

32.1%

Outdoor foodservice ordering kiosks

7.8%

41.6%

Bill payment kiosks

7.6%

31.7%

Bitcoin ATMs

4.5%

17.9%

Source: 2019 Convenience Store News Technology Study

Does Your Company Offer a Loyalty Program?

Forty percent of retailers have equipped their store associates with handheld mobile terminals or tablets, while 17.8 percent plan to roll out handhelds to staffers next year.

CURRENT

Yes

50.3% 54.4%

No

49.7% 45.6%

YEAR AGO

Description of Loyalty Program Point/reward-based

58.4% 64.3%

Credit card/payment option

8.3% 7.1%

Both

33.3% 28.6%

Type of Loyalty Program Proprietary

50.0% 48.3%

Tied to a major oil brand

33.3% 30.8%

Both

16.7% 20.9%

Source: 2019 Convenience Store News Technology Study

customers was also cited by 38 percent of respondents. Other content mentioned were menus, purchase history summary, and employee profiles.

Digital Kiosks When it comes to digital kiosks, the most popular ones in use are car washes with automated payment systems (cited by 27 percent), advertising/couponing through the ATM (18.1 percent), and foodservice ordering screens inside the store (17.8 percent). Job application kiosks, outdoor foodservice ordering kiosks and bill payment kiosks are also used to lesser degrees. Nearly 42 percent of respondents said they plan to add outdoor foodservice ordering kiosks, 35 percent plan to add in-store foodservice ordering kiosks, and 32 percent plan to add job application kiosks in the not-too-distant future. A small but growing percentage of

retailers are implementing bitcoin ATMs in their stores. Currently, just 4.5 percent of respondents claim to be offering this cybercurrency transaction ability at their stores, but 18 percent say they intend to add this feature.

Employee-Facing Technology While much focus is placed on consumer-facing technology, c-store retailers are also looking for advancements to improve the efficiency of their store-level operations. Slightly more than half of this year’s respondents said they’ve implemented inventory management solutions at their stores, while almost a quarter said they plan to implement inventory control technology. About 42 percent have technology-based food safety solutions in place, while 17 percent plan to implement food safety technology. Forty percent of retailers have equipped their store associates with handheld mobile terminals or tablets, while 17.8 percent plan to roll out handhelds to their store staffers within the next 12 months. CSN

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Defend Against Dollar Stores C-stores can protect their turf against value retailers by focusing on strengths and differentiation By Tammy Mastroberte

CONVENIENCE STORE OPERATORS face competition from within the industry, as well as outside of it. This includes quick-service restaurants, drugstores and the expanding dollar store market.

While dollar stores focus heavily on grocery, health and beauty care and general merchandise items, they have slowly been expanding into c-store related categories, such as packaged beverages, alcoholic beverages, fresh food and tobacco. “Within the food and convenience category, there is a lot of competition,” Keith Daniels, partner at Carl Marks Advisors, based in New York, told Convenience Store News. “Dollar General is expanding and adding fresh food and coolers, and we have seen it in the drugstore channel as well. Competition is coming at c-stores from all angles.” This past June, Dollar Tree Stores Inc., which operates more than 15,000 Dollar Tree and Family Dollar stores in the United States and Canada, said it would add adult beverages to approximately 1,000 more Family Dollar locations, and expand the freezers and coolers in approximately 400 stores. At that time, the chain had already added alcoholic beverages to 45 stores and expanded freezers and coolers in 55 stores.

Meanwhile, Dollar General Corp., with more than 15,300 stores in the U.S., started a “DG Fresh” initiative that’s designed to self-distribute fresh and frozen products. Its first DG Fresh facility is already providing more than 800 stores with refrigerated and fresh products, according to a report by CSNews sister publication Progressive Grocer. Dollar General is also expanding its DGX small-format concept, which stocks many items focused on immediate consumption, including fountain beverages, coffee, and grab-and-go sandwiches and salads. “Food could be a huge threat to c-stores because they will be good at it. Everything they have done, they are good at because they have such a large footprint,” said Babs Ryan, group vice president of Bostonbased Publicis Sapient, which works with established organizations on digital transformation. “Also, everyone has thought of dollar stores as suburban and rural, but with the DGX stores, it allows them to get into urban areas and increase their footprint.” The smaller format also means lower costs to run the stores due to less employees and lower rent — something traditional grocery stores like Aldi have also been doing, noted Daniels, explaining that millennials often prefer a smaller format because they want the convenient experience of a smaller, tighter format. While in the past, dollar stores targeted low-income earners (which represent 64.8 percent of shoppers), the channel has expanded in recent years to also go after middle-class shoppers (which represent 22.9 percent) and high-income earners (which represent 12.3 percent), according to IBISWorld’s February 2019 Dollar and Variety Stores in the U.S. Industry Report. “It’s time to stop thinking in segments, and that lower income people go to dollar stores,

Dollar General recently started the “DG Fresh” initiative, which is designed to stock its stores with more refrigerated and fresh products.

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During a recent dollar store walkthrough, consultant Ed Collupy spotted blocked aisles and out-of-order restrooms, among other problems.

because that’s not right,” Ryan said. “People with a high income who don’t want to spend $7 on a greeting card will go in and load up on a bunch of other things while they are there. It’s all income groups.”

Where Dollar Stores Win There are certain areas where dollar stores have an advantage over c-stores, and understanding these areas is important to defend against the value retailers and remain competitive. The first is the scale and size of the two biggest chains — Dollar General and Dollar Tree — each with more than 15,000 stores. And size really makes a difference when it comes to buying power, according to Ed Collupy, executive consultant at W. Capra Consulting, based in Chicago. “The size allows them to leverage their buying power and ability to translate that into a consumer offer that is value based,” he said. “I think that is the biggest threat.” The two largest and growing brick-and-mortar retail segments are currently convenience stores and dollar stores, so many operators are finding themselves competing for the same properties in certain areas, noted Collupy, sharing that a recent client of his firm cited dollar stores as a competitor because of the geography of its locations. Two other areas where dollar stores are winning is with online ordering and weekly promotions, he pointed out. While some c-stores are offering online ordering and delivery for fresh food, Dollar Tree allows customers to order online and then if the item is available at a local store, they can pick it up there or have the item shipped.

“It’s a step the dollar store industry has taken that c-stores should take a look at — it’s exploding and continues to grow,” said Collupy. “It’s definitely an area to watch where dollar stores are ahead of the c-store industry.” And in terms of promotional offers, dollar stores have weekly ads and promotions on merchandise, while the c-store industry is generally still centered on monthly or even longer promotion periods. While dollar stores’ scale likely allows them to do this, it’s another thing that c-stores need to look at for the future, he said. Ryan additionally pointed out that consumers view dollar stores as a destination, rather than a place to stop for a few things on the way home or to fill up their fuel tank. There is more variety, and the stores offer the “treasure hunt” mentality, she observed. “Dollar stores have perfected the treasure hunt. People may not be going in there for fresh food, but they may come up with lunch because they were shopping there,” she explained. “They keep enhancing the treasure hunt and people go in for fun. People don’t associate fun with c-stores.”

Putting Up a Defense With dollar stores continuing to grow and move into new markets and product categories, what can convenience stores do to defend their turf? It’s all about capitalizing on the strengths of both the industry and individual chains. “I don’t think there is an industry that understands tobacco better than c-stores, and they are much further along with foodservice than dollar stores, which is a

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point of distinction,” Collupy said. “Also, in a recent dollar store walkthrough, I noticed the variety in the cooler was much lower than c-stores, so I think that is still a point of difference.” Also, while dollar stores are bringing in fresh food, such as sandwiches, salads and produce, c-stores are still winning when it comes to made-to-order and hot food items. This is not something dollar stores are looking at yet, and if they do, they will have to go through the years of work that c-stores have already done to understand foodservice. “Many c-stores already have established foodservice programs and already went through the growing pains, but dollar stores will still have to go through that,” said Collupy. “C-stores can capitalize on the experience they already have and look at what to do next so that dollar stores will have to continue to catch up.” Daniels thinks it is unlikely dollar stores will enter the freshly prepared food arena. “Dollar stores are all about keeping costs low, so I can’t foresee them getting into fresh and made-to-order food,” he reasoned. C-stores also have established coffee offerings — though DGX stores plan to add this option — so it’s important for convenience store operators to continue to refine and update their coffee programs to keep them fresh. Coffee has been an offering in the c-store industry for a long time and an area that would be easy for them to dominate, according to Collupy. “Coffee should be capitalized on and if a chain has not refreshed its program, it’s probably time to look at that and take advantage of what they know, so again dollar stores will be in catch-up mode,” he said. Yet another plus for c-stores, according to Collupy, is that they’re better at operational execution. “Dollar stores often have aisles jammed with deliveries, and they are hard to navigate,” he said. “There is also a lot of disorganization and out-ofstocks. I’ve seen shelves in disarray, and it’s not just one store, but multiple stores I have visited.” On a recent visit to a Dollar Tree store, Collupy said he walked down an aisle toward the back of the store and saw a hand-written poster that said the restrooms were out of order so neither one could be used. Clean and functional restrooms are something many c-stores focus on, and shows their attention to detail and customer service; this is another advantage, he noted. Above all else, though, the biggest thing c-stores have that the majority of dollar stores do not is fuel. Loyalty programs are a good way for c-stores to further leverage this point of differentiation and get more customers from the pumps into the store regularly. CSN

New Ideas to Beat the Competition Thinking outside the box can help c-store chains fight back against all kinds of competitors Whether it is dollar stores, drugstores, quick-service restaurants or convenience stores, competition in the food retail world is real. It seems like everyone is encroaching on one another’s territory, and nobody wants to be the one left in the dust. Dollar stores, in particular, are jumping into expanded coolers, alcoholic beverages, fresh food and produce, as well as smaller-format stores. But there are areas where c-stores can differentiate themselves and fight back against all kinds of competitors. “C-stores do well at serving hot food, and if you look at other countries like Thailand that do a lot around heat-and-go foods, that is a big opportunity for c-stores who already have the setup,” said Babs Ryan, group vice president of Publicis Sapient, which works with established organizations on digital transformation. “This is a place where c-stores can compete and win.” Also, since c-stores have captive customers at the pump, it’s a perfect time to upsell those customers — but not in the way operators might initially think, according to Ryan. Studies show people don’t go from the forecourt into the store because it takes additional time to park and get in and out of the store. Allowing people to order by voice at the pump and have it delivered to the car would eliminate this hurdle, Ryan advised. Mobile ordering is also an option, but she said adding the human element allows a company to stand out while still using technology to make the customer experience better. “Let people order by voice while they are at the pump, add it to their tab, and then bring it out to their car,” she explained. “This is a massively missed opportunity. They can say to a human, ‘Bring me a quart of milk, a dozen eggs and a pizza,’ and leverage that human experience where the employee can say, ‘Last time you got this’ or ‘We are offering a special today.’” Another big opportunity lies in making the c-store a destination, the way dollar stores have. One way to do this is by offering services people need, such as bill payment at the cashier or selling tickets to local events where people can avoid paying extra fees, Ryan pointed out. “Do the research on services and find the right partner to work with. Integrate the technology needed to come up with a winning formula,” she said. “C-stores can become a destination for frequently used services.”

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FOODSERVICE

What’s Hot on C-store Menus? Don’t be chicken to learn from quick-serve restaurants You normally look here for the latest trends in convenience, but sometimes it’s as valuable to look at your competitors just outside the channel. Taking a look at the biggest trends in quick-serve restaurant (QSR) sandwiches, it should be no surprise to see chicken topping the list.

OPERATOR: Whataburger ITEM TYPE: Returning Item DATE: April 2019 PRICE: $5.99

OPERATOR: Popeye’s ITEM TYPE: Limited-Time Offer DATE: June 2019 PRICE: $3.99

DESCRIPTION: Features

DESCRIPTION: Features a

two chicken strips, melted Monterey Jack cheese, buffalo sauce and ranch dressing on a toasted plain bun.

thick, all-white meat marinated chicken breast that’s buttermilk battered and served on toasted brioche with sliced pickles and mayo.

Popeye’s Chicken Sandwich ($3.99) is now “Instagram famous” for its late summer performance. And with an Unbranded Purchase Intent score of 87, that’s not difficult to forecast. However, Datassential normally looks for high Uniqueness ratings as well to determine if an item will truly deliver — and Popeye’s shot a disappointing 18 out of 100 on that metric. These two SCORES results make this an item highly likely to be copied and acceptable to shoppers in convenience, and should be on your radar. Whataburger’s Buffalo Ranch Chicken Strip Sandwich ($5.99) delivers exactly what its notoriously loyal following wants with this decadent offering. The 97 for Branded Purchase Intent validates that, and the 51 for Uniqueness supports a point of difference beyond Popeye’s result. If you’re looking for a slightly more versatile base, strips might be the next item for your menu. CSN

Whataburger PRODUCT SCORES (Among: Total)

78

97

unbranded PI

branded PI

norms reflect comparison to all items 100 = max possible score

51

94

81

76

would visit somewhere just for this item

excellent or good value for the dollar

46%

49%

uniqueness

frequency

draw

definitely or probably would buy

definitely or probably would buy

extremely or very unique

would order the item all the time

51%

57%

38%

24%

72

75

88

--

benchmark norms

--

97

55

55

64

versus other QSR items

91

97

94

74

versus other sandwiches

82

87

41

55

uniqueness

49

frequency

definitely or probably would buy

extremely or very unique

would order the item all the time

54%

50%

28%

18%

88

58

--

benchmark norms

--

41

20

versus other QSR items

18

38

76

68

46

60

86

draw

definitely or probably would buy

84

52

norms reflect comparison to all items 100 = max possible score

18

branded PI

82

versus other items from Whataburger

Popeye’s PRODUCT SCORES (Among: Total)

unbranded PI

value

value

would visit somewhere just for this item

excellent or good value for the dollar

40% 30

38

versus other sandwiches

43

57% 18

69

87

20

versus other items from Popeye’s

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

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FOODSERVICE

Chewing on the Present & Future of Convenience Foodservice The 2019 Convenience Store News Convenience Foodservice Exchange delved into the varied challenges and opportunities in the category By Angela Hanson & Don Longo Convenience Store News Convenience Foodservice Exchange discussed important foodservice issues in the present and those yet to come during the event, whose theme was "Today's Challenges; Tomorrow's Opportunities."

ATTENDEES OF THE 2019

Held June 19-20 in Dallas, the conference addressed the challenges c-store operators face today as they evolve their operations to take advantage of growth opportunities in the foodservice category. And at the same time, the event looked ahead to help retailers envision what the future might look like — both from a consumer and operator perspective.

chain Kwik Trip Inc., who co-presented with Amy Slechta, partnerships manager for Washington, D.C.-based PHA. Kwik Trip, which was the first c-store retailer to sign a PHA commitment in 2014, seeks to make the healthy choice the convenient choice for its customers. The chain spreads out placement of healthy and fresh products in its 560-plus locations so that customers continually see these options as they walk through the store. This form of "stealth health" focuses on providing more options everywhere rather than consolidating healthy products together. Marketing support comes in the form of digital

During several "Foodservice on the Move" sessions, presenters schooled attendees on changes they can make to further develop their fresh food and beverage programs and achieve longevity, even as consumer tastes continue to change.

Making Healthy Choices Convenient Retailers interested in “doing good” for their community while capturing a portion of the growing better-for-you product market can do so through initiatives such as teaming with the Partnership for a Healthier America (PHA), according to Erica Flint, registered dietitian at La Crosse, Wis.-based convenience store

A panel of retailers shared how their new store concepts are changing the way consumers view c-stores. From left: Ed Burcher, FriendShip Kitchen; Rachel Krupa, The Goods Mart; Joe Hamza, nouria; and Ryan Riggs, Alltown Fresh.

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The New Convenience Retailer

Four c-store execs shared how their companies are redefining the “convenience” experience A highlight of the 2019 Convenience Foodservice Exchange was a panel of four retailers who are redefining the convenience shopping experience. Ryan Riggs of Alltown Fresh, Ed Burcher of FriendShip Food Stores, Joe Hamza of Nouria Energy Corp. and Rachel Krupa of The Goods Mart provided in-depth looks at how their new store concepts are changing the way consumers view convenience stores, especially in the area of fresh food.

nouria LEWISTON, MAINE

Alltown Fresh PLYMOUTH, MASS.

The goal of Alltown Fresh is to change the perception that healthy and fresh choices are not available in c-stores. Alltown Fresh stores feature freshly made bowls; healthier prepackaged, grab-and-go items; kiosk ordering to maximize customization; and a clearly displayed brand promise. The stores also offers a boutique coffee shop experience; bulk nuts and seeds; artisanal, locally sourced products; organic, self-serve beverages on tap; and more.

Nouria Energy Corp.'s new retail brand, nouria, targets younger adults and female consumers through a combination of fresh and healthy selections; a design featuring lifestyle and community-inspired graphics and a brighter, more spacious layout; full-service coffee and espresso drinks; and a drive-thru, along with other unique offerings. The nouria brand seeks to create occasions that make it easier for consumers to shop, according to Hamza, the company’s chief operating officer, retail and marketing.

"Guests don't have to make a choice between convenience and wellness," said Riggs, senior vice president of retail operations for Alltown Fresh, a brand of Global Partners LP.

FriendShip Kitchen

The Goods Mart

ELYRIA, OHIO

NEW YORK

FriendShip Kitchen is a new food-first concept store from FriendShip Food Stores. The locations are designed around food that is freshly prepared onsite, offering customers something tasty throughout the day — from breakfast bowls, to coffee brewed with premium roasted beans, to a variety of lunch and dinner options, including the brand’s signature chicken.

The Goods Mart is a socially-conscious store concept that works with approximately 350 mission-driven companies to offer exclusively better-for-you products, with no artificial ingredients or GMOs and sustainable packaging rather than single-use. The use of black-and-white branding in the store design strategically makes the products stand out.

"It is not good enough to be good," said Burcher, vice president of foodservice for FriendShip Food Stores. "You have to be great at it."

"Everything in the store is transparent," said Krupa, founder and CEO.

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FOODSERVICE

displays, loyalty program rewards, and advertising on the road.

• Create better-for-you planograms and modify existing product sets to incorporate healthier products; and

The framework of a PHA commitment incorporates: increasing offerings and affordability of healthier foods and beverages; increasing marketing and promotion of healthier products; and supporting employee wellness benefits. Specific actions can include:

• Subsidize gym memberships for corporate and storelevel employees.

• Enhance fresh fruit and vegetable offerings; healthier packaged foods; whole grain, lean meat and low-fat dairy offerings; and low- and no-calorie beverage offerings; • Set prices to incentivize the purchase of healthier items; • Use monthly promotions and social media posts to promote healthier options;

Plant-Based Potential In another "Foodservice on the Move" session, Tim Powell, managing principal of Foodservice IP (formerly Q1 Consulting), tackled the question of whether the plant-based food trend has roots. Current consumer trends are a perfect storm for plantbased food growth due to the rising prevalence of restrictive diets, increasing food safety and animal welfare concerns, rising awareness of environmental sustainability, and more focus on health and wellness, noted Powell. Consumers are increasingly accepting of diets with less meat consumption without going fully vegetarian or vegan, he explained, and the use of plant-based products "when possible" signals that there is a need for broader plantbased ingredients.

HAZARD-FREE FORECOURT

Brand New

Spill Kit Station

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W W W. F O R T E P R O D U C T S . C O M | 8 1 6 - 8 1 3 - 3 3 3 7 86 Convenience Store News C S N E W S . c o m

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Kwik Trip's Erica Flint discussed how the c-store chain is supporting Partnership for a Healthier America.

g

d

n,

In terms of branded foodservice, renting space to a franchise is essentially becoming a landlord, making it the "safest bet you can do," Matthews said. Becoming a franchisee yourself requires more effort, but this approach does bring with it certain advantages. The plant-based category has reached upwards of $1.3 billion, yet plant-based products are still ripe for expansion, he advised. Price, taste and nutrition are barriers to growth. "I think we're seeing consumer desire for variety," Powell said. "They're more open to it and information is always around."

Proprietary vs. Branded Foodservice The pros and cons of branded vs. proprietary foodservice programs was the subject of another "Foodservice on the Move" session presented by John Matthews, president and CEO of Gray Cat Enterprises Inc., a consulting firm.

In terms of proprietary foodservice, creating and operating your own brand can give c-store retailers control and competitive differentiation. However, Matthews noted this approach is more time-consuming and more expensive, and requires organizational changes. Ultimately, deciding whether branded or proprietary foodservice is a better fit largely depends on the retailer’s organizational-structure capabilities, according to Matthews. He urged attendees to create a separate profit and loss statement for foodservice, treating it as a store within a store, in order to make proper comparisons. To evaluate labor, operators should know exactly what needs to be done every day and "measure everything," he said. CSN

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TOBACCO

The Next Big Thing? Oral nicotine is starting to take off as consumers embrace alternatives to traditional tobacco By Renée M. Covino over a new leaf? How about making way for no leaves?

IS TOBACCO TURNING

Modern oral nicotine products, in the form of pouches, lozenges, toothpicks, gum and dips, are gaining in popularity, especially among consumers who are seeking to quit cigarettes, but not necessarily nicotine. These products fit into the broader tobacco “alternatives” segment, or reduced risk products (RRPs), which in 2018 had a U.S. following of 20 million adult smokers, according to Wells Fargo Securities LLC. As for the interest in modern oral nicotine specifically, six million adult smokers are “open to trying” the new products, Wells Fargo Securities has found through its research. Bonnie Herzog, managing director of tobacco, beverage and convenience store research for Wells Fargo Securities, said in line after heated tobacco products (like IQOS), traditional oral tobacco products and vapor products, “we see modern oral nicotine as the next step in the potential reduced risk journey.” She added that retailers are “broadly optimistic” about the quickly developing

segment. More than 80 percent of retailers surveyed by Wells Fargo Securities for its Tobacco Talk research — which surveys approximately 60,000 convenience stores, or roughly 40 percent of the channel — said that as of September, they are carrying, or plan to carry, all three of the top oral nicotine pouch products: Zyn, manufactured by Swedish Match; Velo, owned by British American Tobacco/R.J. Reynolds Vapor Co.; and On!, owned by Altria Group Inc./Burger Sohne. Approximately 60 percent of the surveyed retailers indicated they are optimistic about the modern oral nicotine opportunity, and approximately 40 percent intend to allocate more shelf space to the segment. This is at the expense of existing tobacco products; many expect oral nicotine to mostly cannibalize the cigarettes and smokeless tobacco categories. “They could be the next vape-like category to fuel OTP [other tobacco products],” stated one Tobacco Talk retailer. We “will gain new customers with these products,” said another retailer. Matt Domingo, senior director of external relations at RAI Trade Marketing Services, said various factors are aligned right now that make it the ideal time for oral nicotine. “Now is the right time for modern oral products to come to the market because consumers are looking

Sizing Up the Opportunity Is the modern oral nicotine category the next step in reduced risk tobacco products (RRPs)? Wells Fargo Securities Managing Director of Tobacco, Beverage and Convenience Store Research Bonnie Herzog sees excitement growing as the segment starts to take off. Consider the following: • Size — Modern oral nicotine category retail sales reached roughly $60 million in 2018, up 250 percent year over year. • RRP Interest — 20 million adult smokers in the U.S. express interest in RRPs. • Oral Nicotine Interest — 6 million adult smokers are “open to trying” the new oral nicotine products. • Conversion Opportunity — Modern oral nicotine products are expected to appeal to existing smokers, dippers and “some” vapers.

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TOBACCO

“Now is the right time for modern oral products to come to the market because consumers are looking for products they can use anytime and anywhere, with a desire for brands that offer simple, novel and more socially acceptable choices.” — Matt Domingo, RAI Trade Marketing Services

for products they can use anytime and anywhere, with a desire for brands that offer simple, novel and more socially acceptable choices,” he said.

The emergence of the nicotine pouch category could not have come at a better time for adult tobacco and nicotine consumers, agrees Jennifer Mulligan, associate brand manager for Zyn, a smoke-free, spit-free, tobaccofree nicotine pouch. “As restrictions continue to grow for when and where consumers can enjoy tobacco products, many have turned to nicotine pouches for a convenient and enjoyable nicotine experience, without many of the strings attached to traditional tobacco or vape,” she said. Mulligan describes Zyn pouches as “simply food-grade ingredients combined with pharmaceutical-grade nicotine.” They were first introduced in 2016 in the western United States. As of press time, she reported that in the western U.S., Zyn “is almost as large as the entire moist snuff pouch segment and has grown total volume and retailer sales velocity for 40 straight months.” CSN

The Major Players ZYN

Swedish Match

• Current U.S. market leader • Launched in the U.S. in 2015 • Expanded nationally in April 2019 • Available in two nicotine strengths (3 milligrams, 6 milligrams) • Available in six flavors

On!

80/20 ownership split by Altria/Burger Sohne

• Available in Sweden, Japan and the U.S. (limited) • Launched in the U.S. in 2016 (limited distribution) • Altria acquired an 80 percent stake on June 3, 2019 for $372 million • Available in five strengths, seven flavors and 35 SKUs

Velo

British American Tobacco/R.J. Reynolds Vapor Co.

• Launched in the U.S. in July 2019 • Will roll out to more than 70,000 U.S. outlets in the coming months • Available in two nicotine strengths (2 milligrams, 4 milligrams) • Available in two flavors

Source: Company reports; Wells Fargo Securities LLC

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ACTUAL SIZE

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10/9/19 10:57 AM


GROCERY

Bagging a Grocery Turnaround Most segments in the edible and non-edible grocery categories are lackluster at best By Renée M. Covino BREAKFAST CEREAL, condiments, packaged coffee and tea — are these and other edible grocery items earning their space in convenience stores? How about non-edible grocery items such as dish care, laundry care, paper/plastic/foil products and pet care?

From the standpoint of delivering “convenience” to consumers, these and other grocery goods warrant shelf space, but sales have not been stellar as of late. According to the 2019 Convenience Store News Midyear Report Card, non-edible grocery sales in the U.S. convenience channel were down 4 percent in dollars for the first half of this year and down 5.5 percent in unit volume. Edible grocery sales were just slightly better, with dollar sales improving to flat, up from a nearly 2 percent decline a year ago; unit volume was still down more than 2 percent. The only bright spot in 2019’s first half was pet care products, which were up 2.6 percent in dollars.

What’s the Problem? According to industry experts, it’s a complex issue. For starters, competition in the convenience space is growing fiercer, including from grocery specialists. “Retail has grown progressively more dynamic and complex as more and more retailers expand beyond their typical formats to create smaller urban stores that blur conventional channel lines to address the evolving needs of the shopper and, in effect, compete more directly with traditional convenience stores,” said Bob DiNunzio, director of category solutions for retail and privatebrand consulting company Daymon Worldwide, based in Stamford, Conn. This is abundant in the grocery sector, according to DiNunzio, who offered up as an example the Hy-Vee Fast & Fresh concept, which opened at the end of last year. “These new concepts have the advantage of applying learnings, operational synergies and best practices from the retailer’s standard formats to take convenience to the next level,” he explained. Online ordering and delivery services from supermarkets and other retailers are another competitive stab to c-stores’ grocery assortments, according to Mark Singleton, vice president of sales and marketing at Rudolph Foods Co., a snack food maker based in Lima, Ohio. What’s more, delivering on consumers’ convenience needs isn’t as clear-cut as it once was. “Squeezed from both sides by demanding shoppers and an ultra-crowded, ultra-competitive industry that has commandeered the traditional convenience store shopper, c-stores are working hard to find who their consumer is today. They are struggling to offer the assortment consumers want, beyond more fresh and prepared foods,” noted Singleton. Damian Marano, CEO of Seattle-based Docklight Brands, a cannabidiol (CBD) product supplier, also believes unadventurous merchandising is another underlying issue. “Consumers seek new, healthier options in different sizes, and many convenience retailers have not adapted their sets to these needs,” said Marano. “Lack of innovation and staying true to an older planogram only serves dated consumers and doesn’t keep up with more current solutions.”

Potential Remedies To boost the grocery categories, industry experts say a more holistic approach is needed. They offered up both quick-hit and big-picture ideas to turn around the sluggish sales:

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“Millennials are coming into their prime purchasing power and are traditionally brand disloyal. This creates an opportunity for a convenience retailer to promote new and different brands rather than legacy brands.” — Damian Marano, Docklight Brands

1. Adjust Pack Sizes & Planograms

C-store customers who are likely to buy grocery items, just like those who are likely to buy grab-and-go food items, seek new and different pack sizes merchandised in retail sets that adapt accordingly. “The challenge to convenience retailers today is to cater to these new consumers without alienating their core consumer base,” Marano advises. “Retailers need to showcase new and often healthier products, but still maintain a significant traditional assortment. It’s a delicate balance with a relentless focus on quality, price point and right sizing for immediate consumption.”

2. Cater to Millennials

The millennial trend of keeping their kitchens stocked with food only as they need it creates an “unprecedented opportunity” for convenience grocery to promote grab-and-go items, according to Marano. “Millennials are coming into their prime purchasing power and are traditionally brand disloyal. This creates an opportunity for a convenience retailer to promote new and different brands rather than legacy brands,” he said.

3. Refine the Store Design

It’s great that c-stores have caught on to fresh food, coffee bars and other foodservice areas that look and feel more attractive, but the same must be carried through to grocery sections, according to Stephanie Casey, CEO of Lovage Inc., a creative agency based in Dallas. “There needs to be more refined and innovative designs that extend into all sections of the store, including grocery — shelving, flooring, signage and lighting,” she told CSNews. She, too, mentions “interesting take-away packaging design” as a potential boost for the categories. “It also wouldn’t hurt to find/ offer some alternative or local brands and products in edible and non-edible grocery,” she said.

4. Bigger Footprints

While grocers are embracing smaller formats, c-stores are innovating with larger prototypes, according to a new report by global research firm IHL entitled “Retail’s Renaissance — True Story of Store Openings/Closings.” This opens the door for c-stores to expand and innovate within their grocery sections, Casey noted. It’s all about the overall in-store experience, DiNunzio agrees. He emphasized that value-add services, such as online order pickup lockers, could do a lot to increase c-store grocery sales.

5. Let Foodservice Meet Grocery & Vice Versa C-store operators should be leveraging crossmerchandising and strategic curation to bring food and non-foods together in a thoughtful way to create “solution destinations,” says DiNunzio. This should simplify the shopping experience, while raising item awareness to augment the retail ring. “For example, consider ways to tie in cutlery and paper products into meal solutions within the same set to highlight complementary non-food items relevant for the shopping occasion,” he suggested. “This type of solutions-based approach to merchandising further reinforces the value proposition of the convenience channel by better delivering on ease, simplicity and on-demand needs.”

6. Borrow the Specialty Playbook From Supermarkets

C-stores can further entice customers by offering “specialty assortments,” which could include items from various categories, including grocery. “These hand-selected, specialty, curated selections can provide shoppers with a unique experience and generate further interest in shopping at the store,” according to Singleton. C-stores need not be afraid to venture out into a more premium world, he encourages.

7. Implement Ideas With a Test-and-Learn Attitude

Closely monitor what is driving grocery revenue at your locations and optimize those sections, advises Marano. He pointed to the success of functional products and the CBD phenomenon as potential areas of opportunity for the test-and-learn approach.

8. Stay a Step Ahead It is crucial to be forward-looking and anticipate the changing wants and needs of the shopper, in grocery and all areas of the store. “Retail is evolving rapidly, channels are blurred, and if you continue to do what you’ve always done, you’ll quickly find yourself irrelevant,” DiNunzio cautioned. “It is incumbent upon retailers, irrespective of the category, to stay a step ahead of the shopper and be agile in adapting to remain competitive.” CSN

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FEATURE

NEW PRODUCTS FOR THE NEW GENERATIONS Our 23rd annual Best New Products Awards honor 29 innovative items new to c-store shelves By Susan Durtschi, Past Times Marketing

THE NEW AGE OF CONVENIENCE, driven by tech-savvy, functionality-seeking millennials and members of Generation Z, is shaping the new product trends in convenience stores.

Notable new products honored in this year’s Convenience Store News Best New Products Awards contest include high protein/low-carb and lower sugar snacks, packaging designed for small-format stores, plant-based alternatives, and innovative foodservice offerings that are easy to prepare and consume on the go. Keto and paleo diet benefits and health claims also abound in this year’s mix of winners. Many favorite and familiar brands have “cleaned up” their product lines to appeal to a customer base that demands healthier food and beverage choices. Functionality and transparency appeal to millennials and Gen Z, as well as baby boomers. Consumers selected 29 products new to c-store shelves in the past year for recognition in the 2019 Best New Products Awards competition. Now in its 23rd year, the program recognizes and honors the marketers that introduced the most innovative, high-quality products that meet consumers’ evolving needs. Judging was supervised by Past Times Marketing, a New York-based consumer research and product testing firm.

Contest entries were rated and awarded points by consumers based on the criteria of taste, value, convenience, healthfulness, ingredients, preparation requirements, appearance and packaging. Here are the products that indulged the senses, caught the eye and screamed convenience. The 2019 Best New Products Awards honorees are: ALTERNATIVE SNACKS/COMBO PACKS:

Duke’s Shorty & Cheese, Conagra Brands

Consumers in c-stores are looking for mini meals that satisfy their hunger and keep them full longer, while also helping them feel good about what they are eating. Duke’s Shorty & Cheese meets this criteria by providing 9 grams of protein per kit with less than 1 gram of sugar. This premium, shelf-stable product from Conagra Brands is great for any consumer on a high protein/low sugar diet. It combines the two top flavors in the Duke’s meat sticks portfolio with 100 percent real premium cheese crisps. The packaging is small, clever and eye-appealing. Our panelists liked the combination of the Hatch Chili meat stick and Asiago Cheese crisp best. They also loved the fact that they can throw this in their backpack with no refrigeration.

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ALTERNATIVE SNACKS/MEAT SNACKS: Tillamook ZERO

Sugar Beef Jerky, Tillamook Country Smoker

and tireless brewing process that results in a higher alcohol content (7.5 percent ABV) yet refreshing drinkability. Tecate Titanium hits a sweet spot that capitalizes on the continuing growth of Mexican import beers and the more recent demand for higher ABV products in a package that makes sense for c-stores.

Beef jerky is packed with protein, making it a great snack for low-carb dieters. The newest jerky offering from Tillamook Country Smoker is ZERO Sugar Beef Jerky, which boasts 14 grams of protein per serving, zero grams of sugar and zero grams of total carbs per serving. It is the perfect choice for those following the popular keto lifestyle, or for those struggling with diabetes and other health conditions where they must limit their carbohydrates and sugar intake. Featuring a real, hardwood smoky flavor, Tillamook ZERO Sugar Beef Jerky tastes like traditional jerky but with 25 percent more protein than the leading beef jerky.

Hershey has brought a bar to market with the unmistakable taste of Reese’s peanut butter, mixed with gooey caramel, stuffed with crunchy Reese’s Pieces candies, and covered in smooth milk chocolate. Our testers found it a bit messy to eat, but loved the combination of the Reese’s peanut butter and caramel. They called it a “real mashup of decadence.” At 1.4 ounces, it’s a perfect size, and a few testers remarked that it would be great for Halloween.

ALTERNATIVE SNACKS/MIXES:

CANDY/NOVELTY & SEASONAL:

Sahale’s Coconut Snack Mixes combine the delicious flavors of crispy toasted coconut chips, dry roasted nuts, spices and dried fruit. Each ingredient combination is carefully crafted, thoughtfully sourced and packaged in an attractive 1-ounce bag. This is a wholesome snack perfect for on-the-go consumption. It also has some additional applications that the younger generations love: they can sprinkle it on yogurt or put it in a smoothie. The mixes come in Pineapple Rum Cashew Coconut and Cherry Cocoa Almond Coconut varieties. Our tasters found both flavors very satisfying and they liked the logo on the bag that says, “Snack Better.”

In what is starting to become a common trend, Hershey wanted to let consumers decide what the next great-tasting novelty candy from Reese’s would be. In the “quest for the best Reese’s cup,” two limited-edition versions were offered at the same time. The Reese’s Chocolate Lovers Cup has an extra-thick layer of chocolate compared with traditional Reese’s Peanut Butter Cups, while the Peanut Butter Lovers version has a peanut butter candy top sheet and a higher proportion of peanut butter to chocolate. According to our testers, there is no right answer. They just said, “More please.” Both versions come in regular and king-size packages.

Coconut Snack Mixes, Sahale Snacks

ALTERNATIVE SNACKS/PROTEIN BARS:

Epic Performance Bars

As consumers are seeking out responsibly sourced foods and more non-GMO foods, General Mills’ Epic Performance Bars offer a great option that they can feel good about eating. The bars offer consumers a high protein snack (12 grams of protein) with six or fewer ingredients in each bar. Made with egg whites sourced from cage-free hens, the bars are a responsible and truly clean protein bar that meets consumers’ evolving food values. These protein bars have no hidden ingredients and are Non-GMO Project verified, gluten free, soy free, grain free, kosher, and have no added sugar. BEER: Tecate Titanium, Heineken USA

For adult, drinking-age consumers who want to get a bigger buzz, beer brewer Heineken jumped at the opportunity with a new 24-ounce beer. Tecate Titanium is a bold, refreshing beer developed to capitalize on the growth of high ABV (alcohol by volume) beers, specifically within the convenience channel. Its distinct aroma and flavor are the result of an obsessive

CANDY/CHOCOLATE: Reese’s Outrageous Bars, The Hershey Co.

Reese’s Chocolate Lovers/Peanut Butter Lovers, The Hershey Co.

FOODSERVICE/BASE INGREDIENTS:

Tavern Crust, Smart Flour

Smart Flour’s Tavern Crust pizza crust fills a niche for customers looking for a healthier slice of pizza that still provides the classic taste they know and love. Made with clean ingredients and an ancientgrain foundation, this allergy-friendly, certified gluten-free crust allow c-store providers to offer a quick, comforting and delicious pizza that meets the dietary demands and nutritional values of today’s modern consumers, while still appealing to a conventional palate. Instead of being made with rice flour or other cheap fillers, Tavern Crust features the ancient grain sorghum, which gives it a boost of fiber and antioxidants. The par-baked crust cooks up just like a traditional white-flour crust, but it is lower in calories and boasts the on-trend attributes of being vegan, Non-GMO Project verified, and free of many common allergens such as nuts, dairy, soy, egg and rice. FOODSERVICE/BREAKFAST:

Jimmy Dean Stuffed Hash Browns, Tyson Foodservice

Younger consumers are turning to convenient breakfast options. Jimmy Dean Stuffed Hash Browns from Tyson Foodservice are microwavable, portable

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and come in a paper sleeve for minimal clean-up. Made with real potato, the hash browns are stuffed with delicious, quality breakfast ingredients for a full meal on the run. The new product comes in three on-trend breakfast combinations: egg, cheese and veggie; ham and cheese; and sausage gravy. There were lots of conversations between our panelists about what they eat in the car on the way to work. FOODSERVICE/CONDIMENTS:

Califia Oat Barista Blend, Califia Farms

An increasing number of people are choosing plant-based milk products because they believe they are more sustainable, ethical and healthier compared to cow’s milk. Also, they may have a cow’s milk allergy. Califia Farms’ Oat Barista Blend provides a better-for-you, dairy-free alternative for a c-store’s coffee bar. It can be enjoyed with cold brew, steams beautifully to create latte art, or just tastes great on its own. Unsweetened and made with whole, rolled, gluten-free oats, Oat Barista Blend is nut free, allergen free, soy free, Non-GMO Project verified and kosher. Califia spent a lot of time with baristas researching the high end of the coffee industry to figure out what they were looking for — not just in plant milk, but in any whitener. Our testers felt this was very much like actual cow’s milk and the quality was top-notch. FOODSERVICE/LUNCH: Not Your

Nonna’s Stuffed Pizza Wedges, Ruiz Foods

Pizza is a huge part of convenience foodservice. Not Your Nonna’s Stuffed Pizza Wedges from Ruiz Foods help take the c-store pizzaeating experience to the next level with delicious taste and improved portability for the consumer. The four-hour product hold time translates into less waste for the retailer. Not Your Nonna’s Stuffed Pizza Wedges are a truly unique item that delivers tasty pizza ingredients in an enclosed, crispy parmesan-seasoned crust. Each wedge comes in its own paper sleeve for easy handling. Our testers liked that each wedge is pinched at the edges, making it less messy for eating on the go. FOODSERVICE/PACKAGING: Crisp Food Technologies

Containers, Anchor Packaging

The new Crisp Food Technologies Containers from Anchor Packaging use an exclusive, convection cross-flow design to relieve moisture and condensation while maintaining food temperature. Through-the-closure ventilation with raised airflow channels in the base of the container, combined with venting in the anti-fog lid, ensure fried foods remain hot and crispy even when packages are stacked. This unique packaging retains internal temperatures and food texture for fried foods up to 30 minutes in transit, and withstands temperatures of up to 230 degrees Fahrenheit under heat lamps, in warming units or in microwaves. Assorted two-piece and hinged packages are available in various shapes and sizes. All of the packages are consumer reusable and eligible for curbside recycling. Our panelists liked the quality of the contain-

ers and when they tested French fries’ hold time, they were impressed with the food quality compared to other takeout containers they’ve experienced. FOODSERVICE/SNACKS:

Pretzel Fillers Stuffed Soft Pretzels, J&J Snack Foods

Pretzel Fillers Stuffed Soft Pretzels are not your ordinary snack. J&J Snack Foods came up with a solution that fits consumers’ foodservice snacking needs with convenience in mind. They took their popular cheese-filled soft pretzels and prepackaged them for easier operation at the store level for baking, storing and merchandising. Applicable for all c-store operators’ foodservice capabilities, each pretzel is individually wrapped in sleek, eye-catching craft paper packaging that can be microwaved or baked in a convection, convention or TurboChef oven. The product boasts a one-year frozen shelf life, seven-day refrigerated shelf life after thaw, and up to 4 hours of heated hold time in a warming unit. Our testers sampled the Sweet Cream Cheese, Jalapeno & Cheese, and Cheddar Cheese varieties. Panelists enjoyed the generous size of the pretzels, the flavors and the cool cellophane window packaging. GENERAL MERCHANDISE: Scripto Torch Flame Wind Resistant Lighter, Calico Brands

Designed to handle everyday outdoor and recreational activities with ease, the new Scripto Torch Flame Wind Resistant Lighter offers consumers a quality lighter that features a blue torch flame, rubberized tank body, flip cap, push-button ignition and refillable tank. Simple and affordable, it is handy to have around for camping, hiking, or anywhere you need a consistent and strong flame in all different kinds of weather conditions. This lighter creates a precise flame that is hotter and more reliable than an ordinary disposable lighter. The patented jet flame lights and stays lit in windy conditions, tackling even the most challenging outdoor lighting situations. HEALTH & BEAUTY CARE: Tribe Broad

Spectrum Hemp CBD Shot, Tribe CBD

CBD is expanding into the convenience channel and this item was judged to be ideal for the c-store market. For people who want to experience the calming and relaxing effects of CBD on the go, the 30-milligram Tribe Broad Spectrum Hemp CBD Shot in Mixed Berry contains a range of cannabinoids and terpenes to give each serving the maximum benefits of the plant. The shot has zero calories, zero THC, and is made from sun-grown USA hemp. The label promises, “Relaxing of the body. Calming of the mind.” The product was tested by consumers who have used or tried hemp CBD tinctures and gummies in the past. They were impressed. In this shot, the hemp CBD ingredient has been nano-emulsified so the user can feel the effects faster, usually within 10 minutes. The suggested price is relaxing, too, at just $3.99 per shot.

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HEALTHY SNACKS: Pickle Cutz,

Van Holten’s

The demand for healthy snack options continues to grow, and a new option for a healthy snack at c-stores is pickles. Pickle Cutz from Van Holten’s are a better-for-you, convenient snack that packs big flavor with Dill and Spicy varieties. Crinkle cut to preserve maximum crunch and freshness, Pickle Cutz deliver several substantial pickle slices in a handy 3.75-ounce pouch. The pickles are fresh packed, fat free, gluten free, low calorie and keto friendly. They have no added brine, making them easy to eat on the run with less mess. Our panelists raved about the packaging and felt it conveys freshness, and they said the pickles inside were fresh. NON-EDIBLE GROCERY: Pampers

Changing Kit, Convenience Valet

Babies are on the go almost as much as their caregivers. As c-stores look to attract women to their stores and appeal to the need states of mothers/parents, the Pampers Changing Kit delivers. The footprint of this product is compact, and the solution covers two different SKUs — diapers and wipes — making it an extremely efficient

shelf item. Pampers is a trusted name brand that will stand out as recognizable on the shelf, complemented by this product’s bright colored packaging. The Pampers Changing Kit, newly introduced to c-stores, provides two diapers and six wipes per package. The package itself is resealable and sturdy enough to handle diaper disposal, making this kit a complete solution. PACKAGED BEVERAGES/BOTTLED WATER:

smartwater alkaline, The Coca-Cola Co.

Bottled water is one of the fastest-growing subcategories in packaged beverages, and smartwater alkaline comes as Americans continue reaching for more enhanced hydration options. Like the original smartwater, Coca-Cola’s smartwater alkaline is vapor-distilled with added electrolytes for taste, but this new innovation has been ionized to ensure the pH level is 9+. The alkaline water subsegment has grown by 171 percent in the past two years, according to the company. The water is packaged in an environmentally conscious bottle that’s up to 30 percent plant based and 100 percent recyclable. The shape and size of the bottle, combined with its extrathick plastic container, also set it apart. Our panelists had

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high recognition of the smartwater brand and were keen on the new offering. They called it “crisp and clean” and felt it was a “better” water. PACKAGED BEVERAGES/CARBONATED SOFT DRINKS: Sunkist Strawberry Lemonade,

Keurig Dr Pepper

Lemonade-based soft drinks are rapidly growing in popularity and are a bright spot helping to lift the soft drink segment. Keurig Dr Pepper ticked two key boxes with the launch of its refreshing Sunkist Strawberry Lemonade beverage: flavor and packaging. The carbonated dual flavors of strawberry and lemonade pop, and the 20-ounce product’s bright color and unique packaging stand out. The value price of $1.69 is also an incentive and competitive with other carbonated soft drinks. According to the maker, Sunkist Strawberry Lemonade has a strong repeat purchase percentage at 26 percent, indicating that more than one in four consumers who tried the product purchased it again. Our testers liked its pink color, flavor and price point. PACKAGED BEVERAGES/ENERGY DRINKS:

AMIN.O Energy + Electrolytes, Glanbia Performance Nutrition

Functional energy is one of the fastest-growing categories in c-stores. Consumers are seeking more functionality and natural caffeine from their energy drinks. Optimum Nutrition Essential AMIN.O Energy + Electrolytes from Glanbia Performance Nutrition features a unique blend of essential amino acids the body needs, natural caffeine and electrolytes. Available in six flavors, the calorie count for the 12-ounce size varies from five calories to 15 depending on the variety. Our panelists liked the Blueberry Lemonade flavor best. They also praised the beverage’s sleek container. This is “perfect to throw in the gym bag,” one panelist remarked. PACKAGED BEVERAGES/JUICE DRINKS: Snapple

Watermelon Lemonade, Keurig Dr Pepper

In c-stores, consumers are looking for things that are new, on trend and taste great. Snapple Watermelon Lemonade satisfies all three of these attributes. Lemonades are growing as consumers are moving away from carbonated soft drinks and exploring new flavors in other segments. Snapple has taken two summer favorites, watermelon and lemonade, and created a new standard in thirst-quenching. This is a true powerhouse pairing of sweet and sour tastes. According to Keurig Dr Pepper, Snapple Juice Drinks outperform Snapple Teas in the convenience channel, and this is the first juice drink innovation the brand has introduced in more than five years. Our testers loved the flavor and the striking color of it as well. PACKAGED SWEET SNACKS:

7 Days Croissants, EPTA America LLC/7 Days Croissant

Croissants are decadent enough, but now there is a new croissant sweet snack filled with caramel/dulce de leche. Dulce de leche is an on-trend flavor that caters to the growing Hispanic consumer base, as well as millennials. This new product from 7 Days Croissants is a perfect complement to that morning coffee or for the on-the-go snack occasion later in the day. All 7 Days Croissants are individually wrapped and boast a shelf life three times longer than most competitors. Our testers liked the soft layers and flavor combo, plus the value of the oversized croissant with caramel filling. SALTY SNACKS/CHIPS: Pringles Wavy, Kellogg’s

Pringles Wavy are the latest, exciting addition to the successful Pringles lineup. Pringles Wavy are thicker than most ridged chips and available in the iconic Pringles resealable can for easy sharing on the go. With today’s consumers seeking unique snacking experiences, these new crisps provide the enhanced crunch and bold flavors they want. Pringles Wavy crisps come in two craveable flavors — Fire Roasted Jalapeño and Applewood Smoked Cheddar — delivering an awesome snacking experience in every can.

SALTY SNACKS/CRACKERS: Goldfish Epic Crunch, Campbell Soup Co.

Goldfish Epic Crunch is an exciting twist on the Goldfish experience. It’s everything kids love about Goldfish crackers, but now with a bold, big crunch that bigger kids (and adults) want. The product’s larger three-dimensional shape is uniquely designed for bigger kids, and boasts an exciting, crunchier texture than regular Goldfish. Our panel tasted the Bold Nacho flavor. They loved the bigger-size resealable bag and larger-sized goldfish, as well as the fact that they are baked. There were lots of comments on the ingredients, and panelists liked the fact that they are made with 18 grams of whole-grain corn, with no artificial flavors or preservatives. Goldfish Epic Crunch “taste healthier” and “crunchier,” remarked one tester. SALTY SNACKS/NUTS & SEEDS: DAVID

Pumpkin Pepitas Sea Salt/Green Chili with Lime, Conagra Brands

High-protein snacks are all the rage, and alternative plant protein represents 22 percent of the total protein snacking category and is driving overall protein snacking growth, according to Conagra Brands. The company’s new DAVID Pumpkin Pepitas in Sea Salt and Green Chili with Lime flavors are out-of-theshell pumpkin seed kernels that are a good source of energy. They fit in with the growing healthy lifestyle where you can eat them out of the bag or put them on salads instead of croutons. One serving contains 11 grams of protein. Our panelists liked the flavor and texture of these roasted and seasoned seed kernels.

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FEATURE

TOBACCO/CIGARS: Night Owl Tipped Pipe Tobacco Cigars,

Swedish Match North America LLC

From the makers of the highly successful White Owl cigar brand, the newest entry, Night Owl Tipped Pipe Tobacco Cigars, are crafted with the finest tobacco and packaged in the unique resealable FoilFresh pouch, which guarantees freshness. This is a new product line launch within the segment of tipped cigars. Night Owl Pipe Tobacco Cigars from Swedish Match come in four varieties: Classic, Wine, Tropical and Black Cherry. Our testers liked the Black Cherry best. They found the aroma pleasing and said the cigar has a smooth taste. TOBACCO/OTHER: Nicotac, Lil’ Drug Store Products

More than 22 million smokers try to quit smoking every year and they visit convenience stores more than any other channel. According to a November 2018 study by Brandware, 60 percent of shoppers use nicotine gum to supplement their smoking behavior and 80 percent would buy nicotine gum at their local convenience store. Nicotac nicotine gum from Lil’ Drug Store Products is perfect for convenience stores because it fills an unmet need for nicotine gum users with its travel-size pack and competitive retail price. It comes in a 10-piece pack for a suggested retail price of $4.99. The gum offers two strengths of nicotine polacriliex, 2 milligrams or 4 milligrams, and comes in three flavors — Cinnamon, Fruit and Mint. WINE: Single-Serve Barefoot Wine-to-Go, E&J Gallo Winery

Young drinkers value convenience over tradition, so the new package of E&J Gallo’s Barefoot Wine-to-Go makes sense. Today’s drinkers are less worried about con-

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WIRE SHELVING

CHROME Bright, attractive finish

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vention when drinking wine. Drinking locations have expanded to settings where unbreakable options are required, such as at a beach, park picnic or festival. Today’s drinkers are also much more casual about the packaging, preferring the environmentally-conscious smaller container to a big bottle. E&J Gallo now packages its No. 1 brand, Barefoot Wine, in Tetra Pak containers. The screwcap carton holds three glasses (500 milliliters) of wine. The stand-out design is unique, featuring different cool sayings on the sides of the lightweight containers depending on the flavor. Our testers liked the Pinot Grigio best. The product also comes in Muscato, Chardonnay and Rosé varieties. OVERALL INNOVATION:

Rice Krispies Treats Snap Crackle Poppers, Kellogg’s

Rice Krispies Treats Snap Crackle Poppers take the traditional treats customers know and love and puts them in the form of a new unwrapped, bite-sized snack. The marshmallowy crunch is key to the unique and satisfying flavor. Each 1-inch square piece is dipped in a silky smooth coating. Varieties include Chocolatey and Cookies ‘N’ Crème. Rice Krispies Treats Snap Crackle Poppers are portable and shareable, packaged in a 5-ounce resealable stand-up bag. Our panelists liked the Cookies ‘N’ Crème variety best and gave high marks to the product’s satisfying crunch. They said it’s the “perfect size for the movies or snacks in the car.” This product scored the highest overall ratings in this year’s contest. CSN

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STORE SPOTLIGHT

Homegrown Convenience Enmarket’s one-of-a-kind store in Savannah, Ga., pays tribute to the retailer’s history By Danielle Romano

At a Glance Enmarket Size: 3,522 square feet Location: 405 Martin Luther King Jr Blvd., Savannah, Ga. Unique features: A design inspired by the site’s transportationrelated history; a community-themed mural; The Eatery proprietary foodservice; a green space; bike service area

IF THERE’S ONE THING NOT in short supply in the convenience channel, it is retailers showing off their hometown pride with unique store designs. (Think Wawa Inc.’s largest site to date in Philadelphia, and Family Express Corp.’s Valparaiso, Ind., colonial prototype.)

commuters, local businesses, [Savannah College of Art and Design] students and faculty, and tourists were all carefully considered when we selected this store design and the products and services that this location offers.”

This summer, Enmarket joined this group by opening a new store that pays homage to its hometown of Savannah, Ga. The 3,522-square-foot location is one of a kind.

This particular remodel in historic Savannah was several years in the making. The original location was a small kiosk with a pay-only window. However, with healthy fuel volume sales and pedestrian foot traffic, Enmarket had metrics that supported the idea of investing in a fullsize convenience store on the site.

The newly rebuilt and expanded Enmarket convenience store was renovated to integrate its appearance into the surrounding historic district. The design draws from the site’s transportationrelated history given its proximity adjacent to the Central of Georgia Railway and Georgia State Railroad Museum. Additionally, the store is accessible to trolleys and other vehicles critical to Savannah’s downtown tourism industry, according to the retailer. “We are thrilled to unveil this beautiful new store in the historic district. The design and concept reflect the direction we are taking in the community which is to provide a more modern, customer-friendly store with a dual focus on pedestrian and automobile traffic,” said Enmarket President Brett Giesick. “This is a one-ofa-kind location for Enmarket. A diverse customer base of downtown residents,

Unique by Design

“The store was designed uniquely for this site. We had limitations due to the size and layout of the site, and other restrictions that come with a location in historic downtown Savannah,” shared Enmarket Vice President of Marketing Matt Clements. “We learned that we can maintain all of our traditional retail programs and still have ample room for foodservice in a relatively compressed space, so this gives us an option to use in the future on similarly challenged sites.” For this one-of-a-kind store, Enmarket tapped Fort Worth, Texas-based design firm Paragon Solutions to design the building and Gunn Meyerhoff Shay, a local Savannah firm, as the architect. Several iterations were conceptualized before arriving at the final model.

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STORE SPOTLIGHT

This newly renovated location, which was previously a kiosk, now features Enmarket’s proprietary foodservice offerings, bean-to-cup coffee, local craft beer, and much more.

“The area has served the city of Savannah for over a century as a hub for various types of transportation. It seems both appropriate and natural that this particular Enmarket would derive many of its design elements from its rich surrounding context, while blending in certain Enmarket branding elements,” Clements commented. Located at 405 Martin Luther King Jr Blvd., the building showcases a masonry exterior with simple, yet elegant detail as a nod to the remaining industrial-era transportation buildings in the area. Expansive storefront openings allow for natural lighting and provide a human scale inside, where there was more opportunity to play with modern materials and bold colors, according to the marketing executive. Additionally, one of the most unique and unifying elements is a community-themed mural that occupies almost the entire façade of the building, painted by local artist Alexandria Hall. “The Martin Luther King Jr. Boulevard location is especially unique in that it is located in the historic downtown district. It is a highly visible site for our brand, both locally and to tourists who visit Savannah,” noted Clements. “Rebuilding a more modern facility was helpful to our overall brand image.” Inside, the newly renovated Enmarket offers a gamut of foodservice items and traditional c-store fare. The previous site did not offer foodservice or dispensed beverages, and very little beer. Snacks and bottled drinks were limited, as well as general merchandise. Now, the new store features Enmarket products already available at its other fullservice stores, including a full complement of dispensed beverages, bean-to-cup coffee, “Chillen” frozen drinks, fresh brewed tea

and other non-carbonated beverage offerings, and cold brew coffee. The Eatery, Enmarket’s proprietary kitchen concept, serves up antibiotic-free, never-frozen chicken, fried fish and a host of daily specials and sides in the afternoon. During the breakfast daypart, items available include fresh pastries, grab-and-go biscuit and croissant sandwiches made in-house, and a full plated breakfast served out of the cold case. Other amenities and services featured at the new Savannah store are: • An outdoor dining patio; • Green space; • A bike service area; • Local craft beer; and • Expanded availability of diesel to all dispensers, in addition to non-ethanol fuel.

History in the Making Enmarket, which was rebranded from Enmark in 2015, was founded in Savannah in 1963 and the city has always been the location of the company’s headquarters. In fact, to support the retailer’s recent growth spurt, Enmarket is constructing a new office here that is set to open in the fourth quarter of this year. “We have a great relationship and heritage with the city and we take special pride in our locations here,” Clements told Convenience Store News. “Savannah will always be a priority market for us and we have plans to increase our store count there over the next year. “Business and industry are growing rapidly, as well as an increasing population,” he continued. “Enmarket is committed to supporting this growth by building stores that are easily accessible to residents and businesses. We’re also rebuilding existing sites in order to meet the changing expectations of today’s consumer.” Enmarket is part of Savannah-based Colonial Group Inc. The retailer operates 124 c-stores and 14 quickservice restaurants across Georgia, South Carolina and North Carolina. CSN

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TWIC TALK

Line Aarnes, Alimentation Couche-Tard Inc./Circle K The 2018 TWIC Woman of the Year believes more effective sponsorship is needed By Linda Lisanti NOW IN ITS SIXTH YEAR, the Convenience Store News Top Women in Convenience (TWIC) awards program has recognized more than 200 of the best and brightest women making a positive impact on not only the companies they work for, but also the entire convenience retail channel.

TWIC is the only program that recognizes exceptional female leaders, rising stars and mentors among retailer, supplier and distributor firms in the convenience store industry, from the C-suite to the store level to the independent entrepreneur. In TWIC Talk, our bimonthly Q&A series, we interview a past TWIC winner about what it’s like to be a female leader in the convenience store industry today — the opportunities, the challenges — and get their words of wisdom for up-andcomers seeking to blaze their own trail. This month’s TWIC Talk subject is Line Aarnes, global vice president of customer experience at Alimentation Couche-Tard Inc./Circle K. In 2018, Aarnes was one of the five women celebrated by TWIC as Women of the Year. How would you describe the current state of affairs for gender equality in the convenience store industry? How does this compare to 10 years ago? I am seeing progress with more examples of women leaders in both my own company and in the industry in general. However, we have a ways to go: most of the changes I see are in office positions, while not as much in operations. Also, while we have good gender balance at the store manager level, it is not continuing at the same pace above store level. That said, I am encouraged that the topic of gender equality is now higher on the agenda across our industry, and I believe that focus is helping remove some of the bias and allowing for greater representation.

What is the most positive change you have personally witnessed? This year, we founded ACT Women’s Council with the mission of creating winning conditions for women at Couche-Tard/Circle K. Our council started with support from the board of directors, in particular Director Melanie Kau and Chief Human Resources Officer Ina Strand, and is now a thriving group of women across the ranks of the company, as well as male sponsors. We are starting to get the word out of the council’s work across the network and already have regional groups being formed. We are looking closely at issues around gender equality in hiring, bias training, and professional leadership training. The council’s goal is for inclusion in general and, as one of its founders and co-leads, I am incredibly proud of what we have accomplished in a few short months. What barriers to advancement do you see still existing in the c-store industry? As I said before, operations in particular is an area for attention and advancement. Also, and this is not specific to the c-store industry, I am looking for more effective sponsorship connecting women with career opportunities and advocating for their advancement. While mentorship is helpful, I believe sponsorship can be even more effective and, from my experience, there is a lack of this for women across the industry and beyond. What is your advice for other industry women looking to rise to higher ranks? When I was honored as a Top Women in Convenience, I gave the following advice to all women looking for advancement: “Say yes to opportunities, even though you might think they are too big. If you are asked — you are good enough.” I continue to strongly believe this. I would add: Do your best and work hard at the level you are at. Find a couple of tasks that you can be known for in your organization and use them to build your brand internally. Be transparent around defining your goals and ambitions, so your sponsors can help you reach them! CSN

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Services

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

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

Our ads get results! CALL TERRY KANGANIS TODAY-

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Equipment / Supplies

Equipment / Supplies

Equipment / Supplies

Wholesale Refrigeration

Check Guarantee Services

ADINDEX ADD Systems........................................................27

McLane Company...............................................124

Altria Group Distribution..................................2, 25

Miracle Nutritional Products...........................63

Autofry/MTI...........................................................87

Paragon Solutions...............................................28

Blue E-Cigs............................................................123

Premier Manufacturing.....................................19, 53

Bob’s Red Mill.......................................................23

Prince Castle Inc..................................................21

Calico.......................................................................99

Reynolds American Trade

Cookies United.....................................................47

Marketing Services.............................................33

Curaleaf Hemp.....................................................45

Silver King..............................................................43

Del Monte Fresh Produce................................15

Swedish Match.....................................................5, 91, 101

Diebold Nixdorf Inc............................................77

Swisher International.........................................11, 89

E-Alternative Solutions.....................................41

The Hershey Company......................................39

Forte Products.....................................................86

The Procter & Gamble Distributing Co.......35

Fujitsu America Inc.............................................73

The Wonderful Company.................................37

Goya Foods...........................................................7

TransAct Technologies......................................29

Heineken.................................................................95

Tyson Foods..........................................................71, 97

Hughes Network Systems................................8, 9, 69

Uline.........................................................................102

Inline Plastics Corp.............................................55

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

J&J Snack Foods Corp......................................59

Uno Foods.............................................................49

Jack Links...............................................................65

Voss Water.............................................................13

Krispy Krunchy Chicken...................................57

VP Racing Fuels...................................................Cover

Liggett Vector Brands.......................................61

Zebra Technologies............................................75

Living Essentials..................................................17

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

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10/9/19 11:03 AM


INSIDE THE CONSUMER MIND

The Meat of the Matter Plant-based alternatives are increasingly grabbing consumers’ attention and dollars Vegetarians and vegans remain a small, single-digit percentage of the U.S. population — only around 5 percent of households — but that isn’t stopping the rapid growth of plant-based meat alternatives. Increasingly at major restaurant chains, consumers can find plant-based burgers, fried chicken, sausage sandwiches, and more. Wider availability is prompting increased trial among meat and non-meat eaters alike. Here are some of the latest insights on the plant-based trend:

18

%

Consumers want to incorporate more plant-based foods because: • They wish for more protein in their diets;

of the adult population is trying to increase the amount of plant-based foods in their diets.

• Concerns for animal welfare and how meat products are brought to market;

PLAN

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• Sustainability; and • What they perceive to be healthier nutrition.

Source: The NPD Group, Health Aspirations and Behavioral Tracker

228 MILLION

There were 228 million servings of veggie burgers and veggie sandwiches ordered at quick-service restaurants in the year ending May 2019, up 10 percent from a year ago.

Source: The NPD Group, CREST

The strong yearover-year growth is primarily due to increased availability at major chains: Burger King recently made its plant-based meatless and vegan burger, the Impossible Whopper, available nationwide for a limited time at 7,000-plus locations and via delivery.

Plant-based burgers allow consumers to substitute without sacrifice. They get the ‘burger’ experience while assuaging their need for more protein and social concerns. With that said, U.S. consumers have not given up on beef burgers, but are willing to mix things up every now and then.” — DARREN SEIFER, The NPD Group

Dunkin’ launched a plantbased meat alternative, The Beyond Sausage Breakfast Sandwich, at select locations in New York City. The chain plans to roll out the sandwich nationally at a future date.

6.4 BILLION

Kentucky Fried Chicken started a limited test run of a plant-based chicken, Beyond Fried Chicken. Customers can enjoy it in the form of nuggets or boneless wings.

Beef burgers, though, are still by far the most popular burger ordered at QSRs. There were 6.4 billion servings of beef burgers ordered at QSRs in the year ending May 2019.

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IN AN ERA OF DISRUPTION, CHANGE IS CONSTANT. Today’s convenience retailers are facing ever-changing consumer demands, new retail competitors and an endless array of offerings via e-commerce and mobile applications. As a leader in grocery supply chain services, McLane is committed to helping our customers navigate a rapidly evolving c-store landscape. From technology solutions that save retailers time and money, to private label products that offer higher margins, to foodservice-at-retail programs that elevate c-store offerings, McLane has the solutions to help the convenience channel stay relevant. For more information on McLane’s industry-leading products and services, visit mclaneco.com

© 2019 McLane Company, Inc. All rights reserved.

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