Octane English- Mar/Apr 2021 by ensembleiq

INSIDE: Non-refiner marketers have become the biggest group in retail gas sales

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MARCH/ APRIL 2021 Volume 26 | Number 2

CONTENTS

STAY CURRENT

Editor’s message Independents stick-handle market change

Service sells Full-service wash menus generate customer satisfaction

Dirty secrets Underground contamination challenge is ongoing

COVER STORY Declarations of independence Non-refiner marketers have become the biggest group in retail gas sales

Mobile fuelling Start-ups seek to sidestep gas stations

Future ready As the classic Bob Dylan song goes, ‘the times they are a-changin’

Featured products New products, equipment and services

CCA industry forum

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EDITOR’S MESSAGE

20 Eglinton Ave. West, Suite 1800, Toronto, ON M4R 1K8 (416) 256-9908 | (877) 687-7321 | Fax (888) 889-9522 www.CCentral.ca SENIOR VICE PRESIDENT, CANADA | Donna Kerry EDITORIAL EDITOR, CSNC Michelle Warren | mwarren@ensembleiq.com EDITOR, OCTANE Kelly Gray | kgray@ensembleiq.com TRANSLATION | Danielle Hart ADVERTISING SALES ASSOCIATE PUBLISHER Elijah Hoffman | ehoffman@ensembleiq.com VICE PRESIDENT, EVENTS Michael Cronin | mcronin@ensembleiq.com DESIGN AND PRODUCTION SENIOR VICE PRESIDENT, OPERATIONS Derek Estey | destey@ensembleiq.com DIRECTOR OF PRODUCTION Michael Kimpton | mkimpton@ensembleiq.com ART DIRECTOR | Linda Rapini DIRECTOR OF MARKETING, BRANDLAB Alexandra Voulu | avoulu@ensembleiq.com SENIOR DIRECTOR AUDIENCE STRATEGY Lina Trunina | ltrunina@ensembleiq.com SENIOR DIRECTOR, DIGITAL CANADA & SPECIAL PROJECTS Valerie White | vwhite@ensembleiq.com CORPORATE OFFICERS CHIEF EXECUTIVE OFFICER | Jennifer Litterick CHIEF FINANCIAL OFFICER | Jane Volland

CHIEF INNOVATION OFFICER | Tanner Van Dusen CHIEF HUMAN RESOURCES OFFICER | Ann Jadown EXECUTIVE VICE PRESIDENT, EVENTS & CONFERENCES Ed Several

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Please contact Wright’s Media | ensembleiq@wrightsmedia.com 1-877-652-5295 CONVENIENCE STORE NEWS CANADA / OCTANE is published 6 times a year by EnsembleIQ. CONVENIENCE STORE NEWS CANADA / OCTANE is circulated to managers, buyers and professionals working in Canada’s convenience, gas and wash channel. Please direct inquiries to the editorial ofﬁces. Contributions of articles, photographs and industry information are welcome, but cannot be acknowledged or returned. ©2020 All rights reserved. No part of this publication may be reproduced in any form, including photocopying and electronic retrieval/retransmission, without the permission of the publisher.

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Independents stick-handle market change By 2035 General Motors will no longer manufacture vehicles that use fossil fuels. GM joins a growing list of car and truck makers betting on alternatives to gas and diesel. What this means is a massive disruption in the current fuelling model. This disruption is where the independent service station operator can really shine. In this issue, we discuss the independent operator and their market position. Again and again, we were told about the capabilities of independent operators to quickly pivot in the face of change. Certainly, there are considerable benefits to being part of a large refiner-controlled network. However, among these benefits would not be quick responsiveness to changing market conditions. Many independents told us it might take days to get a call back from a refiner gasoline brand regarding a service request, pricing queries or a local promotion. Big wheels turn slowly. What big-name brands offer is consistency. Refiner-branded canopies are easy to recognize. Majors also offer loyalty programs, credit cards, and uniform marketing. Brands help take the bumps out of the road to retail success. However, it is often the independent operator’s unique reaction to these ‘bumps’ that show how they can stick-handle change.

Independents may install EV charging systems or place hydrogen tanks when they see a local need without asking a distant head office if the new services meet current initiatives. Independents can also choose their foodservice partners. One Ontario operator we spoke with decided to go with a well-known provincial restaurant brand rather than the established national set up his fuel supplier suggested. The same is true for car wash, with independent gas operators able to move beyond the express tunnel offerings that major brands have made so ubiquitous across the country. Today, nearly 80% of Canada’s gas stations are independent of refiners. This number is up from 68% in 2004 (15 years). Reasons for the switch are that as changing winds started to blow in the market, savvy business people saw the need for greater market responsiveness. The independent model delivered and Canada’s fuel retailers are making a change for the better.

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Crew at AutoSpa (before Covid-19)

Service sells Full-service wash menus generate customer satisfaction By Kelly Gray

Motorists are turning more often than ever to car washes for the professional services they offer. According to the International Carwash Association (ICA), there has been a 30% uptick in wash site usage over the past 15 years. Driving this growth is convenience, cost and efficacy. Full-service interior/exterior washes deliver it all. At AutoSpa in Mississauga, Ont., they are open during COVID-19 lockdown by appointment for their Express Interior/Exterior cleaning. Their crews wear full PPE (personal protective equipment) for safety. Customers, such as first responders and other essential workers, including taxi and courier drivers, bring vehicles onto a flat deck conveyor at the front end of the wash system. Stage one is a designated prep area where AutoSpa uses high-pressure nozzles to soak and rinse the vehicle. This process loosens dirt and grime and moves soils away from the tunnel and conveyor washes. According to operator Fred Misheal, this first step helps the overall water reclaim systems and keeps moving parts such as those on conveyor belts in top shape thanks to lower maintenance needs. Dirt and grime from this first step are deposited in below-floor tanks where grit settles. Stage one is also where AutoSpa staff greet customers and discuss their car wash needs. On the flat deck conveyors, teams of detailing pros travel along with the vehicle in a 24 minute, fivestage process. Thought-put is 600 cars per day. This

side of the wash uses an average of 16 people who rotate job functions after each wash completion to maintain a fresh approach to tasks. Helping AutoSpa crews is a system design that places tools close at hand while they work on the conveyor. A good example is the vacuum system. Supplied by Eurovac, AutoSpa uses dual 30 horsepower vac systems that are powerful and quiet thanks to motor placement in the compressor room. The hoses run above the conveyor on a rail system. This equipment allows wash detailers to limit reach for hoses and always have a vacuum at hand. At Winnipeg’s MidTown Car Wash, a site that has been cleaning vehicles for more than 50 years, they offer one of Canada’s best values for a full interior and exterior wash. Midtown operates an automatic tunnel with a crew of five technicians handling the details. At the front end, customers are greeted as they leave the car. A team of two takes over with high-pressure wand wash to remove exterior grime and get at hard to reach places such as door jambs. The interior mats are removed and sprayed and crews perform a basic vacuum and wipe down before the vehicle heads onto the chain and roller and into the tunnel. This initial prep process takes about five minutes. At the tunnel exit, MidTown crews are ready with cloths to wipe down seats and dash as well as windows. The exit crew hand wipes door jambs and exterior mirrors. The entire process takes about 15 minutes and costs less than $20.

“By the time it comes through the tunnel the interior is safe for our crews. When we are done we spray again to increase the level of safety for our customer” 6

MARCH/APRIL 2021

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Communicate with customers, so they know to leave unnecessary items at home. Objects such as sports gear and large boxes make it more challenging for interior cleaning crews. Spend the extra time at the front end with high-pressure hoses to loosen dirt and pull off mud before the tunnel.

Make connections with regular customers via loyalty programs and memberships and note preferences for scents on their customer profile.

In Kingston, Ont., Aqua Car Wash opened in April of 2019. This site is Kingston’s only full-service car wash. “Business has been good,” says general manager Sharon Walia. She remarks that Aqua offers a 120-foot tunnel to handle to exterior wash with multi-person crews ready to get into the interior work. “As soon as the car comes out of the tunnel it is moved to a separate bay where we add our personal touch to the service. This is where we do the interior,” she says, mentioning that when the crew takes the car at the front end, they spray a COVID-19 sanitizer into the interior. “By the time it comes through the tunnel the interior is safe for our crews. When we are done we spray again to increase the level of safety for our customer.” According to Walia, important to the whole process is the inspection at the end when the wash technician gives back the car. “The inspection allows us to offer complete customer satisfaction. We aren’t satisfied until our customers tell us it’s right.” OCTANE

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Dirty Secrets Underground contamination challenge is ongoing By Kelly Gray

Underground fuel storage has been an industry standard since the earliest days of gasoline retail. Today’s fibreglass tanks offer a huge step up from older single-wall steel tanks that were common before the 1980s. However, as safe as new tanks might be, there are still as many as 30,000 gas contaminated sites in Canada that require remediation.

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“Tanks today are better. There are fewer of them. Tanks also tend to be doublewalled, and they are better installed than at any time in the past,” says Robert Renkes, executive director with the Tulsa-based Fibreglass Tank and Pipe Institute. Tanks also come with a 30-year warranty. Even with these safeguards, operators and fuel brands are often tasked with

expensive and time-consuming work when underground tanks leak or when soil becomes contaminated with fuel spillage. This is what happened at Bill Barber’s station in Mississauga, Ont. at Queensway and Cawthra. He reports the contamination was not surprising given that they had been operating on the corner for years.

MARCH/APRIL 2021

“It used to be ‘how can we clean this up as fast as possible?’ Now it is being shown that a longer-term approach is the best and most cost-effective remediation method”

“We built the site and operated the gas bar ourselves as a Sunoco dealer. We then leased the site to Sunoco and it was branded as a Petro-Canada. The lease came up after 20 years. We decided to take it back and operate it ourselves with Petro-Canada as the fuel supplier,” says Barber, remarking that the terms of the lease saw Petro-Canada responsible for tank removal and remediation of the site. Cost is estimated to be close to a million dollars for the environmental cleanup. “We detected no leakage over 20 years, so we were interested to discover the extent of the problem underground.” According to Barber, the toxic plume from the tank leakage extended 15-metres beyond the apron but was still on the property. Barber’s location was closed in March of 2020 to get the work done. “Then COVID-19 came along. The construction was delayed for a month because of lockdown. Once they got going, the canopy came down and the kiosk was removed because we are building a larger convenience store. By the end of September, the contractor was ready for tanks, but because of COVID, there was an issue obtaining the necessary permits.

We had TSSA approval but no permits to start construction.” Surprising to Barber was the cost and hassle of obtaining new drawings and reports. “We will have the same size apron and canopy. The only real change is that the c-store will grow from 200 sq. ft. to 1,200 sq. ft. We have the same water and sewer hookup, the same footprint and grades, but the City required us to get permits for site grading and services. The permits added a cost of $20,000 for the required drawings and caused several months of delay.” Barber tells OCTANE that they have found efficiencies in keeping their relationship with their fuel supplier and were able to keep their old dispensers that were a recent purchase. When everything is completed the site will feature self-service gas and diesel, a lube centre, car wash, foodservice from Eggsmart and a convenience store. Remediation techniques are varied. In Barber’s case, it was necessary to dig up the tainted earth and move it to off-site where the toxicity can be removed or safely stored. Other remediation techniques are more long term. These involve in-situ microbiology

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that can reduce the cost of site remediation by as much as 30%. Trevor Carlson is a principal environmental consultant with consulting and engineering firm Geosyntec. He also worked for years as the director of sustainability with Federated Robert Renkes, executive director with Cooperatives Limited (FCL), the Fiberglass Tank and Pipe Institute an organization with 390 gas bars across Western Canada. He points to the Sustainable In-Situ Remediation program launched by FCL and the University of Saskatchewan (USask) and the Northern Alberta Institute of Technology (NAIT) in 2014 as an example of remediation technique changes. The FCL project injects a water-based, nutrient-rich solution into the ground. The solution is made from treated meat and bone meal from a cattle-processing plant. Early trials suggest this technique enhances the growth of micro-organisms to help clean up underground contamination. FCL is now field-testing the technique at sites in Alberta and Saskatchewan. “These new passive techniques allow operations to stay open while microbes do the work of cleaning soil and groundwater,” he says, mentioning that this approach offers a triple win with less risk, greater environmental sustainability, and less cost. “It used to be — ‘how can we clean this up as fast as possible?’ Now it is being shown that a longerterm approach is the best and most cost-effective remediation method,” he says, remarking that where once site shut down and soil extraction was the only solution, operators can now stay open by injecting biological material into the leakage plume and feed it oxygen to keep anaerobic conditions good for petroleum eating bacteria growth. Carlson reports that Geosyntec is developing a vegetable remediation technology alongside majors such as Imperial and Marathon Oil. In recent work in Arizona, they have demonstrated large cost reductions to remediation sites in Phoenix. “Twenty years ago, the risk of tank failure was high. The costs of remediation could be huge. Technology has improved tanks as well as clean up solutions. This work is often too much for a single operator to handle the challenges of site clean up. Government needs to be involved with funding and support. When a leak is discovered it is sometimes difficult to know where to start. I think the cost and challenges of remediation is an unfair burden to place on operators who may not have the resources to bring the environment back. There are a lot of taxes generated from fuel sales. It is not unreasonable to ask government to help,” he says, concluding that while the challenge of site contamination is huge, the cost of inaction is far greater. OCTANE

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Non-refiner marketers have become the biggest group in retail gas sales By Kelly Gray

Canada’s gasoline landscape is a varied one. Altogether, Canada has 93 distinct brands of gasoline that come from 67 companies spread across the country. These numbers reflect the changes that Canada’s gas station universe has undergone over the past decade. Today, there are fewer refiner controlled sites and far greater forecourt independence for operators. “The public’s view of gas station operations is often characterized by closely owned and controlled assets under an integrated oil company model. However, this is becoming increasingly uncommon in Canada,” says Jason Parent, managing director, Kent Group, an organization that calibrates the industry with an extensive annual sector overview. “With the sale of Imperial Oil’s remaining retail assets in 2016, they became the first major Canadian refiner-marketer to be comCCentral.ca

pletely divested of its retail operations and the number of sites price-controlled by an integrated refiner-marketer in Canada fell to below 15% in that year. “Of the retail gasoline stations in Canada, 2,508 (21%) are price-controlled by integrated refiner-marketers,” he says. “The remaining 79% of stations are price-controlled by independent proprietors or companies who are not involved in the refining of petroleum products, up from 68% in 2004. These «non-refiner marketers» therefore reflect the vast majority of retail gasoline stations in Canada. “Refiner-marketers are increasingly willing to either extend or maintain their brand presence through regional distributors that manage the relationship with their former branded associates. This allows a refiner-marketer to focus more on its most-valued outlets, or in the case of Imperial Oil, focus resources further upstream,” says Par-

Jason Parent

“OF THE RETAIL GASOLINE STATIONS IN CANADA, 2,508 (21%) ARE PRICECONTROLLED BY INTEGRATED REFINER-MARKETERS”

MARCH/APRIL 2021

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“QUALITY OF GASOLINE IS CONSISTENT BECAUSE WE ALL GET FUELS FROM THE SAME REFINERIES. WHAT IS NOT CONSISTENT IS THE SUPPORTS OFFERED TO DEALERS. THIS IS WHERE INDEPENDENT COMPANIES CAN SHINE”

ent, adding that there are a growing number of non-refiner marketers who are willing to take on the operation of these outlets, either as controlled or non-controlled sites in their networks. “Parkland (outside of British Columbia) and Wilson Fuels would characterize this type of traditional fuel marketer. However, we are also reporting an increase in the representation of non-traditional chains, such as Sobeys, Costco, 7-Eleven, and Couche-Tard.” The Kent Report indicates that 40% of the fuel marketing companies in Canada operated a portion of their network under a brand owned by another company, representing 37% of stations in Canada. This number is up from just 6%, 15-years prior.

“Typically, these fuel marketers operate under a branded supply agreement with the brand owner (often a refiner such as Shell or Esso) and benefit from the brand recognition, marketing support, and loyalty programs of the established brand.” According to Jessica Friesen, CEO, Gales Gas Bars, a 14-site independent banner in Ontario’s Niagara region, independent operators can be more nimble in the market. She reports that until the early-1990s, their operations partnered with the Ultramar banner. “When my father took over, his idea was to achieve greater autonomy. We could do this with an independent brand. Being independent means we can be more nimble in the marketplace,” she says, pointing to

SHARE OF MARKET BY NUMBER OF OUTLETS - BY MARKETER (2019) Others 29.8% Parkland Fuel 16.2% Suncor Energy 10.7% Couche-Tard 9.6% Shell Canada 6.2% Federated Cooperatives 4.8% Sobeys 3.6% Harnois 3.6% Husky Energy 3.4% 7-Eleven 3.2% Filgo-Sonic 2.5% Canadian Tire 2.5% BG Fuels 2.0% Wilson Fuel Co. 2.0% Source: Kent Report

MARCH/APRIL 2021

their experience with COVID-19. “We have been paying close attention to press conferences from the federal government and the Province of Ontario. Some days we would have to change directions twice to stay on top of the government COVID-19 advisements. As an independent, we could do this without waiting for direction from a head office in Calgary. We know the local market and, as such, we are positioned to create the best value equation for our customers. This is something we have been doing since 1967. First, as a heating fuel supplier, then as a location for motor fuels, and then as a site for convenience retail with Bob’s Fast & Fresh locations,” she says noting that they have developed six sites in the last 12 years. Non-refiner marketers pay the rack rate for fuel and then add in inputs such as Federal Excise Tax. Today’s price (January 20, 2021) for regular gas in Ontario at Petro-Canada’s tap in Oakville is 60.5 cents per litre. The Province of Ontario adds 6.3 cents per litre and the federal government adds in another 10 cents. As well there are GST and provincial sales taxes (combined13% in Ontario). There is also a Carbon Tax of 6.6 cents. Today’s southern Ontario dispenser price is $1.10/litre for regular grade fuel. This value leaves less than a dime per litre for operators who then pay to truck fuel in from the refinery, fills and maintains underground storage tanks at the site, runs dispensers and pays staff and other operating expenses. The average volume for a gas station in Canada is about 3.8 million litres. CCentral.ca

Mike Healey

“EVERY FRACTION OF A CENT IS IMPORTANT TO AN INDEPENDENT”

Non-refiner companies such as Greenergy and Canco are helping operators with tight margins. Greenergy is a UKbased major that operates four fuel distribution terminals in the Canadian market (Concord, Hamilton, Thunder Bay, and Johnstown). It also fronts a portfolio of retail brands such as Mobil, Mr. Gas, Breakaway, Inver, Simply Gas and Waypoint across company-owned and dealer operated sites. Canco is a growing independent chain of gas stations that got its start in 2016 and has locations from British Columbia to Ontario. “Every fraction of a cent is important to an independent,” says Greenergy VP commercial & business development, Mike Healey, pointing to haulage and POS rates that Greenergy works to keep low. He suggests that retail margins in Ontario are stable and with the right offer there is opportunity. “The retail gas market is extremely competitive, and volume is a critical success factor for the independent retailer. Operators want the lowest total cost possible, not just the lowest fuel price.” “Delivering invoices that are correct the first time, owning reliable distribution terminals that are ready to serve, and providing POS and haulage rates that are best-in-class allows the dealer to win. Getting these things right results in lower costs for our partners. Our mission is long-term partnerships and that means making dealers competitive and ultimately profitable.” Skip Milan, senior manager category and marketing with Canco Petroleum, agrees that competitiveness and profitability are key to dealer success. “We know that when our independent dealers are successful, it is good for the overall company,” he says, noting that they limit fees and charges as a way to help dealers with margin. “Quality of gasoline is consistent because we all get fuels from the same refineries. What is not consistent is the supports offered to dealers. This is where independent companies can shine.” Here, Jennifer Stewart, president and CEO of the Canadian Independent Fuel Marketing Association (CIPMA), suggests independent operators take less for granted because the buck stops at their desks. “When it’s your business you pay attention to all the little details. In the fuels business, it›s all about the details. This means you pay attention to high credit card transaction fees that eat into slim margins. You also develop secondary streams of revenue like c-stores and car washes,” she says, mentioning that just like big gas brands, independents are seeking to increase their market edge amid an economic environment that is seeing less gas sold, greater engine efficiencies and alternate forms of fuel. OCTANE CCentral.ca

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Mobile Fuelling

Start-ups seek to sidestep gas stations By Kelly Gray

When drivers need gas and diesel for cars and trucks, there’s an app for that. New digital tools allow fuel sellers to get involved with an evolving delivery platform that removes the need for gas stations. Customers access an app, indicate they need fuel, identify the location of their vehicle and let the magic happen. Fuel trucks pull up to driveways, street-side and parking lots to fill tanks to keep motorists motoring.

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This new service for motorists (old news for fleet and construction vehicle owners) is a growing opportunity in some quarters. Globally there are now 44 companies involved in delivering gasoline directly to vehicles. Here in Canada, this service falls to around half a dozen start-ups located in the GTA, Atlantic region, Alberta and B.C. The idea is all about convenience. “Delivered gasoline is typically the same price as at the pump or a little cheaper,” says, Mo Daouk, VP sales & marketing with ReFuel Mobile, a southern Ontario company based in London that is readying expansion plans for a national rollout this year. They launched in 2018, offering service to car dealerships and companies with fleet vehicles. “Our vision is to create a service where drivers no longer have to think about gas for their cars. The trip to the gas station is a thing of the past because, with ReFuel Mobile, the gas comes to you.” ReFuel Mobile works when customers access a dedicated app and indicate they need gas. The location services on smartphones allow the app to drop a pin to your exact location. Customers merely open their gas caps and go about their business. Refuel Mobile does the heavy lifting and dispatches a truck and driver to a car’s location where the vehicle’s tank is filled, a receipt is generated, and everyone lives happily ever after. “Awareness of this service is the industry’s greatest challenge right now,” says Daouk, adding that they have achieved a 25% uptick in consumer trade in addition to their deliveries to car dealers, businesses and employers. Innovative is their MyTank program for home-based fuel use for lawn tractors and garden equipment. This program has trucks deliver to solar-powered tanks on customers’ properties, making jerry cans and repeat trips to neighbourhood gas bars unnecessary. “Refuel Mobile is also useful for boat and RVs,” he says. In Montreal, Ryan Chadwick-Chabot and George Batkis have started Fuel It Mobile Refuelling, a company they believe offers the innovation traditional gas station sites lack. Fuel It operates one 2,000-litre truck now and has three larger vehicles on order. Fuel It utilizes a dedicated app, Fuel It Canada, that makes it easy to get a fill at home, the office or even in the parking lot of the shopping mall. The company also offers an overnight delivery that is their most popular service so far. They also have an emergency service option that guarantees that they arrive at your site within the hour. According to Fuel It Mobile Refuelling CEO ChadwickChabot, one of the initial challenges was with permits and meeting regulations. “Regulators think about gas stations when you talk about vehicle fuelling. We have

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“OUR VISION IS TO CREATE A SERVICE WHERE DRIVERS NO LONGER HAVE TO THINK ABOUT GAS FOR THEIR CARS" had to have a number of conversations to get things moving in the right direction,” he says, mentioning that there were limits initially on how much gasoline or diesel their truck could carry. Now, after by-law and fire officials better understand the value of his service, Fuel It trucks can haul much larger capacity, a factor in keeping costs to motorists low. “People pay a $1.00 monthly membership, and we have been selling at the average pump price for the region. This low cost is helping us build a customer base,” he says. When it comes to the regulatory environment, mobile fuelling has had a few challenges. In the U.S., locations such as San Francisco and Washington State set up red flags about the service in the early days. Back in 2016, the San Francisco Fire Service told media fuel delivery services were not permitted under the current scope of the regulations. Fear was that delivery trucks could catch fire in underground parking garages as well as other factors. However, with the onset of several companies moving into the market, the Fire Service began writing municipal codes to address the new delivery model. In Seattle, the Fire Department issued a Stop Work Order to Filld, a California-based major player in the U.S. mobile fuels delivery market. At issue was on-street fueling, a service the Fire Marshall saw as something that required more regulations. Filld was unable to negotiate street-side fuelling in Seattle and decided to vacate the market, something that they have just announced for Canada. Filld had been partnering with Calgary’s Parkland and had great hopes for markets such as Vancouver. “Filld has just altered its business model slightly, prompting the decision to leave Canada,” says Ward Supplee, VP, business development, Filld Inc. Among the reasons that mobile fueling is challenging for new entrants is the lack of clarity in the regulatory environment. Calls from OCTANE to major city fire departments typically received quizzical responses and Transport Canada suggested responsibility lies with the provinces. Calls and e-mails to provincial Departments of Transport revealed no specific regulations or knowledge of the remote fuelling sector beyond Canadian Automobile Association programs or fleet services. “At this point, the lack of familiarity with the service is a challenge,” concludes Daouk. “However, as we build a larger customer base and this business concept moves across the country, the convenience of mobile fuel delivery will become more commonplace and accepted as a normal practice. As we move away from the start-up phase, regulations and procedures will standardize. Expect mobile fuelling to become much more common in future.” OCTANE

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Sell the Sizzzle.

Mmm, the Sizzzle. It’s BBQ time and you have the perfect location, Right on the Way Home, to hundreds of neighborhood propane grills. MIGHTY FLAME CANADA

www.mightyflame.com 1.877.438.6444

Future ready By Jennifer Stewart, president and CEO, Canadian Independent Petroleum Marketers Association (CIPMA)

“Change is the law of life, and those who look only to the past and present are certain to miss the future”

As the classic Bob Dylan song goes, ‘the times they are a-changin.’ For our industry, this means a nearly global focus on emission reduction efforts, as governments of all stripes look to achieve a net-zero standard. While some balk at what this may mean for our sector and fear the worst, I look at the opportunities and the role the retail gasoline industry can play long into the future. Protecting our planet and reducing our footprint must be a collective effort and one that carries a myriad of solutions. Here in Canada, our Federal Government has vowed to exceed its current goal of cutting greenhouse gas emissions by more than 30% below our 2005 level. Here’s how I see our industry stepping up and being part of the solution:

› Renewable fuels For many years now, the Canadian Government has had a renewable fuel mandate, and a handful of provinces have implemented their own criteria and average-based renewable fuel programs. And the research is in: according to a 2012 study by Argonne National Laboratory corn-

MARCH/APRIL 2021

based ethanol use in gasoline reduces life cycle GHG emissions on average by 34%. Using cellulosic ethanol provides an even greater benefit. Depending on the feedstock, average emissions reductions of cellulosic ethanol compared to conventional gasoline range from 88% to 108%, depending on feedstocks used, as noted by the U.S. Department of Energy. CIPMA, alongside industry partners, have been advocating to the Federal Government for funding for renewable fuel infrastructure at the retail outlets and terminals. These funds would be used to upgrade equipment to accommodate higher renewable fuel blends (think E15 – E25), in line with increasing government mandates and consumer demand for cleaner fuels. Funding for the equipment needed to handle higher renewable fuel blends would greatly alleviate a significant hurdle for many independent retail outlets to offer this product.

› Research and collaboration CIPMA is a founding partner of an organization that will launch later this year, called the Canadian Transportation Alliance (the Alliance).

This group will operate as a not-for-profit organization, with a diverse member-base of ‘transportation’ related associations and corporations around the table, including from the following sectors: electric, renewable fuels, vehicle manufacturers, refining, hydrogen, academia, among others. The Alliance will commission third-party, innovative research on issues that will impact the sector for years to come. The goal of the Alliance is simple: provide objective research on emerging issues so that decisions can be made soundly. Collaboration is at the heart of this endeavour, and will also be an essential ingredient for our association as we move forward. We’re at a point in time where we need more than lip service to carry this industry forward and make sure it remains nimble, adaptive and iterative – much like the entrepreneurs who are at the helm of their organizations. The time is now to embrace a future of opportunity, rather than have our heads in the sand while the sector changes around us. As John F. Kennedy once noted, “Change is the law of life, and those who look only to the past and present are certain to miss the future.” OCTANE CCentral.ca

Suppliers, what’s new in your product line? Contact Elijah Hoffman at 647.558.0103 or ehoffman@ensembleiq.com

Product News McCowan Design & Manufacturing is pleased to introduce the MU-803 MULTISTREAM WASTE RECYCLE STATION. The MU-803 is an innovative solution to help make your forecourt more environmentally friendly! Manufactured from 100% recycled HDPE material and stainless steel, the MU-803 is built to last in the Canadian climate! Complete with three large capacity 135L liners, vibrant labels, flip lids and graphic doors, McCowan has the recycling solution you’ve been looking for.

PRODUCTS, EQUIPMENT AND SERVICES

BLENDCO SYSTEMS - CERAMIC PROTECTANT Blendco Systems is proud to introduce our NEW line of Ceramic Protectants! These products are specially formulated with a proprietary polymeric silica base, which forms a ceramic glass-like barrier, bonding fully with glass, chrome, rubber, plastic, and paint. These products come with the Rust-Oleum® name synonymous with high quality and trust, which will outlast all others! This fantastic line of innovative products includes our Ceramic Total Body Protectant, Clearcoat Protectant, and Foaming Protectant. Combining these products can help you to produce the driest and shiniest cars possible. 800.446.2091 | www.blendco.com

416.291.7111 | www.mccowan.ca

NOVYC NDO PRICE SYSTEMS NOW AVAILABLE IN CANADA! Novyc NDO price systems are a combination of proven quality and innovation. Novyc has been designing and producing electronic price systems for sign manufacturers and petroleum retailers since 1985 with over 40,000 systems installed in over 40 countries around the world. High quality, competitively priced NDO price signs offer Cree LEDs, IP67 rating and an Industry leading 5-year warranty protection. Contact Novyc today sales@novyc.com to see how you too can benefit from the Novyc advantage. 800.99NOVYC | www.novyc.com

WASHED OUT MANIFOLD REPAIRS - BY GRAY JAY SERVICES Many car wash owners will experience washed out manifolds and then end up buying a new pump. Your washed out manifold can be repaired by replacing the wash out with Stainless Steel. 'It will now perform like new for many years, SAVING YOU TIME & MONEY. A proven repair from Gray Jay for over 20 years! Contact us today. 587.447.5753 | grayjay@telus.net

CANADIAN CANADIAN

CARWASH CARWASH ASSOCIATION ASSOCIATION DIRECTORS Christopher Armena – Morgan Arnelien – Jeff Beam –

MARK VII

MARCH 2021

CARWASH INDUSTRY DATA WITH THE CCA’S WASH VOLUME REPORT

FEDERATED CO-OPERATIVES LIMITED MONDO PRODUCTS CO LTD

Mitchell Easton –

PETRO-CANADA

Michael Howe – BAYWATCH ENTERPRISES CANADA DIVISION

Mike Jacques – WASHTECH VEHICLE WASH SYSTEMS Jason Kaye –

The Canadian Carwash Association (CCA) publishes the results of the Wash Volume Report (WVR) on a monthly basis. It is the single most reliable source of marketing data for the Canadian carwash industry when it comes to evaluating marketing, as well as earning performance and potential. Highlights include: Free participation with your CCA membership;

BAYVIEW CAR WASH LTD.

Jamie Shaw –

7-ELEVEN CANADA, INC.

Karen Smith –

Monthly national and regional reporting comparing your performance with other carwash locations across Canada;

VALET CAR WASH

Tim Walker –

REVINMEDIA

Rudy van Woerkom – BIG CITY AUTO N TRUCK WASH

Monthly national and regional same store reporting comparing your performance with other carwash locations across Canada that have been open continuously for two years; and Monthly national and regional reporting by carwash types;

NATIONAL OFFICE Director of Operations Elizabeth McCaw Accountant Ricky Nason Event Coordinator Martha Feenstra

Canadian Carwash Association Please note our new address: 411 Richmond Street East, Suite 200 Toronto, Ontario M5A3S5

COVID-19

RESOURCES Members have access to a library of resources through the CCA and CFIB partnership. Visit https://www.canadiancarwash. ca/COVID-19-and-the-Industry for more information.

If you are a CCA member, there’s no extra cost and joining the WVR program is an email or phone call away. The data is easy to collect as most equipment used in the car washing industry reports the number of cycles, number of times a bay is accessed and what options have been selected.

INDUSTRY FORUM INDUSTRY FORUM DEDICATED TO SHARING KNOWLEDGE AND BEST PRACTICES IN THE CARWASH INDUSTRY

SOME OF THE FEATURES AND BENEFITS THAT YOUR CCA MEMBERSHIP PROVIDES ARE: NEWS The CCA Communique, our bi-weekly newsletter, offers CCA updates, as well as timely industry-specific news.

INFORMATION ON HOW TO GET STARTED IN THE INDUSTRY The CCA Starter Carwash Toolkit provides key information for business owners and prospective business owners looking to get started in the industry.

BUSINESS RESOURCES AND PROFESSIONAL GUIDANCE A joint-membership with the Canadian Federation of Independent Business (CFIB) brings a host of benefits including: access to free business counsellors, free courses, deep discounts to various services like reduced credit card processing rates and much more.

MARKET RESEARCH The opportunity to participate in the Wash Volume Report Program with access to current market data for carwashes across Canada. This detailed report is free for those who participate in the program. There is no additional cost to join.

MEMBER INSURANCE FOR CARWASH PROFESSIONALS A Carwash Insurance Program with CCA supporter and partner Erb &Erb, that is specifically built for Carwash Owners; one that advocates on your behalf and knows the needs and challenges of your business.

EDUCATION Online education covering compliance, shipping, insurance and other relevant topics to Carwash Owners. The biannual CARWACS tradeshow, a networking and professional development opportunity, that brings together industry professionals and shares current industry best practices. CANADIAN CARWASH ASSOCIATION CANADIAN CARWASH ASSOCIATION

UP IN

SMOKE NOT SO FAST Tobacco trends & tips: Making the most of your top category

5 PANDEMIC-

PROOF MARKETING STRATEGIES

ENERGY SHOTS GET A BOOST

JANUARY/FEBRUARY MARCH/APRIL 2021 2021 CCentral.ca CCentral.ca @CSNC_Octane @CSNC_Octane PM42940023 PM42940023

PLUS JUUL’S MICHAEL NEDERHOFF ON NAVIGATING THE EVER-EVOLVING VAPE CATEGORY

MARCH/ APRIL 2021

Volume 4 | Number 2

CONTENTS 05 Editor’s Message 12 months, countless changes 06 The Buzz People, places, news and events 08

Quick Bites C-stores + vending machines offer a winning combination

Top Ops 5 pandemic-proof marketing strategies

COVER STORY Up in smoke? Not so fast. Despite challenges, tobacco remains a key category and profit driver for Canadian c-stores

16 Retailer Spotlight Community pride: Dépanneur Messek expands and innovates to serve the Innu people living along Quebec’s rugged North Shore

Retailer Spotlight People first: Highway 2 Gas Bar plays an essential role in a small Alberta community with a big heart

24 Ask the Expert Satisfying consumers’ appetite for apps: Mobiquity’s Britt Mills shares insights for creating a 5-star experience

Category Check Booster shots: Consumers turn to functional beverage shots for energy and health

Pulse It’s time to celebrate caffeine

30 Snapshot Kathy Perrotta of Ipsos Canada: The rise of plant-based eating in Canada is an opportunity to grow the snack and beverage category 32 Backtalk Vape expectations: A Q&A with Juul Labs Canada president, Michael Nederhoff

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CONVENIENCE NEWS & INSIGHTS

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The latest industry news and information, plus resources, foodservice insights, store solutions, tobacco/vaping updates and more. Don’t miss our e-newsletter! Sign up today at www.CCentral.ca/signup

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MARCH/APRIL 2021

NEW!

DELIGHT CONSUMERS

ACCELERATE SALES GROWTH AND

with the NEW COFFEE CRISP® Double Double Bar and NEW KITKAT® CHUNKY Popcorn Bar.

Nestle® Singles Innovation Prepack: 274ct 059800748148

NEW! COFFEE CRISP® Double Double 48 bars per box

ranked #1 & #2 innovation in 2020

Nestlé® KITKAT® Chunky Prepack 150ct 059800748186 NEW! KITKAT® Chunky Popcorn 24 bars per box

• KITKAT® Chunky POPCORN is an exciting new flavour, offering consumers an indulgent sweet and salty experience. This bar delivers a BIG HIT of chocolate, combined with a Rich, buttery popcorn filling!

Strong growth with KITKAT® Chunky: +25% YTD Total Chunky, with flavours (Caramel & CookieDough) +57% YTD* (Source: Nielsen pe Oct 31 2020)

• What's more Canadian than COFFEE CRISP®? A Double Double COFFEE CRISP®!! Now you can get this sweet and creamy treat with a harmonious blend of airy coffee crème layers to attract new, younger consumers into this iconic Canadian Brand! For more information, contact Nestlé at 1-800-500-5634 Press 5 to speak to a Customer Care Representative

*As compared to our 40 g bar

EDITOR’S MESSAGE

CHIEF INNOVATION OFFICER | Tanner Van Dusen CHIEF HUMAN RESOURCES OFFICER | Ann Jadown EXECUTIVE VICE PRESIDENT, EVENTS & CONFERENCES Ed Several

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CHANNEL ALLIANCES:

12 months, countless changes This photo was taken in early March last year, just before COVID-19 turned the world upside down. It’s me with Zamboni driver and emergency backup goalie David Ayres, who overcame incredible odds to make his NHL debut at age 42. I’m not a hockey fanatic—my husband owns that title in our house—but I loved Ayres’ story and it was such a pleasure to meet him at the 2020 Convenience U CARWACS Show in Toronto. It’s a poignant reminder of life before masks and social distancing. It’s also a snapshot of last time the convenience industry had the opportunity to come together in person and, needless to say, a lot has changed since then. Within weeks, the country moved into various stages of lockdown, disrupting life and business at every level. In the midst of the chaos and uncertainty, convenience stores were declared an essential service and you stepped up to fulfill the wants and needs of Canadians. In this issue, we are profiling two retailers who anchored and served very different communities—the Innu of northern Quebec (p. 16) and rural Albertans (p. 20). Of course c-stores bolster more than local communities—they also contribute to the larger well being of our nation. A network of 25,000 stores coast to coast to coast collects more than $22-billion in annual tax revenue for federal and provincial governments. However, pandemic-related shutdowns highlighted what many have suspected for years— tax revenues from tobacco sales could

be higher. As part of our 2021 Tobacco & Vaping Issue, “Up in smoke” (p. 12) delves into this important topic and the larger role of tobacco as a viable category for convenience. Overall, the pandemic shifted consumer behaviour on multiple levels, pushing c-stores to adapt and embrace technology to meet those needs. “Satisfying consumers’ appetite for apps” (p. 24) shares insights into how c-stores can employ user-intuitive apps to drive engagement and revenue, plus we highlight “5 pandemic-proof marketing strategies” (p. 10) to help independent operators build relationships and foster loyalty with customers. Pandemic or not, the desire for connection and community remains strong. With that in mind, I am thrilled to kick off the fourth annual Star Women in Convenience Awards. Nominations are now open and the winners will be announced in the July/August issue of the magazine. Plus, we are already planning an exciting industry celebration to take place this fall. I don’t know about you, but I look forward to the opportunity to gather together again in person. It’s been too long.

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Michelle Warren | Editor

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THE BUZZ

CROSS-CANADA ROUND-UP

PEPSICO GOES BEYOND MEAT

PepsiCo and Beyond Meat announced a joint venture to develop snacks and drinks made from plant-based proteins. The partnership gives Pepsi access to one of the leading plant-based meat companies at a time when consumers are increasingly cutting back on meat consumption and looking for healthier, more sustainable foods. Beyond Meat gets access to Pepsi’s distribution system and broad product line. “Plant-based proteins represent an exciting growth opportunity for us, a new frontier in our efforts to build a more sustainable food system,” said Ram Krishnan, PepsiCo’s global chief commercial officer. The joint venture will be managed through a new entity called The Planet Partnership.

VACCINE ADVOCACY

The Convenience Industry Council of Canada is part of the new Ontario Vaccination Support Council (OVSC), founded by close to 100 businesses, organizations, and the Ontario Chamber Network. Members of this new group represent hundreds of thousands of workers from across the province and the purpose is “to provide support for Ontario’s historic COVID-19 vaccination effort with the ultimate goal of ending the pandemic.” CICC’s involvement builds on ongoing efforts to ensure that, as vaccines are being administered across the country to priority workers, provincial governments include convenience workers with other essential retail workers in their vaccination plans.

PEOPLE, PLACES, NEWS AND EVENTS

COUCHE-TARD LAUNCHES RETAIL INNOVATION LAB

Couche-Tard and McGill University have launched an exciting retail innovation lab, which provides a live testing ground for frictionless technologies that address the retail sector’s challenges of the future, as well as efforts to keep customers and staff safe by reducing touchpoints during the pandemic. As part of a joint effort to “transform customer experience at a critical time for retailers,” the initiative includes one of North America’s first live, open laboratory stores, which is located on the McGill University campus in downtown Montreal. “By having a live laboratory, we are confident that the research projects and technologies successfully tested at the lab may eventually be implemented in some of our 14,220 stores across our global network,” said chief technology officer, Deborah Hall Lefevre.

NESTLÉ CANADA AIMS FOR NET ZERO

Nestlé, the world’s biggest food company, is laying out a global roadmap to achieve net-zero greenhouse gas (GHG) emissions and plans to spend US$3.6 billion to achieve its goals. As part of the global announcement, Nestlé Canada outlined initiatives that are in line with recent commitments made by the Canadian federal government to achieve its target of net-zero greenhouse gas emissions by 2050. “As the largest food and beverage company in the world, we are in a position to make a significant contribution to improving the health of our planet,” said Jeff Hamilton, president & CEO, Nestlé Canada. “To tackle climate change, we are committed to accelerating our efforts in Canada across three areas—within our operations, with the ingredients we use and with our packaging.”

PAID SICK LEAVE

MONDELĒZ ACQUIRES ‘WELL-BEING’ SNACKING COMPANY Mondelēz International is expanding its well-being portfolio with Hu Products, which offers high-quality snacks, such as vegan chocolate bars, made from simple ingredients. Recently, Hu broadened its offerings to include premium, grain-free crackers. “Hu is a strong strategic complement to our snacking portfolio in North America,” said Glen Walter, EVP & president, Mondelēz International North America. “This well-being brand platform provides further growth opportunities in chocolate, cross-category potential in crackers, as well as meaningful opportunities to expand distribution, including in e-commerce and premium conventional retail.”

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A report by the Decent Work and Health Network (DWHN), an Ontario-based group calling for better health through improved working conditions, found 58% of workers in Canada don’t have access to paid sick leave: This number jumps to 70% for lowwage workers, including front-line retail workers. In fact, despite repeated calls for paid sick leave during the pandemic, Canada ranks in the bottom quarter globally when it comes to providing paid leave on the first day of illness. As of press time, only Quebec (two days per year, after three months of employment) and Prince Edward Island (one day per year, after five years of employment) provide paid sick leave. For the moment, if you have an employee who needs to isolate due to COVID-19, tap into the federal government’s Canada Recovery Sickness Benefit (CRSB), which provides $500 per week ($450 after tax deductions). Individuals can apply to receive the benefit in oneweek intervals, for a maximum of two weeks.

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PPE PAYBACK: DO YOU QUALIFY?

FCL TO DEVELOP WESTERN NATIONS GAS BARS

Federated Co-operatives Limited (FCL), in consultation with Indigenous leaders and communities across Western Canada, has developed the Western Nations gas bar brand. FCL aims to grow this initiative into a network of independent, locally owned Indigenous gas bars under one banner. Communities will maintain ownership of their locations and make their own decisions. Federated Co-op will supply and support the independent gas bars and manage the Western Nations brand, which can be applied to existing locations or new construction. “We know the energy sector is changing in Western Canada. With that, we see an opportunity to build a brand with Indigenous partners for the collective benefit of our people and communities,” said Brian Humphreys, FCL’s VP of energy.

OLG TEMPORARILY BOOSTS COMMISSION

Retailers in Ontario are earning 30% sales commission for every pack of $5 Plinko tickets activated from January 4 to March 31, 2021. This is an increase of 22% over the regular commission of 8%. The Ontario Lottery and Gaming Corporation says the move is a way to “thank all our retailers and support you for your hard work through this challenging time due to the pandemic.” Last fall, the Ontario Convenience Stores Association petitioned the provincial government to recognize and reward the key role that c-store operators play in driving revenue for OLG by increasing lottery commissions across the board by 2%. OCSA president Dave Bryans pointed out that the recent Plinko promo is the first time the OLG has moved off of commission standards: “We are hoping this will lead to additional promotions or increased commissions for the entire channel allowing for a better business future for all.”

Ontario’s Main Street Relief Grant is designed to help small businesses with the unexpected costs of PPE. To be eligible for grants of up to $1,000, c-stores must have two to nine employees. To apply, you’ll need to submit receipts or proof of costs for PPE purchased since March 17, 2020. This includes: gloves, face shields, masks, sanitizer and sanitizing wipes, as well as the installation of hand sanitizer stations, safety dividers and related signage.

Honour an exceptional woman 2021 nominations now open! Visit: www.StarWomenConvenience.ca Deadline to nominate: March 31, 2021

MOVING ON UP Nick Giovanni is the new chief financial officer at Instacart, reporting directly to founder and CEO Apoorva Mehta. Before joining Instacart, Giovanni spent more than 20 years at Goldman Sachs where he advised on financing and investing transactions for companies such as, Airbnb, DoorDash, Square, Twitter, Snap, Dropbox and Yelp. Instacart partners retailers, including some c-stores, to offer delivery and pickup services, which are available to 70% of Canadian households. Chris Hobson is now EVP & COO at Core-Mark International. With more than 20 years of Core-Mark experience, he most recently served as SVP for the company’s Eastern Divisions and previously served as SVP of Western Divisions, as well as SVP of sales & marketing and in other key roles focused on growth and operational excellence. Earlier in his career, Hobson held progressing leadership roles with 7-Eleven. Tim McNerney, who has been with Coca-Cola Canada for eight years, was promoted from vicepresident of sales to head of Canadian retail sales. The move follows the recent retirement of Scott Lindsay as senior vice president of sales of Coca-Cola Canada. Caroline Nadeau has been promoted from vice-president of sales to lead commercial strategy efforts across Canada and the North East United States for Coca-Cola. She has been with the company for seven years. Andy Newkirk joins the executive team at Core-Mark International following his promotion to SVP of operations. Prior to this role, Newkirk served as VP of operations for four years. Earlier in his career, he held various senior leadership roles at Sysco Corporation and Kellogg Company, providing him with an extensive background in complex supply chain operations.

SAVE THE DATE September 14-15, 2021 The Convenience U CARWACS Show – Toronto ConvenienceU.com

Do you have a staffing announcement to share? Email mwarren@ensembleiq.com

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MARCH/APRIL 2021

QUICK BITES

BY DARREN CLIMANS

Frictionless convenience

C-stores + vending machines offer a winning combination America is a breeding ground for innovation. Take Dean Kamen, serial inventor and entrepreneur. His name may not ring a bell, but you’ve likely heard tell of some of his inventions. Dean is the guy responsible for theSegway— the two-wheeled self-propelled device that you often see groups of tourists scooting around on. The prototype, code-named ‘Ginger’, was launched at the end of 2001 live on TV on ABC’s Good Morning America. Kamen holds more than 400 patents, many in the field of medical devices, including the following: • iBot: a stair-climbing wheelchair • Luke: a prosthetic arm system designed to provide wearers with ‘near-natural’ control • Slingshot: a low-energy water purifier that can turn almost any liquid into 1,000 litres of pure water every day

After Kamen developed Slingshot, he understood both its potential—more than 2 billion people worldwide lack consistent access to clean water—and his own limitations in terms of being able to bring Slingshot to places across the globe where the need was greatest. Kamen approached Coca-Cola, an international distribution marvel, for assistance. Coca-Cola agreed to use its contacts and supply chain to help, but had a big ask: The beverage giant challenged Kamen to develop a better soda fountain. What he came up with became the Coca-Cola Freestyle. Kamen leveraged technology from the medical device industry to re-imagine the traditional soda fountain. Instead of a rudimentary dispenser offering six to 12 distinct types of beverages, the Freestyle uses a cartridge-based system of delivery. Kamen introduced a system of microdosing, resulting in a machine offering hundreds of choices, from legacy brand soft-drink formulations to limited time offers, private label blends and infinite custom flavours created by consumers.

Vending redux Freestyle rolled out in test markets in 2008. By 2012 there were 2,000-plus locations around the United States. Freestyle won the 2011 Edison Award, and was recognized by

THE ROBOTS ARE COMING CAFEX This robotic artisanal coffee system takes orders, makes and serves a variety of drinks at several airport kiosks in California. The process takes seconds, but, while you wait, the robot server entertains by dancing.

JAMBA JUICE The company is currently testing in-store robot-made smoothies via a partnership with robot-maker Blendid. The pilot kicked off in a California Walmart store in December 2020. The system is fully touchless, from order to production, payment and delivery. Turnaround time per order is roughly three minutes. System capacity is 45 drinks in an hour and it can produce multiple orders simultaneously.

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Forbes as the coolest product of the decade. Coke now has more than 40,000 Freestyle machines in approximately 30,000 worldwide locations. Success can bring its own problems. Early consumer testing determined that a regular dispenser required about seven seconds per user to self-serve fill their order. Freestyle took about twice that time, but at 15 seconds was still manageable. However, as consumers experienced how to use Freestyleand learned to build unique new combinations, wait times increased. In 2019, Coke introduced a mobile Freestyle app that consumers could use to streamline their experience using smartphones, QR codes and geo-locators to find nearby dispensers. The app enables users to create, save and share custom mixes. It also includes a loyalty component, with promotional challenges, achievements, special offers and prizes. In the face of COVID-19, the developers bolted-on an added benefit of being able to order and dispense beverages without touching the keypad at all.

Next level self-serve A recent piece on our website documented the successful introduction in Ontario of the

REIS & IRVY’S FROYO These robots are fully automated, 15-sq.-ft. machines that started in California in 2016. The machines dispense frozen yogurt and process transactions independently. Customers can customize their order, choosing from a variety of frozen yogurt flavours and toppings. Each order takes approximately 60 seconds to dispense.

OCADO Group This U.K. supermarket giant is backstopping a London-based robotics start-up targeting foodservice commercial kitchens. The precision of the DK-One robot allows combinations of up to 18 ingredients onto plates, bowls or containers. They’ve also developed a smaller robot built for QSR and unique applications like measuring and dispensing candy, making ice cream or pouring beverages.

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On-demand in Japan

25 ITEMS YOU CAN BUY FROM A VENDING MACHINE

DARK HORSE COFFEE AUTOMAT ROBOTIC COFFEE PizzaForno pizza vending machine and Dark Horse Coffee Automat robotic coffee. While the pandemic is playing a part in the interest in frictionless convenience, it’s worth noting that first reports of a gourmet pizza vending machine in Italy date back to 2009. This is a trend with long legs. Convenience operators will continue to look further afield for next level vending solutions that tick these boxes for consumers: · meet everyday needs; · assure safety via touchless delivery; · deliver convenience of access and consistent quality; · facilitate customization; · charge a reasonable premium for on-demand service.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Rice Ramen Sake Fruits/vegetables Soup Beer/liquor Hot meals Fresh crepes Milk Sushi Raw eggs Flowers Toilet paper Contraceptives Cigarettes Ice cubes Fuel/kerosene Umbrellas Batteries Ties Costumes Fortunes/charms Underwear Glasses Live beetles

Look to the East When it comes to vending machines, Japan is Godzilla. The Japanese Vending Machine Association says that if every unit was arranged end-to-end, it would stretch from Tokyo to Hawaii. Japan’s 5 million units—roughly one for every 23 people—generate annual sales of more than $60 billion. Beyond being omnipresent, seemingly on every street corner, on top of Mount Fuji and in front of convenience stores, Japan’s vending machines are well known for the unique items on offer (see side bar). Japan embraced automation very early and with enthusiasm. In many ways, Japan was ahead of the curve. The future of vending in Canada may look a lot like Japan’s present.

The big dog There are more than 60,000 c-stores, or konbini, in Japan. It’s the largest c-store market on the planet. The leader in Japan and North America is 7-Eleven. There are actually more than twice the number of 7-Eleven outlets in Japan than in the U.S. Not insignificantly, 7-Eleven Inc. is a wholly owned subsidiary of Tokyo-based Seven & I Holdings Co., which is publicly traded on the Tokyo Stock Exchange. Given Japan’s fascination with robotics and vending, it seems pretty automatic that 7-Eleven will be the c-store tone-setter in this area.

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Keep your eye on the adoption curve of vending solutions by c-stores. Rather than ‘if’, the question for c-store operators in the future will be ‘what’ and ‘when’ to add. It’s okay to not be first to market, and to let the big dog eat. But be forewarned, and be prepared to move quickly to adopt vending technology when the market is established. Plus, with DoorDash’s recent acquisition of salad-making robot company Chowbotics, this opens up an opportunity for c-stores to offer fresh food via advanced refrigerated vending machines. ◗

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FIND OUT HOW DÉPANNEUR MESSEK IS USING VENDING MACHINES TO SERVICE CUSTOMERS 24/7

Darren Climans is a foodservice insights professional with close to 20 years’ experience partnering with broadline distributors, CPG suppliers, and foodservice operators. His practice is to understand issue-based decisions by taking a data-driven approach to strategic decision making.

MARCH/APRIL 2021

TOP OPS

BY ALYSCIA SUTCH

Customer engagement 5 pandemic-proof marketing strategies

Between masks, social distancing and stay-at-home orders, it can be a challenge to connect with and build meaningful relationships with customers. As the pandemic continues to change how individuals shop, so too does it shape how c-stores can connect with and keep customers coming back for more. Try these five strategies to boost customer engagement and revenue.

1. OFFER PHYSICAL AND DIGITAL GIFT CARDS

• Gift cards continue to be one of the most popular options for seasonal and year-round gifting. • Consider not only stocking prepaid gift cards, but also offering gift cards for your own business. • Bringing your business online for customer retention is more important than ever as shoppers navigate COVID-19. By offering digital gift cards, you can increase sales, regardless of foot traffic.

2. IMPLEMENT A CUSTOMER LOYALTY PROGRAM

TIP: Change up the digital and physical gift cards you stock to reflect seasonal holidays, including Easter, with promotions, branding changes and more.

TIP: When collecting personal information from shoppers who join the loyalty program, the information can be used to create a more personal shopping experience, possibly offering a special promotion on their birthday.

• Loyalty programs are important for customer retention, giving customers a reason to return to your store.

3. TAP INTO SOCIAL MEDIA

• Creating a multi-platform social media presence is a free and easy way to stay in contact with customers when they’re not shopping in person. • Use social media to share information about promotions, new products, contests and safety initiatives. • Offer incentives to get customers to like and follow your accounts.

4. OFFER BUY NOW, USE LATER PROMOTIONS

TIP: Know your customer base and consider an email marketing campaign to connect with those not on social media.

TIP:

• This tactic increases revenue immediately, while encouraging customers to return.

5. TIE YOUR BUSINESS TO A COMMUNITY INITIATIVE

The customer is likely to spend more than they received for the promotion.

• Now, more than ever, people want to give back. • Linking your business to a local community initiative can enhance your brand, while increasing customer retention. • Community initiatives will also help facilitate growth in the local economy.

TIP: Before zeroing in on a cause, survey your customers for ideas and to find out what’s important to them.

Alyscia Sutch represents Ackroo, a loyalty marketing, payments and point-of-sale technology and services provider based in Hamilton, Ont.

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UP IN

SMOKE Not so fast. Despite challenges, tobacco remains a key category and profit driver for Canadian c-stores BY DONALEE MOULTON

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F E AT U R E

Last year as COVID-19 locked down towns and cities across Canada, convenience store owners and staff noticed an anomaly: cigarette sales were increasing significantly. The assumption was that customers who routinely—and illegally— purchased cigarettes from First Nations communities and through other means could no longer do this in the wake of public health border closures. That assumption has now been confirmed in a study commissioned by the Convenience Industry of Canada Council (CICC). “The study shows a direct link between the closure of tobacco manufacturing operations and smoke shops on First Nations reserves and an increase in legal tobacco sales,” says CICC president and CEO Anne Kothawala. Following the initial lockdown in Ontario, Eyvind Dahl, owner of Renfrew-based Dahl’s Coin Laundry & Convenience, saw his sales of Imperial Tobacco alone double to 100 cartons a week when smokers who typically purchased tobacco products illegally, had instead to buy legal, duty-paid cigarettes. “I knew the reserves were affecting my sales, but I didn’t realize the extent.” Specifically, the CICC study, conducted by Ernst & Young LLP, found that legal cigarette sales in Canada last June were 24% higher than the same month the previous year. In some provinces, the increase was almost double the national average. On the East Coast, for example, legal sales of cigarettes increased 44.9% in New Brunswick, 47% in Prince Edward Island, and 44.3% in Newfoundland and Labrador. In provincial tax dollars alone, overall tax revenue jumped almost $32 million in Canada for that one month. As well,

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more than $18 million in additional excise duties flowed into federal coffers, according to the 38-page study. “The increase in legal tobacco sales when illegal manufacturing and sale was limited during COVID speaks to the impact of the contraband market in Canada—including the tax revenue being left on the table by governments in failing to address the illegal tobacco trade,” notes Kothawala.

Fighting contraband tobacco The first step is acknowledging the depth and breadth of illegal tobacco. “The biggest challenge for convenience retailers when it comes to tobacco product sales is, without question, loss of sales to unregulated markets. We continue to see products—whether illegally imported, untaxed, or in prohibited flavours—being sold outside of the c-store channel in Canada,” says Jasmine MacDonnell, manager of government and corporate affairs with the National Smokeless Tobacco Company, Ltd., in Toronto. “In order to keep consumers in the legal market, governments need to reconsider their approach to tobacco tax policy and rates,” she adds. “Enforcement alone will not limit the appeal of unregulated markets.” The CICC report, The Impact of COVID-19 on contraband tobacco and provincial tax revenues in Canada: March-August 2020, has several recommendations targeted to government. Topping the list: no tax increases. The council is also calling on federal and provincial governments to empower law enforcement, work collaboratively, invest in enforcement, and work with Indigenous councils to apply a levy to non-Indigenous purchasers of tobacco products.

Putting tobacco in perspective While cracking down on contraband tobacco will undoubtedly increase sales, many believe the long-term prospects for tobacco remain bleak. “Tobacco to the convenience sector and the government is a sunset category. It goes down every year,” says Dave Bryans, CEO of the Ontario Convenience Stores Association (OCSA), which is based in Oakville. According to the University of Waterloo’s School of Public Health and Health Systems, smoking rates in Canada decreased on average 3.2% over the previous year from 1999 to 2017. There is hope for renewed interest in the category, however. That hope can be summed up in one word: vaping. “Tobacco remains a key category and profit driver for c-stores despite declining cigarette volumes,” MacDonnell says. “It is a market that has undergone fundamental change in recent years with the introduction of new product categories, and c-stores will continue to play a critical role in responsibly selling tobacco and vaping products to adult tobacco and vaping consumers as this industry evolution continues.” The surge in vape is a double-edged sword for c-stores. As vaping sales climb, there is a further decline in tobacco sales. “In a normal year, traditional tobacco is a declining product category for our stores— particularly as adult users look to transition to vape products,” says Kothawala. “Our focus on tobacco remains in ensuring a level playing field for our stores to retail this product to adults, which includes advocating against the growth of the illegal tobacco trade.”

MARCH/APRIL 2021

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TOBACCO TALK

“[Tobacco] is a market that has undergone fundamental change in recent years with the introduction of new product categories, and c-stores will continue to play a critical role in responsibly selling tobacco and vaping products to adult tobacco and vaping consumers as this industry evolution continues”

1. UNDERSTAND BRAND ATTRIBUTES If a customer is looking to make a change, be it lighter, stronger or a different price point, be ready to have that discussion.

2. GET ORGANIZED

Shoppers want to be in and out quickly so invest in storage that makes plain packaged products quickly accessible.

3. COVER THE BASES

Know your customers and stock the brands they smoke, however ensure your product mix includes tobacco alternatives, such as cigars, snus and vapes, so you don’t miss out on sales opportunities.

4. KNOW THE ISSUES While c-store operators cannot actively promote vape products, you can answer customer queries. Let your customers come to you with questions and be armed with the right information.

5. SUPPORT STAFF

Ensure your employees know the rules about sharing product information and educate them on various brand attributes.

6. ASK FOR ID

In the era of mask wearing, it can be tough to assess age. When it comes to any age-restricted product, always err of the side of caution.

Down, but not out

C-stores cigarette sales were close to $4.2 billion in 2019, down 3% when compared to 2018, but still the top-selling category in convenience. Source: Nielsen Canada

The market for vaping shifts The 2017 Canadian Tobacco, Alcohol and Drugs Survey found that, overall, 15% of Canadians have tried a vaping product: 32% of those users said they turned to vaping to help quit smoking. Rising concerns over potential health concerns linked to vaping, however, may drive those numbers down. At the very least, they will constrain c-stores. “While Health Canada and other organizations rightly describe vape products as a reduced risk alternative to tobacco consumption, government regulations preventing the sale of vape products, limiting flavours and now, potential caps on nicotine mean we are increasingly unable to offer these products to consumers,” says Kothawala. This is such an important issue, says Eric Gagnon, head of corporate and regulatory affairs at Imperial Tobacco Canada. “Vaping products have been proven to be successful in helping many smokers quit. But the reality is that for these products to be successful, they need to be available in the same locations where adults buy their cigarettes. It doesn’t make any sense from a public health perspective to only allow customers to purchase cigarettes in convenience stores and not the alternative nicotine products such as vaping. Adult smokers need to have a choice at point of sale to make that life changing decision to switch from cigarettes to a less harmful alternative, such as vaping products. It is shameful that some governments, who trust c-stores with the sale of other adult-only products like lottery and beer, don’t trust the channel to enforce the same diligence in selling vaping products. C-store operators have an important voice in this debate.” Indeed, there are new and significant restrictions in place or being contemplated. In December, as part of its efforts to reduce the appeal of vaping products, Health Canada proposed lowering the nicotine concentration to a maximum of 20 mg/mL and prohibit the packaging and sale of a vaping product if the concentration displayed on the package exceeds this limit. The current limit is 66 mg/mL. Most recently, Newfoundland and Labrador is requiring both retailers and wholesalers to obtain a license to continue to sell vapour products. This requirement extends to out-of-province wholesalers who sell in the province.

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This comes on the back of Ottawa’s rules restricting the promotion of vaping products in public spaces where youth may be exposed to them. The ad ban kicked in last summer (although many provinces already had restrictions in place) and c-store operators across the country were required to remove all window, point-of-sale and in-store marketing materials, as well as product displays. It puts the industry in a tough position, says Gagnon: “The federal government has prohibited promotion of vaping products to consumers through comparing their health risks with those of tobacco products. The law states that vaping products cannot be promoted in convenience stores. Even though Health Canada states on its website that ‘if you are a smoker, vaping is a less harmful option than smoking’, we can’t say the same thing to customers as it would be considered promotion. This makes it very difficult to get the right information to customers and educate them on the alternatives available to smoking.” He has this advice for operators: “The most important thing is to know your products and let your customers come to you with their questions. Smokers who are looking at switching to vaping have many questions. They have probably read or heard a great deal of contradictory information. C-store operators are in a position to help smokers navigate the new category and hopefully choose an alternative that will satisfy them.” As for concerns about youth vaping, the industry’s position is clear: c-stores can play an important role in this battle, as they already have experience selling highly regulated products. “C-stores have consistently been responsible retailers when it comes to adult-only products like tobacco, lottery and alcohol. There are strict laws against selling to youth. C-stores abide by them. Their license to operate depends on complying with the laws,” stresses Gagnon. “The best thing they can do is simply follow the laws and regulations as they have done for years. So when it comes to age-restricted products, be it tobacco, vaping, lottery or alcohol, ask for ID—better be safe and compliant than not! It is the law but also an important responsibility for retailers to ensure that youth don’t acquire any of those age restricted products from you.” The CICC wants to see government policies and regulations focus squarely on limiting youth access rather than blanket measures that force consumers to obtain these products elsewhere, says Kothawala. “Convenience stores are a partner, not an obstacle, in trying to help governments achieve public health goals and make the switch to reduced-risk alternatives.” ◗ CCentral.ca

Community pride

Dépanneur Messek expands and innovates to serve the Innu people living along Quebec’s rugged North Shore BY MARK CARDWELL

Paul Vollant has a lot to be proud of. As the owner of Dépanneur Messek, a bustling convenience store in the Innu community of Pessamit on Quebec’s rugged North Shore, he is one of a handful of successful retailers on the First Nations reserve. As a former band council member and Hockey Canada-trained coach (whose son was recently drafted by a top team in the Quebec Major Junior Hockey League), Vollant is a well-known and respected member of the tightly knit collective of about 3,200. But Vollant isn’t sitting on his laurels—au contraire. The 45-year-old continues to work hard to achieve further success for his family’s business and to help improve life in the community.

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“We’re in full expansion mode,” says Vollant. “We’re constantly looking for innovative ways to expand and improve our products and services.” In January, work ended on the latest innovation at Dépanneur Messek—a $200,000 renovation project that notably expanded the store’s cold room and added stylish new reach-in refrigerators. Two new grocery aisles were also installed, doubling the store’s shelf capacity. “We needed the extra space to add more products,” says Vollant. The new aisles notably house the store’s growing selection of wines. Another new addition is an M&M Food Market Express freezer—the first in Pessa-

mit—that is now stocked with 75 frozen food products. “We hope and believe it will prove super popular here,” says Vollant. The renovations are a follow up to a major makeover in 2017 that doubled the c-store’s retail floor space and added a storage room, as well as a standalone room with a street entrance. This standalone room is open 24/7 and is equipped with two automated teller machines, a pop machine and a vending machine that sells sundry items like chips, chocolate bars, peanuts and rechargeable batteries. The service—a novelty on the reserve—has proven popular from the get go. “It was a way for us to roll 24 hours a day,” says Vollant. “We always try to be visionary.” CCentral.ca

R E TA I L E R S P OT L I G H T

Owner Paul Vollant Photos courtesy of Depanneur Messek

“We’re constantly looking for innovative ways to expand and improve our products and services”

Innovation has been the hallmark of the business since Vollant’s mother, Marianne, founded the store in 1991. Located on the rue Messek (or Sod Street), next to Pessamit’s high school, it’s one of four convenience stores on the reserve, which is a half-hour’s drive west of Baie-Comeau, a city that serves as a commercial hub for the region. Dépanneur Messek distinguishes itself, Vollant says, with professional and courteous customer service and full lines of the most popular c-store items, including food, snacks, beer, tobacco products and lottery tickets. The store also became the first to offer home delivery, a service that a teenaged Vollant provided when his mom owned the business and a service that continues today. CCentral.ca

MARCH/APRIL 2021

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Operator insights

Vollant and his wife Christiane Riverin, who live right next door, bought the business in 2006 and have continued to build and expand products and offerings, en route to a tripling of revenues. A big part of sales now come from the popular ready-to-eat foods, including baked goods, breakfast sandwiches and salads, which are made fresh by a cook who comes in weekday mornings at 6 a.m. Menu items and special promotions, like the annual Christmas draw, are advertised via a 19-foot long, banner-shaped digital outdoor sign on the front of the store. The store also maintains an active presence on social media, thanks to tech-savvy manager, Jérôme Labbé. Labbé also manages the 12 employees who staff operations from 7 a.m. to midnight seven days a week. According to Vollant, the COVID-19 restrictions and shutdowns last spring resulted

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in a short-term boom in business, as people stuck close to their community. Sales got an added boost in May, when he and Riverin opened a seasonal restaurant next to the store. Dubbed Cantine Hoffie—a play on the name of their 15-year-old daughter, Anne-Sophie—it stands on the same spot where a decade ago the couple briefly operated another fast-food restaurant. Vollant says he contributes about $25,000 a year in cash or in-kind donations to community groups, particularly recreational and minor league hockey teams that play in the arena next to the store. “We’re trying to help people, particularly our youth, to keep moving and stay in good health,” says Vollant, who has travelled extensively because of hockey and the prowess of his son Paul-Edward, a 17-year-old defenceman who was drafted by theVal-d’Or Foreurs in 2019. Travelling has helped the c-store operator see and discover new retail products, services and ways of doing things that have helped to make his own business better. “You need to see what’s going on elsewhere, so you see and introduce things here that you think your customers will want and need,” he says. “And you have to always offer great customer service to keep people coming back.” ◗

Friendliness first

Paul Vollant puts a premium on smiles, especially in small community like Pessamit. “A friendly welcome is crucial. When we hire new people we tell them to serve customers the way they’d like to be served.”

2 | Embrace progress “Never stop developing new ideas or introducing new concepts or products or services that your customers will appreciate.”

3 | Invest in community “We feel a real need and responsibility to sponsor sports teams and community activities that help to get and keep people moving.”

4 | Vending success

Vending machines that sell everything from snacks to essentials are a smart way for independent operators to meet the needs of customers 24/7.

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PEOPLE FIRST

Local business owners Marilynne and Bruce Brulotte knew this busy highway location was an ideal site with a ton of potential

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R E TA I L E R S P OT L I G H T

Highway 2 Gas Bar plays an essential role in a small Alberta community with a big heart BY WENDY HELFENBAUM PHOTOS BY JODI SWARE

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Location, location, location. This real estate cliché has become reality for c-store owners, especially as the country’s economy continues to reel from the raging pandemic. But for those lucky enough to be planted in just the right spot, it’s business as usual. Located about four hours northwest of Edmonton, McLennan, Alta. is a picturesque transportation hub. Highway 2— which stretches from the Canada-U.S. border through Calgary and Edmonton to Grande Prairie—passes right through McLennan, which has a population of about 800. Local business owners Marilynne and Bruce Brulotte knew it was an ideal spot with a ton of potential. The Brulottes, who have owned the local Home Hardware store since 1992, decided to take over an adjacent vacant spot in the strip mall in 1999. “It was a gas station many years ago, and we decided that even though McLennan already had a gas station, competition is not a bad thing, plus they didn’t have a convenience store in

theirs,” says Marilynne. “We wanted to get more business and flow through the community, so that’s why we opened the Highway 2 Gas Bar.” For the first few years, the Brulottes leased out the c-store. The location—one of the 200-plus Fas Gas Plus franchises in Western Canada, with 24-hour fuel pumps—originally featured a car wash until the confectionary was expanded into that space. The couple has been running the c-store at Highway 2 Gas Bar themselves for seven years, splitting their time between both stores. “Bruce is more Home Hardware, and I’m more Highway 2, but he’ll still handle anything to do with gas or propane,” says Marilynne. “I do most of the book-keeping work and the ordering.”

In 2011, the duo upgraded the hardware store to a Home Hardware Building Centre, and five years later, they paved the strip mall’s parking area. The c-store has a 24-hour ATM on the premises, and sells everything from live bait to lottery tickets to MARCH/APRIL 2021

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“We’re very busy and active in our business—we work six days a week, so we’re here all the time… It’s fastpaced, and you get to meet or catch up with people in the community. That’s what we enjoy the most”

fireworks, which is one of the best-selling items year-round. The plan is to renovate the space to add a new accessible washroom and expand the c-store into a vacant 1,200 sq. ft. unit next door so they can offer more in the way of confectionary and other items customers are after. “We’re always looking to improve our product line,” she explains. “We’ve got propane bottles, and we’re planning to put in automotive propane eventually.” As for tobacco sales, they’ve levelled off, reports Marilynne. “At the beginning of the year, people are trying to stick to their New Year’s resolution and they’re trying to quit smoking, so that’s when the vaping stuff sells more,” she says. Thanks to its prime location, Marilynne reports that the pandemic did not adversely affect overall sales for the store. “For us, it’s been business as usual,” she says. “We take all the precautions—masks, shields and sanitizer. We get lots of highway traffic because we have lots of parks in the area, so we really didn’t slow down. We were quite busy throughout.” However, staffing presents an ongoing challenge, Marilynne admits. The couple doesn’t hire students because the store’s shifts are from 6 a.m. to 2 p.m., and 2 p.m. to 10 p.m. “In a rural area, it’s hard, and we’re always looking for staff,” she says. “If one staff member’s sick, then we’re scrambling. I wish I could attract and keep the right people—we’re always looking for incentives, but being a small community, you get what you get and you hope people stick around.”

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When new employees come onboard, the Brulottes provide a manual for them, along with a uniform and name tag. Prior to the pandemic, the c-store had introduced fresh soup, stews, pizza, hot dogs from a roller grill and other entrees to their product line, but last March, they cut back to offering pre-packaged food only. “When COVID hit, we had to stop everything where people used self-serve,” Marilynne explains. “And now, we don’t have the facility to sell fresh food, since we only have one staff working at a time. We hope to start up again after the pandemic.” The c-store’s customer base is split evenly between tourists passing through and local residents. The Fas Gas loyalty card program, the Litre Log, offers savings on fuel, which attracts lots of people, she says, adding price-wise they are very competitive with bulk stations. Plus, they have a fleet card program (with volume discounts) and, as part of the planned renovations, will be adding a larger diesel fuel tank with saddle pump to fuel larger trucks. The Brulottes are proud to support many grassroots charitable organizations in the community. “We’re very busy and active in our business— we work six days a week, so we’re here all the time, but we really try to support anything that has to do with kids,” says Marilynne. “We help the Elks, the Legion, the local schools and minor hockey teams. For us, this business is all about the people. It’s fast-paced, and you get to meet or catch up with people in the community. That’s what we enjoy the most.” ◗

Operator insights 1 | Provide multiple

reasons to visit: In addition to staples and snacks, the c-store has a 24-hour ATM and sells live bait. “We’re always looking to improve our product line.”

Stock fireworks year-round: They’re not just for Canada Day—people are looking for ways to celebrate everything from Family Day to birthdays.

3 | Give back:

Honour your community by supporting grassroots charitable organizations. “For us, this business is all about the people."

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Satisfying consumers’ appetite for apps

Mobiquity’s Britt Mills shares insights to help c-stores create a 5-star experience

Britt Mills Mobile apps have been a saviour for consumers during the pandemic, enabling them to have goods delivered right to their door or ready for curbside pickup. In fact, almost a third of Canadians have used the online technology to order their groceries, according to an Agri-food Analytics Lab poll in November. For c-stores, a user-intuitive app should drive engagement and revenue. But that is not what always transpires. Scroll through reviews on app stores like Google Play or Apple’s App Store and you’ll read myriad users frustrated with the experience. “[My order] was cancelled without explanation.” “The app is fine…it’s the stores that are handling the deliveries [that are the problem].” “I never get my bonus points. I have emailed and phoned…nothing gets resolved.” “Customer service is a wasted phone call.”

The problem? Too often there is a disconnect between the experience customers have with the app and the experience they have with the store associate, says Britt Mills, senior director of customer experience at Mobiquity Inc., a digital consultancy that partners with c-stores on building apps or setting up their brand on third-party apps.

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“I can’t tell you how many reviews we’ve seen where an experience someone has with the app is perfect—no bugs, no crashes, no issues with being logged out—yet was poorly rated because of an associate interaction,” says Mills. Think, for instance, of a customer rewarded for their loyalty with an offer on the app, but can’t redeem it because an uninformed associate thinks it’s a scam. “The app then instantly gets a 1-star rating,” says Mills. A once loyal customer may now be lost. Fortunately, c-stores can take measures to help prevent an app going from a 5-star to 1-star experience.

INVOLVE ASSOCIATES IN TESTING Before launching an app, best practice is to beta-test and then roll it out in stages to help identify where breakdowns could occur between the app experience and the store. Companies, however, make the mistake of only soliciting feedback from customers. While their feedback is critical, that cuts out the perspective of associates. “Yet they are often the ones that anticipate friction points users might have with the app,” says Mills. “They interact with customers every day, know what can come up in the store and scenarios that could arise from that.” If you’re performing a beta-test of 20 to 50 loyal customers, include a couple associates. And when you begin to roll it out, do so in stages, first to associates before customers.

BUILD A ‘SOURCE OF TRUTH’ HUB Once pain points have been identified, create what Mills calls a “source of truth.” This can include virtual tutorials, FAQs and more that address for associates how to resolve issues for app users.

An associate can then know how to communicate with—and make right for—a customer, when, for example, their hot food order is delayed for pickup. “Associates can help make sure the store doesn’t drop the ball when a customer expectation isn’t going to be met with proactive customer service,” says Mills.

IDENTIFY A STORE CHAMPION Find an associate who will champion the app at launch. “Choose someone who is in front of and recognizable to customers,” says Mills. Be sure they are digitally savvy, too. “They should be comfortable using apps for delivery and pickup.” Let customers know in an email blast when the ambassador will be in the store. If you’re an independent owner with a few c-stores, you can also have this person bounce from location to location during the first few weeks of the app’s launch. “A store champion can go over with customers payment options, best times for quick curbside pickup and answer any questions they might have,” says Mills. “It shows to customers that associates are part of the process and just as excited about the app as the customer.”

DON’T BE ONE AND DONE Consumers expect an app to be improved and expanded on with new versions. Mills recommends “an update after its first 90 days in market,” and then every few months thereafter. Analyze user data to understand what customers are most interested in and value most. Involve associates in the process with workshops or focus groups. This way, they are not only aware of the changes, but can address how they might play out with customers. “You want to create a roadmap for the app and you need associates to be part of that journey,” says Mills. ◗ CCentral.ca

CATEGORY CHECK

BY MICHELE SPONAGLE

Booster shots

FUEL SALES

Canadians looking for their best shot at improving health and increasing immunity, especially during the pandemic, are purchasing food and beverages that go beyond just satisfying appetites and quenching thirst. The trend is gaining traction and c-stores are well positioned to get in on the action. The 2021 Nourish Network Trend Report from Nourish Food Marketing stated that more than half of consumers claim to use functional food (58%) or beverages (56%) to treat a specific condition, or for prevention. In response to COVID-19, 35% of consumers said they are doing more proactively to take care of their physical and emotional health now, versus pre-pandemic. Shoppers are also ‘future-proofing’ and seeking to top up their nutrition. Instacart searches for vitamin C alone jumped a whopping 74x early in the pandemic, according to the report. It goes on to say, “The lines are blurring between the supplement and grocery aisles, and that trend will accelerate in 2021.” Canadians want to bolster their immunity— and fast. Enter functional beverage shots. It’s a hot category poised to hold its heat this year. Stewart Ingles, president of Hilary’s Salesmaster, the Canadian distributor for 5-hour Energy, says that 2020 was a very good year with double-digit sales growth as consumers spent more time focusing on exercise while working at home. That translated into increased use and purchases of its sugar-free energy shots, which are formulated with caffeine, amino acids and B vitamins. “Based on current trends and the pandemic, we see 2021 shaping up to be another record year,” he says. Ingles recognizes the vital role c-stores play in 5-hour Energy’s sales success: “They are very important to our consumers. Convenience stores are quick and easy stops to get our product.” He encourages retail partners to carry a large selection of the flavours, in-

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market value

Consumers turn to functional beverage shots for energy and health

US $369.3 million

cluding watermelon, cherry and blue raspberry. “Our nine-box racks work best to display product—the more it’s front and centre, the greater the purchase rate by consumers.” Molly Jacobson, communications director at VitaminEnergy, cites convenience as a big selling point. “Consumers are seeking a more convenient way to nourish their bodies with vitamins on the go, while boosting their energy levels... without sucking back loads of sugar,” she says, pointing out that while orange juice delivers vitamin C, it’s often loaded with sugar. Consumers who want a dose of vitamins, coupled with an energy kick, have fuelled sales growth in a big way for VitaminEnergy. The brand is popular in the U.S. and growing in Canada, where it’s being sold by independent retailers, with plans to roll out to larger chains, like Circle K, in the coming months. Sales in the convenience store channel are strong. The magic behind its success? “Merchandising is key,” says Jacobson. “When VitaminEnergy has parity merchandising in c-stores, it sells at the same level or higher than older brands in the market. Offer two for $5 EDLP (everyday low price) to gain trial.” She also recommends retailers have six to eight SKUs minimum, since each one features a different vitamin compound. “Different vitamins attract trial from a diverse consumer base,” she adds. That base includes consumers ages 18-plus and a very high concentration among those in the 35 to 58 range, evenly split between male and female. Next up, Vita-

The global functional shots market size was valued at US$369.3 million in 2019 and is expected to expand at a compound annual growth rate (CAGR) of 13.4% through 2027, according to Grand View Research.

3 WAYS: 1. LOCATION

Display front and centre at checkout. 2. ASSORTMENT

Stock a variety of flavours and functions. 3. PROMOTIONS

Offer two for one deals to gain trial.

minEnergy will roll out in pill form, targeted to mood, focus and immune support. Nipping at the heels of the big players in the fiercely competitive functional shots arena are newcomers worth noting. Proper Wild is aiming to dial up the good-for-you factor by offering plant-based shots without any preservatives or artificial sweeteners. Meanwhile, So Good For You lives up to its name by incorporating certified organic, non-GMO ingredients and a healthy dose of probiotics into their refrigerated products. While these products are not yet available in Canadian c-stores, distributors take note, their explosive growth points to a fresh area for the category—refrigerated shots. ◗ CCentral.ca

PULSE

It’s time to celebrate caffeine Most of us couldn’t have survived the past year without caffeine. Whether doing frontline shift work, working from home, virtual schooling or simply needing an added boost, caffeine is there for us. It’s fitting, then, that there’s a month dedicated to driving awareness about caffeine. March 2021 marks Canada’s fourth Caffeine Awareness Month, an initiative by the Canadian Beverage Association, which represents companies that manufacture and distribute the majority of non-alcoholic beverages in this country. Retail store sales of non-alcoholic beverages in Canada amounted to $7.99 billion in 2019. For convenience stores, sales of beverages with caffeine represent significant volume, making now the perfect time to promote and celebrate caffeine products in store.

Health Canada considers 400 mg per day a safe, moderate caffeine intake for adults. That’s the equivalent of three, 8-ounce cups of coffee.

Health Canada suggests that daily caffeine intake for teenagers be no more than 2.5 mg/kg body weight.

Average amount of caffeine consumed per person in Canada (from all sources) is about 210 to 238 mg per day.

Caffeine occurs naturally in coffee, tea, chocolate and cola soft drinks.

Caffeine is added to some over-the-counter medications, including cough, cold and pain remedies.

Energy drinks may contain both naturally occurring and added caffeine.

93% of caffeine consumed in Canada comes from coffee and tea.

Coffee is the most consumed beverage in Canada, outpacing even tap water.

Canadians aged 18 to 79 sip an average 2.8 cups of coffee per day in 2019.

61% of Canadian coffee drinkers say coffee is important to their daily routine.

46% of Gen Zs (born between 1995 and 2007) drink RTD coffee.

A typical energy drink, 250 to 500 mL, contains between 80 and 180 mg of caffeine.

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Health Canada caps the caffeine in energy drinks at 400 mg per litre.

Retail sales of energy drinks in Canada are expected to hit US$603.7 million by 2022 (Statista).

CCentral.ca

MARCH IS

Home-brewed cup of coffee Coca-Cola Energy (310 mL can) Diet Coke (350 mL can) Pepsi (350 mL can) Ginger Ale (350 mL can) 5-hour Energy shot (Extra) VitaminEnergy shot BANG (473 mL can) Monster Energy (473 mL can) Red Bull (250 mL can) Small Tim Hortons coffee (286 mL) Station Cold Brew Coffee (350 mL) Pure Leaf Real Brewed Tea (500 mL) Nestea with Lemon (500 mL bottle) Tall Starbucks Latte (354 mL) Grande Starbucks Dark Roast (473 mL)

46 mg 0 mg 80 mg 200 mg 260 mg 23 mg 180 mg 260 mg 38 mg 138 mg 99 mg 80 mg 140 mg 63 mg 160 mg 75 mg

PRODUCTS WITH HIGHEST CAFFEINE (260 mg)

PRODUCT WITH NO CAFFEINE (0 mg)

Sources: Canadian Beverages Association, Red Bull Canada, Health Canada, Coffee Association of Canada, Mintel, PepsiCo, Coca-Cola, Starbucks, Statista, brand websites

TEST YOUR KNOWLEDGE! Match the product with the amount of caffeine

Caffeine Awareness Month Answers: Home-brewed cup of coffee 80 mg, Coca-Cola Energy (310 mL can) 99 mg, Diet Coke (350 mL can) 46 mg, Pepsi (350 mL can) 38 mg, Ginger Ale (350 mL can) 0 mg, 5-hour Energy shot (Extra) 200 mg, Vitamin Energy shot 260 mg, BANG (473 mL can) 180 mg, Monster Energy (473 mL can) 160 mg, Red Bull (250 mL can) 80 mg, Small Tim Hortons coffee (286 mL) 140 mg, Station Cold Brew Coffee (350 mL) 138 mg, Pure Leaf Real Brewed Tea (500 mL bottle) 63 mg, Nestea with Lemon (500 mL bottle) 23 mg, Tall Starbucks Latte (354 mL) 75 mg, Grande Starbucks Dark Roast (473 mL) 260 mg

Caffeine Awareness Month is designed to dispel myths about caffeinated beverages and help consumers understand where they’re getting their caffeine from, says Carolyn Fell, VP of the Canadian Beverage Association. C-store operators can play an important role in this education.

SNAPSHOT

BY KATHY PERROTTA

Beyond meals

The rise of plant-based eating in Canada is an opportunity to grow the snack and beverage category The buzz around plant-based eating continues to accelerate as many Canadians pledge to eliminate meat from their diets. The annual Ipsos Canada CHATS 2021 Trends Report reveals that a quarter of Canadian adults (26%) are looking to cut back on their weekly meateating habits and opt for alternative protein sources for a variety of health and social responsibility reasons. Although a significant number of Canadians report a desire to eat less meat, there certainly doesn’t appear to be the same willingness to give up meat entirely. This year’s CHATS Report confirms that nine in 10 Canadians adhere to an eating regime that includes meat and fish. Though, 15% of those consumers report that they restrict their intake to chicken and fish only, while eliminating red meat from their diets. The most recent data released in November 2020 details that 6% of Canadians classify themselves as vegan or vegetarian. Ongoing tracking from Ipsos shows that these rates have held steady for more than five years now. The findings prompt the rise of a growing share of ‘Lessetarians’ in the Canadian marketplace. While consumers of all ages (2+ years) report solid development for opting for plantbased options as a main dish protein, younger cohorts, particularly those aged 18 to 34 years of age, show the strongest development for this behaviour. A key sector prompting trial of plant-based protein alternatives is the foodservice channel. The rise of the juicy and satisfying plant-based burgers on menu boards has been a gateway for many. This has directly broadened consumers’ willingness to try alternatives. This ranges from trying vegan chicken nuggets, strips, and patties as a protein main dish or additive, to frying up a vegan egg alternative for breakfast. In the pre-pandemic era, Ipsos Foodservice Monitor reported a whopping 13% increase in vegan burger orders from the previous year (2019 vs 2018). Vegan burger orders

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rose during that period faster than any other type of burger (including beef and chicken). Though mandatory closures, curfews and safety restrictions have impacted restaurant traffic in our current environment, this channel will be critical to future success, particularly as meal preparers look to the channel for plantbased eating inspiration and ideation. Currently, in our highly homebound environments, the top options Canadians are substituting as their center of plate protein alternatives at meals are:

48%

Dairy and eggs

52%

Plant-based proteins

17%

Fruits, vegetables and herbs

15%

Grains and wheat products

Nuts and seeds

Beans, legumes and soy

Meat substitutes

Proteins/powders/ supplements

Beyond meals, there is an abundance of opportunity for both snack and beverage manufacturers to target innovation options to the plant-based eating craze. Snacking occasions currently represent two-thirds of our intake occasions (66%) in an average day. Consider the inclusion of protein-rich ingredients like almonds, oats, hemp, cashews, and a variety of plant-based oils (coconut and avocado) to augment snack food or beverage appeal. Key to winning innovation is ensuring a fit to consumer needs driving plant-based protein choices. The Ipsos data reveals that beyond the desire for something healthy and nutritious, plantbased protein choices (compared to meat protein choices) are more likely to be motivated by benefits that support both emotional well-being, physical energy boost and social consciousness factors. After almost a decade of tracking the impact of the social consciousness movement on food and beverage choices, there is little doubt that it may no longer be enough for retailers, manufacturers and foodservice operators to have a low environmental impact. Rather the future will be more about what you are doing to positively impact the world around us. The rise of plant-based eating offers opportunities for brands, both big and small, to commit to the environment, animal welfare and fair treatment of workers. For c-stores, it means offering snacks, beverages and foodservice products that cater to a variety of tastes, including those who embrace plantbased eating. Consumers are increasingly looking for it and counting on it. ◗ Kathy Perrotta is a vice-president with Ipsos Market Strategy and Understanding, working with the Food & Beverage Group Syndicated Services. Data sources within this group include, Ipsos FIVE and Foodservice Monitor (FSM).

CCentral.ca

2 0 2 1 N O M I N AT I O N S A R E O P E N

Honour a Star Woman in Convenience Convenience Store News Canada is awarding exceptional women, who are making a notable impact in one of the following areas: R E TA I L DISTRIBUTION M A N U FACT U R I N G /S U P P L I E R I N D U S T RY A S S O C I AT I O N S O LU T I O N P R OV I D E R /C O N S U LTA N T The 2021 winners will be recognized across our digital platforms, featured in the July/August edition of Convenience Store News Canada and celebrated at the Star Women in Convenience Awards Event this fall.

SPE CIA ISSU E

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BACKTALK

BY MICHELLE WARREN

VAPE EXPECTATIONS The enactment of the Tobacco and Vaping Products Act on May 23, 2018, opened up a whole new category for convenience operators, one that many hoped would help offset the steady decrease in revenue from cigarette sales, while supporting initiatives to help tobacco smokers reduce harm by transitioning to vaping. Since then, the Act—designed to regulate the manufacture, sale, labelling and promotion of tobacco products and vaping products sold in Canada—has consistently evolved, putting greater restrictions on the selling of vape products at the c-store level. CSNC caught up with Michael Nederhoff, president of Juul Labs Canada Ltd., to talk about the challenges, responsibilities and opportunities as c-store operators navigate the everevolving vape category.

With the rise of new regulations and restrictions at both the federal and provincial level, everyone is mindful about the messaging around vaping: What is being done to ensure that convenience stores remain a viable channel and resource for adults who vape? MN: At Juul Labs Canada, we remain committed to helping move adult smokers away from cigarettes. However, adult smokers can’t switch to nicotine alternatives if they don’t have access to those products, and in Canada the majority of those products are sold in the c-store channel. The erosion of trust in our category has led governments to adopt policies that have the unintended effect of incentivizing adult smokers to stay with cigarettes or even return to them after transitioning. To achieve the harm-reduction potential of vaping products as an alternative to smoking we believe vaping products should be available everywhere that cigarettes are sold.

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However, progress in harm reduction for adult smokers cannot come at the cost of high levels of underage use. In recent years, there has been an unacceptable rise in underage use of vaping products in Canada. That’s why we need to reset the category together. Educating and working hand in hand with our retail partners on compliance and access control is critical in our combined efforts to combat underage access and use. Regulators, policy makers and the public must see our commitment and action to be disciplined and focused on the responsible stewardship of vaping products.

What advice do you have for c-store operators about speaking to adult smokers about switching to vaping? MN: For adult smokers interested in moving away from cigarettes to vaping products, the sheer number of alternatives can be confusing to navigate. Our c-store partners are the trusted source for many adult consumers who are looking to choose the right alternative for them. It’s essential to understand that finding the right flavour and nicotine strength is important for a smooth transition off cigarettes. And if an adult smokers’ preferences change over time, that’s okay. That’s why it’s important to ensure that c-store partners are well informed and have the correct information. At Juul Labs Canada, we are exploring new ways to connect with c-store staff, including 1:1 conversations with our territory managers, ZOOM training sessions and video modules through a secure portal.

With advertising restrictions at the c-store level, how can operators communicate with shoppers about vaping? MN: The promotion of tobacco and vaping products are illegal in c-stores across Canada, so dark market restrictions can limit awareness of alternatives, shifting the balance a little more towards cigarettes. If an adult smoker is looking for more information on vaping, they should seek guidance from Health Canada’s

website. Additionally, if any adult consumer requires more information about Juul products, our website features information about our company’s mission, along with detailed information on our products from the basics like ingredients and how to get started, to quality and standards.

What messaging is important? MN: We know that over 60% of smokers in Canada report that they want to quit. And c-store partners want to play a role in transitioning adult smokers away from traditional tobacco, and we would encourage them to use Health Canada endorsed messages. Therefore, adult smokers who can’t or won’t quit cigarettes should completely switch to potentially less harmful alternative nicotine products. It’s with that in mind that Juul products were designed.

What should they avoid? MN : Nicotine is not benign. Nicotine is addictive and if you don’t use nicotine, don’t start. If you smoke cigarettes, the best thing you can do is quit. However, we know that there are many smokers who won’t quit. For those smokers, as indicated by Health Canada, switching completely to noncombustible products may be a way to reduce their risk of smoking-related disease. Additionally, there is no single product that will work for every smoker. They need access to a broad range of options that can help them leave cigarettes behind.

What proactive measures can c-store operators take to help curb the youth vaping? MN: From an industry and category perspective, we will never be able to achieve our goal of eliminating smoking unless we can combat underage use. In our efforts to reset the vaping products category, policy makers, regulators and the public must be able to have confidence that the vaping industry is a responsible sector. This will be undermined if businesses do not implement and uphold robust age verification processes.

CCentral.ca

What else needs to happen? MN: We believe that increasing the minimum age for purchasing tobacco and nicotine vaping products to age 21 is one of the most critical tobacco-control strategies to combat underage use. That is because it directly addresses social sourcing, the largest contributor to underage access of vaping products throughout the country. Social sourcing is when minors receive or are sold age-restricted products by legal-aged friends, family, or classmates. According to Health Canada, social sourcing accounts for almost 60 to 70% of underage usage of vaping products. The U.S. passed such a law federally in 2019 (referred to as “Tobacco 21”) and in Canada, Prince Edward Island instituted this law in 2020. If Canada were to adopt this same legislation nationally, we could have the potential to significantly reduce underage use of all tobacco and vaping products. We also believe c-store partners can fundamentally change how vaping products are sold at point-of-sale to further restrict underage access and accelerate the decline in underage use. New technology standards exist that can automate the transaction from beginning-to-end to ensure all age-restricted products, including Juul products, are sold to verified legal-aged purchasers.Until the technology is available everywhere, it’s important to continue to check consumer’s IDs to verify their age. And if you’re unsure how to say no, simply state “I apologize for the inconvenience, but I can’t sell vaping products to you without your ID.” We can all help each other to do the right thing and sell responsibility. MICHAEL NEDERHOFF

What other issues are shaping the space? MN: We know there is agreement from industry, public health officials, and law enforcement that more needs to be done about counterfeits and knock-off products that are making their way into the Canadian market, especially disposable vaping products. These products will continue to proliferate, especially as access to legitimate nicotine concentrations and flavoured vaping products increasingly become restricted. Black market products can carry significant dangers to users, are produced with unknown quality standards and ingredients, and come in youth-appealing flavours. Strong enforcement is needed to help eliminate these unlawful products from the marketplace. Support and assistance from our c-store partners is critical so these illegal products stay out of the market. If c-store staff have any leads on suspicious products being sold, please connect with your Juul Labs Canada territory manager so our team can take appropriate action. ◗

CCentral.ca

Can you tell us about new technologies or product innovations in the pipeline? MN : Our product strategy and roadmap is very exciting as it will not only address the needs of adult smokers but will help build trust with regulators and society. We hope to share more over the coming months ahead. How does your c-store maintain strong relationships with distribution partners? We want to hear about it! Email editor Michelle Warren: mwarren@ensembleiq.com. MARCH/APRIL 2021

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