NACS Magazine February 2023

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IT’S A FACT

$14,458

The average monthly sales per store for OTP in 2021.

CATEGORY CLOSE-UP PAGE 66

ONTENTS

NACS / FEBRUARY 2023

DEPARTMENTS

06 From the Editor

08 The Big Question

10 NACS News

18 Convenience Cares

20 Inside Washington EG Group’s Matt Durand shares why NACS Day on the Hill is a can’t-miss event.

24 Ideas 2 Go

Tip Top re-emerged as a hybrid restaurant/bar/ c-store to serve its rural clientele.

62 Cool New Products

64 Gas Station Gourmet

The Old Koke Plant has a “gas station meets Cracker Barrel” feeling.

66 Category Close-Up

Regionality and regulations remain drivers of OTP performance; also, the salty snacks category hasn’t stopped growing since its pandemic bounce back, and spicy flavors reign on.

80 By the Numbers

The presence of an article in our magazine should not be permitted to constitute an expression of the association’s view. PLEASE RECYCLE THIS MAGAZINE

EDITORIAL

Kim Stewart Editor-in-Chief (703) 518-4279 kstewart@convenience.org

Lisa King Managing Editor (703) 518-4281 lking@convenience.org

Sara Counihan Contributing Editor (703) 518-4278 scounihan@convenience.org

CONTRIBUTING WRITERS

Terri Allan, Fiona Briggs, Sarah Hamaker, Al Hebert, Keith Reid, Jerry Soverinsky, Melissa Vonder Haar

DESIGN Imagination www.imaginepub.com

ADVERTISING

Stacey Dodge Advertising Director/ Southeast (703) 518-4211 sdodge@convenience.org

Jennifer Nichols Leidich National Advertising Manager/Northeast (703) 518-4276 jleidich@convenience.org

Ted Asprooth National Sales Manager/ Midwest, West (703) 518-4277 tasprooth@convenience.org

PUBLISHING

Stephanie Sikorski Vice President, Marketing (703) 518-4231 ssikorski@convenience.org

Nancy Pappas Marketing Director (703) 518-4290 npappas@convenience.org

NACS BOARD OF DIRECTORS

CHAIR: Don Rhoads, The Convenience Group LLC

OFFICERS: Lisa Dell’Alba Square One Markets Inc.; Annie Gauthier, St. Romain Oil Company LLC; Varish Goyal, Loop Neighborhood Markets; Brian Hannasch, Alimentation Couche-Tard Inc.; Chuck Maggelet, Maverik Inc.; Ken Parent, Pilot Flying J LLC; Victor Paterno, Philippine Seven Corp. dba 7-Eleven Convenience Store

PAST CHAIRS: Jared Scheeler, The Hub Convenience Stores Inc.; Kevin Smartt, TXB Stores

MEMBERS: Chris Bambury, Bambury Inc.; Frederic Chaveyriat, MAPCO Express Inc.; Andrew Clyde, Murphy USA; George Fournier, EG America LLC

Terry Gallagher, Gasamat Oil/ Smoker Friendly; Douglas S. Haugh, Parkland USA; Raymond M. Huff, HJB Convenience Corp. dba Russell’s Convenience; John Jackson, Jackson Food Stores Inc.; Ina (Missy) Matthews, Childers Oil Co.; Brian McCarthy, Blarney Castle Oil Co.; Charles McIlvaine, Coen Markets Inc.; Lonnie McQuirter, 36 Lyn Refuel Station; Tony Miller, Delek US; Jigar Patel, FASTIME; Elizabeth Pierce, Applegreen LTD; Robert Razowsky, Rmarts LLC; Richard Wood III, Wawa Inc.

SUPPLIER BOARD

REPRESENTATIVES: David Charles, Cash Depot; Kevin Farley, GSP

STAFF LIAISON: Henry Armour, NACS

GENERAL COUNSEL: Doug Kantor, NACS

NACS SUPPLIER BOARD

CHAIR: Kevin Farley, GSP

CHAIR-ELECT: David Charles, Cash Depot

VICE CHAIRS: Josh Halpern, JRS Hospitality; Vito Maurici, McLane Company; Bryan Morrow, PepsiCo Inc.

PAST CHAIRS: Brent Cotten, The Hershey Company; Rick Brindle, Mondelez International; Drew Mize, PDI Technologies

MEMBERS: Tony Battaglia, Juul Labs; Alicia Cleary, AnheauserBush/In Bev; Jerry Cutler InComm Payments; Jack Dickinson, Dover Corporation; Matt Domingo, Reynolds; Mark Falconi, Oberto Snacks Inc.; Mike Gilroy, Mars Wrigley;

Danielle Holloway,Altria Group Distribution Company; Jim Hughes, Molson Coors Beverage Company; David Jeffco, Dirty Dough LLC; Kevin Kraft, Q Mixers; Kevin M. LeMoyne, Coca-Cola Company; Lesley D. Saitta, Impact 21; Sarah Vilim, Keurig Dr Pepper

RETAIL BOARD

REPRESENTATIVES: Scott E. Hartman, Rutter’s; Steve Loehr, Kwik Trip Inc.; Chuck Maggelet, Maverik Inc.

STAFF LIAISON: Bob Hughes NACS

SUPPLIER BOARD

NOMINATING CHAIR: Kevin Martello, Keurig Dr Pepper

NACS Magazine (ISSN 1939-4780) is published monthly by the National Association of Convenience Stores (NACS), Alexandria, Virginia, USA.

Subscriptions are included in the dues paid by NACS member companies. Subscriptions are also available to qualified recipients. The publisher reserves the right to limit the number of free subscriptions and to set related qualifications criteria.

Subscription requests: nacsmagazine@convenience.org

POSTMASTER: Send address changes to NACS Magazine, 1600 Duke Street, Alexandria, VA, 22314-2792 USA.

Contents © 2022 by the National Association of Convenience Stores. Periodicals postage paid at Alexandria VA and additional mailing offices. 1600 Duke Street, Alexandria, VA 22314-2792

New Wheels

Iparted ways with my car just after Thanksgiving—and not by choice. I collided with a red-light runner in an intersection, and my Audi A3 sedan ended up a total loss. I’d driven it for more than eight years and intended to keep it until the engine wore out. The unexpected opportunity to hunt for new wheels could have been an opening to switch to an EV were it not for my loyalty to gasoline-powered vehicles. (See “EV Charging Your Retail Operations” for an update on the infrastructure landscape.)

In our cover story, “Who’s Minding the Store?”, Jerry Soverinsky checks in on the state of autonomous retail and its various forms, especially so-called unmanned stores. They include a shipping container kiosk market from Swiss convenience retailer migrolino; Toronto’s Aisle 24; Choice Market in Denver; Russell’s Xpress, also in Denver; and the Walk-Off Market at T-Mobile Park in Seattle, among others. While the whys behind each vary—labor savings, limited-access buildings, for instance— each one strives to deliver efficiency and convenience.

convenience stores operating in the United States, a 1.5% increase from a year earlier, reversing a four-year decline. What’s more, the number of single-store operators rose by 1,087 to 90,423 stores, representing 60.2% of all convenience stores.

Elsewhere in this issue, Terri Allan explores how loyalty programs are getting more personal, and Fiona Briggs profiles the Dublin-based entrepreneur who leads SPAR Ireland. Speaking of Ireland’s capital city, see this thriving convenience scene for yourself during NACS Convenience Summit Europe, slated for May 30 to June 1 in Dublin.

Back to my wheels. I opted to stick with the internal combustion engine I know, for now. If Audi starts making hydrogen-powered vehicles, I may revisit my Q5 pick. In the end, I’m thankful that I have a choice. And really, that’s what any consumer wants, be it at the car dealership or the local convenience store.

Selling tobacco is a tangle of regulations, especially amid a pending federal proposal to ban sales of menthol cigarettes and all flavored cigars. In “Navigating

Nicotine During Regulatory

Chaos,” Melissa Vonder Haar talks with industry veterans who offer advice for selling tobacco in this environment. Be sure to read the companion Category Close-Up on OTP for a look at how the category is growing.

The 2023 NACS/NielsenIQ Convenience Industry Store Count is in, and there’s good news. There are 150,174

Kim Stewart

, Editor-In-Chief

The unexpected opportunity to hunt for new wheels could have been an opening to switch to an EV were it not for my loyalty to gasolinepowered vehicles.”

Photography by Kim Stewart

After colliding with a car whose driver ran a red light, my trusty Audi is a total loss.

UP FRONT THE BIG QUESTION

Convenience stores have and will continue to be critical to any community. Their presence helps across multiple facets of daily life. First and foremost, we provide jobs. If you look at the face of convenience stores, you will see one of the most diverse group of individuals working every day. Our industry doesn’t just provide jobs within the individual location but to the extended ecosystem as well. Think of truck drivers who deliver packaged goods, fresh food and fuel to our stores. Think about construction workers, facilities maintenance technicians and a whole host of other service providers. All these individuals are supported by your local convenience store.

C-stores are there for households 24/7, 365 days a year. Our teams work hard to be there when needed the most, whether it is during an emergency or when someone needs a bite to eat or to quench their thirst. They are working hard to provide what the community wants within easy reach of where they live and work.

Above and beyond jobs and availability, c-stores are stewards of the local community. Our company donates over $300,000 to local charities, schools and organizations each year. The entire industry gives $1 billion back to the communities

What roles in the community should convenience stores play?

where they operate through many creative campaigns. In 2022, our company designated a Giving Pump at each location for three months. A donation was made for every gallon of gas pumped at these decorated fuel dispensers. Giving back is what we enjoy the most about our business.

Convenience stores also help individuals earn the American Dream. My parents immigrated from India with very little. It was through their hard work and the opportunities provided by this industry that they were able to provide for their family. Not just their immediate family but also their extended family. There are countless examples of others who have achieved their dreams by working in convenience stores.

Finally, convenience stores provide for the environment. Most people think we just sell gasoline. They don’t always see all the other benefits. Being close to the community keeps many people from driving long distances to get their staples. Car washes recycle 80% of their water and keep dirt and oil out of our storm drains. Many of our stores have solar panels, and we will be providing electric charging soon. Convenience stores provide options that allow customers to make the decisions that fit their values.

 Dr. Varish Goyal, CEO of Loop Neighborhood Markets, Fremont, California

Register for the NACS SOI Summit

Registration for the 2023 NACS State of the Industry Summit is now open. The event will be held April 18-20 in Dallas, Texas—a new location for the summit.

The NACS SOI Summit is the only industry event that delivers actionable insights behind the data on the latest financial, operational, categorical, regional market and consumer trends in convenience. Attendees receive early access to 2022 convenience industry data, which drives the NACS State of

the Industry Report, offering exclusive industry information not available anywhere else.

Retailers and suppliers rely on this proprietary data from the summit to benchmark their performance by region and top-performing quartiles, see what’s working and not working for others across key categories, learn what drives the consumer to enter their store (or not) and purchase what they do, and to gain ideas on how to take their business to the next level. NACS is

Jared Scheeler, former NACS chair and CEO of The Hub Convenience Stores

Lisa Dell’Alba, Square One Markets, presented at the 2022 NACS SOI Summit.

uniquely positioned to provide data and insights laser-focused on the needs of the convenience industry and is backed by its 50+ years of strategic analysis in the space.

The conference is held over two jam-packed days, and those who attend include fuel and convenience retailers and industry partners who want to make data-driven decisions and know the value of using insights and benchmarking to improve their businesses. The event not only builds new connections and opportunities but also is the premier opportunity to upskill future leaders who can impact performance as they grow and develop their convenience and fuel industry knowledge.

NACS will again host a pre-summit session that takes insights and collaboration to a new level. Held on Tuesday, April 18, the SOI Summit Retailer/Stakeholder Strategy Session will offer suppliers a unique opportunity to hear directly from five of the industry’s leading retailers in a closed, supplier-only format. Presenting successively, leadership from invited retailers will share top strategic initiatives and priorities—and address supplier-generated topics—in an intimate session.

The SOI Summit Retailer/Stakeholder Strategy Session will be closed to external media and other retailers, assuring the insights and transparent dialogue are clear and actionable. Separate registration is required for the event at $499 per person. It’s open to supplier members only, with a limit of two seats per member company. Hunter Club Gold members can register up to four attendees, and Hunter Club Silver and Bronze members can register up to three attendees. Attendees must be registered for the NACS SOI Summit to participate in this pre-event add-on opportunity.

Connect Over Lunch

NACS Industry Update Luncheons bring together regional convenience and fuel retail and supplier leaders for a unique experience where they connect, exchange ideas and hear industry performance trends and metrics in a casual setting.

Each year, NACS President and CEO Henry Armour travels around the U.S. to discuss insights, issues and opportunities that are relevant to the convenience and fuel industry. This year, NACS leadership also will present at these luncheons.

Retailers and fuel jobbers regardless of their NACS membership status are invited to attend. NACS Hunter Club member companies can send up to two individuals per event as space allows.

At each Industry Update Luncheon, guests will enjoy casual networking time, followed by a seated lunch including a 60–75-minute interactive presentation and discussion delivered by NACS leadership.

The 2023 dates and locations are:

• February 2: Pleasanton, California

• February 17: Richmond, Virginia

• February 23: Honolulu, Hawaii

• May 1: Bloomington, Minnesota

If you have questions regarding the scheduled luncheons or are interested in having an Industry Update Luncheon in your city, please contact Eboni Russell, NACS state association manager, at erussell@convenience.org.

Whether you are a convenience retailer, a manufacturer or supplier, the NACS SOI Summit and the NACS SOI Report position you to use datadriven benchmarking to improve your business strategies and outcomes. Register today at www.convenience. org/events/SOI

Return to Capitol Hill

Join NACS on March 7-8 as NACS Day on the Hill returns to an in-person event after two years as a virtual event.

NACS Day on the Hill gives convenience retailers the opportunity to be the best advocates for our industry, bringing you face to face with policymakers. Participants will share how policies being developed in Washington, D.C., will directly affect your business and our industry.

When you participate, NACS supports you with training videos, webinars and briefings before you go to Capitol Hill to speak directly with lawmakers. Our government relations team schedules individual congressional meetings and pairs you with other convenience retailers and experienced advocates.

Not only will retailers gain a better understanding of current industry

issues, how they directly affect the way business is conducted and how issues are being legislated, you also get an opportunity to interact with retailers facing the same challenges.

Most importantly, NACS Day on the Hill gives you the opportunity to educate members of Congress about issues they will vote on. Policymakers want to hear from their constituents

Calendar of Events

FEBRUARY

NACS Convenience Summit Asia

February 28–March 02 |

Waldorf Astoria Bangkok | Bangkok, Thailand

MARCH

NACS Day on the Hill

March 07–08 | Washington, D.C.

NACS Human Resources Forum

March 20-22 | The DeSoto |

Savannah, Georgia

APRIL

NACS State of the Industry Summit

April 18-20 | Hyatt Regency DFW International Airport | Dallas, Texas

NACS Leadership for Success

April 30-May 05 | Virginia Crossings

Hotel & Conference Center | Glen Allen (Richmond), Virginia

MAY

NACS Convenience Summit Europe

May 30-June 01 | Intercontinental Dublin | Dublin, Ireland

JULY

NACS Financial Leadership Program at Wharton

July 16-21 | The Wharton School University of Pennsylvania | Philadelphia, Pennsylvania

NACS Marketing Leadership Program at Kellogg

July 23-28 | Kellogg School of Management | Northwestern University | Evanston, Illinois

to do their jobs better for the people who elected them, people like our members—people who work hard each and every day.

As a constituent, your voice matters. Be a part of the conversation and help protect convenienceacross the country by attending this year’s conference. Learn more at www. convenience.org/dayonthehill.

NACS Executive Leadership Program at Cornell

July 30-August 03 | Dyson School, Cornell University | Ithaca, New York

OCTOBER

NACS SHOW

October 03-06 | Georgia World Congress Center | Atlanta, Georgia

NOVEMBER

NACS Innovation Leadership Program at MIT

November 05-10 | MIT Sloan School of Management | Cambridge, Massachusetts

Member News

RETAILERS

Chris Hartman has been named vice president of fuels, advertising and development at Rutter’s. Hartman started at Rutter’s at 13 years old, working in the company’s stores each summer. Hartman received his MBA and gained five years experience before returning to Rutter’s in 2018.

Rutter’s announced Tom Turnbaugh has been promoted to vice president of finance and accounting. Turnbaugh joined Rutter’s in June 2020 as director of financial planning and analysis and has over 10 years of finance and accounting experience.

Mike Shonk has been named senior director of facilities and development at Rutter’s. Shonk will be charged with overseeing the development of new stores and remodels.

Parkland Corp. has named Donna Sanker as president of Parkland USA, following the December departure of Doug Haugh

from the helm of the South Carolina-based company. Sanker has led the company’s Canadian unit since 2019. As president of the U.S. segment, Sanker will lead the U.S. team and strengthen the One Parkland culture.

Ian White has been named president of Parkland Canada. White was formerly senior vice president of strategic marketing and innovation for over four years, leading the launch of the JOURNIE Rewards program and the expansion of ON the RUN c-stores and the M&M Food Market business.

Ryan Krogmeier ’s role as senior vice president of supply, trading and refining at Parkland is expanding to include leadership of Parkland’s U.S. Supply Co. Krogmeier brings commercial downstream experience across many aspects of the downstream value chain, including product supply and trading, marketing, crude oil supply and joint venture management.

The Indiana Food & Fuel Association announced that Executive Director Scot Imus will retire in April. Imus has led the association, which

represents the state’s fuel distributors and convenience store owners, for nearly 20 years.

“During his tenure, Scot has been instrumental in helping IFFA members express a unified voice on advocacy issues of critical importance to our industry, and he will be missed,” said J. Smith, IFFA president.

SUPPLIERS

Grabango has named Ken Fenyo as the company’s first chief marketing officer. A 20-year retail industry veteran and previous senior executive at Kroger, Fenyo will focus on helping the company scale its network of checkout-free stores to usher in a more convenient way for consumers to shop.

Karin RotemWildeman has been named chief research and development officer at Keurig Dr Pepper.

Rotem-Wildeman will be responsible for leading product development, packaging innovation, flavor technology and associated R&D capabilities. RotemWildeman will succeed David Thomas, who is retiring after 16 years with the company.

Chris Hartman

Mike Shonk

Donna Sanker

Ian White

Ryan Krogmeier

Scot Imus

Ken Fenyo

Karin RotemWildeman

Paytronix Systems Inc. announced

Pamela Robertson has been named chief marketing officer.

Robertson will lead strategy and tactics across the full performance marketing spectrum, including content, campaigns, brand, events, product marketing, public relations, social media, paid search and more, to drive brand and revenue.

Swisher announced that Neil Kiely has been named president and CEO after serving the past year as president.

Kiely leads the strategic growth, transformation and diversification of Swisher’s portfolio of products for adult consumers in a variety of lifestyle categories.

Jeffrey Brown is now executive vice president of Swisher Sales. Brown was previously the general manager of E-Alternative Solutions LLC, a sister company of Swisher. Brown brings more than 37 years of industry and leadership experience in several CPG categories, including cigars, e-vapor and CBD, to lead Swisher Sales.

New Members

NACS welcomes the following companies that joined the association in November 2022. NACS membership is company-wide, so we encourage employees of member companies to create a username by visiting www. convenience.org/Create-Login. All members receive access to the NACS Online Membership directory, latest industry news, information and resources. For more information about NACS membership, visit convenience.org/membership.

NEW RETAIL MEMBERS

Creek Indian Enterprises Development Authority Atmore, AL www.pcicie.com

Henry’s Lake Station Island Park, ID

Hollywood Branded El Segundo, CA www.hollywoodbranded.com

Kite Surfing Gable, SC

Lucky Petroleum Inc. Hudson, NY

NEW GLOBAL SUPPLIER COUNCIL MEMBERS

Jack Link’s Protein Snacks Minneapolis, MN www.jacklinks.com

NEW HUNTER CLUB SILVER SUPPLIER MEMBERS

C-StoreMaster Huntsville, AL www.cstoremaster.com

Tropicana Brands Group Chicago, IL www.tropicana.com

NEW SUPPLIER MEMBERS

Cowboy’s Mop Washer Missouri City, TX www.mopwasher.com

Cyril’s Foods Company Fort Lauderdale, FL www.cyrils.com

Domino Equipment Company Oklahoma City, OK www.dominoequipment.com

East Coast Distribution Hollywood, FL

Franchise Equity Partners New York, NY www.FEP-US.com

Mybar LLC Stafford, TX www.mybarusa.com

Numerator Chicago, IL www.numerator.com

Phantom Fireworks Store Sales LLC Youngstown, OH www.fireworks.com

Prisma Health Greenville, SC www.prismahealth.org

Productos Verde Valle Zapopan, Jalisco, Mexico www.verdevalle.com

Righteous Felon Craft Jerky West Chester, PA www.righteousfelon.com

Swiftly Millbrae, CA www.swiftly.com

The Gambrinus Company San Antonio, TX www.gambrinusco.com

Pamela Robertson

Neil Kiely

Jeffrey Brown

March 20-22, 2023

Savannah, GA

Bright Ideas. Lasting Connections.

The NACS HR Forum is a must-attend event for the leaders in our industry who recognize people are the number-one asset of successful businesses.

Over three content-filled days, the NACS HR Forum connects you with peers from around the country. With engaging, interactive presentations and case studies, the forum offers fresh solutions to the issues you face daily.

Attendees earn an average of 10 professional development credits from HRCI and SHRM.

Weigel’s Brings Joy to 250 Children

Knoxville, Tennessee-based Weigel’s hosted its 25th Weigel’s Family Christmas on December 3—a special event that brought 250 local children in need and more than 350 volunteers together for a Christmas shopping spree.

Each year Weigel’s organizes and funds the event, while the Salvation Army assists in selecting children from East Tennessee communities. Since the program’s inception in 1998, more than 4,600 children have received Christmas gifts through the charity.

“We are overjoyed to be celebrating 250 kids, the most we’ve ever sponsored, and give them the joy of shopping and having a special day” said Kurt Weigel, training and recruiting director

at Weigel’s. “Our volunteers are often entire families, coming together to give back to our community. We’re especially

excited to see the growth of this special day.”

Prior to shopping, the volunteers prepare a complimentary breakfast for the children and prepare lunch for the children’s return, while other volunteers help the children with their Christmas shopping spree at a local Target store.

“This December is especially heartwarming to now be able to reflect on many years of our volunteers impacting the lives of these kids, as well as the kids making an impact on our volunteers,” said Bill Weigel, chairman of Weigel’s. “We love watching the kids shop and seeing their faces light up. This day is special, filled with smiles galore and tears of joy, and it truly makes our holiday season as much as we help make theirs.”

Children receive breakfast and lunch to bookend their time shopping with volunteers.

Bill Weigel, chairman of Weigel’s, chats with a volunteer during the Weigel’s Family Christmas shopping event for children in need.

In The Community

Every year, the convenience and fuel retailing industry dedicates billions of dollars to advancing the futures of individuals and families in our communities. The NACS Foundation unifies and builds on NACS members’ charitable efforts to amplify their work in communities across America, and to share these powerful stories.

Learn more at www.conveniencecares.org

LOVE’S PROVIDES HOLIDAY MEAL KITS

1 Love’s Travel Stops and Operation Homefront distributed 150 holiday meal kits to military families in December. This was the third-consecutive year for the event serving preregistered families through Operation Homefront’s Holiday Meals for Military.

“The Holiday Meals for Military is an event we look forward to every year,” said Jenny Love Meyer, chief culture officer and executive vice president of Love’s. “We’re always proud to join Operation Homefront in playing a small part in providing support and comfort to military families during holidays and love seeing the excitement on families faces when they pick up the kits.”

PILOT SUPPORTS WREATHS ACROSS AMERICA

2 The Pilot Company sponsored Wreaths Across America Radio and its live coverage of the 2022 Escort to Arlington National Cemetery, a weeklong tradition of support and remembrance for our nation’s heroes.

Pilot Company also funded the placement of more than 1,300 wreaths at participating cemeteries across Tennessee. In Arlington, Virginia, it also sponsored the Truckload Carriers Association’s annual appreciation dinner for the

Wreaths Across America truck drivers the night before National Wreaths Across America Day.

“On behalf of all of us here at Pilot, thank you to all our service members out there for your service and sacrifice for our country. We are honored to be a part of Wreaths Across America’s mission and be able to remember and pay our respects this holiday season by placing wreaths on the final resting place of our nation’s heroes,” said Jordan Spradling, vice president of transportation at Pilot Company.

RUTTER’S DONATES $75,000 TO LOCAL GROUPS

3 Rutter’s awarded a total of $75,000 to four local organizations within its operating area as part of the York, Pennsylvania-based company’s 2022 Vote With Your Dollars program. The groups included the Adams County SPCA ($25,000), Make-A-Wish Greater PA & WV ($25,000), Ronald McDonald House Central PA ($15,000) and York Habitat for Humanity ($10,000).

“Supporting our local communities is a crucial part of Rutter’s values,” said Chris Hartman, Rutter’s vice president of fuels, advertising and development. “We love giving our customers the opportunity to help direct our donations to organizations they are passionate about, which makes it even more fun.”

SHEETZ CHAMPIONS KIDS

SOCIAL SHARES

NACS encourages retailers to share their giving-back news on social media using #ConvenienceCares

4 Sheetz in December held its annual Sheetz for the Kidz campaign, which has helped more than 150,000 children in need in the communities Sheetz serves celebrate the holidays.

In 2021, Sheetz raised $2.2 million through the campaign, which was the most the retailer has raised since the program’s inception in 1992.

Sheetz for the Kidz also partners with Make-A-Wish foundation, and a portion of the 2022 funds raised will sponsor wishes for 61 children.

ONVO SUPPORTS BREAST CANCER AWARENESS

5 Onvo presented a $21,000 check to the Pennsylvania Breast Cancer Coalition for funds raised during October through sales of pink ribbons to support breast cancer awareness.

“Our store teams were honored to have the opportunity to support the PA Breast Cancer Coalition, and it showed in their eagerness to promote this fundraiser at the store level,” said Bill Donmoyer, vice president of operations—travel plazas, for Scranton, Pennsylvania-based Onvo. “I’m really proud of our store teams for exceeding our goals for this fundraiser.”

Meet Us on the Hill

BY JON TAETS

Key Figures

2

How many days the 2023 NACS Day on the Hill event encompasses

5 The number of extra fly-ins NACS and the Merchants Payments Coalition held in 2022 to focus specifically on credit card swipe fees

Every year NACS hosts its annual Day on the Hill where retailers and suppliers from all over the country come to Washington, D.C., to meet with their members of Congress to advocate for the issues most important to the convenience and fuel retailing industry.

Last year was no exception, apart from the event being held virtually because of COVID-19 and Capitol Hill security restrictions. What was different about 2022? NACS and several allies from the Merchants Payments Coalition conducted an additional five targeted fly-ins, focused specifically on the issue of credit card swipe fees. While our efforts have not resulted in the final passage of legislation addressing the issue (as of this writing), they have had a significantly positive impact on the level of support for such legislation on both sides of the aisle on Capitol Hill.

As we have heard from senators on the Hill, “there is truly no substitute for you being here.” Members of Congress are in office to serve the people who elected them—their constituents. They deeply value each constituent’s opinions and concerns. By meeting with your elected representatives either in your home state or in Washington, D.C., your voice can make an impact not just for your business but also for the convenience and fuel retailing industry as a whole.

Many retailers come to our annual Day on the Hill and heed the government relations team’s calls to action through grassroots and grass-tops activities. One of those retailers is Matt Durand , senior counsel, legislative & regulatory, in the office of the general counsel at EG America. Durand has rarely passed up an invitation to visit Capitol Hill for the benefit of the entire industry. In fact, Durand was one of the few NACS retailers who attended every fly-in NACS held in 2022.

Ahead of NACS Day on the Hill March 7-8, 2023, NACS asked Durand to share his experiences.

WHY DO YOU THINK MEETING IN PERSON WITH MEMBERS OF CONGRESS IS IMPORTANT TO OUR INDUSTRY?

It’s a safe bet that you know your business better than most other people, including most members of Congress. Nobody can be an expert in everything. So, if we want congressional members and their staff to learn and fully

EG Group’s Matt Durand shares why NACS Day on the Hill is a can’t-miss event.

appreciate the issues we’re dealing with, it’s incumbent on us to tell our story. And there’s no better way to tell our story to a congressional office than going to discuss it with them in person. Whether you’re flying to D.C. or meeting back home in their district office, you’re sending a strong signal about how important the issue is to you, simply by taking the time to show up. It’s one of the best ways to pull an abstract concept down to earth, put a name and a face on it and illustrate its real-world impact on constituents like you.

WHAT IS IT LIKE MEETING WITH A MEMBER OF CONGRESS IN PERSON?

I would say upfront: Don’t underestimate the importance of staff meetings, if your member can’t attend. But meeting in person with the member themselves can definitely be an exciting and rewarding experience, especially if you’re then able to develop a rapport with them over time. There are too many to name specifically, but my

favorite stories are always when the member has shopped our stores back home and they share with us how much they love the team at their favorite store, or how we saved the day when they needed something in a pinch and ours

was the only store open. It’s a great bridge to discussing whatever issues we’re facing, but it’s also gratifying to hear that we’re making a difference for them as our guests.

SWIPE FEES ARE A HOT BUTTON ISSUE ON THE HILL THIS YEAR.

WHAT HAVE YOU HEARD FROM LEGISLATORS

ON THE ISSUE WHILE IN MEETINGS?

The reactions we’ve received on swipe fee reform have been really encouraging. The banking lobby can be a daunting opponent, but I really do believe this is a winnable fight for us if we keep the momentum going. We have a compelling narrative with the facts on our side, and that seems to be resonating with congressional members and staff. For those who seemed skeptical at first, often it’s because they were hearing some misleading talking points from the other side, which gives us a perfect opportunity to correct the record. We’re getting good and thoughtful questions in the process, and it is clear people are taking this seriously on the Hill.

I’VE NEVER BEEN ON THE HILL BEFORE. SHOULD I BE NERVOUS?

It’s OK to feel nervous. I felt the same way at first, but soon you realize you’re surrounded by a bunch of other human beings who are doing their jobs and living their lives, just like you. I remember meeting with Rep. Katherine Clark for one of my very first NACS fly-ins, then running into her at the airport later that night when our flights home got delayed. She came over and said hi, and we talked about our commutes and our families and our plans for the summer until our planes finally boarded. Something similar happened with Rep. Jim McGovern at a Red Sox game a few years later, after also meeting him during

You’ll spend the day talking about serious issues with serious implications for our industry, but take some time to enjoy yourself as you walk around this awesome and historic place.”

Matt Durand, EG America

a NACS fly-in. We’re talking about two of the most powerful Democrats in Congress right now, formidable politicians and very good at their jobs, yet there we were out in the “real world” having the most ordinary, friendly, perfectly human interactions you could imagine. Remember that when you’re meeting with members and staff on the Hill, don’t hesitate to make some small talk up front to connect on a personal level. It helps break the ice and sets you up for a more productive discussion when you eventually dive into the issues.

WHAT ADVICE WOULD YOU GIVE TO A FIRST-TIME DAY ON THE HILL ATTENDEE?

First, don’t forget to have some fun and appreciate your surroundings. You’ll spend the day talking about serious issues with serious implications for our industry, but take some time to enjoy yourself as you walk around this awesome and historic place. Second, arrive at your meetings a few minutes early if you can. It’ll give you a moment to relax and calm your nerves if you need to, and some of the offices have interesting art or keepsakes on display from the members’ home states. Third, be kind to the staffers. From the intern at the front desk to the policy adviser assigned to your issue, these are people who work hard, don’t often get the appreciation they deserve and can have a huge impact on how the office handles your issue when you leave.

Durand’s advice is invaluable for visiting your representatives in Washington or back home. If you’d like to join Durand and many others at this year’s Day on the Hill, contact NACS Grassroots Manager Margaret Hardin at mhardin@convenience.org, and learn more at www. convenience.org/DayOnTheHill

Jon Taets is NACS director of government relations. He can be reached at jtaets@ convenience.org

What role in the community do you think convenience stores should play?

Convenience stores are part of the fabric of our communities. They are the focal point where people come together for much-needed food, fuel and refreshments. Although these encounters are meant to be quick and convenient, they are essential interactions in our neighbors’ daily lives. Our stores should be and often are the community gathering point, providing essential services to our customers every single day.

What does NACS political engagement mean to you, and what benefits have you experienced from being politically engaged?

NACS political engagement ensures that someone always has the industry’s back. Someone is looking out for our needs and thinking strategically and thoughtfully about the future. The NACS government relations team makes sure that the needs, interests and business of convenience store companies are being looked after in Washington, D.C.

One of the biggest benefits of this engagement is the fact that we’re kept “in the know.” The NACS team tracks important legislative and regulatory developments that affect our business, and they keep us retailers well informed. NACS also brings us in to participate where needed.

I’ve been a longtime attendee of NACS Day on the Hill, and I

ONE VOICE

This month, NACS talks to Eva Rigamonti, associate general counsel –executive director of public policy, RaceTrac Inc.

encourage everyone to attend. Traveling to D.C. to talk to your member of Congress is invaluable because every day, federal lawmakers work on legislation that has a real impact on our business.

What federal legislative or regulatory issues keep you up at night?

The biggest issue for me is one that is existential in nature: fuels policy writ large. I am concerned about what is happening in the current legislative and regulatory space with regards to the future of fuels. Our business is fuels agnostic. We don’t care what fuel the consumer wants. If it is legal, we want to sell it. We want to provide the best quality and cost product to consumers and give them options to choose from. Policymakers need to develop an energy policy that is technology neutral and promotes competitive market solutions.

Additionally, we need to ensure competition extends to all areas of our business, including payment competition and swipe fees. As a retailer, RaceTrac cannot choose which card network to run its transactions on. Visa and Mastercard control the market and set the prices and terms for banks that issue their cards, while increasing our swipe fees year after year. The market is broken, and we need to bring competition into the equation. Congress needs to pass the Credit Card Competition Act in 2023.

What c-store

product could you not live without?

It’s a toss-up between Topo Chico sparkling water and RaceTrac Swirl World!

NACSPAC DONORS

NACSPAC was created in 1979 by NACS as the entity through which the association can legally contribute funds to political candidates supportive of our industry’s issues. For more information about NACSPAC and how political action committees (PACs) work, go to www.convenience.org/nacspac . NACSPAC donors who made contributions December 1-31, 2022, are:

Brian Ashburn Yesway

Amy Ashley-Burke NACS

Chris Bambury Bambury Inc.

Dan Bambury Bambury Inc.

Joseph Bona Bona Design Lab Inc.

Brett Brobston Altria Group Distribution Company

Rahim Budhwani 6040 LLC

Chet Cadieux QuikTrip Corporation

Nancy Caldarola Concept Associates Inc.

Nishant Chudasama Cadnicks Inc.

Andrew Clyde Murphy USA

Lisa Dell’Alba Square One Markets Inc.

Bhagdeep Dhaliwal Dhaliwal & Associates Inc.

Henry Dodge Dodge’s Stores

Robert B. Dodge Dodge’s Stores

Colin Dornish Coen Markets Inc.

Matt Durand Cumberland Farms

Justin Erickson Harbor Wholesale Foods

Barry Eveland Rocket Oil Company

Cedric Fortemps Matrix Capital Markets Group Inc.

Derek Gaskins Yesway

Annie Gauthier St. Romain Oil Company LLC

Christopher Gheysens Wawa Inc.

Thomas Gresham Double Quick Inc.

Brian Hannasch Alimentation Couche-Tard Inc.

Shultz Hartgrove Naughty Chile Taqueria

Tom Heinz Coffee Cup Fuel Stops and Convenience Stores Inc.

Bob Honkala Bud’s Citgo

Tommy Hunt E-Z Stop Food Marts Inc.

Julie Jackson G&M Oil Company

William B. Kent The Kent Companies

Bill McCloskey Rmarts LLC

Charles McIlvaine Coen Markets Inc.

Scott McPherson Core-Mark International

Greg Mitchell Toot’n Totum Food Stores LLP

Jerry Morrow Mother Parker’s Tea & Coffee

Bill Newcomb Newcomb Oil Co.

Duy Nguyen Bambury Inc.

Ken Parent Pilot Travel Centers LLC

Sunny Patel Pantry Quik Inc.

Duane Phillips Dandy Mini Marts Inc.

Lesley Saitta Impact 21

Tony Savoie Richard Oil and Fuel Inc.

Travis Sheetz Sheetz Inc.

Nicholas St. Romain St. Romain Oil Company LLC

Darlene Stanley Johnson Junction Inc.

William Stein Core-Mark International

Marc Strauch Cameron Park Petroleum

Caroline Taitelbaum EG America LLC

John Tippery Sheetz Inc.

Jill Van Pelt RaceTrac Inc.

De Lone Wilson Cubby’s Inc.

BY SARAH HAMAKER

When Dale Plunkett bought his parents’ Tip Top Tavern restaurant and bar in 2011, he knew he wanted to create a hybrid business. He researched what residents in Watertown, South Dakota, wanted and needed before making the decision to combine the restaurant and bar with a convenience store and fuel pumps.

“I realized the restaurant/bar business wasn’t going anywhere, so I kept the liquor license but expanded into the convenience retail industry,” he said. “I like the restaurant and bar business, but I like the c-store business a little bit more.”

TWO BUSINESSES

The original Tip Top Tavern was bulldozed to create the new business model. He designed the interior into separate but together areas for the restaurant/ bar and convenience store. To divide the space between the restaurant and the store, Plunkett installed a wide cooler with doors on both sides. “While you can walk through to either area, the cooler is the middle of the floor plan,” he said. The kitchen is also strategically located within the building to easily serve both the restaurant and the warm to-go foods as well as the cold graband-go packaged foods.

When rebranding the store, the menu went through an upgrade, too. “I noticed that our customer base on the c-store side was in a hurry, so we went with burgers and other on-the-go foods,” Plunkett said. During lunch, the restaurant offers a home-cooked daily special, which is popular with the more agricultural customer base.

On the c-store side, he works with Coremark reps to keep up with what’s selling and what’s not. “That’s been very helpful to us,” he said. “Overall, the convenience store really boosted my sales incredibly, so it’s been a very positive move for us.” He also added fuel pumps out front, which draw customers inside the store and restaurant.

Tip Top carries a lot of local products, such as beef sticks, cheese and chislic, a South Dakota specialty of cubed beef. “Our No. 1 seller is our Apple Pie liquor, a home-brewed apple cider,” Plunkett said. “We sell hundreds of gallons of it every year.”

COMMUNITY PARTNERS

Being a good neighbor is part of the Tip Top mission. Each year, Plunkett does several fundraisers for charities, such as donating 30 cents from every gallon of ethanol sold or food for a nonprofit’s event. “We care about our community and try to help out whenever we can,” he said. “We’re established in the community, and we want to give back.”

Unfortunately, the low employment numbers in the area mean it’s difficult to find staff. “The past three or four years, it’s gotten even worse,” he said. “The staff I have are great, but I could easily hire another half dozen people. I’ve had to close more this year than during COVID because of low staffing.”

To combat the staffing issues, he’s raised the starting wage and makes concentrated efforts to show his appreciation to his managers and top-performing employees. “I know our staff is part of what makes Tip Top a great place to visit, so I do my best to keep them happy,” Plunkett said. “In turn, they keep our customers happy. Nobody walks into the store without being spoken to.”

For Plunkett, the biggest compliment a customer can give him is to comment

BRIGHT IDEAS

Staffing is always challenging in retail. One way Dale Plunkett, owner of Tip Top, shows his appreciation for his employees is to send his managers and other high-performing staff to the NACS Show. “They came back from the 2022 NACS Show with a lot of good ideas and products for us to try,” he said. “I’m already lining up for three or four employees to attend this year’s NACS Show in Atlanta.”

Plunkett also hands out bonuses for meeting monthly sales goals, as well as bringing the staff together on a regular basis for team building. “We try to make work a fun and safe place,” he said. “We want to keep our staff happy and so we invest in them.”

on how clean the store is. “I want them to walk out of the store thinking, ‘Wow, those bathrooms are clean,’” he said. “I want them smiling and having had a totally positive experience.”

Sarah Hamaker is a freelance writer, NACS Magazine contributor and romantic suspense author based in Fairfax, Virginia. Visit her online at sarahhamakerfiction.com.

Ideas 2 Go showcases how retailers today are operating the convenience store of tomorrow.

To see videos of the c-stores we profiled in 2022 and earlier, go to www.convenience.org/Ideas2Go

WHO’S MINDING THE STORE?

Fifteen years ago, eyes would have rolled if you were told that the future of successful convenience store retailing would rest not on what shoppers could purchase but how they could purchase. It’s a tech-driven economy, and consumers are firmly in control.

BY JERRY SOVERINSKY

The shift has been gradual but unwavering. Ten years ago, in the NACS Magazine article “Big Data. Big Results.” (May 2013), NACS reported on the growth of artificial intelligence (AI)-fueled analytics capabilities and the opportunities available for convenience store operators. “The Big Data approach is not a trending fad but the evolution of a culture that has placed the consumer, not the retailer in control. And how you respond to that dynamic will likely affect your long-term success as you battle for market share of your corner and beyond.”

Five years later in “What’s Minding the Store” (October 2018), NACS Magazine highlighted preliminary tests on robot waiters and automated burger flippers. “Yes, the future is here,” we wrote. “And if not yet on your street corner, it’s fast approaching.”

As you probably have noticed, the future has arrived, and it is on your street corner. And battling for market share has never been fiercer. While there’s no one-size-fits-all solution to achieving success, some retailers are turning to advanced automation to strengthen their bottom line.

Retailers turn to automation to engage customers and boost the bottom line.

A WORK IN PROGRESS

You’ve seen automation evolving, of course, at supermarkets throughout the country. Self-checkout lines have become ubiquitous, a modest retailer control concession that is the baseline consumer expectation today.

According to data from Catalina, self-checkout lanes have increased 10% over the past five years to comprise 38% of lanes in grocery chains, “an effort to offset shrinking margins from inflationary labor costs, respond to social distancing protocols …” Among convenience retailers surveyed by NACS, 41% indicated that they planned to offer frictionless/cashierless checkout in 2022, according to the NACS Building Convenience Retail Success Through Technology survey.

Then there’s full automation.

When it became operational roughly six years ago, Amazon’s cashierless store, Amazon Go, was an industry curiosity—No cashiers? No checkout lines?—that has since expanded, albeit at a trickle (by Amazon’s standards). As of December 2022, the company was operating 30 stores with its Just Walk Out technology, the majority (24) in Chicago, New York, San Francisco and Seattle.

Amazon’s technology has spawned competitive technology from the likes of Standard AI and others that convenience store retailers are adopting. Is it overreach for an industry built upon durable, local relationships? Or a necessary evolution to withstand eroding margins and shrinking market share? Let’s take a closer look.

THE CASE FOR AUTOMATION

Let’s concede for the moment that in-store automation technology is reliable, the how-to consideration that’s better left for other analyses. The key question, once you’re sold on the technology, is why? And for that, we look to shopper attitudes.

“Consumers like in-store automation as an enabler to improve the store experience,” reports the Capgemini Research Institute, especially after a pandemic that shifted shopping behaviors away from in-store experiences. The technology is notably engaging for Gen Z and millennials, 64% of whom have visited automated stores, versus 50% for the general population. And if you get the technology right, the experience is shopper-sticky: 59% of shoppers overall who had a positive experience at an automated store would shift their loyalties to that store, a number that jumps to 67% for millennials. Convenience is a driving factor in consumers’ adoption of store automation. U.K. retailer Marks & Spencer was an early adopter of cashierless shopping, launching its Mobile, Pay, Go app in late 2018. “Our customers—especially those who come to us for lunch—are so busy, any tech that can speed up the shopping experience is a massive benefit to them,” the company said, noting that the technology quickly captured 20% of its sales via its cashierless-enabled app.

We’ve been continuously looking to reduce friction through the ordering and checkout process for several years.” migrolino

When compared to stores that offer little to no automation, automated stores experienced an 11% sales lift among shoppers, as well as an 11% increase in trip frequency, the Capgemini research found.

Speaking at the 2022 NACS Convenience Summit Europe, Sebastian Becker, head of wholesale and logistics for Swiss-based retailer migrolino, outlined his company’s tech approach to convenience retailing, with a growth strategy that includes 24/7 automated format stores. The concept was a response to an EV charging partnership with Tesla, which wanted a store open around the clock. “[W]e [couldn’t] have a manned shop at this location, so this was our solution,” he said.

For migrolino, the primary consumer benefit for its unmanned store is one of convenience. “There are at least 100 different forms of [unattended retail] in Europe and unmanned public stores,” he said on a recent Shop Talk LIVE podcast, “and unmanned is not unmanned in many cases. But it’s a frictionless shopping experience [that wins consumers].”

Of course, the labor savings look good on any retailer’s bottom line, too, but winning customers is primarily about creating a favorable experience.

GIVE ME A BREAK

In addition to Amazon and migrolino, you’ve seen automated stores popping up in a variety of settings, each with their own motivations and customer challenges.

Aisle 24 is a Toronto-based retailer that automates the grocery shopping experience, launching its first cashierless store in 2016.

For co-founder and CEO John Douang, the winning formula isn’t so much about technology as it is about understanding your customer. “We pride ourselves on being able to craft a product offering to the demographics in the particular community in which an Aisle 24 location is present,” he told Retail TouchPoints. The approach is critical to “meet[ing] the locals’ needs and wants.”

For Douang, the cashierless business model was one of necessity. “If [I] wanted to take a break or a vacation, [I] had to shut the store,” he said. “That meant lost revenue and lost income. Moving into cashierless, touchless

and cashless was the natural progression of the retail industry.”

His younger customers have taken to the format enthusiastically. “Gen Z and millennial consumers are the largest spenders,” he said. “As Gen Z gets older, those consumers are going to control a bigger market spend. Their expectations are very aligned with the digital world. Having a traditional experience in a retail environment doesn’t really align with their demands.”

IN THE U.S.

Closer to home, NACS Magazine spoke with two U.S.-based convenience retailers about their experience with automated c-stores.

Choice Market

Long a proponent of using technology to enhance the customer experience, Mike Fogarty, founder and CEO of Denver-based Choice Market, launched a proprietary digital platform in 2019 that offered, among other things, 45-minute delivery turnarounds on customer orders. “The primary goals are to enhance the digital customer experience, to reduce our delivery expense and drive customer loyalty,” Fogarty said in announcing the platform’s rollout.

While the platform was a notable milestone for the company as it established itself among the area’s Gen Z and millennial demographics, Fogarty’s tech work was just beginning.

“We’ve been continuously looking to reduce friction through the ordering and checkout process for several years,” he said, a search that brought him in 2021 to the launch of the company’s Choice Now mobile check-in and cashierless checkout technology.

Unveiled at the company’s 5,000-squarefoot Bannock Street store, Choice Now offers shoppers a cashierless checkout option—but

Our building store used to be open from 6 a.m. to 6 p.m., but with self-serve, we can operate 24/7. ”

Choice Market

only if they want it. “We like to provide options to our shoppers, and the larger format store lends itself to multiple ways to check out.”

But when the company decided to build a 400-square-foot minimart on a Denver medical campus in late 2022, Fogarty decided the time was right to let Choice Now stand on its own as the store’s lone checkout technology.

“The medical community and CU students work tirelessly to serve the greater Denver community,” Fogarty said at the store’s launch. “We couldn’t be more excited to provide these time-strapped first responders, students, patients and their families with high quality groceries and fresh meals 24/7/365.”

With roughly 1,000 SKUs decorating a space that was previously a hallway, Fogarty said the factors were ideal to test Choice Now as the store’s exclusive operating option.

The store’s first two months have produced “data that is really promising,” Fogarty said. “It’s a low margin business, and this is an efficient way for us to distribute product.”

Fogarty said that each retailer would have to evaluate a fully automated store model based on their individual circumstances. “For our smaller format store, it’s about efficiency and convenience, placing products in places where people work or travel and there’s a density for walking traffic,” he said.

While labor reduction was not a primary consideration, Fogarty said the store has reduced staffing by 80 to 90% from a traditional store, though he cautions that alcohol is an outlier. “That still requires a person to be on-site.”

As for Choice’s customers, “they really love the [fully automated format],” Fogarty said. “They love the convenience factor, and the feedback overall has been really strong.”

As a result, he intends to expand the concept in a hybrid model (cashier and cashierless options) to four of his company’s five stores. “In our larger stores, it’s less about labor reduction and more about extending operating hours and revenue growth,” he said, “while maximizing revenue per square foot.”

Ideas 2 Go: Unmanned

NACS visited the Walk-Off Market at T-Mobile Park, home of the Seattle Mariners, for the 2022 Ideas 2 Go video series. Powered by Amazon’s Just Walk Out and Amazon One frictionless technology, the market helps speed baseball fans on their way so they can enjoy refreshments and the game without waiting in line. See video of the store in action at www.convenience.org/Ideas2Go.

And in 2019, Ideas 2 Go visited Russell’s Xpress in Denver, Colorado. The c-store stocks snacks, confections, beverages and general merchandise for grabbing and going—the perfect selection for office workers. Take a tour of the store at www.convenience.org/Ideas2Go

Choice Market

Unmanned is not unmanned in many cases.”

Walk-Off Market

Russell’s Xpress

Colorado-based Russell’s Xpress includes two unmanned stores, a model that the company has operated since 2015. Predating even Amazon Go, the unmanned concept was born out of necessity in one of the company’s high-rise office building locations.

“The building’s traffic pattern had changed, and we were about to close the location,” said Ray Huff, president of HJB Convenience Corp., which operates the Russell’s Convenience and Russell’s Xpress brands. “The landlord asked us if there was any way for us to remain open, and I told him I could do it only if we eliminated labor.”

They did eliminate labor. And they remained open. And things have been working ever since.

The concept is simple: Shoppers must be a member of the Russell’s Rewards Club, which assigns them a number. To enter the store (which remains otherwise locked), they enter the number on a keypad at the store’s entrance, which opens the door. Once inside a store, they shop, scan and pay for their selections on their own.

It’s an ideal concept for the building’s tenants, for whom weather often makes them captive consumers. “One of the beauties of being in high-rise office buildings is that we

service that building, and if the weather gets bad, be it rain, hail, sleet or snow, Russell’s is still there. And rather than office customers spreading out and going into the street, they all come to us.”

It’s a format that has also proven valuable over the past few years, as the pandemic hit the company’s operations especially hard. “Before the pandemic, we had 24 stores, and now we have 11,” Huff said. “Traffic patterns have changed, and people are not returning to downtown areas to work.”

Huff said while the concept works well now for his customers, it’s not necessarily for everyone. “You have to know your customer,” he said. “What drove us to self-serve is that we’re in high rises, and everybody comes down between 6 and 9 and 11 and 1. It helps us better handle the traffic.”

In the meantime, the switch has produced unexpected results. “Our building store used to be open from 6 a.m. to 6 p.m., but with selfserve, we can operate 24/7. We’ve picked up sales that we didn’t get in the past.”

And while Huff worried that unmanned stores might produce an increase in theft, the opposite has occurred. “Our steal actually has gone down,” he said. “While theft industry-wide is maybe 2%, it’s one-tenth of that in our unmanned stores,” he said.

LOOKING AHEAD

While technology can generate profits and engage digital-savvy customers, don’t expect to instantly win over customers. “You have to have an in-store ambassador to make sure things go well,” Huff said. “Someone to teach people how the system works until they’re comfortable with things.”

But if it makes sense for your demographic, it could be an important component in your company’s overall business strategy. “We’re going to lean into this format next year and beyond,” Fogarty said. “This is a key part of our growth.

He added: “It’s a sustainable, profitable business model in a low-margin business.”

Jerry Soverinsky is a Chicago-based freelance writer and NACS Magazine contributing writer. He can be reached at jerrysoverinsky@ gmail.com.

The landlord asked us if there was any way for us to remain open, and I told him I could do it only if we eliminated labor.”

Russell’s Xpress

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STORES

West (region 6)

22,774 stores

There are 150,174 convenience stores operating in the United States, according to the 2023 NACS/NielsenIQ Convenience Industry Store Count. That’s up 1.5% from December 31, 2021, and roughly 100 stores fewer than before the COVID-19 pandemic struck.

With the U.S. population at 334.2 million, according to the U.S. Census Bureau, there is one convenience store per every 2,225 people

The gain of 2,148 stores was largely driven by an uptick in the number of c-stores selling fuel. In all, the industry picked up 2,037 additional sites that offer fuel and 111 c-stores that don’t sell fuel. This also marks a reversal from prior years, which saw the number of fuel-selling locations contract as the number of non-fuel c-stores expanded.

The Central U.S. (region 5) had the fewest stores at 13,127.

U.S. Convenience Store Count

South Central (region 4) 24,163 stores

The number of c-stores has grown, snapping a four-year run of declines.

Change in Store Count, 2023 vs. 2022

Source: 2023 NACS/NielsenIQ Convenience Industry Store Count

Store count increases were recorded in 39 states and Washington, D.C. Texas, the state with the most c-stores, added 276 stores in 2022. Georgia added 271 stores, followed by Florida’s addition of 196 stores and Ohio’s gain of 136 stores. California, meanwhile, lost 53 stores. The store count is based on stores in operation as of December 31, 2022.

Midwest (region 3)

23,516 stores

Source: 2023 NACS/ NielsenIQ Convenience Industry Store Count

The Southeast (region 2) had the most stores at 35,742.

U.S. convenience stores sell an estimated 80% of the fuel purchased in the country.

As of 2023, 118,678 convenience stores sell motor fuels (79%) vs. 116,641 stores (77.6%) that sold fuels as of December 31, 2021. The number of c-stores that do not sell fuel stands at 31,496.

The number of single-store operators grew by 1,087 stores to 90,423, a 1.1% increase over year-end 2021 (89,336) but shy of the 92,198 single-store operators in 2020. As of December 31, 2022, 63,690 single-operator c-stores sell fuel.

A-size companies (1-10 stores) account for 63.2% of all convenience stores. E-size companies (501+ stores) make up the next-largest share with 21.1%.

Top 10 States by Store Count as of December 31, 2022

16,018

5,749 Ohio

5,673 Michigan 4,879 Pennsylvania 4,728 Illinois

4,666

Source: 2023 NACS/NielsenIQ Convenience Industry Store Count

Navigating Nicotine During Regulatory

BY MELISSA VONDER HAAR

Nicotine and tobacco have long been the most regulated products in convenience stores. Limits on retail licenses, sky-high taxes, flavor bans and pack-size limits have become just a part of doing business. Then there are more aggressive regulations, such as Beverly Hills’ total tobacco ban, Brookline, Massachusetts’ prohibiting of tobacco sales to anyone born after 2000 and the state of Minnesota, where convenience retailers cannot sell menthol cigarettes but can sell THC edibles.

And that’s just at the local level. In the next couple years, the U.S. Food and Drug Administration (FDA) has plans to enact more wide-reaching tobacco actions since the agency took over tobacco regulations in 2009.

Here’s a look at where some of the most impactful potential regulations stand—and how tobacco retailers can best navigate them.

THE ISSUE: MENTHOL CIGARETTE/CIGAR FLAVOR BAN

In April 2022, the FDA proposed a rule that would, quite simply, ban the sale of all menthol cigarettes and all flavored cigars in the United States.

“There wasn’t a lot of nuance to it,” said Doug Kantor, NACS general counsel. Though simple, the implications are huge. “It’s the most significant and widespread [potential tobacco regulation] in terms of impact.”

An update on the most impactful tobacco regulations and how retailers can respond.

Jennifer Kelly, a spokesperson for Altria Group Distribution Company, pointed to data showing menthol cigarettes generate $29 billion in annual retail sales, and flavored cigars generate an additional $4-5 billion.

“This total ban will shift products to illegal sellers at a heavy cost to retailers and their employees,” she said, noting that retailers could be forced to cut as many as 150,000 jobs.

It’s nearly impossible to predict the full retail impact because the FDA has never enacted such a wide-sweeping ban of a prominent segment, much less two.

“This would be very different than other things we’ve historically seen because menthols are just about a third of the cigarette market, and flavored cigars are about half of the cigar market,” Kantor said. “Losing that volume of sales to the black market would be a huge financial hit on the industry.”

How Retailers Can Navigate

The FDA is reviewing the hundreds of thousands of public comments on the proposed rule. The agency must evaluate and consider all these comments before issuing either a final rule or a new proposed rule, Kantor said. “There may be another opportunity to formally submit comments, perhaps even more than one,” he added.

Retailers can best respond to the proposal by vocalizing the huge impact this ban would have on their businesses, whether through formal comments or political engagement.

“Retailers should continue speaking up to regulators and policymakers, to ensure their voices are heard,” said Matt Domingo, senior director of external relations at R.J. Reynolds Tobacco Company. “The voices of small business have proven to matter in the minds of most lawmakers.”

THE ISSUE: IN-STORE SIGNAGE REQUIREMENTS

The last item remaining from the U.S. Department of Justice’s 1999 lawsuit against the major tobacco manufacturers is the communication of tobacco-related messages through signage at retail locations. Altria, R.J. Reynolds and ITG Brands reached an agreement on a proposed settlement with DOJ.

“The settlement agreement calls for no more than two signs to be placed within all contracted retail locations nationally for a duration of 21 months,” Domingo said. “The signs will be supplied and installed by the manufacturers or a third party, [and] retailers are expected to leave the signage in its intended location for the duration of the required period.”

Although the court has signed off on the settlement, there’s still significant time before the signage requirements will take effect: The agreement allows time for new contracts to be put in place, as well as for the signs to be distributed.

The voices of small business have proven to matter in the minds of most lawmakers.”

“The court approved the settlement on December 6, 2022, so the first signs will need to be in place by October 1, 2023,” said Kantor.

While the requirements will be “a hassle from a compliance perspective” and store operators may not like the signage, Kantor said “the truth is, because it will be across the industry, it’s not going to fundamentally change the marketplace. It’s burdensome but doesn’t have the same impact as these [other] FDA moves.”

How Retailers Can Navigate

Part of the reason the signage requirement isn’t as problematic from a retail perspective is that the onus falls on manufacturers—not retailers—to get the signs up.

“All of this comes out of a lawsuit against [cigarette manufacturers], and they are heavily incentivized to make sure everybody does this right—and could be penalized if they don’t,” said Kantor.

Both Domingo with Reynolds and Kelly with Altria said their companies are creating support plans for retailers regarding the new signage requirements.

“Retailers will want to be in communication with their reps,” Kantor said. “A lot of the information will probably come from the manufacturers.”

THE ISSUE: VAPE PMTA APPROVALS/DENIALS

The electronic cigarette category continues to operate in a regulatory gray area as retailers wait on premarket tobacco application (PMTA) decisions by the FDA. Despite a deadline of September 9, 2021, the agency has not completed its review of the millions of PMTA applications received. The agency now says it will need until June 2023 to make decisions on all “covered applications” (referring to products from specific major brands

or products that reach 2% of total retail dollar sales, according to NielsenIQ).

“The FDA has blown past every deadline,” Kantor said. “Both NACS and members of Congress have weighed in with FDA saying they need to be more open about the process, but that hasn’t happened.”

A prime example of this confusion is JUUL. The FDA took nearly two years on the decision to issue marketing denial orders (MDOs) on June 23, 2022, that would require retailers to stop selling all JUUL products. JUUL was quickly granted a stay while the court reviewed the denial orders. Less than two weeks after issuing the MDOs, the FDA put the decision on hold and explained via Twitter that it had determined “there are scientific issues unique to the JUUL application that warrant additional review.” The agency did not elaborate on how long that review would take.

“They haven’t been clear with the court,” Kantor said. “That’s incredibly frustrating.”

JUUL is just one example: The FDA also has nearly one million synthetic nicotine PMTAs to issue decisions on as well, and the industry is still waiting to see if the agency will approve any flavored vapor products.

“I don’t remember seeing any [flavors] approved,” said Kantor. “There are a lot of things that they haven’t decided yet.”

How Retailers Can Navigate

Because of the slow and not-always-clear process, retailers wanting to remain in compliance are left in a lurch. It’s not just marketing denial orders they need to watch: They also need to ensure any manufacturer’s vapor product they’re selling submitted the required PMTA on time and that the agency hasn’t rejected said application.

“FDA does have some of the information on their website,” Kantor said. “It’s very difficult to follow, but there is a place to find it.”

The better option is working directly with trusted partners.

“Retailers have an obligation to verify the legal status of their product assortments,” said Domingo. They “should do so by obtaining the necessary information from the manufacturer or distributor to confirm that the product is the subject of a timely submitted and pending PMTA or a marketing granted order.”

This total ban will shift products to illegal sellers at a heavy cost to retailers and their employees.”

THE ISSUE: STATE AND LOCAL REGULATIONS

While not as widespread as the FDA and federal-level regulations, state and local tobacco regulations remain the biggest threat to many retailers’ businesses because of the patchwork nature of such laws. Just ask Massachusetts operators, who saw many of their customers venture to New Hampshire and other neighboring states in 2020 when the Bay State banned flavored tobacco sales.

The good news is the industry has gotten very good at battling at the state and local level.

“The state level was active as expected in 2022, but the industry was successful in defeating nearly all measures proposed including flavor ban bills in Maine, Connecticut, Colorado and Hawaii,” Domingo said, adding that only Indiana succeeded in passing a tax

on vapor products (and the rate that passed was lower than what was proposed).

This is of little relief, however, to retailers in some of the most regulation-happy states, where such proposals continue to succeed. In November, California residents voted at a rate of 75%-plus to uphold a state senate bill to ban the sale of all flavored products, making it the second state to do so.

“Since California voters approved the ban, it will go into effect near the end of December 2022,” said Altria’s Kelly.

How Retailers Can Navigate

Whether a retailer operates in Beverly Hills, Brookline, Massachusetts, or somewhere else, the playbook remains the same: “The big thing retailers should be doing is to spend time getting to know the people who represent them in government,” Kantor said.

Manufacturers like Reynolds and Altria have dedicated resources toward combatting these types of regulations—but the voice of the small business owners like convenience retailers can truly make the biggest difference in whether a law passes or not.

“Often, and especially on the local level, laws and regulations are passed without hearing from store owners,” Kelly said.

Kantor agrees those relationships can influence local, state and even federal regulations.

“Getting to know them and making sure those folks understand their business, that’s the biggest thing NACS members can do,” he said. “It allows a relationship where, not only are lawmakers willing to then weigh in on a proposed regulation but they also affirmatively reach out to folks in our industry before things like this happen.”

Melissa Vonder Haar is the marketing director for iSEE Store Innovations. Follow her on Twitter at @iSeeMelissaV.

The big thing retailers should be doing is to spend time getting to know the people who represent them in government.”

ith so many convenience retailers offering customer loyalty programs these days, consumers can have their pick of the points- and rewards-generating campaigns. To stand out from the pack and attract customers not just for their next visit but for a lifetime, c-stores need to look beyond the omnipresent points/rewards options and consider multifaceted loyalty programs woven throughout store operations, while also demonstrating their own loyalty to valuable patrons.

“People aren’t joining c-store loyalty programs just to be entitled to buy two bags of M&Ms for $5,” said Eric Sales, chief marketing officer at Abierto, which provides digital signs, menus and kiosks for stores. “Rather, they’re interested in supporting stores that are investing in their brands, including food and coffee programs and new store buildouts.” Instead of using loyalty programs to just incentivize, “it’s more effective to use them as rewards,” he added. Fortunately, some c-stores are moving in that direction, Sales noted, and “are beginning to conceptualize customers as long-term clients.”

The recently published “Driving Engagement From Convenience Retail Loyalty Programs” report from NACS—produced in partnership with Bounteous, a digital consultancy—details how c-stores can build loyalty program affinity beyond rewards and provides insights on shopper expectations, program engagement, personalization and communicating with members. The research is based on data from 1,000 responses to a survey conducted

last summer among individuals who belong to c-store loyalty programs in the U.S. According to Patrick Loftus, manager of survey research and data visualization at NACS, the polling of c-store loyalty members found that in many cases, the programs have become “commoditized,” as the average member is enrolled in nearly seven different plans. As a result, he said, “c-stores that are basing their loyalty programs on a simple points incentive aren’t going to get very far” and should consider popular enhancements, such as payment solutions, exclusive offerings and driving home a “feeling of belonging” among customers.

To be sure, loyalty programs have become increasingly important to c-store shoppers, even as the channel has lagged others in advancing the plans. Over the past decade, punch-card incentives have evolved into fob-swipe programs and, most recently, integrated mobile apps. Many consumers today will seek out stores where they’re enrolled in loyalty programs, even when other, more convenient options exist, the study found. But for such a dedicated shopper, fuel and merchandise discounts and rewards are mere “table stakes,” according to Abby Karel, vice president for convenience retailing at Bounteous. “Loyalty members today want mobile checkout, a personalized experience, access to secret menu offerings and exclusive events.” And importantly, best-in-class customer service is vital to these consumers, Karel added. “Loyalty members want that special experience of feeling a part of a community that stretches from the forecourt to the person at the counter to receiving communications via text message,” she said, touch points that provide a deeper level of engagement with the plans.

STATE OF THE ART

App-based loyalty programs are the stateof-the-art option for c-stores and other retailers today, offering more features and ways to communicate with members than physical cards and fobs. Apps are useful for alternative payment methods, tracking past purchases, last-mile fulfillment, exclusive menu items and sweepstake entries. “Driving Engagement” found that 60% of c-store loyalty members access the programs via apps, while 24% use a physical card. Accord-

C-store loyalty programs are moving beyond simple points and rewards to a personalized experience.

Loyalty members today want mobile checkout, a personalized experience, access to secret menu offerings and exclusive events.”

How convenience loyalty members engage with loyalty programs

Frequently take advantage of promotions/discounts

Redeemed loyalty points/ rewards as quickly as possible

Purchased specific items that provide the most loyalty points/rewards

Recommended a store to a family member

Visited a store specifically to try new offerings

Provided a review of the store’s app

Provided a review of a store on Google, Yelp or other online source

Commented on a post from a store on social media

Interacted with other shoppers on social media

Liked/retweeted a post from the store on social media

Posted about the store on social media

None of the above

ing to Karel, c-stores that don’t offer a digital loyalty program “aren’t driving growth of their customer base.”

While consumers—particularly millennial and Gen Z members—are increasingly using the apps, the data generated for retailers is critically important. Digital loyalty programs “allow for personalization,” Karel said. “Thanks to app-based loyalty programs, a c-store will know if a customer is a Red Bull drinker versus Monster. It will know what a customer most likely wants even before he or she walks in the door.” Loftus added that c-stores without digital loyalty programs can easily fall behind in collecting data, as well as miss out on promoting services like delivery and exclusive membership offerings. He and Karel pointed to operators like Wawa, Yesway, 7-Eleven, Spinx and Dash In as among the industry’s leaders with app-based loyalty programs.

The ability to obtain attractive discounts

and exclusive items can be a big draw for loyalty members. United Dairy Farmers’ U-Drive Plus program, for example, recently offered members two gallons of milk for $7, ice cream sundaes for $2.99 and a six-pack of donuts for $6.96. Both Wawa and Casey’s promoted free and exclusive items to their loyalty members late last year. Casey’s offered “daily surprises” for Rewards members for three weeks on drinks, candy and snacks via its app, along with extra bonus points. Wawa, meanwhile, reprised its popular “Free Coffee Tuesdays” campaign for Wawa Rewards members, entitling them to a free hot or iced coffee for eight consecutive Tuesdays. According to the company, coffee is the most popular product among its loyalty members.

“With the recent high gas prices, people are coming into the stores less,” remarked Sales, so the focus for many c-stores has been on keeping customers loyal and not just shopping for stores based on gas prices. He pointed to one chain that recently ran a one-month promotion for loyalty members where, in addition to the standard discount on gas, they could receive a free breakfast sandwich for spending $50 on gas or a free cup of coffee for spending $25 at the pump. “That was a smart way to thank customers for their loyalty at a time when gas prices were high,” he said, while also inviting them into the store.

GETTING PERSONAL

Another tactic is targeting offers, deals and messages to loyalty members based on their user profile and previous purchase behavior. According to the NACS report, convenience loyalty members want personalization to be a part

Source: NACS Driving Engagement From Convenience Retail Loyalty Programs

Text messages and emails are preferred over alerts or messages generated by the app.

of the programs, “but with some reservations.” Personalized offers related to rewards and promotions are welcomed, the study found, but members will push back when asked to share extraneous information about themselves or their families. “The information convenience retailers collect should assist with tailoring rewards, promotions and discounts, and not be used for communications that are unrelated to the primary benefits of their loyalty program,” the report advised.

Overall, tailored offerings can be quite effective. “We’ve seen that more tailored and personalized messaging has improved engagement and response rates with loyalty members, and in some cases has been used as a key incentive to draw customers into the program due to the personalized value it brings,” remarked Jeff Hoover, director, c-store insights at Paytronix Systems. AI-driven tools enable retailers to read consumers’ behavior and then target them with relevant messages based on factors such as what they’re likely to purchase next, their price sensitivity and even the day of the week. Such data helps improve engagement and drives consumers to visit and spend more, Hoover said, and also helps retailers identify unprofitable loyalty customers and exclude them from certain campaigns, leading to

Aside from rewards/promotions/discounts, what do you value the most from the convenience store loyalty programs you belong to?

Percentage of loyalty members who prefer each type of communication

better profitability. UDF’s loyalty program, for example, can customize different offers for members who may not drive or for those that purchase gas but care more about earning a free ice cream shake than a gas discount.

While apps are emerging as a preferred platform for c-store loyalty programs, the NACS study found that when it comes to c-stores communicating with members, text messages and emails are preferred over alerts or messages generated by the app. Karel surmised that loyalty-messaging effectiveness “comes down to timing. An app notification must be relevant at the right time,” and for the most part, c-stores haven’t mastered the timing yet. She pointed to airline alerts related to upcoming flights and the gratitude travelers feel when they are notified as an example of timely text messaging. She envisioned a time when a c-store loyalty program, depending upon the information input by consumers and advances in AI, could alert members that they’re running low on gas and their preferred gas station is just ahead. “In that case,” she said, “the c-store is really responding to the needs of the loyalty member.”

PROMOTE THE PROGRAM

Loyalty programs can’t succeed unless they’re effectively marketed and advertised to customers. Sales pointed to a recent promotion by a 200-unit c-store chain offering a free cup of coffee for customers who signed up for its loyalty program, simply by scanning a QR code on signage. “It was a huge success,” he reported. “In just two weeks, some 50,000

customers scanned the codes.” Similarly, Eric Sherman, executive vice president, insights and analytics at GSTV, a fuel-retailer-focused national video network, sees lots of opportunity to promote loyalty programs at the pump. He cited a recent partnership with a QSR chain to promote its loyalty program by encouraging customers to either download the app or go inside and sign up. “We saw a significant increase in app downloads and customers signing up in store,” he said. “It makes sense. The forecourt is the most highly targeted marketing space for a c-store’s most loyal customers. By promoting a customer loyalty program, c-stores will see not only increased app downloads but increased foot traffic, too.”

Hoover advised c-stores to first consider the long-term customer lifetime value of a digital loyalty program, testing it and surveying customers before rolling it out. Signup should be easy, he continued, such as a QR code for app download or a text-to-join offer. “Then know where each guest is in their customer journey and tailor communications,” Hoover said. “Focus on nurturing new guests, retaining and incentivizing active guests to change their behavior and winning back lapsing guests.” Finally, let members decide how they want to be communicated with and be rewarded. “It’s about catering to the customer needs,” he said.

Source: NACS Driving Engagement From Convenience Retail Loyalty Programs

Focus on nurturing new guests, retaining and incentivizing active guests to change their behavior and winning back lapsing guests.”

IRISH

LESSONS IN CONVENIENCE RETAIL FROM AN INNOVATOR

How Thomas Ennis’ love of food and butchering paid dividends in building SPAR’s network in Ireland.

BY FIONA BRIGGS

Thomas Ennis, an award-winning Dublin retailer, is an entrepreneur in the truest sense of the word, but it’s not a term with which he’s entirely comfortable.

“I work for myself,” he says, self-effacingly; adding: “Retail is one of the few industries where, without much education, you could succeed very well with hard work and common sense.”

Entrepreneur or “street smart” owner operator, Ennis has learned the ropes of convenience retail from the bottom up, beginning his career as an apprentice butcher in 1990 and culminating in the opening of his first SPAR store in Merrion Row in 2005. He’s gone on to build a growing convenience retail network, all the while applying the fresh food skills and management expertise he learned at Ireland’s leading grocery retailers and from some of the Irish retail industry greats.

Photography by Bryan Meade

I’m a great believer in pushing people to get a trade—it’s a life skill and it means you can travel the world.”

LIFE LESSONS

His journey began unceremoniously when he was asked to leave school at age 15. “I got an apprenticeship as a butcher at a place in Dublin City Centre. It was a life lesson in work ethic and working with different types of people,” Ennis recalls. However, it was one he has embraced. “I’m a great believer in pushing people to get a trade—it’s a life skill and it means you can travel the world. College is not for everybody,” he says.

From there he joined SuperValu at age 19, working in the retailer’s fresh food and deli departments, leveraging his butchery skills in all aspects of margin control and food safety. When the travel bug bit in 1996, Ennis left his post as fresh food manager to travel to Australia with friends, although he kept his hand in retail by working at Woolworths while he was away.

On his return he joined SuperValu independent retailers and now EUROSPAR operators, John Furey and Maurice Smyth, working once more in fresh food departments but covering for store managers on their days off.

“They recognized I was quite good at the other side of the counter,” he says. “I’ve been really lucky in having good mentors, or I was smart and I listened,” he says with a grin. The experience gave Ennis the confidence and belief that he could run shops himself—big stores and big teams. “I’d seen the owners packing the fruit and veg—seen these guys hands on and getting involved and knew I could do it.”

But for Ennis, there was one more piece of the jigsaw to becoming a complete retailer, and that came from working at Superquinn under Pat Kelly, Feargal Quinn and Cormac Tobin, “heavy hitters” in the retailer world in Ireland at the time. “I loved working for such a good company. It felt a bit like ‘imposter syndrome,’ but I was there on merit,” he says.

At the time, Superquinn began making its foray into convenience retail with the Superquinn Select banner, and Ennis was put in charge. While he secured great guidance from the Superquinn executive team, he had the freedom to make his own twists, further whetting his appetite for going it alone.

Ennis achieved that milestone with BWG Foods in 2005, when he opened SPAR Merrion Row. It was a trailblazer from the word go, offering barista coffee, chef-produced food, juice bars and touch-screen ordering.

Ennis’s love of food and background in butchering paid dividends at Merrion Row. “It

Thomas Ennis opened his first SPAR store in 2005 at Merrion Row in Dublin City Centre.

We are constantly looking at what’s going on around us because we want to please customers.”

taught me about margins and waste, which is critical in that food space because if you are not conscious of margin or shrinkage you can lose a fortune. That experience came to the fore when I was working for myself.

“The store was designed around food,” Ennis continues, “but it was the toughest six months of my retail life—every single mistake that I could make, I did make. I thought ‘what am doing? I’ve left a well-paid, pensionable job to go and lose money.’”

Undeterred, Ennis dug deep, drawing on that life lesson for hard work, and after six months with his head down, the store had turned around. In fact, it did more than that, winning a major trade award in Ireland and has continued to pick up awards for food ever since.

TEAM BUILDER

A key to Ennis’s retail success has been building a strong team. “I’ve surrounded myself with good people,” he says. They include Sandra McCormick, his general manager from day one; Joanna Staron, operations manager; Anne Carter, fresh foods manager; and Gary Carolan in finance.

“I believe in talking to staff and explaining what you want to do and bringing them on the journey. Now everybody is involved in the decision-making process,” he says. “I have good people around me, but they have the autonomy to make mistakes as well—it’s better to get into trouble for doing something than for doing nothing,” Ennis maintains.

Spurred on by the success at Merrion Row, Ennis went on to open a second site, a 45-minute drive away in Cellbridge. It provided another life lesson for the convenience

retailer. “Everyone told me not to do it,” he recalls. Buoyed by the success at Merrion Row, Ennis failed to do proper due diligence in relation to the sale. “It was horrific. Working there was the worst experience of my life. It lost money from the start—it was the wrong location, recession was kicking in, and people were being encouraged to buy from the German discounters.”

As well as teaching Ennis about the importance of due diligence and “looking under the bonnet,” Cellbridge taught him that the best move, when things can’t be fixed, is to beat a hasty retreat. “I’ve closed two shops since for the exact same reason—if it does not make money or wash its face, get out. It’s a mistake to keep going, and I’ve never made that mistake since. 2008 was a big lesson for me.”

Despite the setback, Ennis went on to open two more stores in the space of six months, and over the following years began accumulating strong sites, applying his successful store formula to each store opening.

Merrion Row, meanwhile, has gone from strength to strength, winning the Small Store of the Year Award from the IGD in 2019 and a ShelfLife award for innovation in 2015, of which Ennis is most proud. And there’s no let up. “We are still chasing innovation and what’s next,” he says. “We are constantly looking at what’s going on around us because we want to please customers.”

SOURCES OF INSPIRATION

While Ennis takes cues from the Irish food market, he looks overseas for inspiration, too. Food formats that have recently impressed include Assenheims 56 (for South American inspired breakfast and lunch dishes) and Carbon (a charcoal grill restaurant) in London; Dom’s Kitchen & Market in Chicago (“the best I’ve been in”), fresh&co (healthy meals) and Chelsea Market, both in New York.

Photography by Mark Wohtlmann, NACS

SPAR Ireland is well-known for its innovative food offer, which features high-quality fresh and prepared foods ready for consuming on the go.

I have good people around me, but they have the autonomy to make mistakes as well—it’s better to get into trouble for doing something than for doing nothing.”

On home turf, Ennis credits Fresh the Good Food Market in Dublin, English Market in Cork plus some “really good” SuperValus in the West and South of Ireland, as well as startup delis in Dublin City Centre.

COST OF LIVING CRISIS

Trading during the current cost of living and energy crisis has its challenges, but Ennis remains pragmatic. “We’ve traded through a recession already and never reduced prices but offered something extra for free, such as a piece of fruit or snacks. Yes, people are watching what they are spending, but they still have to eat, and they appreciate good quality foods. We’ve never changed suppliers or the quality of ingredients. There is value all around the store and every two weeks we are refreshing the offers, but the quality of food will never dip—once that happens you can never come back,” he maintains.

“Sales are not at 2019 levels, but they are holding up, and the margin is good. We can work through this—we are not that upset about it. You do what you do,” he adds.

Despite rising energy prices, keeping stores and colleagues warm remains a priority in the winter months, Ennis adds. “I’m a big believer in controlling the controllables, so there’s not much you can do about that. We do have procedures to minimize usage such as lights, and where we have two fridges in the kitchen, we have turned one off. We’ve become smarter, and recessions are great for sharpening yourself.

“But whatever we are dealing with under the water, consumers can’t see anything but quality food, a warm store that’s well-lit and colleagues looking after them. We use our skills as an independent retailer to keep consumers happy.”

NEW DEVELOPMENTS

New format development continues apace. Ennis opened his latest SPAR store in July 2021. Unlike other sites, there are no concessions, with Ennis describing it as a “back to old school” approach with a traditional deli and good quality, fresh, locally sourced food. It also features a new SPAR concept—Food Junction—offering hot and cold food. It has been a big hit and will be introduced to two further stores next year as a part of a revamp program, along with a further “surprise” in one of them, Ennis reports.

New stores are not ruled out either. “I still have massive energy and love for this business, so we will build and keep going—the Irish market is very exciting,” he says.

Fortunately, Ennis has already laid the foundations for growth. “I built the team first, and I am very lucky to have a really good team around me that I am able to expand and do different things,” he says.

Fostering a good working environment, where staff are paid above the minimum wage and people are recognized and valued for being pivotal to retail success, is also key. It drives staff retention and supports recruitment. “I’ve worked for different people and knew exactly what type of boss I wanted to be—I want people to work for me so I have created that environment where recruitment is not as difficult,” Ennis concludes.

This article is reprinted with permission from Global Convenience Store Focus

Fiona Briggs is a retail business journalist. She can be reached at fionalbriggs@gmail.com

Whatever we are dealing with under the water, consumers can’t see anything but quality food, a warm store that’s well-lit and colleagues looking after them.”

Ennis opened his latest Dublin SPAR store in July 2021, featuring a traditional deli and good quality, fresh, locally sourced food.

Experience Dublin’s thriving retail scene firsthand at the 2023 NACS Convenience Summit Europe, taking place May 30 to June 1. Join NACS for the ever-popular Ideas 2 Go tour of Dublin’s markets and petrol stations. For general event inquiries, contact Suzanne George, NACS meetings and events manager, at sgeorge@convenience.org. Learn more at

BY KEITH REID

Your Re Operati

Here’s where the c-store industry is on EV charging deployment and economics.

Of all the issues facing convenience retailers today, one of the more burning, and certainly perplexing, is what to do about EV charging. Electric vehicles are getting a tremendous amount of press and are seen in some circles as the only solution to achieve a net-zero carbon future on the transportation front.

The California Air Resources Board in August 2022 passed a plan that requires all new passenger cars and light trucks sold in the state to be electric vehicles or plug-in electric hybrids by 2035. The European Union has established similar requirements. Time will tell the practicality, but the headlines are hard to ignore. However, while EV charging will be part of the industry’s future, research indicates the timeline is not nearly as rushed as many retailers anticipate.

tail ons

According to research done on behalf of the Fuels Institute by S&P Global Mobility, a full transition to electric vehicles will be gradual. The data show that electric vehicles may only account for 6% of vehicles in operation by 2030, and 73% of EVs will be in just 15 states.

One retailer taking on the EV challenge is Giant Eagle, with its GetGo convenience store operations. It has over 250 stores in Indiana, Maryland, Ohio, Pennsylvania and West Virginia.

“GetGo is focused on a more sustainable future, and we have strategies in place all across the value chain to reduce or improve our environmental impact,” said Terri Micklin, the company’s senior vice president of strategy and development. “Support of electric vehicles is a significant aspect of these strategies. Giant Eagle and GetGo are at the beginning of our EV journey. We currently have three EV locations, 22 in varying stages of development. Our program is structured to scale across our entire network of stores.”

She noted the company is taking a multipronged approach to maximize EV customer experience. “EV charging isn’t yet as readily available as you might find in other regions. We plan to impact that in a very positive way.”

LEGISLATIVE DEVELOPMENTS

A primary driver for EV adoption is a governmental regulatory push for aggressive net-zero carbon reductions. This is centered in Europe and supported by organizations such as the World Economic Forum and the United Nations.

In the United States, support currently tends to be regional, centered on the West Coast and the Northeast but is growing nationally in select demographics. The Biden Administration is aggressive in its pursuit of electrification, which is realized through the recently passed Inflation Reduction Act and implementation of the 2021 Infrastructure Investment and Jobs Act. The president is pushing hard to deliver on promises made after his election.

Electric vehicles come at a premium price compared to internal combustion engine vehicles. The Inflation Reduction Act modifies the $7,500 electric-vehicle tax credit in ways that both promote and hinder adoption.

To be eligible for the credit, a family’s adjusted gross income must be $300,000 or less and $150,000 for a single filer. The MSRP on the vehicle is limited to $80,000 for an SUV and $55,000 for a conventional automobile. The credit applies to electric vehicles, plug-in hybrids and hydrogen fuel-cell vehicles. Also, a $4,000 tax credit is available for pre-owned electric vehicles. However, the buyer’s gross income must be at half the levels for a new vehicle, and the vehicle must cost $25,000 or less, be the first time being sold as used and be at least two years old.

These requirements are compatible with the profile of the traditional EV purchaser, though limiting for some of the higher trim vehicle options. For automobile manufacturers, vehicles must be made in the United States and have domestically sourced battery components—a requirement that will be difficult to meet, at least in the short term.

Consumers will also have at least 20 new vehicle options to choose from, which will begin to illuminate the actual consumer marketplace pull for this technology.

INFRASTRUCTURE GRANTS

The $1.2 trillion Infrastructure Investment and Jobs Act passed into law in 2021 set aside $7.5 billion for EV charging infrastructure. The federal government is now distributing the funding through two programs.

The first is the National Electric Vehicle Infrastructure program, and it will provide

Monetization is essential to the longterm growth of the EV marketplace.”

$5 billion in formula funding to states to build out charging infrastructure along highway corridors—filling gaps in rural, disadvantaged and hard-to-reach locations while instilling public confidence in charging.

The law also provides $2.5 billion in competitive grants to support community and corridor charging, improve local air quality and increase EV charging access in underserved and overburdened communities. The Department of Transportation will open applications for the program later this year.

With federal dollars flowing to the states to deploy EV charging, the convenience-store industry wants to make sure that Washington is not picking winners and losers in the process (or allowing that to develop by accident) or allowing certain competitive sectors to have unfair market advantages.

“You can have all the money in the world for a particular project, but how you distribute and prioritize those dollars are always the critical elements,” said Paige Anderson, NACS director, government relations. “NACS fought hard during the legislative process to make sure that our industry would have access to those dollars, and they should be used in a way that promotes competition and private investment.”

Part of that is making sure that smaller players have the same access to funding as the larger players. Another concern is making sure that the electric utilities are placed on an equal footing as other players looking to expand EV charging, specifically, that they don’t take advantage of their rate base (existing electric customers) to subsidize building out an EV charging network.

ECONOMICS

For the retailer, making money on electric charging is, obviously, a primary concern, and it comes down to several factors. As with conventional fueling, a major goal is to get people out of their cars and into the store, and charging potentially increases that opportunity, as a five-minute conventional fueling stop potentially becomes a 20-minute or more charging session. Anecdotally, there are success stories on this front where time in store and spend have increased for these

customers. There is also the hope to make money on the charging itself.

“Monetization is essential to the long-term growth of the EV marketplace,” said Micklin. “With our third-party solutions, we are engaging our guests through services inside our stores with grocery, pharmacy, convenience and made-to-order food. Using our in-house solution, by working with current grant programs, we can unlock value over the life of the chargers in addition to our store impact.”

Today’s biggest challenge to EV charging profitability comes down to commercial demand charges. Basically, this is a utility charge for the peak demand during a month. The utility company’s goal with this charge is to provide the infrastructure required to support that level of electrical current. Fast chargers can create a significant peak in demand, especially if several vehicles are charging at once, yet the overall volume for that month may not be sufficient to cover the demand charge.

“We’ve received from an expert source that once you get to 10 to 12 transactions a day, you can overcome the demand charges,” said John Eichberger, executive director, Fuels Institute. “If you go to a congested market like California, where you don’t have enough chargers, you have a lot of demand. If you can spread your demand charge out across a

Once you get to 10 to 12 transactions a day, you can overcome the demand charges.”

A new year, offering tremendous opportunities.

With a full line-up of programming in 2023, NACS has something for everyone. convenience.org/events

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hundred customers, you can figure out a way to make money. But we have a long way to go before this becomes a profitable business enterprise [more broadly].”

Some of the states are starting to recognize that demand charges are an obstacle to EV growth. “The current rate structure doesn’t take the use of electricity as a transportation fuel into account,” Anderson said. “You see some discussions around the potential need to develop a new type of rate or a new tariff. You’re also seeing other states saying it’s too complicated to come up with a brand-new rate in tariff while it still is in its infancy. [So they say,] let’s just do a temporary demand charge holiday.”

Anderson noted that it’s not just a matter of each state doing it differently, but each utility territory doing it differently. There are also complications translating traditional utility rate structures for “selling electricity” to the retail sale of electricity in some areas.

Demand charges are also a concern for GetGo. “Demand charges through the utility companies are very much on our radar, and we are identifying ways to minimize that impact as much as possible by creating other energy sources and looking at our energy usage across our entire facility,” Micklin said. “We are focused on migrating to a more sustainable future across our entire platform, and those goals are embedded into everything we do.”

DEPLOYMENT PERSPECTIVE

A lot of factors impact the rate of adoption.

As noted, government regulations are one component. To cite a few major market driven factors: Gasoline is expensive right now, but there is also inflation and a likely recession; consumer travel behaviors must change (some will not mind, others will); and higher vehicle cost, vehicle options and vehicle availability. Then there is simply the time required to turn over the vehicle fleet.

“If you listen to McKinsey & Company and Boston Consulting Group, retailers should be panicked,” said Eichberger. “But when you think about where we really are—supply chain, production and efficiencies, the recent increase in EV prices—there are indications

Missed the NACS Show education sessions on EVs? Not to worry. EV Economics: Fact vs. Fiction and Reality of EV Transitions are available as part of the 2022 suite of education sessions ready for purchase in a streaming format. Learn more at www.convenience. org/Solutions/Store/ Products

of larger challenges, and it’s affecting the entire automaking industry. But EVs are in a different situation. They’re not cost effective. They’re massive recalls still. There’s a lot of lack of consumer confidence in these. And I think that’s going to be a big anchor on the growth. It’s likely to be a lot more conservative transition.”

Mark Boyadjis, global technology lead, consulting services, S&P Global Mobility (who presented the 2022 NACS Show education session “Reality of EV Transitions ”), offers a more positive adoption counterpoint but still acknowledges an extended time frame beyond the most optimistic assessments.

“Every day there are more EVs put into the fleet. So, that number is growing dramatically right now,” Boyadjis said. “EVs are tracking as the highest selling powertrain segment right now. It’s beginning to flip—I think we’re already there—from a technology push situation to technology pull situation where the customers are demanding this.”

He noted that fuel retailers should have a plan in place on how they’re going to capture EV market share. “By 2030, those plans should have been executed,” Boyadjis said. “Does that mean that they need to invest hundreds of thousands or millions of dollars in equipment? Not necessarily. But it does have to be a concerted and focused effort to understand where the demand is going to be.”

Keith Reid is editor-in-chief and editorial director of Fuels Market News. He can be reached at kreid@FMN.com.

Samuel Borges PhotographyShutterstock

EVs are tracking as the highest selling powertrain segment right now.”

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Cool New Products Guide

This advertorial-style guide of services and packaging appears monthly and is an information-packed tour of ideas and approaches that can change how consumers view your store or choose your brand. It spotlights the newest thinking in convenience and fuel retailing and gives you an advance look at ways of staying in front of industry trends. Products are categorized the same way we organize the Cool New Products Preview Room at the NACS Show each year in October— New Design, New to the Industry, New Flavors, Health & Wellness, Green (EcoFriendly), New Services and New Technology Products are considered “new” this year if they’ve been introduced since October 2021. The products featured here also can be seen in the Cool New Products Discovery Center at www.convenience.org/coolnewproducts

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Nostalgia and Home Cooking

The Old Koke Plant has a “gas station meets Cracker Barrel” feeling.

BY AL HEBERT

You know the feeling. You walk into a store and it hits you, “It feels nice to be here.” There’s nothing like the anticipation of good food. That’s what it feels like to walk into The Old Koke Plant in Brookhaven, Mississippi.

Ken Powell, president of R B Wall Oil Company, wanted to have a big convenience store. The company operated three small c-stores, but he wanted to build his dream store.

Construction began in January 2022. Powell asked his son, Jamison, to come on board to help make the building process smooth and to launch the operation.

Jamison Powell said, “I was living in San Diego when Dad broke ground. It was a big project. My grandmother said, ‘I think it’s time to come home.’” Who can say no to a grandmother’s request? The store opened on September 24, 2022.

Brookhaven has a population of about 12,000. The goal was to build a store that was unique. “People like nostalgia and home cooking, not the corporate operations like McDonald’s and Starbucks,” said Jamison, adding, “We’re kind of a gas station that meets Cracker Barrel. It’s very homey,” he said.

“I hired the managers, and they hired everyone else. I get compliment after compliment about how friendly they are and how they go out of their way to

make sure people get what they want,” said Ken Powell, adding, “This is by far our biggest operation. We learned a lot going through the construction. God did send Jamison home at the right time, and he blessed us with Cathy. I thank God for these two.”

Cathy Pigott, retail operations manager, had been working with RB Wall and wore a lot of hats with the existing c-stores. As construction progressed, Pigott began to look for staff.

“When I began the interviews, we had 80 candidates come in. As the station was being built it didn’t look like an ordinary gas station. The look of the construction motivated people to apply for the jobs. I was on it with the social media posting photos of the progress. We were coming strong,” Pigott recalled.

Jamison said, “We do feel we hired a really good staff. We thought there’d be attrition, but most people have stayed. We provided a unique atmosphere to work in. We ensure it’s a clean place. We make sure everything is organized. We’ve done our best with the physical location.”

Sherry Jean Powell whips up her famous bread pudding, a customer favorite.

Laura Edney introduced the c-store’s customers to her blueberry cobbler baked in a cast iron skillet.

A LOVE OF COOKING

If you’re going to serve great food, you need to hire great cooks. Finding the right people was critical. Pigott wanted people with passion. Lots of passion, so the interview process was tough.

“I had them tell me about cooking. Do you like to cook? We hired no one who liked to cook. We hired the ones who loved to cook. The interviews were personal. We wanted to know where they learned to cook. How did they learn to cook? What made them love to cook? The ones who love it have a history,” she explained.

This is a challenging environment to retain workers, especially cooks. The Old Koke Plant has experienced almost no turnover. Once you hire staff, how do you keep them?

Pigott says it’s a lot about hugs.

“There can be too many cooks in the kitchen. Our job was to find out what they’re good at, brag on them and love on them. We give lots of hugs. We’ve got to keep them happy,” she said, adding, “Anything they want we get them. If they tell me the spoons are too small, they get a bigger one.”

Cooks are creative, and they all have different styles. Pigott gives them the freedom to do what they love. “We let our cooks go with their own recipes. If it sells, we serve it.” New ideas for menu items are encouraged here.

THE FOOD

Sherry Jean’s Kitchen is the place where the culinary magic happens. Sherry Jean is Ken’s wife. Customers flock in for her bread pudding.

If you’re in a southern c-store it’s no surprise that fried chicken is a customer favorite. “Chicken on a stick is the most popular menu item. Our chicken tastes like grandma’s chicken on Sunday. We tasted a lot of chicken. Ours is the best, but you have to cook it a certain way,” Pigott said.

The chicken and dumplings are unique. Customers taste something special. Pigott said, “The lady who makes them has the love to make them. I think it’s the love she puts in them that makes them so good.”

The cobblers are made in black iron skillets. That’s different. “Miss Laura walked up to me and said, ‘I can make a good cobbler.’ She needed a black iron skillet. I got her one,” Pigott said.

A simple marketing plan was used to introduce the cobbler to customers. “We carried the skillet (with the cobbler) up and down the line to introduce the cobbler. Everybody wants it now,” shared Pigott.

Folks in town come in for the daily plate lunches. The Friday fare draws so many people that lines form. “Customers love the fried fish. Joyce, the kitchen manager, does something with the batter to make it crispy,” said Jamison. No one knows what that “something different” is, but it doesn’t matter.

PEOPLE EAT WITH THEIR EYES

Presentation is important when it comes to food, and that’s still true when the food is in a gas station. Pigott has a background in interior design and uses these skills to make everything look good.

“I love beauty. I like everything to be pretty. I want customers to touch it and buy,” she said. “We have a lady that makes pralines. I could throw those pralines out there and say they’re good. But when you wrap them up real pretty, people buy them. We dress that praline up. It might be a $5 praline, but you take it to the next notch with the wrapping. We can never ever get lazy. People will pass us,” she said.

Everything about the store comes down to the people who make things happen each day. Employees feel valued, and customers experience a feeling of home. When you walk in, you feel like family.

What’s in the future for The Old Koke Plant? The early success of the store has the Powells thinking about adding more stores. “We wanted the store to be a destination and to be unique. I do think people who come in have that unique experience,” Jamison said.

Al Hebert is the Gas Station Gourmet, showcasing America’s hidden culinary treasures. Find him at www.GasStationGourmet.com.

The Old Koke Plant in Brookhaven, Mississippi, opened its doors in September 2022.

L to R: Jamison Powell, director of operations; Cathy Arnold Pigott, retail manager; and Ken Powell, owner, The Old Koke Plant.

The c-store has plenty of space for indoor dining in the cozy, retro-looking booths, and there’s outdoor seating, too.

Fits and Starts

Regionality and regulations remain drivers of OTP performance.

BY MELISSA VONDER HAAR

We are seeing demand for products with higher nicotine content.”

OTP may not have the same sales power as cigarettes, its tobacco counterpart, but it is still a top sales driver at 7.41% of in-store sales in 2021, indicate data from the NACS State of the Industry (SOI) Report, which ranked OTP as the fifth-largest inside sales contributor.

But savvy retailers know the value of the other part of the tobacco set.

“While cigarettes tend to have smaller margins, margins for OTP are generally much better,” said Jayme Gough, NACS research manager. “They increased year over year from 29.96% to 30.22% in 2021. Gross profit increased 8.1% year over year to a total of $4,369 per store, per month in 2021.”

OTP has also shown resilience. While both cigarettes and OTP sales grew between 2019 and 2020, CSX monthly data show OTP has continued to grow in 2022, with all months of the first three quarters of 2022 showing higher sales than 2021. “Unlike cigarettes, OTP sales have just continued to grow post-pandemic,” Gough said.

Still, the category remains susceptible to the same pressures facing cigarettes.

“Like all consumers, OTP consumers are impacted by rising prices and inflation,” said Matt Domingo, senior director of external relations at R.J. Reynolds Tobacco Company. “These forces can shape purchasing behaviors and decisions, as consumers become more budget sensitive.”

“We are seeing demand for products with higher nicotine content,” added Kraig Knudsen, tobacco category manager for the Circle K Heartland Division. “Decreased consumption frequency could explain this.”

Regulatory pressures are also impacting how—and where—OTP consumers shop. Lonnie McQuirter, director of operations at 36 Lyn Refuel Station, has seen this firsthand in Minneapolis, where convenience retailers cannot sell flavored tobacco products, but adultonly retailers can.

“It used to be if you carried any kind of cigar or dip, the customer would buy it,” he said. “We’re starting to see customer preference take precedent: If you don’t carry what they want, they will go someplace else.”

This stressor varies greatly depending on a retailers’ region. Ray Johnson, operations manager at Speedee Mart, is allowed to sell flavored products at his Nevada stores and anticipated a big market for shoppers from neighboring California now that flavors are banned.

“We’re waiting to see how much those visitors are going to try to bring home when they visit Las Vegas,” he said.

Here’s a look at the economic, regulatory and regional trends happening within the fourth-largest driver of in-store gross margins.

SMOKELESS: MODERN ORAL OFFSETS MST DECLINES

Smokeless remained the largest OTP subcategory in terms of sales in 2021. The segment accounted for 38.7% of category sales (down 1.1%) and held gross margins of 25.36%, up 0.96 point from the previous year per NACS SOI data.

NielsenIQ painted a generally positive picture for 2022, with all-channel smokeless dollar sales up 4.9% and volumes up 2.2% for a total of $8.5 billion in sales year over year for the 52 weeks ended December 3, 2022.

For several years in a row, the success of the smokeless segment has been attributed to the popularity of modern oral nicotine products, and 2022 was no exception.

“We observed continued growth from the nicotine pouch segment that was offset by declining MST volumes,” said Altria spokesperson Jennifer Kelly. “Like adult smokers, we believe macroeconomic conditions have impacted adult oral tobacco consumers,” Kelly said.

“We can’t sell Grizzly Wintergreen or Skoal Wintergreen, so our sales are skewed a little,” added McQuirter.

Source: NACS State of the Industry Report of 2021 Data

CATEGORY CLOSE-UP OTP

Per Store, Per Month Sales

“Grizzly Wintergreen used to be our No. 1 seller—now we can’t sell Grizzly Wintergreen, [but] we’ve seen some growth in alternatives like ZYN.”

The top-selling modern oral brands continued to see growth last year: NielsenIQ had ZYN up 41.7% in dollar sales and 39.3% in unit sales; on! up 84.7% and 114.2%, respectively; Rogue up 77.1% and 52.5%, respectively; and Velo up 31.1% but down 11.2% in units.

Knudsen saw this in his stores, reporting that modern oral pouches have performed well over the past three years and continue to grow each month. “I believe that this trend will continue, at least in the short term,” he said. “The products are affordable and can be consumed very discreetly.”

To succeed in this space, retailers and manufacturers agree it’s as simple as following the best practices used throughout the tobacco set. “Like every other category, the best thing that a retailer can do is carry the products that the consumers want—give them options,” Knudsen said. “You then must be in stock and priced appropriately.”

Source: CSX LLC; csxllc.com

CIGARS: IMPORTANT YET IN DANGER

While SOI data showed the cigar subcategory continues to lose ground on its share of convenience OTP sales (22.2% of sales in 2021, down 1.3 points from 2020), cigars had the third largest margin in the OTP category at 33.76%, which increased from 32.80% in 2020.

December NielsenIQ data reported mostly flat sales: The cigar segment netted $3.99 billion, with dollar sales up 0.5% and volumes down 1% year over year.

“Where cigar dollar volume is smaller than that of MST, vapor or MON, it is still an important subcategory,” Knudsen said. “In certain geographies, such as the Southeast, cigars play an even more important role.”

McQuirter is one such retailer where regionality (and regulations) makes cigars a key category.

“Cigars are definitely selling more than smokeless after the flavor ban,” he said. “We’re getting some requests on little cigars, and Backwoods cigars are our top-selling OTP SKU. It’s interesting.”

Unfortunately, more retailers may soon find themselves in this “interesting” place without flavors: The U.S. Food and Drug Administration (FDA) has proposed a rule to ban all flavored cigar sales. Such a move would certainly upend the cigar category. The

Where cigar dollar volume is smaller than that of MST, vapor or MON, it is still an important subcategory.”

CATEGORY CLOSE-UP OTP

Subcategory Data

Same-Firm Sample, Per Store, Per Month

Cigar Association of America estimates flavored cigars make up 37-47% of the market and net $4 to $5 billion in annual retail sales.

“An FDA regulatory ban will force these products out of the legal, regulated market and into illegal markets with no regulatory oversight or underage prevention measures,” said Kelly of Altria. “The economic impact of this rule will be severe: Legal businesses losing out to illegal sellers, employees losing jobs and government losing hundreds of millions in excise tax revenues.”

The FDA is reviewing thousands of comments on the proposal, with no timetable on when (or if) it will move forward with the ban. But it has retailers like Johnson—who says flavors make up over 50% of Speedee Mart’s cigar sales—more than a little concerned.

“[FDA] scares you: What’s their longterm game?” he said. “Generally, when the government does something, it takes the average person 24 hours to figure out how to beat it.”

ELECTRONIC CIGARETTES: SLOWLY REBUILDING

For a subcategory that’s now the second-largest driver of OTP sales (31.6% in 2021, down 0.3 point from 2021, according to SOI 2021 data) and the

second-largest gross margin contributor for OTP subcategories (34.17%), electronic cigarettes have been a source of stress and frustration for many retailers in the wake of changes on a seemingly daily basis of what is—and isn’t—legal to sell according to the FDA.

In 2022 alone, the agency required retailers to remove any synthetic nicotine products from manufacturers that had not submitted premarket tobacco product applications (PMTAs) for them by May 14, issued a marketing denial order that would ban the sale of all JUUL products (then quickly backtracked on that ban, for now) and issued plenty of decisions on e-cig product applications but has yet to approve a single flavored product.

Still, the subcategory started to normalize and grow amid the regulatory chaos in 2022.

“E-cigarettes, which have had a bit of a rough road, saw increased sales on a monthly basis compared to 2021,” said Gough of NACS.

NielsenIQ data for the 52 weeks ended December 3, 2022, had total rechargeable e-cig sales at $5.54 billion (dollar sales up 7.9% and units down 5.5%) and disposable e-cig sales at $1.65 billion (dollar sales up 12.8% and units down 6.6%).

Source: NACS State of the Industry Report of 2021 Data

Like every other category, the best thing that a retailer can do is carry the products that the consumers want—give them options.”

CATEGORY CLOSE-UP OTP

Some retailers have seen even bigger growth, albeit with small players. While Johnson says his e-cig business from “the majors” is down between 10-30%, the category overall is “out of sight in sales. It’s all the ones you’ve never heard of,” he said, adding that he uses a local supplier that also distributes to smoke and vape shops. “Whatever takes off in smoke shops is what I switch to. It changes constantly.”

NielsenIQ data support this: Of the top-10 disposable e-cig brands, only three had over a 1% market share as of December 2022—none of which clocked in at more than 4%.

Instead of brands, retailers say flavors, sizes and puff counts are driving consumer preference.

“The variety of flavors and size options of disposable units are much

greater than what was previously available,” Knudsen said.

For vapor—and all of OTP—major manufacturers agree that it is important retailers remember that variety is key, even under regulatory challenges. “We continue to believe that no single product is likely to satisfy all adult smokers,” said Kelly.

“It is critical to provide your customers with access to non-combustible products,” said Domingo of Reynolds.

“By providing a wide variety of products, you will be assisting your customers with choices to meet their nicotine preferences now and in the future.”

Melissa Vonder Haar is the marketing director for iSEE Store Innovations. Follow her on Twitter at @ iSeeMelissaV.

Whatever takes off in smoke shops is what I switch to. It changes constantly.”

40.83% was the average gross margin for salty snacks in 2021.

A Spicier Comeback

BY SARA COUNIHAN

It’s a comeback story for salty snacks. In 2021, the salty snacks category was up 11.3% over 2020, and in-store sales averaged $7,913 per store, per month, according to the NACS State of the Industry (SOI) Report of 2021 Data, and that growth continued into 2022. In fact, the first three quarters of 2022 showed even stronger improvement for salty snacks than in 2021, according to CSX monthly data. The category saw double-digit growth during that period, trending above 2019, 2020 and 2021 numbers.

“In 2020, people were working from home, so they weren’t going out to grab a snack during the middle of the day or on their way to and from their workplace,” said Jayme Gough, NACS research manager. “But 2021 was a phenomenal bounceback year for all in-store categories, including salty snacks, and 2022 to date has delivered even more growth for the category.”

Salty snacks made up 4.36% of inside sales in convenience stores in 2021, and though that may be a small contribution, gross margins in the category were mighty. C-store salty snacks saw gross margins of 40.83% on average in 2021, up 0.93 point year over year. Gross profit was up 13.9% in 2021 over 2020, averaging $3,231 per store, per month, and gross margin contribution was also up 0.26 point year over year to 5.19%.

CATEGORY CLOSE-UP SALTY SNACKS

The salty snacks category hasn’t stopped growing since its pandemic bounce back, and spicy flavors reign on.

Source: NACS State of the Industry Report of 2021 Data

CATEGORY CLOSE-UP SALTY SNACKS GETTING CHIPPY

The potato chips subcategory accounted for the largest percentage of category sales at 38.5%, according to 2021 NACS SOI data. The subcategory increased sales year over year by 8.1% and gross profits by 11.1%.

“Potato chips are a staple for convenience stores and a profit driver,” said Gough. “We’re seeing a ton of innovation in this subcategory, including spicy, limited-edition flavors and international flavors.”

Gough also pointed to strategic partnerships that are emerging in the salty snacks category overall, and in particular, the potato chips subcategory. In 2021, Kellogg partnered with Wendy’s on a co-branded Pringles chip flavor called Wendy’s Spicy Chicken, following a successful collab on a Wendy’s Baconator-flavored Pringles chip in 2020.

“Chips remain one of the most versatile products when it comes to flavors,” said Gough. “There are options for everyone.”

According to Nick Hammitt, vice president, salty snacks, Campbell Soup Company, the company’s Kettle Brand and Cape Cod brands of potato chips are performing exceptionally well.

“Both brands ranked in the top 15 for growth in total convenience among

leading potato chip brands,” said Hammitt. “We continue to see strong growth and demand for our many salty snack brands, including potato chips, with Kettle Brand achieving double-digit growth in 2022.”

POPPING UP

Another subcategory that is making inroads is ready-to-eat popcorn. At Gold Medal Products, a food equipment provider that offers contactless commercial popcorn machines, among other products, growth in its popcorn business has sustained double digits for the past five to six years.

“[Popcorn] has real staying power,” said Pete Bakala, vice president of branch sales and operations, Gold Medal Products. “It’s really growing, and it’s got this ability to pivot in a lot of different directions. It can be a healthy snack or indulgent snack depending on how it’s flavored.”

Ready-to-eat popcorn was the second smallest subcategory of salty snacks, making up only 3.2% of category sales in 2021. Bakala says that c-stores should take a closer look at the popcorn subcategory, as ready-to-eat popcorn is poised to become an $18 billion global market by 2031, according to Allied Market Research.

“That’s a huge pie, and [convenience stores] should ask themselves, ‘How do I best take advantage of that?’” said Bakala.

Ready-toeat popcorn is poised to become an $18 billion global market by 2031.”

Per Store, Per Month Sales

$6,981

SMALL AND SPICY

“Salty snacks is one of the more interesting categories because it’s so dynamic in terms of flavors, packaging and actual types of snacks. It just changes so frequently,” said Gough, adding that uniquely spicy flavors continue to dominate the category.

According to Hammitt, hot and spicy flavors are what’s driving growth for Campbell across its salty snacks products. In fact, Kettle Brand ranked top five for spicy brands in the total potato chips category, according to research from IRI. Frito-Lay is seeing the same trend. The company’s Flamin’ Hot Cheetos product is the No. 1 item in the salty snacks category, according to IRI.

“Hot and spicy continues to be the largest and fastest-growing segment

in the category with the rise of Gen Z,” said Kent Montgomery, senior vice president, PepsiCo industry relations and multicultural development. “We recently launched Cheetos Flamin’ Hot Tangy Chili Fusion, which we expect to be a hit with Gen Z’s diverse palate, in particular.”

Salty snack consumers are also gravitating toward smaller packaging sizes and portions as healthier snacks take hold of their pallets once again.

“During the pandemic we saw more indulgent snacking behaviors and consumption patterns,” said Gough. “As we’re emerging, there’s a re-interest in healthy, better-for-you snacks, yet consumers don’t want to forgo their indulgent favorites, so we’re seeing smaller packaging, bite-size items and smaller versions of products.”

According to Tim Bortner, brand manager at Hormel Foods, its PLANTERS brand is hopping on both the spicy and smaller packaging trends. Last year, the company introduced a sweet and spicy peanuts flavor, as well as a “Bold N Savory & Cracked Black Pepper” flavor, and this year, these items will be available in smaller, six-ounce bags. “Our

The Power of CSX Data

CSX, the engine behind category metrics and NACS State of the Industry data, provides current and customizable tools for financial and operational reporting and analysis in the convenience industry. Retailers can measure their company by any of the myriad metrics generated via our live database. Contact Chris Rapanick at (703) 518–4253 or crapanick@convenience. org for a complimentary executive walkthrough.

Source: CSX LLC; csxllc.com

CATEGORY CLOSE-UP SALTY SNACKS

Subcategory Data

consumers are focused on the core items with an eye on innovation and finding something new,” said Bortner.

At Frito-Lay, Montgomery said smaller versions of snacks have grown popular, and the company recently introduced Frito-Lay Minis, which are smaller portions of core snack brands in easy-to-pour, resealable canisters. “Packaging and proper portions are also important in our salty snack product innovation,” he said. “Consumers are seeking indulgence, while also placing greater emphasis on wellness and moderation.”

THE PERFECT SNACK

Is there such a thing as the perfect snack? According to Frito-Lay’s U.S. Trend Index, the perfect snack does in fact exist, and it crunches. Seventy percent of snackers polled said they would

Source:

Source: NACS State of the Industry Report of 2021 Data

Salty snack consumers are also gravitating toward smaller packaging sizes and portions.”

reach for a food with a crunch when considering their ideal snack.

While Frito-Lay predicts that all adults will continue to look for crunchy snacks in 2023, Montgomery also said barbecue flavors are on the rise. The company introduced a Doritos Sweet Tangy BBQ flavor as a limited-time offering in early 2022, and because it was so popular, Frito-Lay is now making the product available year-round in 2023.

Frito-Lay also points to generational differences in snacking behaviors. Nearly 50% of Gen Z believes snacking is most satisfying after dark, and they are twice as likely as other generations to order delivery when a snack craving

hits. Conversely, half of millennials get their late-night snacks at a convenience or grocery store.

“Understanding how to reach different types of shoppers is more important than ever,” said Montgomery. “Customers are continuing to embrace the omnichannel approach and want grab-and-go options, curbside pickup and delivery as well as personalization at scale.”

Gen Z is twice as likely as other generations to order

when a snack craving hits.”

Discovering Private Label

Shoppers increasingly are taking notice of privatelabel goods, with 83% of shoppers surveyed by NACS in 2022 reporting awareness that convenience stores sell store-branded products, up from 79% the prior year. In fact, 16% of shoppers who selected convenience sites based on products indicated that unique, generic or privatelabel products helped them chose a location—noticeably higher than the 13% who reported doing so the year prior.

Economic pressures were not the only catalyst for an increased enthusiasm for private-label products. Shoppers’ desire for unique, innovative and highly differentiated products had significant impact on demand. What’s more, nearly 6% of all convenience shoppers described their reason for shopping that day as, “I want to look around and find something new and interesting.” To help quantify the impact, that equates to 60 shoppers per store, per day, 1,800 per store, permonth or a whopping 21,600 per store, per year.

Private-label products can help feed the need for discovery among these “what’s new?” shoppers. For example, Gen Z is far more likely than other generations to try new products, especially with brands that come with a compelling story or signal social beliefs that align with their own.

At 8%, Gen Z (born 1995-2012) had the highest incidence of any generation for “…wanting to look around and find something new and interesting,” nearly four times the incidence of boomers (born 1946-1964). Yet, Gen Z also reported being the least likely to purchase private label from their current convenience location.

Nearly 72% of shoppers surveyed said they would be likely to purchase convenience store private-label products from their current location, driven by 73.8% of millennials (born 1980-1994) and 73.9% of Gen X (born 1965-1979), in contrast to Gen Z at 65.2%. To fully realize the opportunity to grow private-label sales, the convenience channel must work to earn consumer trust with consistency, quality and value.

FROM CURRENT LOCATION

Q: What best describes your current trip here today?

NACS

A: “I want to look around and try something new and interesting”

Convenience Voices is packed with valuable, proprietary insights you can only get from NACS. Leveraging the ubiquity of mobile technology enables more precise targeting, expanded geographic reporting, powerful multimedia feedback and more. Visit www.convenience.org/voices to learn how to participate.

GEN Z HAS HIGHEST INCIDENCE OF MISSIONS DRIVEN BY INNOVATION, EXPLORATION AND DISCOVERY

GEN Z IS LEAST LIKELY TO PURCHASE PRIVATE LABEL