NACS Magazine January 2021

convenience.org | JANUARY 2021

LAST-MILE LIFT COVID-19 catalyzes delivery, but technology hurdles dampen adoption.

NACS CHAIRMAN INTERVIEW

Kwik Chek’s Kevin Smartt

WELLNESS DESTINATION:

CBD Has a Moment

Local, State and Federal tobacco taxes and restrictions on the sale of tobacco products can hurt your business. Governments often pass new laws quickly, so you need to stay informed about what is happening in your area. You and your business matter and making your voice heard is crucial to our success in fighting for fair tobacco policies.

Take this survey to learn more about how you can get involved

TAKE SURVEY CLICK HERE

Provided on behalf of Philip Morris USA, U.S. Smokeless Tobacco Co., John Middleton, and Helix Innovations. Š2021 Altria Group Distribution Company | For Trade Purposes Only

JANUARY 2021

32

Last Mile

38

A Tech Leader

44

Seize Opportunity

50

The CBD Wellness Era

Convenience retailers fulfill the coveted direct link to consumers—and discover some watch outs.

Kevin Smartt shares his three key goals as 2020–21 NACS chairman.

From motivating staff to embracing drive-thrus, convenience experts shared how they are adapting to change at Crack the Code.

C-stores can responsibly leverage interest in CBD as customers cope with stress and uncertainty.

Cover Art by Beyond Definition STAY CONNECTED WITH NACS

 @nacsonline  facebook.com/nacsonline  instragram.com/nacs_online  linkedin.com/groups/1776505 Subscribe to NACS Daily—an indispensable "quick read" of industry headlines and legislative and regulatory news from Washington, along with knowledge and resources from NACS, delivered to your inbox every weekday morning. Subscribe at www.convenience.org/NACSdaily.

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JANUARY 2021 |

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JANUARY 2021

We require everyone to wear masks, but I’ve instructed our mostly female staff not to argue with a customer over wearing one.

Retailers prefer more OTP sales because they deliver a better margin and a higher ring.

P.68

IDEAS 2 GO | P.28

08 From the Editor 10 NACS News 18 Good Work

62 Gas Station Gourmet

CD’s Quik Mart pizza puts Hopkins, Michigan, on the map.

64 Global Trends

EG Group owners signal intention to build a differentiated forecourt convenience brand for Asda.

20 Inside Washington

68 Category Close-Up

28 Ideas 2 Go

80 Back Page

A look at how Biden’s cabinet picks might affect the convenience retailing industry.

Otto’s Cones Point General Store throws a wide net to capture customer attention.

54 Cool New Products

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In a year of chaos, other tobacco products hold steady; fluid milk remains challenging to sell but sees renewed attention during the pandemic.

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

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06 Convenience.org

REVOLUTIONIZING THE DIGITAL AIR INDUSTRY

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JANUARY 2021

EDITORIAL Kim Stewart Editor-in-Chief (703) 518-4279 kstewart@convenience.org Sara Counihan Managing Editor (703) 518-4278 scounihan@convenience.org Lauren Brooks Digital Content Manager (703) 518-4283 lbrooks@convenience.org CONTRIBUTING WRITERS Terri Allan, Fiona Briggs, Sarah Hamaker, Al Hebert, Bruce Horovitz, Melissa Vonder Haar

Get Get Inspired, Inspired, Wherever Wherever You You Are. Are. Get the inside scoop on Get the inside scoop onby all things convenience all things convenience by downloading our podcast! downloading our podcast!

Convenience Matters® empowers Convenience Mattersa® community empowers listeners and fosters listeners and a community of sharing by fosters providing of sharing byaccess providing on-demand to business on-demand access to business ideas from those who are at ideas from those who are at the forefront of disrupting the forefront of convenience.

Bydisrupting providing convenience.

By providing convenient access to industry convenient to industry knowledge, access fresh and candid knowledge, fresh candid perspectives fromand thought perspectives from leaders—inside andthought outside of the leaders—inside and outside ofitthe industry—the podcast makes industry—the podcast makes it possible for retailers and suppliers possible for retailers and suppliers to strengthen their bottom to strengthen theirimpact bottomtheir line and positively line and positively impact their communities. communities.

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NACS BOARD OF DIRECTORS CHAIR: Kevin Smartt, Kwik Chek Food Stores OFFICERS: Lisa Dell’Alba, Square One Markets Inc.; Brian Hannasch, Alimentation Couche-Tard Inc.; Andy Jones, Sprint Food Stores Inc.; Ken Parent, Pilot Flying J LLC; Victor Paterno, Philippine Seven Corp. dba 7-Eleven Convenience Store; Don Rhoads, The Convenience Group LLC; Jared Scheeler, The Hub Convenience Stores Inc. PAST CHAIRMEN: Frank Gleeson, Aramark Northern Europe; Julie Jackowski, Casey’s General Stores Inc. MEMBERS: Chris Bambury, Bambury Inc.; Chris Coborn, Coborn’s Inc. Little Dukes; Joseph M. DePinto, 7-Eleven Inc.; Bhagdeep S. Dhaliwal, Dhaliwal & Associates Inc.; George Fournier, EG America LLC; Anne Gauthier, St. Romain Oil

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

NACS SUPPLIER BOARD

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

CHAIRMAN-ELECT: Brent Cotten, The Hershey Company

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

PUBLISHING Erin Pressley Publisher and Vice President, Education & Media (703) 518-4208 epressley@convenience.org Rose Johnson Audience Development and Production Manager (703) 518-4218 rjohnson@convenience.org

CHAIRMAN: Rick Brindle, Mondelēz International

Company LLC; Varish Goyal, Loop Neighborhood Markets; Christine Hogan, Wheels Convenience Stores; William B. Kent, The Kent Companies dba Kent Kwik Convenience Stores; Sydney Kimball, Shell International Petroleum Company Limited; Chuck Maggelet, Maverik Inc.; Ina (Missy) Matthews, Childers Oil Co.; Charles McIlvaine, Coen Markets Inc.; Lonnie McQuirter, 36 Lyn Refuel Station; Glenn M. Plumby, Speedway LLC; Robert Razowsky, Rmarts LLC; Richard Wood, Wawa Inc. SUPPLIER BOARD REPRESENTATIVES: Rick Brindle, Mondelēz International; Brent Cotten, The Hershey Company STAFF LIAISON: Henry Armour, NACS GENERAL COUNSEL: Scott Sinder, Steptoe & Johnson LLP

VICE CHAIRMEN: David Charles, Cash Depot; Kevin Farley, GSP; George Ubing, E&J Gallo Winery

Coca-Cola Company; TJ Lynch; Vito Maurici, McLane Company Inc.; Bryan Morrow, PepsiCo Inc.; Sharon Porter, Saputo USA LLC, dba Saputo Convenience; Lesley D. Saitta, Impact 21; John Thomas, iSEE Store Innovations LLC; Dean Zurliene, Monster Beverage Company

PAST CHAIRMEN: Kevin Martello, Keurig Dr Pepper; Brad McGuinness, Qopper Inc.; Drew Mize, PDI

RETAIL BOARD REPRESENTATIVES: Steve Loehr, Kwik Trip Inc.; Chuck Maggelet, Maverik Inc.

MEMBERS: Blake Benefiel, Altria Group Distribution Company; Alicia Cleary, Anheuser-Busch InBev; Tony Gaines, NVIP LLC; Mike Gilroy, Mars Wrigley; Josh Halpern, FIFCO USA; David Jeffco, Krispy Krunchy Foods LLC; Tim Knight; Kevin M. LeMoyne,

STAFF LIAISON: Bob Hughes, NACS SUPPLIER BOARD NOMINATING CHAIRMAN: Joseph Vonder Haar, iSEE Store Innovations LLC

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 employees of nonmember companies at a rate of $70 per year.

Please add $15 for delivery outside the United States.

Subscription requests: nacsmagazine@convenience.org POSTMASTER: Send address changes to NACS Magazine, 1600 Duke Street, Alexandria, VA, 22314-2792 USA. Contents © 2021 by the National Association of Convenience Stores. Periodicals postage paid at Alexandria VA and additional mailing offices.

1600 Duke Street, Alexandria, VA, 22314-2792

Tune in weekly at Tune in weekly at conveniencematters.com conveniencematters.com

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WHAT’S ONLINE | JANUARY 2021

NACS Has Got Your Back.

NACS Membership helps convenience and fuel retailers from around the world stay competitive and profitable today, while preparing for tomorrow with specialized tools, resources, and exclusive events.

Are you maximizing your benefits?

Learn more: convenience.org/2021ally

Make an Impact

COVID-19 temporarily sidetracked some sustainability initiatives, but it helped sharpen consumers’ desires to invest in their communities and patronize purposeminded companies. At its core, the concept of sustainability is to meet current needs without compromising the ability of future generations to meet their needs.

For businesses, it presents opportunities to grow sales and increase efficiencies.

The NACS Sustainability Playbook was published in July 2020, just as the world faced the first wave of the coronavirus pandemic. The playbook highlights where retailers can take credit for initiatives that are doing well and identifies opportunities to do more. Every business is on a different level of its sustainability journey, and NACS encourages retailers to use the playbook as a guide for advancing the areas most relevant today, and consider how other areas could transform their business in the future.

The Sustainability Opportunities in Retail section—one of the eight sections in the online resource—outlines some of the operational projects that convenience retailers have implemented to address consumer sustainability concerns, including: • Reducing energy use • Reducing water use • Converting to renewable energy • Building “green” facilities • Reducing food waste Many convenience retailers are considering long-term strategic plans for investing in electric vehicle charging, biofuels, natural gas and hydrogen.

The Alternative Fuels section covers the basics of each and what some convenience retailers are doing in these areas. There’s also the NACS Sustainability Assessment tool: Retailers can use it to rate the effectiveness of the sustainability efforts in their stores.

Access the playbook at www.convenience.org/sustainability.

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FROM THE EDITOR

A New Buzz Kim Stewart Editor-In-Chief

Last-mile delivery is the bane of dogs everywhere—and as it turns out, many retailers.

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T

o get a jump on starting fresh for 2021, I finally unpacked a couple of boxes that had made their way from our old house to our new one—in 2018. Amid all of the random power cords for VCRs long discarded and game consoles abandoned, I discovered three hand-size drones, including one with night vision photography capabilities I’d given my hubby several Christmases ago. He charged it up, downloaded a software update and tested it out.

In our kitchen.

As I was cleaning up dinner.

Our dog, who can be counted on to stare at me intently as I load the dishwasher in anticipation of licking a plate or two, was uncharacteristically absent from his sentinel post. The drone and its high-pitched buzzing had driven him from the room.

If delivery drones are our future, I may have to invest in CBD chewables for my poor pup. The FedEx truck already drives him bonkers. Last-mile delivery is the bane of dogs everywhere—and as it turns out, many retailers. Figuring out the sweet spot of delivery, from the mode to price to product quality, is part of ongoing research at NACS. Our cover story this month is a deep dive into the landmark NACS Research study “Last Mile Fulfillment in Convenience Retail.” While drone delivery is certainly on the radar, other more-immediate methods convenience retailers are using to bring the c-store to consumers are covered in the

study, which includes findings from 140 convenience retailers around the world.

Top-notch last-mile fulfillment can’t happen without robust technology platforms. Kevin Smartt, NACS chairman for 2020-21 and Kwik Chek CEO, aims to help the industry lean into technology this year, which also happens to be the 60th anniversary of NACS. Smartt shares his vision and priorities as NACS chair in this month’s interview, “A Tech Leader.”

Smartt says the industry isn’t done learning from COVID-19. “The timing is very opportunistic for our industry to lean forward in technology,” he says. And that includes implementing everything from online ordering to home delivery to curbside pickup.

While the pandemic has accelerated shifts in technology and services in the retail industry, it’s also left many Americans stressed and anxious. So, lots of them are turning to CBD products for relief, as Melissa Vonder Haar shares in “The CBD Wellness Era.” Demand for CBD wellness products, including high-end beauty and skincare products, is surging, presenting another opportunity for convenience retailers to capture this market.

Wellness is a meaningful intention for 2021. Fill yourselves with peace, health and happiness, my friends. Happy New Year!

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NACS NEWS

BY THE NUMBERS

TY PI EN

P TW TO

Top 20 Cool New Products

2020 CK

At the Crack the Code Experience, the Interactive Cool New Products Preview Room was bustling with attendees on the hunt for the latest new c-store products. The Preview Room gave attendees a sneak peek at the newest products, flavors, packaging and innovations available to the convenience and fuel retailing industry. Visitors “loved” the products they liked best, and each week a Top 10 list was generated.

Of the more than 165 products from 77 exhibitors featured in the Preview Room, here are the top 10 favorited products.

2

Flav-R 2-Go® Locker System Hatco Corporation

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3

smoodi Smoodi Inc.

1

Rockit Apple Tubes Rockit Global

4

Portion Control Condiment Dispenser Plastic & Products Marketing CONVENIENCE.ORG

5

6

The Push N Go Sanitary Lid Dispenser (Variations) Plastic & Products Marketing

Roltini Singles: Mozzarella & Pepperoni Volpi Foods

8

9

MultiShelf iSEE Store Innovations LLC

11

Sahale Snacks White Cheddar Black Pepper Bean + Nut The J.M. Smucker Company

Sargento® Balanced Breaks® Cheese and Crackers Sargento Foods Inc.

14

Colliders: Twisted Reese’s, Twisted Kit Kat, Twisted Hershey’s Cookies ‘n’ Crème Crossmark Convenience

12

15

13

16

Push N Go Sanitary Coffee Stirrer Dispenser Plastic & Products Marketing Ooey Gooey Molten Lava Cakes Prairie City Bakery

Reese’s Big Cup Stuffed with Pretzels The Hershey Company Snickers Peanut Brownie Mars Wrigley

7

Wholly® Homestyle Guacamole & Chip Snack Cup 9/2.8 oz MegaMex Foods

10

Supreme Stuffers® Individually Wrapped Filled Bagel Twists J&J Snack Foods

17 18 19 20

Street Tacos Buddy’s Kitchen Inc. Jelly Belly Gummies Jelly Belly Candy Company EMV Upgrade Kits Bennett Pump Company

Don Miguel® Orange Chicken Battered Taquito 24/4 oz MegaMex Foods

For the latest Cool New Products, visit www.convenience.org/coolnewproducts.

CONVENIENCE.ORG

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NACS NEWS

Calculate the Value of Employee Investment

C

onvenience retailing is beset by high turnover and increased competition for employees, who may not necessarily view an entry-level associate’s job as a path to a rewarding long-term career. NACS and the non-profit Good Jobs Institute (GJI) offer an intriguing proposition: Invest in employees and make key operational choices that leverage that investment to increase productivity and contribution, and businesses will decrease turnover and boost their bottom line.

The Good Jobs Strategy shows that providing good jobs is a dynamic combination of operations and HR, creating a virtuous cycle of great jobs, great customer experiences and more financially sound business. Companies like Costco and QuikTrip do invest in people, paying higher wages and offering better training and career opportunities. But they also make key operational choices that allow them to leverage that investment and ensure employees can contribute to better service and continuous

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improvement. (For more on the Good Jobs Strategy visit www.goodjobsinstitute.org.)

As part of the Good Job Institute’s work with NACS, a tool—the Good Jobs Calculator—was created specifically for the convenience industry and allows retailers to forecast the impact of increasing employee wages and assess the benefit of implementing a Good Jobs system. “It can be hard to calculate benefits of creating good jobs because they come over time, across many budget lines,” said Sarah Kalloch, executive director of the institute. “The calculator will show how better training, lower turnover and more productive employees can impact revenue.”

The free tool will help companies assess how good jobs could help them reduce costs, increase revenue and improve labor productivity, helping build the business case for good jobs in the convenience store industry.

Visit www.convenience.org/goodjobs for more information and to access the calculator.

CONVENIENCE.ORG

iStock.com/FG Trade

Free calculator tool helps quantify the benefits of key operational choices on your workforce retention and productivity.

WE’RE

D E R O N O H

NACS NEWS

MEMBER NEWS RETAILER MAPCO has appointed Tony Harris as chief marketing and merchandising officer. Harris, who has more than 25 years of experience in the convenience store space, will continue to build on MAPCO’s Convenience You Can TRUST® Tony Harris promise and Better Break, where guests can recharge and refresh with quality products and services made just for them. Before joining MAPCO, Harris served as the senior vice president of Cumberland Farms, where he spearheaded the company’s retail operations.

Courtney Buckley has been promoted to director of talent management with VERC Enterprises. Buckley joined VERC nine years ago and has filled a number of key roles with the growing Duxbury, Massachusetts-based company. In 2019, Courtney Buckley Buckley was named to the “40 Under 40” list by CStore Decisions. VERC has also promoted Nick Vercollone to the position of director of car wash operations. Vercollone, who joined VERC three years ago, will oversee the operations of the company’s eight Nick Vercollone car washes, including supervising the individual managers at each location, as well as overseeing the maintenance and how the car wash locations connect with the communities they serve.

Rutter’s has promoted Suzanne Cramer to vice president of HR. Cramer joined the York, Pennsylvania, retailer in 2013 and most recently was directer of recruiting. In 2016, she earned Rutter’s “Making A Difference Award” and in 2017 was recognized among Suzanne Cramer the “Top Women in Convenience” by Convenience Store News.

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SUPPLIER dunnhumby has tapped Grant Steadman as the global data science provider’s new president of North America. Steadman has held a number of leadership roles during his 13-plus years with dunnhumby, most recently serving as senior vice president, head of client services for North America since 2017.

Grant Steadman

Liebherr has named Robert “Rob” Marriott as customer service manager.

Marriott has managed thousands of independent service contractors and trained thousands of appliance technicians across the U.S. for more Robert Marriott than 15 years. Marriott will focus on the customer service strategy for the North American market and work in conjunction with the divisional manager and the global customer service manager based in Germany.

KUDOS Sheetz, Cumberland Farms and QuikTrip took three of the top 15 spots on the Fortune Best Workplaces in Retail 2020 list. Sheetz lands at No. 6; Cumberland Farms is No. 12; and QuikTrip ranks No. 13. To determine the 2020 Best Workplaces in Retail list, Great Place to Work® analyzed confidential survey feedback representing more than 900,000 employees working in the retail industry in the U.S. “Sheetz is always changing for the better and embraces new technology and new ways to do things, trying to give all the best possible experiences. During COVID, they went above and beyond to protect employees and customers, outshining like businesses,” said Sheetz employees. Cumberland Farms employees said, “This company has a family-oriented focus. We function fully with the support of ALL team members and our manager provides us with a healthy, fair, non-judgmental atmosphere allowing us to grow to our full potential in this company.” QuikTrip employees commented, … continued on page 16

CONVENIENCE.ORG

Help Develop an Energy Star Score for C-stores Operating a convenience store in the most energy-efficient manner possible can help retailers save money and reinvest those savings back into the business.

Whether retailers are already taking steps to achieve energy-saving sustainability goals or just getting started, industry-specific benchmarks can help the industry plan and adjust energy consumption. To that end, NACS is seeking retailer assistance to develop the first-ever Energy Star Score for Convenience Stores.

With the score, retailers can benchmark their buildings against industry energy consumption and may qualify for an Energy Star certification, which recognizes energy-efficient top

Half Horz.indd 1 CONVENIENCE.ORG

performers or saving money—without sacrificing performance—and communicates to customers which retailers are conscious of their energy use and environmental impact.

To request a personal survey link and to learn more about the NACS and Energy Star project, visit www.convenience.org/energyscore.

The Energy Star program, a U.S. Environmental Protection Agency (EPA) initiative, offers guidance on strategic energy management that helps businesses identify cost-effective approaches to energy use in their buildings. Since partnering with Energy Star in 2018, NACS has made resources available for convenience retailers to help improve energy usage in stores at www.convenience.org/energystar.

12/8/2020 4:54:37 PM

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NACS NEWS NEW NACS MEMBERS NACS welcomes the following companies that joined the association between October 16 and November 15, 2020.

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, call (703) 684-3600.

NEW RETAIL MEMBERS Moga Enterprises Inc. dba Sunoco Gas Station Dayton, Ohio

Commonwealth of Pennsylvania Liquor Control Board Harrisburg, Pennsylvania www.lcb.pa.gov

Okeechobee Fuel Inc. dba Chevron West Palm Beach, Florida

Eurocan Trading Anjou, Quebec www.eurocantrading.com

The Goods Mart New York, New York www.thegoodsmart.com

Fujitsu Computer Products of America Sunnyvale, California www.fcpa.com

Trout Creek Quik Stop Inc. Trout Creek, Montana

Imperial Western Products Coachella, California www.iwpusa.com

NEW SUPPLIER MEMBERS

B Water & Beverages dba Brita Water San Fernando, California

Martin Bauer Inc. Secaucus, New Jersey www.martin-bauer-group.com/en

Next Frontier Brands Boulder, Colorado www.nextfrontierbrands.com

Tommy’s Express Holland, Michigan www.tommycarwash.com

Pete and Gerry’s Lutz, Florida www.peteandgerrys.com

TY INC. Westmont, Illinois www.ty.com

Quail Digital Dallas, Texas www.QuailDigital.com

UP3 LLC Lafayette, Indiana www.underpoint3.com/product

Stratus Mentor, Ohio www.stratusunlimited.com

NEW HUNTER CLUB MEMBERS

SUPERTITE Adhesives (Unecol Adhesives) Durham, North Carolina www.supertite.com

BRONZE

Essentia Water LLC Bothell, Washington www.essentiawater.com

MEMBER NEWS (...Continued) “Our CEO announced that we’d continue to be there for communities. Any employee who gets COVID and needs to take time off may without it affecting sick days, they’ll continue to get paid, and all costs associated will be covered, health plan or not.”

VERC Enterprises, a convenience store and Mobil/ Gulf/Irving/Shell gasoline operator with locations in Massachusetts and New Hampshire, has been named one of the “Top Places to Work” in Massachusetts in the 13th annual employee-based survey project from the Boston Globe. “We’re honored to be a recipient of this prestigious recognition—one we have received five times—from the Boston Globe and proud that we have created the type of working environment that is worthy of our being named a best place to work,” said

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Barry Ahern, vice president of operations for Duxbury, Massachusetts-based VERC. GreenPrint, an environmental technology company, earned a spot on the Deloitte Technology Fast 500 for the second year in a row. The list is a ranking of the fastest growing technology, media, telecommunications, life sciences and energy tech companies in North America. GreenPrint grew 525% during a three-year period, ranking 228 on this year’s list. GreenPrint CEO and co-founder Pete Davis said, “Our mission is to intertwine business value with environmental impact by helping companies build and market sustainability programs that drive customer preference and loyalty. As consumers increasingly seek to do business with companies that share their values, the importance of sustainability is becoming increasingly apparent.”

CONVENIENCE.ORG

Succeeding in a Post-Pandemic Workplace This year, we’re delivering knowledge from top-notch HR leaders at the touch of a button. The NACS Human Resources Forum—now delivered virtually over three days— will show how the most agile retailers are navigating today’s HR challenges.

With the pace of change in retail accelerating more rapidly than ever, retailers need to be more agile than ever to get ahead of what is coming next. With that in mind, here’s what to expect from this year’s event: •E xceptional Content: Custom-made, high-level content that fosters a fruitful dialogue among participants.

•W orking Group Discussions: In-depth discussions with attendees on how HR can properly function in the age of COVID-19.

•L egal and Data-Driven Insights: Sessions delivered by legal counsel and focused on new laws and regulations

that impact the convenience industry, as well as exclusive NACS data on compensation and hiring.

•L asting Relationships: A strong peer network that can function as a personal board of advisers to help with work issues and opportunities.

•P roduct Demonstrations: A first-hand look at HR technologies in a series of curated demonstrations designed to prepare attendees for the future of work.

•C EU Credits: Eight to 10 CEU credits granted (final count to be determined once agenda finalized).

Attend the NACS HR Forum and leave with the toolkit you need to deliver next-level HR value. Join the convenience retailing industry’s HR community at the NACS HR Forum on March 9-10, 2021. For more information and to register, visit www.convenience.org/HRForum.

Which one is right for you?

July 11-16, 2021

July 25-30, 2021

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JANUARY 2021 |

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GOOD WORK

Convenience Cares for Communities

I

n our industry, “c-store” doesn’t just stand for convenience store; it also stands for community store.

Convenience stores are inextricably linked to their communities, with nearly all retailers (95%) supporting some form of charitable cause, either locally (91%), nationally (47%) or both.

From sponsoring youth sports teams to conducting food drives, convenience stores strengthen the communities they serve, contributing more than $1 billion each year to charitable and community groups.

Wrapping up 2020, here are some examples of retailers showing that “convenience cares” in their local communities: On November 10, Knoxville, Tennessee-based Weigel’s presented a check to Smoky Mountain Service Dogs for $45,404.20. The check was large enough to raise and train two service dogs, Sadie and Wiggles.

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The Smoky Mountain Service Dog program provides, at no charge to veterans in need, specially trained service dogs to aid in assistance and companionship. The cost to raise and train just one service dog is about $22,000 before they can be matched to a veteran.

“We are fortunate to have the support of so many customers who have made this donation possible,” said Bill Weigel, chairman of Weigel’s.

“On the heels of Veteran’s Day, it gives us such joy to know we can make a difference in the lives of those that so unselfishly sacrificed for all of us.”

Stewart Spinks, founder of Greenville, South Carolina-based The Spinx Company, recently presented a check for $325,250 to Kelly Jamerson, senior director of community CONVENIENCE.ORG

development for the American Cancer Society.

During October, all 84 Spinx stores participated in an annual store campaign collecting donations from communities in South Carolina to support the efforts of the American Cancer Society.

“As a cancer survivor myself, I know the importance of the work that the American Cancer Society accomplishes each and every day,” Spinks said. “For the 12th year in a row, The Spinx Company is honored to support their mission and its efforts in education, treatment and research to discover more successful treatments and ultimately a cure for cancer.

Throughout December, a portion of the proceeds from the sale of tater tots at all GetGo Café+Market locations raised money for the U.S. Marine Corps annual Toys for Tots holiday campaign.

“Time after time, we’ve been impressed with the generosity of our guests. We know the holidays will be more challenging for some families this year, and we’re proud to partner with our neighbors and the Marine Corps to provide toys and gifts to the children in our communities,” said Rug Phatak, chief of staff for the Pittsburghbased retailer.

The Markets, owned and operated by Charlottesville, Virginia-based Tiger Fuel Company, launched a new campaign to support the Charlottesville City Schools PTO Reopening Fund. As part of The Market Rewards loyalty program, customers can turn rewards points into cash and donate $1 to the local schools. Tiger Fuel Company will match each $1 contribution.

“We’re thrilled to give back to our local schools and the communities we serve. This

is a challenging time for all our educators and students, and we want to do our part to support this virtual learning experience. We love the idea of getting our customers involved and using loyalty points for a great cause,” said Tiger Fuel President Gordon Sutton.

Texan by Nature, a Texas-led conservation nonprofit founded by former First Lady Laura Bush, recognized Marathon Petroleum Corporation (MPC) in its second annual Texan

by Nature 20 (TxN 20), a ranking of companies with Texas operations that demonstrate a commitment to innovative work in conservation. MPC was recognized for its community investment, water conservation practices, employee volunteerism, habitat restoration, landfill diversion and reductions in energy consumption.

“It’s an honor to be recognized for our work in conservation and sustainability,” said Karen Beadle, MPC vice president of environment, social and governance and stakeholder engagement.

“Core to our sustainability commitment is concrete action that empowers people, contributes to progress in our communities and conserves the natural resources we all share.”

York, Pennsylvania-based Rutter’s donated more than $600,000 to charities throughout the state that focus on children, youth and education in the various neighborhoods where Rutter’s operates.

Rutter’s planned to announce several additional donations to local charitable organizations before the end of 2020.

“During these trying times, all of us at Rutter’s recognize that charities and nonprofit organizations need our support now, more than ever,” said Scott Hartman, Rutter’s president and CEO. “We take pride in supporting charities and programs that benefit children in the communities we serve.”

CONVENIENCE.ORG

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INSIDE WASHINGTON

Biden’s Cabinet Takes Shape A look at how his picks might affect the convenience retailing industry.

FACTS & FIGURES

4,000

The number of federal positions filled via political appointments

1,200

Roughly this many require Senate confirmation

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| JANUARY 2021

S

oon after the November election, President-Elect Joe Biden and his team began the work of identifying nominees for the roughly 4,000 positions across the federal government that are filled via political appointments. Of those, roughly 1,200 require Senate confirmation. Those are generally the highest levels at the various cabinet departments and agencies.

The majority in the Senate remains up in the air until the January 5 runoff elections in Georgia. As it stands, we know Republicans will have at least 50 votes, meaning that the best the Democrats can hope for is having Vice President-Elect Kamala Harris as their tie-breaking vote. That dynamic may

have a significant impact on who Biden nominates for many key positions.

While the House of Representatives does not have a role in confirming nominees, the Democrats’ much smaller majority in the 117th Congress may have an impact on the pool of individuals from which Biden would pick.

Biden may be less likely to nominate Democratic House members from swing districts. He’s shown he’s not afraid of nominating House members, as he’s already named Representative Cedric Richmond (D-LA-2) to lead the White House office of public engagement.

Richmond’s New Orleans-based district is considered safely Democratic and will likely stay in Democrats’ hands in the eventual special election.

The status of the Senate majority would likely preclude nominating many of the higher profile progressives to key spots.

Prior to the election, these were rumored to include Senator Bernie Sanders (I-VT) for secretary of labor, Senator Elizabeth Warren (D-MA) for Treasury secretary or former Obama National Security Adviser Susan Rice as secretary of state. However, Biden’s nominees to head the State Department and Treasury, Antony Blinken and Janet Yellen, respectively, suggest he is choosing nominees who can be confirmed without controversy. In December, he named Rice to lead the White House Domestic Policy Council, a position that doesn’t require Senate confirmation.

Another factor in Biden’s choices will be the intraparty tension between progressives and more moderate CONVENIENCE.ORG

gettyimages.com/ANGELA WEISS

BY JON TAETS

Democrats. Many progressives have expressed displeasure at some of the president-elect’s early senior staff appointments, particularly that of Richmond, whom they view as too cozy with corporate lobbyists—particularly oil and gas lobbyists.

Many party activists want to see the Biden Administration institute a prohibition on lobbyists serving in senior administration posts. The Obama Administration ostensibly had such a prohibition, but it was routinely waived. Many on the left want a prohibition that cannot be waived, as well as a ban on anyone who has received any reportable contribution from corporate lobbyists. However, they would like to see exemptions for those representing labor unions or certain nonprofits. The more moderate wing of the party opposes any such prohibitions.

The final factor we know Biden will be considering is diversity. He’s publicly committed to having one of the most diverse cabinets in history. The names being circulated for key spots reflect that.

For example, he has nominated the first African American to serve as secretary of defense and may pick the first Native American to serve as secretary of the interior. With all that in mind, let’s take a look at some already-announced appointments

and the most likely candidates for some positions important to our industry.

SECRETARY OF HEALTH AND HUMAN SERVICES In early December, President-Elect Biden made a surprising choice in California Attorney General Xavier Becerra to lead the Department of Health and Human Services (HHS). Since Biden will be sworn in during the pandemic, his choice for who will lead HHS will be heavily scrutinized. HHS is also the parent agency for the Food and Drug Administration (FDA), which has a significant impact on our industry.

Becerra’s name had been mentioned for a cabinet position, but most speculation focused on U.S. attorney general, not secretary of HHS. Becerra has been California’s attorney general since 2017, taking over the role from Kamala Harris, who had just been elected to the Senate. He previously served in Congress representing parts of Los Angeles for 12 terms. During his time as attorney general, he has made a name for himself in the health-care space. Among the more than 100 lawsuits California has filed against the Trump Administration are ones seeking to stop changes

ONE VOICE This month, NACS talks to J. Scott Apter, president, Apter Industries Inc. What does NACS political engagement mean to you, and what benefits have you experienced from being politically engaged?

NACS political engagement has enabled me to become J. Scott Apter conversant in the major issues in the convenience store industry. I have had the opportunity to compare notes with major players in the industry and help them get results to help the business move forward. As a smaller supplier, NACS political engagement has given me a larger platform to advance and be part of the industry.

CONVENIENCE.ORG

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

The issue that really bothers me is the huge expense of credit and debit card processing, which is getting worse with the desire of people not to use cash due to the COVID-19 situation. Sooner or later the fees for smaller charges and swipes need to be reduced, but many people in government think dealing with these high costs is somehow noncompetitive. The issue will continue to get worse unless NACS and members of our industry continue to engage and educate members of Congress on the unfair fees of the major card networks.

What c-store product could you not live without?

I am a big convenience store coffee drinker, and as I return to getting out and about, I will start to enjoy the terrific coffee offerings of the convenience store industry.

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INSIDE WASHINGTON

A factor in some of Biden’s choices will be the intraparty tension between progressives and more moderate Democrats.

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to the Affordable Care Act and access to Medicaid. He’s also leading a group of Democrat attorneys general who are seeking to defend the constitutionality of the Affordable Care Act in federal court against a Republican-led lawsuit.

Becerra may face headwinds toward confirmation if Republicans maintain control of the Senate due to his lack of true health-care experience and his staunch pro-choice record.

Biden also announced other key health-care-related positions at the same time. He tapped Jeff Zeints, a former Obama Administration official, to be his coronavirus response coordinator—a position that does not need Senate confirmation. Zeints’ only health-care-related experience was being tapped with fixing the failed healthcare.gov website, which marred the original implementation of the Affordable Care Act. Biden also chose Dr. Vivek Murthy to reprise a role he held under former President Obama as U.S. Surgeon General. Murthy had previously been mentioned as a possible choice to lead HHS but ultimately accepted a reprise of his previous role.

Before making these announcements, it was made known that Dr. Anthony Fauci would remain as director of the National Institute of Allergy and Infectious Diseases at the National Institutes of Health. He also has accepted Biden’s offer to remain on the coronavirus task force and take on the role of chief medical adviser to the president.

SECRETARY OF TREASURY In November, Biden made a historic selection for Treasury secretary with the nomination of Yellen, the former Federal Reserve chair, who would be the first woman to serve in the Treasury role.

Many saw this pick as a safe one that would make it through the Senate confirmation process easily and appease both moderate and progressive Democrats.

If confirmed, Yellen will lead the Biden Administration’s economic response to the COVID-19 pandemic and could play a leading role in future stimulus negotiations. Notably for the convenience and fuel retailing industry, as Treasury secretary, Yellen will have significant

influence over payments policy and potential efforts to raise corporate or other business tax rates.

SECRETARY OF AGRICULTURE With its oversight of the Supplemental Nutrition Assistance Program (SNAP) and work on biofuels, the U.S. Department of Agriculture (USDA) is an important agency in the convenience retail world.

While it’s sometimes viewed as a lower tier cabinet position, it is expected that the secretary of USDA will have a larger role in the Biden Administration as the president-elect seeks to expand the role of the department in his climate change efforts. Marcia Fudge is a Democrat congresswoman from Ohio who was in the running for USDA before Biden chose her to lead the Department of Housing and Urban Development (HUD).

To lead the USDA, Biden has picked yet another alumnus of the Obama Administration. Tom Vilsack is a former governor of Iowa who also served as President Obama’s agriculture secretary for his entire term. Under his leadership, USDA proposed the SNAP “depth of stock” rule in 2016, which would have pushed almost all convenience stores out of the program. Following significant pushback from Congress and the industry, the agency rewrote the rule to make it more workable for small format stores.

More recently, he was Biden’s key adviser on rural issues.

Vilsack’s name emerged fairly late in the process and seems to have pushed Representative Fudge (D-OH), a favorite of progressives and those advocating for an African American to take the post, to be chosen instead to run HUD. While likely preferable in the eyes of progressives to former North Dakota Senator Heidi Heitkamp, who was an early front-runner for the post, many on the left do not feel that Vilsack will change the direction of the department enough, particularly in terms of climate-change-related policies or civil rights policies related to the treatment of minority farmers. Despite those objections, his confirmation is considered non-controversial even under a Republican majority Senate.

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INSIDE WASHINGTON SECRETARY OF LABOR The Labor Department will likely be active early in the Biden Administration. The Labor Department is expected to roll back changes in the overtime rule and joint employer rules that the Trump Administration made in the past two years. The department will likely seek to make those rules much friendlier to labor unions and harder on businesses.

It is possible that Biden will make a more progressive choice here. The names being circulated for this position are directly associated with organized labor or seen as strong allies. Biden may attempt to get Senator Sanders through the nomination process for this role, the area where the former rivals are in the most ideological agreement.

Others under apparent consideration are California Labor Secretary Julie Su, Association of Flight Attendants President Sara Nelson and Representative Andy Levin (D-MI). Su fits the progressive mold; Nelson has been a darling of the labor community while advocating for her union’s members during the pandemic-related slowdowns in air travel; and Levin has a strong pro-labor record in Congress and before being elected.

Levin, however, also represents a district that could yield a Republican win in a special election, which may weigh on Biden’s decision making.

U.S. ATTORNEY GENERAL The top post at the Department of Justice (DOJ) has been the focus of considerable controversy during the Trump Administration. Biden has declared he intends to ensure that whoever leads the department remains free of political interference from his administration. The DOJ post is important to the convenience retailing industry as the department has the ability to investigate the antitrust activity of the payment card networks and to make legal and prosecutorial decisions on issues such as internet gaming and cannabis sales.

An early top contender for that position is Alabama Senator Doug Jones (D-AL). Jones first came to the Senate by winning a special election to replace former Senator Jeff Sessions (R-AL), who became Trump’s first attorney general.

Jones, whose voting record is moderate, lost his re-election bid in Alabama. He is a longtime friend of Biden and has a strong record on civil rights from his time as U.S. attorney before coming to the Senate. Another name being considered is Lisa Monaco, a former Obama National Security adviser who spent 15 years working at the DOJ under the Clinton, George W. Bush and Obama administrations.

Progressives are unlikely to be happy with the selection of Jones and may prefer other candidates,

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 November 1-30, are: Daniel L. Alsaker Alsaker Corp.

Robert Coughlin Eby-Brown Company LLC

Ken Jackson Good Oil Co. Inc.

Darcy Paluch Moyle Petroleum Company

Kevin Smartt Kwik Chek Food Stores Inc.

Frank Beard Safe Shop

Henry Dodge Jr. Dodge's Stores

Darrin Pohar Sheetz Inc.

Marc Strauch Cameron Park Petroleum

George H. Bennett Imperial Trading Company— S. Abraham & Sons Inc.

Peter D. Krueger Nevada Petroleum Marketers & Convenience Store Association

Robert Forsyth FKG Oil Company

Taha Saleh T. A. Saleh Enterprises Inc.

Gray O. Taylor Conexxus

Robert J. Berkstresser White's Travel Center LLC Robert A. Buhler Open Pantry Food Marts of Wisconsin Inc. Brad Call J&T Management

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Desiree Logsdon Bunn-O-Matic Corporation

Annie Gauthier St. Romain Oil Company LLC

William Milam

Kay Segal Business Accelerator Team

John Tippery Sheetz Inc.

Mark Hanners InComm Payments

Doug New Nouria Energy Corp.

Stephen G. Sheetz Sheetz Inc.

Nicole Walbe NACS

Julie Jackowski Casey's General Stores Inc.

Darryl Nirenberg Steptoe & Johnson LLP

Travis Tyler Sheetz Sheetz Inc.

Dean Zurliene Monster Beverage Company

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including former Acting Attorney General Sally Yates, who was deputy attorney general under both Eric Holder and Loretta Lynch in the final years of the Obama Administration. President Trump asked her to serve as acting attorney general in the early days of his term in 2017 while Sessions’ nomination was being considered. However, she was quickly fired by Trump on January 30, 2017, after refusing to enforce his executive order restricting travel from a number of predominantly Muslim countries.

SECRETARY OF TRANSPORTATION Biden has indicated he will seek to expand his efforts on climate change beyond the Department of Energy (DOE) and Environmental Protection Agency (EPA). He is likely to seek more involvement from departments such as Transportation and Agriculture in those efforts. The next Transportation secretary certainly will explore expanding the use of electric vehicles and other alternative fuel sources. A leading candidate for the position is Los Angeles Mayor Eric Garcetti. He has the experience of overseeing Los Angeles’ massive public transportation infrastructure and has been a strident ally of Biden’s for years.

He’s also term-limited as mayor in 2022.

Other names reportedly under consideration are Representative Earl Blumenauer (D-OR) and former Chicago Mayor and Obama Chief of Staff Rahm Emanuel.

ENVIRONMENTAL PROTECTION AGENCY ADMINISTRATOR Whomever Biden picks as EPA administrator will be in the eye of the storm in the fight over climate change policy.

The administrator will have significant influence over fuels and environmental regulations that directly impact the convenience and fuel retailing industry.

Biden will seek to undo many of the Trump Administration’s actions and will likely eye someone with a strong clean energy and/or conservation background for the post. This is another position where the Democratic Party’s left wing will want a nominee with a progressive record, but it is also one where it will be CONVENIENCE.ORG

difficult to get a progressive past a Republican Senate.

Candidates popular with the left wing of the party are Mary Nichols, who is the current chair of the California Air Resources Board; Heather McTeer Toney, who is a former EPA official and currently a senior official at Moms Clean Air Force; and Washington Governor Jay Inslee. Beyond climate policy, the usual debate between the oil and gas industry and the ethanol industry may factor in the confirmation process. If Republicans do retain the Senate majority and block these nominees, other names that could be considered are two executives from the National Wildlife Foundation. CEO Collin O’Mara, who served in the same Delaware cabinet with Biden’s late son, Beau, or Vice President Mustafa Santiago Ali, who resigned from a senior EPA position after more than two decades serving there soon after Trump took office in 2017.

Beyond climate policy, the usual debate between the oil and gas industry and the ethanol industry may factor into the confirmation process.

SPECIAL PRESIDENTIAL ENVOY FOR CLIMATE With climate change a priority, the president-elect announced that former Secretary of State John Kerry will serve as special presidential envoy for climate, which will put Kerry in charge of coordinating the administration’s climate strategy.

Often referred to as the “climate czar,” this position does not need Senate confirmation.

In this role Kerry will hold a seat on the National Security Council—the first time the council will include someone dedicated to climate change—a longtime goal of environmental groups. If Republicans hold the majority in the Senate, Biden will have to rely on executive action on climate policy, and naming a special envoy on climate is critical to this effort.

There is still a lot to be learned about who will serve in Biden’s cabinet. These are the positions that are likely to most directly impact our industry, but there are many others NACS will be monitoring. It remains to be seen how long it will take the Biden Administration to get all of the necessary appointments through a Republican or evenly divided Senate.

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

Editor’s Note: This information was current as of December 10, 2020.

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INSIDE WASHINGTON

Climate Corner LOOK FOR A RENEWED PUSH IN THE STATES AND ON CAPITOL HILL TO CREATE A LOW CARBON FUEL STANDARD.

Paige Anderson is the NACS director of government relations. She can be reached at panderson@convenience.org.

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Not only will a new Congress convene this month, but a new president will be sworn in, and one of the top issue priorities for the new administration is climate change.

With the complexities and wide range of topics under the climate issue umbrella, NACS breaks down this broad issue into smaller topics in this edition and in future Inside Washington columns.

One area of climate change receiving quite a bit of attention recently is the low carbon fuel standard (LCFS). The main purpose of a low carbon fuel standard is to decrease carbon dioxide emissions associated with vehicles powered by various types of internal combustion engines. Most LCFS programs focus on transportation fuels because the sector accounts for as much as 50% of greenhouse gas emissions, including industrial sector emissions from oil refining and crude production.

California is the first state to adopt a low carbon fuel standard program and is heralded as the model for other states, provinces and countries to establish.

California’s LCFS program sets annual carbon intensity standards or benchmarks for gasoline, diesel and fuels that replace them. Carbon intensity is the measure of greenhouse gas emissions associated

with the production, distribution and consuming of a fuel and is based on a complete life-cycle analysis, also referred to as “well to wheels.” These benchmarks or standards are reduced over time.

Currently, the target is a 20% reduction in the carbon intensity of fuels by 2030.

To assist in meeting these targets, a cap and trade type of system was developed. Fuels and fuel blendstocks introduced into the California fuel system that have a higher carbon intensity than the benchmark generate deficits.

Similarly, fuels and fuel blendstocks with carbon intensities below the benchmark create credits. Those with deficits can purchase credits to meet the standard or benchmark for that year.

Proponents of the LCFS argue that low carbon fuel has increased in California, and fuel producers are also taking action to decrease the carbon intensity of their fuels. Opponents of the program are concerned about the higher cost of fuel in California.

Other states are joining California in adopting a low carbon fuel standard. Oregon, Washington and the Canadian province of British Columbia have established a regional agreement with the Pacific Coast Collaborative to strategically align policies to decrease greenhouse gas emissions and promote clean energy. Additional states are looking to create a similar program, as are other Canadian provinces and the country of Brazil.

Some policymakers in Washington also seek to establish a federal low carbon fuel standard program. In fact, this objective was included in the House Special Committee on Climate Crisis report and recommendations released last summer. It is highly likely that the topic will be part of the coming debate on climate policy.

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IDEAS 2 GO

Something for Everyone

Otto’s Cones Point General Store throws a wide net to capture customer attention.

BY SARAH HAMAKER

The rustic design of Otto’s Cones Point General Store in Poultney, Vermont, is a nod to its location near Lake St. Catherine, which draws lovers of the great outdoors. The c-store keeps tourists and locals well-supplied and well-fed.

Once COVID is over, we’ll bring our Elvis impersonator back.

W

hen you’re in a rural area near a tourist destination, the secret to success is offering a plethora of goods and services. “We have restaurant-quality takeout, seasonal soft-serve ice cream, fresh-baked goods, beer and wine, tobacco, CBD products, maple syrup, Vermont-made products

SEE MORE! Ideas 2 Go showcases how retailers today are operating the convenience store of tomorrow. To see videos of the c-stores we profiled in 2019 and earlier, go to www.convenience.org/Ideas2Go.

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and souvenirs, live bait, hunting and fishing licenses, game reporting, lottery, minigolf, catering and summertime live music,” said Carrie Reed, comptroller and procurement manager for Otto’s Cones Point General Store in Poultney, Vermont.

The location near Lake St. Catherine means the store receives a steady stream of campers, hikers, fishers and hunters, along with the locals. “We’re not a restaurant and not your usual convenience store,” she said. “We have a little bit of everything because of our diverse clientele.”

REBIRTH Otto’s Cones Point has been around since the 1980s, but when owner Rosemary LaManna bought it in 2015, she leveled the building and built a new store with the CONVENIENCE.ORG

ABOUT

Otto’s posts daily specials—including soups like Karen’s Homemade Seafood Chowder—on its Facebook page. To-go orders increased during the pandemic, while catering slowed. Playing a round of minigolf on the c-store’s course is a popular pastime.

Name of company Otto’s Cones Point General Store

same footprint. “She wanted to add a full kitchen, among other changes,” Reed said.

The kitchen allowed the store to expand its menu to club sandwiches, salads, hamburgers, soups and a full line of breakfast sandwiches, sausage and French toast. Baked goods are made fresh in-house. Daily specials are posted on Facebook and in the store.

The store also offers catering, although that has slowed because of the pandemic. Takeout has increased during COVID-19 as customers placed more to-go orders. “We had to stop serving food for in-store eating and moved to carryout only,” she said. Otto’s Cones Point also offered curbside service and delivered orders to some of the senior citizens in town. “We don’t normally offer delivery and only do special orders, but we continue to offer curbside pickup of foodservice and grocery orders.”

In the fall, the state of Vermont allowed restaurants to offer limited seating. “The requirement to gather names and phone numbers for contact tracing in case of a positive COVID-19 test means not as many customers are taking advantage of on-site dining,” she said. Early in the pandemic, the store had difficulty stocking some customer favorites, but now the usual brands and product mix have returned to normal.

Other changes because of the pandemic

Date founded 2016

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include wrapping baked goods individually instead of housing them for self-serve in a glass container.

“We require everyone to wear masks, but I’ve instructed our mostly female staff not to argue with a customer over wearing one because we don’t want

# of stores 1 Website www.ottosconespoint.com

BRIGHT IDEAS An online presence has become an even more important way to connect with customers in this time of social distancing. Otto’s Cones Point General Store has a website and Facebook page, where Carrie Reed, comptroller and procurement manager, posts specials and contests. For example, in the fall, Vermont ran a statewide promotion to encourage people to shop local—spend $30 pretax and receive $10 off. Reed posted about it on the store’s Facebook page to highlight the offer. “It brought in a little business as it gave people an incentive to try a new local store,” she said.

Reed also pays close attention to the store’s Google business page, ensuring that she replies to all the questions or comments posted there. “We concentrate more on our Facebook and Google page than on our website, which is more of an informational page,” she said. “With Facebook and Google, we have the opportunity to address any issue and resolve it for our customers more quickly.”

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A Critical Time for Educating New Lawmakers March 23-24, 2021 Virtual Meeting

NACS Day on the Hill ensures retailers' voices are heard and relationships with key representatives are developed. Plan now to join us as we enter a critical time for educating lawmakers on issues that have a major impact on your bottom line.

Registration is open!

convenience.org/DayOnTheHill

them to get into a confrontation with a potentially angry customer,” Reed said.

That care of her co-workers goes both ways. “The staff have known each other for years, and we’re all very close,” she added. “Everyone’s very friendly and will go the extra mile for each other or our customers.”

A DIFFERENT EXPERIENCE The coronavirus also shut down some of the store’s customer favorites. For example, Otto’s Cones Point usually has live music in the summer but had to put that on hold in 2020. Also taking a hiatus from the store’s calendar is the Christmas fair and chili cookoff—events where Otto’s Cones Point would bring a food cart to sell its restaurant fare.

“Once COVID is over, we’ll bring our Elvis impersonator back,” she said. “It’s a free event for our customers, who love this particular performer. People have a really good time at our music events, and we can’t wait to get everyone dancing again.”

However, the store’s 18-hole minigolf course was able to reopen. “The golf course is very popular, even in this time of COVID-19,” Reed said.

Overall, Otto’s Cones Point makes it a point to provide a special experience for all customers. “We try to show kindness and go above and beyond what they need,” Reed said. “You never know how someone’s day is going, and if we can make them leave our store with a smile and a good experience, then we feel like we’ve done our job.”

Sarah Hamaker is a freelance writer and NACS Daily and NACS Magazine contributor based in Fairfax, Virginia.

Visit her online at www. sarahhamakerfiction.com.

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CONVENIENCE RETAILERS FULFILL THE COVETED DIRECT LINK TO CONSUMERS—AND DISCOVER SOME WATCH OUTS.

BY CHRIS BLASINSKY

W

ith increased time pressures and expectations for same-day, nextday and one- or two-hour delivery windows, the final leg of reaching customers has created an increasingly cluttered last-mile landscape with multiple solutions.

“There are going to be some implications and, quite frankly, some significant opportunities for our industry,” said Lori Buss Stillman, NACS vice president of research, during the virtual 2020 NACS State of the Industry Summit this past April. “Last-mile fulfillment is the future, and it is what retailers are using to continue operations at a time when retail is being shut down and social distancing becomes a norm,” she said.

As the last mile ecosystem continues to evolve, Stillman noted that when retailers look at the value proposition through the lens of the shopper, there are some finite ways in which they are defining what last mile looks like for them, and how new technologies and an increasingly digital market are serving shopper needs.

NOT SO SCIENCE FICTION Delivery by drone may sound futuristic, but 7-Eleven actually made the first commercial delivery by drone in July 2016 when it teamed up with Flirtey to deliver Slurpee drinks, hot coffee, a chicken sandwich, donuts and candy to a home in Reno, Nevada. Additional drone delivery tests followed that November.

Amazon began testing drones in 2013, and in 2016 the company announced Prime Air to deliver

CONVENIENCE.ORG

packages up to five pounds in 30 minutes or less using small drones. Amazon received approval from the Federal Aviation Administration (FAA) in August 2020 to operate its fleet of Prime Air delivery drones.

“This certification is an important step forward for Prime Air and indicates the FAA’s confidence in Amazon’s operating and safety procedures for an autonomous drone delivery service that will one day deliver packages to our customers around the world,” David Carbon, vice president of Prime Air, said in a statement.

Although Prime Air is not yet delivering packages at scale, the company is actively testing the technology. UPS, which also has FAA approval, teamed up with CVS Health Corporation in 2020 to use drones to deliver prescription medicines from a local CVS pharmacy to more than 135,000 residents in The Villages in central Florida, the largest retirement community in the United States.

Logistical issues, regulatory roadblocks and cost considerations need to be ironed out before drone deliveries could go mainstream in the U.S., but they are on the horizon to bridge the gap between convenience stores and consumers’ homes.

SURVEY SAYS Long-term, which technologies and solutions are truly facilitating growth in the last-mile landscape? And near-term, how much will the coronavirus pandemic continue to have an impact on these services within the convenience retail industry? In mid-2020, NACS Research surveyed

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convenience retailers globally to answer these questions and collect insights for creating or enhancing a last-mile fulfillment strategy.

In October 2020, NACS Research released the resulting global benchmarking study, “Last Mile Fulfillment in Convenience Retail,” which delves into four key areas: 1. H ow readily convenience retailers are adopting last-mile fulfillment 2. C urrent and anticipated use of delivery services 3. Retailer options for accepting orders 4. D ifficulties retailers face with adopting last-mile services

WHERE’S THE PARTY? Convenience retailers generally use two models when it comes to delivery: third-party providers like DoorDash, Grubhub, Postmates and UberEats, or in-house delivery. Each has advantages, like business growth and lower overhead costs. However, one of the more significant challenges with thirdparty services is access to some important user data, like ZIP code and customer location.

Providers like Uber Eats don’t hide the fact that they’re going to keep some customer information, said Loftus, noting that they maintain that these data are their intellectual property. “I think one of the alternatives to [sharing data], and we’re seeing this uptick quite a bit with North American operators, is retailers using their own staff” for delivery, he said.

Interestingly, among the convenience retailers who participated in the last-mile survey, most (61%) were not satisfied with their last-mile fulfillment partners, and they cited four main reasons why: 1. Drivers pick up orders late.

2. D rivers pressure store staff to hurry when they arrive too early.

3. The fees associated with delivery are too high.

4. T he data sharing and processing are not as expected.

In terms of adoption, more than half of all of convenience retailers (57%) currently offer some form of last-mile fulfillment.

Third-party provider delivery fees have been a point of contention among restaurants, QSRs and fast-casuals, although some operators say these

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iStock.com/kokoroyuki

For convenience retailers, NACS defines last-mile fulfillment as order fulfillment processes that deliver goods to a destination. Fulfillment could occur to the customer’s residence, the retail parking lot (drive-thru; curbside pickup), lockers or in-store pickup.

Patrick Loftus, NACS survey research manager, noted that three-quarters of the retailers surveyed are North American-based, and that roughly 68% mentioned that they did begin offering these services in response to COVID-19.

“Clearly it’s top of mind for a lot of retailers right now, who are looking at last-mile fulfillment in any way to increase traffic as much as possible,” he said in a Convenience Matters podcast, “Winning the Last Mile.”

Across the globe, however, retailers approach last-mile fulfilment in different ways. “The story in Europe and in Australia is somewhat different, where we are seeing a higher level of last-mile adoption,” said Loftus, noting that these retailers are higher adopters of third-party lockers, while North American retailers are more apt to offer curbside pickup.

services have helped them keep their doors open throughout the pandemic. Hagop Giragossian, CEO of Pasadena-based Dog Haus, said the outlook for the restaurant industry could have been much worse had it not been for third-party delivery services. “I actually think they saved it,” he said during a QSR magazine webinar in May 2020. “They’re not just delivering our food; they’re generating interest in our concepts.

They’re driving sales to our businesses. … Even if we did our own delivery, we’re not going to capture as many guests without those partners.”

Even though some food retailers may consider the fees a cost of doing business, cities such as

Discover important insights on the ways in which retailers can win trips, grow baskets and reinforce industry leadership through last mile fulfillment solutions. Download the free report, “Last Mile Fulfillment in Convenience Retail,” at www.convenience.org/lastmile.

Mobile orders for in-store pickup is the most frequent last-mile service currently offered.

Convenience retailer adoption of last mile services is still relatively new, especially in the U.S. This has led retailers to accept orders through a wide range of options. Many retailers accept orders from multiple sources displayed below.

Last-mile fulfillment services currently offered Last-mile fulfillment services expected to offer in the next 12 months

Mobile order (app or call-in) for in-store pickup

Mobile order for delivery to an alternate location (e.g. home, office, etc.)

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Mobile order for curbside pickup

Website order

Third-party lockers of own or other retailer merchandise (e.g. Amazon, UPS, etc.)

Mobile orders for drive-thru pickup

Order at the pump for in-store pickup

Order at the pump for delivery to car

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Chicago, Jersey City, Los Angeles, New York, San Francisco and Seattle have capped the fees at 15% or less of the order that third-party providers can charge restaurants, which can run from 20% to 30% per order.

Meanwhile, some newer companies are reinventing the third-party business model. In August 2020, Tryp Technologies Inc., a rideshare company, entered 36 U.S. markets with its TripDelivers service for restaurant and grocery delivery. The company says its policies separate it

from the competition: Restaurants receive direct payment of monies earned, get paid faster and there’s no menu price markup.

Convenience retailers unhappy with their third-party providers also cited food integrity as a point of frustration. After food leaves the store and travels to the customer, taste and texture can change. There are very real and serious food safety considerations as well, such as temperature and allergen control, cross contamination and safe food-handling procedures.

Third-Party Watch Outs Pervez Pir, COO of Loop Neighborhood Marketplace stores in Northern and Southern California, shared what his company learned when embarking on its last-mile journey with third-party ordering and delivery during the NACS Crack the Code Experience session “Driven to Delivery.”

As a personal user of DoorDash, Pir researched how the service could fit into Loop’s business model and serve as a differentiator in the tech-industry-heavy Bay Area market.

“For two years we just couldn’t pull the trigger” due to a handful of roadblocks. “The No. 1 issue was the margin they take,” said Pir, citing how the already-low margins on cigarettes and alcohol made partnering with a third-party provider a nonstarter. Citing other cons for partnering with DoorDash, he said that Loop “didn’t need them— but hindsight is 20/20.”

In 2019, Loop began developing its own mobile ordering app and tested pizza ordering via the Loop website. The company also fielded advice from peers that launched third-party delivery to capture their learnings, which included pitfalls like employees not having orders ready, missing items or pulling the wrong items.

Fast-forward to 2020, and Pir said the coronavirus pandemic impacted Loop’s customer base overnight, as the tech firms all shifted to working from home. “We had to quickly respond and figure out how to bring customers into our stores and how to increase basket size.” In response to losing customer traffic, Loop paused testing its mobile ordering app and partnered with DoorDash, UberEats and Postmates within a six-month span.

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There were some initial challenges, said Pir, as many food retail companies were quickly moving to takeout and delivery, which created backlogs in obtaining tablets for accepting third-party orders.

“It took upwards of three days to set up accounts with the menu assortment and pricing, scheduling and updating product images—which had to be completed for each store,” he said. But once the program was ready for prime time, Pir said one positive commonality among DoorDash, UberEats and Postmates was the ease of reporting and data that helped Loop determine which products were selling, how often and the basket size.

“There’s a lot you need to think through when considering a third-party provider,” advised Pir. “First, know the dominant player in your market and start there.

They have the brand equity and members to put you on the map quickly. Second is the fees, which you can negotiate. Don’t believe the first amount. We’re a tight margin business, so every point you save is a point to the bottom line.”

An additional benefit Pir noted was attracting new customers through the platforms and exposing them to the Loop brand. He also advised retailers to pay attention to the ratings: “I can’t emphasize enough how important this is for your business,” noting that younger customers are more apt to use the rating to determine whether to engage with your brand via DoorDash. “If you drop below 4.5 [out of five], you will see a drop in transactions and frequency,” he said.

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iStock.com/Gudella

“As a customer, who do you blame? The retailer or the delivery provider? What we hear is that the blame is often shifted to the retailer, with the delivery company saying all they do is deliver the food,” said Stillman, in a NACS Crack the Code spotlight session, “Essential Analytics for Essential Businesses.”

Stillman noted that retailers and restaurants can negotiate contracts with third parties that build in food quality and integrity during the delivery process, as well as ensure their provider is following food safety protocols. She anticipates that packaging innovations will help maintain product quality, but she cautions that retailers may need to consider which menu times are available for delivery versus in-store only.

“The reality is that some foodservice items may not travel well, and quality is best maintained when they’re available in-store or grab-and-go,” Stillman said.

WHERE TO START Among the convenience retailers surveyed by NACS who were not offering some form of lastmile fulfillment, they cited several concerns: cost, technology constraints (app, ordering and payment processing) and adequate staffing to fulfill orders.

These retailers may be missing potential sales, but those jumping on board should be aware of potential pitfalls. Here are recommendations to help retailers develop their strategies: • Conduct a cost-benefit analysis of partnering with any third-party provider and determine if offering last-mile fulfillment through store staff is a better option.

• Ensure data captured through last-mile fulfillment orders are accessible and can be analyzed to understand the benefits/limitations for your store.

• Confirm that ownership of customer data is clearly retained in any third-party service agreements.

• Understand whether the benefit of extending the reach of your product availability through last-mile fulfillment outweighs the potential burden for store staff.

• Ensure your store can match alreadyestablished consumer expectations for order CONVENIENCE.ORG

Pumpside Aside from online and mobile ordering, there are other opportunities unique to the convenience retail business model, which could turn the last mile into the last minute: ordering at the pump.

“There’s a big opportunity for ordering at the pump for either in-store pickup or staff delivering orders to a customer’s car as they are refueling,” Patrick Loftus, NACS researcher, suggested. “From our survey results, we saw that it’s only about 10% of retailers who are taking advantage of that right now, and granted, some of the respondents may not actually have a filling station at their store location …[the] number of convenience retailers who anticipate actually offering ordering at the pump for in-store pickup or even for delivery to their customer’s car is expected to triple in the next year to two years,” he said.

For Jiffy Trip, delivery is anywhere the retailer is delivering goods or services: at the pump, in-store or even some other location, said Mark Holloway, CIO for the 28-store chain that operates in Northern Oklahoma. “I think of it in terms of transaction destination over delivery specifically.”

Unlike retailers who embraced last mile in response to the pandemic, Jiffy Trip launched its own in-house delivery system in 2013 with positive reception. “We recognized a growing demand for delivery before UberEats, DoorDash or Instacart” entered its operating area, Holloway said. “We owned the vehicles, and we employed and trained the drivers,” as well as accepted and processed orders.

processing visibility, payment acceptance and low wait times for in-store and curbside pickup.

What’s on the horizon for convenience retailers as the world continues to move forward through the pandemic? A last-mile landscape that provides an industry, which prides itself on offering customers ample choices, just that: a choice in what they want, when they want it and how they want to receive it.

Chris Blasinsky is the NACS content communications strategist. She can be reached at cblasinsky@convenience.org.

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KEVIN SMARTT SHARES HIS THREE KEY GOALS AS 2020-21 NACS CHAIRMAN.

BY BRUCE HOROVITZ

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ack in the spring, before Kevin Smartt became NACS chairman but after COVID-19 had begun menacing the nation, he was asked to testify before the U.S. Senate Judiciary Committee. Smartt had the option to testify online or in person but chose to testify in person because he thought it might have more impact.

Smartt, who also is CEO of Kwik Chek, flew to Washington, D.C., from Austin, Texas, knowing that there was a very good reason why all the airports he passed through were so empty. But he had a point to make, and he wanted to make it in person. So he walked into the U.S. Senate chambers wearing a face mask, which still was not a common action at the time. On that particular day, he recalls, he was almost the only one in the Senate chambers wearing one.

“The whole experience was surreal,” said Smartt.

“But everyone saw that the NACS team member was wearing a mask. And that was perfect.”

Kevin Smartt testified before the U.S. Senate Judiciary Committee in a May 2020 hearing on liability during the pandemic. Of the six witnesses, Smartt was the only one representing essential businesses.

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Kwik Chek is rolling out a gradual rebrand of all of its convenience stores to Texas Born (TXB), a nod to the company’s Texas roots and values. A new store under construction in Georgetown, Texas, will be the first under the new brand.

WITH COVID-19 AS A DRIVER, KEVIN SMARTT SAID HE HAS THREE KEY GOALS AS NACS CHAIRMAN OVER THE NEXT YEAR: IMPROVE TECHNOLOGY ACROSS THE BOARD AT C-STORES

HIGHLIGHT THE GOOD THINGS THAT C-STORES ARE DOING FOR THEIR COMMUNITIES

ATTRACT AND HIRE A DEEPER TALENT POOL WITHIN THE INDUSTRY THAT’S MORE TECHNOLOGY-CENTRIC

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“We’re still in the middle of COVID-19, and we’re not done learning from it,” said Smartt. His advice to NACS members is to stay clear, focused and realistic on what’s ahead for 2021—including the strong possibility of many more months of face masks, social distancing and vigilant sanitation efforts. “I wouldn’t want to be the first retailer to stop using any of these things in order to save a little money.

It’s hard to make predictions on what’s yet to come from COVID-19, but I don’t foresee any of these things changing any time soon,” he said.

“The timing is very opportunistic for our industry to lean forward in technology.”

FRAMEWORK FOR SUCCESS Smartt has success written all over his resume.

Since 2001, when Smartt and his former business partner, Doyce Taylor, acquired Kwik Chek from its founder, the chain has more than doubled in size.

The Spicewood, Texas-based, customer-servicefocused chain has 47 locations spread across Texas and Oklahoma and more than 400 employees. The chain is widely recognized for its fresh and betterfor-you food offerings and for its cutting-edge and industry-leading advancements in technology.

Perhaps that’s one reason why Smartt is also chairman of Conexxus, the nonprofit, memberdriven technology arm of NACS that’s dedicated to developing and implementing standards, technology innovation and advocacy for the c-store and fuels market. Conexxus members collaborate on key industry tech challenges, and their group efforts can often reduce the cost of IT ownership.

Smartt has helped to make Kwik Chek an industry leader in technology in everything from mobile payments to digital offers to loyalty programs. But now, as NACS chair, he’s looking out for the entire c-store industry. “We’re at that point where mobile ordering and contactless payment should be on the forefront of every retailer’s mind,” he said. “My CONVENIENCE.ORG

Renderings courtesy of VLK Architects

Sometimes real leadership is demonstrated by simple action. It can be pushing legislatures on important industry issues or it can be just showing up. And during a pandemic, it can be simply wearing a face covering because you know it’s the right thing to do for everyone’s safety—just as NACS advises all c-store employees and customers to do.

That one act was symbolic of the person Smartt is—and of the critical moment that he has taken the chairmanship reins at NACS. Perhaps never in the 59-year history of NACS has the organization and its many thousands of retail and supplier company members globally faced so many concurrent challenges—from the pandemic to industry consolidation to rising direct store operating expenses (wages, utilities, credit card fees) to the difficulties and expense of keeping up with new technologies.

In this highly volatile and historic moment, in Smartt, NACS has a steady hand at the wheel.

role is to be a voice for the industry and encourage retailers to take a look at certain things.”

Because of the pandemic, many c-store customers are demanding fewer touchpoints to make transactions. So, to better compete with the drugstores and grocery stores that also are working to eliminate touchpoints, c-stores have to embrace and implement technology that encourages everything from online ordering to home delivery to curbside pickup, said Smartt.

Kwik Chek, for example, has developed a mobile loyalty app where customers can pay for their fuel right at the car without even touching their wallet.

Customers simply scan their phones. As a result, Smartt said, “Our numbers have skyrocketed during COVID.” COVID-19 is continuing to impact the industry— and Kwik Chek—in ways that would have been unimaginable just one year ago. All c-store retailers now have to think strategically, Smartt said, particularly as they design, build and open new stores.

In new Kwik Chek stores, for example, the designs include hand-washing stations that don’t require customers to step into the restrooms.

Also, COVID-19 has changed the way Kwik Chek provides customer seating in new stores. Because the chain is mostly located in warmer parts of the country, it is shrinking its indoor customer seating space and expanding outdoor seating. A couple of its newest stores each offer seating for 40 people outside and no seating inside. The trick is to accomplish this without impacting available parking spaces, Smartt said.

technology, Smartt said. “We need to hire great people and build a strong bench,” he said. Much of that talent pool will need to be more “tech-centric,” and this workforce may need to be more capable of responding to customer interactions that are more remote—like home delivery or curbside delivery.

Among the key technology projects that NACS and Conexxus will continue to work on during the next year is a method that standardizes the age verification process right at the point of sale.

The project, which is particularly critical to c-stores, includes ID validation, age calculation, procedures for non-supported IDs and the ability to keep verification anonymous, so that personal information is always protected. Some 90% of Americans support a nationwide standard for age verification, according to a NACS poll taken in March 2020.

With sales of everything from beer to tobacco products to e-cigarettes, the c-store industry has always been a leader in selling age-restricted products, said Smartt. “We know, better than anyone, how to do it responsibly, but this is a necessary next step,” he said.

“TECH-CENTRIC” Technology advances are critical for the c-store industry Smartt believes, but not all technologies start strong, and a test and learn environment is critical. For example, Kwik Chek’s app sends customized coupons to customers after analyzing their spending habits. But for a relatively small c-store chain like Kwik Chek, “Analyzing data is still a challenge for us,” Smartt said. “We have more data than we know what to do with.” As a result, Kwik Chek’s app now allows customers to pick from an array of coupons instead of serving them only specific offers. “That’s more efficient because we still get data to see who uses what,” he said.

Additionally, the skill set of the c-store industry’s labor force needs to evolve to be comfortable with

If new technologies aren’t developed and used to verify the ages of customers who purchase agerestricted products, it could impact the entire c-store industry. “These are important categories for us. We don’t want to see them go away,” he said.

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The timing is very opportunistic for our industry to lean forward in technology.

A SPOTLIGHT ON GIVING BACK Smartt’s ambitions for NACS stretch well beyond technology. He has set a goal for NACS to do lots more public crowing about all of the philanthropic and community service efforts in which c-stores are involved coast to coast. “NACS can be the voice that lets people know how many millions of dollars c-stores spend annually in giving back to their own communities,” he said.

In the community arena, Kwik Chek has set a stellar example over the years. In collaboration with

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Exxon Corp., for example, in a multi-year program, Kwik Chek sponsored thousands of eighth-grade students in Northeast Texas to visit the Texas A&M University campus in Commerce, Texas, to attend college classes and meet college students. This was an effort to demonstrate that higher education is an attainable goal in a community in which most adults do not attend college. This program has increased the number of rural, first-generation college students attending Texas colleges.

Smartt’s also intent on better-explaining to NACS members all the ways they can be helped by NACS. “Networking connections between retailers is part of the true magic that NACS offers,” he said. “Our challenge, as our industry shrinks, is to continue to tell that story.”

Another challenge, he said, is to uplift the industry’s overall image on all fronts. Advancements in age verification technologies could greatly help that, he said, and continued strides in offering healthier food choices will, too. At Kwik Chek, for example, “We are totally focused on our food being fresh and prepared right in front of you.” Customers can observe everything from tacos to tenders to salads being prepared in Kwik Chek’s open kitchens.

The new Texas Born c-stores will exemplify the company’s values of hospitality, authenticity and integrity. An important part of the brand is fresh food prepared in open kitchens.

Meanwhile, Smartt also has an eye on the industry’s future. He strongly believes that c-stores will evolve from being gasoline providers to what he calls “energy providers.” As electric vehicle use grows, there will be more charging stations at c-stores, he said. “We have the retail assets perfectly placed to allow that to happen,” he said.

But Smartt takes nothing for granted.

Since he was a youngster, he’s had to work extra hard for his successes. “With a last name like Smartt, you learn to be tough and quick-witted,” he said. As his family moved from place to place as his dad changed jobs, Smartt attended 13 different schools by the time he was in 10th grade. This made it extra critical that he learned—at a very early age—how to make new friends and get along with people. He always found a way to earn money on his own, and by the time he finished his junior year of high school, Smartt moved out of his parents’ home and found a full-time job, even as he completed his last year of high school. Self-confidence was his daily fuel as a kid. It still is.

Smartt started his career at Frito-Lay and later joined Kwik Chek as district manager in 1992. He earned promotions to the director of marketing and was named president in 2001.

Fast forward a couple of decades and he’s now chairman of NACS. What would he like his legacy at NACS to be?

“I hope that I’m the chairman who gets the age verification project launched and a host of good retailers involved,” he said. “I’d be very proud.

We should be the ones who get this launched.”

Don’t bet against him. It wouldn’t be Smartt.

Bruce Horovitz is a freelance journalist and a national media training consultant. Contact him at brucehorovitz@gmail.com.

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Renderings courtesy of VLK Architects

NACS can be the voice that lets people know how many millions of dollars that c-stores spend annually in giving back to their own communities.

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SEIZE OPPORTUNITY From motivating staff to embracing drive-thrus, convenience experts shared how they are adapting to change at Crack the Code.

I

n the absence of the in-person NACS Show in 2020, the NACS Crack the Code Experience brought the convenience industry together during a very tumultuous year. Attendees experienced more than 50 content-rich education sessions loaded with insights and new ideas, more than 5,000 products displayed in hundreds of virtual showrooms, and numerous Cool New Products ready to adorn store shelves.

Educational opportunities offered during the five weeks of the experience provided tools for both retailers and suppliers to grow personally and professionally. From retailer-led education sessions on many different operational topics, to small group meet-ups with industry leaders such as Sheetz CEO Travis Sheetz, to spotlight sessions with dynamic storytellers, to live small operator training, there were myriad opportunities to learn and connect.

Clearly, Crack the Code attendees now have an edge: They will emerge from the pandemic ready to gain customers and generate revenue after what they learned. So that you can stay current yourself, here are a few highlights from a handful of education sessions:

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CARING FOR EMPLOYEES “The biggest things all of us are working on is creating that compelling employee experience so our team members feel appreciated for what they do every day,” said Paul Shore, chief people officer at Pilot Travel Centers LLC, during the “Motivating and Protecting Your Frontline” education session.

“It’s more important that every team member feels connected and part of the team, and that we go out of our way to make sure our team members feel part of the larger organization.”

Shore outlined the common strategies retailers employ to motivate workers, including developing camaraderie with other team members, the desire to do a good job, being encouraged and recognized by management, and making an impact with their work. “Taking the time to recognize and appreciate those team members who are coming in every day is more important than ever,” Shore said.

Casey’s General Stores Inc. also follows the same best practices. “One that I heard most appreciation for was thank-you pay,” said Sherri Hart, vice president of total rewards at Casey’s.

“We received random thank you notes and emails CONVENIENCE.ORG

from employees showing their appreciation for the extra pay.”

What garnered the most feedback for Kum & Go was an email of gratitude and appreciation Matt Spackman, vice president of fuels, sent out to employees during the summer when civil unrest had exploded around the country. “I expressed my personal thanks for the work our associates had been doing,” he said. “I got a number of responses from associates thanking me and our owners for all that we had done. It was a great reminder of how we need to empathize with our associates.”

Hart also discussed how to motivate employees into the future. “We know things are changing, … and human behaviors are going to change, too,” she said. “We need to ground ourselves in the fundamentals of change and the fundamentals of management and the fundamentals of motivation. … We’re trying very hard to listen to employees and guests.”

Hart highlighted four motivational strategies she sees going into the future: 1. C larity around expectation 2. R ecognition and appreciation 3. Coaching and feedback 4. F ollowing through on promises “It’s been a stressful time,” she said. “If there are ways to have fun and laugh with co-workers, we need to encourage that, too.”

PROTECT PROFITS THROUGH LOSS PREVENTION Resolving convenience store shortage problems starts with the hiring process, according to Mark Wells, president of LJT Management, a Californiabased consultancy for the convenience and fuel retailing industries. “Successful companies have consistent processes in place for recruiting, selecting, training, developing and managing employees,” he said.

Train them well, make them responsible for their shifts and “put the perception in their minds that you are watching, listening and managing your business,” he advised during the “Protecting Profits Through Loss Prevention” session.

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Another important way to curtail shortage is to count critical inventory items, such as cigarettes or lottery, every day.

Wells shared his system to make counting cigarette packs quick and efficient. It starts with the way packs are stored in the cigarette rack. Load from the back to the front (or top to the bottom based on the type of display). Every fifth pack should be turned backward or marked in some way. One of Wells’ clients puts paint sample cards from the hardware store at every fifth pack. This way you can quickly count your inventory by fives.

Each carton is counted as 10.

Top Topics

When looking at the Top 10 attended education sessions, the pandemic and resulting disruptions took center stage: 1. Adapting to the COVID-19 Disruption: Is There a “New Normal”?

2. Strategies of Category Management Superstars 3. A Guide to Capitalizing on Key Consumer Moments 4. 2020 Elections and What They Mean for Convenience 5. How to Succeed in the EV Market 6. Open the Door to Innovation 7. Understanding Dayparts and Optimizing Each Hour of the Day 8. Accelerating Growth in a Disrupted Retail Landscape 9. Driven to Delivery 10. Buying Smarter Despite Volatile Petroleum Prices

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Wells suggests using Microsoft Excel to create a diagram of your cigarette rack or even drawing your rack on a piece of paper. The first employee in the morning counts the merchandise, producing an “opening count” and records that figure on the paper. Any cigarette deliveries during the day are counted and “added” to the original number. At the end of the day, the employee on duty makes a third count and subtracts that from the earlier total, which is then compared to the daily POS results.

Retailers work hard to attract more customers and sell more merchandise, but they can often generate additional revenue by simply tackling shortage.

“It will take about 30 days to get people trained to use the system,” Wells said. “What you’re looking for is a pattern or a large discrepancy.”

In addition to keeping a close eye on inventory, make unannounced visits to your business and conduct periodic cash audits. Use a security camera system and a mystery shopper program, practice proper vendor check-in procedures and communicate your zero-shrink tolerance policy to staffers.

Invest in automated cash management technology, such as safes, change systems and backoffice systems that provide reliable information about your operation, he said.

Retailers work hard to attract more customers and sell more merchandise, but according to Wells, they can often generate additional revenue by simply tackling shortage and “plugging up the holes.”

WHY GAMBLE WHEN YOU CAN HEDGE? Price volatility is always an issue with fuel logistics, whether you are fuel retailer, distributor or commercial fuel buyer. It is bad enough chasing rack prices each day, but what if you are moving larger quantities with greater lead times to achieve

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favorable pricing? The price exposure can be more significant, making that purchase either a brilliant decision or catastrophe, depending on the whims of the market. However, there are mechanisms in place that can remove much of the risk through what amounts to price insurance.

“People say to me, isn’t hedging risky?” said Elaine Levin, president of Powerhouse, during her Buying Smarter Despite Volatile Petroleum Prices session. “It’s really the opposite. The real risk lies in not hedging your fuel purchases. Conservative companies want to protect their precious profit margins from the unknown factors of the market, whether that be an OPEC decision, or the weather, or a pandemic.”

As Levin noted, the goal of hedging is to defend profit margin against energy price volatility to allow fuel purchasers to concentrate on growing their businesses. “Hedging is a defensive activity,” said Levin. “If you are a speculator, you are willing to take risk in exchange for the opportunity to profit.

Speculators think they know something about the future, whether that is going to the roulette table and thinking that red will come up on the next spin, or that the price of crude oil is going to go to $50. The hedger, on the other hand, says, ‘I don’t know what the future holds, and I want to make sure that my precious profit margins are preserved.’”

Speculators trade risk for the ability to profit, and the transactions are not related to an underlying physical position. It is basically an investment and is treated as investment income. Hedgers, on the other hand, try to stabilize the revenues or costs, and hedging gains or losses is part of the cost of goods sold.

What other opportunities are provided by hedging beyond pure profit protection? Distributors can establish fixed-price or cap deals for their customers with the knowledge that their fuel prices will have stability. It also allows a purchaser that is an end-user, such as a fleet, to have stable budgeting.

DIESEL QUALITY CONCERNS Is there something wrong with diesel? That may seem like an odd question to ask—you don’t see stalled trucks littering the highways—but there CONVENIENCE.ORG

have been concerns, and diesel quality is going to become even more important as newer engine technologies start hitting the road.

The most notable concern was the discovery over a decade ago of what appears to be widespread corrosion within the diesel fuel infrastructure after the switch to ultra-low sulfur diesel. Was this related? Perhaps, and perhaps not. And if so, how?

The Fuels Institute’s session “Diesel Fuel Quality and Tank Maintenance” provided highlights from three projects focused on analyzing and maintaining diesel quality.

Fred Passman, president of the microbial contamination-focused consultancy Biodeterioration Control Associates Inc., discussed some of the potential parameters responsible for causing corrosion in the diesel fuel storage infrastructure.

Passman described a laboratory study commissioned by the Coordinating Research Council that aims to identify the primary factors that contribute to accelerating corrosion in a diesel fuel environment. The study was expected to be released by the end of 2020.

Spencer Parkinson, executive director of Decision Innovation Solutions, which focuses on such areas as agricultural policy analysis and economic modeling, discussed the Fuels Institute’s Diesel Fuel Quality Council’s Diesel Fuel Sampling Study. Parkinson shared several key, preliminary takeaways. For the nozzle samples, all PADDs met industry standards, except for oxidation stability, flash point and appearance, which were out of specification in at least one PADD each.

For tank samples, the middle layer samples had better quality than bottom layer samples, as was expected. At least one PADD did not meet industry standards in each area except for water and sediment. Amanda Applebaum, Fuels Institute director of research, shared that members of the Diesel Fuel Quality Council will be carefully reviewing the results of the sample analysis to determine if there are material lessons to be learned or additional research that should be undertaken to assist stakeholders in their efforts to improve fuel quality. The study was expected to be released by the end of 2020.

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Hundreds of Showrooms

The NACS Crack the Code Experience held hundreds of showrooms from big-name brands and new exhibitors, enabled with appointment setting, chat functions, request for quotes and samples, virtual demos and more. Everything exhibitors needed to deliver new products to customers was available at the click of a button.

The Top 20 most visited exhibitor profiles were: 1. Eurocan Trading 2. PDI 3. The Coca-Cola Company 4. Atalanta Corporation 5. Fratelli Beretta USA Inc. 6. Swisher International Inc. 7. Orion Land Mark 8. Mondelēz 9. Acosta 10. GetUpside 11. iSEE Store Innovations LLC 12. Business Accelerator Team 13. Kaival Brands Innovations 14. License 2 Play Toys LLC 15. Crossmark 16. Trion Industries 17. Keurig Dr Pepper 18. Advantage Solutions 19. Campbell’s 20. U P3 LLC

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New Product Explosion

The Cool New Products Showcase was bursting at the digital seams with just-debuted products.

Attendee favorites determined the Top 10 Cool New Products each week.

For the Top 10 list for the entire experience, visit page 10 of this issue.

The interactive showroom was organized by familiar tradeshow product categories: Facility Operations, Foodservice, Fuel Equipment & Services, Merchandise, Candy & Snacks, Technology and CBD. For year-round access to Cool New Products, visit www.convenience.org/ coolnewproducts.

Jeff Hove, Fuels Institute vice president, reviewed the Diesel Fuel Quality Council’s efforts to establish best practices for retailers and distributors to follow in order to preserve diesel fuel quality and provide proper tank maintenance. He noted that the studies covered earlier are helping with these efforts. Also involved in the project are fleet operators, equipment manufacturers, retailers, trade associations, government agencies and industry service providers. The focus is on distribution, storage and dispensing.

GLOBAL DESIGN IDEAS Although curbside pickup and drive-thrus are relatively new concepts for some convenience retailers, others are accelerating these services to provide customers another option for engaging with their foodservice and in-store offers.

Dan Munford, managing director at Insight Research, and Joseph Bona, president of Bona Design Lab, shared trends and examples of how global convenience retailers are transforming the curbside and drive-thru concepts in a NACS Crack

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the Code Experience spotlight session, “Ideas From Around the World.”

Bona noted that during the earlier months of the pandemic, spending a few hours in line at the local drive-thru was a welcoming escape from being stuck at home. But as the c-store industry embraces the drive-thru concept, it’s important to bear in mind an aspect of the customer experience that defines the convenience retail industry: time.

The increase in drive-thru demand has added an extra 30 seconds to the average wait time per person at some convenience stores and QSRs, and as people’s routines start to normalize, “it’s another thing to be sitting in line that long”—especially if a customer is 15th in line, said Bona.

Globally, QSRs and retailers alike are looking at their drive-thru concepts longer term—not necessarily in response to the pandemic. EG Group, which has long embraced the drive-thru well before the pandemic, is developing sites with multiple drive-thru offers. During the pandemic, EG Group saw a shift in sales where drive-thru went from about 31% to more than 50%. Wawa also announced plans for its first-ever freestanding drive-thru-only convenience store, which opened in Falls Township, Pennsylvania, in December. Meanwhile, Pak-A-Sak, an Amarillo, Texas-based retailer with 22 stores and 13 drive-thrus, the first of which opened in 2008, won’t build a new store without a drive-thru.

As the drive-thru concept evolves, Munford noted that convenience retailers are very resilient and adaptable—two qualities they should capitalize on when building for efficiencies.

With limited lot sizes and parking spaces, forecourts in the front and limited circulation around the building, c-stores are by design set up differently than QSRs. Therefore, integrating a drive-thru “comes with a lot of planning and thoughtfulness as retailers consider whether drive-thru is right for them,” said Bona.

In terms of format development, Bona suggested that retailers embrace the future and not run away from it. “Think about the site and its entire functionality: how you enter, exit, fueling, EV charging, drive-thru, curbside—all of these things have to work together,” he said.

CONVENIENCE.ORG

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D B C e Th ne ss l l e W a r E rage e v e l y l b i respons n a c s e r o to m e rs s C-st u c s a D ty. n CB interest i ress and uncertain st cope with a Von

By Meliss

C

an convenience be a wellness destination?

With Adroit Market Research projecting the global wellness supplement market to hit $215.66 billion in 2020, it’s certainly worth considering—especially as both physical and mental wellness remains front-ofmind for consumers.

A July Kaiser Family Foundation tracking poll showed 53% of adults saw their mental health deteriorate because of the pandemic, with 35.2% reporting anxiety symptoms. A year ago, just 10% of respondents reported anxiety symptoms. In this time of heightened stress and uncertainty, consumers have turned to wellness products to cope, including cannabidiol (CBD).

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der Haar

According to a June 2020 consumer panel by the cannabis data company Aclara Research, 20% of CBD consumers were using more CBD because of stress and anxiety related to COVID-19. Some 88% reported using CBD a few times a week or more.

“Basket size is up, consumer spend is up,” said Kristen Nichols, editor of Hemp Industry Daily.

“All the numbers show CBD really booming.”

The question for convenience retailers is where exactly is that overlap between CBD and wellness—and how can they legally benefit from that intersection?

THE CONVERGENCE Of the 3,000 consumers surveyed by Aclara Research, the top reasons for using CBD included pain relief, anxiety, relaxation, sleep and general wellness.

CONVENIENCE.ORG

Aclara’s survey data were very similar to the results of Denver-based BDSA’s Q1 2020 Consumer Research report, which found two-thirds of respondents increased or maintained their shopping frequency due to COVID-19, three-fourths said their cannabis consumption had gone up, and the top reported benefits of cannabis products (including CBD) were relaxation, stress relief and reducing anxiety.

“All of the reported benefits of CBD clearly line up—whether it’s sleep, stress, tension, general sensitivity—to health and wellness,” said Miguel Martin, CEO of the Edmonton, Canada-based Aurora Cannabis Inc. “We’ve seen a massive increase, whether it’s in Google searches or in-store inquiries.”

Ray Johnson, operations manager for Las Vegas-based chain Speedee Mart, has seen this interest in his stores, adding that it’s crucial that convenience shoppers see “CBD” vs. “hemp” when it comes to wellness.

“The marijuana guy understands hemp, but the person buying it thinking it’s going to relieve

HELP ME, PLEASE

“ All of the reported benefits of CBD clearly line up—whether it’s sleep, stress, tension, general sensitivity—to health and wellness.” stress, pain and those things—they’re looking for CBD,” he said. “They don’t even associate it’s the same thing.”

A FINE LEGAL LINE Marketing a product as CBD is one thing.

Marketing it as a potential solution for sleep, stress or anxiety is another, at least in the eyes of the U.S. Food and Drug Administration (FDA). While the agency has not yet released guidance on how ingestible CBD products will be regulated, it has

Of 3,000 consumers surveyed, the top reasons for using CBD included:

Pain Relief

58%

Anxiety

58%

Relaxation

Sleep

General Wellness

48%

37%

30%

0%

10%

20%

30%

40%

50%

60%

Source: “Cannabis and CBD Use During the Pandemic,” June 2020, Aclara Research © 2020 Hemp Industry Daily, a division of Anne Holland Ventures Inc. All rights reserved.

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U.S. HEMP-DERIVED CBD SALES FORECAST $7 billion $6 billion $5 billion

Beauty Edible/Beverages* Inhalables OTC supplements Pet Prestige

$4 billion

Up 165%

Up 428%

Up 197%

$3 billion Up 159% $2 billion

$1.8 billion Up 164%

$1 billion Up 961% $0 2020

2025

*Edibles/Beverages category includes beverages, candy/gum and food.

Source: Nielsen “Thinking Beyond the Buzz” study (2019), CannaUse (2020), Nielsen HomeScan Panel and Nielsen Answers on Demand xAOC+Pet*+Convenience© 2020 Hemp Industry Daily, a division of Anne Holland Ventures Inc. All rights reserved.

held a very firm position about any type of CBD product making health claims.

“Selling unapproved products with unsubstantiated therapeutic claims—such as claims that CBD products can treat serious diseases and conditions— can put patients and consumers at risk by leading them to put off important medical care,” FDA Commissioner Ned Sharpless, M.D., said in a July 2019 press release.

“The FDA has been pretty consistent,” Martin said. “You can’t make health claims.”

While the agency maintains no ingestible CBD product has been approved for sale in the United

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States, it has focused its enforcement not on a specific type of product, but products making health claims. Since 2019, the FDA has issued warning letters to more than 30 CBD makers.

Every one of those letters focused on explicit therapeutic claims.

“The only area where the FDA has been aggressive in reaching out to companies to tell them to cease and desist is in conjunction with health claims,” said Scott Sinder, NACS general counsel and a partner at Steptoe & Johnson LLP, Washington, D.C. He noted that so far, enforcement efforts have been directed at manufacturers, but that retailers should “exercise caution there because that’s the place [FDA] is most focused in terms of enforcement.”

The majority of the warning letters thus far have been directed at fairly extreme medical claims, regarding treatment of COVID-19, cancer or Alzheimer’s. While the larger vitamin supplement industry has been comfortable with more general claims—like “may help with sleep” or “immune-boosting”—Sinder advised caution for now. “What that line is between ‘it enhances your well-being vs. talking about specific maladies,’ it’s delicate,” he said. “There’s not clear law.”

And for the most part, retailers are being cautious when it comes to marketing CBD for specific wellness needs. “It’s a fine line with health claims,” said Don Rhoads, CEO of the Vancouver, Washington-based Convenience Group. “If you look at a number of the other products we sell, there are health claims. With CBD, it’s front of mind with our regulatory agencies. You’re not going to see health claims with these products in my stores—sooner or later it will just get pulled.”

Johnson follows the same rule in his stores. “It’s simple: We just don’t make any claims,” he said.

“People can look that up online.”

Martin said that rule also applies to responsible manufacturers: no health claims and no testimonials that might allude to health claims.

Which begs the question: How can retailers leverage consumer interest in CBD as a health CONVENIENCE.ORG

and wellness solution when they can’t say it’s a health and wellness solution?

LET THE PRODUCT SPEAK FOR ITSELF In this regulatory gray area, it may not be about what the label or marketing materials say—but what the product format says in the mind of consumers. “There are a variety of different formats and options of CBD that seem to be meeting the needs of consumers who are interested in health and wellness,” Martin said.

Topicals (especially roll-ons and salves), capsules, even gummies are associated with health and wellness, even if those messages don’t appear on the label. “A gummy is a delivery method, not candy,” said Johnson. “I have a gummy vitamin every morning.”

Research conducted by Nielsen and Hemp Industry Daily suggests that the types of CBD products consumers are most open to either have an explicit or implicit association with health and wellness. Nielsen found 59%-68% of consumers would try CBD capsules, 57%-68% would try topicals, 54%-64% would try edibles (which include gummies) and 51%-58% would try tinctures, sublignuals and oral sprays. By comparison, only 22%-29% would consider using a CBD vaporizer.

Over-the-counter CBD supplements, such as capsules and tinctures, already make up more than one third of all CBD sales ($588 million in 2020). Nielsen projects the segment will remain the largest piece of the CBD pie, increasing to $1.5 billion in sales by 2025.

But it’s not just those formats that look like vitamins that are succeeding in the wellness space. Nielsen predicts “prestige” CBD products (described as high-end beauty and skincare products) will grow by 1000% over the next five years.

Though it might not seem like a natural fit in convenience, some retailers are succeeding by offering the right size and format of CBD beauty/ skin/bath products. Speedee Mart, for example, carries CBD bath bombs. “When I first saw it, I wondered how anyone would even know what it CONVENIENCE.ORG

For the most current legislative and legal information on CBD and cannabis, visit www.convenience.org/ cannabis.

Though it might not seem like a natural fit in convenience, some retailers are succeeding by offering the right size and format of CBD beauty/skin/ bath products. was,” Johnson said. “But they’ve been selling. I never would have thought of that!”

Offering some of these traditional health and wellness CBD products doesn’t just allow convenience retailers to benefit from a current consumer trend, but it also reinforces the fact that convenience is no longer just a place for gas, cokes and smokes. “The reality is, convenience stores are serving a broader role in their communities in a lot of different ways,” said Martin.

“There’s been a massive evolution in convenience stores as a place where you can find many items that would historically have been found in a pharmacy. I don’t see CBD any differently.”

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

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COOL NEW PRODUCTS 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 last year’s NACS Show (after October 4).

The products featured here also can be seen at www.convenience.org/coolnewproducts.

COMPANY

Tree-Rolls Hemp Company PRODUCT

Tree-Rolls® CBD Hemp Pre-Rolls

COMPANY

You Smoke’em—We Plant’em

PRODUCT

Discover slow-cured USA organically grown Tree-Rolls® Hemp pre-rolls: Sequoia, Aspen, Palm, and Hemp & Herbs pre-rolls: Hemp & Lavender, Hemp & Peppermint and Hemp & Rose Petal—all rich in CBD & CBG. Products undergo four points of compliance testing, with a DEA-certified laboratory final test. Available in a 12/1 unit display, perfect for countertop impulse sales. Proudly partnered with Trees For the Future (www.trees. org), a tree is planted for every product sold. Contact your HLA Representative and visit www.treerolls.com.

These products are not available for sale, and the FDA maintains that the sale of such products is illegal under the Federal Food, Drug & Cosmetic Act.

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Campbell’s/V8 V8 Red Original 11.5 oz Slim Can

Same V8, Now in a New Sleek Can

V8 100% Vegetable Juice is the trusted, nutritious plant-based drink that blends veggies you know and love. An excellent source of antioxidant vitamins without the added sugar, every 11.5 ounce can of this veggie juice has 2 full servings of veggies. Non-GMO, gluten-free, with no artificial flavors or colors, the 11.5 oz slim can is a feel-good nutrient drink and satisfying veggie snack. For more information, contact your local Campbell’s Account Representative or learn more at www.campbells.com/v8/.

CONVENIENCE.ORG

COMPANY

Bennett Pump Company PRODUCT

EMV Upgrade Kits

COMPANY

Factory-Fit EMV Upgrade Kits Ensure Quick EMV Compliance

PRODUCT

Bennett Pump’s EMV upgrade kits provide a factory-fit upgrade of a new dispenser without the excessive downtime and high installation and equipment costs that come with new dispensers. Available for Bennett and most Wayne and Gilbarco fuel dispensers, Bennett’s EMV kits are a great solution to improve the look of your dispensers while meeting EMV compliance. The effortless installation process facilitates compliance in short order as retailers prepare for the EMV liability shift. To learn more about Bennett’s EMV solutions, visit bennettpump.com/emv-upgrades. For more information, call (800) 235-7618 and visit bennettpump.com/emv-upgrades.

Campbell’s/Snyder’s of Hanover Snyder’s of Hanover Rounds

Perfectly Pop-able Pretzels Are Here

Introducing Snyder’s of Hanover Pretzel Rounds. Bite-size, airy, crispy pretzels that are a delicious, fun, portable snack for the whole family. We baked each one to perfection to bring a fun new dimension to snack-time. Available in 3 flavors: Milk Chocolate, Sea Salt and Butter. For more information, contact your local Campbell’s Account Representative or email us at CSnacksCstore@campbells.com.

COMPANY

Hostess Brands, LLC PRODUCT

Voortman® Mega Size Wafers

Voortman®: A Treat to Feel Good About

This sweet treat from Voortman® delivers all the joy of a tasty snack with none of the artificial flavors, artificial colors or high fructose corn syrup ingredients. Indulge in the rich, triple layer crème filling wrapped by a crispy crunchy wafer. Now available in Mega Size, this item is perfect for on-the-go snacking and sharing. Available in vanilla, chocolate and strawberry flavor varieties and sold in 10 count, 5.17-ounce mega size packets. For more information, email sales@hostessbrands.com.

CONVENIENCE.ORG

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COMPANY COMPANY

The Hershey Company PRODUCT

KIT KAT® DUOS Mocha + Chocolate

KIT KAT® DUOS Mocha + Chocolate

KIT KAT® DUOS Mocha + Chocolate is that delicious combo of mocha coffee flavor and chocolate layering the KIT KAT® wafer everyone knows and loves. It is available at stores nationwide in both 1.5 oz. standard size and 3.1 oz. king size (3 oz.) bars. (Standard SRP $1.11, King SRP $1.66).

The Hershey Company.

PRODUCT

Reese’s Snack Cakes

New Reese’s Snack Cakes

New Reese’s Snack Cakes are the first-of-its kind mid-morning cake treat. Two soft baked chocolate cakes topped with Reese’s Peanut Butter Crème covered in REAL Milk Chocolate will satisfy your mid-morning sweet tooth and save your morning!

Reese’s Snack Cakes (2.75 oz., SRP $1.99) are available nationwide exclusively at convenience stores.

COMPANY

REIGN Total Body Fuel PRODUCT

REIGN Total Body Fuel & REIGN Inferno

New Year, New You, NEW FLAVORS!

BOOST, HYDRATE, RECOVER with 300 mg of natural caffeine, BCAAs, electrolytes and CoQ10—all with ZERO sugar. REIGN Total Body Fuel provides exactly what you need to power through your day. Try our NEWEST flavors launching January 25: Cherry Limeade, White Gummy Bear and Inferno’s Watermelon Warlord. For more information, visit www.reignbodyfuel.com and call (833) 836-5857.

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CONVENIENCE.ORG

COMPANY COMPANY

PepsiCo, Inc. PRODUCT

Cheetos® Crunch Pop Mix

PepsiCo, Inc. PRODUCT

Cheetos® Mac ‘n Cheese

Bringing Two Favorites Together!

Your Favorite Snack Is Now a Cheesy Mac!

COMPANY

COMPANY

PRODUCT

PRODUCT

The Flavor You Have Been Waiting For!

The Newest Addition to the DEW Flavor Family

The NEW Cheetos® Crunch Pop Mix gives you double the Cheetle® power and cheddar flavor with the perfect mix of Cheetos Popcorn and Crunchy Cheetos. Available nationwide in multiserve (7oz/ SRP $3.99) and single serve packages (2.5oz/ SRP $1.89).

For more information, visit www.cheetos.com.

PepsiCo, Inc. Pepsi™ Mango

In March 2021, Pepsi will introduce the most popular fruit in the world to the cola category. Pepsi™ Mango—the deliciously refreshing taste of the Pepsi you love now with a splash of Real Mango. Uniquely refreshing, universally appealing. Also available in Zero Sugar.

CONVENIENCE.ORG

Introducing Cheetos® Mac ‘n Cheese. Bold, creamy and full of Cheetos® flavor, this is the mac you’ve been dreaming of for lunch, dinner and anytime in between. Get your paws on a box or cup of this deliciousness. Available Summer 2021. For more information, visit www.cheetos.com.

PepsiCo, Inc. MTN DEW® MAJOR MELON™

MTN DEW® MAJOR MELON™ is the newest addition to the DEW flavor family. Its juicy, watermelon flavor has an added DEW twist and is sure to be an instant Dew Nation favorite. MTN DEW® MAJOR MELON™ is available nationwide in two iconic variations; Full Sugar and Zero Sugar.

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COMPANY

iSEE

PRODUCT

PumpLoc Refill Sanitizer Dispenser

Get Pumped: A Sanitizer Dispenser for Everywhere!

The new PumpLoc Refill dispenser from iSEE and RPP allows retailers to create a clean shopping experience with sanitizer dispensers that can go virtually anywhere in the store—from the front door to the cold vault to the front counter—secured by iSEE’s patented DisplayLoc suction technology. Even better, the PumpLoc can be easily refilled with the dual-purpose removable funnel and driptray, providing a more flexible option for retailers. PumpLoc Refill can be purchased on its own or as part of a bundle with RPP’s premium and readily available Premier Pure Hand Sanitizer. For more information, contact iSEE, email: info@iseeinnovation.com, phone: (888) 417-2457 or RPP, email: customerservice@rppproducts.com, phone: (800) 657-4811.

COMPANY

Trion

COMPANY

BIC Lighters

PRODUCT

PRODUCT

BIC EZ Reach™ ®

BIC EZ Reach

The new BIC EZ Reach™ lighter features a 1.45-inch extended wand that helps keep fingers further from the flame. Its body is the size of a pocket lighter, so it fits comfortably in your hands, making it perfect for lighting candles, grilling and everything in between. The new design lights at any angle. Every lighter is 100% safety tested and up to 50% More Lights vs. non-refillable wand pocket lighters.

BIC® EZ Reach™ is The Ultimate Lighter. Visit ShopBIC.com/newinquiry. ®

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WonderBar® Tray Merchandiser

Sell More in the Same Space !

WonderBar® Tray Merchandising allows you to increase your SKUs by 20 to 30% utilizing your existing retail space; that can mean more than 20 or more products in the same area. Your items are always “billboarded” for a more uniform and attractive display for easy customer choices. Adjustable trays accommodate various product widths. Easy restocking with proper date rotation and less bag tear outs. Cut labor and dramatically increase sales. SELL MORE IN THE SAME SPACETM! For more information, call (800) 444-4665 and visit www.triononline.com.

CONVENIENCE.ORG

COMPANY

Sungal Displays PRODUCT

Walk-In Cooler Shelving System & Roller Mats

Introducing SUNGAL NEXGENTM Cooler Shelving System

Front and rear uprights are welded one-piece with easy no-tool assembly. Free-standing design allows for recessing from the door to increase light in the center of the shelf. Plus, twice the slots, with 3/4" centers, compared to the 1-1/2” of current uprights equals more adjustability. Upright slots are numbered so shelves can be installed without packaging. Shelves are easier to install as the front-top prong is 1" longer. Only engage two prongs at a time. The second prong prevents the shelf from twisting, resulting in stronger structure. NSF Certified – US10660435. Plus – Sungal offers Innovative Roller Mats in all sizes—UL962 Certified and five-year warranty. Patents pending. Competitively priced. For more information, contact Don Miller, Chief Innovation Officer: don.miller728@gmail.com, (618) 444-2802 or Winn Esterline, VP Sales, wfesterline@gmail.com, (610) 858-1549.

COMPANY

Ecolab®

PRODUCT

Water Filtration

Quality Water Makes a Difference

A comprehensive managed water filtration program that aligns cutting edge technology with industry leading service and expertise—a complete solution that is critical to protecting the quality of the beverages that you serve and allowing you to enhance guest satisfaction, improve operational efficiency and support food safety. For more information, call (817) 527-3860 or email c-storeinfo@ecolab.com.

CONVENIENCE.ORG

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COMPANY

Jolt

PRODUCT

Digital Task Management

With Jolt, Your Employees Exceed Expectations

Jolt Software helps c-store operators delight their customers by helping them serve hot and freshly prepared foods safely and accurately. Our team accountability and food safety solutions will put your shoppers at ease with sanitation task management you can’t fake and will provide an audit trail to make sure prepared foods are served under the highest quality and safety standards. Jolt’s labeling solution is state-of-the-art, and our digital temperature probes provide more safety and time-saving audit features that Redbook manual logbooks simply cannot match. Discover why thousands of QSR operators have become raving fans of Jolt’s food safety and team accountability solutions. To learn more, please call (888) 346-5658 option 2, or visit us at www.jolt.com.

INDEX HEALTH & WELLNESS

Tree-Rolls Hemp Company.................................................... 54 NEW DESIGN

Campbell’s/V8........................................................................... 54 Bennett Pump Company........................................................ 55 NEW FLAVORS COMPANY

Compliance Safe PRODUCT

Compliance Safe

Compliance Safe Solves Permit Problems

Managing business-critical paperwork is a headache for every retailer, with risks that can lead to disruptions in your operations and loss of revenue. Built by retailers for retailers—no more spreadsheets, sticky notes or missed deadlines with Compliance Safe. Secure and store your documents in the cloud for easy access anytime and anywhere. Save time and money with CSP 2020 Retailer Choice Best New Technology Product. Available for $10/month, per location. For more information, contact Gerry@compliancesafe.com and visit www.compliancesafe.com.

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Campbell’s/Snyder’s of Hanover......................................... 55 Hostess Brands, LLC................................................................ 55 PepsiCo, Inc................................................................................ 57 REIGN Total Body Fuel............................................................ 56 The Hershey Company............................................................ 56 NEW TO THE INDUSTRY

BIC Lighters................................................................................ 58 iSEE................................................................................................ 58 Sungal Displays......................................................................... 59 Trion Industries, Inc.................................................................. 58 NEW TECHNOLOGY

Compliance Safe.......................................................................60 Ecolab®......................................................................................... 59 Jolt Software, Inc......................................................................60

CONVENIENCE.ORG

A new year, offering tremendous opportunities.

With a full line-up of virtual and live programming in 2021, NACS has something for everyone.

convenience.org/events

Signature Event

Leadership

NACS Show

October 5-8, 2021 Chicago, IL

NACS Leadership Forum

May 12-14, 2021 Kansas City, MO

October 24-29, 2021 Yale School of Management New Haven, CT Endowed by: Altria

Global

NACS Leadership for Success

NACS Innovation Leadership Program*

NACS Convenience Summit Asia March 29-April 2, 2021 Virtual

NACS Convenience Summit Europe June 1-3, 2021 Dublin, Ireland

Government Relations NACS Day on the Hill March 23-24, 2021 Live Virtual

NACS In Store

Throughout 2021 Stay tuned...

May 2-7, 2021 Richmond, VA

NACS Financial Leadership Program* July 11-16, 2021 The Wharton School University of Pennsylvania Philadelphia, PA Endowed by: Cash Depot

NACS Marketing Leadership Program* July 25-30, 2021 Kellogg School of Management Northwestern University Evanston, IL Endowed by: Frito Lay, Keurig Dr Pepper, Nielsen

NACS Women’s Leadership Program*

October 31- November 5, 2021 MIT Sloan School of Management Cambridge, MA Supported by: Gilbarco Veeder-Root, Mondelez, PDI, Shell

Staff | Operations NACS Human Resources Forum March 9-11, 2021 Live Virtual

Industry Insights & Data NACS State of the Industry Summit April 13-14, 2021 Virtual

NACS Executive Leadership Program* July 25-29, 2021 Dyson School Cornell University Ithaca, NY Endowed by: Reynolds

*PLAN NOW! Achieve the Master of Convenience designation by completing 3 of the 5 Executive Education programs.

GAS STATION GOURMET

Small Town Celebrity CD’s Quik Mart pizza puts Hopkins, Michigan, on the map.

BY AL HEBERT

It might come as a surprise that the best pizza in Hopkins, Michigan, is made in a gas station. Family-owned CD’s Quik Mart sells on average 200 to 230 pizzas on Fridays and Saturdays, with some regulars driving 40 miles for one of the award-winning pies.

A

bout 10 million people live in Michigan, making it the tenth most-populated state in the country. Cities like Detroit, Grand Rapids and Lansing are teaming with people. Yet when Michiganders search for the best pizza in the state, some look to the tiny

CD’S AND COVID-19 CD’s Quik Mart in Hopkins, Michigan, has seen an increase in business since COVID-19 began. “With indoor dining shut down, our Friday and Saturday business exploded. Once we were a few weeks into it [the pandemic], we got really busy,” said co-owner Chris Kerber.

“We don’t deliver; we get beat up a little about that. We found out people will travel for our food … [and] people will wait even when wait times may be up to an hour.”

The c-store is exploring implementing an online ordering system to help with scheduling foodservice orders.

CD’s also offers a contactless option. Customers order food and beer, and the staff gives them the total cost.

The food is brought out and placed in the trunk, where an envelope with cash is waiting.

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West Michigan village of Hopkins, population 611 and home to CD’s Quik Mart.

“A couple of years ago a local radio station did a best mom and pop pizza contest. We won two years in a row,” said co-owner Chris Kerber. That got people talking. Then, in fall 2020, a local news outlet set out to find the best doughnuts in the Great Lakes State. “MLive was doing a best doughnut contest, and they were going to check out the bakery next door to us. They were told you’re missing out on some of the best pizza. They came in and were blown away,” Kerber said. Word spread pretty fast.

“People say gas station pizza can’t be good, but they eat our pizza and can’t believe it comes from a gas station,” Kerber said. “People come in from 40 miles away” for one of the store’s awardwinning pizzas. “I can go to Florida with my CD’s t-shirt, and people come up to me and say, ‘Isn’t that the pizza place in Hopkins?’ ” HUMBLE BEGINNINGS Dallas Kerber, Chris’ father, purchased the station in 1993. “There was very little inventory and only a single pizza oven. Not much was there. I had one employee and a friend who helped me. The first year was pretty rough. I was sitting there wondering CONVENIENCE.ORG

what I did wrong when I had no customers and no traffic,” recalled Dallas, who didn’t take a salary then so he could put all earnings back into the business.

He decided to focus on pizza, starting with the sauce. He experimented until he found just what he wanted. Then, he changed the dough and used a better quality meat.

Dallas knew he had great pizza, but the challenge was getting locals to give his new pie a try. Then it hit him: Give it to kids. “I gave the pizza away to kids from high school and young people in their 20s,” he said. They loved it! “We couldn’t keep up with demand.”

PIZZA AND SUBS When it comes to pizza, customers have their favorites. “The most popular pizza is our deluxe pizza. Even if you don’t like everything that’s on it, you like it because it’s so pretty,” said Heather Baier, kitchen manager. “On a Friday and Saturday we go through 200 to 230 pizzas.”

Customers love CD’s fresh-made sandwiches, too. “Our pizza sub is the most popular,” said Baier. It’s made with the same unique sauce as the c-store’s pizza.

“It also has ham, pepperoni, mozzarella, provolone cheese—and anything else you can add to a pizza. Once people discover our subs, it’s hard to walk away,” she said.

Hamburgers and cheeseburgers, salads, garlic cheese sticks, mozzarella sticks and cinnamon sticks also are on the menu.

Ninety percent of the customers are regulars. “If you’re not a regular, you will be after your first order,” Baier said.

The store has no dining area, but it’s still a place where people of all ages gather. “We are date night for a lot of families, older couples and younger ones.

They’ll come in, order pizza and hang in their pickup trucks, and we bring it out when it’s ready,” Baier said.

And for beer lovers, CD’s touts its beer cave as having “the coldest beer in West Michigan.” The store stocks a variety of beer, microbrews and ciders and promises to order customer favorites if they CONVENIENCE.ORG

They eat our pizza and can’t believe it comes from a gas station.

Flanked by their team, CD’s Quik Mart co-owner Chris Kerber, front left, and his father, Dallas Kerber, right, show off CD’s crowd-pleasing pizzas. The deluxe pizza is the most popular, and the pizza sub is another favorite.

don’t see it in the beer cave. Wine and package liquor also are for sale.

FAMILY AND COMMUNITY CD’s Quik Mart has decades’ long roots in Hopkins and gives back to the community in support of nonprofits, churches, the local fire department and Hopkins High School.

Giving high schoolers a chance at their first job is important to the Kerber family. “In 1994, I hired a high school student to work in the cooler and gradually hired more, and we’re up to 10 now.

We got support from the parents and community. This is usually their first job,” said Dallas Kerber.

Kerber reflects back to when he couldn’t take a paycheck and borrowed money from a friend to buy a used pizza oven. The store has grown, its pizza is a local favorite, and two of his granddaughters are on staff.

“I never imagined that it would turn into what it is today,” he said.

Al Hebert is the Gas Station Gourmet and showcases America’s culinary treasure— gas station cuisine. He shares these stories and on occasion, a recipe or two at www.

GasStationGourmet.com. He is a NACS Magazine contributor, bringing foodservice ideas to readers.

JANUARY 2021 |

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GLOBAL TRENDS

On the Move

EG Group owners signal intention to build a differentiated forecourt convenience brand for Asda.

BY FIONA BRIGGS

M

ohsin and Zuber Issa and TDR Capital’s acquisition of Asda from U.S. giant Walmart—a transaction expected to complete in the first half of 2021, subject to regulatory approvals—will inject new energy into the U.K. convenience retail scene. The deal is independent of EG Group, and the Issa brothers are making the acquisition in a personal capacity.

Just weeks before the deal was announced, the U.K.’s third largest supermarket group announced plans to expand into convenience stores with a trial of a new Asda on the Move concept at three EG Group forecourt locations in the Midlands, U.K. EG Group is an international forecourt, food to go and convenience store operator with about 6,200 stores across Europe, the U.S. and Asia Pacific. Asda, meanwhile, has circa 580 stores and about 320 forecourts.

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Announcing the deal, Walmart stated that besides accelerating Asda’s existing Everyday Low Pricing (EDLP) strategy, the Issa brothers will bring significant expertise, drawing on their experience as a global convenience retailer.

“They are well placed to support Asda in developing a compelling convenience retail proposition and taking it to market, and to advise on the development of strategic brand partnerships that will better enable Asda to address multiple consumer missions,” the retailer said, with the goal of “building a differentiated operating model that will drive competitive outperformance and long-term growth.”

The Issa brothers said: “We believe that our experience with EG Group, including our expertise around convenience and brand partnerships and our successful partnership with TDR Capital, can help to accelerate and execute that growth strategy.

After a successful period as part of Walmart, we are CONVENIENCE.ORG

iStock.com/mikeinlondon

U.K. supermarket group Asda has about 580 retail stores and is expanding into convenience stores with a new Asda on the Move concept. Its pending acquisition by brothers Mohsin and Zuber Issa and TDR Capital from Walmart positions Asda for future growth.

looking forward to helping Asda build a differentiated business that will continue to serve customers brilliantly in communities across the U.K.”

“Slices by NKD.” A trial launch with global pizza brand Sbarro has also just started, with a plan to extend the trial across five of EG Group’s sites.

THE TIMELINE The deal comes two years after Asda tried to merge with Sainsbury’s, a proposal that was blocked by the U.K.’s Competition and Markets Authority in April 2019.

Since then, Walmart had indicated it was exploring an alternative future for Asda that did not involve its full ownership.

In February 2020, the business confirmed it was considering opportunities for a third party to invest in Asda. By March, reports suggested that three buyout specialists—Apollo Global Management, Lone Star Funds and TDR Capital—had been invited to join the next round of bidding.

However, in April the business put the sale on hold to focus fully on its response to the COVID-19 pandemic. Talks were restarted in July 2020.

For Nick Gladding, senior retail analyst at the IGD, it was clear why TDR Capital was the front-runner and preferred bidder, even if press reports suggested otherwise. TDR Capital owns 50% of EG Group. “Founded in 2001 as Euro Garages with the acquisition of a single forecourt by the Issa brothers, EG Group has grown swiftly to become one of the world’s largest forecourt operators with over 6,000 sites across 10 countries and revenues of €20 billion,” he said. “Key to its rapid expansion has been a focus on developing high quality modern in-store environments and a retail proposition that are both attractive to motorists and often also function as local convenience stores. To do this, EG Group works with a range of retail and foodservice brands, including Starbucks, Greggs, Subway and KFC in the U.K.” EG Group recently announced the trial of a new on-the-go pizza concept, operating under NKD Pizza’s sister brand,

ASDA ON THE MOVE The Asda On the Move trial at EG Group fuel station forecourts in Ashby, Leamore and Primley is designed to provide customers with greater access to the supermarket’s products and prices. The new convenience proposition follows the successful launch of Asda’s partnership with Uber Eats in July, which has now been expanded to 25 stores.

Preyash Thakrar, Asda’s chief strategy officer, said: “Our partnerships strategy is focused on making our busy customers’ lives easier. That means offering convenience when they visit our stores by bringing in complementary brands to help them complete more shopping missions in one location, and convenience that makes our great value products more accessible in local communities.”

Gladding at the IGD said the partnership with EG Group made a lot sense.

“Asda is one of the U.K.’s largest fuel retailers but has not used its retail expertise to build up a network of stand-alone forecourt convenience stores. It currently operates just 18 stand-alone sites, a total that has fallen over the last year, at a time when rival Morrisons has built up its reach by partnering with several forecourt operators,” he said.

EG Group’s acquisition of Asda could have implications for Spar, the forecourt retailer’s current convenience store provider. Question marks will also hang over EG Group’s more recent collaboration with the Sainsbury’s On the Go format, launched in February 2020 and rolled out to 22 EG Group sites in July.

On the Go is EG Group’s second stint with the top four supermarket, shifting

CONVENIENCE.ORG

NACS GLOBAL CALENDAR MARCH 2021

NACS Convenience Summit Asia www.convenience.org/asia

JUNE 1-3, 2021

NACS Convenience Summit Europe Dublin, Ireland www.convenience.org/cse

OCTOBER 5-8, 2021 NACS Show Chicago, Illinois, United States

We are looking forward to helping Asda build a differentiated business that will continue to serve customers brilliantly in communities across the U.K.

JANUARY 2021 |

65

GLOBAL TRENDS

Our partnerships strategy is focused on making our busy customers’ lives easier.

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

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| JANUARY 2021

The acquisition includes about 320 Asda forecourt locations. Ahead of the deal, Asda had announced plans to expand into convenience stores with a new Asda on the Move concept at three EG Group forecourt locations.

away from a royalty-based model similar to foodservice brands, to one where Sainsbury’s serves as a branded wholesale distributor. EG Group launched a forecourt franchise trial with the supermarket in 2016 but terminated it two years later.

Speaking prior to the Asda announcement, Ilyas Munshi, group commercial director at EG Group, said the On the Go move was part of a strategy to transform c-store forecourt space from being a distress purchase environment to one where shoppers are able to purchase fresh food and food to go.

“We have established a fantastic business with Spar, who have been our partner from early on and have helped us grow significantly,” Munshi said.

“We are pleased to have relaunched a franchise trial with Sainsbury’s On the Go, providing our customers with more options for their shopping.”

Asda On the Move in Ashby opened on October 19 and was the third of the three new concept stores to open at EG Group sites in the Midlands. It’s a multi-branded location that features Esso fuel, KFC, Starbucks On the Go and Starbucks Drive-Thru, Greggs and Greggs Drive-Thru, plus Asda On the Move, replacing a former Spar store. A 24-hour location, the store has a bright and industrial-style, modern interior and an immensely shoppable offer.

The layout is clean and uniform with low shelving providing brilliant sight lines across the store. Signage is strong, with displays dedicated to key shopper missions and categories including: Fresh

Meat & Produce, Food to Go, Food for Later, Chilled Drinks, Frozen Foods and the like. A variety of categories such as protein, rice and pasta, pet food, fresh flowers, canned vegetables, cereals and more are also clearly marked, and promotional products are located on the end of aisles, flagged up by the famous “That’s Asda Price” messaging.

Greggs is tucked neatly inside the right-hand-side of the store entrance and caters to takeaway and eat-in customers, while a Starbucks counter provides a selfserve, takeaway coffee offer.

Spacious aisles and meticulous merchandising make Asda On the Move incredibly navigable, with ample space to maintain social distancing. The brand caters to multiple shopper missions—for those just wishing to enter quickly, pay for fuel and leave, to customers purchasing food-for-now and more extended top-up shopping needs.

It’s a concept that could easily roll out to other EG Group locations. At the same time, EG Group’s foodservice brand partnerships could extend to Asda supermarkets with in-store “concessions” akin to those the retailer has already introduced with the likes of Greggs, toy retailer The Entertainer, DIY specialist B&Q, music Magpie and Fragrance Point.

That would enable Asda to achieve its ambition of meeting multiple shopper missions and make EG Group’s forecourts an even more attractive, convenient destination for customers.

CONVENIENCE.ORG

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CATEGORY CLOSE-UP / OTHER TOBACCO PRODUCTS

The Workhorse Works In a year of chaos, other tobacco products hold steady.

O

ther tobacco products (OTP) has long been a bright spot for convenience, a category that enjoys consistent growth and great profits for retailers. The category accounted for 7.85% of in-store sales in 2019 (a one-point increase vs. 2018) but 6.78% of gross margin (an increase of 0.97 point vs. 2018), according to NACS State of the Industry (SOI) data.

So what happened to this steady player when the pandemic hit?

Turns out, not much.

“The category overall has grown again in comparison to last year,” said Jayme Gough, NACS research manager, with

JUST THE FACTS Cigars continue to lose ground to e-cigarettes, accounting for 18.4% of the OTP category in 2019, down from 21.5% in 2018.

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steady growth from month to month for the past three years, according to NACS CSX data. “That seems to be the trend for the category in general,” she said.

While sales, margins and growth held steady, one thing that did shift was what sold. The OTP category is broken out into smokeless, cigars, electronic cigarettes, papers, pipe, pipe/cigarette tobacco and “other” tobacco. For a long time, the category was almost exclusively driven by smokeless and cigars.

Then in 2018, e-cigarettes overtook cigars are the second-biggest sales driver. “Other” tobacco has also begun to grow its share, largely due to the popularity of modern oral nicotine pouches like Zyn. “In 2018, the top three—smokeless, cigars, e-cigs—were about 90% of category sales,” Gough said. “In 2019, it went down to 86%. I expect it will go down further as innovation in the category, currently representing ‘other,’ continues to grow.”

The combination of growth, innovation and profits has been a net positive for the industry, according to NACS Vice President of Research Lori Buss Stillman.

“Retailers prefer more OTP sales because they deliver a better margin and a higher ring,” she said. “The two together are always a beautiful thing.”

CONVENIENCE.ORG

iStock.com/tomch

BY MELISSA VONDER HAAR

Industry Sales

% of In-Store Sales 2018

2019

6.85% 7.85%

% of Stores Selling

Avg. Sales/Store 2018

2019

$155,372 $182,005

2018

2019

99.3% 99.3%

Source: NACS State of the Industry Report of 2019 Data

iStock.com/bildfokus

Here’s a look at what’s happening in the four key segments of OTP. SMOKELESS HOLDS STRONG Smokeless, which includes chew and dip, remains the largest segment of OTP sales, accounting for 36.8% in 2019, per SOI data.

Sales were up 8.7%, and gross profits grew 9.4% between 2018 and 2019.

Those trends continued in 2020: NACS CSX data showed smokeless sales were up 7.4% in the first quarter of 2020 and 8.7% in the second quarter, compared with the first two quarters of 2019. “It looks really consistent in terms of the monthly sales,” Gough said.

What about the stock-ups other categories saw during the initial COVID-19 shutdowns in the spring of 2020?

“There was a little bit of a spike in March, so a smidge of pantry-loading,” said Gough. “Then steady sales throughout the rest of the year. It’s a product where you can use it for a little bit longer, so you don’t have to pantry-load as much, depending on your usage.”

E-CIGS INCH CLOSER When the e-cigarette segment—which includes all e-cigarettes, cartridges, vaporizers and e-liquids—overtook cigars in 2018, it accounted for 24.7% CONVENIENCE.ORG

of OTP sales. In 2019, that percentage climbed to 31%.

“They’ve really started to edge their way toward smokeless,” Gough said.

“It’s unclear how that will pan out in the next couple of years because of everything going on with e-cigs.”

That “everything going on” includes the increased scrutiny the category experienced nationally in 2019, flavor bans at the state and federal level, the U.S. Food and Drug Administration’s premarket tobacco product application deadline (September 2020) and a natural slowdown after years of triple-digit sales growth. Somewhat reflected in the 2020 numbers: In the first quarter, e-cig sales were up 16.1% compared with 2019. By the second quarter, that dropped to just 5.3% growth.

Retailers prefer more OTP sales because they deliver a better margin and a higher ring. The two together are always a beautiful thing.

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.

JANUARY 2021 |

69

CATEGORY CLOSE-UP / OTHER TOBACCO PRODUCTS

PER STORE, PER MONTH SALES

2017

2018

2019

2020

$13,000 $13,040 $12,000

$11,000

$10,000

$9,000

$8,000

$7,000 JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

Source: CSX; csxllc.com

“We’re probably seeing something there that’s independent of the pandemic,” Stillman said.

We’re not going to fully understand what OTP flavor bans and other regulations really mean for a while.

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CIGARS ENJOY SLIGHT INDULGENCE BOOM Though cigars continued to lose ground to e-cigarettes in terms of category share—accounting for just 18.4% in 2019, down from 21.5% in 2018—it may be the one OTP segment that did enjoy a bit of a COVID-19 bounce. While first-quarter cigar sales were down 0.4%, second-quarter sales grew by 11.8%.

“Cigars had something interesting going on,” Gough said. ”There was a spike, which is not typical of what the yearly curve looks like.”

While it’s impossible to know exactly why this happened, Gough believes it may

have been a combination of nicer weather and the same indulgence trends seen in beer, wine and spirits.

“People like to smoke a cigar out on their porches, and they’re home a lot more,” she said.

“OTHER” GETS MODERN In terms of segments, “other” OTP is a bit of a mixed bag, encompassing anything not falling into the other six segments.

Yet with every passing year, it’s becoming a more important part of the category, accounting for 10.1% of OTP sales in 2019.

“There’s really been some steady growth in the ‘other’ category,” Gough said. “In 2017 it wasn’t even on the radar, now it’s on the radar a little bit. It’s still a small part of the category, but there’s definitely growth.”

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CATEGORY CLOSE-UP / OTHER TOBACCO PRODUCTS

Subcategory Performance Percent of Sales

Avg. Sales/Store

2018

2019

2018

Smokeless

39.7%

36.8%

E-Cigarettes

24.7%

31.0%

Cigars

21.5%

Other Tobacco

OTHER TOBACCO PRODUCTS

Avg. GP$/Store

Gross Margin %

2019

2018

2019

$61,643

$67,023

$12,791

$13,994

20.75%

20.88%

$38,414

$56,362

$11,521

$11,943

34.53%

35.60%

18.4%

$33,363

$33,549

$530

$725

45.83%

45.45%

10.7%

10.1%

$16,700

$18,465

$388

$486

31.95%

34.40%

Pipe/Cigarette Tobacco

1.9%

2.0%

$2,881

$3,597

$865

$383

30.03%

10.63%

Papers

0.7%

0.9%

$1,155

$1,596

$618

$725

46.83%

45.45%

Pipes TOTAL

2018

2019

0.8%

0.8%

$1,216

$1,412

$457

$485

32.95%

34.40%

100.0%

100.0%

$155,372

$182,005

$43,807

$52,651

28.34%

29.09%

Gough specifically credited a subsegment dubbed by the industry as modern oral nicotine pouches. Unlike traditional smokeless products, these pouches do not require the users to spit or chew; instead nicotine is absorbed through a pouch traditionally placed under the lip. Zyn, from Swedish Match, has been the leader—but Reynolds, Altria and Kretek all now offer modern oral nicotine pouches.

Nielsen data show the modern oral category is experiencing triple-digit growth, with dollar sales up 179.7% and unit sales up 238.6% year-over-year in the 12 weeks ended August 8, 2020. Comparatively, the full “other” segment enjoyed more modest gains. NACS CSX data showed the segment up 10.1% in first-quarter 2020 and 8.5% in the second quarter.

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

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LOOKING FORWARD In terms of what to watch for in 2021, Gough and Stillman agreed: Regulations remain the biggest challenge for OTP. “Cigarettes have been

the key highlight of regulations for so many years, and I think that spotlight has shifted onto OTP with e-cigs,” Gough said, adding that nicotine pouches may soon garner legislative attention. “You just never know what’s going to be the next target.”

Stillman described 2020 as something of a pause when it came to feeling the ultimate impact of the 2019 e-cigarette and flavor bans. “There was a collision of increased demand because other outlets that sell tobacco were closed at the same time a lot of restrictions went into place,” she said. “It delayed the ultimate impact on the category. We’re not going to fully understand what OTP flavor bans and other regulations really mean for a while.”

The reason for optimism? OTP has long faced regulatory challenges, and has long performed strongly in spite of them.

“OTP is typically a steady workhorse,” Gough said. “The past few years have seen continual growth, good margins and innovation keeping it fresh.”

CONVENIENCE.ORG

iStock.com/Givaga

For more information on NACS category definitions, visit www.convenience.org/categorydefinitions.

Source: NACS State of the Industry Report of 2019 Data

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CATEGORY CLOSE-UP / FLUID MILK PRODUCTS

Dairy Dilemma

Fluid milk remains challenging to sell but sees renewed attention during the pandemic.

W

ith per-capita consumption continuing to decline and tough competition from larger retailers, the fluid milk category remains a challenging one for convenience store operators. Still, the segment shouldn’t be overlooked, owing to its good margins, promising outlook for emerging betterfor-you products and the opportunity to cater to consumers searching for a convenient shopping experience.

According to the NACS State of the Industry Report of 2019 Data, average per-store sales of milk declined 4.4% to $31,019, from $32,435 in 2018. At 1.2% of

JUST THE FACTS The largest contributor to the fluid milk category in c-stores is flavored milk, which accounted for 32% of category sales, according to 2019 NACS State of the Industry data.

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in-store sales, fluid milk represented “a small but still top 10 category in terms of percentage of store sales,” remarked Jayme Gough, NACS research manager.

Nevertheless, the category offers “decent margins at 30.91% and faster inventory turnover than any other category,” she continued. While fluid milk isn’t a category often promoted by c-stores, “customers expect it to be able to find it in store,” Gough said, providing retailers the opportunity to capitalize on planned shopping visits. Indeed, nearly 98% of all c-stores stock fluid milk, according to the 2019 NACS State of the Industry Report.

Rachel Kyllo, senior vice president, marketing innovation, at DFA Dairy Brands, the Dairy Farmers of America co-op, concedes that while per-capita milk consumption continued its years’ long decline in 2019, the overall dairy segment holds opportunity. “There’s a lot to be optimistic about as U.S. consumers are eating more dairy, with products like cheese, butter and yogurt driving substantial growth in per-capita consumption and reaching a record high in 2019,” Kyllo said.

That’s certainly the case at the Corner Post in Watford City, North Dakota.

“We don’t sell a lot of traditional milk,” reported manager Shasta Fuller, but yogurt is a growth area. “As long as it’s single serve, it does well in our store,” she noted. “We’re also seeing a steady CONVENIENCE.ORG

iStock.com/limpido

BY TERRI ALLAN

Industry Sales

% of In-Store Sales 2018

2019

1.30% 1.22%

% of Stores Selling

Avg. Sales/Store 2018

2019

$32,435 $31,019

2018

2019

96.8% 97.6%

Source: NACS State of the Industry Report of 2019 Data

iStock.com/THEERADECH SANIN

rise in protein-enhanced shelf-stable milks, thanks to the high-protein, low-carbohydrate trend,” Fuller added.

At Jiffy Trip, the 28-unit Oklahoma chain, a recent emphasis on pints and quarts of fluid milk has proven to be profitable. According to Steve Morris, director of merchandising and marketing, “We don’t use milk as a loss leader.” Rather, the stores focus on the smaller containers of flavored and 2% milk, with some locations devoting an entire cooler shelf to quarts of chocolate milk alone. “Some stores sell 100 units a week,” the retailer said, “which is pretty similar to sales of products like Coke and Mountain Dew.” COMPETITIVE CONCERNS Convenience retailers agree that when it comes to fluid milk sales, it’s increasingly difficult to go head to head with the likes of the big-box stores. “I can’t compete with Walmart, who can sell a gallon of milk for $1.99, when my cost is $3,” remarked Matt Paduano, owner of Lakeport Market, with two locations in New York. “But at least I can benefit from the convenience factor,” he continued. “Unlike at Walmart or Wegman’s, our customers don’t have to walk to the back of a massive store just to pick up a gallon of milk.” To keep his loyal milk customers coming back, Paduano makes sure the stores’ CONVENIENCE.ORG

milk selection is “in stock, rotated and everything is clean,” he said.

Similarly, Daniel Moran, category manager at California’s Rotten Robbie chain, said his stores can’t compete on price with local groceries when it comes to the milk category. “For that reason, it’s a small category for us. We keep no more than one shelf and just a few SKUs for our small dairy customer base,” he remarked. “At best, our milk sales are flat.” Non-milk dairy items aren’t a big focus at Rotten Robbie either, also due to pricing challenges. “We prefer to stick to those products that turn quickly,” the retailer explained.

The largest contributor to the category in c-stores is flavored milk, accounting for 32% of sales, followed by 2% milk, at 21% of sales. But other subsegments, including plant-based milk alternatives,

We’re also seeing a steady rise in protein-enhanced shelf-stable milks, thanks to the high-protein, lowcarbohydrate trend.

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.

JANUARY 2021 |

75

CATEGORY CLOSE-UP / FLUID MILK PRODUCTS

PER STORE, PER MONTH SALES

2017

2018

2019

2020

$3,200

$3,000 $2,798 $2,800

$2,600

$2,400

$2,200

$2,000 JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

Source: CSX; csxllc.com

I can’t compete with Walmart, who can sell a gallon of milk for $1.99, when my cost is $3.

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are emerging. “The c-store shopper is following many of the same consumer trends that we’ve observed in other channels, namely a shift toward cleaner-label, lower-sugar, plant-based alternatives that align with a healthier lifestyle,” remarked Suzanne Ginestro, chief marketing officer at Califia Farms, the marketer of refrigerated nut-based milk alternatives. “This trend is particularly strong in metropolitan areas, where millennials, Gen Zers and higher-income households increasingly seek out more premium, better-for-you products like plant-based milk alternatives and more. These groups expect to find their plant-based favorites and

other healthier options where they shop, including at convenience retail.”

At Lakeport Market, some better-for-you dairy products are faring well. “We’ve seen an uptick in sales of Chobani Greek yogurt,” Paduano said, along with lactosefree and almond milk. Jiffy Trip’s Morris added that while there have been some requests for oat milk at some of the stores, only the chain’s urban locations currently offer plant-based milk alternatives. But he sees potential for the alternative products going forward.

“As better-for-you takes hold, including trends like the keto diet, we hope sales of these products will increase,” Morris said.

CONVENIENCE.ORG

Subcategory Performance Percent of Sales

Avg. Sales/Store

2018

2019

2018

Flavored Milk

32.9%

32.0%

$10,662

2% Milk

22.2%

21.2%

$7,191

Whole Milk

18.4%

17.5%

$5,976

Skim/Non-fat Milk

8.6%

9.4%

Other Milk Products

8.7%

1% Milk

5.9%

MILK

Cream/Creamer Products TOTAL

2019

Avg. GP$/Store

Gross Margin %

2018

2019

2018

2019

$9,926

$4,281

$4,049

40.15%

40.79%

$6,566

$2,093

$1,789

29.11%

27.25%

$5,436

$1,686

$1,445

28.21%

26.58%

$2,790

$2,906

$621

$589

22.25%

20.26%

9.3%

$2,836

$2,876

$812

$787

28.62%

27.38%

7.6%

$1,902

$2,366

$348

$668

18.29%

28.24%

3.3%

3.0%

$1,079

$944

$311

$260

28.77%

27.59%

100.0%

100.0%

$32,435

$31,019

$10,151

$9,588

31.30%

30.91%

For more information on NACS category definitions, visit www.convenience.org/categorydefinitions.

Source: NACS State of the Industry Report of 2019 Data

PANDEMIC SPIKE As with a number of other in-store categories in 2020, fluid milk was impacted by changed consumer shopping habits due to the COVID-19 pandemic. “We’re seeing significant growth across the entire dairy category,” including double-digit volume upticks for items like butter and cheese, DFA’s Kyllo said in November. “On the fluid milk front, while we saw a big retail spike at the beginning of the pandemic, sales volumes at retail have leveled out and are up about 2.7% for the year.”

According to NACS’s CSX data, milk sales per store per month trended higher from March through July last year, compared with the two previous years.

“In response to the pandemic, customers have been looking to convenience to provide household staple items, like milk,” explained Gough. That shift benefited plant-based milk alternatives, added Ginestro. “With the pandemic, we’re seeing more people placing an emphasis on self-health or self-care, scrutinizing CONVENIENCE.ORG

their food labels more closely and trying to reduce ingredients like sugar, saturated fats and cholesterol,” she noted.

C-store operators, meanwhile, reported mixed results for dairy sales at their stores in 2020. “It’s been a rollercoaster for us,” Paduano said. “For the first month to six weeks of the pandemic, our sales went through the roof and tripled. We found that people didn’t want to go to Walmart or grocery stores for their fluid milk needs,” the retailer noted. By the fall, demand had settled back down, but sales were still up year to date, Paduano said. Morris also reported higher sales of fluid milk in pints and quarts at Jiffy Trip early in the pandemic. Sales of eggs, cheese and butter, however, suffered, he added, as consumers stocked up on those items at grocery stores. At Rotten Robbie, meanwhile, the pandemic has adversely impacted dairy sales. According to Moran, dairy sales were down 10% through October. “People are stocking up so much, there aren’t any last-minute outs,” he said.

Millennials, Gen Zers and higher-income households increasingly seek out more premium, better-for-you products like plant-based milk alternatives.

JANUARY 2021 |

77

CATEGORY CLOSE-UP / FLUID MILK PRODUCTS

Terri Allan is a New Jerseybased freelance writer, specializing in the beverage industry. She can be reached at terri4beer@aol.com, and on Twitter at @terriallan.

BUILDING SALES Even though milk accounts for just a small portion of store sales, thoughtful merchandising and promotional support can add lift to the category. Both Rotten Robbie’s and Jiffy Trip offer “two fors” on some milk purchases.

Jiffy Trip’s offer—a 25-cent savings on two pints or quarts—yields market basket increases, Morris said. At Lakeport Market, Paduano likes to keep dairy offerings fresh, so extra facings are added for popular seasonal items, such as eggnog during the holidays.

Consumer messaging is also important in driving sales, according to Ginestro.

She points to increased signage at the pump and in windows.

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“Milk and dairy foods have an inherent role in health and wellness,” remarked Kyllo. “C-store operators interested in growing dairy sales should explore innovative products and grab-and-go offerings that will deliver better-for-you snacking options that appeal to different consumer targets and demographics.”

Jiffy Trip is a good example of a c-store operator looking to grow its milk sales.

According to Morris, a recent analysis of various in-store categories found that the profit generated from just three shelves of fluid milk warrants opportunity for allocating more space to the products.

“We’re going to try to do a better job with our gallon program,” the retailer said, “and give dairy the respect it deserves.”

Thank you to these advertisers who have demonstrated their support of the convenience and fuel retailing industry by investing in NACS Magazine.

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A GDCTradeRelations@Altria.com................... Inside Front Cover www.altria.com www.tobaccoissues.com

L iving Essentials LLC (5-hour ENERGY)........................................7 (866) 960-1700 www.5HErewards.com

Premier Manufacturing Inc..............................................................5 & 43 www.gopremier.com

Calico Brands Inc. (Scripto).....................................................................15 (800) 544-4837 www.calicobrands.com

NACS 2021 Events..................................................................................... 61 www.convenience.org/events

S wedish Match North America (Game)......................................23 (800) 367-3677 www.smna.com

NACS Convenience Matters.......................................................................4 www.conveniencematters.com

S wedish Match North America (White Owl)..............................49 (800) 367-3677 www.smna.com

C ash Depot.....................................................................................3 (800) 776-8834 sales@cdlatm.com www.cdlatm.com

NACS Day on the Hill...............................................................................30 www.convenience.org/dayonthehill

Charleys Philly Steaks..............................................................................31 www.charleys.com

NACS Executive Education.......................................................................17 www.convenience.org/NACSExecEd

Cool New Products Guide.................................................................54-60 www.convenience.org/coolnewproducts

NACS Human Resources Forum..............................................................67 www.convenience.org/HRforum

EcoLab...................................................................................................... 27 www.ecolab.com

NACS Masters of Convenience................................................................ 73 www.convenience.org

T he Hershey Company................................................. Back Cover www.hersheysolutions.com

NACS Membership..................................................... 6, Inside Back Cover www.convenience.org/2021ally

L iggett Vector Brands Inc............................................................13 (877) 415-4100 www.liggettvectorbrands.com

NACS Payment Processing Program......................................................79 www.conveniece.org/LowerFees

78

| JANUARY 2021

S wedish Match North America (Zyn)...........................................9 (800) 367-3677 www.smna.com S wisher International Inc............................................................71 (800) 874-9720

Cool New Products Guide......54-60 www.convenience.org/CNP

CONVENIENCE.ORG

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7 2

8 8

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13. Publication Title

12

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JANUARY 2021 |

79

BACK PAGE

KW I K

TRIP

K KW I

RI IK T KW TRIP

KW

W PK

IK

IK T RIP KW I K

Paying It Forward

TRIP

Boxers or Briefs?

C-store regulars know their favorite retailers oftentimes sell some quirkylogoed merchandise, and true fans are quick to snap up the coveted swag, from PopSockets to beer kegs. Kwik Trip’s marketers chose to get a bit more personal.

The LaCrosse, Wisconsin-based c-store chain introduced limited edition themed men’s boxers and women’s briefs ahead of Christmas. “Nobooty was prepared for this. Order your Midwest stocking stuffer at kwiktripmerch.com,” Kwik Trip tweeted.

What’s not to like about underwear adorned with gas pumps, donuts, pizza, burgers and frosted drinks?

80

| JANUARY 2021

Retailers that sell a winning lottery ticket typically receive a commission on the proceeds. When KP Food Mart in Anderson, South Carolina, sold a winning scratcher that netted one lucky customer a $350,000 prize just ahead of Thanksgiving 2020, the c-store spent its $3,500 share feeding the community. “We’re going to have a Thanksgiving dinner for all of my walk-in traffic and homeless people around here,” Aggi Tarnowski, store manager, told the Anderson Independent Mail. “We’re cooking all the sides, turkeys, everything, the whole nine yards. The food is going to be free for all who need it.” Customers of the c-store, which opened last fall, got wind of the plan and chipped in donations, and store owners Prasanna Parvatneni and Ritesh Patel also contributed. The plan was to feed at least 30 people, with leftover proceeds going to help needy families at Christmastime.

The Real Deal A shuttered Los Angeles gas station is finding new life as a drive-thru inspection station for eBay. The online marketplace converted a 1940s-era Texaco Station in East Hollywood into a place where would-be sellers of collectable sneakers and luxury watches can drive up, hand their items to appraisers and remain safely inside their vehicles while the goods are authenticated. On the former forecourt, attendants in face masks sport mechanic-style coveralls, but no one is getting their hands dirty. A sign advises: “Please stay behind the wheel while we check if it’s real.” People who decide to sell can fill up with cash on the spot.

CONVENIENCE.ORG

In Uncertain Times, You Need an Ally.

You Can Depend on NACS Membership.

NACS Membership helps convenience and fuel retailers from around the world stay competitive and profitable today, while preparing for tomorrow. You can count on NACS to help you navigate disruption and future proof your business with access to new tools, products and resources, exclusive in-person and virtual events, and opportunities to make lasting connections.

Boost your business resiliency in 2021.

See how at convenience.org/2021ally

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