NACS Magazine - July 2020

convenience.org | JULY 2020

ADAPT TO SURVIVE Consumers demand new ways of thinking in category management post-pandemic.

OH CANADA

Lessons From the Cannabis Rollout

CAN-DEMONIUM

Wine and Cocktails in Cans Win Over Fans

COOL NEW PRODUCTS GUIDE

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

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

©2020 Altria Group Distribution Company | For Trade Purposes Only

JULY 2020

34

ategory Management C in a Post-Pandemic World

Embrace relevant lessons of the past to forecast and swiftly evolve to meet new demands ahead.

42 Snack Attack

Healthy and indulgent snacks combine to drive traffic and profits for c-stores.

46 A Kinder, Gentler EMV 48 Can-demonium A Q&A with Invenco.

Adult beverages in cans are winning over consumers and retailers alike.

54 Rebuilding the Brand

Your brand tells the world who you are and what you do—and sometimes it needs a facelift.

60 What’s Next for Mobile Pay?

The pandemic creates an opening for pay-by-app or tap-and-go to accelerate in the U.S.

Cover Art by Beyond Definition

66 Oh, Canada!

What the U.S. can learn from Canada’s marijuana rollout.

STAY CONNECTED WITH NACS

TWITTER @nacsonline FACEBOOK facebook.com/nacsonline INSTAGRAM instragram.com/nacs_online LINKEDIN 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.

CONVENIENCE.ORG

JULY 2020 |

1

JULY 2020

We want Carl’s to be the hub of our community, a place where people come to stay and talk.

Consumers crave variety in their beverage selection and choose retailers based on this.

P.86

IDEAS 2 GO | P.30

08 From the Editor 12 NACS News 20 Good Work 22 Inside Washington

NACS Treasurer and Kwik Chek CEO testifies before Congress on liability protection; NACS advocated for a delay in the fraud liability shift at the pump.

30 Ideas 2 Go

Carl’s Food & Beverage brings the community together.

72 Cool New Products 2

| JULY 2020

80 Gas Station Gourmet

Pizza kits and virtual wine tastings are on the menu at High Country Market Bistro & GastroPub.

82 Global Trends

Convenience retailers in Asia Pacific are using digital tactics and delivery to engage with customers post-pandemic.

86 Category Close-Up

Packaged beverages drive traffic and profit for c-stores; consumers celebrate the warmer months with frozen dispensed beverages.

100 Back Page 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.

CONVENIENCE.ORG

iStock.com/karandaev; MahirAtes

06 Convenience.org

Revolutionizing The Digital Air Industry.

Call Us At 1-800-776-8834

cdlatm.com sales@cdlatm.com

Magazine_July_Third_V2.pdf

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6/15/20

9:29 AM

VOLUME 19, ISSUE 7

JULY 2020

Conference / Oct 11-14, 2020 Expo / Oct 12-14, 2020 Las Vegas Convention Center

EDITORIAL Kim Stewart Editor-in-Chief (703) 518-4279 kstewart@convenience.org Sara Counihan Managing Editor (703) 518-4278 scounihan@convenience.org

News

When You Need It, How You Need it.

TO S U C C E S S

Introducing the NACS I N CONVEN I E N C Magazine digital experience— featuring instant access to online articles and a PDF digital edition with premium extras. Enjoy solutions-focused articles on industry trends, best practices, metrics and advocacy—on your schedule.

E

Early Bird Registration And And it’s FREE for NACS Preferred Housing members.

Are Now Open.

With health and wellness in mind, enhancements have been made to this year’s show, including extending our cancellation policy to 30 days pre-event to offer you Openflexibility. it. maximum

Read it.

Now. Save $300

Register June 24 Discoverbefore instant access today at NACSMagazine.com/instant

Available in print, online Learn more at and digital PDF edition. nacsshow.com/SAVE300

Lauren Brooks Digital Content Manager (703) 518-4283 lbrooks@convenience.org CONTRIBUTING WRITERS Terri Allan, Frank Beard, Fiona Briggs, Sarah Hamaker, Al Hebert, Pat Pape, Liza Salaria, Melissa Vonder Haar DESIGN Beyond Definition www.beyond-definition.com

ADVERTISING Stacey Dodge Advertising Director/Southeast (703) 518-4211 sdodge@convenience.org Jennifer Nichols National Advertising Manager/ Northeast (703) 518-4276 jnichols@convenience.org Ted Asprooth National Sales Manager (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

NACS BOARD OF DIRECTORS CHAIR: Julie Jackowski, Casey's General Stores Inc. OFFICERS: Lisa Dell'Alba, Square One Markets Inc.; Andy Jones, Sprint Food Stores Inc.; Jose Victor Paterno, Philippine Seven Corp.

(7-Eleven Convenience Store); Ken Parent, Pilot Travel Centers LLC; Donald Rhoads, The Convenience Group LLC; Jared Scheeler, The Hub Convenience Stores Inc.; Kevin Smartt, Kwik Chek Food Stores Inc. PAST CHAIRMEN: Frank Gleeson, Aramark Northern Europe; Joe Sheetz, Sheetz Inc. MEMBERS: Chris Coborn, Coborn's Inc. Little Dukes; Joseph DePinto, 7-Eleven Inc.; Bhagdeep Dhaliwal, Dhaliwal & Associates Inc.; Anne Gauthier, St. Romain Oil Company LLC; Varish Goyal, Loop Neighborhood Markets; Thomas Gresham, Double

Quick Inc.; Brian Hannasch, Alimentation Couche-Tard Inc.; Christine Hogan, Wheels Convenience Stores; William Kent, The Kent Companies (Kent Kwik Convenience Stores); Chuck Maggelet, Maverik Inc.; Chuck McDaniel, QuikTrip Corporation; Charles McIlvaine, Coen Oil Company; Lonnie McQuirter, 36 Lyn Refuel Station; Glenn Plumby, Speedway LLC; Robert Razowsky, Rmarts LLC; Stephen Spinks, The Spinx Company Inc.; Richard Wood, Wawa Inc. SUPPLIER BOARD REPRESENTATIVES: Rick Brindle, Mondelēz International; Drew Mize, PDI STAFF LIAISON: Henry Armour, NACS GENERAL COUNSEL: Scott Sinder, Steptoe & Johnson LLP

NACS SUPPLIER BOARD CHAIRMAN: Drew Mize, PDI CHAIRMAN-ELECT: Rick Brindle, Mondelēz International VICE CHAIRMEN: Thomas Blair, MillerCoors; Brent Cotten, The Hershey Company; Frank Squilla, InComm PAST CHAIRMEN: Jay Ard, Coca-Cola Company; Kevin Martello, Keurig Dr Pepper; Brad McGuinness, Qopper Inc. MEMBERS: Blake Benefiel, Altria Group Distribution Company; Steve Bradley, Wilbur Curtis Co. Inc.; David Charles Sr., Cash Depot; Alicia Cleary, Anheuser-Busch InBev; Tony Gaines, NVIP LLC; Josh Halpern, FIFCO USA; David Jeffco, Krispy Krunchy Foods LLC;

Tim Knight, BIC Corporation; Vito Maurici, McLane Company Inc.; Bryan Morrow, PepsiCo Inc.; Sharon Porter, Saputo Convenience; TJ Powers; John Thomas, iSEE Store Innovations LLC; George Ubing, E&J Gallo Winery; Dean Zurliene, Monster Beverage Company RETAIL BOARD REPRESENTATIVES: Stephen Loehr, Kwik Trip Inc.; Chuck Maggelet, Maverik Inc.; Chuck McDaniel, QuikTrip Corporation 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 © 2020 by the National Association of Convenience Stores. Periodicals postage paid at Alexandria VA and additional mailing offices.

1600 Duke Street, Alexandria, VA, 22314-2792

CONVENIENCE.ORG

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CONVENIENCE.ORG WHAT’S ONLINE | JULY 2020

Manage Effectively Effective category management can help retailers drive sales, reduce out-of-stocks and deliver new and exciting products to the 165 million shoppers who frequent convenience stores each day. NACS provides multiple category management tools to help you stay on top of your inventory.

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.

Available on: Available on:

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

TRAINING AND DEVELOPMENT • Certified Convenience Category Manager Course In a time when many retail channels are targeting the convenience-oriented shopper, it is more critical than ever for convenience operators to have the right product mix to meet consumer needs.

• NACS Certified Convenience Advanced Category Management Curriculum Whether a national, regional or local chain, experienced convenience store professionals will better understand the profit opportunities that come with effective category management.

To access these resources and more, visit www.convenience.org/ categorymanagement.

CATEGORY BENCHMARKS • Convenience Tracking Program CTP is a research study that conducts shopper interviews at convenience retail locations.

• CSX Benchmarking Application CSX allows participants to compare financial performance and operating trends against various industry averages with powerful business intelligence and benchmarking tools.

• Syndicated Data Program NACS and The Nielsen Company have joined forces to provide syndicated data to help NACS member consumer product goods companies and convenience retailers gain a better understanding of the competitive marketplace.

To access these resources, visit www.convenience.org/research.

Digital Read Don’t forget that you can access NACS Magazine anywhere and anytime. Check out NACS Magazine in a flippable PDF version, which offers the look and page-turning feel of the print version and includes links to websites, video and more. You can find the most recent digital issue at www.NACSMagazine.com. While you’re there, be sure to catch up on articles from past issues. You can browse by topic, popularity or by month.

NACSMagazine.com allows you to stay connected with the latest industry news during these critical times.

CONVENIENCE.ORG

FROM THE EDITOR

Here for You Kim Stewart Editor-In-Chief

Retailers have risen to challenge after challenge in the past few months.

8

| JULY 2020

I

visited a gas station over an early June weekend for the first time since March—and no, I don’t drive a hybrid.

Let that sink in: My car has been sitting in my garage since the Virginia governor issued a stay-at-home directive.

My tank was three-quarters full, and my left front tire needed air. After using the air machine at the Tiger Mart, I went inside for a Coke Zero, and at the counter, I hesitated as I dug out a bill and coins.

Did the store still accept cash?

“Of course,” the masked station manager told me from behind a plexiglass partition. “We need all the cash we can get!” I inquired about business, and he made a diving motion with his hand. “It’s bad,” he told me, “but not as bad as in April. People are afraid to leave home,” he said. I wished him luck and noted that nearly all of the pumps on the forecourt were busy. An encouraging sign, especially since the smaller “non-essential” stores in the adjacent shopping center were starting to reopen.

It’s no surprise that c-store foot traffic has declined. By early June, trips were at roughly 90% of the level they were a year ago, excluding the morning daypart, which lagged at just over 80%, according to data from PDI and NACS. In early June, the National Bureau of Economic Research officially declared that the nation entered a recession in February. Just how long it will last, though, is subject to debate. So it’s instructive to revisit the learnings from the last recession to see how consumer shopping habits might change and how agile category management plans can help convenience retailers flex to anticipate and meet new customer demands. Our cover story looks at category management in a post-pandemic world.

Payments is one of the many areas affected by COVID-19 and one most

certainly ripe for change, as concerns linger about the personal contact that comes with handling cash. In the past few months, Kum & Go, Sheetz and other c-stores have rolled out or upgraded their mobile apps and payment systems to enable customers to order and pay for goods or fuel with their smartphones.

This month, we examine what’s next for mobile payments in the U.S. Pre-pandemic, there was a lot of buzz about legalizing marijuana for recreational use in the U.S., at least at the state level. Canada began allowing cannabis sales for adult use nationwide in October 2018, and while initial demand was strong, first-year sales fell far short of analysts’ rosy projections. Turns out, Canada encountered some stumbling blocks that could inform a potential nationwide rollout of legal cannabis in the U.S., as we detail in “Oh, Canada!”

Convenience and fuel retailers have risen to challenge after challenge during the past few months. Staying open, staying safe, serving your neighbors— through a pandemic and also protests and unrest following the police-involved death of George Floyd, a Black man in Minneapolis, as well as other injustices.

Looters hit some of your stores and threatened your employees, while in other cases, neighbors stood guard to protect their beloved corner markets. At NACS, we’ve had some tough conversations about not only the business costs of the unrest but, more importantly, the human pain and frustration behind the protests. In these emotionally charged times, let’s not lose sight of the good that binds us together.

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ACS has enhanced its role in the fuels retailing and marketing space by purchasing Fuels Market News LLC, a provider of fuels-related news and information for the downstream

MEMBER NEWS RETAILER Casey’s General Stores Inc. announced three additions to its executive leadership team. Ena Williams is Casey's new chief operating officer; Steve Bramlage is chief financial officer; and Adrian Butler is chief information officer.

BP PLC has named David Lawler, CEO of BPX Energy Inc., as the new chairman and president of BP America Inc., succeeding Susan Dio on July 1. Lawler will become BP’s chief representative in the United States.

SUPPLIER Sally Grimes, a food industry leader with more than 25 years of experience, has been named the next CEO of Clif Bar & Company. This transition became effective June 1.

STATE ASSOCIATION The Pennsylvania Food Merchants Association appointed Redner’s Markets President and CEO Ryan Redner to its board of directors.

The Midwest Independent Retailers Association (MIRA) promoted Ed Weglarz to CEO. Prior to joining MIRA in 2006 as director of petroleum, Weglarz served as the president of the Great Lakes Petroleum Retailers Association and was the executive director of the Service Station Dealers Association.

12

| JULY 2020

Ena Williams

Steve Bramlage

Adrian Butler

Ryan Redner

petroleum industry. The deal closed May 1.

Fuels Market News joins the already-robust NACS portfolio of fuels data and information, including the Fuels Institute, which provides objective analysis of the transportation market; the NACS Fuels Resource Center, which presents relevant fuels information in one convenient location; the annual NACS Consumer Fuels Report, which delivers fundamental knowledge about how consumers behave and how the fuels retailing industry operates; and a long-standing partnership with the Oil Price Information Service (OPIS) to ensure the most credible data is available to NACS members.

Fuels Market News includes a contentrich online news website, four weekly e-newsletters and a quarterly print magazine, which reaches fuel marketers (wholesale and retail), retail dealers, convenience stores, terminals, truck fleets, fuel suppliers, service and lubricant distributors.

Convenience stores sell approximately 80% of the motor fuels purchased in the United States, and the industry’s fuels sales reached $395.9 billion last year. The importance of fuels in all forms will remain a critical part of the industry for years to come, and NACS will be there to help the industry evolve. Fuels sales are also important to earning trips inside the store: 52% of gas customers say they also go inside the store, according to a 2020 NACS consumer survey.

Long-time fuels media veteran and Fuels Market News co-founder Keith Reid will continue as the brand’s editor.

Reid brings decades of in-depth fuels knowledge and experience from his time at Fuels Market News and National Petroleum News (NPN).

CONVENIENCE.ORG

Explore the NACS Leadership Curriculum In this tumultuous time, you can’t afford to put capability building on hold. Whether it’s reskilling at the business-unit level or a company-wide aspirational transformation, don’t push the pause button on critical workplace learning, even as you put employee safety first. Skilled leadership is essential for survival and long-term success, and NACS Executive Leadership Programs—tailored specifically to the convenience industry—are your platform for success.

Date: October 25-30, 2020 Location: Yale School of Management at Yale University, New Haven, CT Designed for women executives looking to develop critical skills, including developing strategic perspective and decision making, understanding and honing leadership style, enhancing executive presence and leveraging diversity to accelerate innovation.

Apply today at www.convenience.org/ExecEd/Yale.

Date: November 1-5, 2020 Location: Dyson School at Cornell University, Ithaca, NY Designed for senior-level retail management preparing to take on key leadership roles in retail companies, this program gives participants the skills needed to successfully respond to the challenges of a competitive marketplace.

Apply today at www.convenience.org/ExecEd/Cornell.

Endowed by Endowed by

Date: November 1-6, 2020 Location: The Wharton School at the University of Pennsylvania, Philadelphia, PA Designed for high-potential executives in all functional areas who have been challenged by their companies to expand their financial insights and, in turn, provide greater value to their organizations.

Register today at www.convenience.org/ExecEd/Wharton.

Supported by

Endowed by

Date: November 1-6, 2020 Location: Kellogg School of Management Northwestern University, Evanston, IL Designed for CEOs and senior-level management looking to enhance their knowledge in topics such as branding, consumer experience and analytics.

Register today at www.convenience.org/ExecEd/Kellogg.

Endowed by

CONVENIENCE.ORG

Date: November 1-6, 2020 Location: Sloan School of Management at Massachusetts Institute of Technology, Boston, MA Building on MIT’s prestigious reputation and innovative culture, this program combines research-based management frameworks with practical hands-on experiences and offers networking opportunities for top-tier convenience industry leaders. Attendees (from retail companies only) will directly apply methods and frameworks to their own businesses—to build innovation capability and improve business results.

Register today at www.convenience.org/ExedEd/MIT.

For questions or to request more information, please contact Brandi Mauro, education program manager, at bmauro@convenience.org or (703) 518-4223.

Our programs are still a few months away, but our preparedness plans are evolving daily in light of new guidance on COVID-19. Our team is taking precautions and proactively running contingency scenarios with schools to guarantee we deliver high-quality networking and education—without jeopardizing anyone’s safety.

JULY 2020 |

13

NACS NEWS

NEW NACS MEMBERS NACS welcomes the following companies that joined the organization between April 16 and May 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 Darling C-Store LLC Yelm, WA

CraftAg dba AromaHemp Bainbridge Island, WA www.aromahempcbd.com

Outo.Me Vista, CA www.thesmythgroup.com

My Saving Center LLC Hanging Dog General Store Murphy, NC

EspriGas Hiram, GA

Sansome Pacific Properties Inc. San Francisco, CA www.sansomepacific.com

The Lewis Convenience Group Wichita, KS

KeHE Distributors Naperville, IL www.Kehe.com

NEW SUPPLIER MEMBERS

NEW HUNTER CLUB MEMBER

AboveTraining LLC dba StateFoodSafety Orem, UT www.statefoodsafety.com

LK Packaging Commerce, CA www.LKpkg.com

Best Catch Bait Company Chapin, SC www.wanglerslive.com

Mandel Distributors Lakewood, NJ www.mandeldistributors.com

Calpine Energy Solutions San Diego, CA www.calpinesolutions.com

Nutkao USA Inc. Battleboro, NC www.nutkao.com

BRONZE

NACS Calendar of Events

2020

OCTOBER 25-30

NACS Women's Leadership Program Yale University, New Haven, CT

OCTOBER 11-14 NACS Show Las Vegas, NV

14

| JULY 2020

Excel Tire Gauge LLC Warwick, RI www.exceltiregauge.com

For the most up-to-date information on event cancellations, please visit www.convenience.org.

NOVEMBER 1-6

NOVEMBER 1-6

NOVEMBER 1-6

For more information about these NACS events, visit www.convenience.org/events.

NACS Financial Leadership Program Wharton School of Business, University of Pennsylvania Philadelphia, PA

NACS Marketing Leadership Program Kellogg School of Business, Northwestern University Chicago, IL

NOVEMBER 1-5 NACS Executive Leadership Program Cornell University Ithaca, NY

NACS Innovation Leadership Program Massachusetts Institute of Technology, Boston, MA

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©2019 Trion Industries, Inc.

NACS NEWS

BY THE NUMBERS

Shifting Consumer Behavior As communities reopen, consumer expectations of convenience have shifted. To help retailers navigate coming changes, this spring we asked consumers what they would want and expect when they emerge from lockdown.

Results showed that it’s mixed what consumers will do, but routines will be tougher to establish: 69% of consumers surveyed say they will delay normal work and travel.

Consumers expect to commute again but not fully. Before the pandemic, 39% said they commuted at least five days a week, compared to 37% who did not commute. Going forward, 27% expect to commute five or more days a week, a 12-point drop. Meanwhile, 43% will not commute at all, a six-point increase.

In tandem, convenience routines will return slowly. Twenty-three percent of consumers say they will return to their normal routines at convenience stores, and 16% will not shop at stores at all. Others will shop for gas or inside the store when they need something. And while there is definite economic stress now, consumers find great value in convenience and safety. When asked about new technologies/offers (see below), convenience and safety were cited more often than price. $

Why Do You Like This?

It sounds like it would save me time

It sounds like a safer way to get what I want

It sounds like it would save me money

Pre-ordering food for delivery later in the day

49%

27%

20%

Same-day grocery delivery (i.e., Peapod or Instacart)

47%

32%

16%

Having online shopping orders for goods and merchandise delivered to a physical store location for easy pickup (i.e., Walmart, Home Depot or Best Buy)

43%

35%

17%

Ordering groceries online/via app for pickup at an in-store location (i.e., at a supermarket)

43%

38%

15%

Ordering drinks or food online/via app for pickup at an in-store location

42%

36%

15%

Mobile self-checkout technologies that allow you to instantly pay without standing in line or interacting with a cashier

41%

41%

15%

On-demand, local prepared food delivery (i.e., Grub Hub, DoorDash or UberEats)

40%

29%

23%

Source: NACS Consumer Survey, May 2020

16

| JULY 2020

CONVENIENCE.ORG

24/7 Heroes Don’t Take a Break The NACS Foundation is uniting the convenience industry to honor those on the front lines of our communities.

This July 24 (24/7 Day), the NACS Foundation is uniting convenience stores in recognizing first responders, medical personnel and American Red Cross volunteers who work around the clock, 24/7, serving our communities to ensure people don’t face emergencies alone. The annual event helps raise awareness and donations for the urgent humanitarian needs of the Red Cross and spotlights our industry’s critical role in supporting local heroes and the communities we serve.

Join our mission to amplify the good work done every day in local communities across America by visiting 247day.org.

THANK YOU TO OUR 24/7 DAY 2020 PARTNERS:

NACS FOUNDATION MEDIA PARTNER

COMMUNITY LEADER SPONSOR

#conveniencecares The American Red Cross name, emblem and copyrighted materials are being used with its permission, which in no way constitutes an endorsement, express or implied, of any product, service, company, opinion or political position. The American Red Cross logo is a registered trademark owned by The American National Red Cross. Should you require a receipt, please donate by calling 1-800-RED CROSS (1-800-733-2767), or give online at redcross.org

NACS NEWS

Linda Toth Becomes Conexxus Managing Director Linda Toth has been promoted to managing director, overseeing all day-to-day operations of Conexxus and working with the organization's boards of advisors and directors, which represent the invaluable work of Conexxus to the broader membership of NACS. For more than a decade, Toth has contributed her dedication and considerable talents to the work of Conexxus first as a vendor, then as standards manager, advancing to director of standards. Since Toth joined the Conexxus team, the organization has broadened the scope of its work

from interoperability standards to include EMV advocacy, standards process improvements and association infrastructure—to name just a few. Her success at Conexxus has helped membership double.

Linda Toth Gray Taylor remains executive director in a strategic role, with all operations oversight moving to Toth. For more information about the work of Conexxus, visit www.conexxus.org.

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GOOD WORK

Stay Safe at Home

BY SHELLY FEIST

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•T o remove food from a stove top •W ipe down interior refrigerator surfaces with hot water and soap When you should sanitize: •S omeone sneezed on your countertop •S omeone sick touched your refrigerator door handle or faucet •R aw meat juice spilled on countertop, stove, sink, floor or in the refrigerator •R aw meat touched a countertop, stove top, sink, utensil or cutting board or shelf in your refrigerator Coronavirus is a respiratory illness and is not known to be transmitted through food or food packaging, per the CDC. It just so happens that safe food handling steps also help to reduce the risk of coronavirus.

Currently, there is quite a bit of misinformation on food packaging and food handling. Some are advising people to disinfect food packaging or leave food in the garage to kill coronavirus. Some of the steps recommended by well-meaning bloggers could result in chemical and food poisoning for some. We recommend the following food handling guidance.

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he global coronavirus pandemic has vastly changed our daily habits.

Your friends at the Partnership for Food Safety Education thank you for stepping up for your communities and have noticed the industry’s efforts to keep families safe and fed, and we are grateful.

Convenience retailers are well-versed in how to keep their stores clean and safe. Your employees can set another great example by practicing safe food handling and food safety protocols at home, ensuring their own families take action to reduce the risk of food poisoning.

The work environment has built in queues for handwashing; however, at home it may not always be so obvious when to wash hands. Here are some scenarios in which hand washing is recommended at home: • Before eating food • Before, during and after preparing food • Before and after treating a cut or wound • Before and after caring for someone who is sick • After changing diapers or cleaning up a child who has used the toilet • After handling uncooked eggs or raw meat, poultry or seafood (or their juices) • After blowing your nose, coughing or sneezing • After touching an animal or animal waste • After touching garbage • After using the toilet or assisting another with doing so • If you use a smartphone device or tablet in the kitchen while preparing food, you should wash your hands after holding or touching the device.

Cleaning refers to the removal of food pieces and dirt, but a quick wipe down may not reduce the risk of coronavirus or food poisoning. It is important to sanitize surfaces to remove germs.

Just like handwashing, it may be obvious at work when it is best to sanitize surfaces but challenging to know when to clean versus sanitize at home.

When you should clean: • To remove dried food and spills from countertops

• Food delivery: Use the contactless, “leave-at-my-door” option. Wash hands before and after handling delivered food; eat or refrigerate delivered food within two hours; and eat leftovers within three days.

• Meal kits: There is no need to wipe down the box or packaging. Wash hands before and after handling delivered food, and eat or refrigerate delivered food within two hours.

• Grocery shopping: Wash hands before and after shopping; wipe down the cart handle; maintain social distancing; and follow your store guidelines. Go home immediately; store food immediately;

and wash hands. No need to wipe down packaging after you get home.

• P roduce handling: Rinse under running water, and use a scrub brush or your hands to gently massage the produce. Pat dry with a clean towel.

Do not use soap or bleach on produce, which can make you violently ill.

Shelley Feist (sfeist@fightbac.org) is the executive director of the Partnership for Food Safety Education (PSFE) of which NACS is a partner. The non-profit PSFE is the originator of science-based food safety messages and the national leader in developing and disseminating information around the linkage of food safety consumer education with positive health outcomes.

There are many resources available to you and your families for download, including food safety education information, from the Partnership’s website at www.fightbac.org. Also, check the latest coronavirus resources from NACS at www.convenience.org/coronavirus.

IN THE COMMUNITY Across Louisiana, six ExxonMobil-branded wholesalers banded together to donate $13,000 in gas gift cards to health-care workers so they can continue their work fighting COVID-19 and get back home to their families. This builds upon ExxonMobil’s support of now 60,000 gallons of fuel for emergency response vehicles, as well as gas gift cards to hospital workers in Baton Rouge.

•B rother’s Petroleum donated gas gift cards to the Oschner Health Center. The 44 Brother’s Food Mart locations in the New Orleans area also gave out free two-piece chicken dinners to medical workers.

•L ard Oil donated gas gift cards to Our Lady of the Lake and North Oaks Hospital. The company also donated phone chargers to local hospital workers and distributed hand sanitizer produced by ExxonMobil to emergency responders across Louisiana.

•P opingo’s Convenience Stores LLC donated gas gift cards to Prevost Memorial Hospital, St. Elizabeth Our Lady of the Lake Ascension, Coastal Urgent Care, Ochsner Medical Complex, St. James Parish Hospital and Assumption Community Hospital.

•R A Collette Oil Co Inc. donated gas gift cards to the Woman’s Hospital in Baton Rouge.

•R io Fuel & Supply donated gas gift cards to Ochsner St. Mary.

•W B McCartney Oil Company donated gas gift cards to Jackson Parish Hospital.

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Holmes Oil Company Inc., operator of 26 Cruizers stores throughout central North Carolina and headquartered in Chapel Hill, donated $5,000 to the Chapel Hill-Carrboro Meals on Wheels. These funds helped the nonprofit deliver meals to food-insecure and home-bound members of the community.

In May, Weigel’s employees delivered dozens of pizzas and donuts to local hospitals, hospital emergency rooms and fire stations in 11 counties throughout the Knoxville, Tennessee, area. Over a four-day period, the team made deliveries to 15 hospitals and 18 fire stations.

Working with the American Logistics Aid Network, Core-Mark International’s regional distribution center in Forrest City donated the use of several of its drivers, trucks and temperature-controlled trailers to deliver much-needed frozen and other perishable items to Arkansas residents. In May, the Core-Mark team transported donated food from Arkansas Foodbank’s warehouse in Little Rock to food pantries, soup kitchens, churches and other centers in a 33-county service area.

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Mr. Smartt Goes to Washington

NACS Treasurer and Kwik Chek CEO testifies before Congress on liability protection.

BY CHRIS BLASINSKY AND ANNA READY BLOM

FACTS & FIGURES

6 Witnesses spoke on liability, and Kevin Smartt was one of four who testified in person

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lying to Washington, D.C., in the middle of a pandemic to testify before Congress when the nation’s capital was under a stay-at-home order probably wasn’t on the list of things Kevin Smartt ever thought he would be doing. Yet when NACS called Smartt, president and CEO of Kwik Chek Food Stores, to ask if he would be willing to represent the industry before Congress at a hearing examining liability, he willingly obliged, knowing the urgent need for businesses to be protected from unfounded lawsuits related to the coronavirus.

In fact, one of the biggest threats facing the industry during the coronavirus

pandemic is costly litigation that alleges employees or customers were exposed to COVID-19 at a convenience store, despite a retailer’s best effort to mitigate the virus.

NACS has organized a coalition of essential industries to advocate for legislation that provides narrow liability protection for those businesses who acted responsibly from these types of claims.

In early May, the Senate Judiciary Committee convened a hearing entitled, “Examining Liability During the COVID-19 Pandemic.” Smartt was one of six witnesses, which included a labor union president, a university general counsel, a tourism industry executive, a law professor and a labor employment CONVENIENCE.ORG

advocate. To maintain social distancing, Smartt and three other witnesses testified in person sitting six feet apart, while two of the witnesses testified remotely. Smartt was not just representing the convenience store industry but all essential industries, as he was the only business witness.

In addition to operating Kwik Chek, which has 47 convenience stores in Texas and Oklahoma, Smartt also is the owner and CEO of McCraw Oil Company, a fuel wholesale distribution company; McCraw Transport, a fuel delivery company; and Texas Born, a food product company. In his opening statement to the committee, Smartt stated, “I am a retailer, wholesaler and distributor. All my businesses are considered ‘essential’ and have remained open during the COVID-19 pandemic.”

Smartt shared the concerns of businesses around the country who feared they would be targeted by plaintiffs’ attorneys for staying open during the crisis, even though they were asked to remain open to serve the public. “While it’s extremely difficult to prove where COVID-19 was contracted, we know that some plaintiffs’ attorneys will look to take advantage of the crisis and file claims against businesses that stayed open,” he said.

When the Department of Homeland Security designated a list of industries as “critical infrastructure,” the agency wrote that these businesses had “a special responsibility to maintain their normal work schedule.”

Convenience retailers rose to the occasion and strived to stay open during stay-at-home orders and provide for their communities, including first responders and frontline workers, with much-needed food and fuel. However, remaining open during the crisis has been anything but business as usual amid numerous obstacles, such as significant supply chain deficiencies and shifting and conflicting public health guidelines from federal, state and local agencies.

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Since early March, Smartt’s Kwik Chek stores have implemented time- and cost-intensive virus mitigation protocols to protect the safety of employees and customers and reevaluate how Kwik Chek is approaching and responding to the COVID-19 threat every day. In-store team members have undergone intensive safety and cleaning training, and they are disinfecting all high-touch areas, such as cashier counters, PIN pads and food preparation areas, at least every 15 to 30 minutes.

Senator John Cornyn (R-TX) commended Smartt for taking action to protect employees, customers and the community, which should be considered as liability protection legislation is drafted, Cornyn said. “If what we do doesn’t work for people like you and your business, it’s not going to work for anybody.”

Smartt encouraged Congress to pass legislation that protects essential businesses against unwarranted liability and takes into consideration these principles: • Protecting essential businesses that were asked to keep operating to serve their communities and first responders • P rotecting against claims that the virus was contracted by a customer or employee on the premises or due to the continued operation of an essential business • Ensuring the protections cover employers that take precautions • Tailoring liability protections so that they still allow true bad actors to be sued • Separating any questions of compensation for people who get sick from the question of whether and when businesses should be liable • Limiting the duration of these protections so that they apply to situations arising out of the current crisis but are not permanent changes to liability laws Given the frequent changes in pandemic guidelines for retail operations, whether from the CDC, OSHA or the local county, Smartt responded to a question from Texas Senator Ted Cruz by saying that the threat of potential lawsuits impacts

We know that some plaintiffs’ attorneys will look to take advantage of the crisis and file claims against businesses that stayed open.

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

Anna Ready Blom is the NACS director of government relations. She can be reached at ablom@convenience.org.

decision making. Smartt said that it’s difficult to communicate changes that can happen daily to all 600-plus employees, such as different mask requirements for drivers passing through multiple counties with varying degrees of personal protective equipment requirements.

Throughout the hearing, Smartt continued to clarify that the industry is looking for limited liability protection for businesses who have done the right thing and acted in good faith, but the industry is not looking to protect bad actors.

“We’ve tried to do the right thing. We chose people first over economics,” said Smartt, adding that although his fuel volume is down 40%, and in-store sales are down about 17%, the company is keeping its 600-plus employees on payroll at full pay.

“We should not be punished with unfair lawsuits just because we kept our doors open for the American public,” he said.

“Mr. Smartt, you’ve become the gold standard” for how businesses are protecting their employees and customers, said Chairman Lindsey Graham.

Smartt would tell you that his experience is not unique to the convenience industry.

“It was an honor to represent the convenience industry before Congress.

My testimony about what I’ve done to protect my employees and customers

in the midst of this pandemic is not unusual for this extraordinary industry.

Countless convenience store retailers have taken similar measures to protect their people,” stated Smartt. “And yet those measures may not be enough to protect them from unfounded lawsuits from those looking to take advantage of the crisis. This is why I went before Congress—to ask them to pass legislation that provides liability protection for the businesses that never closed and did the best they could in the midst of this unprecedented, highly contagious virus.”

NACS continues to advocate for federal legislation that provides liability protection for businesses who have acted responsibly from claims related to COVID-19 exposure. Senate Majority Leader Mitch McConnell (R-KY) said Congress will take action on the next stimulus package when Congress returns from the Independence Day recess. He has said that reasonable liability protections for businesses are a top priority. To reach out to your member of Congress and urge them to pass liability legislation, visit www.votervoice.net/NACS/Campaign, or email mhardin@convenience.org.

For more recent updates, subscribe to NACS Daily at www.convenience.org/ NACSdaily.

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 May 1-31, 2020, are: J. Scott Apter Apter Industries Inc.

Sydney Kimball Shell International Petroleum Company Limited

Joseph Vonder Haar iSEE Store Innovations LLC

Dell Cromie Glassmere Fuel Service

Henry Latifzadeh Callaway Oil Inc. dba Ultra-Fuel

Donald P. Zietlow Kwik Trip Inc.

Josh Halpern FIFCO USA

Natalie Morhous RaceTrac Petroleum Inc.

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INSIDE WASHINGTON

Card Firms Postpone EMV Deadline NACS ADVOCATED FOR A DELAY IN THE FRAUD LIABILITY SHIFT AT THE PUMP, CITING THE PANDEMIC.

BY ANNA READY BLOM Convenience and fuel retailers won a sixmonth reprieve from the October 1, 2020, deadline to upgrade their automated fuel dispensers (AFDs) to enable EMV chip-card payments. The four major credit card networks agreed to delay the deadline for the EMV fraud liability shift

at the pump to April 2021 in response to letters NACS sent on behalf of its retail members, given the extreme disruption to the workforce and supply chain due to the coronavirus pandemic.

Visa was the first of the big four global networks to announce it would

ONE VOICE This month, NACS talks with Lonnie McQuirter, director of operations at 36 Lyn Refuel Station.

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

Convenience stores reflect the neighborhoods we Lonnie McQuirter serve. You can learn about neighborhoods and how the community is evolving by paying close attention to the interactions and ambiance of the local convenience store. Without fail, you will find a strong operator in strong communities. We mirror and make investments a majority of the time based on the support of our neighbors.

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

When a retailer is politically engaged—meaning they personally reach out to their congressional representatives and their staff—it positively affects the outcome of the issue for our industry. A key example

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of that is NACS’s victory in passing swipe fee reform a decade ago. NACS activated its retail members, and it ultimately led to legislation that saved the American consumer billions in card fees. A more recent example is the work being done to pass liability protections to ensure that those who risked and sacrificed a lot to remain open are not exposed to unethical ambulance chasers.

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

I'm more concerned with the fact that many decision makers have little to no experience running their own businesses and have this hubris about how they should engage with us business operators. For instance, in this crisis much has been mentioned about first responders and those on the front lines, while with a loud silence ignoring those who maintain a clean and orderly store, provide lifesaving medicine and a safe place to go (getting away from a domestic violence situation, harassment, clean bathroom to use). Our staff do important work and, in many ways, have been overlooked during all of this instead of receiving the recognition and honor they deserve in my opinion.

What c-store product could you not live without?

Coffee, Altoids and spring water.

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delay the liability shift to April 17, 2021.

American Express and Discover followed, pushing back their deadlines to April 16, 2021. Mastercard was the last holdout, announcing in mid-May that it would postpone the EMV liability shift for AFDs to April 16, 2021. In addition to the major networks, U.S. Bank Voyager Fleet Services, an issuer of fleet cards, announced a delay to April 17, 2021.

The EMV delay comes at a time when convenience stores’ main objective is keeping stores open to meet the essential needs of their customers and communities. NACS is glad to see American Express, Discover, Mastercard and Visa recognize the unequivocal economic impact coronavirus is having on businesses and also the amount of work involved in EMV compliance.

Anna Ready Blom is the NACS director of government relations. She can be reached at ablom@convenience.org.

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“Our retailers’ top priority at this time is providing fuel and other products to the Americans who need it most and keeping its employees and customers safe and healthy,” NACS wrote to the card networks in late March as part of a coalition of retail and fuel marketer groups. “Given the significant impediments to many retailers getting AFDs and appropriate software that accept EMV payments developed, tested, certified, and installed, we respectfully request that you delay the AFD liability shift and set a new, achievable date for that transition once the current crisis has abated,” the letters stated. The coalition sent follow-up letters in early April after Visa initially denied the associations’ request.

For EMV research and compliance resources, visit www.convenience.org/ EMV.

2:51 PM

Las Vegas Convention Center / Oct 11-14, 2020

S H A P I N G T H E F U T U R E O F C O N V E N I E N C E 2020 NACS Show Updates

Visit the NACS Show FAQ page to see all of the enhancements we're making to ensure everyone's well-being while still striving to deliver the same high-quality networking, access to never-before-seen products and thought leadership that will inspire your business' next moves. As public health guidance is updated, any changes to the delivery of content and experience at the 2020 NACS Show will be shared with you immediately via nacsshow.com and/or by email.

NACSSHOW.COM/FAQ Half Horz.indd 1

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IDEAS 2 GO

A New, Old Tradition

Carl’s Food & Beverage brings the community together.

BY SARAH HAMAKER

For some customers, this is the only store they have been coming to during the pandemic.

Carl's Food and Beverage first opened in the 1960s but had closed by the early 2000s. In 2006, the Tuck family purchased the building and reopened Carl's, revitalizing the business as a place for the community to gather once again.

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arl’s Food & Beverage has been an institution in Bristol, Tennessee, for more than half a century. The original Carl’s opened in the 1960s and quickly became a favorite for locals. But by 2006, it had closed, and the building had fallen into disrepair.

“We had been looking for a change to bring our own family together and saw reopening Carl’s as a great opportunity to do just that,” said Karen Tuck, who

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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bought the business with her husband, Don. Together, they revitalized Carl’s, making it once again a place for the community to gather.

REBUILDING HISTORY Fourteen years ago, the Tucks decided that running a business together would be better for them and their children. “Don worked in the restaurant industry, and I was home with the kids running various businesses out of our home,” Karen said.

“We never saw each other, and that wasn’t how we wanted to raise our family.”

The two looked for a business venture and found it in Carl’s, which had been closed for a while. “We saw Carl’s as the perfect way to bring our family together and to serve the community,” Karen said.

The Tucks kept much of the charm of the original Carl’s while adding modern conveniences, such as a deli inside the CONVENIENCE.ORG

ABOUT

Name of company Carl’s Food & Beverage

Next door to Carl's is a Zero Sub franchise, which the Tucks also own, and it provides a more robust foodservice option.

store. They made the store bigger with more products and a checkout counter with two cash registers, built a big beverage center and made other changes.

The store stocks old-fashioned candy and soft-serve ice cream, while serving breakfast biscuits and hot dogs.

The building next door, which the Tucks also own, houses a Zero Sub franchise, which provides a more robust foodservice option. “Both businesses are interconnected and feed off each other, although each have separate entrances,” Karen explained.

PERSONALIZED SERVICE From the beginning, the Tucks knew the store’s future depended on friendly customer service. “Service is the key to the success of our business,” Karen said. “We carry similar items to other convenience stores, but our approach to our customers sets us apart.”

At Carl’s, employees are encouraged to come out from behind the counter to visit with customers, which Karen and Don model for them. “We wanted to create an environment where our regular customers are known by their first name,” Karen said. “We want Carl’s to be the hub of our community, a place where people come to stay and talk, not just grab something and leave quickly.”

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While the coronavirus pandemic has meant social distancing, the Tucks said they remain committed to stellar customer service with a friendly smile.

“We still interact with people, but we are more cautious, and there’s a lot more hand sanitizer around,” Karen said. “Since we tended to keep the store and restroom super clean anyway, we haven’t altered our cleaning schedule much at all.”

Date founded 2007 # of stores 1 Website www.facebook.com/carlsbeverage

BRIGHT IDEAS For Karen and Don Tuck, owners of Carl’s Food & Beverage, their success can be directly tied to listening to customers and discerning what they want or need. For example, by asking customers what they’d like to see in the store, they have been able to curate their products into a mix that works. “We had to change our original planogram because we ended up needing different products than we thought we would,” Karen explained.

That listening goes beyond bringing in new products—it goes to the heart of their customer service. “It’s important to never let your systems interfere with your service,” Don said. Karen added, “I always tell my staff that if you feel like you’re being inconvenienced, then you’re doing your job.”

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IDEAS 2 GO

Don added, “Our customers still feel comfortable coming to our store. For some, this is the only store they have been coming to during the pandemic.”

Beyond a friendly atmosphere, Don and Karen pride themselves on stocking what their customers need. “Our customers know if they want something that we don’t carry, that we’ll get it for them if we can,” Don said. For example, they have special-ordered specific brands of candy and beer for regular customers.

CREATING REGULARS Overall, both Karen and Don strive to build a place where customers want to return. “I want each customer to think, ‘I can’t wait to come back because it’s such fun at Carl’s,’” Karen said.

Sarah Hamaker is a freelance writer and NACS Daily and NACS Magazine contributor based in Fairfax, Virginia. Visit her online at www.sarahhamaker.com.

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Customer service is paramount at Carl's, and the Tucks strive to create an environment where regular customers are known by their first name.

Part of that process is listening to customers. “I don’t think a day goes by without one or two customers talking to us about their problems,” Karen said.

“It’s part of our job to listen because they just need to know that they matter. And they do matter—we’re like a very large, extended family here.”

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CATEGORY MANAGEMENT IN A

POST-PANDEMIC WORLD Embrace relevant lessons of the past to forecast and swiftly evolve to meet new demands ahead.

BY LIZA SALARIA

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Price—both everyday and promotional pricing—are important elements in the strategies retailers deploy to retain existing customers and earn the dollars of new ones. and alcohol might be spared, preserving category sales will hinge on merchandising agility to apply relevant lessons from the past while forecasting what trends lie ahead.

PROTECTING CATEGORY PROFITABILITY A study by the University of Chicago provides some insight into how consumers respond during uncertain economic times. The study, “Food Purchases During the Great Recession,” indicates that unemployment led households to purchase less expensive brands, irrespective of whether they were private label or national brands.

Interestingly, it also revealed that unemployment had an insignificant effect on top national brands, suggesting that less-expensive brands stole share from mid-tier brands, while expensive brands were relatively insulated. This may point convenience retailers to some basic assortment lessons for the future. For example, rethink categories with a multi-tiered brand strategy such as “good, better, best”—leaving less space for “better,” while expanding lower priced brands and preserving shelf space for select premium brands.

If private label is part of a retailer’s arsenal, now is the time to promote its value and quality as there is high probability it will display sales “stickiness” post-recession. During springtime stay-at-home orders in the U.S., consumers increasingly tried private label brands at supermarkets.

Data from AlixPartners show that 65% of U.S. consumers tried new brands during the coronavirus pandemic—79% did so because their usual option was out of stock—and consumers chose more CONVENIENCE.ORG

iStock.com/Eugene_Antonov, kozorog

A

s we navigate the current recession (which economists say began in February), it’s instinctive to revisit learnings from the 2008 recession to gauge how this one might impact convenience retailing. But stark differences in the world today versus 12 years ago should be considered when trying to predict future shopping habits of convenience customers post COVID-19 and crafting agile category management plans to flex with consumer demands.

Today, the average price of gasoline hovers under $2 per gallon, while in April 2008 some parts of the U.S. were paying as much as $3.50 per gallon. Mortgage rates dropped this April to their lowest level ever in the history of the Mortgage Bankers Association’s (MBA) 30-year-old weekly survey, compared with a significantly tighter credit market in 2008. Despite the differences in economic fundamentals between the two eras, one thing is for sure—consumer uncertainty, fueled by high unemployment, traditionally translates into a contraction of consumer spending. Though some recession-proof categories such as tobacco

long-term value, versus benefitting from shortterm pricing advantages.

These are unprecedented times for our industry, as Lori Stillman, NACS vice president of research, notes. “The impact of COVID-19 on our supply chain and consumer behavior has created a wide array of challenges,” Stillman said. “Some categories have seen sharp decreases in demand, while others are recording unprecedented increases in sales. Staying true to your overall retail pricing strategies is essential as these new behaviors cement or erode and as product availability stabilizes.” Stillman also noted the importance of paying close attention to the opportunities that exist to use cross-promotion as a vehicle to marry trip drivers with the emerging items shoppers are increasingly seeking in convenience retail. “Right now, shoppers are open to looking at new retail solutions to meet their everyday needs. Price—both everyday and promotional pricing—are important elements in the strategies retailers deploy to retain existing customers and earn the dollars of new ones.”

PRICING STRATEGY—STAY THE COURSE Pricing strategies are critical for retailers who are looking to capture shopper attention, stimulate sales and drive bigger baskets. As the industry works to meet the changing needs of shoppers in a post-COVID-19 world, price will play a critical role in how and where shoppers shop. Having an effective pricing strategy that is consistently executed and optimized is critical for the elongated recovery ahead in retail.

Retailers who take the long view of the relationships they enjoy with their customers and the communities they serve will find themselves guided by a strategy that enables them to drive

LEVERAGE LOYALTY The convenience channel is blessed with selling habit-forming, high-purchase-frequency categories that drive loyal customers to stores multiple times per week. Yet, convenience trips per week have steadily declined from 3.6 in 2014 to 2.3 in 2019, according to NACS CTP (Convenience Tracking Program) data. The industry may see further pressure from a post COVID-19 consumer mindset, where even the most loyal customers look to avoid public places and reduce the number of shopping trips. In a NACS-sponsored national consumer sentiment survey conducted by PSB Insights in mid-May, 69% of Americans surveyed said they would delay normal work and travel.

And less than one in four (23%) who commute to work said they would immediately return to their normal routines at convenience stores.

Retailers will need to develop and implement creative programs to rebuild high-frequency foot traffic. One solution could be to institute a beverage subscription program where customers purchase a monthly subscription for a flat price and enjoy unlimited cups of drip coffee and/or fountain drinks. In March 2020, Panera rolled out

By engaging in a more streamlined assortment strategy postCOVID, retailers may see some operational savings related to receiving, stocking and ordering.

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iStock.com/serezniy

lower-priced private label options over national brands. 7-Eleven, for example, has a strong commitment to private label. Today, the company currently offers more than 1,500 private label items and expects annual sales to reach $1 billion.

By engaging in a more streamlined assortment strategy post-COVID, retailers may see some operational savings related to receiving, stocking and ordering. However, when making assortment changes, retailers must consider any financial impact from lost rebate revenue. Retailers may need to work with their vendor partners to restructure contracts that support this new strategy.

And finally, if consumers do indeed start to “trade down,” it can be risky for retailers since less expensive brands typically offer less penny profit. To combat this risk, retailers should look to overlay these lower cost products with “multiple” style promotions that drive incremental units and penny profit. An example would be to take a $1.19 single-priced item and lead with an everyday promotion “Buy One Get One for $1” to drive a larger basket ring and more margin dollars.

to its nearly 2,200 locations a coffee subscription program for $8.99 a month. In its test markets, Panera “saw a 200% increase in the frequency of visits and a 70% increase in consumers buying food with the coffee,” USA Today reported.

Replicating the Panera approach could be just what the convenience industry needs to coax loyal customers back into a routine. Tying the subscription program to the enrollment in a loyalty program can provide yet another layer of benefits.

Subscription programs allow retailers to uncover deeper insights into their customers’ purchasing behavior, giving them needed data to provide consumers with meaningful rewards and start building a long-lasting relationship to their brand.

ADJUST FOR CHANGES IN DEMAND Sales volatility will be the new constant. As retailers experience sharp sales spikes in essentials, declines in non-essentials and natural brand shifting, they will need to make the necessary adjustments to their ordering processes to avoid out of stocks. Accommodations might be as basic as developing a report of “SKUs that have grown greater than XX% in the past 30 days” and communicating to both stores and suppliers to increase supply and adjust ordering par levels.

Likewise, manual intervention with any computer-assisted ordering technology may be necessary as these systems often do not react immediately to rapid spikes in demand. Significant volume shifts could require updating space allocation and planogram facings. Finding temporary “space-expanding” solutions, such as re-purposing CONVENIENCE.ORG

flexible endcaps, utilizing mobile merchandising units and allocating bulk space for high cube items like toilet paper, budget beers and case water, can make it easier to shift between pandemic needs and normal space planning activities in anticipation of possible COVID-19 waves.

7-Eleven’s use of mobile merchandising is a good example of an agile merchandising approach which enables stores to quickly capitalize on seasonal and popular merchandise without having to reset inline gondolas. During the pandemic, these merchandisers were dedicated to COVID-19-specific merchandise such as washable face masks, bandanas and various sizes of sanitizer. The mobility of these merchandisers also allowed them to be placed in high traffic, impulse areas of the store.

SAFETY DRIVES FOODSERVICE Safety and sanitation will continue to be top of consumers’ minds, along with a new aversion to high-contact surfaces. A likely outcome could bring significant change to how self-service food

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NACS Advanced Category Management Certification Sunday, October 11, 2020 9 a.m.-3:30 p.m.

Earn your NACS Certified Convenience Advanced Category Management certification (CCACM) through the completion of this hands-on education session at this year’s NACS Show.

Learn how to develop a holistic brand strategy and identify points of differentiation for your brand. Discover how to integrate consumer shopping behavior to create winning space and assortment strategies. A deep dive into price elasticity modeling, utilizing behavioral economic principles, will guide attendees on how to optimize price, promotions and overall profitability.

Drawing on the fundamentals included in the online NACS Advanced Category Management curriculum, this in-person workshop will incorporate industry data and offer collaborative work sessions designed for maximum learning and retention.

Upon completion, each participant will earn a CCACM certificate from NACS and Impact 21.

Who Should Attend: Retailers and suppliers looking to deepen their existing knowledge of c-store category management.

Registration: Pre-registration is required.

• Retailers: $499 per registrant (includes lunch and materials) when added to a NACS Show registration • Suppliers: $599 per registrant (includes lunch and materials) when added to a NACS Show registration

is merchandised. Bulk bakery cases might soon be replaced with wicker floor baskets filled high with wrapped donuts and muffins. And hot cases, once filled with bulk burritos and corn dogs, may soon take on a new appearance as products are dressed in insulated window bags. At the onset of COVID-19, Jeff Foley, manager of business improvement at CEFCO in Temple, Texas, explained how CEFCO transitioned from merchandising hot snacking items (burritos, egg rolls, etc.) from a bulk display to packaging each item in CEFCO Kitchen branded bags. “We believe this change was exactly what customers wanted and helped preserve much of our snacking business during peak COVID-19. We

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also streamlined our assortment and focused more on the top sellers. These changes improved operational execution, and our margin in this category has improved 18 full percentage points,” Foley said.

Accordingly, changes to foodservice merchandising may come with both operational and sales benefits: •W rapped products would be tagged with individual UPCs, allowing better visibility into SKU level sales and therefore more accurate production planning.

•W rapping food items typically extends shelf life, which in turn can help reduce waste.

•M obile merchandising units such as floor and counter baskets allow bakery products to reside in multiple “impulse” locations throughout the store. This display flexibility capitalizes on the right category adjacencies and potentially increased sales.

A CHECKLIST FOR THE RECORD… As category teams react to the effects of COVID-19, it is critical to keep copious notes. Adjustments to space allocation, assortment, promotional and pricing strategies, and ordering systems need to be permanently recorded in an organizational archive. This pandemic “checklist” will be essential for retailers to quickly react to similar events in the future.

The key theme for this time period is simple— be agile amid changing times. Category teams must act swiftly to meet the shifting dynamics of the business. This includes capitalizing on a changing product mix, pricing sensitivities, ordering disruption and new delivery mechanisms for foodservice.

Don’t assume 2020 will be a copy and paste from 2008. Economic fundamentals between the two eras are significantly different, but the general outcome will most likely be the same—a value-seeking customer. Though this time, the value seeker places equal importance on a safe and sanitary shopping environment from a trusted brand.

Liza Salaria is a senior principal consultant of Impact 21.

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the Corner Post convenience store in Watford City, North Dakota, general manager Shasta Fuller sees the impact that healthier-eating habits are having on the shop’s snack food sales. “Seeds, seeds, seeds,” she said of products that are thriving as consumers seek to add more protein to their diets. Yet, while sales of protein and other nutrient-dense snacks, such as sunflower seeds and pistachio nuts, are on the rise at the Corner Post, Fuller noted, “Other snacks aren’t decreasing. We’ve lost no sales of high-carb snacks.”

Indeed, other retailers and vendors verify the trends Fuller is seeing: Consumers are increasingly demanding healthier and cleaner snack options, but they’re not looking to give up their indulgent treats anytime soon. And while the COVID-19 outbreak and the resulting slowdown in c-store foot traffic has adversely impacted sales of snack foods in the channel this year, there’s widespread optimism that there’s a bright future ahead for the products.

Mondelez International’s State of Snacking™: 2019 Global Consumer Snacking Trends Study found that the average American now eats more snacks than meals on a given day as “the appetite for smaller bites grows.” Moreover, the study found that fans of snacks in the United States “are seeking access to both healthy and indulgent options, depending on the moment of need.”

Other snack food suppliers agree. “It’s great to see consumers eating healthy,” said a spokesman for McKee Foods, the marketer of the Little Debbie line of packaged sweet

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snacks. “But even the healthiest of eaters enjoys a treat from time to time.” Bob Clark, vice president, marketing, at Herr Foods, said better-for-you salty snacks are appearing more and more in the direct-shipped peggable sections of c-stores. “The result is usually incremental to sales,” he noted, “although they don’t sell at the same velocity as indulgent snacks.”

Eric Patterson, merchandising manager at the Beacon & Bridge Market chain, with 25 stores in Michigan, said that while he’s increasingly seeing customers reading ingredient labels on snack foods—including “blue-collar workers looking for a protein boost”—the better-for-you trend has been slow to gain traction. “Our customers are still buying snacks as a means to fill in the space between meals,” Patterson remarked.

Still, most of the stores feature four-foot sections of BFY snacks, including products like snack pea crisps, jerky and meat bars.

FLAVORS RULE FOR SALTY SNACKS Salty snacks remain one of the top in-store categories for c-stores. Within the category, emerging “other salty snacks,” including pork rinds and vegetable chips, appear to be on-trend, according to Jayme Gough, NACS analyst. “That speaks to the innovation that’s happening within the salty snacks segment,” she said, pointing to growing demand for products like chickpea puffs and seaweed chips.

New and trendy international flavors are also bringing renewed interest to the category. “Everyone wants spicy,” said Kati Dickson, manager of County Line c-store in Wiley, Colorado, citing products like Lay’s Flamin’ Hot Dill Pickle and Kettle Cooked Flamin’ Hot potato chips, which have been

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iStock.com/BWFolsom, Floortje, threeart, duckycards, IgorDutina, LOVE_LIFE

performing well recently. “Salty snacks are a big deal in our store,” Dickson noted. “We sell everything from plain Lay’s to Doritos to Tostito’s Salsa Verde.” To merchandise, County Line features a shelf by the checkout counter that holds up to 50 single-serving bags. Patterson agrees that trendy “non-traditional” flavors are helping to drive sales of salty snacks. “Siracha is huge,” he said, as well as kimchi and Korean barbeque flavored chips.

Within the packaged sweet snacks category, snack cakes and breakfast pastries have posted the largest volume gains in c-stores in recent years, according to Scott Ward, group vice president, convenience, at Hostess Brands. The McKee spokesman reported that seasonal and LTO baked sweet goods, such as Little Debbie Christmas tree and Be My Valentine cakes, have been resonating in c-stores. Fuller and Patterson, meanwhile, both note that consumers are trading up in their packaged sweet snacks selections, and that’s providing improved margins. “We’re seeing good growth on packaged sweet snacks,” the Beacon & Bridge executive revealed, and with the emphasis on premium brands, “we’ve attracted new customers.”

Alternative snacks—driven by protein-packed items such as meat snacks and protein bars—have been gaining share in c-stores.

“Alternative snacks continue to be a strong category for us,” said Peter Garrett, president of Volta Oil, the operator of Rapid Refill c-stores in Massachusetts, New Hampshire and Rhode Island. “Meat sticks have been strong movers, as have protein and health bars, such as Clif, ONE and Quest.”

Within meat snacks particularly, “there’s been a lot of innovation,” remarked Gough. And that innovation has stretched beyond just flavors to ingredients, too, she noted, pointing to the increased use of chicken, turkey and vegetables.

C-store operators report that locally produced meat snacks are growing in popularity. “While Jack Link’s remains the workhorse, we’re getting good margins on local and regional products, like those from Little Town Jerky Co.,” based in Falmouth, Michigan, Patterson said. “We’re able to offer fresh jerky, including from cattle and wild game, all produced in Michigan.” In Colorado, meanwhile, No Man’s Land Beef Jerky is so popular, “we can’t keep it on the shelves,” Dickson reported. And among other alternative snacks, protein bars are “big movers” at the Corner Post in North Dakota, according to Fuller, with Quest and Clif bar as top performers.

Like salty snacks, candy is a key in-store category for c-stores, and retailers rely on the impulse and add-on-value that candy sales bring to their stores. The segment has been “pretty healthy” for Beacon & Bridge, Patterson said, as the chain has put an emphasis on king-size, pegged and takehome candy packages and fewer promotions on standard-size bars. Lance Smith, vice president, industry affairs and customer strategy at Promotion in Motion, marketers of products like Welch’s Fruit Snacks and Original Gummi FunMix, said the category is seeing a proliferation of flavors. “Tropical flavors have been trending,

iStock.com/Plateresca, pong-photo9, Candy_Vandy, Artem Dens, Tatiana Krasnikova

along with sour, and hot and spicy formats,” he remarked. “C-store shoppers love exploring new products and tend to be variety seekers, looking frequently for new products. They also look toward snacks as a source of fun.”

BASKET BUILDERS Convenience retailers and snack food vendors agree that while the products can drive traffic as well as impulse sales, effective merchandising and marketing tactics are great enhancers.

Hostess recommends cross-promotions and bundling offers at the register, along with secondary placements, while McKee suggests using displays and endcaps to drive sales for sweet snacks.

At Rapid Refill, snacks figure prominently in the chain’s loyalty program, which includes an energy bar club, “two-for” deals and other monthly promotions, Garrett said. The offers are supported digitally via the chain’s app, website and email blasts, and in-store and at the pump through GSTV executions.

Beacon & Bridge and the Corner Post, meanwhile, focus on marketing new snack products.

“We piggybacked the introduction of Gardetto’s Crisps from General Mills with a buy-one, getone promotion,” Patterson noted, while Corner Post reserves a display rack by the front door for new snack products.

Despite the rewards that merchandising and marketing attention can bring to snack foods, the categories have their share of challenges for convenience retailers. Clark from Herr Foods and Smith from Promotion in Motion point to competition from other trade channels. In addition, space constraints weigh heavy. “C-stores need enough space to customize and offer regional brands and locally popular flavors, while also offering the big brands that drive traffic,” Clark noted. Indeed, Patterson, Garrett and Dickson all agree that making room for new snack entries is an ongoing battle.

And most recently, the COVID-19 outbreak and sanctions to control it have hampered store traffic and resulting snack food purchases.

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However, retailers and vendors report that large packs—particularly of salty snacks—have benefitted from consumer stock ups. “We’ve doubled down. We’ve added ancillary space through temporary displays and endcaps,” Patterson said of take-home packages. But most expect that consumer buying habits spurred on by the pandemic will gradually revert back with a recovery.

“Chocolate, non-chocolate candy, non-chocolate chewy candy and fruit snacks are well positioned to rebound post-crisis,” remarked Smith, “as spending during and after economic downturns shows consumers gravitate toward comfort and personal indulgences.”

With the right selection and merchandising support, snacks—whether healthy or indulgent— will continue to drive traffic and margins for c-stores. “Consumers love snack products, and snacks can be a basket builder for c-store operators,” said the McKee spokesman. And because most snacks are impulse purchases, it’s important for retailers to merchandise the products in high-traffic areas, he continued.

Despite the competition from other channels, Promotion in Motion’s Smith said c-stores are the ideal venue for snack-loving consumers. Extended hours, convenient locations and speedy service “place convenience operators in the enviable position of capturing more on-the-go snacking consumers,” he said. erri Allan is a New JerseyT based freelance writer, specializing in the beverage industry. She can be reached at terri4beer@aol.com, and on Twitter at @terriallan.

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A Kinder, Gentler EMV A third-party outdoor payment terminal provider alleviates financial investment, and its open system creates new opportunity.

Dan Harrell Chief Innovation Officer Invenco www.invenco.com

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BY APRIL 2021, RETAILERS MUST UPGRADE THEIR DISPENSER AND POS EQUIPMENT OR BE HELD LIABLE FOR ANY FRAUDULENT ACTIVITY THAT OCCURS BECAUSE THE DISPENSER HAS NOT BEEN UPGRADED. BUT FOR MANY RETAILERS, UPGRADING TO EMV IS A NONSTARTER SINCE THE SWITCH CAN BE EXPENSIVE, TEDIOUS AND PAINFUL. WHAT OPTIONS ARE OUT THERE FOR THESE RETAILERS? Although they have dominated the market for decades, Outdoor Payment Terminals (OPTs) manufactured and distributed by big name pump companies are not necessarily the most convenient or cost-effective solutions available today. These proprietary offerings, which are mostly built and sold as a bundled unit including hydraulics and the OPT, are expensive, difficult to install, costly to maintain and become outdated quickly as payment technology evolves.

Instead, retailers should look at thirdparty OPT providers. Some of these providers have decades of experience in the payments industry and with EMV globally. They utilize certified retrofit kits, which allow OPTs to be installed in working pumps of any make and model.

The installation process is significantly faster, requires no permits, digging up concrete or rewiring. The cost is substantially less, with rental models to alleviate

the burden of a huge upfront investment on EMV also available. Rental models can be all-inclusive, meaning maintenance and warranty are covered, with no more “surprise” invoices for broken parts and on-site servicing.

HAVEN’T EUROPE AND ASIA SOLVED FOR DE-BUNDLING AND OUTDOOR EMV ALREADY? Yes. Believe it or not the U.S. is the last major country to adopt outdoor EMV. Asia and Malaysia introduced outdoor EMV in 2004 and the U.K. in 2013.

Invenco has worked on EMV installs in these countries as far back as 2004, yielding significantly lower fraud since implementation. When it comes to OPT purchasing, nearly 75% of the U.K. market favors a de-bundled approach.

The Malaysian and Asian markets prefer the same, with more retailers moving away from purchasing OPTs from pump manufacturers and instead buying from third-party providers. In Southeast Asia, Invenco worked on an EMV installation with a major oil company, which illustrated the ease of retrofit kit installation: 1,000 sites were upgraded to EMV over the course of nine months with zero repumping and repermitting.

MANY RETAILERS BELIEVE THAT ONCE THEY MAKE THE INVESTMENT IN EMV, THEY’LL CONVENIENCE.ORG

NEED TO DO IT AGAIN IN A FEW YEARS WHEN THE ENVIRONMENT CHANGES AGAIN. HOW CAN RETAILERS GUARD AGAINST FUTURE DISRUPTION? This is a valid concern as EMV and PCI regulations update on a regular basis.

The first step to future-proofing a site is to purchase your OPTs from a payments company. Payments companies are continuously tracking and developing solutions for the industry’s ever-changing regulations and consumer trends. When compliance regulations change, payments companies can distribute software updates via the cloud with no service reps needed on site. Within the rental model previously mentioned, OPT compliance is managed by the provider, relieving the retailer of the responsibility to track compliance regulations. This also relates back to the retrofit kit model. The major oil company sites in Southeast Asia that were upgraded to EMV have since utilized three versions of Invenco’s all-in-one OPT (the G5, G6-100 and G6-300) since their initial installation, all without ever getting new pumps.

ADJACENT INDUSTRIES, SUCH AS QUICK-SERVICE RESTAURANTS (QSRs), HAVE BENEFITTED FROM A MORE OPEN SYSTEM. CAN WE LEARN ANYTHING FROM THEM? Absolutely. Choosing a provider with an open system (or open API) creates more CONVENIENCE.ORG

opportunity for what retailers can do with their OPTs, and makes incorporating new feature functionality significantly easier.

Innovative third parties can implement features like media, food ordering and loyalty, which plug into the open architecture. An open API allows for future changes as functionality can be added or updated as the retail landscape progresses. An example of this was seen with the COVID-19 pandemic when many sites wanted to implement curbside pickup of store items. In the past, functionality to order store items may only have been available via the site’s Point of Sale (POS) system, but with an open API OPT, an application could be developed and implemented so that a customer could order those food items directly from the OPT.

This interview was brought to you by support from Invenco, a NACS member.

WHAT ELSE CAN RETAILERS DO TO ENSURE THEY STAY ENGAGED AND CURRENT WITH EMV, STANDARDS AND OTHER CRITICAL RETAIL ISSUES? Industry organizations that make payments a priority are important for retailers to involve themselves with.

Conexxus is a non-profit, member-driven organization for the convenience store and retail fuel marketing industry which provides insightful resources on the forefront of the EMV and payments space. Engaging with organizations like Conexxus (www.conexxus.org) will keep retailers in the know for coming trends like contactless payment and other consumer tendencies. Invenco also has a series of resources on our blog at www.invenco.com/news, as well as a Convenience Matters podcast recently co-hosted with NACS (www.conveniencematters.com titled “#230 EMV Upgrades Made Easier”), which provide helpful insights into EMV and OPT topics.

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Adult beverages in cans are winning over consumers and retailers alike.

BY TERRI ALLAN

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J

ames Ricker is delighted with the latest trend overtaking the wine and liquor categories. “We’re thrilled with the response we’re seeing to our canned wine and cocktail products,” said the COO of Gapp Fuel & Food Service, the operator of Buchiki’s convenience store in Houma, Louisiana.

Thanks to the fledgling packages, the store now features an entire cooler door devoted to canned wine and cocktails, and both Buchiki’s and its customers are benefitting. The packages don’t require the “white-glove treatment” that their

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glass counterparts do, Ricker explained, and in many cases, customers will buy a single canned wine or distilled spirits product along with their regularly planned bottle purchases, resulting in higher rings.

Similarly, in Lakeport, New York, Matt Paduano, owner of Lakeport Market, reported that in the craft beer space, cans now dominate. “I stock 70 beers in singles, and they’re all in cans,” the retailer remarked. “In the old days, c-stores were known for 40-ounce bottles of brands like Budweiser, but single bottles just don’t sell anymore,” Paduano said.

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" The success of craft beer in cans has likely contributed to the emergence of cans for wine and cocktails."

Indeed, retailers today are experiencing a bit of a “candemonium” when it comes to alcoholic beverages, as consumers flock toward craft beer, wine and spirits—not to mention surging hard seltzers—all packaged in cans. The trend indicates that the years-ago stigma that canned beverages were inferior to those in bottles has dissipated.

“The success of craft beer in cans has likely contributed to the emergence of cans for wine and cocktails,” remarked Sherrie Rosenblatt, vice president, marketing and communications, at the Can Manufacturing Institute (CMI). “Cans are now a vital part of the mix for beverage alcohol consumers,” Rosenblatt said. Brie Wohld, vice president of marketing at Trichero Family Estates, the winery behind Del Mar wine seltzer and Fre alcohol-removed wine, both packaged in cans, added that convenience and portability are key attributes for consumers today. “C-stores that stock wine in cans are better positioned to sell more wine because the format is perfectly suited for their customers’ needs,” she said.

Cans have been performing so well, in fact, that in late spring Molson Coors Beverage Co. revealed an emerging shortage of 12-ounce returnable cans, partly due to consumer pantry loading during the COVID-19 pandemic.

Marketers and retailers are hopeful that the shortage won’t have a meaningful impact on the growing sales of canned alcoholic beverages.

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BENEFITS ABOUND According to Rosenblatt and Scott Green, vice president, sustainability at CMI, cans better protect the quality attributes of beverages such as beer. “Cans block out the oxygen and light that could harm the flavor of a beer,” Rosenblatt explained. “And of course, cans won’t shatter like glass,” Green added, “while they’re quicker to chill.” Moreover, the lightweight nature of cans versus bottles provides “transportation cost advantages” for supply-chain vendors, including brewers and wholesalers, Green noted.

For retailers, the benefits to canned alcoholic beverages abound. “Cans take up far less space than bottles, are much easier to move, and can be stacked, which provides a significant advantage in maximizing shelf space or creating secondary displays,” said Sara Hillstrom, senior director, category development, at Anheuser-Busch.

David Barker, owner of Blowing Rock Market in Blowing Rock, North Carolina, said that due to the space-saving nature of cans, he’s been able to put an extra shelf or two in each cooler door. “This has increased our variety, which is an important part of our marketing,” the retailer noted, as the shop caters to tourists who visit area parks and who typically prefer cans.

Steve Gee, vice president, national accounts, at Colorado’s Oskar Blues Brewery—which is widely cited as being the first craft brewer to emphasize cans—said, “Retailers can stack two six-packs of cans in nearly the same space as just one six-pack of bottles.” As a result, c-store operators have been increasingly leaning in to the package. “Craft cans are seeing huge growth in c-stores,” he reported, while retailers are reaping the same or even better margins than bottled crafts. According to Hillstrom, canned craft brews are driving the overall growth of the craft segment. Five years ago, cans accounted for only 14% of craft beer sales. Last year, the share jumped to 48%, she

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Retailers can stack two six-packs of cans in nearly the same space as just one six-pack of bottles. reported, and it’s expected that cans will overtake bottled craft sales this year.

PORTION CONTROL While not nearly as large a presence in wine and liquor as in craft beer, cans are nevertheless having their moment in those categories, too.

According to Hillstrom from A-B, which acquired the canned wine Babe last year, sales of canned wine in c-stores more than doubled in 2019, IRI data indicate. Ryan Harms, founder and owner of Union Wine Co., marketer of the Underwood line of canned wines, remarked that smaller packaging size is winning over consumers. “There are a lot of consumers who would like to have wine on a regular basis but can’t rationalize a 750-ml. bottle,” he explained. Jeanine Scalero, co-owner of Eastside Mini-Mart in Costa Mesa, California, agreed.

“Customers like the portion control of a 375-ml. can versus a 750-ml. bottle,” the retailer said.

Sales of canned spirits-based products in c-stores, meanwhile, surged 58% last year to nearly one million cases, according to Herb Smith, vice president, customer development, at E. & J. Gallo Winery, marketer of High Noon Sun Sips vodka-based seltzer, as well as Dark Horse wine, Barefoot Spritz and Barefoot hard seltzer, all available in cans. Canned liquorbased products provide wide appeal for retailers, Smith explained, including incremental volume and higher margins than malt-based cocktails.

Moreover, the products increasingly draw coveted consumers, Hillstrom said. “A great way to attract shoppers in their 20s and 30s, as well as female shoppers, is with canned cocktails,” noted the executive from A-B, which markets the Cutwater Spirits line of canned cocktails.

And of course, those consumers enjoy the “no fuss” factor canned cocktails provide. “Consumers don’t have to buy several different ingredients to mix a drink, so they’re willing to pay a little more,” said Sean Bumgarner, vice president at Scrivener Oil’s Signal Foods c-store chain in Missouri, which stocks canned cocktails like Cutwater and Monaco.

CROWDED COOLERS While the canned adult beverage craze continues to attract consumers, it still comes with its challenges for store operators. Finding space, particularly in already-crowded coolers, is a concern. “There are so many canned craft beers, and it’s a challenge to decide which ones to stock,” remarks Lakeport Market’s Paduano. “I constantly rotate depending on what’s selling.”

At Oklahoma’s Jiffy Trip chain, where “canned cocktails do surprisingly well,” according to Alex Williams, COO, challenges include shrinkage.

“There’s higher theft,” Williams noted. “We have to keep these items closer to the checkout counter because they’re so small.”

Where space allows, marketers of canned craft beer, wine and cocktails encourage convenience retailers to carry the products in both single- and multi-pack formats. When it comes to canned cocktails and wine, Hillstrom noted that the packages perform best when merchandised in the cold box. Oskar Blues’ Gee pointed to the efficiency that canned craft brews offer.

“They allow you to bring in more variety due to the space savings,” he said. “Canned crafts are a natural fit for c-stores. Feature them regularly.”

Union Wine’s Harms sees good growth opportunities in the channel. “The premiumization of the c-store environment is perfect for premium canned wine,” he said. “As consumer trends continue to evolve in the c-store, canned wine is going to have greater demand.”

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.

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August 9-14, 2020 | Glen Allen, Virginia convenience.org/LFS2020

REBUILDING THE BRAND Your brand tells the world who you are and what you do—and sometimes it needs a facelift.

By Pat Pape 54

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iger Fuel Company, the petroleum product distributor in Charlottesville, Virginia, was eight years old in 1991 when it acquired its first convenience store. Both entities grew steadily, and soon the organization included the original business, nine c-stores dubbed The Market and 10 car washes known as Tiger Wash. But with success came a problem.

“As the number of stores grew, we started seeing inconsistencies in messaging, design and application of our brand,” said Sarah Whitney, director of marketing, Tiger Fuel. “A lot of our customers didn’t understand that Tiger Fuel owned and operated The Markets, and we realized that there was a lot to gain by developing a stronger association between the two brands. There are instances where we want to promote all of our business together, but they looked drastically different.” Those differences were hard to ignore. The Market stores had a green and white color scheme, while Tiger Fuel’s was black and red.

Last year, Tiger Fuel launched a major rebranding effort to update the entire operation. “We felt it was important to unify our brand family and create a more modern, consistent and professional look that appeals to customers,” said Whitney.

“And we wanted the look to reflect the delicious foods in our Gourmet-to-Go deli.”

After choosing a red, black and white color scheme and a trendy logo for all three businesses, Tiger Fuel recently unveiled its new look, including new interior wall wrap, a redesigned menu board and an inviting coffee bar, at a store in Charlottesville.

But the rebrand was more than just skin deep.

The company’s technology and online presence were upgraded, adding a new loyalty program and mobile app, an online ordering system and redesigned websites.

Gone are the printed cards that customers kept in their wallets to track the free products they earned from the The Market’s sandwich and coffee clubs.

Those benefits are now collected on The Market Rewards mobile app. In addition, online ordering is available in The Market Rewards app and website, CONVENIENCE.ORG

allowing customers to place food orders electronically and pick them up in-store.

“Guests can now earn points to use for fuel and in-store discounts and free products,” said Whitney.

“Loyalty is so important in the convenience-store marketing space, and we’re constantly looking for ways to increase retention and customers’ commitment to The Market stores and products.”

HAVE PATIENCE Two years ago, the growing Kwik Chek chain based in Spicewood, Texas, wanted an updated look to ensure consistency with future locations the company plans to open.

“If you’re buying stores or building new stores, you’re probably in a seven- to 10-year cycle of having to go in and remodel them,” said Kevin Smartt, president of Kwik Chek and a NACS Board member.

“When we looked at that process, we knew we wanted our existing store chain to mirror the quality of any new stores we would be building.”

Rebranding a chain is “a lot of who you want to be and what product you want to offer your customers,” said Smartt. “It’s been a process of figuring out what works, how to control labor and how to do this in an efficient way.”

“ If you’re buying or building stores, you’re probably in a seven- to 10-year cycle of having to remodel them.”

So far, 11 of the chain’s 47 stores have been updated inside and out. Because Kwik Chek has a strong commitment to fresh, made-to-order foods, the remodels feature open kitchens that let customers watch their orders being prepared.

A novel color scheme includes plenty of orange: “a happy, friendly, appetizing color,” he said. “It’s not a color that has been heavily used in the past by other chains.

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“We’ve changed the primary store logo and the food logo, though they’re similar in nature,” Smartt added. “We are doing the stores one at a time, so it’s taken longer than we thought it would.

But customers love it.”

WHAT’S YOUR BRAND? Every business has products or services to offer, and your brand is how you communicate that offering, according to Ernie Harker, president of ErnBurn, a brand development consultancy, and former head of marketing for the Maverik convenience chain in Salt Lake City.

“In the convenience-store world, most stores say, ‘We’re clean, we’re fast and we’re friendly.’ And they should be. But how are you going to communicate that in a way that’s different from your competitors?”

Harker said. “What language and visuals do you use to express what it is that makes you different?”

HOW TO TELL YOUR STORY Communicating to your customers what your company stands for is another element of building your brand.

Remember: If you don’t tell your story, then who will?

The NACS Public Relations Toolkit is a great resource to use for telling your story. The toolkit gives retailers the resources they need to launch their own publicity efforts in their community, from how to write a press release and craft talking points to how to pitch an interview and inspire great media coverage. By implementing some basic public relations strategies and gaining some additional exposure for their efforts, retailers will be able to more successfully attract consumers to their store, increase sales of marketed items and improve their reputation and brand. To access the toolkit, visit www.convenience.org/community.

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Rebranding can be a challenging process, as Harker well knows. In 2001, he led the re-branding effort that took Maverik Country Stores from an Old West themed retailer with a mustachioed cowboy on its logo to one focused on an active outdoor lifestyle and bearing the now well-known slogan, “Maverik—Adventure’s First Stop.”

In preparation for the project, Harker’s team surveyed convenience-store shoppers and found that many didn’t particularly like going to c-stores or even filling up their car. “The only thing that got them excited about a c-store was stopping on the way to their favorite activity—hiking, fishing, skiing or whatever,” he said. “We thought, ‘what if Maverik positioned itself as a place where everyone was treated like they were going on an adventure?’”

The idea was a big hit with management, and the next step was creating billboards, advertising and a store interior decorated with images and actual sporting goods to inspire dreams of outdoor activities. “But [the execution of that idea] was not nearly as cool as it is today,” he said.

The change was different, but not drastic.

Instead of embracing the independent cowboy spirit that was so popular in the mid-20th century, the chain celebrated the independent spirit of contemporary individuals who do their own thing in the great outdoors. “Those things were already congruent with the heart of Maverik’s brand,” Harker said. “We were just expressing it in a different, updated way that over the years became more crystalized.”

THREE QUESTIONS When clients come seeking help with a rebrand, Harker puts them through several exercises and asks them a series of questions before talking tactics. To help them clarify their goals, he asks: 1. W hat makes your business special and different from your competitors?

2. W ho is the customer who cares about that?

3. What do you want customers to say when they leave your store?

“People have a hard time figuring this out,” he said. “It’s important to identify who is most likely to be your customer, which is where you’ll get the most frequency, most transactions, larger transactions. Then, develop your message for those people.”

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“ It’s important to identify who is most likely to be your customer, which is where you’ll get the most frequency.”

Retailers typically insist they want everyone to be their customer. “There is a difference between sales and marketing,” Harker said. “Sales is, ‘We will sell to everybody.’ But marketing is trying to reach the people most interested in buying your product. Yes, you will sell to everybody. But it’s hard to market and advertise to everybody.”

WHEN TO CHANGE There are two primary reasons to rebrand, according to Mike Musso, senior managing director for Conway MacKenzie, a global management consulting firm in Atlanta.

“The first is because you have to, and the second is because you need to,” he said. “The first has to do with consolidation after an acquisition. You are forced to choose a footprint to ensure you have a recognized brand for consistency and consumer recognition. The second reason is about staying ahead of the competition.” Consumers are a fickle bunch, he said. “They always want new.”

In the world of c-stores, visual appeal starts well before a consumer drives up to the store.

Highway signs establish the store’s image miles before the customer arrives. Compelling signage and a bright, well-lit, clean forecourt invite consumers inside to shop a thoughtfully planned selection of merchandise.

“Product assortment is important to rebranding, whether it be a new offering or new location for certain products,” Musso said. “And giving customers access to convenient technology is mandatory. Can they order prepared food from a touchscreen, and do they have good instructions on how to use the technology? Does the POS system check them out quickly, or are there long lines? Rebranding goes well beyond signage. It has to do with your connection to the consumer.”

Of course, a major consideration when planning a rebrand is the cost. “In 2016-17, an

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average convenience store rebrand ran from $20,000 to $100,000 per location,” said Musso.

“When you start talking about updating fuel pumps, canopies and technology, that number can go as high as $200,000.”

Fortunately, there are multiple ways to measure ROI, including changes in revenue, margin, customer counts, loyalty program memberships, shopping baskets and managing the store with less labor. Before attempting to tackle a rebrand internally, Musso and Harker advise store operators to call on an experienced consultant.

When managers meet to discuss their business, “the quiet person often gets steamrolled by the loudest person in the room,” Harker said. “You should bring in a third party, who will ask hard questions. That person is like a therapist and isn’t worried about losing their job. They can say, ‘I challenge this. Let’s go a little deeper,’” he said.

“You need an outside perspective,” Musso said.

“You have to understand who your customer is today and what’s your target. That can only be done with an outside agency that has had repeatable success within branding projects. This is not where you cut corners.”

Rebranding has many rewards, but you need a well-defined vision of the finished product—plus total management commitment—before you start. “If you don’t, you’ll spend time and money making changes,” Smartt said. “In a smaller company, that diverts everyone’s attention from other projects. And while this may sound contradictory: Keep it simple.” at Pape worked in the P convenience store industry for more than 20 years before becoming a full-time writer.

See more of her articles at patpape.wordpress.com.

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What’s Next for

Mobile Pay? The pandemic creates an opening for pay-by-app or tap-and-go to accelerate in the U.S.

By Frank Beard 60

| JULY 2020

CONVENIENCE.ORG

“T

he mobile phone is staging a coup,” said CNN in August 2009. “In the not-too distant future, you may be able to leave the wallet and the keys behind.”

We’ve heard this story for years.

Despite advances in payment technologies, Americans continue to reach for their wallets. Entering 2020, the mobile payment adoption rate remained below 10% in the United States, according to a Bain & Company report. Cash and credit, meanwhile, were at 79% and 80%, respectively.

“I always kind of said, ‘come back and talk to me in 2020,’” said Will Hernandez, a media strategist at BackBay Communications, when interviewed in January. Hernandez has covered the banking and payments industries for more than 12 years. “Well, we’re here now. But I still see some of the same problems.”

And then everything changed in March.

A global pandemic and patchwork of local and state regulations forced consumers to modify their habits.

“I wasn't initially convinced that there was going to be this huge leap when we were about a month in, and that’s only because old habits die hard,” said Hernandez, during a more recent interview. “But data from the card brands says otherwise regarding contactless payments.

And with touchless service being the rage right now, these trends will only continue.”

Visa reports that the use of tap-and-go payments rose 150% in the U.S. during March. A Mastercard survey from April 10-12 found that more than half (51%) of U.S. consumers say they’re using cash less often, or not at all, since the pandemic began. The same survey revealed that 50% worry about the cleanliness of signature touchpads, 72% prefer to skip signatures altogether, and 74% say they will continue to use contactless payments post-pandemic.

The road ahead remains uncertain.

Let’s take a closer look at where mobile payments were pre-pandemic, and what

CONVENIENCE.ORG

retailers can reasonably expect in the near future.

THE CHINA DIFFERENCE If you spoke to anyone about mobile payments before the pandemic, then you probably heard about China. According to a 2019 report by eMarketer, China represents 18.6% of the global population but 61% of proximity mobile payments— meaning point-of-sale transactions using a mobile device as the payment method.

Estimates vary, but one report predicted that 790 million Chinese citizens would use mobile payments this year.

Alibaba’s Alipay and Tencent’s WeChat Pay are the two dominant platforms— accounting for 53.8% and 38.9% of transaction value share, respectively.

Alipay is used mostly for online shopping, while WeChat is popular at brick-andmortar stores.

Mobile payments are ubiquitous to the extent that even panhandlers have QR codes. China Channel reports local businesses are known to encourage this practice. They take a cut of transactions and harvest the WeChat account names for use in their marketing efforts.

China’s success with mobile payments can be attributed to two major factors.

First, China is a mobile-first market where consumers get their first taste of the internet through a mobile device. Second, credit card ownership was low when Alipay and WeChat were introduced.

“In the U.S., people have more access to traditional credit,” said David Jones, editor of Mobile Payments Today. “Mobile is so big in parts of Southeast Asia and China, and it’s growing in Africa, but they didn’t have much access to plastic credit cards. They jumped from cash to mobile.”

Jones explained that many consumers were excluded from traditional banking services through high fees and inadequate transportation. Mobile services also appealed to migrant workers who wanted to quickly transfer funds to friends and family.

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Alipay and WeChat also find success through their ability to bundle a diverse range of services. For this reason, some experts refer to them as “super apps.”

Users can book travel, reserve a table at restaurants, access public services and much more.

“The U.S. is not China,” said Hernandez.

“The amount of things you can do within those apps—if someone did that here, then it might change the landscape.”

“They have near universal acceptance,” said Don Frieden, president and CEO of P97. “Those platforms work at virtually every retail establishment.”

exceeded the number of transactions that Starbucks has, but think about that: It took a company that big five years.”

According to McCrary, these are signals that consumers will choose mobile payments over a card within the right context.

Beyond rewards, members also receive a 7% to 8% percent discount. There’s also the ability to skip lines.

However, consumers may be reluctant to switch when mobile payments aren’t paired with incentives or added to reduce friction.

“I have a theory that the wallet is one of the biggest reasons why adoption rates are

“I still have to carry a wallet because I have my driver’s license, health card and more. By introducing mobile payments, am I really reducing friction?”

The ecosystem in the United States is comparatively fragmented. A consumer would need ExxonMobil Rewards+ to turn on the pumps at their stations, while Shell’s app is needed to pay at their pumps or purchase products in the store. As Frieden pointed out, however, the Shell app may not work at a Shell-branded Circle K. Conversely, the Circle K app won’t work at Shell-branded fuel pumps.

“The problem is you can’t train a consumer when you have massive disparities between systems,” said Frieden.

SUCCESS AT STARBUCKS This isn’t to say there aren’t success stories in the United States. Membership in Starbucks Rewards grew 16% year over year to end the first quarter of 2020 with 18.9 million members. In that quarter’s earnings call, Starbucks mentioned that the mix of mobile order and pay transactions grew to 17%.

“I’ve been in payments for 15 years, and the same topics have always been there,” said Sarah McCrary, CEO of GasBuddy.

“But then Starbucks comes along. Apple Pay just came out and said they finally

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low,” said Brandon Logsdon, president and general manager of PDI Marketing Cloud Solutions, during an interview in January.

“I still have to carry a wallet because I have my driver’s license, health card and more.

By introducing mobile payments, am I really reducing friction?” asked Logsdon.

“For me personally, even when Apple Pay is accepted, half the time I’m pulling out a card. Sometimes it’s just faster.”

EMBRACING A MOBILE FUTURE There’s no denying that much has changed during the past few months—including the way we shop.

From curbside and delivery to new ways to pay, Americans have adjusted to a retail landscape complicated by health concerns and a patchwork of local and state regulations. Even as traffic rebounds, many would agree that some of these changes are likely to stay.

“Online retail will become the primary commerce channel for an even greater subset of the American consumer,” writes Web Smith, founder of 2PM Inc. This behavior was already being conditioned prior to the pandemic as CONVENIENCE.ORG

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RELUCTANT TO SWITCH

The U.S. has one of the world’s highest smartphone penetration rates in the world. Yet consumers are not embracing mobile payments on a significant scale, despite its benefits in terms of higher security, speed and convenience. Leading reasons for reluctance include:

66% changing habits

39% fraud concerns

23% tech issues

18% fear of losing mobile device Source: Simon-Kutcher & Partners

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| JULY 2020

many aspects of our lives were conducted digitally. We reserved tables at restaurants via OpenTable, sent money using Venmo and hailed a ride with Uber. And instant pay apps provided many employees with access to funds immediately after working a shift. It was enough to ask if many consumers might begin to view plastic cards and physical currency as antiquated.

But this isn’t to say that everyone’s habits are changing. The “new normal” is not the same for everyone. Although e-commerce penetration surged from 16% of U.S. retail to 27% during the first eight weeks of the pandemic—representing years of growth—most buyers have not been driven online. Some of that shift was also reactionary.

“Against the drumbeat of forecasts of the demise of physical stores, people still prefer them,” writes Steve LeVine, editor at large at Medium. “Perhaps not the current number of stores but physical shops nonetheless.”

Maybe the question isn’t “physical versus digital” but rather how retailers can provide additional channels to access their brands. Many consumers are looking for delivery, curbside pickup and other means of access. The restaurants most successful during the pandemic are those with robust off-premise sales channels.

Moving forward, they’re doubling down on digital everything.

“When boundless restrictions, fear of physical endangerment and poor customer experiences abound, buyers may continue in the shift to digital,” writes Web Smith, in a recent 2PM member brief. “Consumers will search for ease, quality and service elsewhere. And e-commerce will be the great equalizer.”

This certainly creates opportunities for further growth in mobile payments but so will a revised in-store experience. Many consumers are likely to emerge from the pandemic as newly-minted germaphobes.

Even the most risk tolerant consumer is sure to view touchscreens and keypads differently than he or she did in January.

That’s one reason why it’s no surprise that leading retailers are looking beyond cash and cards.

“We predict the mobile app will become the dominant form of payment,” said Starbucks Chief Executive Officer Kevin Johnson in a May 4 letter to customers.

Fuel and convenience retailers, too, have made significant investments in mobile solutions. Sheetz recently released a feature that enables scan and pay within its app.

Contract operator StrasGlobal launched an online ordering and curbside pickup program. Moving beyond the store, Kum & Go announced the ability to turn on pumps and pay for fuel using its &Rewards app.

“Let’s be honest, no one gets joy from starting a pump. On a cold winter’s day, the last thing you want to be doing is standing outside paying for gas,” said Kum & Go President Tanner Krause in a press release. “Today, in our current moment, limiting common contact points is essential. So we created an app feature that significantly reduces the time to activate a pump and allows you to do most of it from the comfort of your vehicle.”

The development of mobile payments will also be influenced by Big Tech’s continued move into financial services.

As a recent Wired article mentions: If you thought iMessage kept you tethered to your iPhone, get ready for when your life revolves around Apple Pay. Apple offers a credit card in conjunction with Goldman Sachs, and while Amazon doesn’t offer a card or a checking account, reports suggest they may be in the works. Amazon Cash already enables underbanked consumers to load Amazon accounts with cash after downloading a barcode and presenting it at participating retailers.

“Apple created a really good experience with their new payment card,” said Frieden. “If they can get connected into fuel retail sites, we’re going to see a high uptick in the use of that technology.

But they have to get past the barrier of CONVENIENCE.ORG

integrating into site systems. Otherwise, you have to retrofit 1.3 million gas pumps with contactless readers.”

NO TIME LIKE THE PRESENT Unlike China, the United States is in a category formation period. Merchants and consumers are still establishing their mobile commerce relationships.

“You don’t want to be too late to the game,” Frieden said. “Once consumers have started using applications by certain merchants, it’s going to be harder to move them to your platform. There are early adopter advantages. People are lazy and will keep using what they’re familiar with.”

At the same time, cash and cards are likely to remain the choice for many—at ELP_July_half.pdf

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least in the near future. Hernandez understands this challenge too well.

“My mother is never going to make a mobile payment. Never. We tried, and there’s no way,” Hernandez said. “But I’ve been incredibly interested in the discussions about how consumer behavior is going to change once we’re on the other side of this pandemic. Maybe, just maybe, this finally puts the U.S. over the hump as far as contactless payments go.” rank Beard is a F speaker, writer and industry advocate.

11:15 AM

November 1-5, 2020

Developing leaders to spearhead the industry. convenience.org/ExecEd-Cornell Half Horz.indd 1 CONVENIENCE.ORG

6/15/2020 5:41:36 PM

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n le a a c .

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By M e

a n a ro u j i r a m s ’ Canada

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H aa r

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hen Canada became the first major country to allow adult-use cannabis sales in October 2018, analysts and investors alike projected major numbers. Deloitte Touche Tohmatsu Limited predicted Canadians would purchase $4.34 billion in the first year of legal marijuana sales.

As it turns out, that projection was quite off.

Statistics Canada reported non-medical cannabis sales hit $1.2 billion in the first full calendar year.

Not everyone was surprised by Canada’s first-year numbers. It’s a pattern similar to what happened in U.S. recreational states like California, Colorado and Oregon, said Jessica Lukas, senior vice president of commercial development at the cannabis research company, BDSA. “It’s interesting when we’re all surprised that a market doesn’t perform as well as we think it will—after seeing every single market not perform as well as we thought it would the first year,” she added.

Jonathan Havens, a partner at Saul Ewing Arnstein & Lehr LLP who has worked on a number CONVENIENCE.ORG

of deals involving U.S. cannabis companies going public in Canada, agrees that it can be difficult to predict the shape early cannabis markets will take.

This is especially true when regulations vary stateto-state, as in the U.S. or province-to-province, as in Canada. “Knowing the rules versus how they’re rolled out and seeing how consumers respond to them can be challenging,” he said.

Pablo Zuanic, a cannabis analyst at Cantor Fitzgerald, said the data suggest Canada’s rollout was a bit behind other recreational markets. In a recent research note, Zuanic wrote that Canada’s per-capita sales were “less than half” where Colorado was after 14 months of legalization. At that point, Canada’s market was about C$45 (US$33) per person, whereas Colorado was at C$97 per person 14 months into its adult-use cannabis program.

While a period of adjustment is typical, there were some unique aspects of Canada’s marijuana launch that caused unnecessary problems. This information might prove useful for the U.S. to consider if—or when—marijuana is legalized.

JULY 2020 |

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PROBLEM NO. 1: LACK OF RETAIL One of the most commonly cited reasons for lower-than-expected revenues has been a lack of brick-and-mortar retail locations. While cannabis was legalized on the federal level, each province dealt with the issue of retail licenses differently.

Some only allowed for government-run dispensaries, some allowed independent operators and others allowed for chains or multi-license holders.

It’s very similar to how licenses have been issued in recreational marijuana states in the U.S.: No two programs are exactly the same.

“You look at shoppers’ access to retail provinceby-province, and in some cases it’s very, very limited,” said Lukas, noting this is something seen in Illinois and Massachusetts as well. “Some provinces were slower to release licenses to allow retail locations to open.”

Ontario provides a clear example of the lack of access. In Canada’s most populous province, retail licenses were awarded by lottery and capped at 24 dispensaries for a population of 14.5 million.

The move proved problematic for consumers, who appear to prefer an in-person marijuana shopping experience. As more dispensaries opened, sales in Canada grew. It’s a promising sign for offline retailers in the United States who hope to one day benefit from a recreational marijuana market.

“One of the things that’s interesting—but not surprising when you think about it—is why people are going to dispensaries rather than opting for delivery,” Havens said. “Particularly early on in medical markets, there are a lot of people who need or want that educational experience, want to be guided, want to learn best practices from dispensary personnel, including clinical directors.”

PROBLEM NO. 2: LACK OF FORMS A slow rollout of retail locations is not particularly unique to Canada, but how the country regulated different forms of marijuana certainly was. For the first year-plus of Canada’s cannabis program, only certain types of marijuana were allowed to be

About 35% of adult Canadians are currently consuming cannabis, and more than 40% of non-consumers are accepting of it.

Analysis by Stifel Financial Corp. showed that at the end of 2019, 76% of the Canadian population had one cannabis store per 300,000 people. By comparison, in Colorado there is one store for every 10,000 people. That means that many consumers in Canada not only have to travel long distances to access a dispensary but also are potentially facing massive lines once they arrive.

“Especially in the early days, weeks and even months, long lines out the doors of dispensaries are common,” Havens said, adding that there have been similar lines in markets like Illinois after the start of the state’s adult-use program. “Long lines around the block are not unique to Canada.”

One aspect that is unique to Canada: The country launched its adult-use cannabis program with online—not retail—sales. Instead of visiting a brick-and-mortar dispensary, early Canadian marijuana shoppers had to place orders online to be delivered via mail. This is not something recreational marijuana states have done, though Lukas pointed out that Canada’s medical marijuana market was largely mail order.

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sold. Specifically, only flower (including pre-rolls), oils, capsules, seeds and plants were permitted to be sold until 2020.

This kind of limited form rollout is possible, perhaps even likely, if marijuana is legalized federally due to the position of the U.S. Food and Drug Administration (FDA).

Havens, who formerly worked as a regulatory counsel for the FDA, addressed the agency’s stance on CBD in ingestible products—that it is technically impermissible—but quickly noted that, to date, the FDA has not taken any CBD-related enforcement absent very aggressive therapeutic claims being made about products (e.g., COVID-19, cancer, AIDS, diabetes, etc.). If and when marijuana is legalized federally, it is possible that THC ingestibles could face a similar FDA hurdle.

The situation in Canada provides a clear picture of the demand for a large variety of products. Vape pens, edibles and topical marijuana became legal in October 2019 and hit retail stores in early 2020, part of “Cannabis 2.0.” New Leaf Data Services predicts the 2.0 forms will grow the Canadian CONVENIENCE.ORG

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cannabis market by 30% to 40%, since they are more accessible for new cannabis users who might not be comfortable with smoking marijuana.

Even for experienced cannabis users, a variety of options is desirable for different occasions.

“There’s a lot of cross-consumption that drives growth because now you have people buying more for all the different need states,” Lukas said.

PROBLEM NO. 3: BLACK MARKET A lack of retail locations combined with a lack of product forms can lead to a thriving black market, another major problem for Canada’s first-year marijuana market.

Rade Kovacevic, president of Canopy Growth Corp., explicitly blamed these issues for his company’s performance and dropping stock price. “Lack of continuity of points of purchase across the country slowed the transition from the black market to the legal market,” he told the BBC. Statistics Canada estimates that currently, 75% of Canadian marijuana sales happen on the black market.

To be fair, black market sales are still a huge problem in markets with ample retail and product for sale. The cost difference between legal, taxable marijuana and marijuana on the black market is frequently significant enough to give consumers pause. Between October 2018 and July 2019, legal marijuana prices rose from C$9.82 per gram to C$10.65 per gram; during that same time frame, Statistics Canada estimates black market prices fell from C$6.51 per gram to C$5.93 per gram.

“To state the very obvious, it’s a lot more expensive to operate in a compliant fashion than to be a drug dealer,” Havens explained. “Compliant businesses are paying taxes (without being able to take all ordinary business deductions), applying for and maintaining licensure, offering competitive employee pay and benefits—the list goes on.”

Recent examples would suggest moving those illicit marijuana sales to legal outlets simply takes time—a lot of it. “In states like Colorado, we have, over time, seen the negative impact to the illicit market because of the legal market,” said Lukas.

“But it doesn’t happen overnight.”

BDSA predicts that by 2024, 17.4% of Colorado marijuana purchases will still be on the black market. That’s 10 years after legalization. “Until the cost is the same, you will lose some customers to illicit sources,” Havens said. “However, the investment in the products that are being sold, processed and dispensed in state-regulated programs is incredible. Product testing, myriad

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other safety and quality controls and research and development all distinguish regulated product from illicit product.

HOPE ON THE HORIZON Likewise, Lukas and others see lots to be excited about in Canada. “Over time, you start appealing to people who never would have consumed or bought illicitly anyway,” she said.

BDSA has been tracking both adoption and acceptance (consumers who do not use cannabis but are accepting of those who do) in Canada since before legalization passed. Lukas and her team have observed “significant growth” in both areas. About 35% of adult Canadians are currently consuming cannabis, and more than 40% of non-consumers are accepting of it.

“That’s grown 10 percentage points in a year,” Lukas said. A 10-point growth in a single year is much faster than the acceptance and adoption rates seen in early recreational states: It took Colorado three years to grow its consumption rate from 25% to 40%.

Lukas said the products, technology and investments in marijuana have all grown significantly from when Colorado first went legal. “Markets that turn on now gain greater acceptance faster,” she said.

Those new adopters are boosting sales, as are more retail locations and product formats.

Canada closed out 2019 with an 8.1% increase in recreational marijuana sales in December, marking three straight months of growth, according to Statistics Canada data.

All of which leave four simple takeaways for those hoping to one day follow in Canada’s cannabis footsteps: 1. C annabis consumers want easily accessible retail locations 2. C annabis consumers—both new and experienced—want a variety of formats 3. The black market doesn’t go away overnight 4. B e patient: It takes time to develop a successful, adult-use marijuana market.

Or as Lukas put it, “it’s not surprising to see the light turn on and things don’t happen immediately.”

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 quarterly (January, April, July and October) 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) and before this year’s NACS Show (October 11).

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PRODUCT

KIT KAT Duos Mint + Dark Chocolate

The new KIT KAT® DUOS Mint + Dark Chocolate feature a combination of two iconic flavors. A mint flavor crème on the top and dark chocolate on the bottom, all surrounding light and crispy wafers. KIT KAT® DUOS Mint + Dark Chocolate are available nationwide in standard 1.5-ounce bar (SRP: $1.09) and in king size 3.0-ounce bar (SRP: $1.89).

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COMPANY

The Hershey Company

PRODUCT

| JULY 2020

Reese’s Take 5 Bars

Reese’s Take 5 Bars

Reese’s is taking over Take5! It has the perfect combination of five key ingredients: chocolate, peanut butter, caramel, peanuts and pretzels. Reese’s Take5 Bar is the ideal combination of salty, sweet, crunchy and chewy in one candy bar. Available nationwide in standard bar (1.5 oz., SRP $0.99) and king size bar (2.55 oz., SRP $1.69).

CONVENIENCE.ORG

COMPANY

Krispy Krunchy Chicken® PRODUCT

Classic Chicken with NEW Sweet Butter Bun

Unbunlievable

Krispy Krunchy Chicken®, one of the fastest-growing convenience store quick-service restaurant concepts, launched a new sweet butter bun for their classic fried chicken sandwich.

The bun is soft, sweet, and buttery and also Louisiana-made. This sandwich also includes dill pickles and a honey butter spread. In 2019, Krispy Krunchy Chicken® celebrated its 30th anniversary with a record-breaking year. This included the addition of 441 new locations, new menu items, such as Boneless Wings, Crispitos®, and State Fair® Corn Dogs, and the unveiling of their new logo and tagline. The new sweet bun is currently only at select Krispy Krunchy Chicken® locations. For more information about Krispy Krunchy Chicken®, call (318) 483-4343, and visit krispykrunchy.com.

COMPANY

COMPANY

PRODUCT

PRODUCT

Run Your Carry-Out Program With Speed and Efficiency

Manitou Super Premium Cigarettes

Hatco Corporation Flav-R 2-Go™ Locker System

Hatco® Corporation’s Flav-R 2-Go™ Locker System redefines the customer experience and revolutionizes to-go and delivery order pick-up. By conveniently holding multiple hot or ambient to-go food orders with quick and secure access, customers and delivery drivers can arrive, access their specific locker and leave without disturbing the flow of business. Models available as countertop, floor mount or built-in to fit your operation’s needs and with POS integration capabilities. For more information, call (800) 558-0607, and visit www.hatcocorp.com.

CONVENIENCE.ORG

Premier Manufacturing Manitou

Manitou cigarettes contain only water and flue-cured tobacco. To make Manitou a unique premium product, only the finest whole leaf flue-cured tobacco from the upper stalk position is used. Manitou cigarettes contain no reconstituted sheet tobacco, stems or fillers; also, no additives and no artificial flavors. Manitou cigarettes are 100% free from chemical additives like artificial preservatives, humectants or synthetic flavors commonly found in other brands. Manitou offers six king-style varieties for the adult consumer. For more information, visit GoPremier.com, or call (800) 272-8656.

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COMPANY

Old World Industries PRODUCT

PEAK® 10X Antifreeze + Coolant and BlueDEF®

Two No. 1 C-Store Brands Are Now Better Than Ever!

We have been a trusted supplier of automotive products to convenience stores by providing the highest quality products that meet or exceed OE specifications, and now we have made these products even better! BlueDEF’s Purity Guarantee is our promise that each batch of America’s No. 1 DEF brand is tested to meet or exceed the strictest OE standards before we put our name on it! PEAK® Antifreeze + Coolant contains 10 times more scale fighters and ensures maximum cooling system performance for 10+ years/300,000 miles of guaranteed lifetime protection! PEAK® is designed for use in all vehicles! For distribution and promotional opportunities, please contact Andrew Kloep at (847) 443-0703 or e-mail akloep@owi.com. Visit www.peakauto.com for additional information.

COMPANY

Rogue Holdings, LLC distributed

by Swisher International PRODUCT

Rogue

Swisher International PRODUCT

Swisher Sweets Leaf Cognac

Nicotine on Demand®

Rogue Nicotine on Demand® offers adult consumers a full lineup of tobacco-leaf free and sugar-free modern oral nicotine products including spit-free, easy-to-use pouches, long-lasting gum, slow-release lozenges and instant-satisfaction tablets.

Discover how you can capture more sales and profits in this fast-growing category with Rogue Nicotine on Demand®. Contact Information: www.roguenicotine.com; (800) 874-9720.

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Leave the Rest Behind

Swisher Sweets Leaf cigars are perfectly imperfect, embracing every flaw in pursuit of the best cigar. These all-natural tobacco cigars will keep customers coming back for more.

Enhanced by oak barrels, Leaf Cognac is a full-bodied and spicy smoke with just a hint of sweetness. Ignite your sales by adding Leaf Cognac to your Swisher Sweets lineup today.

Contact Information: www.swisher.com; (800) 874-9720.

CONVENIENCE.ORG

COMPANY

The Mitten Fruit Company PRODUCT

NoMI Sparkling Water

Always Real. Gently Sparkled

The delicious taste of real fruit, gently carbonated, creates a completely authentic taste experience. Zero calories, zero sugars, zero sweeteners. Taste what’s real. For more information, call (269) 282-2318, and visit www.drinknomi.com.

COMPANY COMPANY

Naughty Chile Taqueria PRODUCT

Quickies Burrito Mixes

One Scoop Wonders for the Easiest Foodservice Ever

Quickies Burrito Mixes are one scoop wonders that easily expand your Mexican program. Simply thaw, scoop and roll, and your foodservice offerings cover all dayparts. Perfect for both hot glide grab and go and in the fresh cooler. Quickies Burrito Mixes’ low labor platform will fit into your current operations. Visit www.naughtychile.com, or call (303) 329-0900.

CONVENIENCE.ORG

Lavi Industries PRODUCT

Queue Guard™ Merchandising Panels

Keep Customers Safe in the Checkout Line

Queue Guard Merchandising Panels protect customers by providing a physical germ barrier between adjacent checkout queue rows. Especially effective in tight spaces.

Seamlessly integrates with our Nextrac Merchandising System and Beltrac Queuing Stanchions to create a safe waiting line in any size space. Also available as a retrofit to existing NeXtrac Slatwall and Gondola fixtures. For more information, contact: (888) 285-8605, and visit www.lavi.com/store-fixtures.

JULY 2020 |

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COMPANY

CraftAg LLC

PRODUCT

AromaHemp CBD*

A Healthier Way to Take a Break From It All

With the passage of the 2018 Farm Bill, it is now legal to sell hemp-derived CBD in retail stores without a 502 license. At the same time, smokers are turning to CBD as a healthier alternative to tobacco. This has resulted in c-stores commanding the highest share of CBD dollar sales in 2019 (IRI and BDS Analytics). Sales nearly quadrupled in 2019 to more than $70 million, which put CBD close to making the top 100 in-store categories by dollar sales. AromaHemp is grown in Washington state on pesticide free farms and grown from the highest quality strains for the purest experience consumers can find. For more information, call (206) 337-7559, and visit www.aromahemp.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.

COMPANY

Ocean Spray Cranberries Inc. PRODUCT

Craveology™ Snack Mix with Cranberries

Explore Uncharted Flavors

Explore a delicious, uniquely flavored dried fruit and nut snack mix that can be eaten as is or added to your favorite meal for a whole new taste experience. Sweet cranberries combined with salty nuts in three unique flavor combinations—Vanilla Chai, Spicy Coconut Curry and Tuscan Herb. Craveology™ Snack Mix with Cranberries is packed with six grams of plant protein and no artificial colors, flavors or preservatives. Available in a 2-ounce recyclable pack, perfect for on the go. For more information, visit www.oceanspray.com.

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CONVENIENCE.ORG

COMPANY

Midway Displays Inc. PRODUCT

Knockdown Compact Displays

Quick Ship | Space Saver POP Displays for C-Stores

Maintaining clear aisles has never been more important. Midway Displays’ compact display racks are convenience and fuel retailer favorites with grab-and-go design, highstocking capacity and small footprints! New to the convenience and fuel retailing industry is the ability to now purchase Midways' bestselling compact powerhouse displays in small quantities of 1-24 with the added quick ship benefit through Midways' online store: www.midwaydisplays.com/In-Stock-Floor-and-Counter-Displays.html. Also new is Midway Displays' ability to provide full-height side graphics for their compact shelving racks to speak your brand and marketing message! Midways' collection of American-made compact displays are also green—they all knock down to pack small and save on freight and warehousing costs! Contact Midway today to see how they make merchandising easy!

Phone: (708) 563-2323, Website: www.MidwayDisplays.com

COMPANY

Bug Juice International Inc. PRODUCT

Vita Blue and Vita Berry

New Functional 10-Calorie Children’s Beverage

Vita Bug, the first children’s fun functional beverage, was developed due to COVID-19.

We contacted nationally renowned nutritionists to discuss the best way to help support children’s immune systems. New 10-Calorie Vita Bug is packed with all the vitamins, minerals, electrolytes and amino acids in a buffered formula to support children’s health and immune system needs. With no synthetic sugars added. Contact your distributor/wholesaler, or call (810) 225-3200, and visit www.vitabug.net CONVENIENCE.ORG

COMPANY

BackTrack Video Inc. PRODUCT

BackTrackVideo.net

Get Paid for Incident Videos!

Two easy ways to register: 1) Simply register your outside cameras; get paid $250 for each video sold. Send notifications to local and nationwide buyers. They buy, you get paid; it's that easy! Busy intersections earn thousands annually! Register today at BackTrackVideo.net. 2) BackTrack installs cameras: Get paid per store every month. You do nothing but receive funds. Prevent interruptions. Save time. Let BackTrack Video act as your police liaison. Contact info@backtrackvideo.net.

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COMPANY

NACS

PRODUCT

NACS State of the Industry Report® of 2019 Data

The Only Benchmarking Report for Convenience

Today’s dynamic landscape requires agility along with a balance of efficiency and effectiveness to free up resources and fuel new growth. But how do you know where to invest in technology and how to harness data to deliver targeted, personalized offerings and customer experiences? For more than 50 years, the convenience and fuel retailing industry has relied on the NACS State of the Industry Report® to answer that question and more. The report gives retailers the essential edge to win trips, exceed shopper expectations and grow in an increasingly competitive retail landscape. Pre-orders for both hard copy (last year in this format) and digital PDF versions are available now at www.convenience.org/soireports2020-cnp. Grab your copy today. Contact Information: Doug Spencer, director, products and services, (703) 518-4293

INDEX NEW FLAVORS

The Hershey Company............................................................ 72 Krispy Krunchy Chicken®........................................................ 73 NEW TO THE INDUSTRY

COMPANY

NACS

PRODUCT

NACS State of the Industry Compensation Report®

Insights to Attract and Retain Top C-Store Talent

The NACS State of the Industry Compensation Report® of 2019 Data provides critical benchmarking data and up-to-date standards in the key human resource categories of compensation, turnover, benefits and recruitment. It also breaks down the newest available numbers in the convenience industry and is considered an essential guide for HR professionals. Purchase your digital copy today at www.convenience.org/ compreport2020-cnp. Contact Information: Doug Spencer, director, products and services, (703) 518-4293

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CraftAg LLC................................................................................ 76 Flav-R 2-Go™ Locker System................................................ 73 Lavi Industries............................................................................ 75 Premier Manufacturing........................................................... 73 Midway Displays Inc................................................................. 77 The Mitten Fruit Company..................................................... 75 Naughty Chile Taqueria.......................................................... 75 Ocean Spray Cranberries Inc................................................. 76 Old World Industries................................................................ 74 Swisher International.............................................................. 74 HEALTH & WELLNESS

Bug Juice International Inc.................................................... 77 NEW SERVICES

BackTrack Video Inc................................................................ 77 NACS

NACS State of the Industry Report© of 2019 Data.......... 78 NACS State of the Industry Compensation Report© of 2019 Data.................................. 78

CONVENIENCE.ORG

November 1-6, 2020 The Wharton School University of Pennsylvania | Philadelphia, PA Endowed by:

November 1-6, 2020 Kellogg School of Management Northwestern University | Evanston, IL Endowed by:

November 1-5, 2020 The Dyson School Cornell University | Ithaca, NY

Join the Masters.

Endowed by:

The NACS Master of Convenience designation is awarded to convenience retailers who complete at least three of the five Executive Education programs.

Congratulations to the first-ever NACS Masters of Convenience:

October 25-30, 2020 Yale School of Management Yale University | New Haven, CT

+ Pablo Andonie, AMPM Latam + Jose Chua Ang, Jr., Philippine Seven Corp.

Endowed by:

+ Lisa Dell’Alba, Square One Markets, Inc. + Francis Santos Medina, Philippine Seven Corp. + Joyce B. Pingel, formerly with Kum & Go, L.C. + Markus Schroeder, Shell Deutschland Oil

Let us help you realize your leadership potential. convenience.org/NACSExecEd

November 1-6, 2020 MIT Sloan School of Management | Massachusetts Institute of Technology | Cambridge, MA Supported by:

GAS STATION GOURMET

A Fresh Perspective Pizza kits and virtual wine tastings are on the menu at High Country Market Bistro & GastroPub.

BY AL HEBERT

Facing pandemic-related restrictions, Texas-based High Country Market Bistro & GastroPub downsized its menu to focus on artisanal pizza and gourmet burgers, available for curbside pickup and home delivery.

CLEAN CLEAN CLEAN High Country Market Bistro & GastroPub has a reputation for being clean, and it has doubled down on that in light of COVID-19. “We offer free masks and free gloves to all customers who visit the store,” said Zahir Walji, managing partner. “We have one person at the register making sure all who enter get their hands sanitized. I make our own hand and counter sanitizer twice a week. Our bathrooms are locked all the time. I will only give the key to the bathroom to someone who has had their hands sanitized and is wearing a mask,” he said.

Walji gives small bottles of hand sanitizer to customers at no charge. “I buy aloe hand lotion and add two tablespoons of this, so it doesn’t dry your hands out.”

He added, “Everyone truly appreciates it. The health inspector mentioned that I'm always one of the highestscoring restaurants, owing to our attention to cleaning details. People need to think along the lines of safety.”

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Z

ahir Walji, managing partner of High Country Market Bistro & GastroPub, established a reputation for artisanal cuisine, fine wine and craft beer in the upscale convenience store in Round Rock, Texas.

Gas Station Gourmet visited High Country on the way to the 2018 NACS Show and recently caught up with Walji to see how his business has flexed during the pandemic—and what’s ahead as Texas reopens.

The first challenge was to determine what food he could still serve without sacrificing quality, so Walji narrowed the menu to focus on pizza and hamburgers. Pizza has always been a customer favorite at the High Country Market Bistro & GastroPub. And when Texas shut down in early March, Walji was able to offer curbside delivery, but he also wanted to make sure customers had the best experience. “We had to figure out how to make food-to-go last,” he said. “I found some artisanal pizza makers double toast the dough; we now do the same—toast the dough before we put the marinara on it.”

CONVENIENCE.ORG

The signature burgers were the next challenge because beef has been in short supply, so Walji went right to the source.

“We now have our beef coming right from here locally,” he said.

MEAL KITS Delivery is not perfect since the food will never be as fresh as when it goes from the kitchen to a table. To bypass some of the challenges of delivery, Walji came up with a way for customers to enjoy the same great food, hot and fresh, without having the food make the trip from the store to home. Introducing the Home Pizza Pack—a DIY artisan pizza kit. Each kit includes dough for one 16-inch pizza or three small pizzas, freshly made tomato marinara, a provolone/mozzarella cheese blend, toppings and extra virgin olive oil.

High Country is exploring whether the DIY concept would work with hamburgers.

“I’ll sell five pounds of ground beef, prepackaged with freshly made pretzel buns. We give you dill pickle slices, our special burger sauce and premade packets of our rosemary white truffle ketchup,” Walji said. #WINEWEDNESDAY Walji is a sommelier, so it’s no surprise that High Country has one of the best wine collections in the Austin area. For years, 10 to 12 wine enthusiasts have gathered at the bar for weekly classes. “I would open four or five bottles of wine; everyone would sample it, along with specially prepared appetizers to match the wines. Now, we can’t do that. At 50% capacity, I can only have six people at the bar.”

The wine sessions are now happening via Zoom and even expanded to other cities and states. Each week, two wines are selected and posted on Facebook, along with a link to join Virtual Wine Wednesday. People can come by and pick up the bottles of wine he’s selected or buy them elsewhere. Walji sets up his laptop in the wine area, and people CONVENIENCE.ORG

The new Home Pizza Pack is a hit with customers, who often prepare them during the Virtual Wine Wednesday classes Zahir Walji and his wife, Salima, host via Zoom.

join the class virtually—some from Dallas and others as far away as North Carolina, Walji said.

The weekly event draws about 30 people, and Walji is excited about his new online community. “When I do my wine class, I do the pizza pack as well,” he said. “It’s fun, and they show their pizza on Zoom.

People who make the pizza compare notes and talk about what they do at home. It’s a virtual happy hour. “

We had to figure out how to make food-to-go last.

THE FUTURE In July, most Texas restaurants could be back up to 100% capacity, but one caveat often goes unconsidered. Walji explained, “The social distance makes you safe, but doesn’t allow you to be at full capacity.

Restaurants with only booths will have to close every other booth. Social distancing makes sense, but you will never be at 100% with social distance in play,” he said.

While many Americans are excited about dining in, Walji is aware that many are still cautious. “There’s a new order at play here,” he said, adding, “Some people want to come in and eat. They’re ready to get out, but some people don’t feel comfortable as yet dining out.”

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.

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GLOBAL TRENDS

Life After Lockdown

Convenience retailers in Asia Pacific are using digital tactics and delivery to engage with customers post-pandemic.

BY FIONA BRIGGS

A

s countries in Asia Pacific, including China, begin to emerge from the COVID-19 pandemic, convenience and forecourt retailers are finding new ways of engaging with their shopper base.

Online, unsurprisingly, has stolen the show— especially in China where the density of the population makes delivery services cost efficient.

A new study, led by academics from the University of Greenwich, found major changes in food and grocery shopping behaviors in China as a result of the pandemic, with online purchases rising dramatically, while many customers remained loyal to small, local independent shops.

The study, led by Dr. Junxiong Li, based at the Marketing, Events and Tourism Department at the University of Greenwich, examined how Chinese consumers’ food shopping preferences changed during China’s nationwide lockdown. The study’s findings indicate that farmers markets lost more than half of their regular customers, while local small, independent food retailers enjoyed the highest levels of customer loyalty (75%) during the pandemic. Supermarkets lost more than a third of their regular customers. However, the biggest winner was online food shopping.

The findings pave the way for the future and necessary business response, as the study’s co-author, Dr. Andres Coca-Stefaniak, states: “Most experts agree that we may yet suffer new waves of COVID-19 infections and possibly new strains of the virus, particularly in the autumn, which gives the findings of this study an additional dimension and one we hope policymakers and key decision makers will heed.”

CONSUMERS TURN TO C-STORES In Australia, where petrol and convenience stores were able to remain open during the pandemic and

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restrictions are now slowly being lifted on pubs, cafés and restaurants in some states, a study by the Australasian Association of Convenience Stores (AACS) and CMA Consulting also found smaller c-stores are being visited more as an alternative to supermarkets.

The survey of 500 regular convenience store shoppers and 500 regular supermarket shoppers found that for the two weeks ended March 31, 2020, 47% of supermarket shoppers and 44% of convenience shoppers were using small c-stores more frequently to purchase household products including milk, general groceries and paper products. The survey also showed that regular shoppers—mainly males 31-40 years old—are still using convenience stores for food-on-the-go.

Although supermarkets still rank as the first option for a shopping trip for one to three items, researchers found convenience stores are considered safer due to stores being less crowded, easier to get in and out of and more likely to have stock availability.

The survey endorsed the need for petrol and convenience stores to remain open, too, with 63% of convenience shoppers rating eight or above on an agreement scale that such stores should remain open during these times, and 47% of supermarket shoppers stating they will be likely to use petrol and convenience stores for items other than fuel during this period.

AUSTRALIA’S PATH TO RECOVERY Setting out a 10-point plan for the sector’s road to recovery, the AACS said it had successfully lobbied for the industry to be allowed to continue to operate during the pandemic, albeit with enormous health and well-being responsibilities delegated to staff and customers.

“We do, however, see many businesses shuttered and government spending at levels never before CONVENIENCE.ORG

seen to support small businesses and people affected by this virus,” the AACS said. “Many businesses are taking different approaches to keep trading and even innovate during these times as we can no longer just do business the old way.”

The association’s 10-point recovery plan includes: • Banning further excise hikes on tobacco • A llowing alcohol sales • Removing supply-chain authorizations that favor supermarkets over smaller and independent retailers • I nstituting least-cost routing for electronic payments as the move away from cash intensifies

iStock.com/tupungato

“Australia is becoming a cashless society, and this trend is being accelerated during the coronavirus pandemic,” AACS said. “Tap-and-go is becoming a far more frequently used method of transacting in convenience stores, increasing further as a result of measures such as social distancing. Convenience operators are stepping up to meet consumers’ expectations and preferences but are presently prevented from routing these tap-and-go transactions through the least costly payments network.”

THE PHILIPPINES EXPERIENCE Expanding online retailing is top of the agenda at 7-Eleven in the Philippines, where community quarantine measures were imposed on March 16, with only one person per household allowed to leave and purchase necessities plus nighttime curfews.

While the measures have been lifted in lowrisk areas, and some businesses and offices are returning to work, they have hammered trade, according to Victor Paterno, president and CEO at Philippine Seven Corp.

Paterno reports that the customer count at his stores has been cut by twothirds, although the average transaction has doubled. Foodservice has dropped by half. “We are selling coffee beans and frozen hot dogs,” he said. “It’s pretty bad but better than QSR.” CONVENIENCE.ORG

The supply chain has also been massively impacted, with the fill rate dropping from 80% to 30%. “Manufacturers have been unable to get people in factories or trucks across borders, and there was a mad scramble for essentials like everybody else,” Paterno said. In the Philippines, that’s compounded by the geography of the archipelago. “We run a complex logistics operation, and we felt it, but the islands that are dependent on tourism, which disappeared, got hit harder.”

Paterno plans to expand 7-Eleven’s online delivery capability shortly via warehouse fulfillment, with orders either picked up at convenience stores or delivered by courier. The retailer’s existing e-commerce business leverages its store network for orders placed through its CLiQQ loyalty program with fulfillment via delivery platforms such as Deliveroo. The potential is huge, said Paterno. He suggested online grocery penetration is half a percent, but the latent demand is 50%.

In China, local small independent food retailers enjoyed the highest levels of customer loyalty (75%) during the pandemic.

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NACS GLOBAL CALENDAR OCTOBER 11-14, 2020

NACS Show Las Vegas, Nevada www.nacsshow.com

MARCH 2-4, 2021

NACS Convenience Summit Asia Bangkok, Thailand

JUNE 1-3, 2021

NACS Convenience Summit Europe Dublin, Ireland

Australia is becoming a cashless society, and this trend is being accelerated.

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Despite the current lack of online infrastructure in the Philippines, small farmers have joined forces with aggregators to sell fresh produce online and deliver to homes. While 7-Eleven would prefer to stay clear of selling fresh and chilled foods online, there’s an opportunity to empower those farmers by supplying them with barcodes so they could package their products and drop off at a store.

The retailer also is accelerating plans to take seating out of stores and replace the space with essentials, while store openings and expansions have been put on pause, Paterno reported. Food-to-go will come back, he maintains, but only after a vaccine for COVID-19. In the meantime, as restrictions start to ease in provincial areas, 7-Eleven is beginning to see some promising upticks in sales, especially where alcohol bans are relaxed.

Re-negotiating with landlords is imminent, too, but Paterno is watching the stance taken by QSRs, which are currently taking a harder line. It’s no surprise since 7-Eleven closed 30% of its store network in April, largely because staff were unable to use public transport to get to work (20% remain closed as of this writing), and the chain introduced double “hazard pay” for staff.

When the head office returns to work, Paterno is insisting that everybody goes to the office at least once a week, unless they have pressing medical issues, since frontline workers should not be the only ones taking a risk. Ultimately, he believes routines will settle down, and he is optimistic for the future. Our businesses have not been as badly affected as some, and I am really excited about the online grocery opportunity,” he said.

ON-DEMAND DELIVERY IN CHINA Back in China, many offline retailers have shifted their activities to digital tactics, such as livestreaming and private WeChat groups, to keep their businesses alive, reported Elena Gatti, managing director of

Azoya EU, an e-commerce solutions provider and expert in China market entry.

Grocery chains such as Alibaba’s Hema, which has been rebranded as Fresh Hippo, Tencent’s Super Species and JD.com’s 7Fresh have all seen abrupt increases in orders through their on-demand delivery services, which can be accessed through mini-apps on WeChat, Gatti said.

A Fresh Hippo spokesperson reported the brand is prepping six times the amount of fresh vegetables for its 50 stores in Shanghai, equivalent to 330 tons of groceries. JD Daojia, JD.com’s on-demand delivery service platform, which services the likes of Walmart and JD’s own grocery stores, also has seen a fivefold increase in sales.

“Since everyone in China is staying inside to stay away from the coronavirus, the only way for them to get food is through these on-demand delivery services, which explains why demand has skyrocketed,” explained Gatti. Customers can order whatever they want on the retailer’s WeChat mini-program store; each supermarket can deliver groceries to one’s door within an hour.”

During the coronavirus crisis in April, Hema opened a flagship e-commerce store on Tmall and hired a top influencer, Viya, to do a livestreaming session to promote sales. The store sold six million preserved crawfish lobsters within five seconds through the livestreaming program. The e-commerce store also is used to sell more long-tail, non-perishable items such as snacks.

Better Life (BuBuGao), a leading multiformat retailer with 100 stores in Hunan and Jiangxi Province, has worked with Tencent to expand its digital retail business through a WeChat mini-program store since 2018. It integrates inventory systems and acts as a mini-app e-commerce store so that customers can order and have supermarket items delivered within an hour.

There is a three-step strategy to increase CONVENIENCE.ORG

iStock.com/caoyu36

GLOBAL TRENDS

sales: door-to-door delivery, livestreaming and WeChat community marketing.

To increase sales during the coronavirus crisis, Better Life launched its first livestreaming session on WeChat on February 25, selling 400,000 Chinese yuan (US $55,974) of products in 30 minutes.

Users placed 10,683 orders in the first two hours, and conversion rates reached 15.3%. Typically, China e-commerce conversion rates are around 3%, according to Gatti. The orders go directly from the warehouse to the customer, reducing crowds in the supermarkets.

7-Eleven China also is well on its digital journey, a bonus during the COVID-19 pandemic. The retailer has been working with Meituan to offer on-demand delivery services since 2018 and with JD Daojia since 2016. 7-Eleven stores on JD Daojia saw sales grow 400% after they were put onboard the platform in January 2018. In Beijing, all branches of 7-Eleven are on the Meituan food delivery platform, offering more than 1,000 SKUs to online users.

According to Gatti, people often buy soups and hot foods, such as meat and tofu sticks, from 7-Eleven. On the CONVENIENCE.ORG

Tap-and-go is becoming a far more frequently used method of transacting in convenience stores, increasing further as a result of social distancing.

delivery apps, customers can specify re-heating requirements when placing an order, so that the food will be heated before delivery. Some refrigerated frozen foods also will be delivered with ice packs to keep them cool.

Elsewhere, the Japanese convenience store chain Family Mart announced a partnership with JD Daojia in 2018. Family Mart initially onboarded 212 stores in Beijing, Shanghai, Shenzhen and Chengdu to the platform but expanded its online branches to 1,000 within six months. Apart from online delivery, Gatti said Family Mart also offers self-service checkout and other new retail solutions in some of its physical stores, such as vending machines that provide different products based on customer demographics.

While convenience stores have fared relatively well during the COVID-19 pandemic, the crisis has highlighted the online opportunities for the sector with digital ordering solutions, electronic payments and multiple delivery options, including vending. Those trends are set to escalate, even out of lockdown, and probably will become the “new norm.�

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

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CATEGORY CLOSE-UP / PACKAGED BEVERAGES

Thirst Quenchers

Packaged beverages drive traffic and profit for c-stores.

BY TERRI ALLAN

JUST THE FACTS On a per-store basis, average gross profits for packaged beverages increased a healthy 7.3% last year to $147,882 from $137,810, according to recently released NACS State of the Industry data.

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as per Nielsen, dollar sales rose 3.3% to $30.5 billion. The packaged beverages category is not only a traffic driver, it’s a top profit contributor to c-stores’ bottom lines.

According to the recently released NACS State of the Industry Report of 2019 Data, the packaged beverage category was the No. 2 in-store merchandise sales contributor and the No. 1 merchandise gross margin contributor. On a per-store basis, average gross profits for packaged beverages increased a healthy 7.3% last year to $147,882 from $137,810. Average sales per store rose 5.1% to $353,123 from $336,127 in 2018.

BREAKOUT BEVERAGES As with other in-store categories, packaged beverages are being transformed by increased consumer demand for betterfor-you products, as well as heightened interest in new flavors. “Products with a perceived health benefit continue to populate the space,” remarked Gough, pointing to the recent “breakout” of drinks like non-alcoholic seltzers and steady gains for enhanced and functional beverages, along with kombucha, specialty, ready-to-drink coffee and bottled water.

GT Dave, CEO and founder of GT’s Living Foods, the kombucha marketer, also has seen the shift. “Traditionally, the convenience channel has been the destination for snacks, candy and not-so-healthy beverage options, but that’s changing as consumers continue to seek better-for-you options while on the go,” said Dave, noting that response to his kombucha in c-stores has been very positive.

CONVENIENCE.ORG

iStock.com/bravo1954

S

ales and gross profit dollars of packaged beverages in convenience stores are on the rise, which demonstrates how vital the category continues to be for retailers.

“The packaged beverage segment is a key expected category for c-store consumers, and it accounted for 15.36% of in-store sales in 2019,” said Jayme Gough, NACS analyst. “The category has seen extensive innovation, subcategory blurring and healthy growth in the past year. For the first time in NACS State of the Industry data history, energy drinks passed carbonated soft drinks as the largest sales contributor to the category in 2019.”

Overall, the convenience channel accounted for 43.8% of total packaged beverage sales, just behind the food channel at 49.4% in 2019, according to Nielsen. While unit sales of packaged beverages in the channel slipped 1.7%,

Industry Sales

% of In-Store Sales 2018

2019

14.93% 15.36%

% of Stores Selling

Avg. Sales/Store 2018

2018

2019

2019

99.8% 99.8%

$336,127 $353,123

iStock.com/karandaev; MahirAtes;

Source: NACS State of the Industry Report of 2019 Data

Pat Determan, owner of Lyons Filling Station in Clinton, Iowa, reported that brands like Propel flavored electrolyte water and Vita Ice flavored sparkling water are popular at his store. “Even energy drinks are putting an emphasis on health,” he added. And like other retailers, Determan said his packaged beverage customers continue to welcome the category’s endless array of new flavors. “More often, customers are looking to try new beverages they have never tasted before,” agreed Gough. “Younger customers especially are more adventurous in their consumption habits, compared with their parents, who might prefer a beverage they know and love.” For this reason, retailers should adhere to a “delicate balance of providing repeat, daily customers with what they want, as well as stocking items for customers who want something new and different every time they visit,” she advised.

Energy drinks now lead all other packaged beverage types in dollar sales and gross profits per store, and 2019 was another strong year for the segment.

According to NACS State of the Industry (SOI) data, average per-store gross profit dollars for energy drinks reached an impressive $45,134 last year, more than any other packaged beverage subcategory.

CONVENIENCE.ORG

“Energy drinks are a destination category for c-stores,” remarked Laura-Lynn Freck, director of shopper insights at Red Bull North America. In fact, a number of successful new entrants to the segment helped drive growth, she noted, including the Red Bull Peach edition. While the COVID-19 pandemic has been impacting c-store traffic this year, Freck added that energy drinks still play an important role for the channel and consumers. “The need for energy is greater than ever as consumers are juggling more demands than ever,” she explained. “Energy drinks are a trip driver now and will be again with resumed routines.”

The strength in the energy drink segment hasn’t been lost on other beverage

More often, customers are looking to try new beverages they have never tasted before.

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.

JULY 2020 |

87

CATEGORY CLOSE-UP / PACKAGED BEVERAGES

PER STORE, PER MONTH SALES

2017

2018

2019

$29,688

$30,000 $28,204

$29,000 $28,000 $27,000 $26,000 $25,000 $24,000 $23,000 $22,000 $21,000 $20,000 $19,000 JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

Source: CSX; csxllc.com

Energy drinks lead all other packaged beverage types in dollar sales and gross profits per store.

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| JULY 2020

marketers. Coca-Cola North America, for example, recently launched Coca-Cola Energy. J.C. Harvey, director of retail channel strategy and commercialization, said early sales for the brand were promising.

“We’re confident that the category-crossing innovation will be a big hit for us and our customers,” he remarked.

FUNCTIONAL FAVORITES Carbonated soft drinks (CSDs), meanwhile, have been struggling in recent years as consumers ease up on sweetened drinks. CSDs accounted for 24.2% of average per-store sales in the packaged beverages category last year, according to SOI data, down from 25.3% in 2018.

Still, the news wasn’t all bad as average sales per store last year rose slightly. And Harvey noted that despite the overall

decline for the segment, some brands, such as Coca-Cola Orange Vanilla and Sprite Lymonade, are seeing growth.

Bottled waters, of course, have been a beneficiary of the shift away from CSDs, and in 2019, the inroads continued. Average sales per store, average gross profit dollars per store and average gross margins all rose, according to SOI data. Harvey reported that Smartwater Alkaline, Smartwater Antioxidant and Topo Chico were Coca-Cola’s top water performers.

Tom Hipwell, vice president of retail sales at Nestlé Waters North America, noted that bottled water is generally within the top three packaged beverage segments in c-stores, depending on the market. At Nestlé Waters, Acqua Panna is a growth brand, Hipwell said.

CONVENIENCE.ORG

CATEGORY CLOSE-UP / PACKAGED BEVERAGES

Subcategory Performance PACKAGED BEVERAGES

% of Sales

Avg. Sales/Store

Avg. GP$/Store

Gross Margin %

2018

2019

2018

2019

2018

2019

2018

2019

Energy Drinks

29.4%

31.5%

$98,857

$111,247

$37,848

$45,134

44.98%

45.01%

Carbonated Soft Drinks

25.3%

24.2%

$85,201

$85,377

$29,788

$29,623

34.96%

34.70%

Bottled Water

12.4%

12.6%

$41,521

$44,367

$22,738

$24,394

43.34%

43.69%

Sports Drinks

9.1%

9.2%

$30,679

$32,325

$13,296

$14,123

44.12%

46.74%

Iced Tea, Ready to Drink

8.5%

7.8%

$28,714

$27,570

$12,917

$12,409

54.76%

54.98%

Juice/Juice Drinks

7.1%

6.8%

$23,914

$24,037

$10,551

$11,235

39.12%

37.90%

Other Packaged Beverages

5.4%

5.1%

$18,016

$17,980

$7,047

$6,814

38.29%

40.57%

Enhanced Water

2.7%

2.9%

$9,224

$10,220

$3,624

$4,149

39.29%

40.60%

100.0%

100.0%

$336,127

$353,123

$137,809

$147,881

41.00%

41.88%

TOTAL

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

Source: NACS State of the Industry Report of 2019 Data

The big trends we’re seeing in the packaged beverage space are kombuchas, ready-to-drink coffees, all-natural sodas and CBD drinks.

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| JULY 2020

Enhanced waters, meanwhile, are now hitting their stride. While comprising just 2.9% of category sales, enhanced waters containing caffeine, protein, probiotics and other additives are increasingly appealing to consumers interested in more functional water products.

Indeed, retailers report that traditional beverages are seeing share loss to newer, often functional drinks. “While there will always be a market for Coke, Diet Coke and bottled water, the big trends we’re seeing in the packaged beverage space are kombuchas, ready-to-drink coffees—including those with alternative milks—all-natural sodas and CBD drinks,” said Dani Cone, owner of Cone & Steiner General, with three stores in the Seattle area. Whenever possible, Cone tries to stock locally made beverages, including RTD coffees and kombuchas.

SPACE AGE With both established and new beverages, c-store coolers are increasingly stressed.

Lynette Stoudt, owner of Tramway Market in Stateline, Nevada, lamented,

“My biggest challenge is finding space for all the new energy drinks, while maintaining room for the staples like Red Bull and Monster that continue to perform well.” In addition to space constraints, Coca-Cola’s Harvey said c-stores find it difficult to encourage fuel customers to enter the store for packaged beverage purchases. Signage at the pump can be effective in converting those consumers, the beverage executive noted.

Other best practice merchandising tactics can go a long way in helping retailers get the best results from their packaged beverage offerings. Harvey suggested food and beverage bundles, while Freck pointed to merchandising energy drinks in multiple areas of the store. Nestlé Waters’ Hipwell said that while selection should appeal to the majority of consumers, it’s important to consider special needs, too. “Some consumers like to have bottled water at room temperature, and some may want to purchase a case pack,” he noted.

Among retailers, Lyons Filling Station’s Determan has found everyday low CONVENIENCE.ORG

CATEGORY CLOSE-UP / PACKAGED BEVERAGES

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.

pricing to be effective, while Cone calls out new products on social media.

Then there’s Pops in Arcadia, Oklahoma, located on famed Route 66. The c-store is renowned for its more than 700 different sodas—most of which are sold as singles in glass bottles—and its iconic 66-foot tall neon soda bottle that serves as a beacon for many tourists. While brands like Coke and Pepsi are top sellers year-round, Pops specializes in limited-volume and hard-tofind soft drinks. “We see a run on a lot of crazy flavors,” remarked general manager Missy Smith, adding that the store does its best to fulfill customer requests.

Unlike other c-stores, Pops isn’t seeing a

retreat in CSD sales, Smith noted, with the drinks—stocked in some 13 cooler doors and end-aisle coolers—accounting for about half of the store’s sales.

While not all c-stores can take the same approach to packaged beverages as Pops, there’s still plenty of opportunity to grow category sales. Harvey advises retailers to tailor their product offerings to the store’s specific customer base.

Cone, meanwhile, believes in a “trial and error” approach. “Packaged beverages is a strong category for us,” she said, so managing it is important. “We’ll take on two or three new flavors, see how customers react, and move on from there.”

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CATEGORY CLOSE-UP / FROZEN DISPENSED BEVERAGES

A Summer Tradition

Consumers celebrate the warmer months with frozen dispensed beverages.

W

hen it’s hot outside, sales of frozen dispensed beverages sizzle at convenience stores.

“Depending on a particular store's location, sales of this category routinely spike in the summer and dip in the winter,” said Jayme Gough, NACS research analyst. “While the impact of COVID-19 on category sales is not known yet, retailers have had to pivot their strategies for the category as warmer weather and summer travel approach.”

But with some planning, convenience retailers can keep their frozen dispensed beverage sales strong and create loyal customers.

JUST THE FACTS Frozen dispensed beverages accounted for 1.36% of in-store sales in 2019, averaging $29,960 sales per store, according to recently released NACS State of the Industry data.

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| JULY 2020

A POPULAR CATEGORY Frozen dispensed beverages have long been a staple at convenience stores since slushies were created in the 1950s. Their popularity continues more than 60 years later with slush drinks, both carbonated and non-carbonated, driving growth.

Frozen dispensed beverages accounted for 1.36% of in-store sales in 2019, averaging $29,960 sales per store, according to recently released NACS State of the Industry data. “While the frozen dispensed category accounts for the second smallest percentage of sales within foodservice (5.7%), it has the second-highest gross margin of foodservice categories (56.7%), underscoring its attractiveness to retailers,” Gough said.

Slushie sales at Doodles Convenience Store in Oak Island, North Carolina, have picked up as the weather warms. “It’s been a little bit different this year because of the pandemic,” said manager Michelle Pruitt. “Our sales are off from the previous year, but we think they will increase now that summer is here.”

Our Place Quick Stop in Pingree, Idaho, hasn’t seen sales of frozen dispensed beverages dip. “In fact, because of our rural location, we’ve actually had more business since the pandemic because we’re one of the few places still open,” said manager Kathy Hone. “Our frozen dispensed beverage sales have stayed pretty good.”

CONVENIENCE.ORG

iStock.com/RonBailey

BY SARAH HAMAKER

Industry Sales

% of In-Store Sales 2018

% of Stores Selling

Avg. Sales/Store

2019

2018

1.32% 1.36%

2018

2019

2019

91.0% 89.3%

$29,355 $29,960

Source: NACS State of the Industry Report of 2019 Data

SLUSH TRENDS Innovation in frozen dispensed beverages keeps the category fresh and interesting for consumers. For example, according to The ICEE Company, candy company brands are partnering with convenience stores on branded slushie drinks, such as ICEE Warheads Sour Strawberry Grape Smashup. In addition, add-ins and infusions to create textural experiences in frozen dispensed beverages have become popular.

“Viral trends on social media, whimsical flavors and unique renames of popular flavors, such as Mermaid and Unicorn, have driven impulse and desire to try new flavors,” said Natalie Peterson, senior director of marketing

for The ICEE Company. “It’s important that retailers pay attention to these trends to stay relevant to consumers.”

For example, ICEE’s newest machines allow customers to choose a base flavor and mix in flavor shots.

“Customization is key to success,” Peterson said. “The ability to customize flavors spans across frozen carbonated and frozen non-carbonated.”

Today’s consumer is more aware and conscious of ingredients and what is put into their bodies.

HEALTHY SLUSHIES As consumers become more aware of what they put in their bodies, there has been a shift within this category from frozen carbonated to frozen non-carbonated. “This category gives retailers a chance to offer innovative, healthful frozen dispensed

Subcategory Performance iStock.com/viennetta

FROZEN DISPENSED BEVERAGES

% of Sales

Avg. Sales/Store

Avg. GP$/Store

Gross Margin %

2018

2019

2018

2019

2018

2019

2018

Frozen Non-Carbonated

66.4%

68.3%

$19,484

$20,464

$11,694

$12,014

60.02%

58.71%

Frozen Carbonated

18.8%

16.4%

$5,516

$4,904

$2,876

$2,667

52.13%

54.38%

Other Frozen Dispensed Beverages

14.8%

15.3%

$4,355

$4,593

$2,052

$2,306

47.12%

50.20%

100.0%

100.0%

$29,355

$29,960

$16,622

$16,987

56.62%

56.70%

TOTAL

2019

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

Source: NACS State of the Industry Report of 2019 Data CONVENIENCE.ORG

JULY 2020 |

95

Customization is key; the ability to customize flavors spans across frozen carbonated and frozen non-carbonated.

beverages that can turn customers into loyal shoppers,” Gough said.

For example, Green Zebra Grocery has its own line of kombucha slushies. The store partnered with Brew Dr. Kombucha to create a Superberry Lemonade kombucha slushie packed with organic berries, including elderberry, currant, blueberry, goji berry, strawberry and raspberry.

Other kombucha slushie flavors are pineapple ginger and marionberry mint.

At 7-Eleven’s lab store in Dallas, the chain has been experimenting with organic Slurpee “farm-to-fountain” flavors such as blood orange, cucumber and coconut.

These non-carbonated flavors include superfoods like turmeric, celery, licorice root and black carrot. This year, 7-Eleven launched its first energy version with the limited-edition Quake Energy Berry Blast Slurpee, based on the chain’s private-label Quake performance energy drink.

“Today’s consumer is absolutely more aware and conscious of ingredients and what is put into their bodies,” Peterson said. “ICEE is working on innovation that will highlight some value-added ingredients and healthier options in our fresh line. Reduced sugar, and more natural f lavors and colors are important options in frozen dispensed beverages.”

CORONAVIRUS CHANGES Because of the coronavirus pandemic, retailers have been scrutinizing their operations, including frozen dispensed beverages. “We are seeing retailers

The NACS Convenience Tracking Program (CTP) comprises consumer behavior analytics from more than 10,000 convenience store shoppers across 42 states, representing the most comprehensive consumer-driven metrics available to the industry.

To learn more about CTP and how to participate, contact Leroy Kelsey, director of industry analytics, at lkelsey@convenience.org or visit www.convenience.org/ctp.

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| JULY 2020

adapt quickly to offer frozen beverages in a safe way,” Peterson said.

“We’ve always kept our slush machine very clean, but we have been wiping it down even more because of the coronavirus,” Hone said. “We’ve also stopped allowing customers to refill slushie cups to help keep things sanitized during the pandemic.”

Our Place Quick Stop still sells refillable cups and plans to restart its refillable service as soon as it’s safe to do so. “Ninety-nine percent of our customers always get a new cup, so there’s not many who are clamoring for refillable slush cups,” Hone added.

Pruitt said the cleaning schedule for the frozen dispensed beverage equipment continued as usual at Doodles Convenience Store. “We’ve always completely cleaned the machines every 14 days, so we didn’t need to make any adjustments during the pandemic,” she said.

Roslindale Food Mart in Roslindale, Massachusetts, had to shutter its self-service frozen dispensed beverage machines during the state’s shutdown to follow health department guidelines CONVENIENCE.ORG

iStock.com/venakr

CATEGORY CLOSE-UP / FROZEN DISPENSED BEVERAGES

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CATEGORY CLOSE-UP / FROZEN DISPENSED BEVERAGES

PER STORE, PER MONTH SALES

2017

2018

2019

$1,200 $1,100 $1,000 $835

$900 $800

$659

$667

$700 $600 $500 $400 $300 $200 JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

Source: CSX; www.csxllc.com

Retailers should establish an annual frozen dispensed beverage promotional calendar with limited-time offers built in.

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| JULY 2020

but was able to put the machines back in service in May. “We have to sanitize the machines more frequently than before, but we’re glad to have them back in time for summer, said employee George Elias.

SUMMER SALES With summer in full swing, retailers should use the hotter weather to capitalize on sales of frozen dispensed beverages.

“The summer months provide a great opportunity for convenience retailers to promote and highlight their slushies,” Gough said. She suggested tying frozen beverage promotions into summer holidays like Independence Day to create buzz for the category. “Some retailers have created summer discounts or expanded loyalty programs, while others have experimented with a variety of different flavors,” Gough said. “Still others pair a frozen beverage with another discounted item to spur even more sales.”

Because 90% of consumers say they snack multiple times a day, Peterson recommended an aggressively priced frozen drink program paired with late afternoon snacks to help boost frozen dispensed beverage sales. “Any-size beverage promotions with a low price point drive traffic traditionally, and we see that activity continuing,” Peterson said. “We also think convenience retailers can maximize on increased snacking occasions in the United States, post-pandemic.”

Overall, retailers should establish an annual frozen dispensed beverage promotional calendar with limited-time offers built in. “This will differentiate the offerings for consumers,” Peterson said. “Brands matter, as does variety and rotation to keep consumers engaged in the category.”

Doodles Convenience Store changes the flavors on its two-spout dispenser every 14 days to keep the category fresh. “We have four to six flavors in our rotation, CONVENIENCE.ORG

which includes two berry flavors and our No. 1 seller, Lemon Ice,” Pruitt said.

Roslindale Food Mart doesn’t adhere to a specific flavor rotation on its six-flavor dispenser. Elias said the store’s most popular flavors are watermelon and strawberry. “We put in a new flavor whenever one runs out,” Elias said. “We don’t advertise or promote the category because it basically sells itself, especially in the warmer weather.”

FROZEN FUTURE These retailers have a rosy view of the category’s future. “Frozen dispensed

beverages are very popular with our customers, and we anticipate that will continue,” Hone said.

“It’s still a good category to have,” Pruitt added. “We have no plans to change our frozen dispensed beverage program.”

However, to run a successful program, retailers should consider staying on top of category trends. “Studies show consumers crave variety in their beverage selection and choose retailers based on this,” Peterson said. “The convenience stores offering the best selection and variety in frozen dispensed beverages will continue to win over customers.”

ADVERTISER INDEX Contact Information

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Contact Information

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

Visit her online at www.sarahhamaker.com.

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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Contact Information

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7-Eleven Inc...............................................................................................7 www.7-eleven.com

Cool New Products Guide.......................................................................72 www.convenience,org/coolnewproducts

NACS Executive Leadership Program....................................................65 www.convenience.org/ExecEd-Cornell

ADD Systems............................................................................................27 www.addsys.com

CraftAg (AromaHemp)............................................................................69 www.aromahemp.com

NACS Foundation 24/7............................................................................ 18 www.conveniencecares.org/24-7-Day

A ltria Group Distribution Company................ Inside Front Cover AGDCTradeRelations@Altria.com www.altria.com

Electrolit USA...........................................................................................89 www.electrolit.com

NACS Innovation Leadership Program..................................................32 www.convenience.org/ExecEd-MIT

Bob’s Red Mill..........................................................................................33 www.bobsredmill.com

H unt Brothers Pizza.................................................................... 57 (800) 453-3675 www.huntbrotherspizza.com/nacs

NACS Leadership For Success.................................................................53 www.convenience.org/LFS2020

B UNN............................................................................................97 www.bunn.com/frozen-beverages

I TG Brands.................................................................................... 41 www.itgbrands.com

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

J UUL..........................................................................................10-11 retailers@juul.com

C hester’s International LLC.........................................................59 (800) 646-9403 www.chestersinternational.com Chevron Corporation Chevron Energy Solutions LP....................................... Inside Back Cover (866) 354-4476 www.Havoline.com/PitPack

L iggett Vector Brands Inc...........................................................25 (877) 415-4100 www.liggettvectorbrands.com L iving Essentials LLC (5-hour ENERGY)........................................9 (866) 960-1700 www.5HErewards.com M cLane Company Inc................................................... Back Cover www.mclaneco.com

NACS Magazine..........................................................................................4 www.nacsmagazine.com NACS Show..........................................................................................28, 51 www.nacsshow.com NACS SOI Report.......................................................................................71 www.convenience.org/SOIReports2020 N estle Waters North America Inc............................................... 91 (S. Pellegrino essenza) www.nestle-watersna.com/en Placon...................................................................................................... 19 (800) 541-1535 www.placon.com Premier Manufacturing Inc..............................................................5 & 29 www.gopremier.com

Chicago Bar Company LLC (RXBAR) ...................................................... 37 www.rxbar.com

NACS Compensation Report...................................................................92 www.convenience.org/SOIReports2020

ClickIt Inc.................................................................................................63 www.clickitinc.com

NACS Convenience Matters.......................................................................6 www.conveniencematters.com

S wedish Match North America (Zyn)..........................................17 (800) 367-3677 www.smna.com

Conexxus Annual Conference.................................................................93 www.conexxus.org

NACS Executive Education Programs.....................................................79 www.convenience.org/NACSExecEd

Trion Industries Inc..................................................................................15 (800) 444-4665 www.triononline.com/art

CONVENIENCE.ORG

JULY 2020 |

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BACK PAGE

Melon Heads

A Good, Ole’ Time For some Americans, the quarantine freed up time for binge watching TV shows and movies, and chances are your well of unwatched entertainment may be running dry. If you’re looking for something to watch other than the usual Netflix drama or Hulu documentary, you may want to check out the classic short film “Service With a Smile.” The 17 minutelong movie follows Leon, the owner of a deluxe service station, complete with a golf course, foodservice and a staff of chorus girls, who pump gas and shine patrons’ shoes. The movie was released in theatres by Warner Brothers on July 28, 1934, and it was the first live-action film in full color (three-strip Technicolor).

We don’t think a service station like this one will happen anytime soon, but a gas station with a golf course isn’t a bad idea.

100

| JULY 2020

Police have arrested one of two people suspected of robbing a Virginia gas station using watermelons as a disguise. Two men hollowed out watermelons, made eye holes and placed them on their heads, then walked into the convenience store and allegedly stole some items. As if the conspicuous watermelon disguises weren’t enough for these guys, they fled the scene in a jacked-up Toyota Tacoma truck. While one arrest has been made, the other watermelon head is still at large.

A Grand Proposal Fans of NBC’s “The Office” will instantly recognize the inspiration behind a Maryland couple’s proposal at a Charles County Wawa gas station. Just like the show’s characters Jim and Pam, John Lush got down on one knee in the forecourt and proposed to his then girlfriend Susan Hedrick, who happily accepted. Little did the couple know that The Office’s involvement in their proposal wouldn’t stop there. John Krasinksi, who played Jim on the show, brought them on his web series show “Some Good News,” where he legally married the couple, while Jenna Fischer, who played Pam, served as Hedrick’s maid of honor. As if that wasn’t enough for the couple, former Office cast members streamed in after the ceremony and celebrated with the newly married couple.

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