NACS Magazine June 2021 by NACS Magazine

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convenience.org | JUNE 2021

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Untitled-2 1

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2/16/2021 1:03:37 PM

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Untitled-2 2

2/16/2021 1:03:39 PM

convenience.org | JUNE 2021

DELIVERY SERVICES

BIGGER BASKETS

CURBSIDE PICKUP

WAGES & BENEFITS SHOPPER LOYALTY WINNING TRIPS

GHOST KITCHENS

DIGITAL ORDERING

ELECTRIC VEHICLES

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

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

TAKE SURVEY CLICK HERE

JUNE 2021

32 48 50 56 62 68 Cover Art by Beyond Definition STAY CONNECTED WITH NACS

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

CONVENIENCE.ORG

74 84 90

he Big Pivot T In 2020, healthy margins offset a crash in fuel demand, while bigger baskets lifted inside sales. hat’s Now, What’s Next W This year, understanding industry strengths— and your opportunities—is more valuable than ever.

I gniting Sales Fourth-tier cigarettes and cigars benefited from pandemic shifts, while e-cigarettes shed their appeal. old Vault Superstars C Carbonated drinks, sports drinks and juice boosted packaged beverage growth. appy Hour H The beer, wine and liquor categories thrive as consumer shopping habits shift. he Power of Sweet and Salty T The candy and salty snacks categories boosted basket size and traffic for retailers in 2020. own But Not Out D The pandemic battered foodservice in 2020. rom the Source F NACS Convenience Voices program reveals key trends of today’s ever-evolving consumer. he Post-Pandemic Future T Convenience retail leaders share how their companies are navigating the future.

100 Back to Normal, Slowly

A review of the fuel disruptions of 2020 offers a measured outlook for recovery.

JUNE 2021 |

JUNE 2021

Consumer desire for frictionless options has become a trend across all retail channels.

Swipe fees continue a rampant upward trajectory with seemingly no end in sight.

P. 120

INSIDE WASHINGTON, P. 22 (Continued)

06 Convenience.org

08 From the Editor 12

NACS News

22 Inside Washington NACS takes another run at the swipe fee debate; with climate-related buzzwords floating around, here’s what you need to know.

108 Cool New Products

The

Personalization Factor How to focus on profit over volume by bringing in more customers, more often. et Up for Success S Today’s modern forecourt and c-store platforms should be openplatform, software-based systems.

106 A Q&A With Envysion

Check on your stores any time, any where and generate valuable insights from what you see.

Beer sales and profits thrive amid pandemic challenges; after a rocky 2020, cold dispensed beverages are poised for growth.

128 Back Page 2

| JUNE 2021

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/julichka

114 Category Close-Up

T H E

A R T

O F

M E R C H A N D I S I N G

T M

VOLUME 20, ISSUE 6

JUNE 2021

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

Lauren Brooks Digital Content Manager (703) 518-4283 lbrooks@convenience.org CONTRIBUTING WRITERS Terri Allan, Sarah Hamaker, Pat Pape, Renee Pas, Keith Reid, Jerry Soverinsky

PAST CHAIRMEN: Frank Gleeson, Aramark Northern Europe; Julie Jackowski, Casey’s General Stores Inc.

DESIGN Beyond Definition www.beyond-definition.com

MEMBERS: Chris Bambury, Bambury Inc.; Chris Coborn, Coborn’s Inc. Little Dukes; Joseph M. DePinto, 7-Eleven Inc.; Bhagdeep S. Dhaliwal, Dhaliwal & Associates Inc.; George Fournier, EG America LLC; Anne Gauthier, St. Romain Oil

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/ Midwest, West (703) 518-4277 tasprooth@convenience.org

PUBLISHING Erin Pressley Publisher and Vice President, Education & Media (703) 518-4208 epressley@convenience.org

Submit Your Nominations Today* Visit conveniencecares.org/ Future-Fund to download an application or email Lindsay Buchanan at lbuchanan@convenience.org

*Application submission deadline extended: Monday, June 21, 2021

CHAIR: Kevin Smartt, Kwik Chek Food Stores OFFICERS: Lisa Dell’Alba, Square One Markets Inc.; Brian Hannasch, Alimentation Couche-Tard Inc.; Andy Jones, Sprint Food Stores Inc.; Ken Parent, Pilot Flying J LLC; Victor Paterno, Philippine Seven Corp. dba 7-Eleven Convenience Store; Don Rhoads, The Convenience Group LLC; Jared Scheeler, The Hub Convenience Stores Inc.

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

Nominate A Rising Star From Your Company

NACS BOARD OF DIRECTORS

Rose Johnson Audience Development and Production Manager (703) 518-4218 rjohnson@convenience.org

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

NACS SUPPLIER BOARD CHAIRMAN: Rick Brindle, Mondelēz International

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

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

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

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

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

STAFF LIAISON: Bob Hughes, NACS

CHAIRMAN-ELECT: Brent Cotten, The Hershey Company

SUPPLIER BOARD NOMINATING CHAIRMAN: Joseph Vonder Haar, iSEE Store Innovations LLC

NACS Magazine (ISSN 1939-4780) is published monthly by the National Association of Convenience Stores (NACS), Alexandria, Virginia, USA. Subscriptions are included in the dues paid by NACS member companies. Subscriptions are also available to employees of nonmember companies at a rate of $70 per year. Please add $15 for delivery outside the United States. Subscription requests: nacsmagazine@convenience.org POSTMASTER: Send address changes to NACS Magazine, 1600 Duke Street, Alexandria, VA, 22314-2792 USA. Contents © 2021 by the National Association of Convenience Stores. Periodicals postage paid at Alexandria VA and additional mailing offices.

1600 Duke Street, Alexandria, VA, 22314-2792

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WHAT’S ONLINE | JUNE 2021

What’s top of mind in convenience? We’ll tell you.

Keep Searching

Download our weekly podcast today and gain access to industry knowledge and trends — all in 24 minutes or less! Tune in at conveniencematters.com

Special Episode: It’s Electric! It’s time to focus on the future of cars, consumers and travel as an electric reality is coming quickly for those who live in places where EVs are being mandated.

That’s Cool

Are you looking to stock your stores with the best new merchandise from across the industry? The online Cool New Products Discovery Center allows you to find new packaging solutions, merchandising displays, technology, product designs, exciting new flavors and much more. Each month, NACS Magazine features the latest Cool New Products, but you can view the products at www.convenience.org/coolnewproducts. CONVENIENCE.ORG

iStock.com/AlexSecret

Episode

#278

Search engine optimization (SEO) plays a significant role in how marketers and public relations specialists produce online content. Employing good SEO strategies can help your content rise to the coveted first page of search results on search engines like Google, Bing and Yahoo, etc. The higher the rank, the faster people can organically search the web and find your content. SEO and the various considerations involved in designing an SEO strategy are complex and often require assistance from organizations dedicated to helping companies develop, monitor and maintain an SEO strategy. From understanding your audience to keyword optimization, NACS provides helpful tips on how to optimize your content for SEO. Learn more at www.convenience.org/topics/ community/communication-strategies-for-retailers.

You asked. We answered. Watermelon Extra Strength is here to stay.

Contact your distributor to order. Watermelon Extra Strength

THIS STATEMENT HAS NOT BEEN EVALUATED BY THE FOOD AND DRUG ADMINISTRATION. THIS PRODUCT IS NOT INTENDED TO DIAGNOSE, TREAT, CURE OR PREVENT ANY DISEASE. Extra Strength 5-hour ENERGY® shots contain caffeine comparable to 12 ounces of the leading premium coffee. Limit caffeine products to avoid nervousness, sleeplessness, and occasional rapid heartbeat. Individual results may vary. See 5-hourENERGY.com for more details. ©2021 Living Essentials Marketing, LLC. All rights reserved.

FROM THE EDITOR

G o o d as ne

Tread lightly

Just chilling!

Built for Impact

Kim Stewart Editor-In-Chief

Things aren’t quite the same as before, but that doesn’t mean they are bad. 8

| JUNE 2021

leaning maple lost its fight against gravity and smashed a footbridge along one of the paths in the woods near our home. The impact split a joist, but the opposite side remained intact, so for a couple of weeks, hikers and dogs alike gingerly tiptoed across the good side, testing their luck. At last, the damaged end of the bridge gave way, and on one recent weekend, two kind neighbors disassembled the structure—saving the good two-by-fours—and rebuilt the bridge a few feet from its original spot. My husband and I walk our dog there nearly every day, so when our mutt trotted down the path to the bridge, he stopped short at the edge of the embankment where we’d always crossed the creek. What he didn’t notice is the new bridge just to his left, built mostly of the boards he’d walked across countless times. We guided him over the bridge and went on our way. The next time we crossed the creek, he knew just where to go. Our salvaged footbridge remade with a mix of old and new timber is much like the pandemic year-plus from which we are emerging. Things aren’t quite the same as before, but that doesn’t mean they are bad. We remember the impact but also our resilience. And so it is with the convenience and fuel retailing industry. This issue of NACS Magazine is an exclusive deep dive into the

NACS State of the Industry Summit (SOI), which previewed the State of the Industry Report of 2020 Data, available from NACS Research this month, and shared what the experts see ahead. It’s a crucial year for the SOI Report because 2020 was an anomaly in so many ways. Fuel margins reached record levels even as demand plummeted. The tobacco category, which had been declining, performed unexpectedly well, along with the beer, wine and liquor categories and the candy and snacks categories. That was not the case with foodservice, as we reported in the May issue and go deeper into this month. Packaged beverages overall had a good year, although sales for some items like bottled water and ready-to-drink iced teas were tepid. The big question is, will any of this last? I love the advice from Jim Jacko, senior category manager, Coen Markets: “Don’t set your planograms using data from 2020.” I’d amend that a bit to advise: Use last year’s data to benchmark your business, figure out what you can build on and what’s too broken to reuse. Then chart a course to what’s next. Enjoy your summer—and if you live on the East Coast, marvel at the 17-year cicadas.

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NACS NEWS

What’s Next

he NACS State of the Industry Report of 2020 Data has arrived! The report is the convenience and fuel retailing industry’s premier benchmarking tool and the most comprehensive collection of data and trends. Want to find out what’s next and how you can get there faster? For more than 50 years, the convenience and fuel retailing industry has relied on the NACS State of the Industry Report to answer this question and more. This report will help you: •U nderstand the big picture with data and analysis on economic, market and shopper dynamics. • Maximize effectiveness and profitability with insider access to aggregate financial, operational and category data from more than 24,000 convenience stores across the United States. •B enchmark against top performers in the industry and determine key drivers of their success. Don’t forget about the NACS State of the Industry Compensation Report of 2020 Data. This report 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 both digital reports today at www.convenience.org/research. Scan the QR code to order the digital NACS State of the Industry Report of 2020 Data today!

| JUNE 2021

CONVENIENCE.ORG

NACS Announces 2 New Global Relationship Partners NACS has expanded its international reach by adding Paul Chamberlain and Peter Gale as NACS Relationship Partners. Now totaling 13 partners in six continents, the NACS Relationship Partners provide direct access to leading industry experts who provide unparalleled insights into the dynamics of global convenience markets and help NACS identify strategic issues and opportunities to share with its members. NACS operates a network of global relationship partners who are directors and senior executives of local, regional or global leading consultancies, research agencies and other supplier companies, each with a strong industry network in their respective regions. Paul Chamberlain is NACS Relationship Partner U.K., based in the United Kingdom. He is the newly appointed CEO of Grocer Talk (c-talk.co.uk), after serving for 14 years as commercial director with the U.K.’s Association of

Convenience Stores (ACS). Prior to joining ACS, Chamberlain was in the media business and helped with the U.K. launch of OK! and Glamour magazines. Peter Gale is NACS Global Representative Asia-Pacific, based in Thailand. He has been at Nielsen for the past 26 years and as managing director of retailer services led the company’s partnerships with leading FMCG retailers across Asia, the Middle East, Africa and global emerging markets, before starting his own consultancy earlier this year. NACS connects global retailers to new markets, business contacts, industry trends, regulatory news and technologies through its suite of programs that include NACS Convenience Summit Asia and NACS Convenience Summit Europe. Learn more at www.convenience.org/global.

NACS Calendar of Events SIGNATURE EVENT NACS Show October 5-8, 2021 | Chicago, IL

GLOBAL

NACS Convenience Summit Europe June 1-3, 2021 | Virtual NACS Convenience Summit Asia August 16-20, 2021 | Virtual

GOVERNMENT RELATIONS

NACS In Store Throughout 2021 | Stay tuned …

CONVENIENCE.ORG

LEADERSHIP

NACS Executive Leadership Program at Cornell University July 25-29, 2021 | Ithaca, NY NACS Financial Leadership Program at the Wharton School of the University of Pennsylvania August 1-6, 2021 | Philadelphia, PA

NACS Innovation Leadership Program at MIT Sloan School of Management October 31-November 5, 2021 | Cambridge, MA NACS Marketing Leadership Program at Kellogg School of Management, Northwestern University November 14-19, 2021 | Evanston, IL For more information about these NACS events, visit www.convenience.org/events.

NACS Women’s Leadership Program at Yale School of Management October 26-28 and November 2-4, 2021 Live Virtual

JUNE 2021 |

NACS NEWS

Boost Your Knowledge, Build Your Career In today’s competitive market, we know that skilled leadership is essential for survival and long-term success. To help our industry leaders meet this demand, NACS has partnered with world-class institutions to customize executive training that advances convenience retail leaders and shapes industry innovators. Treated holistically, NACS Executive Education helps forge the well-rounded leaders we need. Each program, standing strong individually, also acts as a puzzle piece in creating nimble, adaptive strategists and thinkers that help forwardthinking organizations grow and evolve. Which of our five programs is right for you, or your team members? Take a look:

July 25-29, 2021

Competition surrounds you. How will you lead? How will you excel? Senior-level retail management, this program is designed to enlighten, inform and level-up your skills. Foster new ways of thinking and responding to the challenges you will face. Be equipped, and own your position as a visionary leader.

August 1-6, 2021

Balance sheets are black and white. The thinking around finances, the insights, and the strategies are where financial awareness (and associated action) grows more informed, more confident, more lucrative. Designed for executives who seek to maximize their financial adeptness and in turn, amp up their organizational value and their organization’s bottom line.

October 26-28 and November 2-4, 2021

Unapologetic. Powerful. Respected. Authentic. Women aren’t simply equipped to succeed because they are human—they have unique strengths. Often they can harness an innate emotional intelligence that allows a deeper breadth of understanding and clarity. This empowering course is designed for women who want to individually, and collectively bolster their leadership abilities, reinvigorate their companies and expand their networks.

October 31November 5, 2021

Innovation isn’t just a word—it’s a necessity. In convenience, we must bring it to our perspective, our skillset, and our implementation. Because without innovation, stagnation sets in. And we all know this fast-paced world has no room for stagnation. Want to be an innovator? An innovative thinker? Want to network with other innovative leaders? This program is for you.

November 14-19, 2021

When you deeply understand and connect with your customer, you excel. When you don’t, you decline. Marketing is about showing customers that you understand them; you have what they need. And it’s about building the connections that create loyalty. Are you a senior-level executive looking to hone in on branding, consumer experience and analytics? This program is for you.

The Dyson School Cornell University Ithaca, NY

The Wharton School University of Pennsylvania Philadelphia, PA

Yale School of Management Live Virtual

MIT Sloan School of Management Cambridge, MA

Kellogg School of Management Northwestern University Evanston, IL Register today at www.convenience.org/education 14

| JUNE 2021

CONVENIENCE.ORG

NACS NEWS

NEW NACS MEMBERS NACS welcomes the following companies that joined the association between March 16, 2021, and April 15, 2021. 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 RETAILER MEMBERS

American Brokers Riviera Beach, FL

2080 Investments Fort Lauderdale, FL

Arihant Investment LLC North Prince George, VA

Agfinity Inc. Greeley, CO

Bablu & Bunu Inc. Cape Coral, FL

Ahmed Ventures Hollywood, FL

Blessed Inv dba PrimeT Polk City, FL

Boca Gas Company Holdings LLC Boca Raton, FL Buckingham Oil Fort Myers, FL Coral Springs Port St. Lucie, FL

Crozet Market Crozet, VA

Hambaz Enterprises, LLC Virginia Beach, VA

Edison Express/Chevron Fort Myers, FL

IBAR2 Portsmouth, VA

EZ Mart TNNJ LLC Newport News, VA

Industrial Park Sunoco Norfolk, VA

Grocery (Qwik Way) Fort Meade, FL

INSHA Petroleum Fort Pierce, FL

MEMBER NEWS RETAILER Casey’s announced that Paul Suarez has joined the company as chief information security officer. SUPPLIER PepsiCo Inc. announced that C.D. Glin, currently president and CEO of the U.S. African Development Foundation, has been appointed vice president, global head of philanthropy, for The PepsiCo Foundation. Impact 21, a retail consulting, analytics and services company, announced the appointment of Pete Chrystal and Matt Dicke as its newest principal consultants. Chrystal and Dicke will help Impact 21’s clients by offering specialized in-depth knowledge and expertise gained from their past accomplishments and achievements.

Paul Suarez

C.D. Glin

Pete Chrystal

Matt Dicke

| JUNE 2021

StrasGlobal announced the addition of two leaders. Derek Abitz joined StrasGlobal in January 2021 as vice president of brand, marketing and innovation, and Steve Morris joined in February 2021 as vice president of retail operations. TJ Lynch has been named the new national sales director of foodservice and special markets for HOSPECO. In his new role, Lynch will leverage his deep knowledge of c-stores and reputation for innovation to grow HOSPECO’s verticals and adjacencies in that space. ASSOCIATION National Convenience Distributors announced that Jeff Allen has been named chief executive officer. Edward Berro will continue as chairman of the board. In addition, Paul Murphy has been appointed chief operating officer.

Derek Abitz

Steve Morris

TJ Lynch

Jeff Allen

CONVENIENCE.ORG

NACS NEWS

NEW NACS MEMBERS Ishvandana LLC Bowmanstown, PA www.rellysdeli.com

(Continued)

Sadat Petroleum Vero Beach, FL Sample BP Deerfield Beach, FL

K Square Naples, FL

Sanibel Sanibel, FL

Kids Petrol Corp. Coral Springs, FL

State Rd 84 Fort Lauderdale, FL

Krome BP Homestead, FL Lawson Retail Operations LLC dba Roaster's Market Norman, OK www.roastersmarkets.com Lyons Petro Inc. Lake Worth, FL

Taj of Sarasota Sarasota, FL Wauchula Groceries Ona, FL Williams Food Mart Seffner, FL

MB Food Haverhill, FL

YP YP Services Pembroke Pines, FL

NF Holdings Port St. Lucie, FL

NEW SUPPLIER MEMBERS

North Lake Petroleum North Palm Beach, FL

Capturis a Conservice Company River Heights, UT www.capturis.com

One Stop 568 MMB Invest MM#1 Virginia Beach, VA OSLO BP Vero Beach, FL

Das Labs dba Bucked Up American Fork, UT www.buckedup.com

Paterson Retail Miami, FL Pavan Inc. Chesapeake, VA

Drip Drop Boise, ID www.orderddd.com

Peace River of Ona Ona, FL Quantum USA Inc. Sarasota, FL

Charlie's Holdings Inc. Costa Mesa, CA www.charliesholdings.com

| JUNE 2021

Executive Stream Solutions LLC dba ESS.Rocks St. Simons Island, GA www.ess.rocks

Francis Energy Tulsa, OK www.francis.energy

MLC Manufacturing LLC Spring Lake, MI www.mlcmfg.com

generosiTEA Las Vegas, NV

Mobivity Chandler, AZ www.mobivity.com

GripHero Hatherleigh, United Kingdom www.griphero.com Happy Place CBD West St Paul, MN www.discoverhappyplace.com Hilton Trading Company dba AccuBANKER USA Miami, FL www.accubanker.com Hospeco Brands Group Cleveland, OH UNITED STATES www.hospecobrands.com ICE Robotics Zeeland, MI www.icerobo.com IHOP Closter, NJ www.ihop.com Information On Demand Inc. Blairsville, GA iSi North America Fairfield, NJ KHM LLC dba KHM Imports Sacramento, CA www.khmimports.com Kona Gold Beverage Melbourne, FL www.konagoldbeverage.com

Monify South Jordan, UT www.mymonify.com Mulligan's Ireland Syracuse, NY NIIN Nicotine Huntington Beach, CA www.niinpouches.com

SPS Commerce Inc. New City, NY Stewarts Enterprises Inc. Lincroft, NJ www.stewartspiked.com SV3 LLC dba Mi-One Brands Phoenix, AZ Www.MiPod wholesale.com United National Consumer Suppliers Wilton Manors, FL www.uncs.com White Bear Inc. Anaheim, CA

Olo New York, NY www.Olo.com PayRange Portland, OR www.payrange.com Primary Colors Design Corp. Ashland, OH www.primarycolorscorp.com Relex Solutions Inc. Atlanta, GA www.relexsolutions.com/relexfor-convenience-stores REPP Sports dba RAZE Energy Longwood, FL www.reppsports.com/product/ raze-energy Ritz Systems Anaheim, CA Snack Primal LLC Linden, CA www.snackprimal.com

CONVENIENCE.ORG

Fresh Solutions Delivered.

Fresh foods. Fresh ideas. Fresh perspectives. Through innovation, empowerment, and consumer insights, we at Core-Mark are dedicated to provide “fresh” ideas to drive new solutions for the convenience retail industry, as we have for over 130 years. Every day, Core-Mark provides the insight our customers need and expect to be successful. We invest and innovate to achieve our goals as a pioneer of foodservice programs and technology for the convenience store industry.

We are Fresh Solutions Delivered.

NACS NEWS

BY THE NUMBERS

Are We There Yet? March 2020 was the last somewhat normal month seen by convenience retail—though the month signaled dismal times ahead and the catastrophic impact COVID-19 would have on three key convenience performance indicators. Year over year, transactions were down 16%, fuel gallons were down 16% and foodservice sales declined 10% in March 2021. Benchmarking 2021 data against 2020 would only provide false flags, but analyzing 2021 data versus 2019 delivers a truer view. The chart below presents data for March across the past three years. Both 2020 and 2021 are indexed against the base 2019 data. The comparison indicates recovery in the three metrics hardest hit by the pandemic. Transaction counts have rebounded to 97% of 2019’s count. Fuel gallons were also just shy of 2019’s performance at a 94 index. Perhaps the best news, however, is that foodservice sales not only met but also exceeded that metric, indexing at 103 vs. 2019’s value. March 2021 may not fully be what normal looks like, but it’s great to think that we’re more than 90% of the way back. RECOVERY PICTURED IN THREE METRICS

March 2019

March 2020

March 2021

120

100

2019=100

100

94 84

103

100 90

0 Transactions

Fuel Gallons

Foodservice Sales

Source: CSX

| JUNE 2021

CONVENIENCE.ORG

KEEPING SUMMER ROLLING

Learn more at: cdlatm.com I 800.776.8836 sales@cdlatm.com

INSIDE WASHINGTON

Swipe Right

NACS takes another run at the swipe fee debate.

I FACTS & FIGURES

$10.7 Billion

The amount c-stores paid in credit card swipe fees in 2020

2.25%

The average swipe fee rate paid by retailers

How much more the U.S. pays in credit card swipe fees than European retailers

| JUNE 2021

n 2010, retailers led by NACS earned a hard-fought victory in the debate over swipe fees. The Durbin Amendment was included in the Dodd Frank Financial Reform legislation and ultimately became law. For the first time, retailers had some regulatory protection against runaway swipe fees, at least in relation to debit card transactions. This was not an overnight success by any means. Years of educating legislators preceded the successful amendment. Neither was it the end of the fight. During the decade since the amendment became law, retailers, again led by NACS, successfully fought off a number of attempts to repeal this landmark legislative accomplishment. While our industry, and all of retail, has enjoyed the protections of the Federal Reserve’s regulation on debit card transactions, swipe fees on credit card transactions are allowed to continue on a rampant upward trajectory with seemingly no end in sight. In fact, both Visa and Mastercard were planning yet another credit card swipe rate increase last year, and this year, they were essentially shamed into delaying the increases until after the pandemic eased.

While many opponents of the Durbin Amendment derisively refer to it as government price fixing, they ignore the true pro-competition nature of the legislation. Yes, the Federal Reserve sets a swipe fee limit on debit card transactions; however, if an issuing bank chooses to set its own rates rather than use the rates set by Visa and Mastercard, the Fed’s cap no longer applies. Unfortunately, no bank has agreed to compete—suggesting that the Fed set the fee limit too high. Opponents also miss, or more likely choose to ignore, the most pro-competition requirement of the Durbin Amendment. Merchants must be given a choice in the routing of debit card transactions. This requires competition among networks on price, quality and security. Competition and market improvements are things that only Visa and Mastercard seem to dislike. NACS and our retail allies once again are taking this fight to the halls of Congress. In functioning markets, competitors seek market share by keeping prices low and innovating. The credit card swipe fee market is just the opposite. The major card companies seek to get issuing banks to use their cards by offering higher and higher rates, meaning the banks get more revenue to the detriment of retailers everywhere. The dominance of the major credit card networks, along with their anticompetitive rules, means that retailers must accept their cards. With swipe fees increasing year after year and U.S. merchants and consumers paying more in fees than the rest of the world combined, something must be done to fix this broken market. CONVENIENCE.ORG

istock.com/filo

BY JON TAETS

INSIDE WASHINGTON ONE VOICE For many convenience retailers, the swipe fees they pay exceed their pre-tax profits. And, swipe fees are convenience retailers’ second-highest operating cost— less than labor but more than rent and utilities, according to the NACS State of the Industry Report of 2020 Data. U.S. merchants paid more than $90 billion in fees to accept credit cards in 2019 alone, according to a 2020 Nilson report. On Visa and Mastercard credit transactions, the average rate paid in the United States was 2.25% of the transaction amount—more than seven times what merchants pay in Europe. NACS is seeking to build on the success of the Durbin Amendment through ongoing efforts and fighting for federal protections to correct the existing market failures to ensure competition in the credit card swipe space. We’ll need your help to get this done. A core strength of our industry in Washington, D.C., is our grassroots engagement. We’ll be calling on you to engage with your specific legislators to reinforce how important this cause is to our industry and to all retailers. Your direct advocacy is the strongest tool we have to move such meaningful legislation. This fight is just getting under way, stay tuned.

This month, NACS talks to Amanda Thompson, manager of real-estate operations, MAPCO Express Inc.

Amanda Thompson

What role in the community do you think convenience stores should play? Convenience stores should be known as more than just a “gas station.” There are endless opportunities for us to play an active role in giving back to the communities we serve. At MAPCO, on top of providing household essentials, top-quality fuel and better-for-you products, we are always moving the needle on how we can impact the lives of our team members and guests through volunteering in the community, donating materials and funds to charities, providing competitive employee incentives and benefits, providing leadership training and more. What does NACS political engagement mean to you, and what benefits have you experienced from being politically engaged? A diverse group of industry experts and individuals that come together to bring awareness to, and discuss, a broad range of issues surrounding the industry. The best benefit thus far has simply been the insight gained! As a young professional in the industry, knowledge is power—the more you know, the better prepared you can be to navigate the challenges ahead. The fact that I can bring these discussion points and ideas back to my team is highly beneficial. What federal legislative or regulatory issues keep you up at night? EV chargers are top of mind, especially since Tennessee Valley Authority was named one of the six major utility companies making up the Electric Highway Coalition. As a California transplant, I have always been animated about electric vehicles, and my brain is constantly turning with ideas! Second are credit card swipe fees. After speaking with other convenience store executives at NACS Day on the Hill, I became passionate about seeking ways to mitigate this obstacle in our industry. What c-store product could you not live without? I have a sweet tooth, so I’m going to stick with my favorite—a Snicker’s bar!

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 April 1-30, 2021, are: Lucia Romanello Crater Impact 21

Bradley R. Heetland Advantage Solutions

Jeff Lenard NACS

Drew Mize PDI

John J. Thomas iSEE Store Innovations LLC

Karim W. Dhukani Easy Lane Stores

Scott Hill Jack Link's Protein Snacks

Steve Loehr Kwik Trip Inc.

Sarah Vilim Keurig Dr Pepper

Matt Domingo Reynolds

Danielle Keck Holloway Altria Group Distribution Company

Kevin Martello Keurig Dr Pepper

Anthony Perrine O-Line 50 Inc. dba Lou Perrine's Gas & Groceries

Tony El-Nemr Nouria Energy Corp.

Jonathan Ketchum Energy North Group

Doug Middlebrooks Advantage Solutions

| JUNE 2021

Joseph Sheetz Sheetz Inc.

Thomas Wake Eby-Brown Company LLC Todd Walker Altria Client Services LLC CONVENIENCE.ORG

OUR BAIT keeps your net busy

Help your customers catch life’s best moments with our

LIVE BAIT PROGRAM for retailers, offering an extensive product range, P.O.S. support, along with impressive margins. Drop us a line, or visit us at NACS 2021.

800 -332-2248 / ORDERS @ DMFBAIT.COM

DMFBAIT.COM

INSIDE WASHINGTON

Climate Corner WITH CLIMATE-RELATED BUZZWORDS FLOATING AROUND, HERE’S WHAT YOU NEED TO KNOW.

BY PAIGE ANDERSON A new set of climate-related terms, words and tools are taking over the environmental economy and establishing financial sector instruments to reduce carbon dioxide (CO2) emissions. Carbon finance, carbon banks, carbon pricing and carbon trading are just a few concepts in this climate lexicon. As policymakers continue to debate climate change proposals, they are taking a close look at the market-based solutions and financial tools being used to reduce the carbon footprint. Here’s a glossary of those terms and tools: CARBON FINANCE Carbon finance is a part of environmental finance that covers financial tools, such as carbon emissions trading, to reduce the impact of greenhouse gases (GHG) in the environment by establishing a price or cost on carbon emissions. Generally, it is a term applied to investments in reducing GHG emission projects and the establishment of financial instruments that are traded on a carbon market. CARBON BANKS Carbon banks provide financing and funding for green initiatives and climatefriendly projects. CARBON PRICING Carbon pricing places a monetary value on carbon emissions and the costs of climate impacts. Some believe that putting a price on carbon helps to incorporate climate risks into the cost of doing business. There are two main ways to put a price on carbon—a cap and trade system and a carbon tax. Paige Anderson is the NACS director of government relations. She can be reached at panderson@convenience.org.

| JUNE 2021

CARBON MARKET A carbon market is a system created to buy and sell carbon credits. Under a

regulated limit or “cap” on carbon emissions, allowances or credits are given, auctioned or traded to carbon emitters. Businesses or entities that emit below the cap can then trade or sell their extra allowances or carbon credits to those who need additional allowances, thus establishing a market for buying and selling carbon credits. CARBON EMISSIONS TRADING Carbon emissions trading is a form of trading that targets CO2 and works by setting a calculable limit on the emissions produced by the emitter of carbon emissions. CARBON TAX A carbon tax is a tax levied on the carbon emissions required to produce goods and services. Many proposals establish a fee per ton of carbon emissions from a business sector or the whole economy. The businesses or organizations that emit the carbon would be subject to the tax. The goal of a carbon tax is to make visible the “hidden” social costs of carbon emissions. The idea is that CO2 is reduced when prices increase. With over 25 countries implementing or about to implement some form of carbon tax and 46 other countries or states attempting to put some sort of pricing on carbon—whether through taxes or some sort of trading system—lawmakers in Washington, D.C., are looking at these concepts. Several pieces of legislation and congressional reports encourage or establish a carbon tax or recommend some type of emissions trading system to address climate change. Understanding the impact on the convenience and fuel retailing industry and the financial implications to businesses and consumers will be critical. CONVENIENCE.ORG

When it comes to your most significant transaction, experience counts

The Raymond James Convenience Store and Fuel Products Distribution team is focused on serving the needs of convenience store retailers, fuel distributors and related suppliers and service providers. As a leading financial advisor in the industry, we are committed to advising business owners on strategic alternatives that impact succession planning and liquidity options and assisting our clients through the nuances, pitfalls and sensitivities surrounding a sale process.

The Raymond James Convenience Store & Fuel Products Distribution team has closed over 75 relevant M&A or capital raising transactions with over $12 billion in total deal value, spanning over 20 years of dedicated industry focus. Put the expertise, quality and experience of Raymond James to work for you.

SCOTT GARFINKEL Managing Director, Head of Convenience Store & Fuel Products Distribution scott.garfinkel@raymondjames.com +1.615.645.6796

ROGER WOODMAN

JOHN VEITH

Managing Director roger.woodman@raymondjames.com +1.404.240.6864

Director john.veith@raymondjames.com +1.615.645.6799

M E R G E RS & ACQ U I S I T I O N S | P U B L I C O F F E R I N G S D I V E S T I T U R E S | P R I V AT E P L A C E M E N T S D E B T O R I G I N AT I O N | R E S T R U C T U R I N G

RJCSTORE AND FUE L . COM

THE

PERSONALIZATION

FACTOR A

s spring turns to summer, the majority of convenience retailers anticipate a return of leisure travel and routine customer trips to pre-pandemic levels in the coming weeks. That’s welcome news after the past year in which convenience stores registered a 13% drop in fuel sales and saw fewer customers coming into stores, according to NACS data. “The decline in customer trips has always been one of the major challenges facing the convenience and fuel industry, but even more so over the last year,” said Alex Kinnier, co-founder and CEO of GetUpside. “Retailers are struggling not only to attract new customers but also to get existing customers shopping more often and spending more.” One solution to increase trips—and profitability— is to find the minimum possible incentive that will change each customer’s buying behavior. “There’s been a pivot toward not just using signs or price to compete, but using technology to find future customers for retailers,” Kinnier said. “Personalized, margin-bound offers are the proven way to drive traffic to specific stores.”

How to focus on profit over volume by bringing in more customers, more often. BY SARAH HAMAKER

| JUNE 2021

CUSTOM CUSTOMERS Over the past two decades, personalization has revolutionized online shopping through customized promotions and product suggestions. Many loyalty programs do the same, delivering targeted offers to members, often in real-time as they shop. “Only 9% of fill-ups nationwide are associated with a loyalty program. So, what about the other 91% of gallons on the road? That’s the question we asked,” Kinnier said. “We wanted to help brick-andmortar stores identify potential new customers, as CONVENIENCE.ORG

well as incentivize existing customers to shop those locations more often.” GetUpside uses personalized cashback offers via a mobile app and network of partner apps to drive traffic to participating retailers. They bring in new customers, get existing customers to visit more often, and enable everyone to buy more while on-site. GetUpside taps into a retailer’s own data to give every single user a personalized offer to shop that store today. “Every single transaction is guaranteed to be profitable—we don’t make money until the retailer makes profit,” Kinnier explained. “Our goal is to get the retailer the most margin on each transaction through individually targeted promotions.” “GetUpside understands that this is a really, really, really tight business,” said Pete K., owner of Auto Wash Group in greater Pennsylvania. “It continues to get more and more competitive on the street corners where we’re located. … Everybody wants to maintain their volume [but ends up sacrificing] their margin [to do so].” WORKING THE DATA GetUpside’s millions of users nationwide means thousands of users are in any one retailer’s neighborhood—tapping into a pool of potential customers who might not otherwise visit your store. “It’s almost like free marketing,” Pete K. said. “We don’t have the ability to spend those big ad dollars to drive customers to our site, so why not use an app to do it for us?” Exactly how does GetUpside accomplish this? By using data retailers already have—just like online retailers use purchase and search history to predict shopping behavior. “We mine a retailer’s own anonymized customer transaction data for insight into each customer who visits that location, while taking into account that retailer’s fluctuating margins,” Kinnier said. CONVENIENCE.ORG

With that data, GetUpside drives incremental gallons and store visits by profitably bringing in new customers and getting current customers to buy more, more often—and has the hard facts to back up that claim. “Results show that GetUpside c-store product users go from pump to inside the store two times more often than customers without GetUpside,” Kinnier said. For example, 63% of GetUpside users had never been to the c-store before. Existing customers using GetUpside put 20% more into their baskets than they normally would have because of the personalized offers the app delivers. “With this increase in pump-to-store conversion and basket size, c-store merchants earn a 50% return on investment,” Kinnier said. “GetUpside is about a third to a quarter of my volume right now,” said Larry Jannes, CFO and co-owner of Superior Auto Care Group in Reston, Virginia. “The trend in industry is volume just going down, down, down. We have maintained our volume, and I think if we did not have GetUpside, that would not have happened.”

This article is brought to you by GetUpside.

We mine a retailer’s own anonymized customer transaction data for insight into each customer who visits.

THE COMMODITY OF FUEL Fuel is a near-perfect example of an interchangeable commodity. “Meaning, if fuel of the same grade at two nearby gas stations is priced equally, most consumers view them as interchangeable,” said Alex Kinnier, co-founder and CEO of GetUpside. “This incentivizes those nearby fuel merchants to match their sign prices and sets up a price war whereby if one station drops their price, the other will do so to avoid losing customers to the competition.” However, the fuel merchant who personalizes price for incremental purchases on a one-on-one basis—in addition to maintaining the same, visible sign price for expected buys—will be able to incentivize new and existing customers to buy more at that station than the competition. “Since these GetUpside offers are crafted for each individual user, rather than for the general population, the competitor is unable to respond with a similar price incentive,” Kinnier explained.

JUNE 2021 |

The best part is how seamlessly it meshes with existing loyalty programs or operations that involve different fuel providers. Because the app tracks users’ movement and also places a half-hour window around each incremental transaction at a specific location, GetUpside is able to provide retailers with detailed data to show the conversion rate. “Overall, merchants see their conversion rate from pump to inside the store double, which means GetUpside users went inside the store twice as often as non-users,” Kinnier said. “Plus, c-store product users chose to go into the store 3.5 times more often than they did before signing up for our app.” In terms of monetary investment, for every dollar spent on the GetUpside program, c-store retailers earned $1.50 back for their business. “In addition to increasing transaction volume and profitability at the gas pump, GetUpside also drives a lift in transaction volume inside fuel merchants’ stores,” Kinnier said. For Imad Khalil, president of Kelly’s Fuel Mart in Detroit, Michigan, being a partner with GetUpside has been good for business. “There’s only a certain percentage of [nearby retailers] who will have the ability to be in the program,” he said of the app’s exclusivity clause. “There’s a finite number of gallons out there, so we’re trying to repurpose those gallons and bring them toward our locations that are on the platform.”

IT’S IN THE NUMBERS GetUpside users go from pump to inside the store 2x more often than customers without GetUpside

63%

of GetUpside users had never been to the c-store before

Existing GetUpside customers put 20% more into their baskets $

C-store merchants earn a 50% return on investment

| JUNE 2021

SEAMLESS ADDITION These retailers say the best part of GetUpside is how seamlessly it meshes with existing loyalty programs or operations that involve different fuel providers. “There’s no change to business operations,” Kinnier said. “The app can supplement by bringing in new customers, without affecting any of the programs you’re running at your site.” “It’s seamless between all of my stations—I don’t have [to have] a GetUpside for Marathon or GetUpside for Shell,” said Elizabeth Waring, president and CEO of Busy Bee in Madison, Florida. “It’s so nice to be able to do one thing no matter what brand it is, and my customer is winning, too.” When customers use GetUpside alongside an existing loyalty program or proprietary app, those loyalty customers visit 187% more than usual. Making both programs available to customers maximizes the investment most retailers have already made in their loyalty program, since GetUpside keeps promotions within available margin to guarantee profit. Some retailers even integrate GetUpside into their own app so they can simplify their customers’ experiences. The data also showed that customers using a retailer’s loyalty program visited an average of 1.8 times per month, while GetUpside incentivized them to stop by 2.5 times per month. “By understanding what motivates each user and treating them accordingly, within the margin constraints that are available, retailers and consumers are both able to earn more,” Kinnier said. The upshot is personalization based on individual consumer preference can drive both incremental sales and more frequent trips to the store. As Khalil put it, “GetUpside provides a service without any stress or overhead. The app helps bring customers to my site that I wouldn’t have already.” Sarah Hamaker is a freelance writer and NACS Daily and NACS Magazine contributor based in Fairfax, Virginia. Visit her online at www.sarahhamakerfiction.com.

CONVENIENCE.ORG

GetUpside helps over 25,000 retailers outmatch their competition R E AC H

Find your future customers. We reach over 30 million customers online who are ready to purchase, and route them right to you.

I N F LU E N C E

Change their behavior. Our algorithm uses 24 pricing factors to personalize the minimum incentive needed for each customer to choose you, spend more, and visit more often.

PROFIT

Earn proven profit. We target the right customers with the right incentives at the right time so you don’t just sell more product, but earn more profit.

Learn how you can use GetUpside to grow your business profitably. Visit http://bit.ly/outmatchNACS

LOCKDOWNS DROVE HISTORIC DECLINES IN FUEL CONSUMPTION

CONVENIENCE SHOWS THAT IT IS ESSENTIAL

THE BIG

PIVOT

PANDEMIC BUYING BUILT BIGGER BASKETS

IN 2020, HEALTHY MARGINS OFFSET A CRASH IN FUEL DEMAND, WHILE BIGGER BASKETS LIFTED INSIDE SALES. BY RENEE PAS

| JUNE 2021

ny discussion of 2020 convenience industry data will be forever intertwined with the new realities brought on by the pandemic. Consumers not only changed how often they shopped but also how they shopped and what they purchased, forcing convenience retailers to pivot to meet expectations, adjust their sales mix and provide safe shopping experiences both in-store and on the forecourt. Because 2020 was a year like no other, the 2021 NACS State of the Industry Summit, held virtually April 14, was highly anticipated as a guide to explain how the industry fared amid chaos and also to look at what’s next. CONVENIENCE.ORG

BIGGER BASKETS NACS board member Charlie McIlvaine, chairman and CEO of Coen Oil and the 57-store Coen Markets, based in Pennsylvania, shared a first look at the 2020 numbers with SOI Summit attendees. He pointed to a bright spot that emerged among the less-than-stellar 2020 yearend data: Basket sizes increased in the double digits, which in turn helped inside sales reach a new record. It wasn’t enough, however, to offset the larger double-digit decline in overall industry sales. Total U.S. convenience store sales dropped 15.4% in 2020, ending the year at $548.2 billion. The drop follows a strong 2018 and 2019, when total sales were $654.3 billion and $647.8 billion, respectively. Convenience stores sell about 80% of the fuel purchased in the United States. In the heat of the pandemic, fuel sales saw historic declines, with fuel consumption contracting about -45% at the lowest point, according to NACS SOI data. Total industry fuel sales declined 26.1% in 2020 to $292.6 billion, compared with $395.9 billion in 2019. Fuel sales started to slowly rebound in the second quarter. Clearly, workplace changes weighed in here, McIlvaine said. “Despite this significant dislocation from work, Americans were still moving around in the last half of the year,” he noted.

While the transaction count was down, the basket sizes were up sharply. McIlvaine pointed out the volatility in retail fuel pricing throughout 2020. The year ended with an average fuel retail price of $2.17 per gallon, compared with $2.59 in 2019. “Meanwhile, our [cents per gallon margin] was up markedly this year, around 34.7 cents, in the face of significant demand destruction,” he said. Cents-per-gallon (CPG) margins gained more than 30% in 2020 compared with 2019, moving from 26.3 CPG to 34.7 CPG, respectively. That’s a margin increase of 8.4 CPG. “That’s a pretty strong increase,” he added. Putting the CPG numbers in perspective, McIlvaine noted, “CPG has OVERALL SALES

-15.4% YOY

ESSENTIAL BUSINESS

$548.2 BILLION VS. $647.8 BILLION

Overall sales were down 15.4% in 2020 off a strong 2019 and 2018. Fuel sales declined 26.1% for the year, despite being off about 45% during the height of the lockdowns. FUEL SALES INSIDE SALES

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

NET GROWTH RATE OVER PAST 12 MONTHS (%) Source: NACS and CSX

CONVENIENCE.ORG

TOTAL FUEL SALES

-26.1%

TOTAL INSIDE SALES

+1.5% JUNE 2021 |

been on a consistent rise over the last five years. Obviously 2020 had some unique features to it, but generally speaking, CPG has drifted northward, and I think that’s emblematic of the costs of doing business alone, which has contributed to this margin increase.” “CPG was the savior during the pandemic,” McIlvaine said, noting that fuel retailers gained a nice boost when oil pricing went negative in 2020. Consumers also realized a benefit in lower retail fuel prices, he added.

The higher fuel margin in 2020 also contributed to stronger gross profit dollars for fuel in 2020 as a total percent of sales. “The fuel margin made an impact to the mix of overall site profitability,” McIlvaine said. Fuel gross profit dollars increased two percentage points over the prior year and contributed 39.4% as a percent of total gross profit dollar mix, according to NACS SOI data. Merchandise was the next largest contributor with 36.3% of the mix (up two percentage points), followed by foodservice, which dropped

The bottom dropped out fast and furious on fuel consumption, with the low point occurring around April 2020. The dip shows the dramatic impact of the pandemic lockdowns on fuel consumption using a rolling four-week average comparison from 2018 to 2020. After the main contraction, fuel consumption slowly rose again into the second quarter, and by the end of July 2020, consumption started to level off at a decline of around 10% and remained near that level the rest of the year. Source: EIA

BARRELS A DAY (THOUSANDS)

FUEL CONSUMPTION BOTTOMS OUT

9,500 8,500

WEEK 28

7,500

WEEK 17

6,500

-43.7% vs. 2019

5,500 4,500

2020 TRANSACTION COUNT BREAKDOWN:

TRANSACTIONS REBOUND While fuel demand was down and inside sales were up, transaction counts dipped in April amid the lockdowns but have since rebounded. For the year, inside transactions were down 12.9%, fuel transactions were down 16.1%—including a large dip in April and May—and total transaction counts were down 13.9% for the year.

-8.9% vs. 2019

45,000

INSIDE TRANSACTIONS

PUMP TRANSACTIONS

-12.9%

-16.1%

| JUNE 2021

-13.9%

37,000 33,000

2017 2018

29,000

2019 2020

25,000 JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

2019 AVG. INSIDE SALE:

BASKET SIZES INCREASE

Source: CSX

TOTAL TRANSACTIONS

41,000

Source: CSX

While fewer customers were coming to stores throughout 2020, those who visited significantly increased their purchase size. The average basket size total was $7.34 in 2020, a year-overyear increase of 18.4%.

2018 2019 2020

NOV

DEC

2020 AVG. INSIDE SALE:

$6.20

$7.34

$8.00 $7.00 $6.00

2017 2018

$5.00 $4.00

2019 2020

$3.00 JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

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to 19% (down four percentage points, largely a result of pandemic-influenced factors). Other income (car wash, ATM, lottery, money orders, etc.) rounded out the total gross profit dollar mix at 5.3% (shy of 5.6% in 2019). TRANSACTIONS SHRINK, BASKETS SWELL Amid the tumultuous year, total convenience industry inside sales managed to increase 1.5% to a record $255.6 billion. “We do think that’s interesting,” McIlvaine said. That meant consumers were still frequenting c-stores to get their daily needs filled. The bigger sales picture, however, shows total transactions (fuel sales plus inside sales)

declined 13.9% for the year. Inside transactions fell 12.9%, while fuel transactions declined 16.1%. The saving grace for c-store operators rested in basket sizes, which increased 18.4% compared with 2019, and in the end made a significant contribution to that 1.5% increase in inside sales. The average basket size was $7.34 in 2020 vs. $6.20 in 2019. “When guests were shopping, they were purchasing more items,” McIlvaine said. “This is what allowed yearover-year sales to be f lat to up. So, this signals a modification in consumer behavior. Guests are being intentional with their time and their destinations, and it’s our job as retailers to make them want to choose our stores versus other alternatives.”

STORE COUNT BUCKETS SHIFT

STORE COUNT

Independents represent a large number of convenience stores, accounting for 92,196 stores out of a total of 150,274 c-stores in 2020. However, that independent number took a hit in 2020, dropping 2,912 stores. Worth noting: 67% of the independents exiting in 2020 didn’t sell fuel. In addition, store counts contracted in two category buckets, and then grew in two other category buckets, suggesting a shift due to mergers and acquisitions.

2020 KEY PERFORMANCE INDICATORS Looking at the key profitability measures from 2020, Charlie McIlvaine, chairman and CEO of Coen Oil, described the overall picture as “somewhat of a sigh of relief.” Total EBITDA on a per-store, per-month basis rose 28.2% in 2020. Inside store operating profit, however, plunged more than 100% year over year.

2020 TOTAL

+/- vs. YAG

150,274

-2,446

Single stores

92,196

-2,912

A: 2-10 stores

4,767

B: 11-50 stores

9,704

-378

C: 51-200 stores

8,063

494

D: 201-500 stores

5,257

-136

E: 500+ stores

30,287

448

Source: NACS/NielsenIQ TDLinx Annual Store Census

METRIC

2019

2020

Change vs. 2019

Inside Store Operating Profit

$1,996

-$2,123

-106.3%

Fuel Gallons

184,737

161,807

-12.4%

Fuel Pool Margin

23.95

34.69

44.8%

EBITDA

$32,178

$41,239

28.2%

Breakeven CPG

11.49

14.97

3.48 CPG

In-Store GP$ per Labor Hour

$34.81

$34.70

-0.3%

Wages/Benefits as a % of GP$

31.6%

31.1%

-0.5 pts

Non-Manager Turnover (annual)

94.7%

74.3%

-20.4 pts

Manager Turnover (annual)

24.2%

16.5%

-7.7 pts

(PER STORE/PER MONTH)

Source: CSX

| JUNE 2021

CONVENIENCE.ORG

I see COVID-19 as an accelerator of further evolution of our industry to continue to own the word ‘convenience.’ In terms of transactions, a rebound is starting to show promise in 2021, McIlvaine said, albeit slowly. “Currently, total transactions remain around 10% or

so below the prior year in December 2020,” he said, “and as restrictions ease and vaccines get distributed, it’s not unreasonable to expect that traffic and transactions will rise going forward.” Drilling down on the inside store gross profit dollar mix for 2020, most categories increased their overall contribution. This was the case for five of the seven categories: • Cigarettes/other tobacco products (up three percentage points to 19.6%) • Packaged beverages (up 0.4% to 19%) • Other (up 3.7 percentage points to 10%) •B eer/wine/liquor (up 0.8 percentage points to 4.9%) • G eneral merchandise (up 0.7 percentage points to 3.8%)

TOTAL SITE GROSS PROFIT DOLLAR MIX Fuel expanded to 39.4% of the total mix in 2020, up from 37.3% in 2019. Bigger margins helped lift overall site profitability.

37.3%

5.6%

FUEL

OTHER INCOME

39.4% FUEL

TOTAL GP$ MIX 2019

34.0%

MERCHANDISE

23.1%

FOODSERVICE

5.3%

OTHER INCOME

TOTAL GP$ MIX 2020

36.3%

MERCHANDISE

19.0%

FOODSERVICE

Source: CSX

| JUNE 2021

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Unsurprisingly, foodservice saw a significant drop in its contribution to the gross profit dollar mix (down 4.4 percentage points to 34.5%), and salty snacks realized a small dip in gross profit dollar mix contribution (down 0.4 percentage points to 12%). “Foodservice dropped quite a lot,” said Mcllvine, largely because of pandemic restrictions and local protocols. Consumer behavior between channels in 2020 also showed shifts, with the online segment predicted to have double-digit growth over the fiveyear period from 2020 to 2025. U.S. channel sales projections from Kantar Consulting forecast a 12.2% compound annual growth rate (CAGR) for online sales between 2020 and 2025, compared with 2.7% CAGR for the convenience channel.

The data show the discount channel surpassing convenience with a 4.4% CAGR. “Consumers have really gotten used to buying goods from [the online] channel,” McIlvaine said. INDEPENDENTS STRUGGLED; MORE M&A LIKELY “The pandemic was very devastating to independent operators,” McIlvaine said, “particularly those that did not sell fuel. Nearly 3,000 independent c-stores went out of business in 2020, according to the NACS/NielsenIQ TDLinx Annual Store Census. More than half of that group—67%—did not sell fuel. Looking at the store count buckets in chain sizes, McIlvaine pointed out a notable shift

INSIDE STORE GROSS PROFIT DOLLAR MIX Foodservice took a hit in gross profit dollars, dropping from 38.9% in 2019 to 34.5% in 2020. Much of that decline is the result of pandemic-influenced restrictions.

3.1%

GEN MERCH

38.9%

4.1%

34.5%

BEER/WINE/ LIQUOR

6.3%

FOODSERVICE

3.8%

GEN MERCH

FOODSERVICE

OTHER

19%

INSIDE GP$ MIX 2020

PACKAGED BEVERAGES

18.6%

PACKAGED BEVERAGES

16.6%

CIGARETTES/OTP

12.4%

SWEET/SALTY SNACKS

BEER/WINE/ LIQUOR

10.0%

OTHER

INSIDE GP$ MIX 2019

4.9%

12.0% 19.6%

SWEET/SALTY SNACKS

CIGARETTES/OTP

Source: CSX

| JUNE 2021

CONVENIENCE.ORG

When you have a year like last year, it shows that we are not running away from those categories [fuel and tobacco] but we [TXB] are putting our time and effort into places that the future holds. in store counts for chains in the 11 to 50 store category. That group had about 378 fewer stores in 2020. The number of chains in the 201 to 500 store range also fell, decreasing by 136 stores. Two store count brackets that increased in 2020: chains in the 51 to 200 range and chains with 500 stores or more. Another 400-plus stores now fall into those two segments.

TOTAL SALES (PER STORE, PER MONTH) Total inside and outside sales dropped double digits. Fuel gallons decreased 12.4% on a per-store, per-month basis in 2020, as did the average price of fuel, down 15.4%. “When you take a look at the gallons dropping and the average price of fuel dropping, it’s no wonder that fuel dollar sales were down 25%,” said Charlie McIlvaine, chairman and CEO of Coen Oil. “The only good thing about fuel dollar sales declines was that drop in credit card fees associated with the decrease.” Foodservice contracted as other categories increased, namely merchandise and cigarettes.

METRIC

“This may seem a little counterintuitive, but when you consider the M&A activity in 2020 it makes a little more sense,” McIlvaine said. There were several chains that sold in the 11 to 50 size range, he explained, and they were probably acquired by larger chains, resulting in a shift of the overall mix. One element that remains consistent is that the c-store industry is very fragmented, McIlvaine said. “Compared to other retail industries, convenience has about two-thirds of its total store count operated by small chains or independents,” he said. “Consolidation is likely to continue for the next couple of years.” Sizing up total c-store closures relative to other retail segments, dollar stores fared better than c-stores in 2020. The c-store total contracted (-1.6%), while the total store count for dollar stores climbed (3.1%). “Dollar stores continue to pose a threat in competing for the convenience customer,” McIlvaine said. Other segments that notably declined at a greater percentage than c-stores include the number of superettes (-13.2%), gas kiosk sites (-9.4%) and smoke shops (-8.4%). Another callout for convenience operators comes by way of wages and benefits. Wages and benefits increased 7.7% in 2020. Personnel expenses totaled $41,883 per store per month in 2020, compared with $38,882 in 2019. Wages were up 8.3%, an

(PER STORE/ PER MONTH)

2019

2020

Change vs. 2019

Total All Sales

$659,572

$548,371

-16.9%

Fuel Sales

$474,760

$351,928

-25.9%

Fuel Gallons

184,737

161,807

-12.4%

Avg. Seling Price

$2.57

$2.17

-15.4%

$211,226

$214,294

1.5%

Foodservice Sales

$54,238

$49,103

-9.6%

Merchandise Sales

$158,058

$166,352

5.2%

Merchandise Less Cigarettes

$101,732

$107,446

5.6%

Cigarettes

$43,854

$45,454

3.6%

49,746

42,831

-13.9%

Inside Sales

Transactions Source: CSX

| JUNE 2021

CONVENIENCE.ORG

increase of about $2,500 per store per month, to $33,564 per store per month. The change was likely driven by bonuses and higher wages given to frontline workers during the height of the pandemic, McIlvaine said. Looking ahead, wages and benefits are likely to continue to rise with $15 per hour wage proposals making their way through Congress. “The pandemic, in a way, has given operators a glimpse into what they can expect can happen to inside store profit if sales volumes and mix—namely foodservice—are not prone to offset the changes in the cost of labor,” McIlvaine said. LONG-TERM IMPLICATIONS Two big and largely unanswerable questions surround 2020 year-end data: What will stick? And what will trickle away as things get back to normal? On the fuel side, the massive increase in margins, which clearly helped offset losses, will probably “never happen again,” said Jared Scheeler, CEO of six-store chain The Hub Convenience Stores Inc., based in Dickinson, North Dakota. He also serves as vice chairman, treasurer, of the NACS Board of Directors. He shared his perspective on how NACS SOI data relates to his long-term planning. “Consider when the day comes that we don’t have liquid fuel—when electric vehicles rule—how will we replace that? We got a taste of that last year. It affects

TOTAL GROSS PROFIT DOLLARS (PER STORE, PER MONTH) Inside gross profit dollars were basically flat in 2020 on a per-store, per-month basis, despite the falloff in transaction volume. Fuel gross profit per store per month grew 41.7%, largely the result of centsper-gallon margin growth, which increased 44.8%.

METRIC

our pocketbooks more than we anticipated,” Scheeler noted. In his operating area of North Dakota, he said fuel margins leveled off to normal faster than perhaps what happened nationwide. “It would be a grave mistake for anyone to look at the trends in 2020 and say, ‘We made a nice chunk of profit on fuel and cigarettes,’” he said. Notably, while cigarettes showed a growth increase in 2020 data, the category has been declining for the past decade. In the same vein, SOI data on tobacco and fuels “does not change our business strategy” on either category, said Kevin Smartt, president and CEO of Texas Born (TXB) Stores, a 47-store chain in Spicewood, Texas. He also serves as NACS chairman of the board and vice president of political engagement. Last year was a bit of an anomaly when it came to both fuel and tobacco—among other things, Smartt said. “When you have a year like last year, it shows that we are not running away from those categories, but we [TXB] are putting our time and effort into places that the future holds. We are still a great source for those products; they are still there.” With the new TXB brand—the chain is undergoing a rebranding from Kwik Chek—“we are energy agnostic,” Smartt said, noting that new builds include charging stations for electric vehicles. One other piece Scheeler views a little less favorable for the long-term than the NACS SOI

2019

2020

Change vs. 2019

Total Gross Profit

$123,169

$134,648

9.3%

Fuel Gross Profit

$56,126

$84,527

41.7%

Pool Margin

23.95

34.69

44.8%

Margin - CC Fees

(PER STORE/PER MONTH)

17.80

29.89

62.8%

In-Store Gross Profit

$75,047

$74,476

-0.8%

Foodservice GP

$29,708

$26,198

-11.8%

Merchandise GP

$45,973

$48,898

6.4%

Merchandise Less Cigarettes GP

$37,924

$38,793

2.3%

Cigarettes GP

$6,359

$7,916

24.5%

$6,374

$6,971

9.4%

Other Income Source: CSX

| JUNE 2021

CONVENIENCE.ORG

Join the

10,945

data might suggest is basket size. “The average ticket did go up. We experienced the same thing at The Hub that the NACS data shows,” he said. “If it wasn’t for that, I think a lot more stores in our industry would be in trouble.”

DIRECT STORE OPERATING EXPENSES Overall, direct store operating expenses rose 2.4%. Wages and benefits increased about $3,000 per store, per month, or 7.7%, over 2019, likely driven by recognition pay for frontline workers. Safety and PPE requirements likely drove the increases in supplies, repairs, maintenance and facility expenses. Credit card fees dropped in reaction to lower fuel prices and overall fuel revenue.

However, Scheeler does not want the basket size bump to cause him to lose sight of the fact that transaction counts went down. “I’d choose frequency any day,” he said, if given the choice between basket size and increasing customer

PER STORE/ PER MONTH

2019

2020

Change vs. 2019

Wages & Benefits

$38,882

$41,883

7.7%

Credit Card Charges

$10,774

$8,776

-18.3%

Utilities

$3,825

$3,844

0.5%

Repairs & Maintenance

$5,993

$6,189

3.3%

Supplies

$1,886

$2,043

8.3%

Total DSOE

$70,516

$72,178

2.4%

Facility Expense

$19,084

$19,585

2.6%

Total DSOE & Facility Expense

$89,601

$91,763

2.4%

Source: CSX

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visits. “Frequency gives me the chance to add on the sale each time. The sum of the parts exceeds the whole that the less frequent customer might spend.” He does believe the increase in takehome package size will stick, at least for the short term. “It’s a habit that hasn’t gone away yet.” From a big picture point of view, Scheeler said the SOI data this year “show us how we need to more quickly evolve. We are quickly coming into another stage of evolution for our industry. I see COVID-19 as an accelerator of further evolution of our industry to continue to own the word ‘convenience.’”

The NACS State of the Industry Report of 2020 Data—the essential guide for convenience and fuel retailers to benchmark their performance in tumultuous 2020—is now available for purchase in a digital-only format. NACS is now in its 51st year of publishing the report, which highlights business-critical categories of finance, store operations, merchandising and fuel sales. The data are also analyzed and presented in a comparative performance quartile format based on store operating profit, which allows you to benchmark and improve your own retail operations by understanding the drivers of key performance metrics.

Renee Pas’ writing draws from both her c-store background and her more than 20 years writing about various retail channels. She gravitates toward the intersection of ideas and execution, where the rubber meets the road. She can be reached at reneepas4@gmail.com.

Purchase today at www.convenience.org/ SOIreport.

BREWED TO BE

BOLD LEARN MORE

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5/13/2021 4:33:41 PM JUNE 2021 |

FUEL DEMAND WEAKENS

DAYPARTS SHIFT

| JUNE 2021

WHAT’S NOW. WHAT’S NEXT. CONVENIENCE.ORG

iStock.com/AvigatorPhotographer

DIRECT STORE OPERATING EXPENSES INCREASE

IN-STORE SALES GROW

ver the past 20 years, in-store sales at convenience stores have increased 152%, defying the slowdown seen in many other retail channels. As we look back on 2020, we know that in-store sales continued to grow—despite a decline in fuel demand, significant pandemic-related restrictions on foodservice and operations and the rapid growth of online sales. What propelled convenience store sales in 2020, and what will affect sales in 2021 as we see the light at the end of the pandemic tunnel? Answers to those kinds of questions have always been revealed at the annual NACS State of the Industry Summit, held every April. This year’s event brought two significant changes:

Due to the pandemic, the event’s 635 attendees gathered virtually. And, for the first time in nearly two decades, NACS State of the Industry (SOI) data became available only from NACS.

SOI data is not found anywhere other than at the State of the Industry event, the NACS SOI Report and the pages of this issue of NACS Magazine. The following pages deliver industry and category performance data about a critical year to help you navigate the post-pandemic marketplace. We’re also sharing newly available shopper insights from our Convenience Voices panel to help shed light on the new c-store consumer. Use these pages—and the recently released NACS State of the Industry Report of 2020 Data— to compare your financial performance against the industry and to help you make data-driven decisions and improve the profitability of your business. This year, understanding industry strengths—and your opportunities—is more valuable than ever. CONVENIENCE.ORG

JUNE 2021 |

E-CIGARETTE GROWTH STUNTED

PREMIUM CIGARETTES DOMINATED CATEGORY SALES

IGNITING

SALES SMOKELESS TOBACCO PRODUCTS GAINED OTP CATEGORY SHARE

FOURTH-TIER CIGARETTES AND CIGARS BENEFITED FROM PANDEMIC SHIFTS, WHILE E-CIGARETTES SHED THEIR APPEAL. BY CHRIS BLASINSKY

| JUNE 2021

iddled with regulatory challenges—notably vape product flavor bans—cigarettes and other tobacco products face more burn on Capitol Hill and in statehouses than any other product convenience stores sell. The biggest disruption came in late December 2019, when President Donald Trump signed into law legislation that makes it illegal for retailers to sell tobacco products to anyone younger than 21. More than a decade of declining smoking rates and increasing excise taxes on cigarettes have been two constant hurdles for cigarettes. In 2019, industry sales of cigarettes dipped 1.9% year over year as the percentage of in-store sales also lost 1.3 share points from 2018. In 2020, the law could have been a third hurdle to dent consumption and sales. But that was not the case. CONVENIENCE.ORG

Cigarettes are a declining category but continue to be a top sales and profit generator for convenience stores, increasing 3.6% in sales year over year in 2020. The other tobacco products (OTP) category, meanwhile, grew 4.5% in 2020, but one subcategory—e-cigarettes—took a nosedive for the first time since hitting the U.S. market. CIGARETTE SALES RISE The pandemic year generated a notable split between premium- and lower-tier subcategories, shared Laura White, category manager for cigarettes at Atlanta, Georgia-based RaceTrac. Premium cigarettes—the lion’s share of the category at 77.5% of the category’s total sales— decreased sales 1.3% but increased gross profit. Fourth-tier cigarettes increased in double digits for both sales (61.7%) and gross profit (89.9%), although they only represented 3.5% of total category sales. This bifurcation among top-tier and bottom-tier brands was driven by changes in consumer behavior, as more people were working from home, dining at home, driving less and adapting their social routines to pandemic realities. Last year, cigarettes experienced one of the biggest twists during a chaotic year full of atypical highlights. NACS CSX data showed that in 2020, cigarette sales were up about 4.4% from January through August. By comparison, cigarette sales were down 0.6% from January to August 2019. To continue the trajectory, White discussed four industry priorities to maintain the momentum cigarette sales gained during 2020.

Customers turned to cigars as a product to kick back and relax with. OPPORTUNITIES “Retailers should be using the momentum in sales that we have now to continue growth for 2021,” said White, suggesting that retailers look no further than their point-of-sale (POS) data to make informed decisions and keep up with current trends and sales patterns. Subgeneric/private-label cigarettes, which experienced growth the past four years, was the second largest category contributor in 2020 and represented 11.7% of category sales. Branded discount, fourth tier and imports rounded out the category. Consumers and retailers typically plan for two cost increases per year. However, 2020 saw four cost increases. “These

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TO LOWER COST BRANDS Cigarettes contributed

27.8% of in-store sales

CONSOLIDATED TRIP FREQUENCY HINTS AT NEED FOR

MULTISERVE PORTIONS

INCREASED CONSUMPTION DUE TO

INCREASED ACCESS

CONVENIENCE.ORG

JUNE 2021 |

PREMIUM

74.7% Premium cigarettes dominated the category, but subgeneric and discount grew.

11.7%

SUBGENERIC/ PRIVATE LABEL

4.5%

BRANDED/ DISCOUNT

3.5%

FOURTH TIER

2.1%

IMPORTS

cost increases will push consumers to the lower-price-point brands and increase the fourth-tier private-label brands,” said White, suggesting that retailers evaluate how they can continue reaching customers who are minding their spend and finances by promoting brands that fit their desired price point. There are also opportunities to upsell, particularly to larger pack sizes. “Consumer purchasing changed during the coronavirus pandemic,” said White, suggesting that multipacks will allow shoppers to continue stocking up until a sense of normalcy returns.

PROMOTIONS Successful promotions rely on staff communication. “If your staff doesn’t understand the program, they’re not going to be able to sell it,” said White, adding that awareness is equally important so staff can adequately communicate the promotion to customers. “And once you’ve run a promotion, make sure you have a clear and concise way to measure its success and act on the learnings,” she said. ASSORTMENT Relying on POS data can help retailers expand beyond their core cigarette brands and products. Also, now may be a time to explore other partnerships with small or

SIZE OF BUBBLE = AVG. SALES/STORE

new distributors to better track innovations and trends within the category.

ALLOCATION Inside the store, 2020 was also the year where cleanliness became a top priority for consumers in deciding where to shop. “Make sure fixtures are clean, well-lit and the signage is clear,” suggested White. At RaceTrac, she shared the company ensures correct counts, accounts for seasonality and plans around events to maintain inventory and space allocation. “It’s always great to rely on your employees to help track special events that may be a great opportunity to take advantage of near your stores,” she said. OTP BENEFITS FROM INNOVATION The OTP category grew 4.5% in 2020, led by increases in smokeless tobacco, cigars and other nicotine products. The category represented 6.9% of in-store sales and grew share 0.23 points from the prior year. The category has benefited from innovation, with newer items such as nicotine pouches and alternative smokeless products piquing the interest of customers looking for alternatives to tobacco. Products like heat-not-burn tobacco have the potential to generate category excitement.

INDICATES CATEGORY AVERAGE

AVG. SALES/STORE CHANGE VS. YAG

GM%

Total cigarettes grew

20%

3.6%

in dollars with average gross margin of

10%

18.05%

Source: NACS State of the Industry Report of 2020 Data and CSX

| JUNE 2021

SUBGENERIC/ PRIVATE LABEL 1.7%

IMPORTS -3.2%

BRANDED DISCOUNT -9.4%

-10%

FOURTH TIER 61.7%

PREMIUM -1.3%

10%

20%

30%

40%

50%

60%

70%

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SMOKELESS

36.9% E-cigarette growth was stunted, leaving smokeless tobacco atop the OTP category.

29.5%

E-CIGARETTES

19.7% CIGARS

11.4%

OTHER TOBACCO

0.9%

PAPERS

0.8% PIPES

0.8%

PIPE/CIGARETTE TOBACCO

One shining star of the OTP category lost its luster: e-cigarettes. These products saw tremendous growth when they were introduced to the convenience channel and became an emerging product for retailers, attracting customers who were seeking an alternative to traditional tobacco products. E-cigarettes faced a tumultuous regulatory environment in 2019. The U.S. Food and Drug Administration banned the sale of flavored, pod-based e-cigarettes—excluding tobacco and menthol flavors—across all retail channels. With flavor bans and health concerns, 2020 “wasn’t kind to vapor products,” said White. The subcategory lost share in terms of percent of total category sales, dropping from 33.9% in 2019 to 29.5% in 2020. Smokeless tobacco products, OTP’s largest sales contributor, gained category share (35.2% in 2019 to 36.9% in 2020). Cigars also gained category share, increasing from 17.9% in 2019 to 19.7% in 2020. “It was a great year for products of indulgence, and customers turned to cigars as a product to kick back and relax with,” said White. Moving forward, White shared areas to watch within the OTP category: 1. Innovation: With overall trips down, new products such as heat-not-burn technology have not had the customer

SIZE OF BUBBLE = AVG. SALES/STORE

exposure of a typical year. “We don’t yet know how customers will react to and engage with this new product, or how quickly adoption will happen,” said White. 2. A lternative tobacco: Products like pouches are providing customers even more options for nicotine consumption. 3. Consumption changes: More people working from home means they can consume their tobacco product of choice anytime throughout the workday. “Retailers have to now figure out how to keep up with these changes in behavior to keep these loyal buyers,” she said, adding that these products will also fill a need for consumers as they head back to the workplace. Convenience retailers can expect that 2021 will be the year for OTP category innovation, although the potential for regulatory setbacks is worth keeping an eye on. Chris Blasinsky is the content communications strategist at NACS. She can be reached at cblasinsky@convenience.org.

INDICATES CATEGORY AVERAGE

AVG. SALES/STORE CHANGE VS. YAG

GM%

Total OTP grew

4.5%

40%

in average sales per store with average gross margin of

29.44%

Source: NACS State of the Industry Report of 2020 Data and CSX

50%

| JUNE 2021

E-CIGARETTE -8.9%

PIPE/CIGARETTE TOBACCO 5.2%

30%

CIGARS 15.2% OTHER TOBACCO 11.3%

SMOKELESS 9.3%

20%

PAPERS 23.8%

PIPES 15.1%

10% 0%

-10%

-5%

10%

15%

20%

25%

30%

AVG. SALES/STORE CHANGE VS. YAG CONVENIENCE.ORG

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ENERGY DRINKS LOST SHARE; CARBONATED SOFT DRINKS GAINED

COLD

FUNCTIONAL BEVERAGES IMPACTED CATEGORY MANAGEMENT

VAULT SUPERSTARS

CARBONATED DRINKS, SPORTS DRINKS AND JUICE BOOSTED PACKAGED BEVERAGE GROWTH. BY PAT PAPE

| JUNE 2021

TOTAL CATEGORY GREW 3.9% IN SALES DOLLARS

nlike dispensed beverage bars in convenience stores, the cold vault remained open and busy last year, capitalizing on the forced closures of soda fountains and self-serve coffee stations. Last year was an outlier in many respects, so can convenience retailers expect similar growth in packaged beverages in 2021? Jim Jacko, senior category manager, Coen Markets, the Canonsburg, Pennsylvania-based retailer with 60 locations, recapped 2020’s performance and shared insights about what lies ahead. Despite nationwide lockdowns, restrictions on CONVENIENCE.ORG

Yellowimages.com/Bruno Nunes, Alexander Shved; iStock.com/hometowncd

foodservice and indoor dining and consumers making fewer convenience store visits in 2020, the packaged beverages category was active. “For some time, the packaged beverages category has held the No. 2 ranking and share of inside sales and the No. 1 ranking in gross margin contribution,” Jacko said. “This year was no different, as the category represented 15.6% of in-store sales and 19% of in-store margin contribution. I consider this a superstar category,” he said. “We’ve seen continued growth over the years but massive growth in 2020,” he added. Sales of carbonated soft drinks were up 8.8%. “More people were purchasing two liters and 12-packs to take home … and I expect this category will come down a little bit once more restrictions are lifted.” Sports drinks saw a “decent lift” of 7.8%, he said. “Mainline Gatorade fell off a bit but was promptly replaced—and then some—by the continued growth of Gatorade Zero and Bodyarmor brands.” Juice and juice drinks were up 3.5%, and Jacko credits some of that jump to regions where Naked and Tropicana juices became available from PepsiCo route drivers as opposed to the limited distribution available from warehouses. However, not all subcategories were winners. Sales of energy beverages declined 1.5% as mainline offerings softened. “With increased trips, I suspect we’ll see the return of this category in 2021,” Jacko said. Bottled water sales were down 5.9% over 2019. “Out of stocks on take-home and an abundance of water inventory at home likely caused some of the

Don’t set your planograms using data from 2020. decline,” he said. “Premium and sparkling waters are growing at a rapid rate but not overcoming the decline of base still water.” The sharpest decline in the category came from RTD iced tea, down 7.3%. “There is a lack of low-sugar options,” he said. “Big brands have quashed innovation, and alternative teas—like kombucha—are still looking for national mainstream acceptance.” WATCH FOR NEW PRODUCTS Consumer behavior during the pandemic opened the door to new category considerations. “We saw the emergence of new brands in categories such as RTD coffee,” Jacko said. “The restrictions on dispensed coffee beverages in some

Advice for Category Managers

iStock.com/Boarding1Now; Floortje; baibaz; klenova; Say-Cheese;

OPEN THE

DISTRIBUTION NETWORK

Packaged beverages contributed

15.6%

DRIVE NEW BRANDS

WITH MARKETING

of in-store sales

CONVENIENCE.ORG

JUNE 2021 |

ENERGY DRINKS

28.5% Energy drinks still account for the biggest share of the category but contracted in 2020, while carbonated soft drinks’ base grew.

23.0%

CARBONATED SOFT DRINKS

13.4%

BOTTLED WATER

| JUNE 2021

9.3%

ICED TEA

9.3%

SPORTS DRINKS

8.0%

JUICE/JUICE DRINKS

7.2%

OTHER PACKAGED BEVERAGES

1.3%

ENHANCED WATER

The restrictions on dispensed coffee beverages in some areas greatly increased the traffic headed to the coolers to get that morning caffeine fix. areas greatly increased the traffic headed to the coolers to get that morning caffeine fix. And we have an underlying generational shift in the coffee category. I’ve seen articles about younger consumers preferring the innovation that the RTD coffee section gives them.” “Functional beverage” has been a buzzword for several years, and “the term seems poised to affix itself to all the subsections in the cold vault,” he said. “We’ll see an abundance of new brands that blend the subcategory lines and add increased function in 2021 and beyond.” And don’t ignore the increased awareness of CBD-infused beverages. Currently, they’re expensive, he said, but the cost will drop over time. Retailers should be thinking now about where this product will go in the vault, how it will be promoted and how it will be handled. RTD PROMOTIONS As c-store visits increase, retailers must consider promotional strategies to drive sales and engagement. And they need to control and analyze the promotions they run. “Great resources come from our bigger beverage vendors, but don’t rely on them to bring you promotions,” said Jacko. “Analyze your promotions and understand the purpose for having them. What are you trying to achieve? Do you want to increase units? Are you using it to launch a brand? Do you even need to run a promotion right now?” Set goals for a promotion in advance and do a recap afterward. “Understand how much growth came from the promo,” he advised. “Keep a history of it and go back to it. Use it as a leverage tool when you’re discussing funding programs with the big brands.” CONVENIENCE.ORG

More people were purchasing two liters and 12-packs to take home … and I expect this category will come down a little bit once more restrictions are lifted.

level. “You will know how much your distribution is across the board, and you can do some calculations about what each product is doing for you,” he said. “But one metric doesn’t tell the whole story. Sales are subject to retail increases, cost increases and promotional activities. Take a fully wholistic look at the metrics.” Jacko believes that retailers must embrace the future while keeping an open mind about new products, trends and technologies. “Go outside the box a little bit. It’s okay to find a new energy drink that may or may not be successful,” he said. “Put your core in first and then bring in your innovation.” Jacko sees packaged beverages as an impulse item, yet still a predetermined shop. “Beverage shoppers love to buy in multiples, and packaged beverages is a one-size-fits-all category,” he said. “There’s something for everyone, and it’s one of the few categories where you have almost no consumer gaps if you do it right.”

SPACE TRAVEL Rethinking how you allocate products in the vault can drive innovation and excitement. Since every store must manage limited cooler space, “look at what products are making money and let those metrics dictate what goes in your sets,” said Jacko. “Don’t set your planograms using data from 2020. Look at the past few years, and if you see brands growing, take note. Don’t think of your facings as a way to control inventory. Proper metrics will sort that out for you. You built a cold vault with space to keep backstock. Don’t be afraid to use that space.” If a big brand does planograms for you, its representatives can provide this information at a line

SIZE OF BUBBLE = AVG. SALES/STORE

Total category grew

3.9%

INDICATES CATEGORY AVERAGE

BOTTLED WATER -5.9%

GM% 70%

Pat Pape worked in the convenience store industry for more than 20 years before becoming a full-time writer. See more of her articles at patpape. wordpress.com.

ENERGY DRINKS -1.5%

60%

AVG. SALES/STORE CHANGE VS. YAG

50%

42.46%

Source: NACS State of the Industry Report of 2020 Data and CSX

40%

RTD ICED TEA -7.3%

CSDs 8.8%

ENHANCED WATER -0.6%

30% 20% 10% 0%

-8%

-6%

-4%

-2%

AVG. SALES/STORE CHANGE VS. YAG

| JUNE 2021

iStock.com/thesomegirl

in sales dollars with average gross margins of

SPORTS DRINKS 7.8%

JUICE/ JUICE DRINKS 3.5%

OTHER PACK 10.0% BEV 69.7%

8.0%

CONVENIENCE.ORG

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WINE SURGED 21.1% IN AVERAGE STORE SALES

LIQUOR AVERAGE STORE SALES INCREASED 15.3%

HAPPY BEER SALES PER STORE ROSE 18.1%

HOUR “A

BEER, WINE AND LIQUOR CATEGORIES THRIVE AS CONSUMER SHOPPING HABITS SHIFT. BY TERRI ALLAN

| JUNE 2021

mazing. Unprecedented. Historic.” Those are the words Chris Long used to describe the performance of alcoholic beverages in convenience stores in 2020. Long, director of category management–age verified at Kum & Go, which has 400 stores in 11 states primarily in its home state of Iowa, discussed the double-digit growth that the beer, wine and liquor categories all enjoyed in c-stores, largely attributed to shifts in consumer buying patterns brought on by the pandemic, as well as fast-growing new products that are ideal for the channel. According to NACS State of the Industry data, alcoholic beverages comprise 8.6% of total inside c-store sales and contribute nearly 4.9% to margin. The importance of beer, wine and distilled spirits to basket rings and profitability was certainly highlighted last year, at a time when other in-store departments were hampered. The tailwinds that the pandemic wrought on bars and restaurants translated into opportunity for convenience retailers, Long said. “Consumers came to rely on c-stores for stock-up trips, especially for alcohol.” CONVENIENCE.ORG

Among the shifts in consumer habits that benefitted alcoholic beverages in 2020 were large pack-size purchases, increased at-home mixology and more outdoor activities that called for convenient packaging, such as canned wine. Moreover, emerging readyto-drink products such as hard seltzers and canned cocktails continued to surge, in part driven by increased demand for low-carbohydrate, low-sugar, low-calorie drinks. “They allow consumers to have a taste of mixology in their own homes,” Long said.

iStock.com/Boarding1Now; Floortje; baibaz; klenova; Say-Cheese;

Yellowimages.com/Quocos(2), Bruno Nunes

FMBS, LARGE PACKS SOAR Average store sales of beer jumped 18.1% last year, growth which Long called unprecedented. “Our fast trip worked for us in helping to fill consumer needs,” he said. Flavored malt beverages (FMBs) emerged as the subcategory superstar, with average store sales surging 70.5%. That pushed FMBs into the No. 2 position among beer subcategories with 14.7% of category sales, behind only premium beer, which increased 8.2% and accounts for nearly one-third of category sales. Dramatic consumer shifts from six-pack purchases to 12-, 24- and 30-packs propelled basket rings higher. Variety packs, particularly for hard seltzers, flew off shelves. “Variety packs allow c-stores to better utilize space, as one 12-pack variety pack can replace two to three SKUs,” Long remarked. “Singles were relatively flat,” he said. Hard seltzers and other FMBs are having their moment in c-stores and other retail channels. “Hard seltzers turned in an incredible performance in 2020,” Long said, and “drove FMBs to amazing heights.” The subcategory’s 70.5% growth aside, FMBs are driving beer’s profitability mix. According to the SOI, FMBs contribute a

Beer contributed

6.79% of in-store sales

CONVENIENCE.ORG

Hard seltzers turned in an incredible performance in 2020, and drove FMBs to amazing heights. 22.87% gross margin, as compared to an overall category average of 18.44%. “That’s what makes this new innovative category so appealing to us,” he noted of the above-premium-priced brands. BIG OPPORTUNITY GAP Among alcoholic beverage categories, wine posted the best performance in c-stores last year as average store sales surged 21.1%, delivering average gross margins of 25.24%. Still, wine only accounts for 0.53% of in-store sales and just 0.37% of in-store grossmargin contribution. “We have a large opportunity,” Long said, noting that wine sales in the c-store channel have plenty of room to grow. Table/varietal wine—which jumped 24.2% in average sales per store thanks to the loss of some on-premise occasions at bars and restaurants— accounts for more than half of total wine sales in c-stores, followed by coolers and wine cocktails at 27.8%. The coolers/wine cocktails subcategory, meanwhile, was the fastest growing within the category last year as average sales increased 30.1%

Wine contributed

Liquor contributed

0.53%

1.31%

of in-store sales

JUNE 2021 |

SIZE OF BUBBLE = AVG. SALES/STORE

INDICATES CATEGORY AVERAGE

AVG. SALES/STORE CHANGE VS. YAG

GM%

Total beer exploded by

18.1%

in average sales per store, led by growth of flavored malt

30%

NONALCOHOLIC -6.2%

25% 20% 15%

BUDGET 2% PREMIUM 8.2%

10% 5% 0%

-20%

FLAVORED MALT 70.5%

IMPORTS MICROBREWS/ CRAFT 16.8% 26.8%

SUPER PREMIUM 28.3%

POPULAR 10.4%

20%

40%

60%

80%

100%

AVG. SALES/STORE CHANGE VS. YAG

iStock.com/thesomegirl

MALT LIQUOR 1.2%

35%

GM% FORTIFIED WINE 4.8%

40%

More off-premise consumption grew total wine dollars

21.1% 25.24%

with average gross margin of

35%

COOLERS/ WINE COCKTAILS 30.1%

30% 25%

CHAMPAGNE/ SPARKLING WINE 14.1%

OTHER WINE -8.2%

20% 15%

TABLE/ VARIETAL WINE 14.1%

10% 5% 0%

-20%

-10%

10%

20%

30%

40%

AVG. SALES/STORE CHANGE VS. YAG GM% iStock.com/Okea, Alter_photo, ~UserGI15966731

50% 45%

Total liquor grew

15.3%

in dollars with average gross margin of

26.89%

Source: NACS State of the Industry Report of 2020 Data and CSX

40% 35% 30%

CORDIALS/ BRANDY/COGNAC -15.1%

DISTILLED SPIRITS 19.6%

COCKTAIL MIXES 99.8%

25% 20%

OTHER LIQUOR -2.5%

15% 10%

PREPARED COCKTAILS 25.1%

5% 0% -40%

-20%

20%

40%

60%

80%

100%

AVG. SALES/STORE CHANGE VS. YAG

| JUNE 2021

CONVENIENCE.ORG

120%

MORE CHOICES. MORE “CHEERS!” With mor e off e r in g s th an ev er b efo re, we’re bring i ng ne w f r i en d s to win e an d sp irits wh ile conti nui ng t o c ultiv ate o u r p rem iu m b u sine s s . That m e a ns m or e cu sto m ers fo r y o u an d mo r e chee r s a l l a r ound. Gro w with u s.

PREMIUM

TABLE/ VARIETAL WINE

50.8%

DISTILLED SPIRITS

85.8%

Premium beer drove nearly one-third of category sales. Table/varietal leads wine with 50.8% of category sales contribution in 2020.

8.3% CORDIALS/BRANDY/ COGNAC

15.5% FORTIFIED WINE

3.3% OTHER LIQUOR 0.7% COCKTAIL MIXERS

HIGH SPIRITS Average store sales of liquor increased 15.3% last year, according to SOI data, fueled in part by a 19.6% gain for distilled products and a 25% increase for prepared cocktails. Liquor accounts for only 1.31% of total in-store sales—due to legal restrictions in many states—and 1.15% of in-store gross margin contributions. At stores that sell liquor, average gross margins run 26.89%, Long said. Among the trends convenience retailers are seeing within the category is a shift from budget and value tiers to more premium-priced spirits such as whisky and Tequila. The stay-at-home economy helped propel sales of prepared cocktails. “RTD cocktails offer opportunity for suppliers and retailers alike,” he remarked. Relatedly, average store sales of cocktail mixes doubled last year, as “shoppers looked to fill the gap that on-premise restrictions created with cocktails at home,” Long said. With products like RTD cocktails, adult milkshakes and smoothies, innovation within the | JUNE 2021

14.6% POPULAR

27.8%

COOLERS/ WINE COCKTAILS

in 2020 off a relatively large base in 2019. Nontraditional wine packages, including cans, large-format boxes and tetra packs, are trending, driven by consumer demand for more convenient options than bottles. The shift offers c-store retailers a big opportunity. “Small bottles and large-format boxes fit right in our wheelhouse, due to space restrictions,” Long said.

14.7% FLAVORED MALT

11.0% IMPORTS 4.4% CHAMPAGNE/ SPARKLING WINE 1.5% OTHER WINE

9.7% BUDGET 9.1% SUPER PREMIUM 7.7% MICROBREWS/ CRAFT

category is only expected to continue, further blurring the lines between liquor and beer.

1.3% MALT LIQUOR 0.1% NONALCOHOLIC

KEY FUNDAMENTALS To ensure that the strong trends for beer, wine and liquor in c-stores continue in 2021, Long advised retailers to merchandise for local events and seasonal occasions and provide proper product organization and shelf flow. Lean into limited-time-only offerings to “drive excitement,” as well as larger pack sizes. Crosscategory tie-ins and twofer offers, meanwhile, help build larger baskets, Long said, and clearly communicated pricing is imperative. When it comes to space, he recommended retailers consider secondary locations to drive impulse purchases and to utilize vendor point-of-sale “to add pop.” While the past year has been one of dramatic change for the beer, wine and liquor categories, retailers must still adhere to the basics, Long said. “The fundamentals are still key—price, product, promotion and platform.”

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

CONVENIENCE.ORG

Yellowimages.com/Pavel Gubin

Distilled spirits dominated the liquor category with 85.8% of sales.

1.9% PREPARED COCKTAILS

31.7%

CHOCOLATE BARS/PACKS DOMINATE CANDY SALES

OTHER SALTY SNACKS NOW LEAD

THE POWER OF

SWEET AND SALTY T

TOTAL SALTY SNACKS DECLINED

THE CANDY AND SALTY SNACKS CATEGORIES BOOSTED BASKET SIZE AND TRAFFIC FOR RETAILERS IN 2020. BY SARAH HAMAKER

| JUNE 2021

he coronavirus pandemic heightened many retail trends, such as more online shopping, payments with apps or mobile wallets and home deliveries of takeout meals and groceries. What didn’t change was consumers’ desire for self-indulgent treats, according to NACS State of the Industry (SOI) data. “We saw a great increase in candy as people were taking more time to treat themselves to that extra chocolate bar or buying bigger packs to take home and share with their family,” said Kelley Gutierrez, category manager for candy and snacks at MAPCO Express Inc., which operates more than 345 stores largely in the Southeast U.S. For example, chocolate bars and larger packs continue to dominate sales within the candy category. “At MAPCO, we saw innovation driving performance and shopper preferences widening to where they sought new and exciting options within the candy segment,”

CONVENIENCE.ORG

iStock.com/Boarding1Now; Floortje; baibaz; klenova; Say-Cheese;

Yellowimages.com/Gardina; iStock.com/kyoshino, mayakova

she said. “Similar to candy, the demand for larger pack types impacted the overall sales within salty snacks,” Gutierrez said. Here’s how these two categories did in 2020— and how retailers can continue the momentum into 2021 and beyond. SATISFYING A SWEET TOOTH Candy continued to be a powerhouse performer in the convenience channel, grabbing 2.95% of in-store sales and 4.34% of in-store gross margin contribution, according to NACS SOI data for 2020. “Candy is typically a higher margin product that is used as a basket builder and has a high affinity to many other categories, such as packaged beverages, fountain drinks and foodservice,” Gutierrez said. Candy sales grew 1.9% in dollars, delivering an average gross margin percentage of 51.77%. At MAPCO, bagged and repackaged peg candy snagged Gutierrez’s attention. “Many other category and merchandising teams I’ve spoken with have also seen massive demand for bagged candy, speaking to consumers buying it to share with others or for special at-home moments, rather than for immediate consumption,” she said. Bagged candy experienced a 12.8% sales bump last year. Overall, innovation in the candy aisle is building excitement in the category. “People are still looking for those standard indulgent treats that they’ve come to know and love,” she said. Chocolate continues to lead as a decadent treat, while gummies and sours spurred growth in bagged candy. One subcategory hurt by the loss of commuter traffic has been candy rolls, mints and drops. “We’ve had a really tough year within the gum, mint and drops category because of the reduction

Candy contributed

2.95% of in-store sales

CONVENIENCE.ORG

Bagged candy experienced a 12.8% sales bump last year. in trips,” Gutierrez said. With not as many people going out or interacting face-to-face with co-workers, there has been a 23.6% decline in average store sales for candy rolls, mints and drops and a 24.2% drop in average store sales of gum. Pandemic shopping behavior has opened the door to new category considerations for candy, such as expanding bagged or repackaged peg candy to deliver more variety and meet the price-conscious shopper’s needs. Consolidated trip frequency hints at the consumer need for multiserve portions and purchases of multiples at one time. Novelties represent an area of growth potential for retailers. Novelties and the seasonal segment showed 82.8% growth over 2019. “We noticed people still wanted to celebrate the little moments by grabbing a couple of candies for families or friends,” she said. “Seasonal items that are limited-time only can drive customers into your store, so executing them prior to holidays will allow your customers to know you are a destination for those items.”

Salty snacks contributed

4.27% of in-store sales

JUNE 2021 |

8.6%

BAGGED OR REPACKED PEG CANDY

CHOCOLATE BARS/ PACKS

4.2%

43.9%

25.6%

NON-CHOCOLATE BARS/PACKS

CANDY/ROLLS/ MINTS/DROPS

10.7%

2.5%

GUM

CHANGE MAKERS/ PENNY COUNTER GOODS

Chocolate bars/packs comprise the biggest share of candy sales.

2.2%

NOVELTIES/ SEASONAL

2.2%

repeat business from people who want a quick alternative to the grocery store but still want those larger pack types at a great value price.” Shoppers are also snapping up better-for-you options in salty snacks as they embrace new eating lifestyles. For example, the popcorn and pretzel segments are seeing new innovation with potential for share growth, and mixed snacks have been showcasing more intense flavor profiles. “While popcorn and pretzels haven’t done well lately, they’re going to bounce back in 2021 because of the innovation and flavor profiles coming out,” she said. MAPCO leverages cross-category marketing to drive basket sales that include salty snacks. “Are you calling out to the customer coming in for a soda about your salty snacks? Are you using your cooler doors and other prime signage points to

80%

Total candy grew

1.9%

60%

in dollars with average gross margin of

51.77%

Source: NACS State of the Industry Report of 2020 Data and CSX

70%

CANDY ROLLS/ MINTS/ DROPS -23.6%

50% 40% 30%

CHANGE MAKERS/ PENNY CANDY -34.2%

CHOCOLATE BARS/PACKS 5.9%

GUM -24.2%

NON-CHOCOLATE BARS/PACKS 14.4%

NOVELTIES/ SEASONAL 82.8%

BAGGED OR REPACKED PEG CANDY 14.4%

20% 10% 0% -60%

-40%

-20%

20%

40%

60%

80%

100%

AVG. SALES/STORE CHANGE VS. YAG | JUNE 2021

CONVENIENCE.ORG

iStock.com/subjug

SNACK ATTACK Salty snacks sales declined last year. The category represented 4.27% of in-store sales and 4.84% of gross profit dollars, according to NACS SOI data. “New priorities for salty snacks have emerged in a post-COVID world,” Gutierrez said. For example, there are increased options within growing flavor segments. “We’ve seen the hot and spicy flavor segment blow up,” she pointed out. In addition, as with candy, fewer trips translated into consumers buying more multiserve portions and value-based multiples offers. “Since people are shopping less frequently, I want them to come to my store to purchase their take-home sizes of chips, so we will entice them with a twofer promotion,” Gutierrez said. “That’s very competitive with your local grocer or drugstore, and it’s a great way to get

GM%

iStock.com/FreeSoulProduction; Yellowimages.com/Alex Walker

BULK CANDY

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OTHER SALTY SNACKS

30.5% Other salty snacks now lead category sales.

26.9%

POTATO CHIPS

14.5% TORTILLA CORN CHIPS 3%

9.4% PRETZELS

CRACKERS

MIXED

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

2.3%

8.5% NUTS/SEEDS TO EAT 3.2% READY POPCORN

1.7%

PUFFED CHEESE

GM% 60%

Total salty snacks declined

3.2%

50%

41.78%

Source: NACS State of the Industry Report of 2020 Data and CSX

CRACKERS -3.8%

NUTS/ SEEDS -10.0%

40%

in average sales per store with average gross margin of

PRETZELS -36.9%

POTATO CHIPS -3.9%

30%

RTE POPCORN -0.6%

20%

OTHER SALTY SNACKS 12.8%

MIXED 7.8%

TORTILLA CORN CHIPS 82.8%

PUFFED CHEESE 11.9%

10% 0%

-50%

-40%

-30%

-20%

-10%

10%

20%

AVG. SALES/STORE CHANGE VS. YAG | JUNE 2021

iStock.com/mircevski; Yellowimages.com/Vadim Petrov

grab attention to your salty snack promotions? All of these working together will increase salty snack sales,” Gutierrez said. For example, twofer offers build bigger baskets, while promotions on larger packs can incentivize shoppers to skip the grocery store. Keep an eye on the calendar to capitalize on holidays and other special events to tie into seasonal promotions. “For MAPCO, car racing events can be huge for us,” she said. “We make sure we have extra products in stores near stadiums on race days.” Overall, candy and salty snacks will continue to provide opportunities for retailers who recognize how customer behavior has changed because of the pandemic. “Those who tailor their promotions to serve new-to-convenience-store guests and adjust their assortment to offer in-demand pack sizes will be well positioned to grow these category sales well into 2021,” Gutierrez said.

CONVENIENCE.ORG

30%

HOT DISPENSED BEVERAGES HAD THE SHARPEST SALES DECLINE

COMMISSARY WAS A STRONG PERFORMER

DOWN BUT N

o in-store category was harder hit in 2020 than foodservice, with dispensed beverages—particularly hot dispensed beverages—bearing the brunt of the pandemic’s impact as c-store regulars didn’t stop by for their morning cup of coffee, and government ordinances forced closures or modifications of c-store food and self-serve beverage operations. That’s not to mention consumer wariness about sanitation and food safety. “Day by day, hour by hour, we were trying to manage what was happening in our stores and satisfy not only compliance but consumer expectations,” said Heather Davis, director of foodservice, Parker’s, based in Savannah, Georgia. With schools and offices shuttered starting in March 2020, commuting patterns were upended, and dayparts

THE PANDEMIC BATTERED FOODSERVICE IN 2020. BY KIM STEWART

| JUNE 2021

compressed. The key morning rush was hardest hit, while the midday and evening dayparts picked up some trips. On an annual per store basis, foodservice sales fell 9.6%, from $651,934 in 2019 to $589,241 in 2020, and represented 9.0% of total sales in 2020, NACS State of the Industry data show. Foodservice gross profits represented 19.5% of total store gross profits, dropping 11.8% year over year from $356,496 in 2019 to $314,377 in 2020. Gross margin dipped to 53.35% in 2020, a decline of 1.33 points compared with 2019. Foodservice remained a crucial contributor to store trips, accounting for 22.9% of inside sales in 2020. Foodservice represented 35.2% of inside gross profits, a drop of 11.8 points year over year. Despite the challenging year, the category still delivered a significant portion of overall inside sales and gross profits. The foodservice segment of in-store sales includes the five categories of prepared food, commissary, hot dispensed beverages, cold dispensed beverages and frozen dispensed beverages. PREPARED FOOD Prepared food contributed the biggest share of 2020 foodservice sales at 66.6% of sales, an increase in share of 1.8 points compared with 2019. After an initial dive, prepared food gathered

CONVENIENCE.ORG

iStock.com/TheCrimsonMonkey; t:Floortje

NOT OUT

speed in the third quarter as consumer trust returned regarding store-made food items and states reopened. For the year, prepared food saw average annual sales per store fall 5.7% to $462,801. Gross profit dollars from prepared food totaled $249,105 in 2020, an 8.0%

decline compared with 2019. The gross margin percentage for prepared food stood at an average of 53.83%, a fall of 1.38 points year over year. “Prepared food business declined because consumers weren’t out and about,” Davis said. “As the pandemic continued and restaurants remained closed or were operating at reduced capacity, customers tried food from convenience stores for the first time—or the first time in a long time,” she said. COMMISSARY Commissary was the bright spot in an otherwise challenging year for foodservice. The subcategory includes sandwiches and wraps, sides and salads, heat-and-eat foods like burritos and ready-toeat meals like soup. Commissary traditionally contributes the smallest percent of sales within foodservice but in 2020 accounted for 8.6% of sales. For the year, commissary sales per store climbed 15.4% to $59,565. Gross profit dollars rose 17.4% to $20,511, and gross margin percentage edged up 0.58 points to 34.43%. “There was some built-in confidence with prepackaged items at the onset of the pandemic, so people bought more prepackaged than normal. They felt like these items were safe; they weren’t handled a lot,” Davis said.

PREPARED FOOD SALES PER STORE FELL 5.7% HOT DISPENSED BEVERAGES TUMBLED 32.2% COMMISSARY SALES PER STORE CLIMBED 15.4%

SIZE OF BUBBLE = AVG. SALES/STORE

GM%

INDICATES CATEGORY AVERAGE

AVG. SALES/STORE CHANGE VS. YAG

PREPARED FOOD -5.7% FROZEN DISPENSED BEVERAGES 4.2%

70.0%

50.0%

HOT DISPENSED BEVERAGES 32.2%

30.0%

COLD DISPENSED BEVERAGES -6.1%

COMMISSARY 15.4%

10.0%

Foodservice sales fell

9.6%, 53.35%,

but gross margins held at

off -1.33 points year over year

0.0% -50.0%

-30.0%

-10.0%

0.0%

10.0%

AVG. SALES/STORE CHANGE VS. 2019

| JUNE 2021

30.0%

Source: NACS State of the Industry Report of 2020 Data and CSX

CONVENIENCE.ORG

Yellowimages.com/Olga Lupol

n ased o rt icle is b d ustr y Rep o t r a is Th In e g e a h r t of ove S State r com plete c ep Dive C A N e o th De Data . F egor y of 2020 ds er vice C at mit, re a d o m t u Fo of th e h e 202 1 SOI S S Magazin e a C A at t N f . o m in e.co y is su e th e Ma .na c smagaz w w w

over year to $23,819. The gross margin of 72.82% for cappuccino and specialty coffee was the highest among the hot dispensed beverage subcategories.

Prepared food accounted for the biggest share of 2020 foodservice sales, while the pandemic took a toll on self-serve beverages.

66.6% 12.3%

HOT DISPENSED BEVERAGES

8.6% COMMISSARY

7.6% COLD DISPENSED BEVERAGES

5.0% FROZEN DISPENSED BEVERAGES

HOT DISPENSED BEVERAGES Hot dispensed beverages accounted for 12.3% of foodservice sales in 2020, making it the secondbiggest contributor behind prepared food. Hot dispensed beverages experienced the biggest decline in sales among foodservice categories, tumbling 32.2% from 2019 levels and accounting for $85,166 in annual sales on a per store basis. Gross profit dollars fell 34.4% in 2020 to $55,477. Gross margins fell 2.18 points compared with 2019 but still contributed the highest margin percentage among foodservice categories at 65.14%. Coffee still accounted for the bulk of hot dispensed beverage sales at 48.8%. Coffee sales on a per store annual basis fell 35.8% to $41,552 year over year. Gross profits declined to $25,102, while gross margin percentage was 1.09 points lower than 2019 at 60.41%. Cappuccino and specialty coffee represented the second largest percentage of hot dispensed beverage sales at 38.4%. Cappuccino and specialty coffee sales declined to $32,708, and gross profits fell 40.3% year

| JUNE 2021

FROZEN DISPENSED BEVERAGES Frozen dispensed beverages, the smallest category in foodservice, finished in the black for the year, notching an increase in average sales per store of 4.2% year over year to $34,464. Frozen dispensed beverages contributed a 5.0% share of foodservice sales in 2020, up from 4.4% in 2019. Gross profit dollars increased 6.5% year over year to $22,382. Gross margin improved by 1.42 points to 64.94%. Frozen non-carbonated beverages continued to account for the bulk of frozen dispensed beverage sales, increasing from 80.2% to 84.8% of sales in 2020. Average sales per store climbed 10.2% to $29,230. Gross profit dollars improved 12.8% to $19,423. Gross margin percentage of 66.45% increased by 1.51 points and was the second highest among all foodservice categories. Kim Stewart is editorial director of NACS and editor-inchief of NACS Magazine.

CONVENIENCE.ORG

iStock.com/AlexandrBognat

PREPARED FOOD

COLD DISPENSED BEVERAGES Cold dispensed beverages accounted for 7.6% of foodservice sales and $52,675 in average sales per store in 2020, down 6.1% from 2019. The category saw gross profit dollars fall 4.1% to $25,622 on a per store basis. Gross margin improved by 1.03 points to 48.64%. Carbonated fountain drinks suffered due to closures of dispensers. Although the subcategory still represents the largest percentage of cold dispensed beverage sales, its sales contribution declined from 56% to 41% of cold dispensed beverage sales. Carbonated fountain drink sales decreased by 31.4% to $21,581 on a per store basis. Gross profit dollars fell 32.8% to $9,707, and gross margin slipped 0.94 points to 44.98%. Other cold dispensed beverages, a subcategory that includes iced coffee, iced specialty coffee and kombucha, accounted for 36.9% of category sales in 2020, up from 21.3% in 2019. Other cold dispensed beverage sales totaled $19,463 in 2020, up 62.9% from 2019. Gross profit dollars grew 61.4% to $10,191. Gross margin declined 0.51 points to 52.36%.

All snacks on deck. Looking for pre-packaged and portable offerings? With a huge variety of flavorful grab-n-go products, Tyson Convenience is ready to meet your needs. Offer snacks that work across all dayparts with brands your customers know and love. Visit https://www.tysonfoodservice.com/your-channel/convenience to explore the full grab-n-go portfolio.

SET UP FOR

SUCCESS Today’s modern forecourt and c-store platforms should be open-platform, software-based systems that deliver operational efficiency, security and ongoing flexibility. BY JERRY SOVERINSKY

he convenience store industry is at an inflection point—again. There’s a widening gulf between the have and have-nots. Many of the lesser performing stores are struggling to remain competitive, with decreasing fuel demand, shrinking tobacco sales and escalating labor costs all cutting into margins. Add to that increased competition from dollar stores, grocers and Amazon, and there’s a perfect storm of factors pressing down on the industry’s collective bottom line. And that was before COVID-19. As consumers venture out more into public, trading work-from-home arrangements for hybrid or even old normal routines, there’s an urgency among fuel retailers to claw back sales, stimulating trip frequency and basket size to right a damaged ship. Easier said than done. Discretionary spending is hard to come by, yet distinguishing yourself from your competitors is an operational mandate. Where to begin? For Invenco, a global provider of secure selfservice payment terminals and c-store solutions, the answer is modernization: bringing efficient, connected systems from the forecourt to the c-store. “Today’s consumer is spoiled for choice, making first impressions critical,” said Chief Innovation Officer Dan Harrell. “For many fuel customers, everything starts and ends at the forecourt. Providing them with a premier experience helps build loyalty and position your business for success.” But the modernized forecourt is more than the customer-facing experience. It’s a tightly integrated platform of solutions that deliver efficiencies,

| JUNE 2021

security and greater flexibility into a retailer’s systems and infrastructure, as well as performance enhancements and actionable data that help create a more successful and durable business. So, what exactly goes into building a modern forecourt and what can it mean for your business? And more important, how best can retailers build one today when ROI is more important than ever. Let’s take a look. THE MODERN FORECOURT When Invenco speaks of the modern forecourt, this isn’t an aesthetic renovation but an infrastructure overhaul that impacts the retailer’s back-end operations and every touchpoint of the customer experience—personalized communications (targeted promotions, identity protection), payment method and security (EMV, contactless and next generation payments, ACH), vehicle energy delivery (electric charging, CNG, hydrogen), and external factors (competing channels, autonomous vehicles). “These are not disparate components and must coordinate in such a way that today’s retailer can deploy them easily, without fear of incompatibility,” said Harrell. “Closed, spiderweb systems that are difficult to update and difficult to integrate create problems for both the customer and retailer. An open API platform is key to success.” Most forecourts today, he said, include too many proprietary interface configurations, with integration failures common. “As a result, new implementations become costly, with timeframes that are excessive—many greater than one year.” To address these challenges, Invenco created iNFX and Invenco Cloud services, an CONVENIENCE.ORG

Providing [fuel customers] with a premier [forecourt] experience helps build loyalty and position your business for success.

This article is brought to you by Invenco, a NACS supplier member

architecture that facilitates innovation quickly and easily and that fosters seamless integration among forecourt equipment. It’s an open architecture approach to modernization, one that is committed to standards and that has the retailer—not vendor—firmly in control. “iNFX furthers a mission of secure digital agility,” Harrell said. The system works by separating core business functionalities previously rooted in hardware or complex systems and solving for those functions with lightweight and cloudbased microservices software. The software is connected through open APIs with additional core functions and third-party integrations. The iNFX system additionally comes pre-integrated with Invenco’s pay-at-pump terminals and Cloud Services management platform, all of which sit on open systems. BENEFITS THAT MAKE (DOLLARS AND) SENSE With iNFX and its cloud-based based services platform, forecourt modernization is future-proof, making it far simpler to deploy and manage system functions and features. The standards-based architecture drives efficiency with improved operations, less money spent on service deployments, proactive system upkeep and better opportunities for customer engagements. The overall result is a better user interface for the employee and customer. RECOMMENDED STEPS Of course, disassembling an existing system— especially at once—is an overwhelming prospect. With multiple pieces of hardware, software and integrations already setup between systems, disrupting that system may seem impossible. But it’s not. Invenco advises a systematic approach that addresses modernization one step at a time. CONVENIENCE.ORG

The approach we encourage advises Harrell, “is for sites to start small and expand from there. Conceptualizing an entire system change at once is overwhelming. Instead, retailers should individually ‘section’ each piece of current functionality (even if it is not set up this way in the current system) and address those pieces in as many different steps as they feel comfortable doing so.” Rather than approach things from a “low hanging fruit” perspective, Invenco advises addressing major problems first, a prioritization that delivers the greatest overall benefits to the retailer in the shortest amount of time. Harrell advises this will ensure that your site is taking a major step in the right direction and allocating resources to your biggest problem areas.” Once a plan is developed and the process begins, the retailer can expect to realize returns quickly, a reflection of the cloud-based system and open API that promotes third-party integrations. “Retailers who have been relying on closed, slow systems may not realize they may be missing out on revenue-generating opportunities because of those systems and should challenge their providers to ensure they have systems that will enable them to reach full potential. In order to ensure they are getting the most of their systems, they should,” says Harrell. By closing systems to third-party integrations, providers may limit their own competition—but the retailer ends up missing out. All of that sounds good on (digital) paper, but a real-world demonstration provides more insights into the modernization process. GETGO ELEVATES THE CUSTOMER EXPERIENCE For Pittsburgh-based GetGo, Invenco’s iNFX solutions have provided back-end efficiencies while providing its customers with a dynamic media experience at the pump.

JUNE 2021 |

TERMINOLOGY Open System: Open systems have publicly available communication paths, so any third party that wants to connect can do so. Closed systems require permission from the system provider to integrate. Invenco’s open system approach means that third-party solutions like food ordering, personalization, loyalty and media can be quickly integrated with core systems. Platform Architecture: iNFX’s unique structure of separate but connected microservices detangles the web of overlapping functionalities and communication paths that complicate proprietary systems. By breaking down each function into separate pieces of software, retailers can address a specific piece of functionality without touching additional parts of the system. This means easier updates, integrations and management of the entire platform and the ability to focus on the pieces of each system most important to the business at a point in time. Cloud-based Management: Invenco’s Cloud Services (ICS) Platform provides a holistic view of assets through real-time data collected over the cloud. ICS proactively alerts retailers of terminal issues with notifications so they can be addressed quickly through remote diagnostics. The platform also improves operational costs by enabling retailers to deploy remote software and compliance updates and media and prompt “playlists” to pay-at-pump terminals across pumps, sites or geographies.

Invenco partnered with GetGo earlier this year to add its G6 and G7 Pay-at-Pump terminals, iNFX retail microservices, and its cloud services management platform at its 266 locations. The goal was addressing the retailer’s need for outdoor EMV while using technology to improve systems to better engage consumers. Leveraging Invenco’s Cloud Services, the new terminals deliver a robust media experience to GetGo fuel customers, along with video promotions that can be customized by location, time of day and rotated to remain current and fresh. It’s a massive upgrade from GetGo’s previous static signage experience. “Creating an engaging, personalized experience for our customers is a top priority at GetGo and our new Invenco terminals, management

| JUNE 2021

platform and upgraded service software are the latest store innovation to reflect our commitment,” said Rug Phatak, GetGo spokesperson. “Promotions shared at the pump can be tailored by store location and will allow us to personalize the experience for customers in the future. The terminals and new technology support GetGo’s focus on innovation and continuous enhancement of the customer experience.” Invenco pay-at-pump terminals incorporate enhanced security with outdoor EMV-enabled chip readers, advanced data protection and anti-skimming technology. As well as NFC contactless readers for touchless payments like Apple Pay, Google Pay and mobile wallet credit cards. To support GetGo’s robust foodservice program, the technology also supports mobile ordering for fresh food offerings, interactive functionality for strong customer engagement to help build sales. In a short time, the retailer has seen strong and sustained incremental sales of foodservice items, a significant percentage of that coming from our new terminal ordering capabilities. MOVING FORWARD The systems required to process a fuel sale are extensive and complex. And modifying elements within that system can be expensive, not to mention fraught with uncertainties. Invenco’s suite of secure solutions brings secure, open digital agility to the process, an innovative approach to forecourt modernization that improves performance and efficiency. The result is faster enhancement deployments, improved site operations, quicker transactions, and a better customer experience. At a time when the battle for market share is more competitive than ever, can you afford anything less? Jerry Soverinsky is a freelance writer and NACS Magazine contributing writer. See his work at www.jerrysoverinsky.com.

CONVENIENCE.ORG

MODERN - OPEN - FLEXIBLE

Pay-at-Pump Terminals & C-Store Solutions Invenco is a global provider of secure self-service payment terminals and convenience store solutions. Their products are designed internally, from the ground up, to deliver open, flexible and reliable systems which drive ongoing business value through increased customer engagement opportunities and improved operational efficienciency. Invenco is a long-standing advocate of open platform systems and have created an ecosystem where third-party implementations are more manageable than ever. In a time when agile systems are so crucial to success, Invenco sets up retailers to win now and in the future, however that future may look.

Ready to future-proof your retail fuel business? Contact Invenco sales@invenco.com +1 877 515 0935

www.invenco.com

QUICK TRIP TO PICK SOMETHING UP

PROMOTIONS PIQUE SHOPPER INTEREST

FROM THE

SOURCE DIGITAL LOYALTY

T NACS CONVENIENCE VOICES PROGRAM REVEALS KEY TRENDS OF TODAY’S EVER-EVOLVING CONSUMER. BY SARA COUNIHAN

| JUNE 2021

he moment of truth—a phrase that can mean many things but at its essence captures something important that tests something or someone and has an effect on the future. For NACS, the retail moment of truth is a consumer’s motivation and behavior behind a purchase at a convenience store, and a significant part of NACS Convenience Voices, a syndicated mobile shopper insights program. During the late summer of 2020, NACS conducted more than 7,000 mobile intercepts across the U.S. to capture customer experiences, develop a deeper understanding of their motivations and activate shopper behavior against data. So, what did NACS discover about convenience store shoppers, and what do those insights mean for our industry? Leroy Kelsey, director of research, NACS, shared some key shopper trends that emerged from the surveys, and how they play a critical role in shaping retail strategy. CONVENIENCE.ORG

iStock.com/arsa35

SHIFT TO ONLINE One critical trend was a stronger shift from brickand-mortar shopping to e-commerce. Last year, many Americans were unable or unwilling to leave home because of the COVID-19 pandemic and turned to online retailers to fulfill their shopping needs. NACS asked shoppers if they were members of an e-commerce service, and prior to the pandemic, nearly one-third (30.7%) of convenience shoppers subscribed to a service. Post-pandemic, NACS found that 68.9% of convenience shoppers belonged to an e-commerce platform. “The trend was growing at a rate of about 5% each year until COVID when we basically doubled the number of shoppers that were engaged with some e-commerce membership,” said Kelsey. It’s no surprise that Amazon Prime was the No. 1 most popular e-commerce platform in 2020, with 78.0% of those surveyed subscribing. Walmart moved up two slots to become the second most popular e-commerce membership with 42.0% of shoppers subscribing, edging out Ebay and Apple. The No. 3 and No. 4 spots were DoorDash and UberEats.

Food delivery apps “have now become aggressive competitors,” according to Kelsey, who also noted that dark stores (vacant retail stores converted to local distribution centers) and microwarehouses should be monitored due to their ability to mimic convenience’s core competencies. According to eMarketer, e-commerce is 15% of overall retail. “Eighty-five percent of retail still happens within four walls,” said Kelsey. “This is a tremendous opportunity for our channel because we’re the closest to our consumers. … Being the closest in the community, we sell time, and the demand to connect the [consumer with] products in almost real time will continue.” DAYPARTS ARE CHANGING Looking at the reason why shoppers are coming into convenience stores, a “quick trip to pick something up” doubled from 19.6% in 2019 to 46.7% in 2020. “Shoppers are staying in their own local orbit,” said Kelsey. “They’re taking trips to pick up essentials and staples and then stopping in [a convenience store] along the way.”

Listen to the Convenience Matters podcast as Leroy Kelsey, NACS director of research, shares further research from NACS Convenience Voices.

CONSUMPTION IMMEDIACY DECLINES FOR FIRST TIME IN 5 YEARS IMMEDIACY RETURNS TO LEVELS OF “GREAT RECESSION” PEAK UNEMPLOYMENT

100%

79.8%

80.2%

80.7%

83.4%

83.5%

83.2%

83.3%

83.4%

83.5%

79.7%

80%

79.7%

60% 40%

WITHIN AN HOUR

63.2%

63.4%

63.5%

63.6%

64.6%

64.7%

64.8%

64.9%

65.0%

63.2% IMMEDIATELY

20% 0% 2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

63.2%

Source: NACS Convenience Tracking Program 2009 to 2019, n=145,173, NACS Convenience Voices 2020, n = 7,150

CONVENIENCE.ORG

JUNE 2021 |

DIGITAL LOYALTY PARTICIPATION REFLECTS A SIGNIFICANT OPPORTUNITY TO BUILD AWARENESS AND ENGAGEMENT

% OF AWARE WHO DOWNLOAD

MOBILE APP AWARENESS

REASON FOR NOT DOWNLOADING APP

39.8% 29.7%

58.0%

60.2%

+19 PPS YOY

YES

Source: NACS Convenience Voices 2020

1 OUT OF 5 MISSED PURCHASES WERE DUE TO OUT OF STOCKS

Out of stock

22.7%

Didn’t have the flavor/variety I wanted

18.1%

Didn’t have the brand I wanted

16.5%

Line was too long

14.8%

Too expensive

14.6%

Didn’t have the size I wanted

11.5%

Not chilled or cold

7.6%

Equipment was broken or dirty

7.0%

Other

2.9%

| JUNE 2021

CONVENIENCE.ORG

31% OF SHOPPERS PLAN TO BUY FAST- FOOD SOMEWHERE ELSE IN 30 MINUTES ALL REGIONS HAVE AT LEAST 1 OUT OF 5 SHOPPERS BUYING FAST-FOOD ELSEWHERE WITHIN 30 MINUTES

45% 40% 35%

+12.3 PPs YoY

30% 25% 20% 15% 10%

32.8%

37.6%

31.3%

39.0%

26.3%

41.8%

31.3%

REGION 2 Southeast

REGION 3 Midwest

REGION 4 South Central

REGION 5 Plains

REGION 6 West

NATIONAL

5% 0%

Yellowimages.com/SnapWrap

REGION 1 Northeast

Kelsey also noted more people shopped convenience on their way home from work in 2020 (17.4%); whereas 13.5% of people stopped at a convenience store commuting from home in 2019. “The going-from-home or the breakfast daypart has typically been a beachhead for us, but when you look at 2019 versus 2020, we’re seeing the inverse half,” said Kelsey. Essential workers, busy families and professionals are stopping in to grab refreshment, snacks or food on their way home, according to Kelsey, but as travel restrictions lighten and people get back on the road, retailers can expect the morning daypart popularity to return. In the meantime, there is an opportunity to provide a food offer to these shoppers, as they’re looking to convenience for a substantial meal. A quarter of shoppers surveyed said they seek a meal for now or to take home. However, according to Kelsey, 31.0% of shoppers plan to buy fast-food within 30 minutes after they visit a convenience store. “Think about it as a business of penny profits— can we really afford to give away occasions with high margin food?” asked Kelsey. “No matter what your offer, the ability to connect with shoppers who are already coming on our sites and provide a meal occasion for essential workers and busy families has to be a priority.” PUSH TO LOYALTY According to Kelsey, 57.0% of shoppers surveyed belong to a convenience loyalty program. “This CONVENIENCE.ORG

is a huge opportunity for us to innovate, build awareness and engage shoppers,” he said. The Midwest region led in convenience loyalty and engagement, which was expected, as the region includes operators that were early pioneers in the loyalty space. When comparing coasts, the Southeast region notably outpaced the West. According to Kelsey, 58.0% of shoppers said they were aware that the retailer they were shopping at offered a mobile app. “That’s up 19 percentage points year over year, and I think it underscores that shoppers were looking for ways to conduct business and connect with products in a low friction, high impact and high convenience environment,” said Kelsey. Of the 58% of shoppers who were aware their retailer had an app, 60% downloaded the app— which means 40% were aware of the app but did not download it. “This is a huge opportunity for us to try to understand what those barriers are [to downloading the app],” said Kelsey. Convenience Voices is packed with valuable, proprietary insights you can only get from NACS. Leveraging the ubiquity of mobile technology enables more precise targeting, expanded geographic reporting, powerful multimedia feedback and more. Visit www.convenience.org/voices to learn how to participate.

JUNE 2021 |

TYPES OF PROMOTIONS NOTICED Bundled offer (e.g., soft drink with candy)

36.0%

Reward bonus points

35.4%

Buy 1 get 1 free

31.7%

Combo-meal deal (e.g., sandwich and drink)

29.2%

Temporary price reduction

22.7%

Any promotions tied to gas/fuel gallon

14.8%

Coupons - money off

13.2%

Extra quantity free

10.8%

A special price on beer multipacks

9.0%

Free gift with purchase

8.1%

Other

3.9%

PROMOTION LOCATIONS MOST NOTICED WHILE PUMPING Pump screen

39.9%

Sign on top of pump

30.7%

Store windows

29.9%

Signs beside gas pump

28.1%

Standing signs in front of store

23.4%

Sign on side of building

19.6%

Mobile app

19.3%

Pump handle

15.6%

Billboard

12.1%

I did not notice promotions

5.5%

Other

2.0%

What’s more, 41.2% said that they did not download the app because they did not think the benefits of the app were relevant to them, and 23.5% said their visit to the store did not justify downloading the app. “The No. 1 issue for folks in terms of barriers to downloading … is that they can’t make a connection to [the app’s] relevance, and that’s a major opportunity,” said Kelsey. PROMOTIONS INCREASE IMPACT According to Kelsey, over the past six years, about one out of five shoppers noticed a promotion. In 2020, nearly one out of three shoppers noticed a promotion. What types of promotions receive the most traction? BOGO promotions have given way to bundles with 36.0% of shoppers noticing a

| JUNE 2021

bundled offer. Since 35.4% of shoppers noticed reward bonus points, Kelsey said to look for reward points to continue developing as “operators double down and up the ante on each dollar spent.” In terms of where shoppers noticed promotions, at the shelf or on cooler doors were the No. 1 noticed placement, “but don’t forget that communication starts before the shop … 94.0% of shoppers notice promotions at the pump.” Sara Counihan is managing editor of NACS Magazine and content project manager at NACS.

CONVENIENCE.ORG

YOUR DIGITAL GROWTH PARTNER

Hi, We’re Hathway We drive customer engagement in food, convenience and fuel retailing — empowering brands to increase sales and customer lifetime value. Our fully integrated technologies help c-stores build meaningful customer relationships through personalized experiences that promote long term loyalty and exceed customer expectations.

www.wearehathway.com

Download our new eBook now!

MEALS TO CAPTURE THE DINNER DAYPART

DRIVE-THRUS, CURBSIDE PICKUP AND DELIVERY

A POST-PANDEMIC

FUTURE E-COMMERCE AND FRICTIONLESS EXPERIENCES

CONVENIENCE RETAIL LEADERS SHARE HOW THEIR COMPANIES ARE NAVIGATING THE FUTURE. BY CHRIS BLASINSKY

| JUNE 2021

uring the 2021 NACS State of the Industry Summit, retail leaders representing each operating region of the United States came together to discuss the unique performance metrics that challenged their business models and created opportunities. Led by Henry Armour, NACS president and CEO, the panel of retailers highlighted their thoughts and experiences on managing change, the workforce, winning trips and delivering exceptional convenience retail experiences.

CONVENIENCE.ORG

CONVENIENCE RETAIL LEADERS SHARE HOW THEIR COMPANIES ARE NAVIGATING THE FUTURE.

COLIN DORNISH

PAUL CASADONT

SENIOR DIRECTOR, OPERATIONS, COEN MARKETS

iStock.com/temniy

PRESIDENT, EXTRAMILE CONVENIENCE STORES

DEREK GASKINS CHIEF MARKETING OFFICER, YESWAY

JARED SCHEELER

NACS VICE CHAIRMAN AND TREASURER AND CEO OF THE HUB CONVENIENCE STORES

MANAGING CHANGE

For Kwik Trip, a drop in breakfast and lunchtime sales accelerated the Wisconsin-based retailer’s mealtime solutions to capture the dinner daypart.

CONVENIENCE.ORG

TIM RUPP

JOE ZIETLOW

SENIOR VICE PRESIDENT, MARKETING, SPEEDWAY

INDUSTRY AND TRADE ASSOCIATION MANAGER, KWIK TRIP

Some of the changes convenience retailers made in 2020 have traction moving forward.

Yesway continued its Hospitality Heroes program to celebrate frontline workers and capture the spirit of exceptional customer service under pressure.

“One area that stuck out to me was the importance of the drivethru as we move forward,” said Jared Scheeler, CEO of The Hub Convenience Stores.

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EYE ON THE COMPETITION Online shopping exploded during the pandemic. The U.S. saw a 44% increase in e-commerce sales in 2020. To capture this momentum, strategic planning should include how digital and physical retail can create engaging customer experiences.

“E-commerce opens our industry up to consumers who did not have convenience stores in their consideration set. The same way a good in-store experience might lead to an e-commerce customer, having an e-commerce experience could turn into a brick-and-mortar customer for us as well,” said Paul Casadont, president of ExtraMile Convenience Stores.

Convenience retailers continue to capitalize on how they can compete for their shopper’s share of stomach—literally. Joe Zietlow, industry and trade association manager at Kwik Trip, said his stores saw a huge shift in food purchasing when bars and restaurants were closed. “We embraced the opportunity to sell food to people eating at home. We ramped up supply on milk, bread, buns and meats. This shift also created an opportunity for us to embrace curbside and delivery to continue meeting these new customer needs,” he said.

Colin Dornish, senior director of operations at Coen Markets, said that the No. 1 element virtually all QSRs have is a drive-thru window. To compete, convenience retailers should “explore where they can put in drive-thrus, make sure curbside is a good experience and that the technology is functional and frictionless, and look at delivery,” he said.

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CONVENIENCE.ORG

GRAB+HEAT+GO BREAKFAST SCRAMBLES Breakfast has never been so easy! Single-serve grab and go breakfast cups are convenient, easy, fast and they are delicious. Easy to use, just heat & eat! Classic American Breakfast made with scrambled whole egg or egg white, bacon, ham, sausage or chorizo and fresh roasted vegetables all seasoned to perfection. Choose from The Classic American Scramble, The Ranchero Breakfast Scramble, The Meat Lover’s Ultimate Scramble or The Egg White Veggie Scramble or have our team of talented chefs create your unique Signature Breakfast Scramble.

Y - TO -

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Our Grab+Heat+Go Breakfast Scrambles are new to the market place. The pack size comes in 8 cups per case and is available for private label. Haliburton’s culinary creations are designed specifically for operators looking for scratch high quality with Ready-to-Eat ease. For more information about our winning recipes, please contact us at info@haliburton.net.

WINNING TRIPS

Although there were fewer trips—total transactions declined 13.9% for the year— in-store sales grew 1.5% to a record $255.6 billion in 2020. The average basket size was $7.34 versus $6.20 in 2019— an 18.4% increase. What influenced this behavior? The panelists cited several observations:

Customers purchased products they had never bought before in a c-store and realized they weren’t being exposed to as many people as they would in the larger big box and grocery store environments.

IN-STORE CATEGORIES Coming off another record year of in-store sales, a handful of observations stood out to explain why consumers leaned on their local c-stores in 2020. “Customers were yearning and returning to comfort. They wanted brands of yesteryear or the bigger comfortable brands,” said Derek Gaskins, chief marketing officer of Yesway. “We saw indulgence brands challenged with this growth because they didn’t see it coming, while categories like energy drinks and CBD took a hit early in the pandemic because people were grabbing for the basics and everyday indulgence,” he said. Casadont agreed: “Given the economic situation that many people were in, every dollar they were willing to spend was more important. They looked for things that were comforting, and there was less desire to purchase innovation because they didn’t want to be disappointed and not have money to buy something else,” he said.

$ Pre-pandemic, the customers who came in two or three times a day shifted to buying in bulk and stopping by less often during 2020, although they were spending more on each trip.

There will be changes in consumer habits, notably a continuation of buying bigger pack sizes and spending more money on fewer in-store trips.

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CONVENIENCE.ORG

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Reimagine your menu with our craveable protein-packed meals and snacks. Our blow-away products can work across your entire program. They’re the perfect partner for the roller grill, hot case, and made-to-order applications. Spark curiosity and heat up interest in your c-store with creative hot foods.

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CONVENIENCE RETAIL PRIORITIES

WORKFORCE CHALLENGES

Labor practices changed in 2020, setting new expectations for staffing stores. “Look at productivity on your third shift and be honest about whether it was profitable during the pandemic,” suggested Tim Rupp, senior vice president, marketing at Speedway. He noted how store traffic dramatically declined between 10 p.m. and 5 a.m. “We’ve all seen the shift of the morning daypart stretching into the afternoon, so allocating your labor in response to when the transactions are happening on an hourly basis is important for our industry to remain profitable,” he said.

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

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The strength and resiliency of convenience and fuel retailers during 2020 showcases how the industry can come together during crisis to serve their communities, deliver essential services and protect employees and customers. For most retailers, strategies and business plans were dismantled to adapt to new operating norms. Shopping LORI STILLMAN NACS VP OF RESEARCH patterns and consumer behaviors changed, revealing inefficiencies in the supply chain and bringing new opportunities that can have a lasting impact. Lori Stillman, NACS vice president of research, delved into the future of convenience retail and the lessons of 2020 as the backdrop for the key priorities that operators must embrace to rebuild and deliver profitable growth in 2021 and beyond. Now is the time to up the game, Stillman suggested. One way to continue sharing the positive impact retailers have in their communities is telling their story about how their frontline staff served customers during the pandemic. Investments in cleaning and sanitation and in-store modifications also amplify the message that safety was and continues to be a top priority. “Don’t just assume that shoppers can see all your hard work; you need to tell them,” she said, noting that retailers can let customers know about their safety efforts through in-store signage, social media and loyalty platforms. Despite the industry’s adaptability and resiliency, the challenges of 2020 will be felt long after the pandemic. Although shopper habits and routines changed, now is the time for retailers to embrace new product innovation and explore new brands that bring excitement to stores. These changes also have staying power. Per McKinsey data, more than 60% of U.S. consumers who tried a new behavior plan to stick with it post-pandemic. “These new behaviors create opportunities for convenience retailers,” said Stillman.

WINNING TRIPS While total industry transactions declined nearly 14% in 2020, basket sizes increased by almost 19%, compared with 2019. NACS Vice President of Research Lori Stillman digs into these numbers in this Convenience Matters podcast. Scan the QR code to listen.

CONVENIENCE.ORG

What excites the panelists most about the future and outlook for convenience?

“ We always change to meet the moment and to serve— that is what excites me; the constant change and the opportunities, whether it’s new categories or the new customers that came into our stores, these are very exciting times,” said Gaskins.

“ The durability our industry has with last mile capabilities was proven in 2020,” said Rupp. 98

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Dornish kept it short and sweet: “Continuing to test what the art of the possible is.”

“ What I saw in 2020 gives me extra confidence that our industry will adapt as need be and do it quickly,” said Scheeler.

For Zietlow, a long-held industry perception is diminished. “We’re not just a gas station anymore,” he said.

Casadont noted that the definition of convenience has expanded, “and it will do wonders for those who are willing to go for it.”

CONVENIENCE.ORG

INGENUITY STARTS HERE In 1893, Charles Cretors’ imagination led to an invention, the first commercial popcorn machine. Whether we’re inventing the popcorn machine or perfecting the hot dog grill, being the leader in technical innovation means that from food service equipment to food processing systems, snacking starts with Cretors.

Discover how easy it can be to cook and serve hot dogs and other rotisserie items from our state-of-the-art patented Hot Dog Grills and Bun Warmers. Features such as Warm/Hold operation, a lift-off grill rack and digital temperature controls simplify your cooking and serving experience and ensure top quality.

The Trilogy popper will pop an 8, 12, or 16 oz popcorn portion pack quickly and efficiently. No switches to flip, no settings to change. It’s that easy.

The Grab N’ Go Cabinet is flexible in both design and function. At 6½ feet tall with 28 cubic feet of interior space, this self-serve warmer provides a great deal of vertical storage and is ideal for behind-the-counter or self-serve applications.

QUALITY ENGINEERING IS AT THE CORE OF WHAT WE DO. We’re a modern company developing and utilizing the latest industry technology. But there are real people behind each machine who have ownership over their work and produce handmade, thoughtfully built products. Every Cretors machine is tested in-house to ensure it meets our exacting standards.The concession industry trusts Cretors, the kind of machines only experience can build. OUR PRODUCTS ARE MADE IN AMERICA. For more than 135 years, Cretors has provided American-made products for the concession industry. Ask our craftsmen and most of them will say that Cretors is not just a line of products made in America. It’s a line of products made by hand in America. We take pride in what we do. Our team and our process is uniquely made in America, just like our machines.

Say goodbye to dried-out snacks and pizza with our Humidified Food Warmer. Programmable digital controls allow you to set exact humidity and temperature.

SERVICE TO OUR CUSTOMERS INSPIRES US. At the dawn of the 20th century, we were champions of the peddler, street vendor, and concessionaire. Today, we support 21st century multiplexes, multi-thousand seat stadia, and large-scale food processors. The people and products of Cretors work for you and your business. ENDURING VALUE IS WHAT SETS US APART. We know high-quality products like the ones we make are investments. So we work to make it easy and affordable to own a Cretors. We love that service teams are often our best advocates, letting customers know that a Cretors requires fewer repairs and are built so repairs and maintenance are easier and faster. We’ll always strive to have the parts, the service, and the support you need. Every step of our design includes thinking about assembly, maintenance, and serviceability to maximize the value for our customers. You can’t find a better made or longer lasting machine.

JOIN THE CRETORS FAMILY. Our family name is our brand and promise. Since 1885, all our equipment has been proudly branded with the Cretors name. It has taken different forms over the years, but it always stands for quality craftsmanship, innovation, customer service and industry leadership. From the entrepreneurial spirit of the first peddlers selling popcorn from a horse-drawn cart to the corporations our products support today, our customers become part of the family and part of our story. It’s why the top U.S. snack companies have chosen Cretors. Made in America, loved world-round.

Contact Shelly Olesen at 847.616.6901 or solesen@cretors.com or visit www.cretors.com

SUPPRESSED OIL DEMAND STRONG RETAIL MARGINS

BACK TO NORMAL,

SLOWLY ELECTRIC VEHICLES AHEAD

A A REVIEW OF THE FUEL DISRUPTIONS OF 2020 OFFERS A MEASURED OUTLOOK FOR RECOVERY. BY KEITH REID

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s with just about everything in 2020, the fuel markets had an extraordinary year. West Texas Intermediate (WTI) future prices settled in negative territory on April 20, refinery runs plunged to the lowest levels ever, demand plummeted to the lowest levels in decades (station volumes dropped 47.5% compared with 2019), and retail margins peaked at nearly a dollar while consumers enjoyed some of the lowest prices in years at the pump. Denton Cinquegrana, chief oil analyst, OPIS by IHS Markit, reviewed the events that shook the oil and refined product markets in 2020 and provided some insights into what the sector might see this year. “It was an eventful first quarter,” Cinquegrana said of 2021. “Prices are rising. Petroleum futures reached their highest levels in more than a year, and that’s the same with the physical spot markets and racks. Obviously, as a result, retail gasoline prices are near a two-year high and are near the level last seen around Memorial Day 2019.” CONVENIENCE.ORG

iStock.com/arsa35

The global oil glut that marked 2020 is finally starting to rebalance through OPEC+ supply cuts and increasing demand. The deep freeze in the South also resulted in numerous refinery and pipeline shutdowns, along with shutdowns from margin pressures. “We are still running above the five-year average, but the 50 to 100 million barrels over the five-year average is well in the rearview mirror,” Cinquegrana said. Crude oil inventories were consistently 50 million barrels or more above the five-year average from midMay 2020 through mid-September. The peak was 79.3 million barrels over the five-year average during the week of July 17. Demand has made significant strides from the dark days of April 2020, but it still lags significantly behind pre-pandemic levels. However, the public is expressing optimism over the possible easing of COVID-19 restrictions. Some analysts have predicted that demand will return to the 10-million-barrels-a-day level on a weekly basis. Cinquegrana is not nearly as bullish. “We think gasoline demand is obviously going to be stronger in the summer, but I don’t believe you’ll see a 10-million-barrel-a-day week,” said Cinquegrana. “You’re going to see some really strong weeks of demand, but we’re going to struggle to reach nine million barrels a day as an annual average.”

RETAIL GASOLINE PRICE AND MARGIN OPIS predicts that the January retail price of $2.25 a gallon of gasoline will likely remain the low price for the coming year. Cinquegrana noted that circumstances can obviously change, but there is a high degree of confidence in the assessment. Retail margins have been solid for the past several years, with 2020 being “off the charts,” driven by the unprecedented circumstances. Margins peaked at 95.5 cents per gallon on March 24, 2020, and have generally run between $0.20 per gallon and $0.40 per gallon from May through December 2020. During this period, they averaged $0.36 per gallon. Cinquegrana expects margins to remain strong throughout 2021 and perhaps even spend some time above $0.40 during the second quarter, but with upside limits. “Catching up to those superhigh numbers is not going to be likely,” he said. “They’ll probably outperform 2019 and 2018, or at least become pretty close. It’s just going to be tough to replicate 2020’s numbers.” WHAT IMPACT WILL EVs HAVE? Cinquegrana commented on demand loss relative to electric vehicle penetration, noting that for all the buzz, the impact is not significant yet. Even

WHAT DOES A ONCE-IN-A-LIFETIME CHART LOOK LIKE? 2020 WTI SETTLEMENTS

$60 $40 $20 $0 -$20 -$40 1/2/20

2/2/20

3/2/20

4/2/20

5/2/20

6/2/20

7/2/20

8/2/20

9/2/20 10/2/20 11/2/20 12/2/20

Source: OPIS by IHS Markit

CONVENIENCE.ORG

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A DECADE OF CONSUMER SPENDING Average Daily Demand Millions b/d (EIA)

National Daily Average (OPIS)

Fuel Spending Per Day

Approximate Annual Cost

2010

8.993

$2.782

$1,050,778,092

$383,534,003,580

2011

8.753

$3.510

$1,290,367,260

$470,984,049,900

2012

8.682

$3.607

$1,315,270,908

$480,073,881,420

2013

8.843

$3.494

$1,297,692,564

$473,657,785,860

2014

8.921

$3.343

$1,252,561,926

$457,185,102,990

2015

9.178

$2.399

$924,756,924

$337,536,277,260

2016

9.329

$2.123

$831,672,886

$303,560,603,682

2017

9.327

$2.390

$936,244,260

$341,729,154,900

2018

9.329

$2.720

$1,065,744,960

$388,996,910,400

2019

9.309

$2.611

$1,020,999,949

$372,664,981,458

2020

8.034

$2.178

$734,985,670

$268,269,769,404

Source: OPIS by IHS Markit

with government support, EV adoption will likely take time, and penetration into the fleet is going to be slow and steady. “EVs are coming, and at some point they’re going to reach critical mass,” Cinquegrana said. “Whether that’s 10 years from now, 20 years from now, 30 years from now—we’re just going to have to keep an eye on things. The vehicle fleet turns over slowly.” There are about 1.3 billion cars on the road globally today. Current annual electric vehicle registrations total about 255,000 in the U.S., but light vehicle registrations still overwhelmingly consist of internal combustion engines (approaching 85%). According to Cinquegrana, EVs were expected to displace 400,000 barrels a day of oil demand

globally in 2020. That was projected to triple by 2025 to about 1.5 million barrels a day. Even if that tripled again by 2030, EV displacement would still only represent about 5% of global oil demand. And this turnover might now be slower than expected, even with the current push by the Biden Administration and state governments such as California and Oregon. “A lot of us are still working from home, and some of us are working from home permanently now, myself included,” Cinquegrana said. “So now, instead of putting maybe 15,000 to 20,000 miles on my car, I may only put 3,000 to 5,000 miles on my car in over a year. That’s just going to extend the life of the vehicle I’m driving.”

EXTREME VOLATILITY CREATED AN INCREDIBLE MARGIN ENVIRONMENT U.S. DAILY AVERAGE GROSS RACK-TO-RETAIL MARGIN

1.00 0.80 0.60 0.40 0.20 0.00 1/1/20

2/1/20

3/1/20

4/1/20

5/1/20

6/1/20

7/1/20

8/1/20

9/1/20

10/1/20 11/1/20 12/1/20

Source: OPIS by IHS Markit MarginPro

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CONVENIENCE.ORG

MADE TO LAST. HERE TO STAY. Wayne Ovation® Fuel Dispenser

With or without the DFS Anthem UX™ user experience platform, the Wayne Ovation fuel dispenser is engineered for durability and built for the future. Dependability has been our business for 130 years. Dover Fueling Solutions delivers reliability that stands the test of time. Visit doverfuelingsolutions.com/ovation to discover the options available to you, and find us in Booth 4139 at the PEI Convention at the NACS Show in Chicago, October 5-8, 2021. © 2021 Dover Fueling Solutions. All rights reserved. DOVER, the DOVER D Design, DOVER FUELING SOLUTIONS, and other trademarks referenced herein are trademarks of Delaware Capital Formation, Inc./Dover Corporation, Dover Fueling Solutions UK Ltd. and their affiliated entities, registered or claimed in the United States and various other countries. 13-MAY-2021

DEMAND IS STILL CATCHING UP

OPIS Demand Weekly Volumes in Millions of BBD’s per Day

9,500 8,500 7,500 6,500 5,500 4,500

2/2

2/22 3/14

2020-21

4/4

2019

4/25 5/16

6/6

6/27

7/18

8/8

8/29 9/19 10/10 10/31 11/21 12/12

2018

1/2 1/23 2/13

3/5

Source: OPIS by IHS Markit DemandPro

LIGHT-DUTY VEHICLE REGISTRATIONS STILL DOMINATED BY INTERNAL COMBUSTION 100%

Registrations by Fuel Type

90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

2011 GASOLINE

2012 HYBRID

2013 FLEX

2014 DIESEL

2015 ELECTRIC

U.S. ANNUAL EV REGISTRATIONS 255,000 205,000 155,000 105,000 55,000 5,000

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: IHS Markit

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2016

2017

2018

2019

2020

Source: IHS Markit

Cinquegrana noted that the post-COVID-19 impact will not be limited to EV fleet penetration. We have yet to see just what the post-COVID world will truly look like for fuel supply and demand. “The telecommuting phenomenon—what does that mean for demand as we go forward? Is it worth 100,000 barrels a day? Is it worth 500,000? We just haven't figured that out yet. But I think we’ll be able to get a good sense of what telecommuting is doing as people go back to the office over the next several months.” Keith Reid is editor-in-chief of Fuels Market News, a NACS media entity. He can be reached at kreid@fmnweb.com. Visit Fuels Market News at www.fuelsmarketnews.com. CONVENIENCE.ORG

VISIBILITY

LEADS TO ACTION

Matthew Umscheid CEO, Envysion envysion.com

C-STORE OPERATORS/MANAGERS NEED VISIBILITY INTO THEIR STORES FOR MANY REASONS SUCH AS THEFT, COMPLIANCE AND EVEN GROWTH. HOW DOES ENVYSION HELP? By providing recorded and real time video footage, cloud storage, POS keystroke data, daily exception reporting and access from any device at any time, Envysion is an invaluable managed video software solution used to gain immediate visibility—across all departments—to monitor your business inside and out. With almost a decade of experience and partnerships in the c-store space, we understand the many challenges faced by operators: internal or external theft, general liability cases, policy infractions, store culture and even customer service. A video solution tied directly to data saves time from sifting through hours of footage. Plus, it provides concrete evidence and verification with the proof needed in loss prevention incidents. THE RIGHT VIDEO SOLUTION CAN SAVE C-STORES TIME AND MONEY, IS THAT RIGHT? Yes! You can’t spend every waking moment in your store(s), and you shouldn’t have to. Our cloud-based platform lets you create and save video

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clips and snapshots, review your flagged incidents and view reports from any internet-capable device. Our mobile app makes all of this convenient to access anytime and anywhere. A full library of customizable exception reports allows you to easily look up voids, refunds, unauthorized safe drops, opening a drawer without a sale—and more—all tied to video and audio for verification. One client reports an average of less than 1% monthly loss utilizing our software solution when assigning regional managers and store managers with permissions to access the platform. They have implemented a 30-minute daily check of reports to ensure nothing out of the ordinary occurred the day before. Our experienced audit team can also review your footage and grade locations using metrics of your choosing. ASIDE FROM ENHANCING SECURITY, WHAT OTHER WAYS CAN A MANAGED VIDEO SOLUTION HELP C-STORES? C-stores are complex environments. With so many different revenue streams, high foot traffic and employee headcount, there’s a lot going on. Retailers can also use video to verify vendor deliveries, ensure IDs are being checked, monitor pumps and signage, as well as record CONVENIENCE.ORG

footage for training and development, which can help with rewarding proper employee behavior and in turn, build a culture of excellence. With programs designed to target food safety, hygiene and customer satisfaction, you can obtain multiple daily data points to assess compliance with operational best practices. Trust is the new KPI. Envysion helps to monitor all of these aspects of your business simultaneously to create a better work environment. Throughout the COVID-19 pandemic, we provided our partners with immediate access to their employees and locations, giving them the peace of mind they needed. WHAT TYPE OF DATA OR INFORMATION IS AVAILABLE THAT RETAILERS CAN TAKE ACTION ON? Tied to the footage from any given camera, retailers can see every single keystroke that is entered on the POS. You can even drill down by date and time, clerk or receipt number. This is helpful when reviewing events and exceptions that may be a concern. A standard set of reports has been refined based on customer feedback, giving retailers freedom to customize and build reports that meet their needs. From line voids, to discounts, to refunds, no transaction goes unnoticed. CONVENIENCE.ORG

HOW CAN RETAILERS GET THE MOST FROM THEIR INVESTMENT IN SURVEILLANCE? It’s important to have optimal clarity, access and video retention because incidents can arise days, weeks or months down the road. DVRs have limited storage, and by archiving to the cloud you can retain years of video for defending down the road. It is also critical to ensure that cameras are of decent quality and well positioned to provide full operations and loss prevention support. By placing cameras near a cooler door or the back door, you can keep an eye on any debris maintaining OSHA compliance and safety. You can use motion detection to know when doors open or can verify who is at the back door. In one recent example, a vendor was billing for delivered product, yet the product seemed to be missing. The video revealed the driver never actually delivered the product even though it was on the invoice. Envysion’s main value comes from our software and the different products we offer within the solution. Customers can embed our tool in their current surveillance approach, and we [can] work with customers to maximize the equipment already in place, although sometimes that means upgrading to new equipment. If a customer requires assistance, our customer support team is ready to answer questions.

This article is brought to you by Envysion, a NACS member.

It's important to have optimal clarity, access and video retention because incidents can arise days, weeks or months down the road.

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COOL NEW PRODUCTS This advertorial-style guide of services and packaging appears monthly and is an information-packed tour of ideas and approaches that can change how consumers view your store or choose your brand. It spotlights the newest thinking in convenience and fuel retailing and gives you an advance look at ways of staying in front of industry trends. Products are categorized the same way we organize the Cool New Products Preview Room at the NACS Show each year in October— New Design, New to the Industry, New Flavors, Health & Wellness, Green (EcoFriendly), New Services and New Technology. Products are considered “new” this year if they’ve been introduced since October 2020. The products featured here also can be seen at www.convenience.org/coolnewproducts.

COMPANY

Baker Boy

PRODUCT

The Donut Hole® Individually Wrapped Donuts

Fully Finished, Retail-Ready Individually Wrapped Donuts

The COVID-19 pandemic has shined a light on the importance of food safety. More than ever, operators are under scrutiny to provide fresh products in safe, user-friendly packaging. Baker Boy’s The Donut Hole-branded Individually Wrapped Donuts are ideally suited for multiple foodservice segments — especially convenience stores. These donuts arrive frozen, and ready to thaw and serve in convenient retail-ready packaging. There’s something for everyone with 8 unique flavors, including Baker Boy’s signature Magic Ring® Filled Donuts — ring donuts featuring delicious filling in every bite — and popular classics like the Glazed Donut and Maple Long John. The Donut Hole donuts are the same high-quality foodservice donuts customers have come to expect from Baker Boy. These donuts have a wonderful fresh taste, are sealed for safety, require minimal labor, and lead to little product waste. Visit bakerboy.com and contact Baker Boy at thedonuthole@bakerboy.com to learn more.

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CONVENIENCE.ORG

NEW DESIGN

NEW FLAVORS

Benestar Brands

Krispy Krunchy Chicken®

PORQ and Turkey Creek Pork Skins

Krispy Krunchy’s® Sunrise Breakfast

Bring Home the Crunch

Because Your Coffee is Lonely

sales@benestarbrands.com benestarbrands.com

Krispy Krunchy® will soon have all dayparts covered! Our NEW Sunrise Breakfast menu rolls out in July and will allow operators to build a professional turnkey program with the support of our Krispy Krunchy® field team members. Our aim is to help reach additional consumers with easy-to-serve products that can be oven-baked or merchandised in a retail cold space. Visit krispykrunchy.com or call 1-800-290-6097 to learn more.

NEW TO THE INDUSTRY

PURELL® PURELL® Foodservice Surface Sanitizing Wipes

Kills 99.9% of viruses & bacteria—no rinse required

PURELL® Foodservice Surface Sanitizing Wipes make it easy to sanitize large hard-to-wash items, are always ready when speed is a priority, and leave a positive impression with customers. Demonstrate your commitment to a clean and healthy environment with PURELL branded products. For more information, please visit www.gojo.com/NACS.

CONVENIENCE.ORG

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NEW TO THE INDUSTRY

Haliburton International Foods Breakfast Scrambles

Introducing Grab+Heat+Eat Breakfast Scrambles

Breakfast has never been so easy! Single-serve grab and go breakfast cups are convenient, easy, fast and they are delicious. Easy to use, just heat & eat! Classic American Breakfast made with scrambled whole egg or egg white, bacon, ham, sausage or chorizo and fresh roasted vegetables all seasoned to perfection. Choose from The Classic American Scramble, The Ranchero Breakfast Scramble, The Meat Lover’s Ultimate Scramble or The Egg White Veggie Scramble or have our team of talented chefs create your unique Signature Breakfast Scramble For more information about creating your Breakfast Scrambles and our capabilities, please contact us at hifsales@haliburton.net.

NEW TECHNOLOGY

Mashgin Inc. The Touchless Checkout System

Boost Store Profits by $800/Week With Instant Self-Checkout

Give customers a faster and safer checkout experience with Mashgin’s Touchless Checkout System. Mashgin uses computer vision to instantly identify multiple items at once without looking for a barcode - just place items down on the tray then pay. Convenience stores using Mashgin improve profit margins by over $800/week. Mashgin is already operating in over 300 convenience stores, cafeterias, and sports stadiums across the US and has run over 14 million transactions to date. To see if Mashgin is right for you, reach out to our VP of Partnerships Jack Hogan at jack.hogan@mashgin.com. Learn more at www.mashgin.com

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CONVENIENCE.ORG

NEW DESIGN

Monster Energy Company Monster Hydro

Hard-Charging Hydration

The New Monster Hydro design establishes clear “energy water” positioning, improves chug-ability, is preservative free and naturally flavored. Monster Hydro currently offers five refreshing flavors including the very popular watermelon and a zero-sugar offering. For more information, call (800) 426-7367 and visit www.monsterenergy.com

NEW DESIGN

QNC, Inc. / Quik n’ Crispy Greaseless Fryers Rapid Air Fryer

Quik n’ Crispy Launches New Innovative & Patented Rapid Air Fryer!

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NEW TECHNOLOGY

Quail Digital Pro10 Wireless Headset

Prevent Retail Crime with Communication

Crime can be costly for your store, so make sure that your team have effective real time communication with wireless headsets. When a potential shoplifter is spotted, staff members can alert the rest of the team without the shoplifter knowing that they are now being shadowed, potentially saving valuable stock, and avoiding unwelcome confrontation. Pro10 headsets are a huge team motivator, saving time and creating a calmer and safer environment for your employees and your customers. With wide range, Pro10 headsets are light and easy to use, they’ll transform your team’s productivity across the whole shop floor, prep areas, office, warehouse, external storage and car parking. Don’t forget to also ask about our Pro9 Headset System for your foodservice drive-thru window. Contact 888-575-1016 or visit https://www.quaildigital.com/retail-headset-system.html

NEW TO THE INDUSTRY

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Baker Boy, Inc.......................................................................... 108 Krispy Krunchy Foods, LLC.................................................. 109 NEW DESIGN

Benestar..................................................................................... 109 Monster Beverage Company..................................................111 QNC, Inc. dba Quik n' Crispy...................................................111 NEW TO THE INDUSTRY

NACS; Good Jobs Institute Good Jobs Calculator

Happy Employees = Profits Do you know if your company offers good jobs? Is the secret sauce to your financial success about investing more in your people or your operations? If you don’t know, you’re not alone. That’s why NACS partnered with the Good Jobs Institute to offer free tools to help you figure out how investing in your people can deliver a motivated workforce, while decreasing turnover and boosting your bottom line. Start exploring with the Good Jobs Calculator at www.convenience.org/GJcalculator.

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| JUNE 2021

GOJO Industries, Inc.............................................................. 109 Haliburton International Foods............................................ 82 NACS; Good Jobs Institute....................................................112 NEW TECHNOLOGY

Quail Digital................................................................................112 Mashgin....................................................................................... 110

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CATEGORY CLOSE-UP / BEER

Powerful Punch Beer sales and profits thrive amid pandemic challenges.

hile convenience store traffic and some in-store categories were challenged in 2020 as the pandemic altered life for so many, the beer category emerged as a major sales and profit driver for retailers, and merchants are looking to continue to build on last year’s big gains in 2021 and beyond.

JUST THE FACTS Average in-store sales of beer soared 18.1% last year, according to the NACS State of the Industry Report of 2020 Data.

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| JUNE 2021

Average in-store sales of beer soared 18.1% last year as c-stores benefited from closures and reduced capacities at bars and restaurants, pandemic-induced pantry loading and surging flavored malt beverages, according to the NACS State of the Industry Report of 2020 Data. “There was huge, huge growth for beer in 2020,” remarked Jayme Gough, NACS research manager, noting that the category accounted for 6.79% of in-store sales last year and 3.49% of in-store gross margin contribution. Gough added that because 2020 was a stressful year for many consumers, beer and other indulgent categories fared well. In addition, c-store beer sales saw a lift from consumers who shied away from supermarkets and other larger-format stores to avoid coronavirus exposure. “C-stores are a great option for customers to get in and out quickly and safely,” she said. Joy Young, senior director, category development at Anheuser-Busch InBev, pointed to the value that beer holds in total store profitability. “Beer contributed to over 60% of total store absolute growth dollars, outpacing all other categories,” she reported, citing IRI total U.S. convenience store sales for calendar year 2020. In 2020, “performance was driven by hard seltzers, lighter, low-cal and low-carb beers, and the resurgence of mainstream brands turning to growth,” Young said. CONVENIENCE.ORG

iStock.com/nitrub

BY TERRI ALLAN

Industry Sales % of In-Store Sales 2019

5.83%

2020

6.79%

% of Stores Selling

Avg. Sales/Store 2019

2020

$207,536 $245,017

2019

84.9%

2020

87.5%

Source: NACS State of the Industry Report of 2020 Data

iStock.com/Chinnasorn Pangcharoen

NACS CSX and NielsenIQ data reflect the beer category’s stellar performance last year. CSX monthly data showed beer sales accelerating from trends of the previous three years beginning in April 2020 and spiking in July, and then slowing later in the year. According to NielsenIQ, total beer unit sales in c-stores last year rose an impressive 5.4%, while total category dollar sales jumped 14% to nearly $23.3 billion. The double-digit dollar sales growth indicates consumer trade up in both package size purchases and more premium brands. SELTZERS SPARKLE Flavored malt beverages (FMBs), and specifically hard seltzers, were the big volume and margin drivers for the beer category in 2020. Average store sales of FMBs surged 70.5% last year, pushing the subcategory into the No. 2 spot for sales contribution after premium beers. FMB’s 22.87% margin—as compared to the category average of 18.44%—helped deliver significant lift to c-stores’ gross profit dollars in 2020. Vince Segura, general manager and retail director at Texas’ Fuel City chain, said young consumers of legal drinking age favor spiked seltzers. “We’re trying to make the shift and take on a lot of the seltzers,” he noted, a move that may CONVENIENCE.ORG

require cutting back on SKUs of mainstream brews. Nearly every other beer subcategory posted growth last year, according to Gough. Premium—which accounts for almost one-third of all c-store beer sales—increased 8.2% while higher margin imports, superpremiums and microbrews/crafts all surged at doubledigit rates. “We did well with imports,” Segura reported, particularly brands from Mexico, such as Modelo Especial, Corona Extra, Dos Equis and Pacifico. Chris Peckat, director of purchasing at the PRIDE Stores in the Chicago area, meanwhile, noted that crafts, especially locally produced labels, are seeing continued demand. “We used to go all out and get crafts from California, Colorado, all over,” he said. “But today, it’s just the local ones that people are after.”

Flavored malt beverages, and specifically hard seltzers, were the big volume and margin drivers for the beer category in 2020.

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.

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CATEGORY CLOSE-UP / BEER

PER STORE, PER MONTH SALES

2018

2019

2020

$25,000 $20,386 $20,000

$15,000

$10,000

$5,000 JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

Tom McReavy, senior vice president of sales at California’s Stone Brewing Co., said the c-store channel is an ideal one for craft brews. “C-store customers are looking for the opportunity to make a choice quickly, and when they make that choice, they want to know that they are getting a quality beer that tastes great,” he explained. “Craft beer was founded on the principles of quality and flavor, so it’s an easy connection to make that craft and the c-store consumer would be a great fit.” Pantry loading led to a beer packaging mix shift to 12- and 24-packs for retailers in 2020. While the multipacks typically carry lower margins than smaller pack sizes, they do provide higher basket rings. Chandler Tillery, merchandising assistant at Arkansas’ Big Red Stores,

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| JUNE 2021

reported that much of the growth in beer sales at the chain last year was due to more than 20% growth in 12- and 30-packs. As a result, Big Red is increasing the amount of space it allocates to multipacks this year. The big boom in c-store beer sales last year wasn’t without its challenges. Retailers pointed to supply issues as vendors and wholesalers struggled to keep up with soaring demand at a time when the pandemic placed numerous restrictions on the supply chain. According to Peckat, multipack shortages drove customers to “raid our singles cooler. Rather than buying two cans at a time, they would buy six,” he noted. “Then our singles doors would empty out.” Indeed, Tillery said “consistency in inventory” CONVENIENCE.ORG

iStock.com/micropic

Source: CSX; csxllc.com

CATEGORY CLOSE-UP / BEER

Subcategory Performance Avg. Sales/Store

Avg. GP$/Store

Gross Margin %

2019

2020

2019

2020

2019

2020

2019

2020

Premium

34.5%

31.7%

$71,699

$77,585

$10,325

$10,870

14.40%

14.01%

Flavored Malt

10.2%

14.7%

$21,184

$36,118

$5,423

$8,260

25.60%

22.87%

Popular

15.6%

14.6%

$32,381

$35,763

$6,081

$6,799

18.78%

19.01%

Imports

11.2%

11.0%

$23,178

$27,069

$5,048

$5,969

21.78%

22.05%

Budget

11.2%

9.7%

$23,337

$23,798

$3,621

$3,755

15.52%

15.78%

Super Premium

8.4%

9.1%

$17,470

$22,407

$3,571

$4,469

20.44%

19.94%

Microbrews/Craft

7.1%

7.7%

$14,806

$18,775

$3,476

$4,121

23.48%

21.95%

Malt Liquor

1.5%

1.3%

$3,181

$3,220

$835

$876

26.26%

27.21%

Non-Alcoholic Beer

0.1%

$301

$282

$75

$76

24.93%

27.00%

100.0%

$207,536

$245,017

$38,452

$45,192

18.53%

18.44%

TOTAL

For more information on NACS category definitions, visit www.convenience.org/categorydefinitions. Source: NACS State of the Industry Report of 2020 Data

Half Horz.indd 1

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| JUNE 2021

5/12/2021 3:22:14 PM CONVENIENCE.ORG

iStock.com/melanjurga

% of Sales

BEER

remains a concern today. “There have been more isolated out-of-stock issues from manufacturers,” he reported. MAINTAINING THE MOMENTUM While it’s unlikely that the beer category will record another 18% growth hike this year, there are steps retailers can take to maintain last year’s momentum and continue to benefit from changing consumer buying habits. “Track inventory and monitor if shopping patterns are shifting back to pre-2020 habits, and change assortment if needed,” commented Gough. McReavy agreed. “Make sure you’re staying ahead of the trends in beer and have the right assortment of flavor profiles for your local customers’ tastes,” he advised. A-B’s Young added that given

the constant challenge for space in the cooler, “look to use ambient space and displays more effectively.” While 2020 may have been a banner year for the beer category, there’s still plenty of opportunity ahead. Gough pointed to the “huge influx of new customers” who began shopping c-stores during the pandemic. And while last year may have been marked by a return to tried-and-true brands, with the pandemic easing, “consumers may feel more comfortable trying new things again. They might peruse the aisles a little longer than they did last year.” Indeed, A-B’s Joy said, “Beer has a proven track record in delivering growth during uncertain times, and we’re confident in the category’s trajectory.”

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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CATEGORY CLOSE-UP / COLD DISPENSED BEVERAGES

Cold Sensation

After a rocky 2020, cold dispensed beverages are poised for growth. BY SARAH HAMAKER

JUST THE FACTS Cold dispensed beverages accounted for 7.4% of foodservice sales, according to the NACS State of the Industry Report of 2020 Data.

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| JUNE 2021

CSX monthly sales data also showed a sharp dip in April 2020 during the peak of the uncertainty around COVID-19, further harming 2020 overall sales of this category. “While sales recovered some during the summer of 2020, they didn t yet return to 2019 levels,” Gough said. “Historically, fountain drinks are often purchased during the lunch daypart and bundled with prepared food offers, but all of this was disrupted.” Last year when COVID-19 restrictions went into effect, 7-Eleven reported a dip in in-store visits, especially among commuters during morning and evening hours, which impacted sales of cold dispensed beverages, among other categories. “However, the cold dispensed beverage category has been resilient during the pandemic, as it offered a break from the daily routine and trends to skew lunch and afternoon dayparts that have been much less impacted by loss of mobility,” said Jawad Bisbis, vice president of proprietary beverages for the Irving, Texas-based chain. “Now as more and more states and counties open up, we are seeing more traffic in stores, which is driving up our cold and frozen dispensed beverage business.” COVID-19’S IMPACT While COVID-related restrictions for self-serve fountain have largely eased, the category still has a ways to go to recover from the downturn of 2020. “Nearly 100% of our customers have safely reopened their dispensed sections to be fully self-serve, and many CONVENIENCE.ORG

iStock.com/Juanmonino

or years, cold dispensed beverages have pulled in customers and revenue to convenience stores. Then the coronavirus pandemic hit, triggering shutdowns of self-dispensed beverage programs for several months. “Cold dispensed beverage sales suffered in reaction to COVID-19 concerns around food safety,” said Jayme Gough, NACS research manager. According to the NACS State of the Industry Report of 2020 Data, cold dispensed beverages accounted for 7.6% of foodservice in 2020. Average sales per store for cold dispensed beverages dropped 6.1% from 2019. “Three of the five foodservice categories experienced negative sales growth from 2019 to 2020,” Gough said.

Industry Sales

% of In-Store Sales 2019

2020

1.97% 1.82%

% of Stores Selling

Avg. Sales/Store 2019

2019

2020

96.3% 98.1%

$56,125 $52,675

iStock.com/TheCrimsonMonkey

Source: NACS State of the Industry Report of 2020 Data

are heavily promoting and innovating,” said Shane Wheatland, vice president of Keurig Dr Pepper Foodservice Solutions. Keurig Dr Pepper worked regularly with its customers to ensure sanitization of all self-serve stations by placing hand sanitizer near the fountain station, frequent cleaning of the fountain area and mask reinforcement. “We’ve also worked with our equipment partners on touchless valves as an option for customers,” Wheatland said. That’s also something The Coca-Cola Company noticed. “Consumer desire for frictionless hygiene options has become a trend across all retail channels,” said Carlton Austin, director of convenience retail strategy and commercialization, North American operating unit for Coke. “Everything people touch needs to come with an assurance it’s been properly sanitized. For convenience retailers, this means they need to overcommunicate their health, safety and sanitation measures to shoppers.” To that end, Coca-Cola rolled out an innovative, touch-free solution for fountain: contactless valves. Additionally, in July 2020, Coke introduced contactless, mobile pouring for its Coca-Cola Freestyle platform through a QR code on the machine without having to download an app or enter personal data. “Our goal is to provide a variety of solutions CONVENIENCE.ORG

so our customers can offer consumers the Coca-Cola beverages they love while driving critical revenue to their bottom line,” Austin said. 7-Eleven halted reusable self-serve cups and complied with local ordinances requiring some stores to temporarily move self-serve beverages to a clerkserve model. “Beyond maintaining a clean store and adhering to CDC guidelines, offering customers unmatched value and unique product innovation will continue to be key to winning them back,” Bisbis said.

Everything people touch needs to come with an assurance it’s been properly sanitized.

SUMMERTIME THIRST Summer is a fantastic time for promotions and getting customers excited about cold dispensed beverages. “With hot weather comes thirsty customers seeking something traditional or adventurous,”

JUNE 2021 |

121

CATEGORY CLOSE-UP / COLD DISPENSED BEVERAGES

PER STORE, PER MONTH SALES

2018

2019

2020

$5,000 $4,500 $3,879

$4,000 $3,500 $3,000 $2,500 $2,000 $1,500 JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

Gough said. “Retailers have to be prepared for all tastes this summer.” Cold dispensed beverage offers are a great way to get customers in the door, giving retailers the opportunity to convert them into a food or snack purchase along with the fountain drink. “There’s huge competition in this category from QSRs, and other channels like dollar stores have attempted to siphon off share from the convenience channel,” Gough said.

NEW CATEGORY DEFINITIONS RELEASED! NACS Category Definitions & Number Guide Version 8.0 was released in early 2021. Developed by the NACS Research & Technology Committee, this new version reflects significant updates to the last broad iteration (version 7.0 released in 2010). To view the latest updates, visit www.convenience.org/categorydefinitions.

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| JUNE 2021

To reinvigorate the cold dispensed beverage category, 7-Eleven launched a limited-time offer on Big Gulps for 79 cents through its 7Rewards program to kick off summer. The chain also recently introduced five new flavors on the fountain from its private-label sports and energy drinks and branded offerings. Coca-Cola’s Freestyle’s mobile pour technology proved successful in keeping dispensed beverages flowing during the pandemic, especially during the summer of 2020. “We know from Coca-Cola Freestyle data that consumption in c-stores typically peaks in the summer, and that trend held true in 2020, despite the COVID-19 pandemic,” Austin said. FOUNTAIN INNOVATION While traditional carbonated beverages are still dominant in terms of sales, the growth of other dispensed beverages can be attributed partly to the recent CONVENIENCE.ORG

iStock.com/undefined undefined

Source: CSX; csxllc.com

frazil.co m info@fre • 801-838-7147 ezingpo intllc.co m

*Source: Sales data from 1,100+ stores that switched to Frazil from other FUB programs during 1/1/2019 – 12/31/2020

CATEGORY CLOSE-UP / COLD DISPENSED BEVERAGES

Subcategory Performance COLD DISPENSED BEVERAGES

Percent of Sales

Avg. Sales/Store

2019

2020

2019

2020

2019

2020

2019

2020

Carbonated

56.0%

41.0%

$31,455

$21,581

$14,445

$9,707

45.92%

44.98%

Other Cold Dispensed Beverages

21.3%

36.9%

$11,946

$19,463

$6,316

$10,191

52.87%

52.36%

Non-Carbonated

11.8%

16.9%

$6,634

$8,916

$3,316

$4,454

49.98%

49.96%

Club Mugs

5.9%

2.6%

$3,321

$1,381

$1,325

$609

39.90%

44.13%

Refills

3.9%

1.5%

$2,207

$808

$1,017

$397

46.08%

49.08%

Sports Drinks TOTAL

Avg. GP$/Store

Gross Margin %

1.1%

1.0%

$561

$527

$305

$263

54.32%

50.00%

100.0%

$56,125

$52,675

$26,724

$25,622

47.62%

48.64%

popularity of iced or cold brew coffee, kombucha and other cold brew teas. “Customization is particularly important to young customers, who love to experiment with flavors and create

NO FIZZ Noncarbonated beverages have been growing in popularity. “To meet this rising trend, PepsiCo debuted VivaSol Aguas Frescas in five flavors to about 40 Circle K locations in Texas in April,” a company spokesperson said. “The wide selection of flavors will satisfy those who have a taste for the traditional, as well as those seeking new flavor experiences.” Keurig Dr Pepper worked closely with several customers to develop unique products, such as lemonades, limeades and aquas frescas. “These noncarbonated beverages align well with specific consumers and food pairings, which can be dispensed from attractive, auto-fill bubblers, which is an updated feature post-COVID,” Shane Wheatland, vice president of Keurig Dr Pepper Foodservice Solutions, explained. 7-Eleven has been testing dispensed kombucha at its Evolution stores but hasn’t decided when to introduce it nationwide. However, the chain has expanded its cold specialty coffee menus at more than 1,000 locations in the Northeast and select stores across the U.S., with more stores receiving the expanded and enhanced hot and cold specialty coffee menus in 2021 and 2022. Coffee brews on-tap include cold brew; Nitro cold brew; flavored cold brew, such as vanilla or mocha; and a selection of iced teas, including hibiscus pear and honey green.

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| JUNE 2021

something unique,” Gough said. “More and more retailers are meeting that need with myriad cold dispensed options.” At Keurig Dr Pepper, COVID-19 accelerated the brand’s innovation pipeline because of customer collaboration and planning. The company recently developed a shelf-stable, cold brew concentrate for the Green Mountain Coffee Roasters brand. Working in conjunction with the Bunn Nitron machine, Keurig Dr Pepper now offers a turnkey, low maintenance solution for convenience store operators looking to add premium cold brew and cold brew nitro offerings. Coca-Cola recently introduced two varieties of its sparkling water brand, AHA to the fountain: AHA Lime + Watermelon and AHA Blueberry + Pomegranate. “Americans are drinking more sparkling water during more occasions and times of day than ever before,” Austin said. PepsiCo has brought its first permanent new Mountain Dew flavor in more than a decade to the fountain. “We’re first bringing Mountain Dew Major Melon exclusively to Circle K’s cold dispensed beverage program,” said a PespiCo spokesperson. The company will also launch Dole Strawberry Lemonade Fountains at Circle K stores in late June. CONVENIENCE.ORG

iStock.com/Irochka_T

For more information on NACS category definitions, visit www.convenience.org/categorydefinitions. Source: NACS State of the Industry Report of 2020 Data

Rutter’s is currently “sticking with what has worked,” according to Chad White, foodservice category manager for the York, Pennsylvania-based chain. “But we are looking at new equipment and what flavors should be on the fountain beverage island.” Rutter’s is considering adding cold coffee but is still in the process of evaluating options. According to 7-Eleven's Bisbis, “We’ve continued to be a leader in the cold dispensed beverage category.” 7-Eleven’s ongoing refresh of its in-store cold beverage fountains include five new pours designed to capture consumer interest in better-for-you functioning beverages: Replenish Zero, Quake

Berry Blast, AHA Sparkling Water, vitaminwater zero squeezed and Craft Lemonade. “We will continuously track customer trends and preferences in order to provide a cold beverage assortment [customers] crave,” he said.

Americans are drinking more sparkling water during more occasions and times of day than ever before.

SPARKLING FUTURE Convenience stores should lean into their competitive advantage of meeting shoppers where they are, especially with cold dispensed beverages. “Convenience retailers miss out on major profits when gas shoppers don’t go inside the store,” Austin said. “Therefore, it’s important to leverage pump signage to increase

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4/15/2021 7:30:55 AM

24/7 Day: A Day for Heroes Let’s come together to support our community’s front line workers

When our communities need us most, the convenience industry is always there. Now in its third year, 24/7 Day continues to unite our industry to honor the incredible life-saving work done every day by hometown heroes on the front lines of our communities, including first responders, medical personnel, and American Red Cross volunteers. 24/7 Day, held on July 24th, is hosted by the NACS Foundation, along with participating convenience industry retailers, suppliers and partners, in support of disaster relief efforts and the American Red Cross. Join us to amplify the reach and impact of your company’s charitable efforts—and deliver measurable change for the communities you serve— by becoming a 24/7 Day Partner. Visit 247Day.org and contact Lindsay Buchanan with the NACS Foundation to learn more: lbuchanan@convenience.org or 713.518.4222. 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.

@TheNACSFoundation @NACS_Foundation conveniencecares.org

awareness of cold dispensed beverage offerings inside.” Adds Wheatland, “The future of cold dispensed beverages in convenience stores will be an intersection of safety, value and innovation. We’re working hard to keep our employees, customers and consumers safe while delivering innovation that will drive traffic and sales,” he said. “Meet shoppers in the moment with innovative cold dispensed beverages,

and show them how a fountain beverage will elevate their occasion and liven up their days with new experiences and interesting flavors,” Austin said. “Customers want high-quality, great-tasting beverages in a convenient way at a great price,” Bisbis noted. “Our cold beverage fountain assortment provides fantastic opportunities to innovate quickly to meet customer needs.”

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

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ADD Systems............................................................................................46 www.addsys.com

E&J Gallo Winery.........................................................................65 www.gallo.com

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

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

Electrolit USA...............................................................................97 www.electrolit.com

NACS Education......................................................................................125 www.convenience.org/series

Farmer Brothers Coffee Co.....................................................................47 www.farmerbros.com

NACS Foundation.......................................................................................4 www.conveniencecares.org

Freezing Point LLC..................................................................................123 www.frazil.com/frazil

NACS Show..................................................................... Inside Back Cover www.nacsshow.com/2021

Get Skip.................................................................................................... 73 www.getskip.com

NACS State of the Industry Report ...................................................... 126 www.convenience.org

Campbell’s Snacks........................................................................71 www.campbellsoupcompany.com

GetUpside.....................................................................................31 www.app.getupside.com

C ash Depot................................................................................... 21 (800) 776-8834 sales@cdlatm.com www.cdlatm.com

North American Bancard........................Outsert (polybagged w/ issue) (866) 481-4604 www.nynab.com

Haliburton International Foods Corp.....................................................93 www.haliburton.net

B IC Corporation.......................................................................................53 www.biclighter.com Calico Brands Inc. (Scripto)................................................................... 118 (800) 544-4837 www.calicobrands.com

Cheyenne International LLC.................................................................... 37 www.cheyenneintl.com Constellation Brands Inc............................................................ 117 www.cbrands.com

Cool New Products Guide................108-112 www.convenience.org/coolnewproducts

Conexxus................................................................................................ 113 www.conexxus.org Core-Mark International Inc....................................................... 19 www.core-mark.com Cretors......................................................................................................99 www.cretors.com CROSSMARK.............................................................................................43 www.crossmark.com CURTIS.......................................................................................... 61 www.wilburcurtis.com Diaego Beer Company USA (Smash)......................................................67 www.smirnoff.com DMF Bait Company..................................................................................25 (800) 332-2248 orders@dmfbait.com www.dmfbait.com Dover Wayne Fueling Systems................................................. 103 www.wayne.com

CONVENIENCE.ORG

Hathway.......................................................................................89 www.wearehathway.com The Hershey Company.................................................................15 www.hersheysolutions.com Home Market Foods................................................................................95 www.homemarketfoods.com Hunt Brothers Pizza....................................................................35 www.huntbrotherspizza.com Hussmann Corporation............................................................. 105 www.hussmann.com Invenco Group Limited...................83 & Outsert (polybagged w/ issue) www.invenco.com Johnsonville Sausage LLC.......................................................................39 www.johnsonville.com Keurig Dr Pepper.........................................................................59 www.keurigdrpepper.com Krispy Krunchy Chicken.............................................................. 77 www.krispykrunchy.com L iggett Vector Brands Inc............................................................17 (877) 415-4100 www.liggettvectorbrands.com

Placon..................................................................................................... 119 (800) 541-1535 www.placon.com Premier Manufacturing Inc..............................................................5 & 55 www.gopremier.com Raymond James & Associates Inc..............................................27 www.raymondjames.com Refrigeration Design Technologies Inc................................................125 www.rdtonline.com Ruiz Food Products Inc...............................................................75 www.ruizfoods.com S wedish Match North America (Zyn)...........................................9 (800) 367-3677 www.smna.com S wedish Match North America................................................... 41 (800) 367-3677 www.smna.com Swisher International Inc. .........................................................23 (800) 874-9720 Trion Industries Inc...................................................................................3 (800) 444-4665 www.triononline.com TY Inc........................................................................................................45 www.shop.ty.com

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

Tyson Foods Inc...........................................................................79 www.tysonfoods.com

McLane Company Inc................................................... Back Cover www.mclaneco.com/edge

Vitamin Energy LLC.............................................................................10-11 www.vitaminenergy.com

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BACK PAGE Q: Which actor from the TV show M*A*S*H was the co-founder of a convenience store chain that was once the second largest privately owned chain in the United States? A: Wayne Rogers (Trapper John). Swifty Serve had more than 550 convenience stores at its peak, under a variety of store names. Q: Which New York Mets star opened a small chain of carwashes in Southern California and was featured in a NACS Ideas 2 Go video segment? A: Lenny Dykstra. Lenny Dykstra’s Carwash in Corona, California, was featured in the 2004 NACS Ideas 2 Go series. Q: California has the highest combined federal and state gas tax in the country at 81.45 cents per gallon. Which state has the second highest tax? A: Pennsylvania Q: Wawa began as an iron foundry in 1803 and was involved with textiles and dairy before opening its first convenience store in 1964. Which U.S. president was once on Wawa’s payroll? A: Abraham Lincoln. He helped collect delinquent accounts. Fresh off earning a law degree, Lincoln helped collect debts for the company, which has two cancelled checks from him to prove it.

NACS Style Time for some fun! How well do you know the convenience store industry? Q: The NBA allows ads on player jerseys. Which NBA team jersey features a NACS retail member ad? A: Oklahoma City Thunder: Love’s Travel Stops & Country Stores. Love’s is the only U.S.-based retailer of any kind on team jerseys. Most sponsors are in financial services or software companies. Q: When did the national average gas price first top $1 a gallon? A: 1979—During the Iranian Revolution. At the time, many dispensers couldn’t go above 99.9 cents per gallon, so some retailers looked to sell gas by the half gallon to address the problem. 128

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Q: Early gas stations sold “TBA” in addition to traditional fuel. What did TBA stand for? A: Tires, batteries and accessories. The original stores focused on the TBA line of products for the car. Q. Alimentation Couche-Tard operates more than 7,000 convenience stores in North America, including the Circle K brand. What does “Couche Tard” mean? A: Night owl. In French, couche tard is someone who goes to bed late—or “night owl.” Q: All letters in the 7-Eleven logo are capitalized except this one: A: N. Rumor has it that then-CEO Joe Thompson’s wife felt that the capital “N” looked harsh, and the lowercase “n” made the logo look more graceful. Q: Which animals are most associated with early convenience store commercials? A: The rooster and owl—symbolizing the early/late hours of operation. These birds were used in early 7-Eleven commercials. CONVENIENCE.ORG

Conference / October 5-8, 2021 Expo / October 6-8, 2021 McCormick Place | Chicago

CHANGE IS CONSTANT, BUT SO ARE WE.

NACS Show Registration is Now Open! Join the industry this Fall where you’ll find ideas and products by tapping into our industry community as we work together to solve problems, and navigate the future of convenience.

Learn more at nacsshow.com/2021

INDEPENDENT C-STORE OPERATORS PLAY A VITAL ROLE IN OUR ECONOMY

That’s why McLane is focused on helping our independent customers succeed. We partner with independents to tailor solutions to their unique challenges. McLane’s dedicated sales reps offer guidance in category management, new items and programs, and solutions that drive profitability. McLane helps our independent customers maximize their gross margins by ensuring they have the right items in their stores at the right time. To learn more, visit mclaneco.com/independent