NACS Magazine November 2020

convenience.org | NOVEMBER 2020

HEROES SERVE HERE

SWISHER’S SWISHER’S NEW VISION NEW VISI No matter what challenge they face, convenience retailers strengthen their communities.

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CRACK THE CODE

The New Digital Experience Is Live

MUTUAL RESPECT

Behind the YeswayAllsup's pairing

A GOOD YEAR

Exploring the Growth in Cigarette Sales

LEADING & LOOKING FORWARD SINCE 1861 There’s a responsibility that comes with having pioneered the mass cigar industry and other market-leading product categories: the constant pursuit of new ideas that keep our customers out front. For nearly 160 years, we’ve never stopped innovating and improving. And we never will. Our new identity is just one of our exciting steps forward.

JOIN THE EVOLUTION AT swisher.com/SuccessSimplified

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convenience.org | NOVEMBER 2020

HEROES SERVE HERE No matter what challenge they face, convenience retailers strengthen their communities.

CRACK THE CODE

The New Digital Experience Is Live

MUTUAL RESPECT

Behind the YeswayAllsup's pairing

A GOOD YEAR

Exploring the Growth in Cigarette Sales

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

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

TAKE SURVEY CLICK HERE

Provided on behalf of Philip Morris USA, U.S. Smokeless Tobacco Co., John Middleton, and Helix Innovations. Š2020 Altria Group Distribution Company | For Trade Purposes Only

NOVEMBER 2020

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Look for the Heroes

Operating without a playbook, convenience retailers find their way through chaos with their hearts. ou Can Crack the Code Y This past year has been a challenge, but now is the time to set yourself up for success in 2021.

Reduce Your Energy Bill

A clear grasp of key analytics can help retailers save money on energy costs.

B ulking Up

Consumer response to COVID-19 might change the cigarette category’s trajectory for 2020 and beyond.

Cover Art by Beyond Definition STAY CONNECTED WITH NACS

 @nacsonline  facebook.com/nacsonline  instragram.com/nacs_online  linkedin.com/groups/1776505

47 48

Simplify and Amplify

53 54

Optimize Decision-Making

62 66

A Q&A with Gravitate.

The Relationship Business

Jobbers and dealers navigate an evolving business model—and pandemic—to find success.

A Q&A with capSpire.

Weak Signals No More

How the pandemic is shaping 10 key trends in the convenience and fuel retailing industry.

(Part 2 of 3) arketing Disrupted M Loyalty survey reveals the need for technology to personalize and modernize customer loyalty.

eave the Tech, L Take the Burrito

Yesway and Allsup’s came together thanks to a strong relationship, mutual respect and a beloved burrito.

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

NOVEMBER 2020 |

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NOVEMBER 2020

Wine shoppers in the convenience channel are usually younger, female and have slightly higher household incomes than the average wine shopper.

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IDEAS 2 GO | P.22

06 Convenience.org

74 Cool New Products

08 From the Editor

84 Gas Station Gourmet

10 NACS News 14 Good Work 16 Inside Washington

A look at what the presidential race results might mean for the convenience and fuel retailing industry.

22 Ideas 2 Go

Family-run Tobie’s Station is a “must-stop” between Minneapolis-St. Paul and Duluth, Minnesota.

Wellcome Johnston Shell relishes the joys of pairing Cajun barbecue and Indian food.

86 Global Trends

Subscription services are booming, proving to be the ultimate loyalty program.

90 Category Close-Up

Despite a slight dip last year, retailers and marketers have a “glass half full” view of wine’s prospects.

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

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| NOVEMBER 2020

CONVENIENCE.ORG

iStock.com/sorendls

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EDITORIAL Kim Stewart Editor-in-Chief (703) 518-4279 kstewart@convenience.org Sara Counihan Managing Editor (703) 518-4278 scounihan@convenience.org Lauren Brooks Digital Content Manager (703) 518-4283 lbrooks@convenience.org

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

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

Bydisrupting providing convenience.

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

Available on: Available on:

CONTRIBUTING WRITERS Terri Allan, Paige Anderson, Frank Beard, Anna Ready Bloom, Fiona Briggs, Jennifer Bulat, Sarah Hamaker, Al Hebert, Samantha Oller, Pat Pape, Jerry Soverinsky, Jon Taets, Melissa Vonder Haar DESIGN Beyond Definition www.beyond-definition.com

ADVERTISING Stacey Dodge Advertising Director/Southeast (703) 518-4211 sdodge@convenience.org Jennifer Nichols National Advertising Manager/ Northeast (703) 518-4276 jnichols@convenience.org Ted Asprooth National Sales Manager/ Midwest, West (703) 518-4277 tasprooth@convenience.org

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

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

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 © 2020 by the National Association of Convenience Stores. Periodicals postage paid at Alexandria VA and additional mailing offices.

1600 Duke Street, Alexandria, VA, 22314-2792

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

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WHAT’S ONLINE | NOVEMBER 2020

Skim These Resources

About 39 million Americans fill up every day, and fuel dispensers have become one of many targets for thieves looking to steal credit and debit card information by "skimming," an aggressive tactic used to illegally obtain consumer card data for fraudulent purposes.

Since 2008, NACS and Conexxus have offered convenience and fuel

retailers the resources and tools they need to proactively initiate and maintain effective payment security procedures that help reduce the occurrence of skimming. Resources include detailed guides to prevent skimming, webinars, podcasts, news and magazine articles and more.

To view these resources, visit www.convenience.org/skimming.

COME TOGETHER. DO MORE. Join us at conveniencecares.org

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The Convenience Corner blog showcases the dynamic convenience retail environment. Join the conversations on all things retail, NACS and convenience brought to you by industry experts and guests. Updated each month, recent topics include how NACS is creating an industry-first, world-class digital experience with all the feel of a live event, how convenience retailers are living through virtual communication pandemonium and how the essential business designation goes well beyond the products convenience stores sell. Check out the blog at www.convenience.org/conveniencecorner.

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FROM THE EDITOR

Rescue Story Kim Stewart Editor-In-Chief

2020 has hurled some scary stuff at us, and who knows what fresh hell awaits us in 2021?

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| NOVEMBER 2020

I

’ve always had a soft spot for first responders—people who run toward danger. And also for people who can fix things—those guys you call when your sump pump backs up or you discover a bee hive in your attic. In my extended family there are nurses, teachers, firefighters, EMTs, state troopers, sheriff’s deputies, federal law enforcement agents, former soldiers and sailors, and the skilled trades guys who can rebuild engines, raise houses, wire commercial buildings and operate heavy equipment. Most would, as the saying goes, “give the shirt off their backs” to help people in need.

Whenever disaster strikes, it seems, quotes from Fred Rogers of “Mister Rogers’ Neighborhood” fame, circulate on social media. “When I was a boy and I would see scary things in the news, my mother would say to me, ‘Look for the helpers. You will always find people who are helping,’” Rogers said to the children viewing his TV show.

Well, 2020 has hurled some scary stuff at us, and who knows what fresh hell awaits us in 2021? Increasingly, as I immerse myself in NACS and get to know our members, I’m amazed at the resilience of this industry—and the optimism—albeit held somewhat in check by the peculiar challenges of operating an essential business amid a pandemic and a recession. This month we share the stories of some of the heroes in our industry: small operators with huge hearts who certainly aren’t passively sitting this year out. They are fighting every

day for their employees, businesses and communities. If you read just one article in this issue—and I challenge you to read them all—make it the cover story (and not because I wrote it).

When you log on for the NACS Crack the Code Experience this month, you’ll see interviews with a few of our heroes: Lonnie McQuirter of 36 Lyn Refuel Station (Nov. 4); Rachel Krupa of The Goods Mart (Nov. 18) and Don Rhoads of The Convenience Group (Nov. 25). These interviews and more will be featured in a dozen-plus Spotlight Sessions rolling out over the five weeks of Crack the Code. Of course, you’ll also be able to select among the more than 45 education sessions and have 24/7 access to innovative product showrooms and forge connections with attendees from around the world.

I suspect some of you may have “Zoom fatigue.” I get it. Not another virtual event! Listen, I’ve had a sneak peek at what’s in store for you, and it’s quite exciting. You know that exhausted-butsatisfied-ideas-percolating feeling you get after a day at the NACS Show? I promise that your NACS bucket will be full when you journey through your own Crack the Code Experience. But your feet won’t hurt, and you can get away with wearing those sweatpants you should have trashed two years ago.

I miss you, friends. Be well.

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NACS NEWS

NACS Welcomes Executive Committee, Board of Directors

K

evin Smartt, CEO and president of Kwik Chek Food Stores, has been named the 2020-21 NACS chairman. He began his term following the virtual NACS Board of Directors meeting on October 13.

Kwik Chek Food Stores is a 47-store chain with locations across Texas and Oklahoma. Over the past 15 years, the chain has doubled in size, Kevin Smartt developed a unique customer loyalty program and is implementing cutting edge point-of-sale technology. Under Smartt’s leadership, Kwik Chek has become a leader in charitable giving programs, including the donation of hundreds of thank-you bags with food and water distributed to frontline hospital workers, as well as its long-standing support of CASA of Central Texas. In addition, Smartt is the owner and CEO of McCraw Oil

Company, a fuel wholesale distribution company; McCraw Transport Inc., a fuel delivery company; and Texas Born, a food product company.

In 2020, Kwik Chek began rebranding to Texas Born (TXB), which emphasizes the company’s Texan roots and values that the brand has been built around.

Smartt also leads the NACS Executive Committee, which provides strategic direction and financial oversight to the association. Committee members are: • Vice Chairman, Treasurer: Jared Scheeler, The Hub Convenience Stores Inc. (Dickinson, N.D.) • Vice Chairman, Strategic Communications: Ken Parent, Pilot Flying J LLC (Knoxville, Tenn.)

• Vice Chairman, Legislative: Don Rhoads, The Convenience Group LLC (Vancouver, Wash.)

• Vice Chairman, Member Services: Lisa Dell’Alba, Square One Markets Inc. (Bethlehem, Pa.) • Vice Chairman, Research and Technology: Andy Jones, Sprint

Food Stores Inc. (Wrens, Ga.) •V ice Chairman: Victor Paterno, Philippine Seven Corp. dba 7-Eleven Convenience Store (Mandaluyong, Philippines) •V ice Chairman: Brian Hannasch, Alimentation Couche-Tard Inc. (Laval, Quebec, Canada) Two past chairmen, 2019-20 NACS Chairman Julie Jackowski and 2018-19 NACS Chairman Frank Gleeson, also serve on the Executive Committee.

During the meeting, NACS also named three new retail members to its Board of Directors: Chris Bambury, vice president, Bambury Inc. (Sonoma, Calif.); George Fournier, president, EG America LLC (Westborough, Mass.); and Ina (Missy) Matthews, owner, Childers Oil Co. (Whitesburg, Ky.).

A member-driven organization, NACS is led by a 30-member Board of Directors, which includes three retailers from non-North American countries.

NEW NACS MEMBERS NACS welcomes the following companies that joined the association between August 16 and September 15, 2020. NACS membership is company-wide, so we encourage employees of member companies to create a username by visiting www.convenience.org/Create-Login. All members receive access to the NACS Online Membership directory, latest industry news, information and resources. For more information about NACS membership, call (703) 684-3600.

NEW RETAIL MEMBERS Tang Mart #5 dba Tang Mart Piedmont Piedmont, AL Wise Brothers LLC dba Kasgo Speed Mart Anniston, AL

10

NEW SUPPLIER MEMBERS

Bourbon Street Group LLC Dallas, TX

American Signs LC Plano, TX www.amsigns.com

Cryptobase LLC Boca Raton, FL www.cryptobaseatm.com

Arning Companies Cassville, MO www.arningco.com

Cutting Edge Consulting LLC dba Trinity Hemp Burlington, CO www.trinityhemp.net

| NOVEMBER 2020

Enjoy The City North Inc. dba Velocity Logic Group Binghamton, NY www.velocitylogicgroup.com Greenlane Boca Raton, FL www.wholesale.gnln.com

Kaival Brands Innovations Group Inc. dba Bidi Vapor LLC Melbourne, FL www.bidivapor.com Taat Lifestyle & Wellness Vancouver, BC, Canada www.taatusa.com

United Country Real Estate dba UC Commercial Kansas City, MO www.uccommercial.com White Knight Marketing West Des Moines, IA www.wkmretail.com

High Liner Foods Mississauga, ON, Canada CONVENIENCE.ORG

NACS Supplier Board: New Members Announced The NACS Supplier Board named new leadership and members at the virtual NACS Board of Directors meeting on October 13. Rick Brindle, vice president, industry development at Mondel z International, was named 2020-21 NACS Supplier Board chairman.

Brindle has served in his current position at Mondel z since 2012 and previously worked at Safeway Stores, Proctor & Gamble, Nabisco and Kraft Foods. He has been named among the Consumer Goods Industry’s Top

25 Visionaries by Consumer Goods Technology magazine and Supervalu Vendor of the Year. Brindle also has won the National Grocers Association Board of Directors Service Award and was inducted into the Candy Hall of Fame in 2017 and the Convenience Hall of Fame in 2018.

Brent Cotten, senior director, customer and industry affairs at The Hershey Company, was named chairman-elect, and four new members were elected to the NACS Supplier Board:

•M ike Gilroy, Mars Wrigley •K evin M. LeMoyne, Coca-Cola Company Rick Brindle •T J Lynch, KeyImpact Sales & Systems •L esley D. Saitta, Impact 21 The chairman and chairman-elect of the NACS Supplier Board serve on the NACS Board of Directors.

MEMBER NEWS SUPPLIER Impact 21 welcomed Simon Kish to the team as a principal consultant. In this role, Kish will help clients implement large-scale changes such as POS.

Simon Kish

Impact 21 announced that Tom Newbould has joined its team as senior principal consultant.

Dover Fueling Solutions announced the appointment of Hector Trabucco as its new vice president and general manager for Latin America (LatAM). Trabucco will play a key part in maximizing business growth opportunities and strengthening DFS’ position in the LatAM market.

Matrix Capital Markets Group Inc. expanded its industry coverage with the establishment of the Matrix Healthcare Investment Banking Group. Leading this industry group will be Amanda Verner Thompson and Vasanta B. Pundarika, who have joined the firm as managing directors and co-heads of the new group.

Tom Newbould

Hector Trabucco

Amanda Verner Thompson

KUDOS Vasanta Pundarika Partnering with Great Place to Work, PEOPLE magazine identified the top 50 U.S. companies

CONVENIENCE.ORG

supporting their employees and their communities during COVID-19. Sheetz Inc. is No. 11 on the list for launching the Kidz Meal Bagz Program, doling out free meals to children at all locations. Ranked No. 10 on the list of PEOPLE’s 50 Companies That Care, American Express launched Stand for Small, a collation of 40+ companies supporting small businesses during the economic downturn, and increased it commitment to diversity, inclusion and support for minority groups. Coming in at No. 37, Mars Inc. created an educational program called Catology to help guide first-time foster parents of kittens and cats. Additionally, the company donated $20 million to support people, pets and communities most affected by COVID-19.

Georgia Trend magazine honored Parker’s founder and CEO Greg Parker as a “Legacy Leader” in the September 2020 issue.

Greg Parker Alto-Shaam has won the Extraordinary Service Award at the inaugural FEDA Gold Awards.

The award is in recognition of Alto-Shaam’s exceptional customer service, demonstrating the foodservice equipment company’s dedication to operators,dealers and distributors at every touch point.

RETAILER SpartanNash Company announced that it has hired Tony B. Sarsam as president and chief executive officer.

NOVEMBER 2020 |

Tony Sarsam

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NACS NEWS

BY THE NUMBERS

Compensation Snapshot Talent is the single largest overhead expense but can be the biggest competitive advantage for convenience retailers. With the U.S. unemployment rate dropping to a near 50-year low in 2019—and COVID-19 upending the global economy in 2020—the competition for top talent has never been greater. Your focus must remain steadfast on initiatives to attract, hire and retain the best talent to meet your customers’ needs and facilitate profitable growth.

The rapid pace of change, digitalization and the tightening of the labor market has transformed the role of HR professionals. Successfully delivering on your top priorities means making the right decisions in a complex and dynamic business environment. Industry HR professionals must take a data-driven approach to talent management to successfully navigate the complexity of the current labor market.

The NACS State of the Industry Compensation Report provides that in-depth data on critical human resource metrics of our industry: compensation, benefits, recruitment and turnover. NACS is committed to providing the robust metrics and data retailers need because we believe that the right choices are those that are the best informed.

The NACS Compensation Survey for 2020 is open! Submit your data by December 18, 2020, and receive a complimentary copy of the report when it is released in the spring of 2021. Visit www.convenience.org/compsurvey.

Convenience Industry Compensation Metrics, 2019 $

$47,429 AVERAGE STORE MANAGER SALARY

$

$11.75

88%

AVERAGE FULL-TIME ASSOCIATE WAGE

AVERAGE FULL-TIME ASSOCIATE TURNOVER RATE

125%

36%

75%

AVERAGE PART-TIME ASSOCIATE TURNOVER RATE

OF COMPANIES OFFER TUITION ASSISTANCE TO STORE HOURLY EMPLOYEES

OF COMPANIES OFFER MEDICAL COVERAGE TO STORE HOURLY EMPLOYEES

Data in this infographic reflect all firm average. (Does not exclude one-store operators) Source: NACS State of the Industry Compensation Report for 2019

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| NOVEMBER 2020

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GOOD WORK

Retailers Supporting Retailers, Socially

A

s part of Casey’s partnership with Feeding America, the retailer set a goal to donate 10 million meals to school-age children and their families experiencing food insecurity within Casey’s communities during the month of September, which was Hunger Action Month. To help achieve this goal, Casey’s engaged Coca-Cola in the effort, including special offers on Coca-Cola at Casey’s stores.

To help address this expanding need, Casey’s and Coca-Cola asked customers to join the fight against hunger by purchasing a Coca-Cola four-pack for $5 at Casey’s, with $1 going directly to Feeding America (up to $50,000). This gained the attention of Tanner Krause, CEO of neighboring Kum & Go, who tweeted to his followers: “If you’re going to buy four 20oz Coke products in one transaction this month, please do so @caseysgenstore.”

The global pandemic has made the need greater than ever as 40% of Americans who are receiving food support today have never needed Feeding America’s help before. Children

are particularly impacted, with as many as 18 million food-insecure children expected this year, according to estimates by Feeding America.

For assistance connecting with a representative of Feeding America in your operating area, reach out to Carolyn Schnare, NACS director of strategic initiatives, at cschnare@convenience.org.

IN THE COMMUNITY On October 6, Pilot Company launched a donation campaign with the St. Christopher Truckers Development and Relief Fund (SCF), a professional driver charity that helps over-the-road and regional semi-truck drivers and their families when an illness or injury causes them to be out of work. While supplies lasted, all U.S. owned and operated Pilot Flying J Travel Centers and participating One9 Fuel Network stores sold ribbons for $1 each in support of the organization.

Pilot Company and the Haslam family have donated $5 million to East Tennessee Children's Hospital to renovate the Emergency Department at the hospital’s main campus on Clinch Avenue in downtown Knoxville.

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| NOVEMBER 2020

The facility will be named Pilot Emergency Care Center, in honor of past, present and future Pilot Company team members and their families.

Pictured L to R: Crissy and Bill Haslam; Ann and Steve Bailey; Dee and Jimmy Haslam; and Natalie and Jim Haslam.

CONVENIENCE.ORG

“East Tennessee Children’s Hospital is a beacon of hope in our community. The new Emergency Department will enhance the offerings and efficiency of the world-class children’s hospital in the heart of Knoxville, as well as provide improved comfort and amenities to families seeking treatment,” said the Haslam family.

Parker’s recently donated $30,000 to Beaufort County Schools in South Carolina and $27,000 to the SavannahChatham County Public School System in Georgia as part of the company’s Fueling the Community program, which donates one cent of every gallon of gas sold on the first Wednesday of each month to local schools.

“At Parker’s, giving back is truly part of our DNA, and we believe there is no better way to give back than to support education,” said Parker’s founder and CEO Greg Parker. “We’re incredibly proud to be headquartered right here in Savannah and are deeply honored to support our city’s future leaders with this donation.”

Launched in 2011 with a mission to give back to every community where Parker’s does business, the Parker’s Fueling the Community charitable initiative distributes more than $200,000 annually to public and private schools in Georgia and South Carolina. To date, Parker’s has donated more than $1 million to area schools through the program.

Pictured L to R: Dr. Ann Levett, Savannah-Chatham County Public School System superintendent of schools, and Parker’s Chief of Staff Kate Smith.

The Wills Group, with nearly 300 retail locations including Dash In, Splash In ECO Car Wash, and SMO Motor Fuels across the Mid-Atlantic region, raised more than $153,000 in support of the Blackie Wills Community Leadership Fund at its fourth annual Blackie Wills Golf Classic event. Since March 2020, the Wills Group, based in La Plata, Maryland, has donated $500,000 through the Blackie Wills Community Leadership Fund to support regional food banks and nonprofit organizations as they address increased hunger and food insecurity as a result of COVID-19.

“Our communities need us now, more than ever. COVID-19 has shone a bright light on the disparities in our communities

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and the increased needs of our most vulnerable neighbors,” said Lock Wills, chairman, CEO and president of the Wills Group. “These contributions will enable the Wills Group to continue our efforts to end childhood hunger.”

Kwik Chek raised $2,631 for Texas CASA and several local CASA programs through the Round Up for CASA program, which raises funds at the register from guests who round their purchase up to the nearest dollar.

Kwik Chek, based in Spicewood, Texas, has supported Texas CASA programs in communities in which it does business for 12 years, donating more than $622,000 to the organization since 2008. Texas CASA works to improve the child protection system through legislation and other positive public policy changes, while speaking up for children in the system and pairing volunteer advocates with every child in state care due to abuse and neglect.

MAPCO, based in Franklin, Tennessee, committed to raising $100,000 in September to support St. Jude Children’s Research Hospital via an in-store face mask sale donation campaign. The mask donation campaign provided guests with the unique opportunity to protect themselves from COVID-19, while also helping support the St. Jude mission.

MAPCO donated 25% from every face mask purchase at MAPCO locations across its seven-state footprint to St. Jude.

“Being active members of the community is part of our mission, so making high-quality masks available at a convenient price and helping St. Jude during Childhood Cancer Awareness Month is a perfect match for MAPCO,” said Frederic Chaveyriat, CEO of MAPCO. Minnoco, the fuel brand for members of the Minnesota Service Station & Convenience Store Association, is supporting Hope Chest for Breast Cancer, a Minnesota non-profit that serves people fighting breast cancer by paying for utilities, groceries, rides to medical treatment and other needs. For every gallon of fuel sold on the Minnoco Rewards program from October 1 through November 8, independent Minnoco retailers are donating $.02 per gallon to Hope Chest.

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Election Watch

A look at what the presidential race results might mean for the convenience and fuel retailing industry.

BY JON TAETS, ANNA READY BLOM AND PAIGE ANDERSON

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W

hen this article is published, Election Day will be just days away.

There is a lot at stake for the country and for the convenience industry, so if you have not yet voted via in-person early voting, absentee or mail-in ballot, we encourage you to vote on Tuesday, November 3.

As is the case every four years, the presidential election is getting the most attention, and we will take a look at what the election results could mean for some

of the top issues affecting the convenience and fuel retailing industry. What would a second term for the Trump Administration or a first term of a Biden Administration mean for payments, fuels and labor policy?

A SECOND TRUMP TERM You can expect a second-term Trump Administration largely to be status quo in these issue areas. Back in 2017, President Trump supported an effort by congressional Republicans to overhaul parts of the Obama-era Dodd-Frank CONVENIENCE.ORG

iStock.com/Feverpitched

A secondterm Trump Administration will most likely continue to try and thread the needle between two powerful stakeholders— the oil and gas industry and the ethanol industry.

legislation. Originally, House Republicans included language to repeal the Durbin Amendment. That effort was defeated before reaching the floor in large part due to the grassroots activity of the convenience store industry and other retail groups. It’s not clear whether the Trump Administration will take a position on the reforms NACS is seeking on payments, and if it does, what that position would be.

On fuels-related issues, the administration was very active during its first term.

From expanding domestic production of oil and gas, expediting the permitting process for pipelines, rolling back or streamlining Environmental Protection Agency (EPA) regulations, and trying to navigate issues surrounding the Renewable Fuel Standard (RFS), the EPA

was very busy during the past four years.

NACS supported efforts to improve and streamline EPA regulations in the agency’s overhaul of several key fuels-related regulations that were included in the Streamlining Rule expected to be finalized by the end of the year.

In addition, EPA granted a onepound waiver to allow E15 to be sold yearround, which NACS supported. NACS also worked with EPA to increase transparency and improve the small refinery exemption process (SRE). Recently, EPA denied more than 50 petitions seeking SREs and pushed back attempts to move the point of obligation under the RFS. NACS worked with other key stakeholders to stop this effort by a small group of merchant refiners. A second-term Trump

FACTS & FIGURES

$

$7.25

The federal minimum wage per hour, last updated in 2007 under George W. Bush

$15

The likely target minimium wage per hour in a Biden Administration

ONE VOICE This month, NACS talks with Rick Brindle, vice president, industry development, Mondelēz International.

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

Rick Brindle NACS has provided an avenue for me to become politically engaged, which has greatly enriched my understanding of the critical issues our convenience retailers face each and every day. By learning about the issues our industry faces, I’ve been able to enlist multifunctional Mondelēz International resources in order to help NACS retailers. This access to education on the issues affecting our industry has been invaluable to me.

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What federal legislative or regulatory issues keep you up at night (with respect to the convenience store industry)?

Any legislative and/or regulatory issue that keeps a NACS retailer member up at night keeps me up at night.

We have such a strong relationship with our retailers that whatever affects them affects me. If I can find a way to assist, I will—whether it be through making outreach to members of Congress or attending NACS Day on the Hill. I want to be a part of the conversations that help all members of our industry.

What c-store product could you not live without?

I wake up really early each morning. In order to not wake up the house, my ritual is to visit my local convenience store and buy a cup of the strongest blend of coffee they offer, a belVita breakfast biscuit and a local newspaper.

So, I would have to say I can’t live without belVita breakfast biscuits (the No. 2 cookie in the U.S.!).

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INSIDE WASHINGTON

Addressing climate change is a top priority for Democrats and will be so in a Biden Administration.

Administration will most likely continue to try and thread the needle between two powerful stakeholders—the oil and gas industry and the ethanol industry. NACS and the fuel retailing community will continue to play a pivotal role in balancing these interests with the interests of consumers.

Labor policy is one area where the administration has tried to be much more helpful to our industry and the business community in general. The White House attempted to reverse two significant Obama Administration rules meant to aid labor unions and their allies. Early in Trump’s first term, after appointing new members to the National Labor Relations Board (NLRB), the board voted 3-2 to reverse a 2015 decision that expanded the definition of a “joint employer,” making it easier for workers at franchises to sue the corporate parent for alleged labor

violations. While that move was ultimately reversed due to conflict of interest accusations against one of the new board members, the NLRB moved earlier this year to issue a new formal rule reversing the 2015 ruling.

The administration made a similar effort at the Department of Labor (DOL), which has its own joint employer rule.

In January 2020, DOL issued a rule in line with the NRLB rule; however, much of that rule was recently invalidated by a federal judge, who determined that the procedures DOL used violated the Administrative Procedures Act, which governs agencies’ abilities to write rules.

In another win for the business community, the Trump DOL also withdrew a rule the Obama Administration wrote that would have dramatically increased the salary threshold for applying the white-collar overtime rules. The eventual

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 September 1-30, 2020, are: Doug M.Beech Casey's General Stores Inc.

Karen Hennings Bonde's Quick Mart

Ena Koschel Casey's General Stores Inc.

Kelly Anne Bucher Casey's General Stores Inc.

David Jeffco Krispy Krunchy Foods LLC

Danielle Mattiussi Maverik Inc.

Jerry Davidson Petes Corporation

Andy Jones Sprint Food Stores Inc.

Scott Minton OnCue Marketing

Lisa Dell'Alba Square One Markets Inc.

Joe Juliano United Pacific

Steven J. Montgomery b2b Solutions LLC

Mark Diarbakerly One Energy Inc.

Steve Kimmes Kimmes Enterprises LLC

Cara Heiden Casey's General Stores Inc.

Lance Klatt Minnesota Service Station Association

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Mitch Morrison Winsight LLC

Bryan Morrow PepsiCo Inc.

Thomas L. Robinson Robinson Oil Corporation

Gregory M. Parker The Parker Companies

Enrique Sales Abierto Networks LLC

John Peyton Gate Petroleum Company

Stewart Spinks Spinx Company Inc.

George T. Prewitt GT Petroleum Company

W.B. Dixon Stroud, Jr. Landhope Corporation

Darren M. Rebelez Casey's General Stores Inc.

Tony Vecchie Huckster Inc. CONVENIENCE.ORG

replacement rule the labor department put in place is much more reasonable and in line with comments NACS filed on behalf of the industry. If Trump is re-elected, we can assume the DOL may take another run at the DOL joint employer rule and continue its pattern of more business-friendly decisions.

A BIDEN ADMINISTRATION As one would expect, there are distinct and differing visions on most of these policy areas should former Vice President Biden win the presidency. In terms of payments policy, there is a likelihood that Democrats would be more amenable to addressing the anticompetitive nature of the credit card networks, which ultimately hurt American consumers. Biden was vice president in 2010 when President Obama championed and ultimately signed the Dodd-Frank financial reform legislation that included the Durbin Amendment. It is possible that a treasury secretary and a Federal Reserve chair under a Biden Administration may be more open to industry-led efforts to bring more fairness and competition to the payments space.

Additional reforms could be possible, especially if Democrats win the Senate majority.

The starkest contrast between the two presidential candidates is in the area of fuels policy. Addressing climate change is a top priority for Democrats and will be so in a Biden Administration. While little may change in the area of renewable fuels, attention will shift to alternative transportation fuels and zero-emission vehicles and the electrification of our transportation sector. Biden has voiced support for the Green New Deal and has described it as a “crucial framework for meeting the climate changes we face.”

However, while on the campaign trail in competitive states such as Pennsylvania, Biden has delivered a more moderate message in areas such as fracking and support for biofuels in the Midwest.

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Under a Biden Administration, we can certainly expect a much-less-friendly Department of Labor and one much more akin to what we saw during the Obama Administration. It is likely that a Biden labor department will seek to return to the Obama-era policies covering the joint-employer rule and the overtime regulations. Making more changes to both of those rules would require full administrative rulemaking processes, meaning they won’t happen immediately, but efforts to move them along would likely start early in the new administration’s term once a new labor secretary and other key positions are confirmed. We also can expect the new NLRB, under a Biden-appointed chair, to seek to reverse the joint-employer rule.

Though much like the DOL rules, it will take more time to reverse since the Trump NLRB used the formal rulemaking process for the joint-employer rule. In addition in attempting to reverse those Trump Administration actions, it is possible that Biden may seek to increase the federal minimum wage. That wage was last updated in 2007 when President Bush signed an appropriations bill including stepped increases, which ultimately set the federal minimum wage at its current rate of $7.25 per hour in 2009.

Many states and localities already had, or have subsequently instituted, minimum wages higher than the federal rate. It would not be surprising to see a Biden Administration seek to increase the federal wage to as much as $15 per hour.

As you can tell there are some stark differences in what we would expect to see, depending on which candidate emerges as our next president. This has been a fairly high-level overview of what NACS would expect to see in just three policy areas important to our industry.

There are innumerable other policy areas important to our industry, members and you as individual citizens.

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

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

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

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How to Tell Which E-Cigarettes Are Legal to Sell FDA HEEDS REQUESTS FROM NACS, OTHER GROUPS AND AGREES TO PUBLISH A PMTA LIST.

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

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Manufacturers of e-cigarettes currently on the market were required to submit a premarket tobacco product application (PMTA) to the Food and Drug Administration (FDA) by September 9 in order for their products to be legally sold in the U.S. Manufacturers who met the deadline can keep selling those products for up to one year while the agency reviews the lengthy applications. If e-cigarette makers didn’t submit applications, their products must be removed from retailers’ shelves immediately. The rub is that retailers could face FDA enforcement if they continue to sell e-cigarettes for which a PMTA hasn’t been submitted. But how is a retailer to know which manufacturers filed PMTAs and which didn’t?

To avoid this confusion and potential enforcement, NACS asked FDA to publish a list of the ENDS products for which the agency has received PMTAs. NACS organized a letter to the agency signed by other retail associations. The retail associations’ main point was that retailers look to the agency to know which products are legal to sell so that they can ensure they are operating in compliance with the law. Without a list from the agency, there would be no credible way

for retailers to truly know which products can stay on the market.

In early September, the agency announced that it would publish a list but gave the caveat that it would not be publicly available immediately.

“We request your patience as we work through the appropriate processes to ensure the posted information is accurate and compliant with federal laws,” FDA Center for Tobacco Products (CTP) Director Mitch Zeller said in a statement.

“In the interim, we encourage retailers and other interested parties to refer to the public statements made by the companies or contact the companies directly to get information about applications they may have submitted.”

NACS responded, asking the agency to exercise its enforcement discretion in the interim since a retailer cannot credibly confirm that manufacturers have submitted PMTAs without a published FDA list. The agency has not responded to that letter as of press time.

Until a list is made public, NACS believes a best practice for retailers is to ask the manufacturers for an email in writing confirming that they submitted a PMTA for their products.

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iStock.com/DedMityay

BY ANNA READY BLOM

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*Caffeine content naturally occurring from green tea 90 mg / 12 FL OZ. ** Only recyclable at participating store drop off locations. For more information please visit how2recycle.info © Ocean Spray Cranberries, Inc. 2020

IDEAS 2 GO

ABOUT

Nothing Halfway

Family-run Tobie’s Station is a “must-stop” between Minneapolis-St. Paul and Duluth, Minnesota.

BY SARAH HAMAKER Hickle’s grandfather was the original owner of the restaurant and convenience store, which Hickle and Zabrok purchased from their parents. “I’ve worked here my whole life,” Hickle said. “And I am thrilled to be the third generation to run this family-owned business.”

Name of company Tobie’s Station Date founded 1978 # of stores 1 Website www.tobies.com

Tobie’s Station is a halfway stop between the Twin Cities and Duluth, a place where travelers can stock up on refreshments and baked goods, fill up their tank with E85 flex fuel or E15, or recharge their Tesla.

S

ince 1948, Tobie’s Restaurant in Hinckley, Minnesota, has welcomed travelers on their journey between Duluth and Minneapolis/St. Paul. In the late 1970s, Tobie’s acquired the adjacent gas station, rebranding it as Tobie’s Station. “The gas station and small convenience store is very complementary to our restaurant business,” said Chris Hickle, who owns the business along with his younger sister, Pam Zabrok.

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

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ON THE ROAD Being a traveler’s traditional stopping point isn’t something Tobie’s Station takes for granted. “We’re a famous halfway stop between the Twin Cities and Duluth, and have marketed ourselves as such for as long as we’ve been in business,” Hickle said.

Tobie’s Station advertises its presence on a freeway billboard and on social media.

“People have known about us for years, and we’ve built our reputation on being the place to stop when traveling between these two cities,” he said.

Today, the station boasts a dozen fueling pumps through the Minnoco brand, offering E85 and E15. In addition, there are eight Tesla Supercharger points. “We’ve had those electric chargers for nearly five years and see them being used more and more every year,” he said.

After purchasing the gas station next door to his restaurant, Hickle’s grandfather put in a convenience store.

“It was really an early rendition of the modern convenience store, with groceries and convenience items inside and gas pumps outside,” Hickle said.

Hickle keeps the grocery section well stocked, which helped during the pandemic. In addition to necessities, Tobie’s Station offers grab-and-go food, drinks, CONVENIENCE.ORG

beef jerky and candy, along with other traditional convenience store items. “Since convenience stores were deemed essential, we were able to operate out of our store and even sell some of our restaurant menu items,” he said. “The pandemic impacted our business greatly, since we had to completely shut down our restaurant.”

One thing that helped Tobie’s Station stay afloat was a willingness to open their restrooms to the public. “With so many fast-food restaurants only offering drive-thru and other businesses and public buildings closed, we were the only public restroom available,” he said. “That brought people into our store and helped us get through the lockdown.”

A SWEET SIDE Travelers and locals alike have another incentive to stop at Tobie’s Station—to sample some of its world-famous baked goods. An in-house bakery churns out pans of caramel rolls, cinnamon rolls, donuts, apple fritters and other pastries daily. On a busy day, Tobie’s Station can sell 3,000 caramel and cinnamon rolls, plus numerous pans of donuts and fritters.

A few years ago, Hickle added a Caribou Coffee kiosk inside the convenience store, which sells specialty coffee drinks. “Our baked goods sell so well, Caribou allowed us to put our bakery products in their case rather than their own branded sweets,” he said.

A Caribou Coffee kiosk sells specialty drinks. Tobie’s inhouse bakery is a destination in itself, offering fresh-baked pastries, apple fritters, donuts and other treats.

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The restaurant provides fresh, graband-go sandwiches, as well as pizza, which Tobie’s Station sells by the slice.

“Our convenience store space is limited, so we’re not able to do more foodservice out of the store,” Hickle said. “But with the restaurant next door, we have a nice selection of grab-and-go food for our c-store customers.”

When he took over, Hickle integrated both the restaurant and convenience store graphic. “Before we remodeled, not everyone knew it was the same business, even though both the restaurant and the convenience store had Tobie’s in the name,” he said. He put a red roof on both buildings, moved the convenience store signage from the side to the front, and made sure the brand crossed into both businesses.

Overall, Hickle is proud of the family tradition of being there for travelers. “We hope our customers recognize that we run a top-of-the-line small family operation,” he said. “We want our customers to know we’re going to be here for many years to come.”

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

Visit her online at www. sarahhamakerfiction.com.

BRIGHT IDEAS As a third generation retailer, Chris Hickle has learned a thing or two about running a family business. “I worked for my parents as a dishwasher and a cook before I went off to school,” he said. A few years after graduating, Hickle ended up back home and went to work in the family business “as a temporary thing.” Soon, he and his younger sister took over the management of the business from their parents. “I have no regrets,” he said. “My sister and I work well together because our strengths complement each other.”

He said the key to working with family is to make sure you each play to your strengths. “She knows how to make every Caribou coffee drink and I don’t,” Hickle said. “But I’m more involved in the rest of the convenience store operation. We both work on providing a clean, updated place that’s focused on customer service.”

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CONVENIENCE.ORG

Operating without a playbook, convenience retailers find their way through chaos with their hearts.

By Kim Stewart

F

rom single-store operators to 200+ location chains, ask convenience retailers how they’ve fared this year and there will be talk of COVID-19 and protests, wildfires and hurricanes, chaos and uncertainty. Peppered throughout their stories and rising above the fray, though, is a single cord that unites the entire industry, from the executive suite to the frontline clerk: community.

This is a story about helpers and heroes and hope.

The COVID-19 pandemic has tested the convenience and fuel retailing industry in ways not imagined at the start of 2020. In March, NACS successfully advocated for a federal “essential business” designation for the industry as 24/7 sellers of gasoline, food and other vital goods. While this meant c-stores and gas stations could remain open as other businesses were forced to close, the designation wasn’t merely about profits, it was about purpose.

“We’re essential businesses because of who we are,” said Don Rhoads, CEO

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of the Convenience Group LLC, based in Vancouver, Washington. “We can always modify what we sell, and we’ll continue to evolve and introduce new channels, and other channels will likely go away because of who we are. We are an industry, one large community, and we serve communities. So, that’s really, I think, the story line for all of us.”

Getting the governmental greenlight to remain open was just the first step.

Staying open has been a much bigger challenge amid a patchwork of federal, state and local COVID-19–related health regulations, personal protective equipment, occupancy limits and safety measures.

“Early on there wasn’t a playbook for this, and there still isn’t for the most part,” said Rhoads, whose businesses are located in the Pacific Northwest, in what was the West Coast epicenter of the initial COVID-19 outbreak in the U.S. “We’re all about health and safety for our employees and customers,” he said, “but it’s been a challenge, and we work hard to remain open.”

Although the pandemic derailed what “started off to be a really good year for us,” Rhoads said, “there’s value in stepping back and looking at the situation for what it is and understanding that you have little control over where this is going to end up, but you do want to make a difference.”

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“The thank yous that we received were really emotional and touching,” she said. “We just want to do good, and they were saying thank you to us, but we also wanted to say thank you to them because they’re keeping our city—all the health-care workers—keeping us alive and doing their best.”

In Washington, Rhoads and his c-stores worked with local agencies and volunteers to help feed needy families. “We did a drive-thru pop-up where the clients did not have to get out of their cars,” Rhoads said. “We gave it one hour, and we were done in 55 minutes. We served 250 families, 600 individuals, close to 100 pounds of food for each car. And we personally provided lunchboxes for everyone who came by that day.”

The Goods Mart in New York City, headed by CEO Rachel Krupa, created boxes of healthy snacks that customers could donate to local hospitals and food banks during the COVID-19 crisis.

GRATITUDE Across the country in New York City, the East Coast epicenter of the pandemic, Rachel Krupa, CEO, The Goods Mart, also found herself in unchartered waters. “There’s no rulebook created for this because we have never been through a pandemic. How do we do this? Do we wear gloves?

Do we wear masks? Do we put up the small piece of plexiglass? Do we serve hot coffee? Do we not serve hot coffee? Do we clean everything?”

The Goods Mart’s mission, though, was clear: “to serve our community, no matter what,” Krupa said. “It’s been emotional,” she said, “because there’s so much unknown, but at the same time it’s been so rewarding because we’ve been able to connect with our community more than ever.”

In the early spring as the city’s hospitals filled with patients battling COVID-19, Krupa wanted to support weary health-care workers with healthy snacks. The Goods Mart started what Krupa calls the Goods Surprise Snack Box available for shipping nationwide. Customers also could donate a box to local food banks and hospitals. Krupa estimates that more than $20,000 worth of snacks were donated to eight different hospitals out of her tiny 300-square-foot SoHo store.

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RELATIONSHIPS There are about 152,000 convenience stores in the United States, and about half of America walks through their doors each day—pre–COVID-19.

Foot traffic may be down, but the connections that c-stores have with their regular customers and the surrounding communities are stronger than ever.

“It’s surprising with having over 1,500 customers a day how many regular customers we have, and how many we remember on a first name basis, and they know us as well,” said Lonnie McQuirter, director of operations, 36 Lyn Refuel Station, Minneapolis, Minnesota. McQuirter’s lone store is located in the heart of south Minneapolis and carries locally sourced and organic products, plus traditional c-store fare.

For McQuirter, investing in relationships with 36 Lyn’s neighbors in an authentic way is nonnegotiable. 36 Lyn was one of the first corporate sponsors of Open Streets Minneapolis, a free, family-friendly street festival in which major thoroughfares are closed to car traffic on a weekend afternoon.

“It was important for me that our customers get to know the staff in a light beyond just the typical cashier/customer transaction and that they get to know the people that live in the area,” McQuirter said of his support for Open Streets.

“It’s humbling, and it’s something that always helps me and my staff appreciate the importance that we have in the area and the reason why we need to be in our community.”

The first Open Streets event was held in 2011 on two miles of Lyndale Avenue South, where 36 Lyn operates. The c-store’s rooftop becomes a stage for musical performances, and classic cars, local vendors CONVENIENCE.ORG

WE’RE

D E R O N O H

and food trucks take over the forecourt. (This year’s festival was cancelled due to the pandemic.)

“It’s my firm belief that the more that we know our neighbors, the more that we can attract people from different walks of life to understand that we all want the same things for the most part. It helps to make our world smaller, but it also helps to build that kind of sense of belonging and community that is much needed,” McQuirter said.

During the height of the COVID-19 crisis, it was especially important for 36 Lyn to provide clean restrooms for customers when other businesses were closed, and serve as a refuge for people in crisis. “There have been people that have had domestic situations where they are fleeing to us, and they wait until the police

get here,” McQuirter shared. “There’s not any other place for them to go to. We are critical infrastructure in our communities.”

SUPPORT LOCAL For these small business owners, supporting their communities also means lifting up nearby enterprises. At Rhoads’ c-stores, foodservice in particular has been limited due to COVID-19–related restrictions. The majority of his stores “are tucked back in neighborhoods, and we’re part of that fabric in the communities where we reside,” he said.

He shares how painful it was to see a small restaurant, Farrar’s Bistro, close down next door to his Felida Store. “It’s a great neighborhood restaurant. It’s very popular, and just overnight

DOWN BUT NOT OUT When an SUV crashed through his Kenosha, Wisconsin, c-store in early October, Anthony Perrine was determined to focus on the positive. Perrine and his family operate Lou Perrine’s, a gas station founded by his grandfather.

“We’re a staple here in the city,” Perrine said. “There are still people who come here that my Grandpa wiped their windshield off.”

The Jeep’s driver mistakenly shifted into drive instead of reverse and hurled into the left corner of the Lou Perrine’s building, taking out the ATM, the shutoff switch for the gas pumps, the wine cooler, the health and beauty section and the checkout counter. Miraculously, neither the driver nor anyone in the store was hurt. And the Mama P’s Ho Ho Cake cooler was unscathed.

Forced to temporarily close its doors and its fuel pumps, Lou Perrine’s donated nearly 1,000 pounds of food to a local food bank and homeless shelter and moved ahead with a planned backpack giveaway for kids in need. “This is an opportunity for us to give back to the community any way we can,” Perrine said, and the community has rallied around the business and its employees. “From a local standpoint, everybody’s been great, showing us love.”

It wasn’t the c-store’s first crisis of 2020. COVID-19 battered businesses in Kenosha, and the restaurants, bars and shops were just getting back on their feet when the small city

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found itself in the national spotlight. On August 23, police officers shot and killed Jacob Blake, sparking days of protests for justice, followed by looting and arson.

“We were in the heart of the riots,” Perrine said. “We knew right away the city was going to burn. Thanks to our connections with NACSPAC, I reached out to our congressmen and city and state leaders and said, ‘We need backup now.’” Perrine hired “some pretty heavy-duty security guys who kept the place safe,” he said. His staff handed out water bottles to protestors and milk to soothe eyes irritated by tear gas. Perrine credits Lonnie McQuirter, director of operations, 36 Lyn Refuel Station, Minneapolis, Minnesota, for the idea. Perrine and McQuirter connected through NACS, and Perrine was grateful for the friendship when he found himself standing post at night atop his gas station—like McQuirter had done in Minneapolis—during the Kenosha unrest. “Lonnie gets it,” Perrine said.

“We made it through COVID, and none of our employees got sick. We made it through our riots. It just so happens that an older lady with a lead foot took us out.” As Perrine said, “It’s 2020. I’m going to make the most of it.” He paid his employees while the store was closed. “These are good people. They’ve been here forever. We’re going to make sure our employees aren’t on unemployment. I’m going to use this disaster and spin it into something good.”

Perrine and his family’s message to people who want to help out is simple: “Support local right now. Support downtown. Go to the restaurants. Enjoy our lakefront.” Kenosha needs extra love.

CONVENIENCE.ORG

the light switch went off.” Rhoads wanted to make sure that Farrar’s “had a fighting chance of moving forward,” so he enlisted owner Debbie Belden to provide foodservice to his c-stores: grab-and-go sandwiches and sides. “They make great products.

I brought a couple of their people into my commissary to help out.” The restaurant is back open now, with capacity limits.

For Krupa of The Goods Mart, building community also means elevating smaller brands, especially Black-owned ones. The Goods Mart is among the retailers that have pledged to devote at least 15% of shelf space to products from Blackowned businesses. “Because now more than ever, our dollar counts for something,” Krupa explains.

“Let’s change society through how we’re shopping, and that is even through the food we buy.”

SILVER LININGS Krupa took a closer look at the SKUs in her store with fresh eyes after it was looted during Memorial Day weekend protests that followed George Floyd’s May 25 death in police custody in Minneapolis. “The death of George Floyd was just heartbreaking,” Krupa said. She awoke on June 1 to an email from her security company alerting her to “destruction” at the Lafayette Street c-store.

“I rushed out in my pajamas and just ran to the store. And as I walked into SoHo onto Lafayette Street, it was just building after building—there was just glass shattered. And at that moment, I just knew that our store was broken into. And then as I approached it, the front rack was down, and the front door was unlocked. And you know, it was emotional because,” she pauses to compose herself, “this is what it takes for us to open our eyes to the change that is needed.”

During the cleanup, The Goods Mart handed out free coffee, and customers and strangers alike stopped by to help it and other shops clean up glass and board up windows and doors. “Our neighborhood came in to support us during this

CONVENIENCE.ORG

Don Rhoads, CEO of the Convenience Group, helped organize a pop-up, drive-thru food pantry at one of his stores in Washington state, feeding 250 families.

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Lonnie McQuirter’s 36 Lyn Refuel Station is a key outpost in the Lyndale neighborhood of Minneapolis.

time. Because it’s how you support each other and how you lift each other up. It was emotional.”

Krupa sees a silver lining. She was able to donate a lot of her stock to a women’s shelter and then started digging anew into the brands she offered, discovering with dismay that only three of 200 brands she carried at the time were from Black-founded businesses. Now there are 20. And she’s enlisted local artists to create murals on the plywood covering her storefront, turning what could be seen as an unwelcoming street façade into a message of hope.

HEARTBREAK AND HOPE Floyd died at 38th Street and Chicago Avenue about a mile away from 36 Lyn. Although McQuirter, who grew up in Minneapolis, didn’t know Floyd personally, some of his employees and customers did, and many attended peaceful rallies and vigils in the initial days after the tragedy.

Then agitators took advantage of the gatherings to

Look for video interviews of the retailers profiled here in the Spotlight Sessions as a part of the NACS Crack the Code Experience, November 2 through December 4, 2020. Register at www.convenience.org/crackthecode. And on November 16 at 2:30 p.m., don’t miss “The Hero Effect” Spotlight Session featuring Kevin Brown, who will share how businesses can bring out their inner heroes.

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stir up violence, and 36 Lyn was looted but spared the devastation that befell other businesses, many of which are owned by McQuirter’s friends.

A security expert told McQuirter that “36 Lyn the convenience store was critical to the health and well-being of our community and neighborhood. He didn’t mince his words in describing and explaining why—if 36 Lyn was to burn down, if we were to be taken away from our community, the dire consequences that it would have for the rest of the community there.”

McQuirter, his staff and volunteers stood watch over 36th Street and Lyndale Avenue for several nights during the height of the civil unrest. Matthew Kernan was one of McQuirter’s neighbors who offered help. The two men testified at a Minnesota State Senate hearing this summer about the impact on small businesses in downtown Minneapolis.

“I saw everything that had happened from Day 1 and…I just couldn’t let things go without taking any action,” Kernan testified. “So I believe it was on the 29th, I came to the gas station where Lonnie owns, and offered any kind of protection that I could provide. So for the next five evenings after the 28th we stood post on top of the gas station,” he said, his voice breaking.

The experience was wrenching. “While we were tired, while we were overworked at the time, it really helps to instill why we were there,” McQuirter said. “I think it’s all too easy to say, ‘That business has insurance. They can just board up and walk away.’ When the sun is going down, when you know the police aren’t going to show up, and you know that the fire department may not show up, to have people in the community that are out there for you…it’s something that others don’t necessarily understand the value of—that’s observed by our customers and by those in our community—until it’s not there.”

Special thanks to Jeff Lenard, NACS vice president of strategic industry initiatives; Chris Blasinsky, NACS content communications strategist; and Blake Althen, co-owner and producer, Human Factor LLC, who conducted interviews for this article.

Kim Stewart is editor-in-chief of NACS Magazine and editorial director of NACS. She can be reached at kstewart@convenience.org.

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T

he NACS Crack the Code Experience is a five-week digital experience and curated marketplace connecting convenience retail buyers and sellers from around the globe.

Running November 2 through December 4, 2020, with continued access through December 31, 2020. The experience will feature 24/7 access to forward-looking ideas and insights, plus innovative new-to-channel products and strategic connections.

Replace months of face-to-face meetings, connect with product representatives and learn from fellow leaders in more than 50 education sessions designed to spark ideas you can implement today and answer the questions that have been plaguing you about the future of your business in these tumultuous times.

Best of all: You can explore the experience on your time and at your leisure. The Crack the Code Experience is open 24/7 (like many of you!) so you can get what you want, when you want it.

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November 2 – December 4, 2020 www.convenience.org/crackthecode DISCOVER NEW TRENDS AND IDEAS WITH 50+ EDUCATION SESSIONS

The Crack the Code Experience will feature more than 50 content-rich education sessions loaded with insights and new ideas. Large or small, one store or 500+ stores, operators of all sizes can find relevant solutions at any one of our education sessions. And new this year: Suppliers can also attend education sessions, which offer valuable insights and an insider’s perspective on the needs of their retailers’ customers.

Searchable by keyword, track or day, the educational opportunities offered during the five weeks of the experience ensure you have the tools you need to grow personally and professionally. Some hot topics include: • Cannabis in the Age of COVID • How to Succeed in the EV Market • Understanding Dayparts • Preventing and Deterring Theft • Age Verification in the Digital Age • Navigating the Current Labor Landscape Explore all the session topics at www.convenience.org/crackthecode.

ABOUT THE EXPERIENCE

What? An online digital experience connecting convenience professionals with products, services, education and insights that are crucial to the future of the industry.

Where? Anywhere you’d like it to be!

When? This five-week series starts November 2 with content available, on-demand, until the end of the year.

Why? We shouldn’t pause this pivotal information exchange just because we cannot physically be together.

The NACS Crack the Code Experience is making industry content and ideas more accessible than ever before— and at a cadence designed to work with your schedule.

You won’t need to be online every day to catch all the learnings, but you will be able to explore the education offerings in three unique formats, based on your schedule: • LIVE: The session will launch for the first time. During these live launches you will be able to experience the content and chat with peers—including the session speakers who will be answering your questions.

• ENCORE: Each Friday, sessions will be played identically as they were when launched LIVE, at a second scheduled time, where you can chat with and experience the content with other attendees.

• ON DEMAND: Within a week of the LIVE and ENCORE sessions, session recordings will be made available to all attendees to view any time they like through December 31. You will also have access to a few extra on-demand sessions from previous NACS events.

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November 2 – December 4, 2020 www.convenience.org/crackthecode

FIND NEW PRODUCTS WITH THE INTERACTIVE COOL NEW PRODUCTS SHOWROOM NACS is putting the Cool New Products Room you love to see at the NACS Show front and center in the Crack the Code Experience. These showcases are filled with just-debuted products and organized in the same product categories you’re used to seeing in person. You can “favorite” your top products within each category, and those favorites will be used to determine the Top 10 Cool New Products each week.

The Interactive Cool New Products Showroom, located on the main landing page of the Crack the Code Experience, is a must-see resource for buyers to locate the newest industry innovations. Once you enter the Amazon-like showroom, navigate the space by familiar tradeshow product categories: Facility Operations, Foodservice, Fuel Equipment & Services, Merchandise, Candy & Snacks, Technology and CBD— or drill down even further by searching by keyword.

You can live chat with suppliers, request samples and view demos. Create a “wish list” and share with the category managers on your team.

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On the exhibitor side, suppliers will receive their leads from the Cool New Products Showroom in real time giving them the opportunity to follow up in a timely manner.

EXPLORE HUNDREDS OF SHOWROOMS As a retailer, you need to have your finger on the pulse of new products and trends for your convenience stores. But are enough suppliers coming to see you right now?

The NACS Crack the Code Experience now puts new connections at your fingertips. During designated expo hours (see sidebar on page 32), explore hundreds of showrooms from big-name brands and new exhibitors, enabled with appointment setting, chat functions, request for quotes and samples, virtual demos and more. Everything you need to deliver new products to your customers will be available at the click of a button.

If you’re exploring the showcases after hours, you can simply leave a message and a sales representative will get back to you.

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November 2 – December 4, 2020 www.convenience.org/crackthecode

WEEKLY SPOTLIGHTS KEEP YOU COMING BACK The Crack the Code Experience dives deep into important topics for the convenience industry. Specifically, Spotlight Sessions “spotlight” five weekly themes and will debut at 2:30 p.m. EST on the dates indicated below. More than a dozen Spotlight Sessions will explore challenges and opportunities related to pressing industry issues and topics and will connect with myriad elements of the Crack the Code Experience that week.

These sessions, led by inspiring thought leaders, will have you thinking critically and strategically.

You won't believe who is joining us this year!

Speakers and special guests can be found at www.convenience.org/crackthecode.

NOVEMBER 2 -6 DISRUPTION/ NAVIGATING CHAOS The pandemic has affected every aspect of physical and digital retailing. Short-term, many retailers adapted their business models to deliver more convenience and new technologies, while also exploring the long-term opportunities. This week’s content highlights how industry thought leaders in the convenience and fuel retailing space can thrive during chaotic times and reinvent themselves to better absorb future impacts more efficiently and sustainably.

NOVEMBER 9-13 WORLD-CLASS IDEAS The future of convenience is global, and as more operators seek ways to innovate their offers and exceed consumer demand, these ideas and evolving trends from around the world are transforming the traditional convenience model.

This week we’ll hear from global retail industry leaders on how they continue to redefine and evolve the concept of convenience with best-in-class ideas that respond to constantly changing consumer behaviors and need states.

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NOVEMBER 16-20 ESSENTIAL STRATEGIES FOR ESSENTIAL BUSINESSES As essential businesses, convenience retailers are staying ahead of the curve on a variety of issues to provide much-needed products and service for their employees, customers and community.

NOVEMBER 23-27 CULTIVATING A COMMUNITY HUB The convenience retailing industry, which contributes more than $1 billion a year to community groups, has a positive impact on local communities by providing jobs, growing the economy and supporting charitable initiatives.

This week’s content takes a deep dive into how the industry’s giving spirit is even more important in today’s climate and why it’s essential for retailers to tell their story and connect their values and brands with their community.

NOVEMBER 30 – DECEMBER 4 THE FUTURE OF THE INDUSTRY Scenario planning and strategic plans help convenience retailers of all sizes prepare for disruption, whether it’s a global pandemic or a new form of competition that seeks to redefine convenience.

This week will wrap the Crack the Code Experience with high-level insights from top retail leaders who have decades of experience leading global and domestic convenience retail companies that are constantly improving their processes and performance.

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C

onvenience-store retailers continuously look for new ways to reduce expenses, and one of the quickest, most effective ways to save is by cutting utility costs.

The typical convenience store is brimming with power-consuming equipment, ranging from refrigerated cases and lighted gas pump canopies to POS technology and coffee pots. That’s why c-stores consume an average of 51.5 kilowatt-hours per square foot per year, and energy is their second largest expense after labor. In 2018, utility costs averaged 3.6% of gross profit dollars, according to the NACS State of the Industry Report of 2018 Data.

“Energy management is an often-missed opportunity for convenience stores,” said Al Subbloie, CEO of Budderfly, an energy management outsourcing company based in Connecticut. “There are dozens of steps a retailer can take to cut a store’s energy consumption, and today, powerful new analytics are available to help monitor, control and record power usage and many aspects of a chain’s operations.”

HOT LIGHTS AND COLD CASES One of the first places to see immediate results is to replace fluorescent bulbs with high quality LED lighting and fixtures. LED lighting can cut energy consumption up to 75%, plus LED lights last three times longer than fluorescents and have

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a high-color rendering index that enhances the look of the entire store interior or forecourt. The lighting “color” can even be customized for front of the house versus back of the house or for time of day for additional operational flexibility.

“One of the best things about LEDs is that they emit very little heat,” said Subbloie. “By comparison, incandescent bulbs release about 90% of their energy as heat, and compact fluorescent lamps release slightly less. Lighting retrofits can lower a store’s demand for cooling by 10% to 20%.

LED costs have come down a lot in recent years.”

Stores can capture additional savings by installing timers, occupancy sensors in certain locations or daylight-detecting monitors on lights.

Beer caves, freezers and coolers are vital convenience store tools. They keep some of the store’s most in-demand products cold and ready to go.

“That’s a big reason why stores should replace traditional lighting in standard refrigerated cases with cooler LED,” Subbloie said. “That change alone can cut significant energy consumption.”

In addition, installing anti-sweat controls on freezer and cooler doors lets retailers monitor the temperature and run the doors’ heaters only when CONVENIENCE.ORG

This article is brought to you by Budderfly.

there’s a chance of condensation.

“By installing those controls, you can potentially save almost $100 per door each year,” said Subbloie.

Most foodservice operators prefer open refrigerated cases for merchandising cold items, such as salads, sandwiches, wraps and cut fruits and vegetables. The design showcases products and makes them easy for customers to grab. By selecting display cases that have clear doors or sliding lids, retailers will lower refrigeration compressor loads, extending the life of the compressor and cutting energy use as much as 65%.

Air conditioning is any store’s biggest energy expense, Subbloie said. “In fact, HVAC can be about 25% of a retailer’s overall energy bill. Freezers, coolers and cooking equipment generate a lot of heat in a small space, so managing the HVAC is key to controlling costs.”

Upgrading HVAC units helps motors and other components run more efficiently, and variable frequency drives can be utilized on larger HVAC units to optimize the speed of the motor. Smart controls, such as wireless thermostats, help the retailer manage the system remotely and also to record data across multiple locations of larger chains.

Large convenience chains, such as 7-Eleven and Kum & Go, have added LED lighting and other cost-saving improvements to their stores.

“Working with Budderfly lets a c-store operator of any size or brand do the same without having to invest their own money or wait on corporate help,” said Subbloie. “This is appealing not only from the perspectives of operations and profitability as everyone seeks the new customers currently choosing a convenient alternative to distant, larger stores, but also for upping the valuation of a group of locations for possible acquirers shopping for well-run groups of stores.”

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MAKING BIG CHANGES Convenience stores may choose to make energy saving improvements gradually or, like P2 Sandhu of Richmond, Virginia, they can do them all at the same time once they know what actions should be taken. Sandhu is the owner of P2 Restaurants Inc., which franchises several QSRs. When he wanted to reduce his locations’ energy bills, he called Budderfly for help.

“We sent a team to Virginia to conduct an on-site analysis of his KFC locations. We wanted to understand everything about his energy needs and opportunities,” said Subbloie. “After an intensive review, we purchased and installed all the necessary technology for lowering and monitoring the stores’ energy use at no cost to P2.”

The Budderfly team created a model to explain the minute-by-minute impact of everything in each store. Then, they designed interior and exterior LED lighting systems and upgraded the HVAC and cooking ventilation systems for the two QSRs. They integrated energy demand response timing and controls to distribute energy usage across the lowest-cost times of day.

Monitors create a network that uses artificial intelligence to oversee the entire system, generate real-time data and notify management in case of irregularities.

A key to the program’s success is that Budderfly monitors usage at key points of consumption, not just the single meter outside the building that utility companies use. On each piece of equipment, Budderfly installed monitors—some as small as a computer chip—to create a network that uses artificial intelligence to oversee the entire system, generate real-time data and notify management in case of irregularities, such as an unlatched freezer door or a rear exit that stays open too long.

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ENERGY-SAVING ADVOCATES Cost cutting is the most common reason for businesses to reduce their energy use, but the desire to protect the environment also is a growing concern. Today, many businesses are sharing their energy saving goals with the public. They are serious about their conservation goals and want customers to know that they are investing in sustainability efforts.

A recent Deloitte report on energy management noted that nearly six in 10 businesses surveyed feel increased pressure from stakeholders to disclose and address climate risk, and of those, nearly nine in 10 have reviewed or changed their disclosure procedures and developed plans to tackle climate-related risks.

According to the NACS Sustainability Playbook, research conducted by one convenience operator found that 68% of regional customers said they would visit the stores more frequently if they marketed themselves as a sustainable company.

Budderfly provides customers with window and cooler clings featuring the green Budderfly Effect logo seal, which designates stores as an energy-efficient facility.

“We’re currently planning to showcase our customer success stories,” said Al Subbloie, CEO of Budderfly, “which gives the customers and their upgraded stores potential social and search exposure on the energy efficiency/green makeover topic. We encourage customers to share this news in their social feeds and use it in their advertising.”

Last year, CGS, a global provider of business applications, conducted a consumer survey on retailing and sustainability.

More than two-thirds of the respondents said they consider sustainability when shopping. Despite price still being a big factor in every purchasing decision, consumers emphasize sustainability and are increasingly focused on supporting brands whose missions they care about.

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“Our IoT smart meters collect information 24/7/365, creating a really unprecedented density and sophistication of data, which is all processed through an integrated platform of proprietary Budderfly software and hardware,” said Subbloie.

“Our AI and sensor-based real-time management can adjust activities to save energy and cost, by shifting usage to lower-rate times of day, by avoiding special capacity charges and by increasing the performance and lifespan of vital equipment in our customers’ stores.”

The electric bills for Sandhu’s two stores were immediately replaced by a monthly statement from Budderfly. A user-friendly dashboard also lets Sandhu review his electrical activity in as great a degree of detail as he likes, or he can choose to leave it to Budderfly to make efficiency and savings decisions effortless.

“And like all our clients, P2 was guaranteed that his monthly electrical usage figure was lower than before,” Subbloie said. “Over a 10-year contract, our program is designed to upgrade equipment and lights for free and also reduce a convenience store’s utility costs by $25,000 or more.”

During the COVID-19 pandemic, foodservice operators and retailers are facing many challenges, “but one thing they can control is energy consumption,” Subbloie said. “Depending on the age of a business’ equipment and other factors, Budderfly can help a retailer cut energy consumption and costs up to 30%, which pays for the customer’s savings, the equipment we install, our services and more. And while Mother Earth won’t share in those monetary savings, these actions will reduce a business’ carbon footprint.”

Pat Pape worked in the convenience store industry for more than 20 years before becoming a writer. Her portfolio can be seen at patpape.wordpress.com.

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Bu 42

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ulking Consumer response to COVID-19 might change the cigarette category’s trajectory for 2020 and beyond. | BY MELISSA VONDER HAAR

T

he COVID-19 pandemic—and consequent lockdowns this spring—impacted virtually every category within convenience. Perhaps none more so than cigarettes. Accounting for nearly 28% of U.S. in-store dollar sales, according to 2019 NACS State of the Industry data, cigarettes have long represented the channel’s greatest sales driver … and the greatest declines, with gross margin dollars shrinking 4.8% last year. It also represents a category where 70% of the sales happen within the convenience channel, and online sales in the U.S. are banned.

So perhaps it’s not surprising that the initial lockdowns benefited both the cigarette category and tobacco retailers.

“In January, before the pandemic hit, the nicotine/tobacco category was declining by 2-3%,” said Don Burke, senior vice president of Pittsburgh-based Management Science Associates (MSA). “Right now, we’re seeing minus 0.8% over the past 52 weeks. That’s a significant improvement.”

That boost was due in part to major stock-ups in March, as well as a continued desire to make fewer shopping trips, according to NACS Vice President of

CONVENIENCE.ORG

Research Lori Buss Stillman. As with beer and packaged beverages, people were consolidating trips by buying larger volumes and larger packages. “There’s been some pivot from buying one or two packs to a carton,” she said.

Lonnie McQuirter saw this happen firsthand at his stores. The director of operations at 36 Lyn Refuel Station, Minneapolis, reported that his weekly carton sales are higher than they’ve been in years. Perhaps more impressive, carton growth hasn’t come at the expense of single packs, representing actual growth.

Indeed, Nielsen data show that as of the 21 weeks ended August 8, 2020, carton sales were up $959 million, and single packs were up $1.2 billion from the 21 weeks leading up to the pandemic. Units also were up: cartons by nearly 15 million units and singles by more than 141 million, suggesting it’s not just stock-ups.

“You’d expect to see spikes for certain weeks, then it balances out the following weeks,” McQuirter said. “We haven’t seen that yet.”

MSA data—which track wholesale shipments to retail—show unit sales were down 2% in January and 3% in February, which Burke described as “typical.” Then March hit and units increased by 3% compared with the previous year. In April and May, units were down 7% and 1%, respectively, as retailers worked off the inventory from March.

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43

June is where things got interesting.

“Cigarette unit sales were up 1%,” Burke said of June. “That was somewhat surprising as volumes were expected to return to a more typical slight decline. If it continues this way, cigarettes could have a very good year.”

THE FACTORS: NOT JUST COVID-19 The continued growth has surprised even seasoned retailers. “It seems confusing at first,” McQuirter said. “Why are our sales up not only in single packs but also multipacks?”

As he reflected on the market since March, McQuirter pointed to multiple factors combining for a perfect storm: yes the quarantine era, but also working from home, the social unrest and protests that have taken out some of his competitors in Minneapolis, and even weather phenomena like Hurricane Laura. “To tease out one thing or another would be naïve,” he said.

Here are some of the most prominent reasons behind a growth in cigarette sales: •A n Essential Good: McQuirter likened early bulk purchases for cigarettes to the extreme stock-ups the nation saw of toilet paper and hand sanitizer back in March, noting that for more niche brands, he had customers who would buy out his entire supply in one trip. “They want to be prepared if there’s a supply shortage or if they can’t leave their homes,” he said. “It’s not a value play: Our cartons are the exact same price as what 10 packs of cigarettes cost.”

•E xpanded Unemployment Insurance: While the cigarette shopper is often price sensitive, McQuirter said that lessened with the congressional expansion of unemployment insurance during the pandemic, putting an extra $600 a week in the pockets of people who’d lost their jobs. “Very few shoppers are actually looking at the price of items; they’re just going and buying them,” he said, adding that he hadn’t yet seen a negative impact from the expiration of those benefits in August.

• I ncreased Consumption: Perhaps the greatest reason behind unit growth is the simple fact that people can smoke more … and are. “Many consumers are in the work-from-home environment and are not faced with the typical smoking restrictions they’d face in the workplace,” Burke said. “Consumption is up because there are

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From March to August, sales of cigarette cartons were up by nearly 15 million units and singles by over 141 million, compared with the six months before the pandemic. no restrictions on usage.” Stillman added, “In the midst of a pandemic, people are stressed.

COVID gave us a bit of a delay on the declines we expected this year in tobacco.”

MOVING FORWARD Though the unemployment insurance expansion has expired, the other factors behind the growth in cigarette sales—while not permanent—are likely to linger through the end of 2020. Potentially longer. “We’re cautiously optimistic about having strong double-digit tobacco and cigarette sales this year,” McQuirter said.

Officially, MSA is projecting declines of 2-3%, which Burke said is in line with major tobacco manufacturer projections. “But it could be better should the pandemic continue, requiring continued work from home,” he added. “That could make a big difference in this market.”

Which means retailers will need to make some adjustments to better capitalize on the new normal in cigarette purchasing patterns. Instead of encouraging a hot coffee with a cigarette pack, make sure pandemic-needed items like hand sanitizer or cleaning supplies are readily available to boost the basket. Instead of banking on single packs, don’t slack on cartons.

“We’re going to have to figure it out as an industry,” said Stillman. “The consumer is willing to buy larger package sizes from us…if we have it available.”

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

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AND

SIMPLIFY AMPLIFY Day-to-day decisions about fuel supply can be made easier with AI-powered software.

WHETHER IN PANDEMIC TIMES OR NOT, REDUCING THE COST OF LAID-IN FUEL IS ALWAYS A GOOD THING FOR CONVENIENCE STORES, RIGHT? Yes. That’s right. Getting fuel in the ground at the lowest possible cost is the ultimate goal of the supply and logistics team. That was the case before COVID-19, and it will be the case after COVID-19.

The only thing that has changed during the pandemic are the complexities of achieving this goal. While market volatility and lower refined product prices have created new opportunities for supply teams, it has created more complexity for transportation departments in executing supply strategies. As such, it is more important than ever to have a unified technology platform that not only optimizes supply decisions but also integrates those decisions with dispatch and the drivers.

HOW DOES GRAVITATE HELP WITH REDUCING LAID-IN COST? Gravitate BestBuy & Dispatch is an integrated supply optimization and dispatch solution. It helps c-stores reduce fuel supply and logistics cost through AI-enabled software. It was built for the c-store business model to optimize fuel supply decisions, dispatch and logistics. We wanted to give users access to better support for day-today supply decisions, oversee logistics, and manage transportation, demand planning CONVENIENCE.ORG

and route optimization—all on one platform.

In essence, we solve for the entire supply and logistics process.

HOW DOES THAT ADD VALUE? Convenience retailers can experience significantly reduced fuel supply costs, reduce their need for dispatch resources and increase the utilization of their assets.

Positive outcomes for retailers include: • Consistently choose the best supply options, decreasing supply cost by 10-25 points • Increase truck utilization by 5-10% using our route optimization engine • Minimize dispatcher and admin overhead by 25-40% by streamlining operational processes • Improve the data flow and communication with third-party carriers HOW IS YOUR SOLUTION DIFFERENT FROM OTHERS ON THE MARKET? The Gravitate Best Buy & Dispatch solution is the only AI-enabled supply optimization and dispatch solution on the market. Other systems are great at capturing data on decisions after they are made, but they don’t help c-stores make the optimal decisions at every stage in the process. We are also a design-minded team, which means retailers will find our software simple to use and aesthetically pleasing while driving strong commercial value.

Mike Scharf Co-founder Gravitate mike.scharf@capspire.com

GETTING FUEL IN THE GROUND AT THE LOWEST POSSIBLE COST IS THE ULTIMATE GOAL OF THE SUPPLY AND LOGISTICS TEAM.

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THE

RELATIONSHIP

BUSINESS

Jobbers and dealers navigate an evolving business model— and pandemic—to find success.

BY SAMANTHA OLLER 48

| NOVEMBER 2020

CONVENIENCE.ORG

iStock.com/ GoodLifeStudio; mregologlu

J

ason Fouts compares a jobber’s relationship to its dealers as that of an NFL franchise owner to its players.

“If the owner succeeds and gets the best in there, the team wins,” he said.

“If the team wins, he looks good to fill the seats for the stadium. And that’s the way we look at it: It’s a win-win.”

Fouts is director of dealer operations for Littlefield Cos., Fort Smith, Arkansas, which has 37 consignment dealer-operated sites and more than 90 dealer-owned and -operated locations, along with its own chain of 23 Littlefield Express stores. Littlefield supplies unbranded and Phillips, Valero, CITGO and Alon fuels in four states.

Both sides need to do their part to make the relationship a success, Fouts said—the jobber providing the fuel branding, supply and retail support, and the dealers keeping stores clean and well run. “It’ll go hand-in-hand, just like Jerry Jones and his team,” he said.

This symbiotic, complex relationship is a relatively new industry phenomenon. For decades, jobber-dealer relationships were focused mainly on pushing fuel gallons.

Andy Gammel, senior vice president of operations with Empire Petroleum Partners LLC, Dallas, Texas, describes the traditional jobber-dealer relationship as transactional. “Just have a good price, bill them correctly and don’t really cause them any issues operationally,” he said. Empire has more than 1,500 wholesale locations in the Mid-Atlantic, Southeast, Southwest and Midwest and supplies most of the major oil brands.

But in the past five to 10 years, the jobber-dealer relationship has become much more dynamic as competitive and consolidation trends reshape the industry. “As our business has become more and more competitive, and maybe profitability and margins for a while there were really, really, compressed, you had to set yourself apart from competition,” said Gammel. “Out of necessity, we’ve had to improve.”

“Back in the day, you could churn through dealers as you needed to,” said Roy Strasburger, president of Temple, Texas-based StrasGlobal, CONVENIENCE.ORG

These days … there is less access to capital and cash to get the inventory to open a store. which supervises dealer sites for jobbers, among other services. But that stream of potential dealers is shrinking.

“There are fewer people who can go into the stores these days because there is less access to capital and cash to get the inventory to open a store,” Strasburger said. He also pointed to immigration restrictions, the troubled economy and pandemic pressures as factors that will “drastically reduce the pool of dealers” in the months ahead.

To continue to grow in this environment, jobbers need to treat their dealers like franchisees of their brand, Strasburger said, and provide

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that same level of support. “If the dealer is more successful, that means more people are coming to his store. If more people are coming to his store, that means you’re selling more gasoline,” he said.

“So, it becomes a virtuous circle just because you’re paying attention to the needs of the dealer.”

GROWTH OPPORTUNITIES As fuel margins have grown increasingly unreliable, the store has become the stable cornerstone of the modern jobber-dealer relationship.

Littlefield has been able to tap vendor relationships from its Littlefield Express stores to give its dealers access to better foodservice programs.

Empire has a preferred vendor program that provides access to foodservice, coffee, grocery and other offers. Recently, the jobber partnered with EVgo to coordinate charging-station installations.

Dealers pay no costs, but instead collect an upfront fee and rent for the area of their site where the stations are installed. The units are metered separately, so the dealer doesn’t pay electricity costs.

Wixom Food & More in Wixom, Michigan, has been an open dealer with Empire for nearly nine years and branded Marathon for its entire 25 years in business. The store, located near Detroit, will host some of the first EVgo charging stations in

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LET’S MAKE A DEAL That said, expectations also are higher for dealers.

As the nature of retail has changed—and competition has ramped up from dollar stores, big box and e-commerce—the traditional gas station approach doesn’t cut it anymore.

“The old model where these dealers just went in and sold cheap fuel and that would drive traffic and [customers would] automatically buy candy bars and Cokes? That’s dead,” said Aaron B. Littlefield III, president and CEO of Littlefield Cos. Today’s dealer is making a deeper commitment; Littlefield compares dealer recruitment to hiring an employee who has the desire and loyalty to stick around. “Once somebody steps in the door, we CONVENIENCE.ORG

flickr.com/EVgo

You want a good jobber/operator relationship. The ones that are flexible and offer support—that helps build that tight relationship.

Empire’s dealer network. Owner Eddie Osman points to the EVgo program as one way that Empire has assisted his growth over the years. It also negotiated a dispenser upgrade deal that was several thousand dollars cheaper and had a longer warranty than what Osman could secure. Empire connected him with a new frozen dispensed beverage program with no maintenance costs and new bean-to-cup coffee machines.

Beyond category growth, jobbers are assisting their dealers with site count expansion. Empire sold Yuba Parajuli, co-owner of Perfect Food and Gas in Chelsea, Oklahoma, four of his five sites since he signed on with them in 2017. “They have brought me so many opportunities—without them, I wouldn’t have five stores right now,” said Parajuli.

Littlefield also helps its exceptional dealers find locations to buy. And it quickly steps in when their existing stores need replacement. In 2019, the Arkansas River flooded and swamped Angela Harvell’s Highway 64 Express location in Roland, Oklahoma, a Conoco-branded site that she has leased from Littlefield for the past three years.

“The water was in there for a week, up above your belly button,” she said. “We lost everything in it, [including] the building. Littlefield came in and rebuilt it.” The process—rebuilding the store and fuel island back up from a concrete pad—took about six months. Harvell could sense Littlefield’s obligation not just to her but also to the town of Roland.

“One of the reasons they did it was for the community,” Harvell said. “It had been there forever and was a staple.”

give them the keys, and they turn the lights on the next morning. It is theirs for a long time,” he said.

“That’s one thing that we try to make sure that they realize and fully understand.”

Fouts says it can be difficult to find dealers with that level of commitment. Littlefield relies on word of mouth and referrals in growing its dealer network, which includes several operators who first partnered with the company back in the 1980s.

“A partnership is when everybody brings something to the table,” said Fouts. “If we’re putting them in our stores, I’m bringing a good location.

I’m bringing a facility. I’m bringing the fuel side of it. I need them to bring the hard work, the store inventory. I need them to bring that as their part to the partnership.”

This year has put the jobber-dealer partnership to the test, as the COVID-19 pandemic has battered gasoline volumes and in-store sales for retailers across the country. It’s required jobbers to flex and be responsive to their dealers’ needs.

“You want a good jobber/operator relationship.

The ones that are flexible and offer support—that helps build the type of relationship an operator wants to have with their supplier,” said Ken Shriber, managing director and CEO, Petroleum Equity Group, Chappaqua, New York.

Dealing with brand volume obligations has been a necessary component of this. Littlefield’s fuel volumes fell more than 30% across its dealer and retail network in April but had risen back close to average

by June. In the lean months, it helped its dealers navigate fuel contracts.

“One day demand went way down, and then also, the price of fuel went way down,” said Fouts.

“It was tight there for a few weeks, but we were working with people,” he said.

“The dealers are Empire, and Empire is the dealers—we’re in this together,” said Gammel, who notes that Empire’s sites also saw big drops this spring. “To a great extent, the [major oil companies] are in that boat with us. As they have granted us some leeway and have worked with us, so have we passed that on and worked with our dealers.”

The pandemic also has highlighted other support opportunities. Littlefield, who is chair of the PMAA executive committee and serves on the NACS legislative committee, has shared expertise and resources from these groups about such topics as personal protective equipment (PPE) with his team, and in turn, his dealers.

CONVENIENCE.ORG

The old model where these dealers just went in and sold cheap fuel and that would drive traffic and [customers would] automatically buy candy bars and Cokes? That’s dead.

Empire has distributed PPE to its dealers and supported their charitable efforts. For example, after hearing that Perfect Food and Gas was supplying free sack lunches to local kids when schools were out of session, Empire offered financial support to keep them going. And when the retailer swooped in to sponsor the town’s Independence Day fireworks, Empire again provided financial backing.

Wixom Food & More was among the first retailers in its area to offer disposable hand coverings at the pump, sourced by Empire. After Osman began making deliveries of food and sanitation supplies to local senior living centers, Empire offered financial support. Osman celebrated the collaboration by making a 10-foot-wide banner for outside his store.

It reads: “This too shall pass. One day at a time, and stronger we will be.”

This message of growing strength is timely as Empire’s wholesale fuel and retail network recently closed on a deal to merge with GPM Investments LLC, out of Richmond, Virgina. Empire will serve as the wholesale arm of the combined entity. Gammel expects the merger to boost the jobber’s economies of scale with the major oil brands, which should directly benefit its dealers with better fuel pricing.

And inside the store?

“It will be supercharged,” he said. “We’re going to have the benefit of their size on the retail side, which will also help us on our wholesale side—especially with our vendor program. That will make us bigger and stronger and more capable.”

Samantha Oller is a Chicagobased journalist with 17 years of experience covering retail and fuels. Follow her on LinkedIn or Twitter at @OllerWriter.

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This interview was brought to you by support from capSpire.

OPTIMIZE Decision-Making Navigate the new and unpredictable fuel environment by diversifying your supply options.

COVID-19 HAS CREATED UNPREDICTABLE FUEL DEMAND, MAKING IT MORE IMPORTANT THAN EVER TO MAXIMIZE MARGINS DURING PERIODS OF LOW DEMAND AND QUICKLY SCALE UP SUPPLY WHEN DEMAND NORMALIZES. WHAT CAN RETAILERS DO TO ENSURE THEIR BUSINESS CAN HANDLE THIS VOLATILE ENVIRONMENT? With fuel demand more unpredictable, it’s critically important for retailers to diversify supply options. The old school model of buying low rack at the closest terminal allows for a simplified supply chain, but this simplified model often forces retailers to sacrifice margin. Retailers should start to consider diversifying supply strategy with self-supply, long-term contracts, day deals and low rack. Diversifying the supply strategy will allow the retailer to take advantage of a variety of options to not only decrease laid cost of fuel but also ensure that there is a committed volume available at all times.

HOW CAN RETAILERS MAKE THE BEST DECISION AROUND DIVERSIFICATION? capSpire can help because of our unique position in this space and our understanding CONVENIENCE.ORG

of two things: the ins and outs of the c-store industry and the technology that can drive it to higher levels. Our team isn’t just well-versed in the business practices required to support a diversified supply chain. We’re also deep experts in the technology needed to drive that change.

The secret sauce is utilizing our unique position to build custom road maps for retailers and implement the project from start to finish with real, tangible results.

Mike Strickland Managing Director capSpire mike.strickland@capspire.com

WHAT INDUSTRY PATTERNS HAVE YOU SEEN OVER THE PAST 12 MONTHS? Our experience with over 50% of the largest c-stores in the industry gives us a front-row seat on how to help companies navigate the fuel supply chain more efficiently. These leading retailers are developing new processes, making their organizations leaner, relying on technology to make better decisions and—as mentioned earlier—diversifying their supply options. It’s not enough to say “Well, this is how we’ve always done it” anymore; we’ll continue to see an openness to new, proven processes. The smartest c-store leaders are challenging what’s been done over the past 20 years and relying on strong technology to make change happen.

The old school model of buying low rack at the closest terminal allows for a simplified supply chain, but this simplified model often forces retailers to sacrifice margin.

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ELECTRIC VEHICLE MARKET

TOBACCO/VAPING/MARIJUANA

DOLLAR STORES

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CONVENIENCE.ORG

How the pandemic is shaping 10 key trends in the convenience and fuel retailing industry.

F

BY FRANK BEARD / PART 2 OF 3

or the past few years, the evolution of convenience retail was a story of a shift from “gas, Cokes and smokes” into something more relevant for modern consumers. Shoppers had higher expectations, channels were blurred, and visits were lost as e-commerce reduced trips to brick-and-mortar stores. Many retailers found new and innovative ways to stand out, while others were forced to evolve or risk being left behind.

“There was already a suspected trip decline looming over the horizon. In effect, the pandemic was a dress rehearsal,” said Brandon Lawrence, a retail fuels consultant and data scientist. “It revealed whose business models had yet to adjust. Unfortunately, many [retailers] have ignored this lesson as crude oil’s crash allowed them to weather the storm with historically high margins. But that was pure luck. Now is the time to ask what would have happened without that lifeline.”

Thriving amid low fuel demand requires a strong in-store offer. Unfortunately for many retailers, 2019 NACS State of the Industry data reveal that only the top-quartile of retailers would have remained profitable pre-pandemic without fuel. That raises questions about how prepared the industry was for this test run.

CONVENIENCE.ORG

This article is the second in a three-part series examining COVID-19’s impact on 10 weak signals—trends that had the potential to become game changers. Part 1 examined how the pandemic accelerated some trends (last mile, cashless payments) but stymied others (single-use plastics), and Part 2 reviews four challenges retailers face at the forecourt and inside the store.

DOLLAR STORES Few businesses were better prepared for the economic downturn than dollar stores.

With a budget-sensitive offer and close proximity to many Americans, the channel found much success amid COVID-19. For the second quarter of Dollar General’s fiscal year 2020—which ended July 31—net sales increased 24.4% year over year. Same-store sales increased 18.8%.

“We continue to operate from a position of strength and are excited to announce the acceleration of several key strategic initiatives including the rollout of DG Pickup, DG Fresh and our Non-Consumables initiative,” said Todd Vasos, Dollar General’s chief executive officer, in a press release. These initiatives should be of particular interest to retailers as Dollar General aims to expand its offer

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beyond the boxed and frozen. DG Fresh was launched in 2019 to build a robust self-distribution system for perishables. At the time, Vasos described it as a way to “control our own destiny in fresh foods.”

On August 5, Dollar General announced that it would build three new DG Fresh cold storage facilities in California, Kentucky and Oklahoma. Each warehouse will house frozen goods, milk, cheese and deli meats and bring self-distribution to an additional 1,500 locations on top of the 9,000 locations that already have access. With three-quarters of Americans living within five miles of a Dollar General, this should raise concerns—especially since the company targets areas that many ignore.

“The thing about dollar stores—and Dollar General, in particular—is they have a deliberate strategy of opening stores where there isn’t much competition,” said Neil Saunders, managing director of GlobalData Retail. “Although they have more than 10,000 stores, there are still many rural locations where they don’t exist … They’re spreading like wildfire.”

“Retailers should be thankful that Dollar General doesn’t sell fuel,” added Steve Montgomery,

10 Key Trends Shaped by COVID-19 1. Last mile 2. Cashless society 3. Plastic 4. Consolidation of c-store industry 5. Tobacco/vaping/marijuana 6. Electric vehicle market 7. Dollar stores 8. Starbucks and high-end coffee 9. Fast-casual restaurants 10. Direct-to-consumer CPG products

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president of B2B Solutions. According to Montgomery, few retailers outside of those in rural markets initially saw dollar stores as a threat. The no-frills “treasure hunt” nature of their early offer created a stigma. While some convenience retailers abandoned the centerstore offer, dollar stores held their ground and were positioned to thrive during the pandemic without having to pivot.

But customer experience remains a weak spot.

As a recent Google Maps reviewer said of a Dollar General in Wisconsin: “Dirty, unorganized store.

But it’s still way cheaper than the local grocery store in River Falls.”

“Dollar stores need to put more emphasis on in-store experience,” added Lori Buss Stillman, vice president of research at NACS. “Their lack of focus on merchandising and the overcrowded shelves do not lend to a great shopping trip for many they are trying to reach; their narrow aisles and general clutter can be overwhelming.”

While convenience retailers may have “trimmed the tail too long on groceries,” according to Stillman, there’s a lesson from the dollar channel’s insistence on packing their stores so full: It’s not wise to add more center-store products without first deciding what to remove. Otherwise the store becomes difficult to shop, and retailers lose the appearance of ease and flexibility.

Still, there’s no denying that dollar stores thrive even amid this blind spot. Dollar General expects to open 1,000 new stores during fiscal year 2020 in addition to completing 1,670 remodels—up from the 1,500 remodels previously announced.

INDUSTRY CONSOLIDATION In Couche-Tard’s most recent earnings call, CEO Brian Hannasch described industry deal flow as “relatively quiet.” People are just focused on dealing with COVID-19. Nonetheless, consolidation shows few signs of slowing down in comparison to recent years.

In July, GPM Investments revealed its intent to enter a tie-up pact with Haymaker Acquisition Corp.—a special purpose acquisition company.

In early September, the deal moved forward.

The publicly traded firm called Arko Corp. will be listed on Nasdaq. A July investor presentation from GPM Investments identifies continued acquisition as one of the company’s three pillars of growth. With 72% of the U.S. convenience CONVENIENCE.ORG

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You might not want EV chargers now, but you should make it possible to add them five years later if you decide it’s time. store market consisting of chains with 50 or fewer locations, there is “ample opportunity to continue to consolidate.”

The real issue raised by consolidation is what it means for the rest of the industry. While a particular segment has rushed forward with best-in-class customer experiences and foodservice that rivals QSRs, the rest of the industry continues to operate a more traditional conception of convenience retail.

Consolidators generally do the same—except with the benefits of scale.

“Many small chains and single stores put forth the same value proposition as consolidators, but they don’t share the same cost structure,” said Lawrence. “Not only are these retailers unable to compete with merchant canopies on fuel price or foodservice-forward chains inside the store, but they lose to the consolidators on both fronts.

They just don’t have the room in their margins.”

Lawrence argues that fuel demand forecasts raise additional concerns about the ability to grow volume post-pandemic. Rather than increasing demand organically, it’s more likely that retailers will have to steal market share from their competitors. In this, consolidators will enjoy additional advantages.

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“The acquisition of Speedway by 7-Eleven is instructive,” said Lawrence. “It gave them significant advantages in economies of scale related to fuel supply and pricing. Not only did they box Couche-Tard out of the Midwest, but I imagine that they will leverage their substantial volume for significantly advantaged supply arrangements.”

This further raises the importance of differentiation. More than a catchphrase, it may be a survival strategy for some—especially in a post-pandemic marketplace.

“In many cases, convenience stores were places that people went by and not to—coffee on the way to work, a gallon of milk on the way back,” said Montgomery. “If customers are working from home, they’re not going by those locations. Unless you’re a destination driver, you’re going to lose some traffic permanently.”

ELECTRIC VEHICLES The pandemic produced an unanticipated side effect in March and April: clear skies.

With the interstates suddenly free of gasguzzling vehicles, the smog surrounding many cities disappeared. Many readers will remember the crystal clear pictures of Los Angeles. Even in New Delhi, the world’s most polluted city, monuments were visible against blue skies for the first time in many years. New York City’s emissions and carbon monoxide levels dropped more than 50% in a single week in March.

“EV skeptics will sometimes argue that charging cars with grid electricity merely moves the pollution somewhere else, aka, the long tailpipe argument,” wrote Wall Street Journal auto columnist Dan Neil in April. “But location matters, particularly for megacities with geographies that tend to trap airborne pollutants, such as Beijing, L.A. and Mexico City.”

While it remains to be seen what impact this might have on consumer preferences for electric vehicles, the category has had a good year relative to the rest of the auto market.

In Europe, EVs grew rapidly while sales of conventional cars collapsed. According to the International Energy Agency, EV sales were up 90% year-overyear in April for France, Germany, Italy and the U.K.—the region’s four largest EV markets. In China, February’s 60% year-over-year sales decrease had rebounded to 80% by April. The U.S., in comparison, saw EV sales roughly halved in April.

CONVENIENCE.ORG

One reason for this difference is that government subsidies in many countries are more generous than what consumers find in the U.S. This contributes to price parity. In Norway—the global leader in EV adoption—the lack of import tax, emission fees and a 25% value-added tax make it possible to buy a Volkswagen e-Golf for less than the regular Volkswagen Golf.

But it may be incorrect to assume that a rapid transition will arrive in the U.S. in the near future.

As a new report from the Fuels Institute points out, the impetus for a dramatic change may not exist at the moment. Nor do consumers seem poised to force a revolution. “Consumers like to buy what’s around them,” said John Eichberger, executive director of the Fuels Institute. “EVs are common in some areas of the country, like California, but they’re not common elsewhere.

Go to a dealership in many other states, and you’ll have a hard time finding an EV. The salespeople aren’t pushing them.”

Eichberger suggests that price remains the most significant barrier. Although the total lifetime cost is often lower, the sticker shock is high.

Many consumers won’t make that calculation, and EV tax credits are now gone for Tesla and GM models.

Those issues aside, he points out that EV adoption will ultimately be driven by global trends.

“We are not the dominant market anymore,” Eichberger said of the U.S. “China is. Europe is also larger than we are in terms of total vehicles sold. They are all aggressively pursuing zero emissions and efficiency. Whether or not the United States slows down is irrelevant, because automakers are building vehicles for all markets. They’re building for those regulations.”

Retailers also should take note that the internal combustion engine has significant room for improvement in fuel economy. The U.S. Energy Information Administration forecasts a 47% improvement in light-duty fleet economy by 2040.

The diesel freight fleet is projected to see a 30% improvement in the same period of time.

Paired with projected increases in remote work, this raises questions about the future of fuel demand. According to Eichberger, retailers should expect a drop in demand of 1-in-5 gallons within the next 20 years.

“Globally though, nobody is taking their foot off the accelerator with electric vehicles,” he CONVENIENCE.ORG

While the pandemic may have temporarily lessened tobacco’s challenges with consumer demand, regulation doesn’t appear to have lost any momentum. cautioned. “Our advice is to pay attention to your market and enter the charging market when the time is right, locally. In the meantime, increase your access to electricity if you’re doing a new build or rebuild. You might not want EV chargers now, but you should make it possible to add them five years later if you decide it’s time. Retrofitting will be prohibitively expensive without the infrastructure in place.”

TOBACCO AND CBD Although declines in tobacco were expected for 2020, the pandemic threw the category somewhat of a lifeline. “We thought we’d see an 8% to 9% decline in tobacco and other tobacco products this year, but people are buying more,” said Stillman.

“That’s because when you’re under stress, you smoke more. Consumption isn’t going down.” (For more on COVID-19’s impact on cigarette sales read, “Bulking Up” in this issue.)

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Learn More Sign up for the NACS Crack the Code Experience, available November 2 through December 4, to hear more from Frank Beard about the 10 trends, as well as education sessions about last mile delivery and the impending future of electric vehicles. Visit www.convenience.org/ crackthecode for a full list of education sessions and other engaging aspects of the experience.

Indeed, Altria revised its previous 2020 estimate of the domestic cigarette industry’s decline.

The company’s second-quarter 2020 investor presentation now calls for a lower decline of 2% to 3.5%. Stay-at-home orders also may have contributed to stronger performance. “Fewer social engagements allow for more tobacco-use occasions,” Altria’s CEO, Billy Gifford, told analysts on a recent earnings call.

While the pandemic may have temporarily lessened tobacco’s challenges with consumer demand, the real issue is that regulation doesn’t appear to have lost any momentum. On August 28, California’s governor signed a bill that bans the sale of most flavored tobacco. This included a ban on the retail sale of menthol cigarettes. Similar efforts are being pushed in Chicago, Phoenix and many other cities.

Even vaping has remained a target of regulation. In Florida, a bill was sent to the governor in September that included a ban on many vaping flavors. He eventually vetoed it.

“History repeats itself, especially with regulation,” said Timothy Mackler, tech guru at Summitt Labs, manufacturer of Kore Organic CBD. “One person sees a trend, we decide we need to do something about it, and then it turns into something blown out of proportion. San Francisco

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made vaping illegal last year. It’s a situation where you can smoke a cigarette, but not vape. What’s the point of that?”

While regulation is a barrier for the tobacco industry, it’s welcome by many in the CBD community. “I’m looking forward to seeing more states move into regulation of CBD products,” he explained. “Not to make it harder for consumers, but to make it safer for consumers. They need to know they’re getting what companies say they’re getting and that everything is dosed correctly. It’s important for consumers to be educated.”

According to Montgomery, tobacco’s regulatory climate only furthers the argument that retailers need to aggressively pursue differentiation. “Will ‘smokes and Cokes’ work for the next few years?” asked Montgomery. “Yes, but in the long term, retailers need to find something else.”

Adds Stillman, “Retailers are trying to win on cigarettes and beer, but the people running foodservice and robust cold and hot dispensed beverage programs are seeing margins of 50 to 60%. Losing a cigarette buyer but gaining a foodservice customer?

They’ll take that any day of the week.”

According to Stillman, retailers should ultimately focus on creating a place that consumers want to visit every day. At new Circle K locations in Norway, for example, it’s possible to catch a bus, rent a scooter, shop and work inside the store, and even charge an electric vehicle.

“The question is what do people need to do, and how can you build your offer around that, so they’re convinced to come and dwell?” explained Stillman. “We’ve never been about dwell. How can we get customers to come and stay for a while?”

Frank Beard is a speaker and retail consultant who serves as the director of Safe Shop. He resides in Des Moines, Iowa.

Follow Frank on LinkedIn or Twitter at @FrankBeard.

This is the second article in a three-part series on how the pandemic is shaping 10 key trends in the convenience and fuel retailing industry.

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MARKETING Loyalty survey reveals the need for technology to personalize and modernize customer loyalty.

By Jerry Soverinsky

T

This article is brought to you by

he COVID-19 pandemic has changed consumer behavior around the world, with no industry spared from its impact. For convenience store retailers, essential business status may have minimized business disruptions, but it has been far from business as usual. “Coronavirus has shown us a world without traffic,” declared the Brookings Institution earlier this year, noting vehicle miles traveled (VMT) had dropped by at least 53% in every metro area less than two months into the U.S. outbreak, with some areas down as much as 88.9%.

All of this doesn’t portend financial riches for those selling motor fuels, which makes inside sales at convenience stores all the more important, with customer loyalty a critical undertaking to achieve success.

We’ve known this, of course, as loyalty programs matured over the past several years. Fueled by technologies that empower geotargeting and offer greater personalization, retailers have tapped the power of loyalty programs to increase customer engagement and build incremental sales.

“The ability to dynamically engage with customers through innovative technologies that deliver personalized messages helps build productive relationships,” said Sastry Penumarthy, co-founder & vice president of strategy for Punchh, a loyalty and

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engagement platform that enables brands to deliver omnichannel customer loyalty programs.

That’s certainly not the same old, same old approach to building loyalty, which Punchh maintains reflects the rapid evolution of the loyalty space. “Generic promotions, pump toppers, window displays, they lack a one-to-one focus,” said Lori Stillman, vice president of research for NACS. “Today’s shoppers are juggling busy, hectic schedules with multiple demands coming at them constantly.

The need to cut through the clutter effectively is critical in today’s increasingly digital world.”

For those retailers deploying a loyalty program, results have been a moving target of success. The challenge? Cutting through marketplace noise and clutter and engaging a customer base that is inundated by media signals through every media channel. How well are they—and you—performing?

Working with NACS and Business Accelerator Team, a consulting firm that focus on convenience retailing, Punchh conducted a deep-dive survey of retailers addressing their loyalty programs (and loyalty program aspirations). Completed in September 2020, over 4,000 retail locations are represented in the results that are a compendium of insights and best practices when implementing a loyalty program.

“Our goal with the study is to be prescriptive; for the CONVENIENCE.ORG

DISRUPTED industry to acknowledge where they are and where they’re going when it comes to loyalty, and what it will take to evolve,” said Kay Segal, founding partner of Business Accelerator Team.

THE STUDY RESULTS The NACS/Punchh survey, completed in September 2020, focused on five categories: 1. Defining loyalty 2. The role of customization 3. Advancing technology 4. Leveraging data 5. Measuring loyalty Defining loyalty Most respondents defined loyalty as it relates to their own strategy, rather than from the perspective of the customer. “Our loyalty program is driven by fuel discounts,” one retailer said, “with customers earning points by buying select offers inside the store.”

It’s a common retailer approach, with one retailer conceding that the result is a zero-sum-game: “It's kind of a something for nothing proposition,” the retailer said. “I don't mean that negatively. Our customers have been coming to our stores over the past 30 years for our proprietary chicken program and other unique food offers. To be rewarded for this loyalty to our offer adds to the satisfaction component of their visit to our stores.”

Punchh said that the approach may breed customer satisfaction, but it doesn’t necessarily build trip frequency or basket size. “This highlights the need for customer-oriented program features, such as personalized messaging, targeting and offers,” Penumarthy said.

According to the survey, more than 43% of respondents said that their definition of loyalty CONVENIENCE.ORG

evolved either “a great deal” or “a lot”—a key indication of “how innovative technology and changing consumer preferences are shifting the role of loyalty in convenience retail,” Penumarthy said.

The role of customization While most respondents (85%) agreed that the ability to personalize the consumer experience was “extremely important” or “very important,” the capability has not been fully explored. While the majority of programs can customize offer type, frequency and products, few can address geo-location, notification type or market segmentation. “This indicates a competitive advantage for retailers that offer it,” Penumarthy said.

“Punchh’s loyalty platform increases customer lifetime value by delivering dynamic programs that engage and adapt to changing customer behavior in real time.”

Advancing technology The majority of respondents ranked “promotion customization” as being the most valuable to shape their future loyalty program, yet the sentiment was aspirational. Surprisingly, 15% of respondents still use antiquated punch cards for their loyalty programs, and less than 30% use a scannable loyalty card.

What's more, 14% of retailers leverage a mobile application, “indicating that many retailers have yet to transition to a consumer-facing loyalty platform,” Penumarthy said. Additionally, many retailers cited a need to integrate their program with their POS as well as future platforms (mobile app, loyalty provider), “pointing to a possible reason why retailers have not yet deployed these advanced technologies to enhance their loyalty programs.”

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More than 43% of respondents said that their definition of loyalty evolved either “a great deal” or “a lot”—a key indication of how innovative technology and changing consumer preferences are shifting the role of loyalty in convenience retail.

Leveraging data CPG rebate integrations were “extremely important” or “very important” to 57% of respondents, while 71% indicated that they would consider adding mobile payment and mobile ordering (57%).

“Established integrations would have been beneficial when launching and when adding new features to their loyalty program,” Penumarthy said, “a clear indication that retailers prefer a more turnkey solution that they can manage.”

Of course, even the most robust offering will fall flat without adequate promotion, a critical challenge cited by many respondents. “The key is to make your customers aware of the program,” one retailer replied. “Every sales associate needs to talk up the program and ask every guest whether or not they have enrolled. And finally, there needs to be multiple ways to enroll … the more flexible the better.”

To that end, word of mouth (85%) has proved the most successful in promoting a loyalty program, followed by email/SMS (57%).

As for the most requested features of a loyalty program, retailers point to online/mobile ordering (71%) and mobile payments/cents off at the pump (57%).

Measuring loyalty No matter how ambitious the offering, without adequate measurement capabilities, the ongoing success of a loyalty program remains speculative.

“No single metric-tracking methodology stood out among retailers,” Penumarthy said, with a scattering of responses that included: downloads, active users, visit frequency and redemption percentages all cited as commonly used metrics.

“We use frequency, active member participation versus total members and gallons realized above baseline,” one retailer said.

It’s little surprise that 100% of respondents either “agreed” or “strongly agreed” that their company could benefit from more robust data management.

“This represents a significant opportunity for

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loyalty platforms—to fill this need in the c-store industry,” Penumarthy said. “Punchh’s proprietary AI leverages data to deliver one-to-one customer journeys. Our platform can automate customer segmentation, target specific SKU spend and even use their shopping behaviors and preferences to win back lapsed customers.”

OPTING OUT And then there are the outliers, those who remain sidelined from loyalty participation. Among retailers who do not currently offer a program, 63% indicated that one is on their roadmap, while the remainder have no plans to develop a loyalty offering. Cost was the major obstacle, followed

by IT upgrades needed and the human resources required to implement and maintain a program.

LOOKING AHEAD While loyalty continues to build momentum and importance across the convenience store industry more than ever before, adoption has been less than uniform, with much room for improvement to maximize returns. “Today’s c-stores need to clearly understand their customers’ behaviors, preferences, and activities to deliver relevant promotions based on one-to-one loyalty,” Stillman said. “With the right customer platform and technology tools, c-store marketers can encourage loyalty by fitting online and offline data together to create customized customer experiences that engage visitors right from the pump.”

Jerry Soverinsky is a Chicago-based freelance writer and NACS Magazine contributing writer.

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Yesway and Allsup’s came together thanks to a strong relationship, mutual respect and a beloved burrito.

BY JENNIFER BULAT

W

hen Lonnie and Barbara Allsup were building their namesake convenience store chain, Lonnie would get into his plane with his son Mark and fly over small towns, scoping out the best spots for a store. That literal “big

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picture” tactic for finding ideal locations was one of the ways Allsup’s grew—from one store in Roswell, New Mexico, that opened in 1956—into a 304-store regional powerhouse in recent years.

After Lonnie died in early 2018, Mark, a successful commercial real-estate CONVENIENCE.ORG

broker, returned to the company. While Mark was a broker, he worked on real-estate transactions with a chain that was building a reputation as a strong corporate partner: Yesway, a Midwest c-store chain founded in late 2015 that had grown to nearly 150 stores via acquisitions.

Before the end of 2019, Yesway had announced its purchase of Allsup’s. The chain was never officially on the market.

And now in late 2020, the integration of the two companies is almost done. How did it come together?

“STEWARD OF THE BRAND” Yesway emerged five years ago when private equity investor Brookwood Financial Partners LLC, based in Beverly, Massachusetts, created BW Gas & Convenience Holdings and anchored it in Iowa. A few years earlier, Mark Daniels, one of Brookwood’s managing directors and its chief strategy officer, had been tasked with researching businesses that were not subject to normal economic, business and real-estate cycles.

He identified several businesses that met the firm’s criteria, but after much research, Brookwood was drawn to the recession-resistant characteristics of the convenience industry and began developing what would become Yesway.

With the purchase of 10 Country Store sites in late 2015, and then 21 sites from Kum & Go, Yesway was in business in the Midwest. The chain kept growing via small acquisitions, and on some of them, Yesway worked closely with Mark Allsup.

The transactions resulted in a good relationship, and Mark remembered that after his dad died.

“Over several decades, Brookwood developed a reputation for being a good and respectful buyer, and we approached the convenience store industry with the same commitment,” Daniels said.

CONVENIENCE.ORG

Yesway purchased Allsup’s Convenience Stores, with stores in New Mexico, Texas and Oklahoma.

In a Yesway news release announcing the sale, the Iowa-based company labeled itself as the “fastest growing convenience store chain in the U.S.”

“Sellers are realizing that there are more important considerations than multiples of earnings.”

In the fall of 2018, Yesway reached out to Mark Allsup to explore the possibility of acquiring the Allsup’s chain. After several weeks of discussions, executives from both companies sat down to dinner at a Red Lobster in New Mexico and began more formally discussing the idea of Yesway purchasing Allsup’s.

From the beginning of the conversation, according to Yesway Chairman and CEO

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Yesway has come a long way since 2016 when it acquired more than 150 c-stores in Iowa, Texas, New Mexico, Oklahoma, Kansas, Missouri, Nebraska, South Dakota and Wyoming.

In November 2019, Yesway acquired Allsup’s—the largest acquisition in its history—and jumped from 150 to 421 stores in one transaction.

Tom Trkla, there was never a question of whether the Allsup’s brand would remain.

More than six decades of history and customer devotion made it “a given” in the purchase. “I made it clear to Mark and Barbara that Yesway could be trusted to be a steward of the brand,” Trkla said.

BURRITO BOON Over its six decades of growth, Allsup’s expanded into Texas and Oklahoma, adding hundreds of stores and a slew of Doug Wald of Yesway

A QUESTION OF STAFF

One of the biggest questions employees had when company officials shared that Yesway would acquire Allsup’s related to staff cuts. Overall, the companies reduced about 100 positions out of a combined workforce of about 5,400, according to Yesway Chairman and CEO Tom Trkla.

In August, Yesway announced it would open a new headquarters in Fort Worth, Texas. With it came the news that its offices in West Des Moines, Iowa; Abilene, Texas; and Clovis, New Mexico, would close. The closures were a factor in the reduction in staff, Trkla said; others were due to advances in technology eliminating jobs or employees choosing not to relocate. The affected employees have been given severance and job placement services.

Tom Brown, president and director of real estate, said it was critical to consider that many of the people losing their jobs may still be customers in the stores where they once worked. “Everybody should be treated with the dignity and respect that they’ve earned,” he said. “If you keep that at the forefront of the thought process, you have to hope they’ll say they treated me well.”

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loyal customers along the way. For many of those customers, their Allsup’s love comes down to one thing: the burrito.

The devotion to Allsup’s and its self-declared world-famous burritos and chimichangas cannot be understated, according to Derek Gaskins, Yesway’s chief marketing officer. “We’ve had people get married at Allsup’s. They’ve gotten Allsup’s tattoos. Country songs have been written about Allsup’s,” Gaskins said.

On the day of one of the interviews for this story, three requests for Allsup’s burritos to be shipped around the world—including to a military base in London—came in. The company receives similar requests every day, Trkla said.

Buying a company with such strong roots in foodservice prompted Yesway to substantially curtail the development of its own proprietary foodservice platform, Trkla said.

“There’s a great simplicity to Allsup’s platform,” he said. That platform includes staples such as Allsup’s-branded bread and milk, which also have a loyal following—something that goes against industry trends of declining dairy sales.

Allsup’s strength in private-label perishables complements Yesway’s strong offering of private-label “contemporary snacking on the go” and bottled water, Gaskins said.

CONVENIENCE.ORG

“ Our priority was to focus on how we could take the best of both worlds and determine the best way to roll that out.”

LISTENING AND LEARNING Before the deal was announced, Yesway assembled an integrated management office (IMO) to handle the acquisition and integration. The team included Tom Brown, president and director of realestate acquisitions; Mark Daniels; Jayne Rice, managing director, director of institutional sales, marketing and investor relations for Brookwood; and Ericka Ayles, managing director and CFO. The IMO spent more than six months on due diligence and preparing for the integration, Rice said. The team created primary work streams and also hired outside consultant AlixPartners to help with identifying synergies between Yesway and Allsup’s.

Doug Wald of Yesway and Brian Ashburn of Allsup’s, both senior vice presidents of retail operations, were charged by Trkla with coming up with the optimal integration structure. “For the first six months, we both ran each other’s division,” Wald said.

They got to know each other by driving together to hundreds of stores, which resulted in conversations they both called “priceless.” (Ashburn even taught Wald the correct way to eat an Allsup’s burrito: “Bite, then sauce; bite, then sauce …”) For Ashburn, a shift in mindset—eliminating the idea of “they” and replacing it with “we”—went a long way during the integration, he said.

Perhaps the most critical part of the process began in September 2019, when CONVENIENCE.ORG

members of the IMO and other executives from Yesway and Allsup’s—including Mark Allsup, who is now president of the combined company—began meeting with Allsup’s employees.

Almost every meeting started the same way, with a few hundred people, all quiet and sort of nervous. There was a big elephant in the room: Was the Allsup’s brand going away? Once they were reassured that the Allsup’s name was never a negotiable, everyone took a breath and started asking questions. If

Since acquiring Allsup’s, Yesway has been actively involved in integrating the two chains from technological, operational, merchandising and marketing perspectives, while also identifying prime candidates for improvements or concept changes.

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The Allsup’s brand will not be disappearing from the convenience store landscape. Yesway CEO Tom Trkla understands Allsup’s “very good brand equity and very good brand awareness in the marketplace.”

the executives didn’t have the answer, they admitted it. “You can never communicate too much—even if the message is, ‘We don’t have an answer yet, but here’s when we expect to know,’” Rice said.

Rice concedes that it was a risk to disclose the purchase to employees before it happened, but it was one Yesway and Allsup’s executives were willing to take.

Everyone needed to feel they had a part in the transition, she said. And the executive teams were determined to take the time to listen and learn from everyone at Allsup’s.

What could they do in the integration to make their lives easier?

“It wouldn’t have been good to find out halfway through the process that you didn’t ask the right people the right questions,” Ayles said.

Rice concurs. “We didn’t want to come in and change anything right away,” she said. “Instead, our priority was to focus on how we could take the best of both worlds and determine the best way to roll that out.”

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Since the internal announcement, the communication has continued via conference calls, plus a monthly newsletter with updates and information about the integration. It highlights departments and individuals who are making a difference in the process.

GIVE AND TAKE Bringing two brands together means a sharing of each one’s best attributes.

Eventually, every Yesway store will get Allsup’s burrito program, Trkla said.

And every Allsup’s store will reap the benefits of Yesway’s deep investment in technology.

Yesway may be a younger chain, but it came into being in today’s tech-dominant world, and its operations reflect that.

Trkla estimates $70 million to $75 million went into developing back-office, pointof-sale and theft-prevention platforms for Yesway. The company also created a robust loyalty program that took a full year to roll out.

CONVENIENCE.ORG

Allsup’s never had a loyalty program.

And before the acquisition, Allsup’s employees were still filling out time cards with paper and pencil. But until then, it worked for them. “It’s always hard to justify the cost of overhauling a tech platform when it’s working fine,” Daniels said.

All Allsup’s stores were slated to have updated back-office and point-of-sale systems from PDI by the end of October. They also will have a loyalty program in 2021.

Both Allsup’s and Yesway’s programs will be accepted at the other’s stores.

“That way, the consumer starts to understand the relationship and the affiliation more,” Gaskins said. He hopes customers will reap the benefits of that relationship by, for example, being able to buy Yesway-branded gummy worms at Allsup’s and Allsup’s-branded chicharrones at Yesway stores.

LOOKING AHEAD With the integration wrapping up, Yesway continues to look for acquisitions. The ultimate goal for the size of the company— which today numbers 406 locations—is 600 to 1,000 stores, Trkla said. The brands will continue to expand in their existing states of operation and abutting states as it makes sense. The company has a ninestate footprint: Iowa, Kansas, Missouri, Nebraska, New Mexico, Oklahoma, South Dakota, Texas and Wyoming. Its new headquarters was slated to open in Fort Worth, Texas, in October.

“Allsup’s is a household name in Texas and New Mexico. We’ve built up a lot of goodwill with Yesway in the Midwest,” Brown said. “The two geographies are complementary, which is why we can expand in nine states with one company approach.”

As head of real-estate development, Brown is focused on a three-year, $100 million plan with about 100 capital projects.

It includes the raze-and-rebuild of about CONVENIENCE.ORG

25 sites, taking 2,400-square-foot stores up to about 5,000 square feet; upgrading 52 Allsup’s stores, including their fountain programs; remodeling and converting 20 stores in the Southwest that were going to be Yesway sites until the acquisition made Allsup’s branding more logical; and opening new stores in markets in and around areas such as Dallas-Fort Worth.

Also in development are two more Allsup’s Market locations. The first, which opened in Melrose, New Mexico, in January, is a 5,000-square-foot store with more grocery items, fresh-cut meats

“ You can never communicate too much—even if the message is, ‘We don’t have an answer yet, but here’s when we expect to know.’” and perishables. It’s designed to go into areas that qualify as food deserts, “where the nearest grocer has either gone out of business or is 25 to 30 miles away,” Brown said. The concept has been especially successful amid the pandemic, he said.

As the company continues to grow— it’s now the 14th largest convenience store chain in the country—Trkla knows how important it is to protect what Yesway already has.

“Taking care of your people is your most valuable asset,” he said.

Jennifer Bulat has worked in the convenience industry for 18 years, and she would love to hear from you at jennifer bulat@gmail.com.

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COOL NEW PRODUCTS This advertorial-style guide of services and packaging appears monthly and is an information-packed tour of ideas and approaches that can change how consumers view your store or choose your brand. It spotlights the newest thinking in convenience and fuel retailing and gives you an advance look at ways of staying in front of industry trends.

Products are categorized the same way we organize the Cool New Products Preview Room at the NACS Show each year in October— New Design, New to the Industry, New Flavors, Health & Wellness, Green (EcoFriendly), New Services and New Technology. Products are considered “new” this year if they’ve been introduced since last year’s NACS Show (after October 4).

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Voortman® Mega Size Wafers

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

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Jalapeño Cheddar Sausage & Beef Hot Dog Handhelds

We’ve set the standard for high-quality again with our new enrobed sandwiches!

Our skinless, smoked Jalapeño Cheddar Sausage offers a spicy kick, while our Beef Hot Dog brings an indulgent, classic favorite to our sandwich line up. Each portable sandwich is enrobed in golden-brown bread and wrapped in a clear, microwavable film—perfect for in-store warmer displays. Unwrap the power of premium of quality and convenience. Family owned and operated, Johnsonville has been known for legendary sausage since 1945. For more information, call (800) 837-5391 and visit www.cstore.johnsonville.com.

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The Pinnacle Corporation PRODUCT

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Lavi Industries PRODUCT

Qtrac VR Digital Waiting Line

Easily Manage Curbside Pickup

Offer your customers the safety and ease of curbside pickup with Qtrac VR Digital Waiting Line. No app, no system integration, no hardware, just great service. From the safety of their vehicle, customers can scan a QR code or send a text message to provide their order number and notify that they have arrived. Two-way text messaging allows for effective communication and improved customer experience.

Customizable to adapt to a variety of uses and implementations. For more information, call (888) 285-8605 and visit www.lavi.com/QtracVR-Curbside.

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Get Pumped: A Sanitizer Dispenser for Everywhere!

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

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| NOVEMBER 2020

CONVENIENCE.ORG

COMPANY

Krispy Krunchy Foods LLC PRODUCT

Krispy Krunchy® Chicken Cracklins

Krispy Krunchy® Announces Launch of Chicken Cracklins

Krispy Krunchy® Chicken Cracklins is marinated thigh meat with skin, battered in an exclusive breading, fried to golden perfection, and seasoned with their own Perfectly Cajun by Krispy Krunchy™ Seasoning & Marinade. The preparation is quick, allowing for a speedy and yummy experience for customers. For more information, call (318) 483-4343 and visit www.krispykrunchy.com/partnering/contact.

COMPANY

Oatly

PRODUCT

11oz Chocolate & Original Oatmilk

Look! Tiny Oatmilks!

Hey person reading NACS Magazine! It’s us, Oatly, the original oatmilk company. We’ve been hoping you’d try our oatmilk, and look! Here it is, now available in an adorable little 11oz size.

What a coincidence. This is the one you want in your smoothie, on your cereal, and hanging out in that weird small pocket of your backpack for snack emergencies. In case you haven’t heard, this is a vegan, dairy-free, nut-free, soy-free, non-GMO, gluten-free, plant-based milk made from oats. But don’t let that long sentence full of buzzwords scare you, this product is seriously delicious. Available in Chocolate and Original—for samples or more info, email Art at info.us@oatly.com with “NACS 2020” as the subject.

CONVENIENCE.ORG

NOVEMBER 2020 |

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COMPANY

COMPANY

PRODUCT

PRODUCT

Explore Unchartered Flavors

Explore Unchartered Flavors

Ocean Spray

Ocean Spray

Cran Energy™ Cranberry Energy Juice Drink

Enjoy the crisp, clean taste of real cranberries, now enhanced with caffeine from green tea extract. Each 12oz bottle contains 90 mg of caffeine*, delivering natural energy on-the-go. Made with real fruit juice and no added sugar, Cran Energy™ Juice drink is an excellent source of Vitamin C and B vitamins. The new 12oz offering is available in two great tasting flavors, Cranberry Pomegranate and Cranberry Raspberry. Contact your Crossmark Representative and visit www.oceanspray.com. *Caffeine content naturally occurring from green tea 90 mg/12 fl oz.

Craveology™ Snack Mix with Cranberries

Explore a delicious, uniquely flavored dried fruit and nut snack mix that can be eaten as is or added to your favorite meal for a whole new taste experience. Sweet cranberries combined with salty nuts in three unique flavor combinations—Vanilla Chai, Spicy Coconut Curry, and Tuscan Herb. Craveology™ Snack Mix with Cranberries is packed with 6g of plant protein and no artificial colors, flavors, or preservatives. Available in a 2oz recyclable pack, perfect for on-the-go. Contact your Crossmark Representative and visit www.oceanspray.com.

COMPANY

BIC Lighters

COMPANY

The Great Spirit Baking

PRODUCT

BIC EZ Reach™ ®

BIC EZ Reach

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

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

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PRODUCT

Guinness, Captain Morgan, Baileys & Pallini Limoncello

New Spirit Flavor

Our premium, individually wrapped 4-ounce cake slices are the perfect on-the-go indulgence. The globally recognized spirit brands, eye-catching packaging and amazing taste are sure to be a hit with your customers! No liquor license, no problem! Our cakes have less than 0.5% alcohol by volume and carry a 90-day ambient shelf life. For more information contact us at (844) 487-2253 and visit www.greatspiritsbakingcompany.com.

CONVENIENCE.ORG

COMPANY

Placon

PRODUCT

Crystal Seal® reFresh® Parfait Cups

Parfait Cups Made Using Recycled PET Bottles

Crystal Seal® reFresh® Parfait Cups are made using post-consumer recycled PET bottles and are 100% recyclable. Each parfait cup features a patent pending sealing mechanism and tamper-evident tab to ensure your products are kept safe and secure. Available in 8-ounce or 12-ounce sizes, each cup comes readily made to be used with our single- or twocompartment insert trays and insert fit lid to keep your ingredients fresh until you are ready to mix-in. For more information, please call (800) 541-1535 and visit www.placon.com.

COMPANY

Sargento Foods Inc. PRODUCT

Sargento® Balanced Breaks® Cheese and Crackers

Introducing Sargento

We've taken America's favorite snacking duo—cheese and crackers—to the next level by perfectly pairing Sargento® real, natural cheese with America's favorite crackers— RITZ® crackers*, WHEAT THINS® snacks* and TRISCUIT® crackers*. Each convenient, individually sized snack contains bite sized pieces of two cheese varieties, has at least 7 grams of protein and 170 calories or less to create a deliciously satisfying snack! Visit sargento.com/cstore, or contact your Sargento® Sales Representative or current Distributor Representative for more information. *RITZ, WHEAT THINS, AND TRISCUIT are trademarks of Mondelez International group, used under license.

CONVENIENCE.ORG

COMPANY

Eagle Protect PBC PRODUCT

STRETCHPoly Gloves

Cost-Effective Nitrile/ Vinyl Glove Alternative

NEW! A cost-effective, FDA compliant, food processing, service and assembly glove option. Nitrile gloves, the premium option for medical, food and general use, are very expensive and hard to obtain right now. Eagle Protect, the leading supplier of PPE to the food sector, has sourced this new generation STRETCHPoly glove with better barrier protection against bacteria and virus than vinyl gloves and better strength and durability than standard PE gloves—all at a third of the price of nitriles! For more information, call (800) 384-3905 and visit https://eagleprotect.com/products/stretchpoly.

NOVEMBER 2020 |

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COMPANY

Sungal Displays PRODUCT

Walk-In Cooler Shelving System & Roller Mats

Introducing SUNGAL NEXGENTM Cooler Shelving System

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

INDEX HEALTH & WELLNESS

NEW TO THE INDUSTRY

LXR Biotech................................................................................ 74

BIC® Lighters...............................................................................80 Eagle Protect PBC...................................................................... 81 Ecolab®......................................................................................... 78 iSEE Store Innovations and RPP Products Inc................. 78 Krispy Krunchy Foods LLC..................................................... 79 Oatly Inc....................................................................................... 79 Ocean Spray Cranberries, Inc...............................................80 Ocean Spray Cranberries, Inc...............................................80 Placon............................................................................................ 81 Sargento Foods Inc................................................................... 81 Sungal Displays......................................................................... 82 The Great Spirits Baking.........................................................80

NEW FLAVORS

Hostess Brands, LLC................................................................ 75 Johnsonville................................................................................ 76 Johnsonville................................................................................ 76 The Coca-Cola Company........................................................ 75 NEW TECHNOLOGY

Compliance Safe....................................................................... 77 Jolt................................................................................................. 76 Lavi Industries............................................................................ 77 The Pinnacle Corporation...................................................... 77

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CONVENIENCE.ORG

CARING TOGETHER Convenience stores are at the heart of every community. Let’s make that known. The NACS Foundation amplifies the good work being done by demonstrating the collective and positive impact being made by you across the country.

Join us today. conveniencecares.org

GAS STATION GOURMET

Eating Happy Wellcome Johnston Shell relishes the joys of pairing Cajun barbecue and Indian food.

BY AL HEBERT

On the c-store side of the business, Wellcome Johnston Shell offers a variety of merchandise, from grocery items to snacks to beverages. The store stocks a diverse assortment of wine and liquor. On the foodservice side, keeping meals affordable for customers is a key part of the business strategy.

H

ow does a guy from Delhi, India, who went to college in England, culinary school in France and spent years working in New York City end up in the heart of Cajun Country cooking Indian cuisine and barbecue? For Shy Kumar, co-owner and manager of Wellcome Johnston Shell in Lafayette, Louisiana, his journey relied on a love of food and people.

Kumar spent seven years in England and left with a degree in business and finance and a master’s in mathematics. Then he “went to culinary school in France as a hobby. I was just cooking for friends,” he said. After 12 years in New York working in finance, he took a job as a systems analyst in Kentucky, where he met his barbecue guru. “The guy bought an old gas station and decided to barbecue there. He had the best barbecue in the town. He taught me every small detail about barbecue,” explained Kumar.

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| NOVEMBER 2020

He discovered seasoning, how to choose the right quality of meat and how to make the barbecue sauce. “I learned details like how to apply the barbecue sauce. I had the culinary background, but he taught me how to make it real,” said Kumar.

Kumar eventually landed in Lafayette after visiting a friend who was building a gas station. He liked the town and its potential for barbecue, so on the spur of the moment, Kumar moved. “People are very friendly here. They are happy eaters,” he said.

The store opened on August 1, 2020—just in time for the busiest hurricane season the Gulf Coast had experienced in 15 years.

SWEAT THE TECHNIQUE Cajuns are indeed passionate about food. “When a person enjoys the food rather than eating to just CONVENIENCE.ORG

Shy Kumar (left) is co-owner and manager of Wellcome Johnston Shell in Lafayette, Louisiana. Kumar considers his employees family and wants them to feel like being at the store is more than a job. It’s about making connections with customers and reflecting positive energy, he says, and of course, serving up delicious Cajun barbecue and Indian food.

get full, it makes a difference,” Kumar said. “When we see a person is eating happy it motivates us.”

Kumar’s brisket and ribs are customer favorites. He credits their popularity with his slow process and attention to detail. “We use Ole Hickory Smokers and a blend of charcoal, apple and pecan wood to smoke the meat,” he said. “The brisket takes 15 hours, and we smoke the ribs around six hours and the chicken around five hours.”

Keeping food affordable is an important part of Kumar’s business strategy.

“My main objective was to feed people at a reasonable cost. I want a person to enjoy a meal with drink and a side every day for less than $10. The object is for people to enjoy good food. They don’t have to think twice about reaching into their pocket,” he said.

CAJUNS LOVE INDIAN FOOD Kumar visited Indian restaurants in the area, but the food just didn’t taste like what he grew up with back home. So, he decided to cook some samples for customers to try.

“It got so popular they started coming back each weekend. They love it!”

He draws parallels between the cultures: “Indian food, like Cajun food, has a lot of flavor; it’s spicy,” Kumar said. “It has a kick, but it brings the joy of eating and sometimes tears, too, tears of taste, but you continue eating it. That is Cajun and that is Indian, where eating is not necessity, it is a culture.”

CONVENIENCE.ORG

The growing popularity of the new Indian food offer has all been customer driven. “They send their boss and friends.

I started out about 30 meals and sold out.

Next week made 50 and sold out in three hours, and last week I cooked for 60, sold out in two hours.”

When we see a person is eating happy it motivates us.

WELLCOME HOME Growth is the future for the Wellcome brand. Since August, an additional store has opened in Lake Charles, and seven more are planned, with two under construction. Opening in November in the village of Maurice is a store that will have outdoor seating for 60 people.

“We’ll have a patio on the side. I plan to build a pavilion because I have five acres. So if people want to have fundraisers or family gatherings they can enjoy that facility,” said Kumar.

He wants his customers to feel welcome, like friends, and his employees to feel like being at the store is more than a job. “If you treat employees like family they’re not employees, but they are family. All my guys are family. They feel like they own the place. They enjoy being here. If you’re happy at work, it’s not work.”

For Kumar, it’s not about the transactions, but about a personal connection with the people who walk through the door. “We provide the best customer service. We have a beautiful smile when you come in—we reflect the positive energy.

It’s why we have the two ‘Ls’ in Wellcome, the extra ‘L’ is for love.”

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

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

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GLOBAL TRENDS

Subscription Society

Subscription services are booming, proving to be the ultimate loyalty program.

BY FIONA BRIGGS

FROM THE CONSUMER’S PERSPECTIVE The top reasons cited for signing up for subscriptions:

53%

Exclusive content

53%

Convenience

48%

Personalized offering

51%

Discovery of new brands or products Source: Barclaycard

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| NOVEMBER 2020

Pret a Manger’s just-launched YourPret Barista subscription model offers customers who sign up for £20 ($25) per month a voucher to redeem for as many as five cups of any Pret coffee, tea, hot chocolate, iced coffee, cold brew, frappe and blended smoothie per day.

L

ockdown has fueled strong growth in subscription-based business models on both sides of the pond as retailers and foodservice operators seek to coax customers back into stores and generate a more reliable and predictable source of income than a one-charge model.

In the U.K., Pret a Manger launched its YourPret Barista subscription model.

Customers who sign up pay £20 ($25) per month and receive a voucher, which they can redeem up to five times per day on any Pret coffee, tea, hot chocolate, iced coffee, cold brew, frappe and blended smoothie.

CONVENIENCE.ORG

YourPret Barista was barely out of the blocks when rival food chain LEON launched its own unlimited coffee subscription, undercutting Pret by £5 per month.

In the U.S., Panera Bread’s My Panera, which offers an unlimited coffee subscription for $8.99 a month, has proven a big hit during the pandemic, while McDonald’s is reportedly testing a food loyalty program, likely to be offered through a mobile app and geared toward helping alleviate drive-thru lines, which have spiked due to restaurant closures during COVID-19.

According to Tom Caporaso, CEO of premium loyalty provider Clarus Commerce, McDonald’s has the potential to steal a bigger market—aside from burgers and fries—namely, coffee drinkers. McDonald’s already has a loyalty program for its McCafé drinks, which gives customers a free drink after purchasing five. In addition, its Forward It program allows cardholders to redeem and then forward a reward to someone else. But the brand could benefit from a premium program like Panera’s, Caporaso argues.

“Many people have been awaiting a rewards program, and a paid component could be the missing key to truly dominate the fast food space,” he said.

Without doubt, lockdowns have fueled the popularity of subscription services from both the retailer and the consumer’s perspective.

LOCKDOWN DEMAND Research by Barclaycard Payments, which processes nearly half of the U.K.’s credit and debit card transactions, found that two-thirds of the nation’s homes are signed up for regular subscription services, and their popularity has led more CONVENIENCE.ORG

than a fifth of retailers—22%—to develop a subscription service during lockdown.

Further, 82% of retailers believe the popularity of subscription services increased during lockdown as Brits took advantage of safe and convenient ways to receive everything from essential items to entertainment into their homes.

According to Barclaycard, 75% of retailers value subscription services for providing a reliable revenue stream in uncertain times; while 82% state the model allows them to build customer relationships through increased contact, and 87% think it enables their businesses to keep up with competitors.

Although entertainment subscriptions are the most popular, food and meal subscription services—such as wine-tasting kits—are the second most adopted, while health, well-being and grooming services also are on-trend, Barclaycard found.

“Subscriptions were already a vital tool for U.K. retailers prior to the pandemic, helping businesses to remain nimble and transport their product or experience direct to their customers’ homes,” retail consultant Mary Portas stated. “Due to the prolonged period of lockdown, the public has grown accustomed to the range of products on offer, as well as the ease at which they can be regularly surprised and delighted by the brands they care about.

“As a nation, we face the challenge of a lifetime, finding ourselves in a precarious position financially, staring into a recession and with many forecasting more difficult times to come. We should remind ourselves that businesses in the U.K. have always been recognizable by their ingenuity and ability to pinpoint their customers’ needs.

Now, with many pivoting toward the subscription economy, we have further proof retailers are willing to try new things to find untapped revenue streams.”

NACS GLOBAL CALENDAR NOVEMBER 2DECEMBER 4

Crack the Code Experience www.convenience.org/crackthecode NACS Convenience Summit Asia www.convenience.org/csa

JUNE 1-3, 2021

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

Subscribers are comfortable and happy to share their data in return for a service, which gives retailers permission to market to them.

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GLOBAL TRENDS

75% of retailers value subscription services for providing a reliable revenue stream in uncertain times.

Successful subscription models that attract drivers to the forecourt include RaceTrac Reward’s VIP, which offers subscribers savings on fuel, and Circle K’s subscription car wash programs that enable subscribers to enjoy the benefits of more frequent car washes for an affordable fixed fee.

LOYALTY DRIVERS For Paula Thomas, host of the “Let’s Talk Loyalty” podcast and chief content officer at the fuel and convenience loyalty specialists Liquid Barcodes, subscription-based models drive extreme loyalty and are exploding within convenience retail globally.

Subscribers are comfortable and happy to share their data in return for a service, which gives retailers permission to market to them, Thomas said, “but recurring revenue is the Holy Grail in marketing terms, increasing the lifetime value of your customers.”

While retailers can benefit from repeat revenue and predictable income, they can’t be complacent just because someone has subscribed to their model.

“They still need to deliver exceptional service, and subscribers need to be able to leave very easily—that’s a key feature in building trust,” Thomas said.

While there are a variety of subscription models, Thomas argues that curated services, such those provided by the recipe box company Gousto (which

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wants to triple its capacity by 2022 and create more than 1,000 new jobs in the process) or MealPal, which aims to help office workers “eat more intelligently” by ordering meals from a selection of local restaurants, are the most powerful since they go beyond simple functionality.

“They have learned my needs and are recommending certain food kits or the style of lunch that I may want,” she said.

Tiered models such as Alibaba’s 88 program in China, which was launched as a free subscription in August 2017 but then expanded a year later with a paid VIP option, also are effective in incentivizing shoppers to spend more and accumulate membership points to access benefits.

Successful subscription models that attract drivers to the forecourt include RaceTrac Reward’s VIP, which offers subscribers savings on fuel, and Circle K’s subscription car wash programs that enable subscribers to enjoy the benefits of more frequent car washes for an affordable fixed fee. Besides driving traffic, these programs engender a halo effect and create CONVENIENCE.ORG

The Coca-Cola Insider’s Club offers exclusive access to new drinks and flavors through a monthly $10 subscription to just 1,000 members.

more opportunities to visit and buy from the retail store, Thomas said.

Pret will be looking for a similar type of spin-off from YourPret Barista suggests Tim Peniston-Bird, founder of Orangutan and an expert in customer loyalty programs. Peniston-Bird reckons Pret’s program is smart thinking for a business that has had its core customers abandon its stores in city center and station locations. “Although there has been a ‘COVID ghost’ haunting our high streets, there are still people there— those that live or work there—and they will still be wanting a number of coffees per day,” he said.

Subscribers will visit more often and in most cases will purchase something else—a snack, lunch, a drink for someone else—and may bring other people along who will pay full price, he said. Even given increased product costs, the business case is compelling, Peniston-Bird said. “Subscriptions have become one of the real hot topics in customer loyalty. They tie the customer in financially, which lets the provider plan ahead. By increasing customer interactions, subscriptions make it much CONVENIENCE.ORG

easier to build a relationship, upsell and cross-sell—whilst removing the pain point of paying on each transaction,” he said.

Panera Bread has already reaped the benefits of its subscription model, with subscriber visits increasing from about four to more than 10 per month in test markets, while food sales increased 70% with those customers.

Product bundling around occasions, akin to Marks & Spencer’s Dine In for Two campaign but with a subscription element, also could work in convenience retail, Thomas suggests.

There are big opportunities for subscriptions within the FMCG space, said Thomas, who cites the Coca-Cola Insider’s Club, which offers exclusive access to new drinks and flavors through a monthly $10 subscription to just 1,000 members. Members have no input on the product selection, so there’s a lot of inherent brand trust ensuring that subscribers are sure that the products will have a value of at least $10, said Thomas. The innovation lies in the exclusivity aspect, plus the opportunity to “surprise and delight,” she adds.

Subscription-based models are thriving and evolving with each new iteration, and future models in convenience retail may encompass voice technology in some form, said Thomas. Other novel ideas include a shared car subscription service (evidenced in Denmark), wellness products such as cold-pressed juices and restaurant-quality, occasion-led, premium meal kits. Themes around community would also fly, she suggests. A subscription service based around wine, for example, could be hosted at a community level, bonding groups of local people around a shared interest—and it would appeal in lockdown conditions or not.

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

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CATEGORY CLOSE-UP / WINE

Everything’s Coming Up Rosé

Despite a slight dip last year, retailers and marketers have a “glass half full” view of wine’s prospects.

F

or the second year in a row, the number of convenience stores stocking wine increased in 2019, and retailers and marketers expect the category will finish out this year with a robust performance.

Increased retailer attention to wine comes as alternative packaging transforms the beverage into a more convenient option for customers, millennial consumers increasingly demand varied wine options, and some states are loosening restrictions on c-store sales of the product. Moreover, the wine category is benefitting in general this year as bars and restaurants have shut down and reduced customer capacity

JUST THE FACTS Average wine sales per store in 2019 dipped slightly to $14,357, and category margins stood at 27.5% vs. 28% in 2018.

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in the wake of the COVID-19 pandemic, and consumers have shifted to more off-premise purchasing habits.

“Since 2010, there are more than 8,000 additional convenience stores in the U.S., with many choosing to sell wine,” said Chad Fisher, vice president, emerging channels at The Wine Group, marketer of the Cupcake line and other wine brands.

“Over the last five years, we’ve seen a large uptick in overall wine category focus from both chain and independent operators.” The relaxation of bans on c-store wine sales in states like Tennessee and Oklahoma in recent years also has contributed to an increased presence of wine in the channel, Fisher added.

While the percentage of c-stores selling wine increased to 52% in 2019 from 46% in the year prior, according to the NACS State of the Industry Report of 2019 Data, the category suffered through lackluster sales performance last year.

Average sales per store dropped slightly to $14,357, and category margins dipped to 27.5%. “Within the category, coolers/ wine cocktails and sparkling wine were the only subcategories to realize sales growth in 2019, while all other subcategories struggled,” remarked Jayme Gough, NACS research manager.

CONVENIENCE.ORG

iStock.com/sorendls

BY TERRI ALLAN

Industry Sales % of Stores Selling 2018

% of In-Store Sales 2018

2019

45.8% 52.1%

2019

Avg. Sales/Store

0.29% 0.30%

2018

2019

$14,425 $14,357

iStock.com/aluxum; AlexandrBognat; Coprid

Source: NACS State of the Industry Report of 2019 Data

DESIRABLE DEMOGRAPHICS Still, wine marketers believe that changing consumer demographics bode well for the category in c-stores. According to Herb Smith, vice president, customer development, at E. & J. Gallo Winery, 50% of c-store shoppers are millennials who choose the outlets for “the ease of purchase and reliability. They’re typically on the go with a three minute or less shopping experience and have made their purchasing decisions before entering the store.”

Millennial consumers also are willing to try “new wine formats outside of traditional 750 ml. bottles,” Smith noted, such as cans, Tetra Paks and 187 ml. bottles.

Tara Shoultz, associate brand manager for Korbel California champagne, prosecco and brandy, said, “Wine shoppers in the convenience channel are usually younger, female and have slightly higher household incomes than the average wine shopper.”

She added that while demographics vary by market, c-store wine shoppers are slightly less price sensitive than average, “although they’re still looking for value.”

Just as the c-store wine consumer is changing, so is wine packaging. With the expanded presence of cans, boxed wine, Tetra Paks and 187 ml. bottles, “c-stores can be arguably the biggest benefactor,” remarked Smith. Wine in cans has become CONVENIENCE.ORG

particularly visible in the past few years, and according to Gough, “they’re a great option for occasions where a customer may not have a corkscrew on hand, or might not be allowed glass.”

Beyond cans, other alternative packages also are on the rise. Smith pointed to strong trends this year for three-liter boxes in c-stores. The Wine Group’s Fisher, meanwhile, said that while “canned wine is certainly on a rocket ride over the last year or two, Tetra is enjoying double-digit growth as well, and on a much larger base.” And the innovation continues. The 19 Crimes brand, known for its augmented reality labels, is now available in 375-ml. aluminum bottles, Carl-André Roux, vice president, national accounts, at marketer Treasury Wine Estates, reported.

Over the last five years, we’ve seen a large uptick in overall wine category focus from both chain and independent operators.

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.

NOVEMBER 2020 |

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CATEGORY CLOSE-UP / WINE

Subcategory Performance % of Sales

WINE

Avg. Sales/Store

Avg. GP$/Store

Gross Margin %

2018

2019

2018

2019

2018

2019

2018

2019

Table Varietal Wine

61.2%

60.8%

$8,827

$8,732

$2,497

$2,446

28.29%

28.01%

Coolers/Wine Cocktails

21.0%

23.0%

$3,031

$3,303

$800

$840

26.38%

25.42%

Fortified Wine

10.6%

9.1%

$1,526

$1,303

$472

$386

30.90%

29.65%

Champagne Sparkling Wine

4.2%

4.6%

$600

$654

$149

$166

24.88%

25.34%

Other Wine

3.1%

2.5%

$441

$365

$129

$99

29.15%

27.09%

100.0%

100.0%

$14,425

$14,357

$4,046

$3,936

28.05%

27.42%

TOTAL

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

Source: NACS State of the Industry Report of 2019 Data

Wine shoppers in the convenience channel are usually younger, female and have slightly higher household incomes than the average wine shopper.

PANDEMIC UPTICK As with other in-store categories, the pandemic has dramatically impacted wine sales. According to Koupon, the digital promotion provider for small format retail stores, wine dollar sales in c-stores increased 9% for the 10-week period from February 23 to May 2, 2020.

Some 32% of c-store wine buyers during the period were new to the category within c-stores, the company noted, and 17% of those first-time buyers made repeat purchases. Retailers also report impressive trends.

Max Glober, director of marketing at Petro Services Inc., the operator of Daily’s stores in Florida and North Carolina, said wine sales at the chain are up more than 20% year to date. “It’s all selling well but in higher quantities,” he noted. “The rings are higher, and we’re selling more units.”

The NACS Annual Shopper Study comprises consumer behavior analytics from more than 10,000 convenience store shoppers across 42 states, representing the most comprehensive consumer-driven metrics available to the industry.

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

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But even before the pandemic, wine was an important category at Daily’s, Glober stated. “It’s not one of our top three categories, but we see a nice little chunk of sales.”

Similarly, at Basecamp Wilson, a highend market, restaurant and gas station in Wilson, Wyoming, at the base of the Grand Tetons, owner Jimmy Fraser said, “We’re seeing an uptick in wine sales during the pandemic. Customers are willing to spend a little more because they’re not going out.” In April and May, volume sales surged, Fraser reported. “We were selling wine by the case, not just by the bottle.” Like Daily’s, Basecamp Wilson has developed a reputation for wine and even employs a sommelier.

And at Good 2 Go c-stores, Waldo Wallace, senior beverage category manager, said, “Our wine sales are going through the roof.” While sales had been doubling on a monthly basis prior to COVID-19—thanks to increased focus on the category by the western chain—sales skyrocketed this spring and summer.

“We’ve seen increases of 600% in a single week,” Wallace reported. As a result, Good 2 Go’s next wine category reset will likely see an expanded selection, the retailer said.

The pandemic may favorably impact the wine category in c-stores for some time.

“With shoppers focused on their health CONVENIENCE.ORG

PER STORE, PER MONTH SALES

2017

2018

2019

2020

$2,344

$2,400

$2,200

$2,000

$1,800

$1,600

$1,400

$1,200 JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

Source: CSX; csxllc.com

CALLING ALL CONVENIENCE STORE & TRAVEL CENTER OWNERS! DISCOVER A FRANCHISE WITH

FLAVORFUL OPPORTUNITY! • 35+ years of experience with reasonable investment levels and strong ROI • Compact footprints, perfect for drive-thru models • 630+ current locations, worldwide • Fresh, crave-able menu!

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9/11/2020 2:35:11 PM

NOVEMBER 2020 |

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CATEGORY CLOSE-UP / WINE

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.

WINE-SHOP TACTICS Pandemic or not, savvy c-store retailers know that proper attention to merchandising—including the use of tactics employed by fine wine shops—helps drive category sales. “We pride ourselves in offering a large selection of premium wines from some of the greatest wine-producing regions around the world,” remarked Glober. Handsome wine racks are now part of new-store builds and retrofits at Daily’s, while merchandising features shelf tags touting highly rated wines, as well as wine gift bags.

Good 2 Go relies on cross-merchandising wine with other products. For Valentine’s Day, for example, “I build displays around flowers and include wine,” Wallace noted.

“For the year-end holidays, I’ll put bottles of wine by the check stand, along with

WINE DELIVERY: THE NEXT FRONTIER? As consumers increasingly shift to online shopping for alcoholic beverages, Drizly, the e-commerce and delivery provider, expects 20% of off-premise alcohol purchases to be transacted online within the next five years, compared with less than 2% earlier this year. Where legal, c-stores can take advantage of the growing opportunity.

According to Blaine Grinna, director of retailer development at Drizly, “Consumers may not think of a c-store as their destination of choice when shopping for beer, wine and spirits. By joining Drizly, your alcoholic beverage selection can reach a wider audience.” Among the c-stores already partnered with the provider are Tobacco Plus in Louisiana, Mega Saver in Nebraska and several 7-Eleven franchisees.

Wine accounts for 36% of sales on Drizly, and by working with the platform, retailers glean insights into what items are selling well online in a particular market, Grinna said. “The insights can help to inform retailers what items they may want to add to their inventory,” she noted.

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| NOVEMBER 2020

bows and ribbons.” Prior to the pandemic, Basecamp Wilson offered frequent in-store wine tastings and even hosted wine dinners with appearances from winemakers. To merchandise, the store employs a unique layout: Rather than organizing selection by varietal, “We use occasion themes,” Fraser said, “such as ‘Front-Porch Sippers’ and ‘So, You Like Cabernet.’”

Wine marketers advise retailers to stock the right selection for their stores and to promote the category. “Providing the right selection of varietals, price points and sizes will be extremely important to grow wine sales,” said Shoultz. Smith and others emphasize the importance of chilled wine. “The impact from putting in full doors of cold wine versus half doors can be immense,” the E. & J. Gallo executive remarked. Proper positioning of ambient wine, meanwhile—particularly in the front of the store—helps alert customers that the shop carries the product, Fisher noted.

The Wine Group executive and other marketers see only growth ahead for the category in the convenience channel.

“With the addition of more stores, consumers gravitating more toward wine as a viable option and retailers getting more strategic with category management, we expect to see the size and value of wine in convenience grow for many years to come,” he said.

CONVENIENCE.ORG

iStock.com/bluestocking

and safety, they’re looking to get in and out of stores quickly,” remarked Korbel’s Shoultz. “This has given c-stores a competitive advantage and has benefitted their wine sales.”

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

ADVERTISER INDEX Contact Information

Page

ADD Systems..............................................................................................3 www.addsys.com AGDCTradeRelations@Altria.com............................... Inside Front Cover www.altria.com www.tobaccoissues.com Budderfly................................................................................................. 41 (855) 785-7534 www.budderfly.com C ash Depot.....................................................................................9 (800) 776-8834 sales@cdlatm.com www.cdlatm.com Charleys Philly Steaks.............................................................................93 www.charleys.com ClickIt Inc................................................................................................. 61 www.clickitinc.com Cool New Products Guide................................................................. 74-82 www.convenience.org/CNP DMF Bait Company...................................................................................31 (800) 332-2248 orders@dmfbait.com www.dmfbait.com

Contact Information

Page

K rispy Krunchy Foods LLC........................................................... 57 (800) 290-6097 www.krispykrunchy.com L iggett Vector Brands Inc...........................................................27 (877) 415-4100 www.liggettvectorbrands.com L iving Essentials LLC (5-hour ENERGY)........................................7 (866) 960-1700 www.5hourenergyretailer.com M cLane Company Inc................................................... Back Cover www.mclaneco.com NACS Compensation Report Survey.......................................................52 www.convenience.org/CompSurvey

Contact Information

Page

NACS Magazine.............................................................. Inside Back Cover www.nacsmagazine.com NACS Masters of Convenience................................................................46 www.convenience.org/NACSMaster North American Bancard............................................ Insert w/i Polybag (866) 481-4604 www.nynab.com Ocean Spray Cranberries Inc.................................................................. 21 www.oceanspray.com Premier Manufacturing Inc..............................................................5 & 35 www.gopremier.com

NACS Convenience Matters.......................................................................4 www.conveniencematters.com NACS Crack the Code Experience.......................................................72-73 www.convenience.org/crackthecode

P unchh.........................................................................................65 www.punchh.com/contact S wedish Match North America (Game)......................................45 (800) 367-3677 www.smna.com

NACS Foundation...............................................................................6 & 83 www.conveniencecares.org

S wedish Match North America (Zyn)..........................................13 (800) 367-3677 www.smna.com

NACS HR Forum.......................................................................................95 www.convenience.org/HRF2021

S wisher International Inc.............Front Cover Tip-On Banner Ad (800) 874-9720

EcoLab...................................................................................................... 37 www.ecolab.com HR2021_NOV_HalfPgAd_ROSE.pdf

1

10/15/20

9:47 AM

Succeeding in a Post-Pandemic Workplace

GOING VIRTUAL

Join industry HR professionals next Spring as we navigate HR challenges and generate new ideas through interactive presentations, case studies, peer-to-peer networking and more.

Sign-up now to be notified when registration opens convenience.org/HRF2021 Half Horz.indd 1 CONVENIENCE.ORG

10/20/2020 3:44:02 PM

NOVEMBER 2020 |

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BACK PAGE

Fuel Up, Virtually Calling all Fortnite fans. Virtual gas stations in video games are just as useful as real-life locations for fill-ups. Here is a list of known gas station locations in Fortnite: Battle Royale: • West of Misty Meadows • South of Weeping Woods • East of Frenzy Farm • Blue Steel Bridge • West of Steamy Stacks • Northwest of the Fortilla $

• Pleasant Park • Salty Springs • Lazy Lake • Sweaty Sands • Catty Corner • Gas N’ Grub • West of Holly Hedges

Sneaky Snake Look twice before grabbing a gas nozzle.

A venomous snake wrapped itself around one fuel pump in Melbourne, Australia, and the gas station owner had to call in a local snake catcher to remove it. The Tiger snake is the most common snake in Melbourne and shouldn’t be approached as they can be “erratic,” according to snake catcher Raymond Hoser. “They are deadly,” he said. “You get bitten by a Tiger snake, and it’s pretty intense.” The five-foot-long snake had hitched a ride on the underside of a car, which is often the case, says Hoser, and slithered out onto the forecourt to curl up around the pump and take a nap.

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| NOVEMBER 2020

A Manga Success Story Japanese manga typically tell fictional stories; however, Project X is a non-fiction manga series of Japanese business success stories, and one stars 7-Eleven.

The plot: A failing Japanese convenience store sends an executive to America to learn about its convenience store industry, and while there, the executive visits 7-Eleven and is impressed by its business model. After negotiating with 7-Eleven, the Japanese company secures use of the 7-Eleven name and process manuals without having to follow many of the U.S. company protocols. The Japanese company eventually develops its own store model inspired by the American stores and flourishes to the point that it could buy out the American company to save it from bankruptcy.

CONVENIENCE.ORG

News When You Need It, How You Need it.

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

And it’s FREE for NACS members.

Discover instant access today at NACSMagazine.com/instant

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