C&I Retailing Magazine - 30th Anniversary

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INTRODUCING WHOLESOME FLAVOURED GOODNESS

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1988 — 2018

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OCTOBER/NOVEMBER 2016

APRIL/MAY 2017

INTRODUCING WHOLESOME FLAVOURED GOODNESS

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lower In sugar* dairy & lactose free

C&I 30TH ANNIVERSARY

The C&I 30 year time line.

This is a timeline showing how the industry has developed into what it is today as reflected in the pages of C&I over its thirty years.

1988 • We launch we revamped Service Station Magazine • “Caltex Breaks New Ground With Franchise Plan”. Other oil companies soon follow. Dealers not happy with franchise terms and upfront fees being asked.

• In April 1988 there are 130 7-Eleven Stores, 72 BP Food Plus with Caltex having 11 Majik Markets and Esso opening its first convenience store.

Ampol and Solo say they have no convenience aspirations.

• Compulsory super introduced.

• Trade Practices Commission has yet another fuel enquiry.

• “Temperature Correction: The Incredible Shrinking Litre”. Buying fuel warm and selling it cold is costing dealers $30-$50 million a year.

• Mobil dealers paying more for lube oil from their oil company than they can buy it for from supermarkets.

• Dealers protest low margins on oil company credit cards.

• Ampol acquires 200 Solo sites.

1989

1990

• Australasian Association of Convenience Stores(AACS) is formed. Executive Director Barry Anderson predicts that Australia will have 3,000-4,000 convenience stores in the next few years.

• Wholesale pricing and temperature correction arguments continue and a new Oil Industry Code of Practice arrives.

• “Stock Losses: Environmental Risks Looming.”

• Test case launched by SSA and VACC for a dispossessed BP dealer fails.

• BP commences site upgrades and a new franchise deal while Ampol launches Road Pantry.

• “Armed Robbery: Service Stations Criticised”. Armed robbers start moving from banks to servos.

• Our first food related ad: Avem places the very first ad in the magazine for foodservice machinery.

• “A Force to be Reckoned with”. Shell launches its FORCE franchise package.

• “How Does Your Oil Company Rate?” Not well according to our readership survey. But oil company reps were much more popular.

• Coopers & Lybrand study claims that 25% of all metro service stations should close down.

• “Coercion Is Not The Answer”. Oil companies pressuring dealers to remove foreign brands of engine oil.

• “The Opportunity Market: Selling Confectionery” and “Cool Profits: Selling Ice Cream”. These were our first category features and Mars, Wrigley, Peters, Streets and Cricket Lighters were our first FMCG advertisers.

• “Anything Interesting on the Bowser Tonight Dear?”

Caltex unveils its first video fuel dispenser.

• “Selling in Bulk: Stack ‘em High and Watch ‘em Fly.” The benefits of bulk forecourt displays of soft drinks and dog food.

• “Stand and Deliver”. We look at the opportunities for dispensing machines.

• “Profit or Volume” and “The Shop Sales Myth?” Independent study shows that increased shop traffic does not make up for money lost through fuel discounting.

• BP launches the first Privately Owned Service Station franchise called POSS. • State trade associations launch the “Prosper From Petrol” campaign, holding dealer meetings demanding a 5cpl fuel margin and were later subject to a failed prosecution.

• Huge industry survey in the magazine results in 10 per cent participation. It shows 70,000 direct employees in the industry with 77 per cent of sites still with a workshop.

Of 24 hour sites, 28 per cent had an armed holdup in the previous 12 months.

• Another petrol inquiry announced.

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C&I 30TH ANNIVERSARY

1991 • Service Station 92 launched. All industry associations decline to support it.

• Service Station magazine goes full colour.

• 600 service station dealers leave the industry due to site closures and non renewal of leases.

• We commence a series called “Fuels of the future” which examines every kind of alternative motor fuel.

• The autogas market is deregulated.

• Shell UK states that the use of mobile phones is not a hazard on the forecourt – confirmed 15 years later by Mythbusters.

• Mobil buys the ESSO downstream business for $500 million.

1992 • Service Station 92, our first trade show, held at Sydney’s Darling Harbour and was runner-up for the “Best New Show” award.

• BIS Schrapnel study finds service station workshops are rated poorly by motorists.

• Goods & Services Tax mooted.

• AACS unveils a “flight simulator” for convenience store suppliers and managers.

• Mobil launches Quix Food Stores.

• Ampol introduces new flexibility into its franchise agreements.

• New environmental regulations are making banks nervous about lending to servos.

• Trade Practices Commission action against the SSA and VACC for price fixing fails.

• Caltex attempts to correct its fuel freight cost anomalies.

• NRMA Survey finds that over 50% of motorists are prepared to pay a little more for driveway service.

• Ethanol blended fuels are first sold at selected independent service stations on the NSW south coast. Branded operators are not happy.

• Streets launches Magnum on October and grabs 22 per cent market share in the following ten months.

It’s been a wonderful ride This year, C&I celebrates 30 years reporting on the life and times of the Australian convenience store industry and 26 years operating the industry’s only independent national industry expo. Founder Keith Berg looks back at how it all began.

I

am Keith Berg, who some say is the founder of C&I. But closer to the truth is that C&I found me. It all started in 1987 when my then partner, Robyn Bennett, and I started from our tiny spare room a business called Berg Bennett & Associates Pty Ltd. As a start-up with very little cash, we thought adding “& Associates” to our company name made us sound bigger and rather more important. We dropped the pretentious suffix a year or two later. Our business was corporate writing. We did company newsletters, direct mail campaigns, management proposals; that sort of thing. Since then, we’ve moved around a bit.

After a year operating out of a spare bedroom in my one storey terrace in Rozelle, I bought an old derelict corner butcher shop in Balmain with a liveable flat upstairs to rest our heads. We cleared out the cool rooms, chased away fifty years of cockroaches and, a new floor and a paint job later, we had a proper office. I later sold the shop to buy a house with my new bride. We then rented the bottom half of an old timber waterfront house as an office on the edge of Sydney Harbour with the best office view ever. Several years later, we bought a strata office in the main drag at Balmain with a view of the fake putting green in the foyer. Then almost five years ago, we took up residence at The Intermedia Group head office in Glebe with a view of, well, the other 150 Intermedia staff. >>

LATION 22,795 NATIONAL CIRCU

2018 FEBRUARY/MARCH

In our 30 years, the magazine has had four different names which reflected the changes that were happening in the industry and the progressively larger readership.

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C&I 30TH ANNIVERSARY

1993 • The magazine gets a new design.

• “Milk the Market” feature annoys the SSA and dispute follows. Our last issue of Service Station was published in March.

• Phil Grose, former Public Affairs Manager for Caltex, joins as editor of the new Service Station & Convenience Store News (SS&CSN) published in April.

• “Underground Time Bombs” a three part series on underground leaks attracts enormous interest.

• Shell Unveils new AWANA image featuring the Lazy-S canopy. But the roll-out is slower than expected. Dealers dub it “All Wank And No Action”.

• SS&CSN interviews Dr David Cousins (Prices Surveillance Authority) and Prof Alan Fels (Trade Practices Commission). Fels criticises foolish behaviour in the fuel industry.

• “The Government’s Heavy Hand” The introduction of ULP. • Breakaway dealer association is formed in WA. • AACS begins a column for SS&CSN and brings

out its first State of the Industry Report on Australia’s 467 convenience stores.

• “Oil Companies’ Support For Terminal Gate Pricing”. The Prices Surveillance Authority suggests compulsory price boards.

• Oil companies introduce workshop programs.

• Independents in WA begin to import their own fuel and begin a discount war.

• “Peace Maker Hit a Chord.” Interview with Dr David Cousins, Oilcode Conciliator.

• Shell converts 67 Circle K stores to Shell Select.

• Peters launches Heaven, in September 11 months after Magnum.

• AC Nielsen study reveals poor drinks merchandising at service stations.

• Breakaway National Petroleum Marketers Association is formed and dissolves two years later.

• Ampol announces its new rack pricing system.

• Newsagents retain their newspaper monopoly.

1994

1995

• “Dealers Say: Outlaw Crazy Price Wars”.

• Ampol changes back to its old rack pricing system following dealer complaints.

• “Branded Fast Foods”. AACS looks at the latest trends.

• AACS launches its Responsible Tobacco Marketing Program.

• “Industry Commission Report: Mixed Results For Servos”. Sites Act and Franchising Act to be repealed.

• Shells runs a pilot scheme for multi-site franchising.

• Federal law clamps down on dodgy fuel blenders.

• “I’ll Order When Someone Asks For It” Missing early sales during promotions.

• Burmah Fuels opens its first site with an AM-PM store and plans a $100 million expansion.

• Reg Johnston opens United Convenience Buyers (UCB) for business.

• “Caltex Will Downsize”. 300 sites to be divested and 25 per cent of refinery staff retrenched.

• Quix trials a Pizza Hut kiosk in one of its stores.

• AACS says that stores with scanning at the till have increased from 28 per cent to 69 per cent in two years.

• Service Station 94 held in Melbourne in September with AACS hosting its first open industry conference.

• Australian Hotels Association claims that only retailers who can provide a place to smoke should be allowed to sell cigarettes.

• Two oil companies announce plans to sell E10.

• SS&SCN goes bimonthly • Caltex and Ampol announce a merger with 700 staff to go and some 650 sites to be divested. TPC places heavy conditions on the merger.

• “The Future Has Arrived”. The first card readers appear in petrol pumps and the word CRIPS is coined.

• Service stations and convenience stores now have 16 per cent of the $4.7 billion tobacco market, up from 15 per cent five years ago.

• “Fast Food: Where it’s at and Where it’s Going”.

US fast food expert claims that nationally branded products are the way to go.

• Pilfering estimated to cost the industry $13-21 million a year.

• “Two out of every three cough lozenge buyers do not have a sore throat.”

• New environmental regulations ring in the need for continuous leak detection.

• Self serve bulk confectionery trialled in stores.

• “Retail Automation: Computerising a Small Site.”

• Fast Food presentation wins AACS Scholarship.

• Shell dealers form the Shell National Action Group (SNAG) to combat Shell’s increasing control over franchised sites.

• Schweppes awarded the BRW “Best Product Launch of 1995” for its Oasis launch (Windows 95 came second). Thus began the New Age Drinks category.

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C&I 30TH ANNIVERSARY

1996 • Frito-Lay wins with big collectable Tazo promotion.

• Soft drinks starting to move to larger pack sizes.

• Convenience stores pressing for direct delivery of newspapers and magazines.

• Service Station 96 held in Brisbane in March. BP stages its first dealers conference at the event and MTAQ hosts an industry breakfast.

• 760 service station sites have closed in the past two years.

• Shell dealers claim that multiple site franchises are de-facto company operations.

• “Back Office Systems for MSOs and Small Chains.”

• ACCC petrol inquiry recommends repeal of the Retail Petroleum Sites and Franchise Acts plus recommends independent monitoring of retail fuel prices.

• AC Nielsen begins tracking convenience store scan data.

• Woolworths announces that it is going into the petrol business.

• Forced divestment of oil company terminals opens the industry to independent importers.

• “Smoke Settles After New Age Drinks Explosion.”

• National Dairies launches three iced coffee variants in 500ml plastic bottles.

• Visiting fast food experts claim national brands is the way to go and say that US stores took 20 years to gain credibility in fast foods.

• “Service station numbers have halved in the past 15 years with no subsequent improvement in profitability.”

• QUF launches Ice Break and Big M runs a promotion to use the microwave instore to produce hot chocolate in winter.

This is a very memorable ad. It was the first that looked like a proper trade ad aimed right at our readers.

Late in 1987 we were talking to a local printer about a job we were having done for a client. The printer suggested we contact the then NSW Service Station Association (known as the SSA), which was having trouble putting its monthly magazine together.

The magazine was called “Service Station”. It was a big loss maker with a circulation of just 1800. The staff at the SSA would be the first to agree that its magazine was something of a shocker.

Anyhow with no publishing experience at all, we ended up taking it over with our first issue coming out in February 1988. We progressively overhauled the design and content, printed it in colour and later took it national. It was well received by retailers and was funded solely by advertising revenue, a fact which nearly sent us broke. We survived by pouring income from other work into the magazine. In the beginning the magazine was very poorly supported by advertisers, who were made up mostly of parts and accessory suppliers. But we saw the early emergence of convenience stores as the oil majors began to franchise their servos, shutting down the workshops and replacing them with recognisable convenience stores.

In a short time advertising for FMCG products began to appear in the magazine; but this didn’t sit well with the Board of the SSA, which viewed the demise of the service station workshop with a certain degree of alarm.

At the time, in 1988, there were 11,500 petroleum retailers in Australia (down from some 13,500 several years prior) and only a handful of stand-alone convenience stores. That number has since more than halved and servos have all since morphed into modern c-stores. The period between 1988 and 1991 was a turbulent time for service station operators and I was blessed with a privileged view of the politics of the industry, largely due to our close relationship with the Service Station Association. As a result, a great deal of Service Station magazine’s content was devoted to oil company bashing. >>

In the early days Cole Buchannan’s illustrations brightened many a dull black and white page.

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C&I 30TH ANNIVERSARY

1997

1998

• Our beloved cartoonist and writer, Cole Buchannan succumbs to cancer on 7th May. Lou Dargham continues with the cartoon strips for several years. Our workshop section in the magazine is discontinued as most service station workshops are closing.

• Federal Treasurer, Peter Costello, announces plans to progressively deregulate the downstream fuel industry.

Of Australia’s 8,500 fuel retailers, 3,000 are predicted to close.

• “Soft Serve & Shakes: Cream the Market.”

• Independent fuel importers report rapid expansion.

• Smiths introduces collectables to compete with Frito-Lay’s Tazos.

• Uncle Ben's reports successful bulk dog food sales from forecourts and responds with a larger servo-only pack size.

• “Fast Food: Buy a Brand or Build Your Own?” • AACS reports convenience sales growth of 240 per cent over the last four years.

• We buy our JV partner, Expertise Events, out of the Service Station Expo.

• Over one dozen ice cream launches planned for summer.

• King sized chocolate bars introduced.

• “Foodservice: Enjoy the Bake-off Rake-off.”

• BP announces national carwash upgrade with new German equipment.

• Single use cameras launched in our industry.

• Shell sheds 500 refinery and retail staff.

• Pepsico, owner of Frito-Lay buys out Smiths and expects to have to divest some brands to the newly formed Snack Brands Australia.

• Service Station 98 held in Sydney in March, our first without our JV partner. Exhibitors voted it “The best one yet”.

• Service Station Association of NSW has a failed attempt to go national.

• “The Millennium Crisis: Complacency Can Cost.”

• US convenience wholesale giant McLanes announces a joint venture with David Holdings to be called M-C Australia.

• BP opens a flagship Express store with a newsagency inside plus a Delifrance cafe and a drive through Eagle Boys Pizza.

• Gull now has 110 sites, Burmah 116, Liberty 250 and Woolworths is predicting 250 within two years.

• Scoop ice cream trialled at selected sites and is not successful.

• “Flavoured milk is driving sales growth in the drinks fridge.”

• “Home Meal Replacement: Fabulous Food, Fast and Fresh.” Didn’t immediately strike a chord with customers.

• Petroleum Retailing Franchising and Sites Acts set to be repealed. Oil code to be beefed up and set into law.

• Sugar free confectionery sees major growth.

• Telephone calling cards becoming very popular in convenience.

1999 • Our motoring journalist, resident wit and raconteur, Brian Woodward, dies suddenly on 3rd January following heart surgery. There was standing room only for mourners at Sydney’s St Andrews Catherdral. Our motoring column, which has been running for 12 years, was subsequently discontinued.

• Mobil and Coles build a prototype “Fast & Fresh” store in Melbourne with a food and grocery offer.

• Milk distribution is deregulated and milko’s lose their traditional territories.

• Salty Snacks category recovers from last year’s slump.

• ACCC recommends deregulating newspaper distribution.

• “Sunglasses: Glaring Profit opportunity.”

• Caltex opens its first site with an IGA Everyday store in Sydney’s Bondi.

• Burmah opens its first site dispensing CNG in Sydney’s South West.

• Swap ‘n Go launches with great success.

• “Still Water Makes the Biggest Splash.”

• MTAA and Oil Company negotiations hit 6 June/July 2018 | C&I | www.c-store.com.au

deadlock as MTAA refuses to budge on repeal of the Sites Act which was repealed anyway, six years later.

• “Nutritious Snacks: Bad Presentation is Killing Sales.”

• Rothmans and WD&HO Wills merge to for British & American Tobacco.

• ACT mandates temperature correction for fuel deliveries.

• David Holdings buys M-C International out of M-C Australia and forms C-Store Distribution.

• Caltex opens its first two non fuel Star Marts in Queensland.

• Liberty opens the first three of a planned 80 sites with IGA Express stores, replacing Liberty’s Timesaver banner.

• Tobacco excise charged per stick rather than on tobacco weight. Longer 100mm cigarettes introduced.

• Seven new ice cream launches planned for summer.

• “HACCP at your site: Food for Thought.”

C&I 30TH ANNIVERSARY

2000 • Service Station 98 grows into C-Store 2000, held in Melbourne in April.

• Ampol and Caltex roll out card readers in pumps.

• 7-Eleven acquires all of Burmah’s 102 retail sites.

• “Cleaning Up in the Carwash Business.”

• Customs officers expose multi-million dollar fuel substitution racket.

• “Mid Morning Munchies: Winning Ways for Your Business.”

• C-Store 2000 Seminar Report: “The case for Micromarketing.”

• GST and PAYG tax commences.

• More delays in newspaper deregulation.

• Chop-Chop illegal tobacco sales reach $500 million.

• New design for ASS&CSN. • BP ditches Delifrance and opts for its own Cafe Zip brand.

• Liberty Oil opens in Tasmanaia.

• “C-Store Design Pitfalls.”

• Energy drinks begin to drive beverage sales.

• BP announces world-wide branding update.

• ATMs becoming popular in convenience stores.

• Independent Petroleum Marketers of Australia formed by 150 dealers in Victoria representing 400 sites.

The demise of the service station workshop followed the rise of convenience stores in the USA, which at the time the Australian industry regarded as a role model. Added to this were escalating property values. The comparatively small rents received by the oil companies for the workshop areas could not be justified based on the value of the real estate, especially since none of the revenue generated by the workshops went to the oil company. Convenience stores represented a new profit opportunity for the oil majors.

It’s worth pointing out that a good number of very fine service station operators left the industry when oil company franchising was introduced as the Petroleum Retail Marketing & Franchise Act expired in September 1989. These retailers were either simply pushed out or were unwilling to pay upfront fees and ongoing franchising fees for the businesses which they had built up over the years. In many cases, if your area manager didn’t like

The demise of the service station workshop followed the rise of convenience stores in the USA, which at the time the Australian industry regarded as a role model. you, you weren’t offered a franchise. If you were too outspoken about any aspect of your relationship with your oil company, even as a member of a Dealer Council, you maybe weren’t offered a franchise. Hundreds of dealers were thrown onto the street. A belated test case which took place well after the dispossessions held that these retailers owned none of the goodwill of their business.

In 1990, we got the idea of putting on a trade show. None of the industry associations were interested in partnering with us, saying that it was “all too risky”. We didn’t have a clue about running a trade show, but we went ahead and booked a hall at Sydney’s Darling Harbour and put an ad in the Sydney Morning Herald for an exhibition manager.

A small expo company called Expertise Events responded and we decided to do the show as a joint venture, which remained in place until 1998 when we acquired sole ownership of the event.

“Service Station 92” went ahead (you guessed it) in 1992. Back then there was a much greater number of independents, and not many oil company operated sites, which were then mostly franchised to single site operators. At the time, one senior oil company confessed to me that, in the first year of its new franchise, some 30 per cent of its franchisees had not purchased a single item of stock from any of the preferred suppliers.

In those days servo operators were all rugged individualists who wanted to make their own buying decisions. >>

2001 • Phone card sales treble in the last 3 years.

• Tobacco products make up 6 of the top ten brands at convenience stores.

• “Outsourcing Your Payroll.”

• US Radiant Systems acquires Breeze Software.

• Numerous launches of energy drinks.

• Woolworths takes over 69 Liberty sites.

• Fringe Benefits Tax introduced.

• “Refrigerated Merchandisers: A Beginner’s Guide.”

• Sales of nutritious snacks on the rise.

• Pricewaterhouse Coopers reports that patchwork and inconsistent tobacco legislation is damaging small retailers.

• ASS&CSN reviews the ice cream and frozen beverage markets for summer.

• Prepay being trialled at 35 sites in Victoria to thwart drive-offs.

• Wholesale temperature correction predicted to be mandated next year.

• Australian Service Station & Convenience Store News (ASS&SCN) becomes Australian Convenience Store News (ACSN) as circulation increases from 10,000 to 16,000.

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C&I 30TH ANNIVERSARY

2002 • C-Store 2 held in Sydney in March.

• “Snack Foods: Suppliers striving for Space and Sales.”

• Tobacco display regulations tightened.

• “The In-Store Deli.”

• Prepay being trialled in Victoria to thwart drive-offs.

• “Dealing with Unfair Dismissals.”

• Wrigley chooses Australia for the first launch of X-Cite gum.

• Victorian Government cuts red tape for small businesses.

• National industry petrol forum discusses key issues affecting fuel retailers – terminal gate pricing, removal of the Sites Act and toughening the Trade Practices Act to favour the retailer.

• “Bakery Brings Home the Bread.”

• We publish the first of many ACNielsen Convenience Reports.

• Sugar free confectionery winning favour with customers.

• Convenience Store News is now available free online.

• “Point of Sale Systems for the New Millennium.”

• Numerous beverage launches planned for summer.

• Federal Minister releases “Industry Framework” plan for the downstream fuel industry.

2003 • “What Exactly is a Convenience Store Anyway?”

• Online ordering of stock begins to gain popularity.

• New point of sale regulations for tobacco differ from State to State.

• Adult magazine sales growing at many sites.

• King-sized chocolate bars show reduced unit sales but higher revenues.

• Microwave fast food continues to show growth.

• Soy drinks growing at selected sites.

• AACS reports 13% sales growth at convenience chains.

• Retailers are given the right to charge merchant fees.

• BIS Schrapnel predicts strong growth at Australia’s 15,265 fast food outlets with sandwiches and coffee the respective leaders in food and beverage.

• Telco products showing rapid growth and healthy margins.

• Industry braces itself for compulsory continuous leak detection, double containment and groundwater monitoring.

• 15 per cent of bread sales happen outside of supermarkets.

• “Growing Your Mid Morning Food Business.”

• Supermarkets predicted to take 40 per cent market share in retail fuel.

• Hugh Watters kicks off the New Sunrise Group.

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2004 • Lawyer Tom Williams, our legal editor for many years, is found murdered.

His accountant and a hit man later receive heavy jail sentences.

• C-Store 2004 held in Melbourne in March.

• Many stores neglecting kids’ confectionery.

• IGA introduces discount fuel offer.

• Energy drinks now the fastest growing segment in the beverage market. ACNielsen reports energy drink market split: Grocery 21.7%, P&C 30.7%, Broader Convenience 47.5%.

• Iced coffee and sandwiches now a popular combo offer with upscale coffee machines now in nearly all major convenience stores.

• Block chocolate sales drop by 3 per cent. BP deletes the category.

• 25 per cent of all fuel sales is now on a fuel card.

• Flavoured milk sales split: Grocery: 62%, Convenience 38%.

• Metcash moves to online ordering.

• Streets has the five top selling ice creams.

• Red Bull and V make up 85 per cent of energy drink sales and 19 per cent of total soft drinks.

• Functional waters make their appearance.

• Graphic warnings appear on tobacco packaging.

• Larger chains achieve direct delivery of newspapers and magazines at full retail margin.

C&I 30TH ANNIVERSARY

2005 • In spite of trend to supermarket milk, white milk sales at convenience stores is growing at 3 per cent.

• Campbells launches its confectionery and snack campaign.

• Water restrictions boost the carwash trade.

• Still water sales growing at 30 per cent in C-Stores.

• Bread sales drop 7 per cent while mineral water is down 37 per cent.

• Phone card sales growing at 42 per cent.

• Ten Ballarat retailer/distributors fined a total of $21 million for price fixing. APCO later wins on appeal.

• Australians are the world’s third biggest online shoppers.

• States to adopt Victoria’s mandated leak monitoring at servos.

• Businesses with less than 100 staff exempted from unfair dismissal rules.

• Convenience Store News gets 5,000 new readers.

• Convenience stores pushing to be supplied with tobacco replacement products.

• “Better for you” products gaining traction.

• Oilcode details are still being debated.

2006 • C-Store 2006 held in Sydney in March.

• Lucky 7 announces big growth plans.

• Convenience performing well with sports drinks. Grocery 65 per cent. Convenience 35 per cent.

• Bankcard withdraws from the market.

• Flavoured milk achieves 16.2 per cent of beverage sales from 7.6 per cent of shelf space.

• Confectionery mint sales up by 20.7 per cent in the last quarter.

• Research shows that one quarter of job applicants lie in their resumes.

• Flavoured soft drinks in decline.

• Oil code comes into effect with repeal of the Franchise and Sites Acts.

• Moves to ban retail tobacco displays.

• Federal Government introduces Work Choices.

• Convenience retailers increasingly ordering stock online.

• Low sugar drinks growing at double the rate of other drinks.

• 7-Eleven launches its Munch range.

• Energy drinks grow to 22 per cent of drinks sales and convenience outsells grocery in the category by 50 per cent.

• Packaged breakfast substitutes grow 22 per cent in one year.

Legal bills, a suspicious office break-in that saw all of our computers stolen, and the 22 percent interest rate on our office mortgage almost sent us broke for the second time.

Poor category management, limited merchandising programs, almost non-existent franchise compliance and traditional distrust of oil company head offices at the time created an appetite for our first trade show, which was an immediate success. It was packed out with visitors and was runner up in the Best New Show awards at the Sydney Exhibition Centre at Darling Harbour.

Tensions began to build with the SSA, which now claimed ownership of “Service Station” magazine. So we handed the magazine back, launched “Service Station & Convenience Store News” and pressed on with the Expo, while expensive lawyers on both sides argued in the Federal Court. Legal bills, a suspicious office break-in that saw all of our computers stolen, and the 22 per cent interest rate on our office mortgage almost sent us broke for a second time.

It had become clear that, with the prevailing minuscule fuel margins, retail fuel businesses would have to sink or swim on the performance of their convenience stores. It was equally clear that many other retail outlets were now competing in the convenience space. Corner stores, newsagents, mini marts and so on outnumbered the branded convenience stores and were collectively selling double what the big convenience chains were selling. So in the years that followed, the magazine morphed into “Convenience Store News” and, as circulation expanded into these non-fuel impulse outlets, to “Convenience & Impulse Retailing” or “C&I” for short.

At the same time, “Service Station 98” became “C-Store 2000” two years later and eventually became “C&I 2010”. If you’ll allow me a plug: don’t forget that C&I 2018 is on in Melbourne in August.

This transformation reflected changes that were already happening in the industry.

The big players were getting bigger and buying better while the smaller standalone operators were getting crowded out. Some of the chains had also embraced multiple site franchising. Around 2000 independents in the petroleum channel banded together into two major buying groups, United Convenience Buyers which started from a tiny base in the early 1990s and some later, the New Sunrise Group.

They negotiated collectively, promoted in-store as a group and emerged as a major force in the fuel based segment of the channel. >> June/July 2018 | C&I | www.c-store.com.au 9

C&I 30TH ANNIVERSARY

2007

2008

• ACSN comes out in big new size.

• “Face Time” series begins with an interview with Reg Johnston, founder of United Convenience Buyers.

• Channel performing well with flavoured milk with coffee driving the growth. Market split: Grocery 63 per cent; Convenience 37 per cent.

• Supermarkets offering 10 cpl fuel discount.

• Energy drinks and sports drinks growing at better than 20 per cent.

• Deregulation reinvigorates newspaper and magazine sales at the major chains.

• David Newton is appointed Oilcode Dispute Resolution Advisor.

• The newer range of pies continues to dominate the fast food offer.

• Iced tea growing at 30 per cent.

• Proposed merger of AACS and APADA to form ACAPMA later ends in tears.

• UCB launches fast & ezy.

• Chinese cigarettes imported into Australia for resale at convenience stores.

• States continue to tighten tobacco display regulations.

• Federal Court dismisses a case brought by the ACCC against eight fuel retailing companies and ten individuals for price fixing and finds serious shortcomings in the behaviour of the ACCC. • Healthy snacks are now mainstream products at convenience stores.

• Pricewaterhouse Coopers reports that chop-chop tobacco is costing the Federal Government $450 million a year in lost excise.

• Caltex opens its first Caltex Star Mart concept store in Sydney’s south.

• Three large independent service station chains formed following several major acquisitions.

• ACCC begins yet another petrol price inquiry.

• ACCC finds that the petrol market in Australia is competitive.

• ACNielsen reports that Telco is the third fastest growing category in convenience.

• Eagle Boys launches pizza kiosks for convenience stores following successful roll-outs of Golden Fried Chicken and Country Fried Chicken.

• CSN begins publishing RRPs for tobacco products.

• C-Store 2008 held in Melbourne in July.

• ACAPMA splits apart; AACS leaves and the old APADA retains the ACAPMA name.

• MTAQ and VACC leave MTAA as SSA tries to poach their members.

• Mars buys the Wrigley Company.

• Campbell Arnott finalises the sale of its snack brands business to the newly formed Snack Brands Australia.

• Underground storage tank regulations tightened further.

• The Federal Government announces the National FuelWatch Scheme. At the same time the ACCC claims that the Informed Sources price monitoring scheme promotes anti-competitive behaviour by the oil companies. The FuelWatch bill subsequently stalls in the Senate.

• NSW further tightens its tobacco regulations, demanding ID checks for under 25s and banning visible displays.

• 7-Eleven named Franchisor of the Year.

• The global financial crisis arrives.

2009 • The first issue of C&I comes out in January with a 6,000 increase in circulation with a new website design.

• Barry Flanagan, Editor of Retail World and elder statesman of trade publishing passes away on 1st January.

• Wrigley has 97 per cent share of the gum market and 50 per cent of the mint market.

Most products are now sugar free.

• The Fair Work Bill to pass into law.

• Theft, fraud and loss at Australian retailers is ultimately costing each household $426 a year, according to Global Theft Barometer.

• New Retail Award ups wages by 11.5 – 16.5 per cent.

• Heinz buys Golden Circle.

• Numerous iced tea launches with Functional and Enhanced waters said to be the big new thing in the drinks fridge. Energy Drinks and Flavoured Milk combined are now outselling soft drinks.

• All types of convenience outlets losing 8 - 13 per cent of their sales to supermarkets.

• Convenience stores doing more in-house bakeries.

• Tobacco goes dark first in NSW on 1st July with Victoria planning to follow suit. WA bans smoking in outdoor eating areas.

• Chocolate bar sales in convenience down 3.5 per cent over the last year.

• Costco opens its first store at Melbourne Docklands.

• Foodworks buys 45 Coles stores and Asahi Breweries buys Schweppes.

• Caltex plans to buy 302 Mobil sites.

• 7-Eleven opens two concept stores with an expanded foodservice offer.

10 June/July 2018 | C&I | www.c-store.com.au

C&I 30TH ANNIVERSARY

2010 • ACCS opposes Caltex acquisition of 302 Mobil sites.

Mobil considers new plans to exit the retail fuel industry.

• Juices fight back with new product launches after declining 5 per cent in the last year.

• Tobacco pack sales down 1.6 per cent but dollar sales up by 4.5 per cent.

• ACCC reports stable retail profits for petrol.

• C&I 2010 postponed till next year as the market recovers from the 2008 crash.

• Caltex launches a new brand image for Star Mart.

• Salty snacks growing at 5.9 per cent with potato chips leading the way at 7.0 per cent. Extruded snacks down 4.7 per cent.

• Crooks putting skimming devices into EFTPOS terminals.

• Metcash closes 8 of its 20 Cash & Carry warehouses and merges the operation into its wholesale business.

It then buys the 85 store Franklins grocery chain.

ACCC’s objection subsequently dismissed in the Federal Court.

• Costco to build a store at Auburn in Sydney’s west.

• United Petroleum announces its franchise program.

• The Distributors buys into the New Sunrise Group.

• UCB’s fast&ezy opens its first pocket sized store in a Sydney railway station.

• ACNielsen reports a big boost in consumer confidence.

• Federal Government ups tobacco excise by 25 per cent and announces plans for plain packaging.

Tobacco is now to be dark in all States with a ban on all retail displays coming soon.

• 7-Eleven launches $1 coffee.

• The launch of ice vending machines is not well received by servos.

• 7-Eleven buys 295 Mobil sites and plans to re-badge 150 of them as 7-Eleven, with the others to be divested, many to the Peregrine Corporation. ACCC does not oppose the sale.

• BP applies to the ACCC to buy 215 Reliance sites and 73 depots.

• Asahi Breweries offers to buy P&N Beverages, but the ACCC objects.

• Court action by Metcash delays Lou Jardin’s majority acquisition of Spar.

• ACNielsen says that consumers are buying fewer soft drinks, but spending more money, increasingly on New Age drinks.

• Many servos suffering in Queensland floods.

Cole Buchannan and Lou Dargham kept readers amused with three cartoon strips that took the mickey out of absolutely everything.

Several attempts were made to follow suit with corner stores, newsagents and other impulse stores with limited success. Many (or perhaps most) of these stores finished up cherry picking much of their product for resale from supermarkets at prices which were often considerably lower than the major wholesalers were able to offer. This practice continues today and is increasing, which to me is a strong indication that there is something not quite right with the supply side of the industry.

Major convenience stores will continue to develop and to engage the customer, particularly in the area of foodservice, and I think they will ultimately find themselves selling liquor, which they may even complement with a credible deli offer.

As I sit here looking back over 30 years in the convenience business, it is sobering to reflect on some of the things that have changed and some of the things that haven’t.

In the early days, when it came to relations with their dealers, there was a certain bullying element among many oil company staff. Sometimes this was elevated to arrogance masqueraded as management talent. Several examples spring to mind, both related to me at the time by reliable people who were present.

In one of the many government Commissions of Enquiry into the petrol industry, one courageous service station dealer gave evidence regarding the behaviour of his oil company. In response an executive from his oil company seated in the gallery turned to a colleague and said: “He’s gone”. This was overheard and reported to the judge during the recess. The judge was infuriated and read the riot act to the chastened and humiliated execs when the hearings resumed. >> June/July 2018 | C&I | www.c-store.com.au 11

C&I 30TH ANNIVERSARY

2011 • C&I 2011 held in Sydney in March.

• Ausfuel acquires Gull Petroleum.

• AACS reports a year of lower store traffic but slightly larger basket sizes largely driven by promotions. Fresh food sales were down 20 per cent.

• Tobacco companies look to “value” products to maintain sales.

• Consumers spending more on private label products.

• Tobacco companies persuade several trade associations to form the Alliance of Australian Retailers to oppose tobacco legislation.

• Payment using mobile phones enters its first trials.

• Lion Nathan National Foods becomes just “Lion”.

• Milk processors are selling to supermarkets at cost, so that they can discount, and recovering their margins from other stores whose buying price is 75 per cent higher than the supermarket’s selling price.

• Coles introduces Click & Collect at its Coles Express stores.

• Flavoured milk and iced coffee are said to be not getting their fair share of shelf space.

• Caltex introduces contactless payment.

• United buys the Dalby ethanol refinery.

• High priced gourmet grocers are becoming popular with shoppers.

• Lucky 7 trials mini stores in Video Ezy outlets.

• Supermarket giants accused of bullying suppliers.

• British American Tobacco challenges plain packaging in the Federal Court.

2012 • New entrants to the energy drink business attempt to create sub-categories with superpremium and women’s energy drink varieties.

• 7-Eleven partners with Krispy Kreme.

• United Petroleum’s parallel importing of Coke products infuriates Coke and results in a huge media uproar.

• Supermarket majors go to contactless payment as their price war gets underway.

• Woolworths trials a virtual supermarket with a shopping wall at Sydney’s Town Hall Station.

• Parallel importing is beginning to anger local suppliers.

• There is little or no staff training at convenience stores for the arrival of tobacco plain packaging.

• Deloitte now estimates that illegal counterfeit and chopchop tobacco is costing the government $1 billion a year in lost excise.

• ACCC to investigate “price signalling” between fuel retailers.

• White milk sales at convenience stores declines by 6 per cent over the last year.

• Study shows that shopper docket fuel at supermarket servos is almost 1 cent per litre dearer than at independents.

• PFD Food Services takes over the ailing Australian Convenience Foods.

12 June/July 2018 | C&I | www.c-store.com.au

2013 • C&I 2013 held in Melbourne in March.

• Sausage rolls are now the top selling hot food.

• Procter & Gamble celebrates 175 years.

• Red Bull claims that energy drinks make up 36.7 per cent of all convenience drinks sales.

• Smartphones starting to be used for payment.

• Possession of smuggled tobacco is now a crime.

• E-cigarettes appear in convenience stores.

• The first Jack Rabbit store (later to become Jack & Co) opens on the NSW Mid-North Coast.

• Supermarkets bring on $1 milk.

• Tobacco retailers report increased labour and administrative costs due to plain packaging.

• More and more stores are sourcing product from supermarkets rather than wholesalers.

• AACS reports that, although milk, bread, printed material and telco products all lost ground last year, convenience still outgrew grocery.

• Caltex to install pay at the pump technology at 300 sites by year’s end.

• Motormouth launches the first app for fuel prices.

• The C&I - Pulse Plus survey shows that 15 per cent of all stock is being purchased from supermarkets, with drinks, confectionery and snacks the most affected.

• Coconut water arrives.

• Industry bodies claim that supermarkets are using overpriced groceries to fund discounts with shopper dockets.

• Phone card sales continue to decline.

C&I 30TH ANNIVERSARY

In another instance a service station dealer went into his oil company’s head office with his solicitor to negotiate the terms of the notice of termination of his lease. The discussion was less than fruitful and when the two got back to his site, they were greeted by a service station which was locked up, in darkness, abandoned by staff and encased in a chain link fence, which had been erected while the meeting was taking place.

Things have mellowed since then as franchise operations have become more streamlined and more professional. Behaviour which was the industry norm in the bad old days would not be as easily tolerated today. On the other hand, the success of franchising has sometimes come at the expense of the franchisees themselves. There are many instances of franchisees simply handing back their keys and walking away from their unprofitable convenience store franchises. Nowadays profitable franchisees must surely form the backbone on any successful chain.

2014 • C&I becomes part of the Intermedia Group and relocates to Glebe in Sydney.

• Magazine, newsletter and website all get a redesign.

• Woolworths opens a stand-alone convenience store with a strong food and deli offer in Sydney’s inner west.

• AACS “Women in Convenience” group is formed.

• Rush of illegal lighters hits Australia.

• Liquid breakfast products are becoming popular at convenience stores.

• Poor ranging is stalling car care sales.

• Mobil brand is to return to 7-Eleven forecourts.

• New cloud storage launched for small businesses.

• PIN to become the main form of card authorisation from 1st August and the first electronic wallets are introduced.

• UCB launches Café Eroma.

• C&I – Pulse Plus survey shows that suppliers are not adequately servicing the broader convenience channels.

• $3 billion a year leakage of purchases to supermarkets from stores outside the P&C channel equals almost 60 per cent of total P&C sales.

• Customers report that they are looking for better quality food at convenience stores.

• Puma is looking for independents who want to rebadge plus multi site franchisees to take over its company operated sites.

• Sunglasses now a growth category at convenience stores.

• 7-Eleven announces its plan to expand into WA and later opens its 600th store.

• 80 million litre Pelican Point terminal opens in Adelaide.

• The Distributors launches its Distributors Advantage rewards program.

• Protein drinks and bars have created a new category.

• Mobile handset sales in convenience treble in the last 12 months.

• White milk sales return to growth.

• Corner stores struggling in Victoria.

• Coke enters the iced coffee market with its Barista Bros brand.

• IBIS World reports soaring demand for functional beverages.

• Premium products account for nearly 80 per cent of ice cream growth.

• Caltex converts its Kurnell refinery into a 750 million litre terminal facility.

We didn’t have a clue about running a trade show, but we went ahead and booked a hall at Sydney’s Darling Harbour and put an ad in the Sydney Morning Herald for an exhibition manager.

Then there are the many underpaid employees who man the consoles. I have spoken to convenience store franchisees who, with hand on heart, have told me that their franchise can’t pay its way if they have to pay proper award wages. Mind you, while the industry is a large target that has been quite fairly singled out for the underpayment of wages, walk into almost any corner store, cafe or any other small retail business with younger people on the staff and you are better than half a chance to find the same thing.

In the first 10 or 15 years of business format franchising, all of the stores from one chain to another pretty much looked the same. Sure, 7-Eleven had its Slurpee and Mobil Quix (Who remembers Mobil Quix?) had its Grilla Dogs, Ampol Road Pantry had Build your own burger and Burmah Fuels tried its damndest to do fresh sandwiches at its short lived AM-PM stores. But by and large, one store looked pretty much like any other.

They all ran similar price-off, combo or two-for-one promotions – while the customers all joined hands and tried to contact the living. Consumer engagement just wasn’t there.

The arrival of some well resourced and courageous independents plus an emerging new retail mindset among the major chains has since seen many green shoots of innovation.

Caltex Foodary, Woolworths mini format stores, Jack & Co, Urbanista, new look Shell, BP and 7-Eleven stores as well as several others immediately spring to mind. As the industry struggles to establish credibility in the area of foodservice, there is a realisation that the competition is no longer just the supermarket or the c-store down the street. It’s now also the quick service restaurants like Mc Donalds and KFC. So the smart operators are now looking for ways to enhance and differentiate their customers’ in-store experience. >>

June/July 2018 | C&I | www.c-store.com.au 13

C&I 30TH ANNIVERSARY

2015 • C&I 2015 held in Sydney in March.

• BP Narellan trials instore pancakes.

• New cigarette vending machines automatically monitor stock.

• Medium bar sales slow by 10.7 per cent.

• Major retailers are all releasing phone apps.

• Federal Minister for Small Business instructs the ACCC to keep a closer watch on petrol prices.

• ACCC goes after supermarket giants for unconscionable conduct.

• AACS celebrates its 25th birthday and agrees to co-locate its Leadership Summit, PJ Convenience Awards and Gala Awards Dinner at the 2016 C&I Expo.

• Counterfeit cigarettes are now coming out in plain packaging.

• AACS says that, for the third year running, branded convenience outgrew the grocery channel.

• BP rolls out its $450 million store refurbishment program.

• Beer makes up 7.5 per cent of total sales at US convenience stores and alcohol makes up 12.5 per cent of total convenience store sales in the UK. • Cyber crime is becoming more common.

• Coca-Cola celebrates 100 years of its iconic contoured bottle.

• BP partners with Eagle Boys at its 98 Wild Bean Cafes.

• Costco is to open fuel forecourts.

• E cigarette sales now growing rapidly as UK report finds them 95% less harmful than the real thing.

• 7-Eleven wages fiasco captures public attention as the company goes into damage control mode. 7-Eleven Chairman, CEO and General Manager resign.

• United Petroleum denies claims of underpayment of wages.

• The first Urbanista store opens in Sydney’s south west.

• Woolworths reports its petrol sales down by 20 per cent.

• C&I – Pulse Plus survey finds that stores buying from supermarkets has risen from 15 per cent to 16.6 per cent of total stock in the last two years. Call frequency and rep coverage of the broader convenience channels continues to be very patchy.

• Diesel exhaust additives have been growing at 35 per cent year on year for the past five years.

• Colour dye removed from petrol.

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14 June/July 2018 | C&I | www.c-store.com.au

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• C&I 2016 held successfully in Melbourne in August, for the first time in conjunction with AACS. • C&I – Pulse Plus survey shows that the major wholesalers are improving coverage and service levels.

• Coconut products hit the snack aisles.

• Despite the move to tap & go, EFTPOS continues to be popular with convenience customers.

• 7-Eleven releases its retail fuel app while seven of its dealers face court over wage rorts.

• Aldi expands into SA and WA. • Informed Sources agrees with the ACCC to share its real time online fuel pricing information with the public.

• KPMG estimates that illegal tobacco now represents 14.3 per cent of total consumption.

• The Distributors celebrates its 35th birthday.

• Drive-offs are costing fuel retailers $66 million a year.

• Telco sales lose ground by 10 per cent on the previous year.

• Peregrine opens a new On the Run concept store in SA. • A Sydney 7-Eleven dealers cops a $214,200 penalty for short changing two staff and falsifying records.

• Retail fuel prices are down by 12.5 per cent on last year.

• Puma begins the rollout of its new 7th Street store concept.

• Sugar free confectionery is growing five times faster at P&C than in grocery.

• Energy drinks sales flattening out.

• ACCC criticises high retail petrol margins.

• BP launches BPMe an app that allows customers to pay from their car.

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C&I 30TH ANNIVERSARY

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2017 • Calls for a sugar tax.

• BP to acquire, rebrand and operate Woolworths’ 527 service stations sites plus 16 under construction at a cost of $1.77 billion. This will see the end of the CaltexWoolworths alliance and will be subject to ACCC and FIRB approval. BP says it plans to honour Woolworths 4cpl redemption vouches across its entire network.

• Caltex to purchase Gull New Zealand for A$325 million.

• Huge savings are possible for retailers by selectively buying from supermarkets.

• AACS research predicts the changing face of the industry in the year 2030 and predicts that the industry will be driven by foodservice.

• Underpayment scandal reaches Caltex and United Petroleum.

• Caltex opens its first Foodary in Sydney’s inner west.

• AACS Report shows printed material and telco continue to decline.

• Beverage customers are progressively embracing sugar-free.

• Mandated ethanol in NSW is driving many motorists to use PULP. • Red Bull research finds that heavy users of energy drink, 25 percent of the customers, are responsible for 75 per cent of consumption.

• Kombucha becomes the latest “new thing” in the drinks fridge.

JUNE/JULY 2017

You can’t innovate without the spectre of failure. In fact Warren Wilmot, the then CEO of 7-Eleven, told the C&I 2015 Convention that he expected 70 per cent of new ideas to fail. Less than that he said, and they weren’t being adventurous enough. So do watch the innovation space and perhaps learn from the failures as well as the successes.

As I settle further into semi retirement later this year, I find myself feeling very optimistic about the industry. Small stores will continue to decline but we will ultimately be left with the cream of single site operators. Fuel margins are stronger than they have ever been. Major convenience stores will continue to develop and to engage the customer, particularly in the area of foodservice, and I think they will ultimately find themselves selling liquor, which they may even complement with a credible deli offer.

In July 2014 C&I Media Pty Ltd, as newly formed subsidiary of the The Intermedia Group, took over the C&I business. I have continued as director and Editor at Large on an increasingly part time basis. Now, after 30 years, it’s time to wet a fishing line.

During these thirty years I have enjoyed rewarding friendships in an industry I love and have been helped by many people far wiser and more generous than I. If I were to thank them all, this short scribbled memoir would run for many pages. To my colleagues, clients and industry friends, it’s been a wonderful ride.

2018 (up to April) • AACS highlights anomalies in tap & go fees.

• Minimum spend requirements on credit cards is harming business.

• Red Bull launches Coconut Edition.

• NSW Supreme Court vindicated 7-Eleven's termination of franchisees who engaged in wages rorts.

• 7-Eleven introduces a new store format at select locations with a much stronger emphasis on food.

• Caltex announces its plan to return franchised sites to company operations by buying out some 500 franchisees.

NATIONA L CIRCULAT ION 22,79 5 FEBRUAR Y/MARCH 2018

June/July 2018 | C&I | www.c-store.com.au 15