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CStoreDecisions

ÂŽ

Solutions for Convenience Retailers

of C-Store Industry Evolution

As CStore Decisions celebrates its 30th anniversary, we look back on the major changes to the c-store industry over the past three decades.

INSIDE Smokeless Steps Up

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Energizing the Bottom Line

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CONTENTS September 2019

Number 9

Volume 30

CStoreDecisions

30

®

EDITOR’S MEMO

8 Looking Forward to the Next 30 Years FRONT END

10 Front End Profile: High’s Expands and Rebrands 18 Quick Bites 20 Industry News 22 NAG Announces Six Scholarship Winners 24 NAG and YEO Announce New Board Members 26 Convenience Store Solutions: Holding Frontline Employees Accountable

CATEGORY MANAGEMENT

46 Brewing Function and Flavor 50 Bettering Beer Sales 54 Salty Snacks Entice Healthier, Diverse Consumers 60 Smokeless Steps Up 64 Frozen Drinks Offer Wellness Appeal

COVER STORY

FOODSERVICE

70 Positioning Prepackaged Sandwiches 78 Branded Coffee Builds Foodservice 82 Food Marketing’s Secret Weapon: Sampling

30 Thirty Years of C-Store Industry Evolution

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As CStore Decisions celebrates its 30th anniversary, we look back on the major changes to the c-store industry over the past three decades.

TECHNOLOGY

86 Figuring Frictionless 88 Energizing The Bottom Line 92 Lights, Camera, Action: Surveillance is a Group Effort OPERATIONS

96 Playing the Acquisitions Game

54

4

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CSTORE DECISIONS •

September 2019

BACK END 99 Product Showcase 105 Ad Index 106 Workforce Management: Be an Enabler

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the CSD Group www.cstoredecisions.com

CStoreDecisions .com CStoreDecisions CStoreDecisions

Convenience Store Decisions

®

®

Convenience Store Decisions • EDITORIAL

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VICE PRESIDENT, EDITOR-IN-CHIEF John Lofstock jlofstock@csdecisions.com

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EXECUTIVE EDITOR Erin Del Conte edelconte@csdecisions.com SENIOR EDITOR Thomas Mulloy tmulloy@csdecisions.com ASSOCIATE EDITOR Isabelle Gustafson igustafson@csdecisions.com ASSOCIATE EDITOR Howard Riell hriell@csdecisions.com ASSOCIATE EDITOR Marilyn Odesser-Torpey mot@csdecisions.com CONTRIBUTING EDITORS Pat Pape Brad Perkins COLUMNISTS Jim Callahan John Matthews Mark Radosevich Lisa Stewart

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PRODUCTION/CUSTOMER SERVICE CUSTOMER SERVICE MANAGER Stephanie Hulett shulett@wtwhmedia.com CUSTOMER SERVICE REPRESENTATIVE Barbra Martin bmartin@csdecisions.com DIGITAL PRODUCTION MANAGER Reggie Hall rhall@wtwhmedia.com DIGITAL PRODUCTION SPECIALIST Nicole Lender nlender@csdecisions.com

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Bill Kent, President and CEO The Kent Cos. Inc. • Midland, Texas Greg Lorance, Dispensed Category Manager Cumberland Farms • Framingham, Mass. Billy Milam, President RaceTrac Petroleum Inc. • Atlanta Patrick J. Lewis, Managing Partner Oasis Stop ‘N Go • Twin Falls, Idaho

EVENTS MANAGER Jen Kolasky jkolasky@wtwhmedia.com

NATIONAL ADVISORY GROUP (NAG) BOARD

EVENT EXHIBITOR & SPEAKER MANAGER Michelle Flando mflando@wtwhmedia.com EVENTS MARKETING SPECIALIST Christina Lograsso clograsso@wtwhmedia.com

CONTROLLER Brian Korsberg bkorsberg@wtwhmedia.com ACCOUNTS RECEIVABLE SPECIALIST Jamila Milton jmilton@wtwhmedia.com

Mary Banmiller, Director of Retail Operations Warrenton Oil Inc. • Truesdale, Mo. Greg Ehrlich, Chief Operating Officer Beck Suppliers Inc. • Fremont, Ohio

Joe Hamza, Chief Operating Officer Nouria Energy Corp • Worcester, Mass. Brent Mouton, President and CEO Hit-N-Run Food Stores • Lafayette, La. Peter Tamburro, General Manager Clifford Fuel Co. • Utica, N.Y. Vernon Young, President and CEO Young Oil Co. • Piedmont, Ala.

YOUNG EXECUTIVES ORGANIZATION (YEO) BOARD Jeremie Myhren, Board Chairman Road Ranger • Rockford, Ill. Garet Bishop, Chief Financial Officer BFS Cos. • Morgantown, W.Va. 2011 - 2019

Copyright 2019, WTWH Media, LLC

CStore Decisions (ISSN 1054-7797) is published monthly by WTWH Media, LLC., 1111 Superior Ave., Suite 2600, Cleveland, OH 44114, for petroleum company and convenience store operators, owners, managers. Qualified U.S. subscribers receive CStore Decisions at no charge. For others, the cost is $80 a year in the U.S. and Possessions, $95 in Canada, and $150 in all other countries. Single copies are available at $9 each in the U.S. and Possessions, $10 each in Canada and $13 in all other countries. Periodicals postage paid at Cleveland, OH, and additional mailing offices. POSTMASTER: Send address changes to CStore Decisions, 1111 Superior Avenue, 26th Floor, Cleveland, OH 44114. GST #R126431964, Canadian Publication Sales Agreement No: #40026880. CSTORE DECISIONS does not endorse any products, programs or services of advertisers or editorial contributors. Copyright© 2019 by WTWH Media, LLC. No part of this publication may be reproduced in any form or by any means, electronic or mechanical, or by recording, or by any information storage or retrieval system, without written permission from the publisher. Circulation audited by Business Publications Audit of Circulation, Inc.

Doug Galli, Board Chairman Reid Stores Inc./Crosby’s • Brockport, N.Y.

Derek Gaskins, Senior VP, Merchandising/Procurement Yesway • Des Moines, Iowa

FINANCE

SUBSCRIPTION INQUIRIES To enter, change or cancel a subscription, please e-mail requests to: bmartin@csdecisions.com or Mail: CStore Decisions, 1111 Superior Ave., 26th Floor, Cleveland, OH 44114

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Brad Call, President Colour Du Jour • Salt Lake City

Scott Zaremba, President and CEO Zarco USA • Lawrence, Kansas

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September 2019

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CSTORE DECISIONS •

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EDITORIAL ADVISORY BOARD

SENIOR DIGITAL MEDIA MANAGER Patrick Curran pcurran@wtwhmedia.com

6

Leading Through Innovation

Caroline Filchak, Director, Wholesale Ops Clipper Petroleum • Flowery Branch, Ga. Kalen Frese, Food Service Director Warrenton Oil Inc. • Warrenton, Mo. Alex Garoutte, Director of Marketing The Kent Cos. Inc. • Midland, Texas Sharif Jamal, Corporate Training Manager Chestnut Petroleum Inc. • New Paltz, N.Y. Lindsay Lyden, Vice President, Development True North Energy • Brecksville, Ohio Stacey Davis, Manager of Marketing Clifford Fuel Co. Inc. • Marcy, N.Y.

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Editor’s Memo

For any questions about this issue or suggestions for future issues, please contact me at jlofstock@csdecisions.com.

Looking Forward to the Next 30 Years The convenience store and petroleum industry is as dynamic and diverse as it has ever been. I have been fortunate to have a front row view of the industry’s evolution through the years, first as a young child learning the automotive and fuel industry at my father’s stations in Mt. Vernon, N.Y., then as an associate category manager for Dairy Mart in New York’s Hudson Valley. I was proud to be in the industry then, and I’m proud of the work the industry does today. This issue marks the 30th anniversary of Convenience Store Decisions, and it’s hard to believe that I have been at CSD for almost half of its existence, joining in 2005. The transformation from two-bay garages to convenience stores was impressive, if not a complete leap of faith for traditional mechanics like my father, who would have rather taken a jackhammer to his building than ponder the true cost of foodservice on a P&L. Even after I entered the trade magazine business in 1996, the budding c-store industry was still finding its way, heavily dependent on tobacco sales and packaged snacks, which offered limited margin potential. The cold vault was predictable, the roller grill was the butt of jokes, innovation was nonexistent and safety for customers and employees was a genuine concern.

The industry will remain strong for decades to come for two reasons: your people and your relationships. Today, the c-store industry is an employer of choice for thousands of Americans. Hiring practices, state-of-theart buildings and cost-efficiencies have evolved beyond expectations making this industry a lean, well-oiled machine of innovation and precise vision. Yet, nowhere is the transformation more profound than in foodservice.

CAPTURING FUTURE CUSTOMERS

While we should all be proud of the c-store industry’s evolution, as CStore Decisions looks toward the next 30 8

08_Edit Memo.indd 8

CSTORE DECISIONS •

September 2019

years, significant challenges lie ahead. Specifically, the challenge to attract customers. Competition from brick-and-mortar stores, while fierce, is just one piece of the puzzle. Amazon is changing the way customers shop, delivery companies are taking away from store trips and electric vehicles and cars with more efficient engines are reducing fuel purchases. Combined, it’s a serious threat. But, as they always have, I have no doubt cstores will evolve and flourish. Fifteen years ago, all trades were warning about Walmart and how it would overtake c-stores by stealing the fuel business. It never materialized, and the Walmart threat fizzled as c-stores soared to new heights. The industry will remain strong for decades to come for two reasons: your people and your relationships. Today’s companies must be nimble, more innovative and more entrepreneurial. This industry will continue to be nurtured by strong relationships and fortified by family-owned businesses with deep ties to their communities. These strong relationships bring a unique sharing of information that has elevated the industry, friend and foe. Never underestimate how special that is. It doesn’t happen in other retail channels. At conferences, such as the National Advisory Group (NAG), it’s not uncommon to have competitors discuss what it takes to drive new business. I learned this at an early age, spending my summer months pumping gas, checking oil and cleaning windows at my father’s stations. He always told me, “If you’re going to be lazy, stay home.” While the industry has evolved, the work ethic driving the industry persists at family businesses across the country, and as long as it remains, convenience stores will take a back seat to no one. Here’s to the next 30 years.

k c o t s f o L n Joh cstoredecisions.com

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FRONT END Profile

High’s Expands and Rebrands

As High’s nears a century of business, the company expands further and works to modernize and standardize all of its locations. Isabelle Gustafson • Associate Editor

Baltimore-based High’s is rapidly approaching 50 store locations and setting its sights on expansion beyond its home state of Maryland. At the same time, it’s aggressively rebranding its c-stores and embarking on a “digital revitalization,” which includes leading the way as the first c-store chain to offer frictionless checkout in Baltimore. “We really see us as trying to lead instead of follow in terms of technology now, to really be on the cutting edge,” said High’s Senior Implementation and Analytics Manager Noah Sanders. A modern approach might seem counterintuitive for a brand as longstanding as High’s, established in 1928 as an ice cream store chain. But according to General Manager and Senior Vice President Brad Chivington, High’s has two main types of customers: those with a sense of nostalgia for the original brand and those who are drawn to modern elements like technology and foodservice. 10

CSTORE DECISIONS •

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September 2019

High’s was established nearly 100 years ago as an ice cream chain. Today, High’s caters to two main types of customers: those with a sense of nostalgia for the original brand and those who are drawn to the modern elements of the new c-stores.

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FRONT END Profile

In 2018, High’s embarked on a brand redesign to modernize and standardize its stores. The newest store, located in Gambrills, Md., is the company’s first new-to-industry store to feature all of the new branding elements.

BRAND REFRESH In an effort to both modernize and standardize its stores, High’s partnered with Indianapolis-based creative specialists Three Sixty Group for a brand redesign in March 2018. “We had a variety of different looks and feels as you went through our stores, and we really wanted to make a brand that would be lighter and more foodfocused but still touch on our heritage,” said Chivington. The company’s newest store — its 49th site — located in Gambrills, Md., is “the first newto-industry store with all of the

branding elements, from exterior to interior, with all of the image elements, down to the uniforms and apparel that the associates wear.” In addition to remodeling its existing locations, the company plans to add one or two new stores per year. “We have a number of pieces of real estate in the pipeline,” Chivington said. And while all of High’s locations are currently in Maryland, this might not be the case for long.

Chivington said the company is “looking at some of the adjoining states” for growth opportunities.

SIGNATURE FOODSERVICE These days, High’s is known for its proprietary foodservice, which is made up of three primary components, according to Chivington: High’s signature hand-dipped ice cream, fried chicken and pizza. “We’ve had better success with developing proprietary brands,

High’s has three primary components of its proprietary foodservice program: signature hand-dipped ice cream, fried chicken and pizza. The ice cream is both a nod to Highs’ history and an evening and weekend driver. 12

CSTORE DECISIONS •

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September 2019

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FRONT END Profile

better control over the product, the offering,” he said. The hand-dipped ice cream adds a sense of nostalgia, Chivington said, as well as a new daypart driver. “Typically, communities are strong on breakfast and lunch, and this gives us an evening and weekend driver,” he said. Fried chicken is also a big piece of the foodservice puzzle. Available at 10 locations with plans to expand, High’s offers tenders, sandwiches, sliders and more. The third component is pizza. High’s pizza is offered at more than 30 locations now and is both customizable through a made-to-order option and available as grab and go. High’s also offers traditional foodservice items such as breakfast sandwiches, burgers and roller grill items but, as is the norm at High’s, ‘traditional’ doesn’t mean ‘boring.’ “Something that we look at, even with traditional items, is how we can put a signature twist,” said Chivington, who cited the

shoulder-cut bacon in the store’s signature breakfast sandwich. Also notable are Highs’ beanto-cup coffee, available in more than a dozen locations, and its bubbler program, which features craft beverages such as tea, lemonade and berry-flavored carbonated drinks.

TECHNOLOGY FORWARD In addition to remodeling and rebranding its stores, High’s is embarking on what it calls a “digital revitalization.” As part of the process, the company now offers touchscreen menu ordering, which began roll-

ing out last summer, at about 10 locations and counting. The touchscreens, Chivington said, work well for both customization and suggestive-selling — and enable more efficiency in the kitchen. “The customer can place their order, go about the store and then pick up their order on completion,” he said. But Highs’ foray into selfcheckout technology may be its most significant endeavor to date. In 2018, High’s partnered with Skip, a company that enables customers to use an app on their smartphones for self-checkout.

As part of its “digital reviatalization” process, High’s now offers touchscreen ordering at 10 locations and counting. The touchscreens allow for more efficiency as well as suggestive selling.

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CSTORE DECISIONS •

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September 2019

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FRONT END Profile

High’s now offers self-checkout at 29 locations through Skip. Employees are notified when a customer using the app enters the store and can monitor their purchases. High’s General Manager and Senior Vice President Brad Chivington said it’s been well received among customers and employees alike.

High’s began testing the service at two locations in April 2019 and then rolled the program out to an additional 27 locations in May. Employees are notified when a customer with the app enters the store and are able to monitor their purchases. This allows customers the freedom to shop at

16

CSTORE DECISIONS •

10-16_Profile_Highs.indd 16

their own pace and leave without waiting in line. Some 29 stores now have the feature, and Chivington said the response among employees and customers alike has been overwhelmingly positive. “We have a lot of regular customers who have started to flip over to it,” said Chivington. “... The associates like it because they’re interacting with the customers a little bit differently. Now it’s a more genuine interaction with the consumer; it allows them to provide better customer service outside of that typical transactional customer service.” High’s is also in the process of switching to a new loyalty provider and private-label payment provider, which will ulti-

September 2019

mately tie in with the chain’s new checkout app. “Our new proprietary app that will be our loyalty and privatelabel payment app will eventually integrate,” said Sanders. “It will have the pump activation and mobile payment, and it will integrate Skip into that, which will be our mobile ordering platform once we develop the APIs (application programming interface).” This is in the testing stage, with no timeline for a rollout set. But eventually, he said, a customer will be able to activate a pump, order food while they’re pumping, walk in, scan other items and pick up their food — all in one transaction. “Part of the overarching strategy is just connecting all these technologies through the mobile phone device for the consumer for ease of use,” said Sanders. “We see that as the way that the consumer is going.”

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quickBites HOW WELL DO YOU KNOW YOUR CUSTOMERS? DIGITALLY ENABLED CONVENIENCE

The store is still a primary focal point in the customer journey, so the technology necessary to provide customers with the best service is critical. With an increased focus on customer engagement and the convergence of the physical and digital retail environments, the point of sale plays a key role in shaping the customer experience. Making the checkout process as frictionless as possible is key to satisfying customers.

Source: BRP Consulting, “Consumer Shopping Habits – The Generation Gap,” April 2019

HOW CAN C-STORES SUCCEED?

Source: The NPD Group, “Digital Evolution of Foodservice Report,” 2018

WHY CONSUMERS 18+ ARE LOYAL TO THEIR CONVENIENCE STORE Convenient location 67% Good prices 60% Good customer service 56% Best gas prices 42% Good selection of packaged food/beverages The prepared/made-to-order foods are high quality The loyalty program The prepared/made-to-order beverages are high quality Other, please specify

41% 36% 33% 24%

0

60

Source: Lightspeed/Mintel, “Convenience Store Foodservice Report,” March 2019

1%

10

20

30

40

50

60

Source: NACS Coca-Cola Retailing Research Council, The Hartman Group, “Embracing Modern Convenience,” December 2018

70

80

WHAT TYPES OF FOODSERVICE FOOD AND BEVERAGE ARE YOU MOST INTERESTED IN PURCHASING FROM THE CONVENIENCE STORE? 57%

50 40

All respondents

Regarding categories of foodservice, consumers have a clear preference for grab-and-go/self-service beverages.

Millennials-only response

40%

30

31%

20

30%

29%

28%

27%

10 0

20%

Grab-and-go/ serve-yourself beverages

Bakery

Hot dogs

Packaged cold salads, sandwiches, fruit trays

Made-to-order salads, sandwiches, etc.

Pizza

Made-to-order beverages

Nachos

7% Soups

56%

39%

32%

37%

33%

44%

36%

29%

6%

4% Sushi

9%

Source: Alix Partners, “Innovating to Compete: Next steps for North American convenience stores,” December 2018

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CSTORE DECISIONS •

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September 2019

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FRONT END Industry News EG Group Buys Cumberland Farms

Blackburn, U.K.-based EG Group acquired Cumberland Farms, which operates about 600 c-stores and fuel stations across seven Northeast states and Florida, and employs about 9,000 people. Founded in 2001 by the Issa Family and run by brothers Mohsin and Zuber Issa, EG Group is a convenience operator that has established partnerships with global brands. “EG Group plans to retain the highly regarded Cumberland Farms brand on all of the acquired stores and are actively considering the addition of Cumberland Farms products in our wider portfolio,” Mohsin Issa said. “Whilst we believe EG can add a lot to the Cumberland Farms business, we also recognize that EG has much to learn from it.” With no presence in the U.S. prior to April 2018, the purchase of Cumberland Farms will take the EG Group’s network to nearly 1,700 stores across the country, operating in 30 states and retailing over 2.5 billion gallons of fuel with merchandise sales of more than $3 billion on an annualized basis.

FDA Proposes New Required Health Warnings for Cigarette Packages, Advertisements The Food and Drug Administration (FDA) issued a proposed rule to require new health warnings on cigarette packages and in advertisements. The warnings, with color images “depicting some of the lesserknown, but serious health risks of cigarette smoking, stand to represent the most significant change to cigarette labels in more than 35 years,” the FDA said. Once finalized, they would appear on cigarette packages and in advertisements, occupying the top 50% of the area of the front and rear panels of cigarette packages and at least 20% of the area at the top of cigarette advertisements. The warnings would be required to appear on packages and in advertisements 15 months after a final rule is issued. The proposed rule will be open for public comments for 60 days through Oct. 15.

Dayton, Ohio, Bans City Employees From Using Tobacco, Vape The city of Dayton, Ohio, will no longer hire employees who use nicotine or tobacco. Employees hired after July 15, 2019, are required to be nicotine and tobacco free as long as they work for the city. Employees hired before then are not affected by the new policy, though the city is eliminating designated smoking areas. 20

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September 2019

Riiser Fuels Acquires Jetz Convenience Centers Wausau, Wis.-based Riiser Fuels Holdings LLC purchased four Jetz Convenience Centers. Jetz President Bob O’Connor plans to remain active in the industry, including as a consultant to Riiser Fuels. O’Connor has served as chairman of the Wisconsin Petroleum Marketers and Convenience Store Association (WPMCA) and as former chairman of the National Advisory Group (NAG). His partner, Tim Klein, has accepted a position as regional director with Riiser Fuels and will help oversee the many stores Riiser has acquired in Wisconsin.

CITGO Names New CEO

Houston, Texas-based CITGO Petroleum Corp.’s board of directors selected Carlos Jorda as the company’s new CEO. Jorda’s previous roles include president of PDV America and chairman of CITGO’s board of directors. He is a chemical engineer with experience in the international oil and gas industry, spanning across refining, corporate planning, finance and upstream. He held several leadership positions within Petróleos de Venezuela, S.A. (PDVSA), in both the U.S. and Venezuela. For the past 16 years, Jorda served as a consultant to large companies and investors in the global oil and gas industry, as well as a board member for Delek USA, a U.S.-based refining and marketing company. cstoredecisions.com

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FRONT END News

National Advisory Group Announces Six Scholarship Winners The John MacDougall/NAG Memorial Scholarship grants six awards to National Advisory Group (NAG) members and their children. Thomas Mulloy • Senior Editor

We all know the importance of a well-educated workforce, and the convenience store landscape is certainly no exception. The National Advisory Group (NAG) Scholarship Fund was developed to help NAG members looking to further their careers and to help their children offset the growing cost of a college education. NAG is a retail trade association driven by retailers for retailers, aimed at small, midsized and familyowned convenience store chains and their executives. As the founder of Nice N Easy Grocery Shoppes, John MacDougall was a longtime supporter of NAG. In his personal life, he was also a strong supporter of higher education. To remember MacDougall’s work and his support of NAG, the association is awarding six John MacDougall/NAG Memorial Scholarships. For the 2019/2020 school year, NAG awarded scholarships totaling $6,000 — $1,000 to each student — to the following recipients: • Andrew Haefele, Baldwin Wallace University, Class of 2023. Andrew is a biology major at Baldwin Wallace, graduation year 2023. His mother, Laurie Cutcher, works at truenorth in Brecksville, Ohio. • Quint Kearns, Rowan University, Class of 2023. Quint is studying engineering at Rowan. He works at Wawa’s Lanoka Harbor, N.J., location. • Melanie Montgomery, University of Dubuque, Class of 2022. Melanie is majoring in communication and works at the Kwik Trip #765 in Dodgeville, Wis. 22

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• Ryan Pohorenec, University of Rochester, Class of 2022. Ryan is a chemistry major at the University of Rochester. He works for Clifford Fuel in Rome, N.Y. • Atilla Toth, University of North Florida, Class of 2020. Atilla will graduate next year with a degree in marketing. He works at Gate Petroleum in Jacksonville, Fla.

• Shae Wolfe, Dartmouth College, Class of 2020. Shae is a psychology major at Dartmouth. She works at Pony Express in Winnebago, Neb. “The NAG Scholarship Program is important to NAG because college graduates earn, on average, $25,000 more per year than someone with just a high school diploma, according to a report by The College Board,” said John Lofstock, NAG’s executive director. “The cost of attending college may seem daunting, but that’s exactly why scholarships are essential to avoiding large student loans.” The NAG Scholarship Fund is managed by the NAG board of directors, CStore Decisions and Scholarship America, and sponsored by the retailer and supplier members of NAG. The program was started in the late ‘90s and has distributed more than 100 scholarships totaling nearly $112,000 to deserving students. The fund is financed through annual dues collections by NAG members and drives from golf outings and conference sponsorship allocations. For more information on NAG, visit: nagconvenience.com.

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FRONT END News

NAG and YEO Announce

New Board Members Doug Galli, of Reid Stores Inc., to helm the National Advisory Group (NAG) board, as Jeremie Myhren, of Road Ranger, heads the Young Executives Organization (YEO) board. Erin Del Conte • Executive Editor

The National Advisory Group (NAG) and the Young Executives Organization (YEO) have both announced new chairpersons and members of the board. NAG is a retail trade association driven by retailers for retailers, aimed at small, mid-size and family-owned convenience store chains and their executives. Doug Galli, the vice president and general manager of Reid Stores Inc./Crosby’s, has been named chairman of the NAG board of directors for a twoyear term helping to oversee the direction of NAG and content for its annual conference.

The 2019/20 NAG Retail Board Members Include: Doug Gali, Crosby Reid Stores, Lockport, N.Y. (Board Chairman) Mary Banmiller, Warrenton Oil, Truesdale, Mo. Derek Gaskins, Yesway, West Des Moines, Iowa Greg Ehrlich, FriendShip Food Stores, Columbus, Ohio Joe Hamza, Nouria Energy, Worcester, Mass. Brent Mouton, Hit-n-Run Food Stores, Lafayette, La. Peter Tamburro, Clifford Fuels, Canastota, N.Y. Vernon Young, Young Oil Co., Piedmont, Ala.

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“I am honored and excited to be named as chairman of NAG. Since both attending the NAG Conference for a number of years and serving on the NAG board, I have been impressed with the depth and breadth of the knowledge I have gained,” Galli said. “I look forward to the next two years working with the NAG board to continue with the tradition of providing a first-class conference where all attendees can leave with some real, actionable items to help grow their business.” Galli has been with The Reid Group, parent company of Reid Stores, since 2004. Reid Stores/Crosby’s operates 82 c-stores throughout western New York and northwestern Pennsylvania. Previously, Galli spent 29 years with Tops Markets/Wilson Farms, having worked in both the supermarket and convenience store division. He currently serves on the board of the New York Association of Convenience Stores and is a past chairman of the state association. “We are honored to have Doug’s vast industry experience on the NAG Board,” said John Lofstock, executive director of NAG. “As chairman, he will have the opportunity to shape the direction of NAG and YEO and continue pushing our mission to help convenience store owners become better retailers.” Galli follows Robert “Bob” O’Connor, president of Jetz Convenience Centers, as NAG chairman. “Serving as chairman of NAG has clearly been among the highlights of my career. With its personal format, outstanding venues and exceptional speakers, the NAG Conference is a must-attend for anyone fully engaged in the

cstoredecisions.com

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The Eight-Member YEO Board of Directors for 2019/2020 Includes: c-store business,” O’Connor said. “Through NAG, I have come to know Doug over the years and can clearly say he will be an outstanding chairman. I wish he and all the members of NAG the very best as we continue to move our industry forward. I especially want to thank John and the entire NAG staff for having given me the opportunity to serve.” “I want to thank Bob O’Connor for his service to NAG,” Lofstock said. “No one has been a better brand ambassador for the group. I look forward to working with Bob in the future.” Derek Gaskins, senior vice president of merchandising and procurement for Yesway, has joined the NAG board of directors. As a member of the NAG board, Gaskins will use his extensive industry experience to help the board identify burning issues and select speakers for upcoming NAG conferences, and serve as a NAG ambassador for both new and existing NAG members. Prior to joining West Des Moines, Iowa-based Yesway, Gaskins was chief customer officer for York, Pa.-based Rutter’s and was instrumental in developing its award-winning customer engagement programs. Before Rutter’s, he served as senior vice president of marketing and merchandising with Mid-Atlantic Convenience Stores (MACS) and led the development of the Circle K brand.

YEO APPOINTMENTS Next-generation leaders play a crucial role in the future of the competitive c-store industry. NAG relaunched YEO in 2012. YEO’s mission is to cultivate young talent in the industry through education and networking. Jeremie Myhren, chief information officer for Rockford, Ill.-based Road Ranger, has been named the chairman of YEO. He will serve a one-year term as board chairman. Myhren follows Bart Stransky, the vice president of merchandising for Atlanta-based RaceTrac Petroleum Inc., who has

Jeremie Myhren, Road Ranger, Rockford, Ill. (Board Chairman) Garet Bishop, BFS Cos., Morgantown, W.Va. Caroline Filchak, Clipper Petroleum, Flowery Branch, Ga. Stacey Davis, Clifford Fuel Co. Inc., Marcy, N.Y. Kalen Frese, Warrenton Oil Co., Warrenton, Mo. Alex Garoutte, The Kent Cos., Midland, Texas Sharif Jamal, Chestnut Petroleum, New Paltz, N.Y. Lindsay Lyden, True North Energy, Brecksville, Ohio served on the board since 2016 and has aged out of the group following his 40th birthday. In his role as chairman, Myhren will help lead the educational component for YEO members, as well as help recruit and integrate new members into the YEO network. “Participation in the YEO has been invaluable and critical to my continued leadership and executive development. It is a great privilege to take the reins from Bart Stransky, who has done a fantastic job embodying and demonstrating what leadership looks like to our industry’s young executives,” Myhren said. Stacey Davis, manager of marketing with Clifford Fuel Co. Inc., has joined the YEO board of directors. Davis has worked for Clifford Fuel since the fall of 2016. She completed her undergraduate degree in government and politics at Utica College and earned her master’s in interactive media from Quinnipiac University in 2016. When Davis joined Clifford Fuel, she immersed herself in the company’s complete rebrand of its Nice N Easy Grocery Shoppes franchises to the Cliff’s Local Market banner. “I became familiar with the NAG family and have been eager to get more involved since,” Davis said. “I look forward to working with the (YEO) board to accomplish our goal of creating a vibrant educational organization exclusively for the convenience store industry’s next-generation leaders,” Lofstock said.

cstoredecisions.com September 2019 • CSTORE DECISIONS

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Convenience Store Solutions

HOLDING FRONTLINE EMPLOYEES ACCOUNTABLE No matter what employees believe they are entitled to, theft of money or store items can never be justified. Jim Callahan • Contributing Editor

The following is a true story that should give pause to those thinking they are smarter than the system. A frontline associate, let’s call her Joyce, was working her shift at a pretty busy convenience store, which was one of several very busy stores under my command a few years back. Joyce had been with us less than a year, but nonetheless had a fairly long history in the industry. Our equally well-experienced manager, whom I will call Jane, had a few hiccups as a leader but was still very competent overseeing the store. In reviewing the day’s work, which included spot-checking the videotape, she noted Joyce, while making a cash drop, palmed a $100 bill and slid it in her pants pocket. Sure enough, when the paperwork was completed the next morning, we were short $100-plus. However, Jane got a little careless and left the videotape containing that day’s work on her desk and shared news of what she found on the tape with another cashier, who in turn passed it along to Joyce. The suspect, as fate would have it, was scheduled to work the first shift the next day. Upon returning to the store, Joyce stole the tape with the evidence off of the manager’s desk. 26

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I count four mistakes: Leaving the evidence out in the open; sharing private information with non-management personnel; the cashier warning the suspect; and allowing the suspect to be alone in the manager’s office, which should have been locked. NO LAUGHING MATTER

We moved quickly to hold Joyce accountable. The suspect was terminated and arrested, and a day in court was quickly set. Word kept coming back to us that the suspect was boldly laughing at us and boasting that she would never be convicted without the missing videotape. Fast forward to the court hearing with our manager and I on one side of the courtroom, and the suspect and her friends on the other side — laughing and joking around without a worry in the world. When our time came, and the judge asked us to play the videotape showing the suspect stealing the $100 bill, we were forced to inform the judge that the suspect stole our tape — back in those days, there was no back-up tape available. The judge started to tell us that, without the missing tape, he would be forced to dismiss our

September 2019

claim and let the suspect go. I turned to watch the suspect and her crew high-fiving each other. But not so fast. Jane, our manager, was able to redeem herself by introducing and playing a secret recording device that fit in the light fixture over the manager’s desk. While that tape, of course, could not show the suspect stealing the money, it clearly recorded Joyce reaching across the manager’s desk and taking the security tape. As the saying goes, you could have heard a pin drop as the air was seemingly sucked out of the room. Joyce was convicted and sentenced to jail time. The moral of this story — and any story that involves the theft of a company’s money, goods or time — is that crime simply does not pay. Employees always think they are smarter, better and sneakier than all the crooks that came before them. I’m sure some are, but the overwhelming majority are not. And far too many will challenge us to catch them. Jim Callahan has more than 40 years of experience as a c-store and petroleum marketer. His Convenience Store Solutions blog appears on CStoreDecisions. com. He can be reached at (678) 485-4773 or via email at jfcallahan1160@gmail.com.

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of C-Store Industry

Evolution

As CStore Decisions celebrates its 30th anniversary, we look back on the major changes within the c-store industry over the past three decades. Erin Del Conte • Executive Editor In 1990, Convenience Store Decisions debuted its first magazine issue. In January of that year, the median price of a home stood at $125,000, a loaf of white bread averaged 69 cents, a gallon of gas went for $1.09 and the convenience market still relied on ‘cokes and smokes’ to drive sales. It would be another year before the ‘World Wide Web’ went live to the public.

Just seven years prior, Chevy Chase’s character Clark Griswold in the movie “National Lampoon’s Vacation” joked, “I’m so hungry I could eat a sandwich from a gas station” — and this general consumer judgment of c-store food being of poor quality remained in 1990. As CStore Decisions celebrates its 30th anniversary reporting on the convenience store industry, a number of c-store retailers shared their memories and insights on what they see as the major changes to the industry over the past 30 years, what’s evolved for the better and the challenges ahead. “The biggest changes in the c-store industry have been the evolution of guest expectations and the realization that the driving force behind our future would be convenience, not gasoline retailing,” said RaceTrac Executive Chairman Carl Bolch Jr. cstoredecisions.com

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September 2019 • CSTORE DECISIONS

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Over the past three decades, consumers’ definition of convenience has morphed, he said. In 1990, it meant paying for fuel inside the store and picking up a bottled beverage and tobacco product. Today, it means paying outside at the pump, then stepping inside for hot coffee, a freshly baked doughnut, snacks or lunch for later, and possibly a six-pack of beer for tomorrow’s cookout. “Our ability to deliver on this expanded idea of convenience has allowed us to be successful in an ever-evolving marketplace,” Bolch said. Since CStore Decisions appeared on the scene, Atlanta-based RaceTrac evolved significantly, beginning with the introduction of pay-at-the-pump technology in the 1990s. It later launched a new store prototype with graband-go food, freshly ground, freshly brewed coffee, a Swirl World frozen treat bar and an easy-to-navigate layout. Today, it operates more than 500 c-stores in Georgia, Florida, Louisiana and Texas. “We have continued to innovate with the goal of delivering a more consistent and convenient experience for our guests,” Bolch said. Bolch sees this inside-the-store evolution as reflective of the c-store industry’s best changes. “Our ability to innovate and deliver on consumers’ desire for convenience has enabled the industry to remain relevant — and thriving — as we respond to our guests’ ever-evolving needs, particularly in the face of online retailing,” Bolch said. “It is our dedication to growing and changing with our guests that allows us to continue to play a valuable role in their daily lives.”

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The biggest changes in the c-store industry have been the evolution of guest expectations and the realization that the driving force behind our future would be convenience, not gasoline retailing.

— RaceTrac Executive Chairman Carl Bolch Jr. cstoredecisions.com

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Consolidation has skyrocketed in the last 30 years. Blackburn, U.K.-based private equity firm EG Group recently acquired Westborough, Mass.-based Cumberland Farms. It has also acquired Ohio-based Certified Oil and Syracuse, N.Y.-based Fastrac Markets, Kroger’s c-store business and TravelCenters of America’s Minit Mart locations. CONSOLIDATION ESCALATES

Robert Buhler, president and CEO of Pleasant Prairie, Wis.-based Open Pantry Food Marts of Wisconsin, as well as numerous other retailers, pointed to industry consolidation as the most significant change. In 1990, early signs of today’s consolidated market were just beginning. Sam Wornom, co-founder of Sanford, N.C.-based The Pantry, had divested his stake in the company to investment firm Montrose Capital in 1987, and co-founder Truby Proctor Jr. followed suit in the early ‘90s, divesting his shares to both Montrose Capital and to Freeman, Spogli & Co. Chase Manhattan Capital acquired the remainder of the company, according to “International Directory of Company Histories, Vol. 36.” In 1999, The Pantry launched its initial public offering. Buhler was an investment banker at the time and knew the people involved. “They encouraged me get into the business from investment banking and buy my family business (Open Pantry Food Stores),” — which he did. “I remember them saying, ‘We’re gonna roll up the industry. It’s ideal for consolidation, and there are a lot of mom and pops. We’re going to go public at 1,200 stores,’ … Sure enough, The Pantry aggressively grew and basically evolved into Circle K. Others tried as well,” Buhler said. Fast forward 30 years and the consolidation today is at an even more sophisticated level, Buhler said. He credited the c-store channel as being “an Amazon-proof industry,” as well 34

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as an industry with valuable and consistent cash flow. As a result, groups of private equity firms, both domestic and international, are coming into the c-store channel. He pointed to the most recently announced acquisition at press time — Blackburn, U.K.-based EG Group buying Westborough, Mass.-based Cumberland Farms. “When a 600-store chain like Cumberland sells, that’s a big deal.” Buhler views the current consolidation environment as a challenge for the industry. “I think there will be larger, more national players, or regional players, that will become very dominant. They will have pricing power. They will have vendor power.” All of which can make it tougher for smaller chains to compete. Buhler expects to see big chains growing larger and stronger and smaller chains filling niches, but still impacted by the competition. “Today the cost of a c-store is into the multi-millions, so that’s a huge change,” said Bob O’Connor, who recently divested his Jetz Convenience Centers to Wausau, Wis.-based Riiser Fuels and is now a consultant to Riiser Fuels. “The barriers to entry to this business now for the newbie are almost insurmountable with respect to regulations and

September 2019

capital, and the things you need to do to get started. I think it would be very, very difficult for a young person to come out of college and say, ‘I’m going to get into the convenience store business.’” O’Connor expects capital will improve the c-store business. “But I think it’s also going to segregate the business, separate the wheat from the chaff. If companies have the capital to buy and support new technologies, they will grow faster and more profitable,” he said. “And if you don’t, you’ll be become more and more marginalized.” Steve Loehr, vice president at La Crosse, Wis.-based Kwik Trip, likewise remembered the proliferation of single-store and small two-tothree store chains at the start of the ‘90s that have eroded as mergers and consolidations took hold. What’s more, fuel competition from big-box retailers arrived. “Our stores are over twice as large today as they were 30 years ago, and the sales in each store is about three times more than we averaged 30 years ago,” Loehr said. Indeed, today Kwik Trip is building 7,500-square-foot stores that dwarf the 2,500 square-foot locations of decades past.

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30th Anniversary In Convenience

(Right) In 1990, Jetz, which just sold to Riiser Fuels, had a cigar box as the cash register, and stores were still two-bay gas stations that serviced cars and had a couple fuel pumps off to the side. (Above) Today the stores feature foodservice, car washes and much more.

FOODSERVICE & OPERATIONS MAKEOVER

Inside the c-store, much has evolved as well. The c-store industry has moved from replenishment to refreshment, said Steven Montgomery, president of b2b Solutions LLC. “This is shown by the sales movement from the center store to the walls,” he said, adding that some well-known chains operate with less than 10 linear feet of groceries. The major driver of this is channel blurring, he said, as more retailers seek “a convenience positioning.”

“We face an ever-increasing competitive set, including dollar stores, chain drug, supermarkets and quickservice restaurants. The convenience everywhere environment is what we live in today,” he said. The skyrocketing importance of foodservice, as evidenced by “the growth of foodservice sales and its gross margin contribution,” is another huge shift. Over the past 30 years, the c-store product mix “changed from tobacco products to take-and-eat food products,” noted Loehr. In 1990, when it came to buying food at a c-store, the sentiment was essentially, ‘Who would do that?’ Loehr said. Still, Kwik Trip had begun its foray into the segment with one roller grill with basic hot dogs and a small selection of sandwiches that were shipped to the stores. Compare that to present day, where the chain is vertically integrated and operates its own distribution center. Two or more roller

Bob O’Connor recently divested his Jetz Convenience Centers to Wausau, Wis.based Riiser Fuels. 36

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September 2019

grills showcase a range of items, and cold cases feature deli-type sandwiches, salads and parfaits made fresh in Kwik Trip’s commissary. “Today our industry has become a major player in the fast food industry,” Loehr said. “Now we’re starting to do fried chicken in our stores. We’re rolling out 10 different takehome meals options, besides a very rigorous grab-and-go hot case with burgers and all kinds of sandwiches.” Over the past three decades, competition from other channels has forced c-stores to level up in terms of best practices in operations, variety of foodservice and convenience — selling guests what they want when they want it. “Our industry is much better at doing that than we were 30 years ago,” Loehr said. Technology around foodservice is advancing. Kwik Trip, which today operates more than 600 c-stores in Wisconsin, Minnesota and Iowa, is now testing delivery and curbside pickup. “It’s a positive commentary about our industry that we have a lot of entrepreneurs and people that have been able to roll with the punches and the changes over the years and competition and still be the vibrant industry we are today,” Loehr said. “It’s a ‘hats off’ to the retailers in our

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industry being receptive and open to change and needing to change to continue to be a dominating place where our guests want to come in and now buy food.” While some chains are still at the first stages of foodservice today, for others, market conditions forced their hand early. In 1990, Peter Tamburro, now general manager of Marcy, N.Y.-based Clifford Fuel, was working with Valley Oil Co., a franchisee of Canastota, N.Y-based Nice N Easy Grocery Shoppes. “We were a gasoline and fuel distributor that owned several locations with full-service pumps out front and service bays. The company was just getting into the c-store business, converting two- and three-bay service stations into small c-stores.” In those days, converting a service bay to a c-store meant pouring a floor, adding a cooler and a checkout counter loaded with cigarettes and “some siding or type of structure around the front to disguise the overhead doors that would be in the front,” Tamburro said. “Sixty percent of our business costs were tobacco products. We

La Crosse, Wis.-based Kwik Trip today (above) and in 1990 (left). Today it’s vertically integrated and operates its own distribution center and commissary to provide fresh food offerings to customers.

sold motor oils and a lot of soft drinks. There wasn’t any bottled water then.” In 1993, when the business sold, Tamburro moved over to Nice N Easy — as vice president of franchise operations. “Nice N Easy at the time was developing the center store, as well as adding things like hot dogs and pizza, and a little more fresh-type product,” he said. In the early ‘90s, the state of New York cut a deal with local Native American reservations to build a casino and open gas stations that sold tobacco, said Tamburro. As a result, New York c-stores saw a downward trend in cigarette sales volumes. “The deal with the state forced (Nice N Easy) to find more sources of margin,

It’s a positive commentary about our industry that we have a lot of entrepreneurs and people that have been able to roll with the punches and the changes over the years and competition and still be the vibrant industry we are today.

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September 2019

— Steve Loehr, vice president, Kwik Trip

and that’s when we decided food was going to be our future,” he said. Tamburro pointed to the addition of fresh, quality food products, including made-to-order, healthy food as the biggest change to the industry, followed by the switch from converting two-bay stations into c-stores to building large, upscale stores. In 2014, following the CST Brands acquisition of Nice N Easy, Tamburro joined Clifford Fuel, which had been a Nice N Easy franchisee. In the ‘90s, Clifford Fuel had been going through the same evolution as Nice N Easy, converting two-bay stores to c-stores. Since 2014, Clifford Fuel has rebranded its stores as Cliff’s Local Market and introduced larger, more upscale new-to-industry stores with an expanded variety of products. The coffee bar has also evolved, as it has across the industry. “That’s come from two small open pots, to a 24-foot wall of iced coffees and cold brews and just more upscale,” Tamburro said. The entire image of the industry has shifted dramatically, he said, from what was “exclusively an impulse, high-priced environment” to a family-friendly place offering quality meals. “We’ve become a safe place to shop that’s recognized for much more than just convenience — we’ve now become a destination,” Tamburro said. cstoredecisions.com

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One of the top changes to the c-store industry over the past 30 years has been the expansion of foodservice — both grab and go and made to order — with some c-store chains even offering their own commissary, distribution system and proprietary offerings.

Gus Olympidis, CEO of Valparaiso, Ind.-based Family Express with 74 stores in Indiana, noted not only are c-stores getting larger, but the growth in foodservice has necessitated more parking. “A subtle change has been the improvement in the quality of the workforce, especially in the top tier,” he added. Like Kwik Trip, today Family Express is driven by a vertically integrated business model with its own distribution center, bakery/commissary and “logistical wherewithal.” “The Family Express model is driven by private label and an extraordinary workforce that is very different than the one from 30 years ago,” Olympidis said. This demand across the industry for high-quality employees brings with it new challenges in labor recruiting and retention. Olymipidis cited perpetual innovation as one of the best aspects of the industry today, and continued consolidation as the most challenging aspect. Tamburro pointed to the aforementioned consolidation as the greatest challenge. “Family businesses are disappearing to the Circle Ks and the EG Groups, and 7-Elevens and the Speedways are all around us,” he said. “They weren’t here until maybe five years ago. None of them.” What’s more, he said, regulations are squeezing retailers from all angles, from a growing minimum wage to legislation on tobacco, and the increased purchase age for tobacco to 21 spreading across the country. SCANNING ARRIVES

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September 2019

Reilly Musser, vice president of marketing and merchandising for Robinson Oil Corp. dba Rotten Robbie, was a freshman in high school in 1990, working in the office at the family business’ partner company during the summer. She remembers the stores as much cstoredecisions.com

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Clifford Fuel operated as a Nice N Easy Grocery Shoppes franchise in the ‘90s. Today it has launched its own c-store banner — Cliff’s Local Market — and has upgraded its stores to a more upscale design and expanded product offering.

smaller and not as cohesive in their appearance. Today, Rotten Robbie, with 34 c-stores in California, features bigger stores with more cooler space and beer caves. “We didn’t have beer caves in the ‘90s, and we don’t want to build a store without a beer license (today),” Musser said. “We have better graphics, a more cohesive look and better lighting, too (including LEDs).” After store upgrades and foodservice, retailers agree the introduction of scanning transformed the channel. “Back in 1990, c-stores weren’t scanning yet; stores had cash registers and separate gas consoles, and Price Book didn’t exist,” Tamburro said. ”The implementation of advanced POS units and the ability to control pricing through scanning were big changes.” Musser remembers when the scanners arrived. “We started scanning close to 2000. (Before scanning), you would walk into a store and say ‘Does this sell?’ And every manager would say, ‘Yeah, we sell a lot of that.’ But what does a lot mean? (After scanning), we were able to put numbers against what we were actually selling,” Musser said. Pay at the pump was also just starting in the ‘90s. “I remember some 42

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people here thinking that was going to be a problem because (they were concerned) people wouldn’t come into the stores,” Musser said. Supply chain ordering systems have become more sophisticated, allowing retailers to order through handheld devices. Back-office paperwork has grown more streamlined. In 1994, the first smartphone debuted to the public, but it was another 13 years before the first iPhone launched and smartphones began a mainstream climb. Today, c-store mobile apps can activate gas pumps, and customers can pay on their mobile device. From geo-location to beacon technology and the internet of things to frictionless checkout solutions, technology is revamping the c-store business in 2019. “The technology required and needed to win has significantly changed,” Montgomery said. “Today, back-of-the-house management requires item level cost capabilities, market basket analysis and full recipe accounting for foodservice. Also needed are volume forecasted and staff schedule to ensure customers’ product and service levels are met. This includes kiosk order and frictionless checkout.”

September 2019

TECH TRANSFORMATION

In 1990, O’Connor was two years into his c-store career as an owner of the Jetz family business. “The federal government mandated that we had to start cleaning up the soil from these gas stations … the previous generation said, ‘these new regulations are too big for us to deal with,’” especially as insurance companies were pulling out of the state. O’Connor and his cousin, Tim Klein, took over the business. Jetz had a cigar box as the cash register, as well as employees with metal change holders on their belts who pumped gas, O’Connor recalled. Many stores were still two-bay gas stations that serviced cars and had “a couple fuel pumps off to the side.” “The stores inside were really nothing more than a small rack of candy bars, some oil, transmission fluid and a soda machine,” he said. The majority of the business was all about gasoline at that time. Compare that to today, where c-stores offer several types of fuel, including alternatives, from electric charging stations to E15. On the technology front, “it went from completely manual to computers today driving the whole

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30th Anniversary In Convenience

operation. … There were no cell phones back then. Just a cell phone has allowed everybody to become so much more productive,” he said. Technology has allowed retailers to run bigger stores without a huge increase in labor. “We used to pump the gas for every customer,” O’Connor said. “We (now) have robotic pumps that dispense the fuel. Payment processing is now robotic. I remember car washes back when I first started — you had to manually drive car wash equipment around a car.” Technology has also allowed a central office to control more stores efficiently. But in the ‘90s it was a feat to bring stores with limited communication and technology together. “Today, with technology, you can get real-time information,” O’Connor said. But even as c-stores become more tech savvy, the basics are simultaneously ever more important. Stores today offer more services, look better

and are a bigger part of the community than they were 30 years ago. C-stores still face challenges with perception and community response, but many stores are getting out into their communities, giving back and showing themselves to be community stewards. To O’Connor, what’s best about the industry now is how technology has allowed c-store retailers to know their customers better. When he first started in the business, retailers might know a customer’s name. Today they also know what they like to drink and the price points they’re willing to accept. “We sell people their time. I think we’ve become very good at that, he said. ” I think data will continue to drive that. And I think it’s going to be a very important part of the business going forward, knowing your customer.” ONWARD TO 2049

“Technology implementation will

Family Express today (above) and in 1990 (right). Today the chain is driven by a vertically integrated business model with its own distribution center, bakery/ commissary. It offers its own private-label items and a top-notch workforce. 44

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change the face of the industry in the next three years in ways that may be unimaginable to most current operators,” Family Express’ Olympidis predicted. “Convenience in the future would likely include ‘delivery,’ and it would be substantially more frictionless.” Tamburro pointed to the expanding intersection of food and technology and how it will change how stores sell food, including, “how you order — whether it be an app or online ordering, self-checkouts, delivery.” The future of fuel is also uncertain. Cars are getting better gas mileage. “There’s more hybrids, there’s more electric vehicles coming. Outside the store, that’ll be probably the biggest change in the next 30 years, as opposed to inside,” he said. O’Connor expects hydrogen — because no country controls it and it has zero emissions — or a similar fuel to thrive, and he expects cash to disappear in favor of electronic currency. He also pointed to the rise of augmented reality and artificial intelligence. “It’s going to rock our world,” he said. Open Pantry’s Buhler observed this industry is “extraordinarily kind, friendly and interactive between even competitors, and it’s like no other industry in that way. … (It offers) a genuine culture that comes from the hearts of people that care about what they do and care about each other in the industry, and it’s very unique.” That culture of caring and inclusion has helped the c-store industry band together and pivot with the times to remain relevant over the past 30 years. There’s no doubt that, whatever changes occur, the industry will transform itself along with them. The industry has changed a lot in the past 30 years, O’Connor said. “It will continue to change at a faster pace. But the change will be good. And at the end of the day, our industry will continue to improve and better serve the needs of our consumers.” CSD

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Category Management | Juices & Teas

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Brewing Function and Flavor Juices and teas are enticing c-store customers with healthier and functional benefits. Thomas Mulloy • Senior Editor

Powered by an influx of ready-to-drink (RTD) products featuring elevated health profiles, juices and teas are becoming American consumers’ health elixirs. Customers are seeking juices and teas with better-for-you additives and interesting flavors, and they’re willing to pay more for them. According to Packaged Facts’ “U.S. Beverage Market Outlook 2019,” retail tea sales reached $8 billion in 2018 after trending upward at a compound annual growth rate (CAGR) of 3.8% the previous five years. The report projects sales to reach $9.5 billion by 2023. TEA INFUSIONS

“In the c-store world, it’s the 22- to 38-year-old blue collar (shopper),” said Scott Zaremba, who owns multiple convenience outlets in the Lawrence, Kan., area. “And they’re the ones buying the big jugs, the big cans of tea that are infused with something.” It’s that infusion that is key to higher sales dollars. Sales volume trends remained flat, which means people are more willing to pay more for what they see as a better product. Regardless of the flurry of new RTD tea flavors and additives the market has seen recently, consumers still respond to familiar combinations. “I’m just seeing the ginseng tea and the other stuff that’s been around for a while, but now we’re getting big cans of it,” said Zaremba. “When it comes to teas, tea is everything now … and now sweet tea seems to be coming on and becoming a big deal.” cstoredecisions.com

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Category Management | Juices & Teas

fast facts: • A compound annual growth rate (CAGR) of 3.8% pushed retail tea sales to $8 billion in 2018. That consumer behavior is in line with the rise of functional beverages, especially among millennials, a demographic that expects more of their beverage choices. JUICES APPEAL

Cold-pressed juices, reported Packaged Facts, are possibly the most popular drinks on the market because of their high nutritional value. They also feature immunity boosters and can even serve as meal replacements. Contributing to that healthy profile are innovations by juice and tea makers to include trendy ingredients. Look for juices to include kale, spinach, turmeric, spirulina, barley grass, alfalfa grass — and even activated charcoal. Then there are juice blends, which go one step further: Instead of extracting the juice, these smoothielike drinks are made using the entire fruit — retaining the fiber as well as the nutrient-rich skin. Despite the skyrocketing innovation in the juice category, many cstore owners aren’t yet seeing the demand for trendier juices among their demographics.

“We’re a little slower to catch on to some of these things,” said Dan Dunstan of Parkland USA, which operates 50 stores in six Midwest and Southwest states. “I’m definitely not seeing the large draws there. Not early out of the gate.” When it comes to juices, another trend Zaremba has seen is lots of activity in mixing flavors. “They’re flavoring them all,” he said. “There’s not just grape juice anymore. It’s cranberry-grapeapple, whatever.” Zaremba said he believes the new flavor profiles are a sign that drink makers are trying to keep up with a diversifying market. Those unconventional innovations don’t extend to simply flavor, either. Health-targeted options abound. Strong trends have emerged in favor of more antioxidants, less sugar and more gut-friendly probiotics. Packaged Facts reported manufacturers may be working in mashup overdrive to find the next huge juice/water trend, one that might achieve a swift rise to mainstream

For both juices and teas, Packaged Facts’ “U.S. Beverage Market Outlook 2019” predicted emerging trends to build on current trends: • Maximization of functional benefits, particularly in gut health with probiotics • Development of other techniques create different textures • Greater penetration of plants/fruits to challenge coconut water • Even more mashups with other beverage categories

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• Customers are willing to pay more for healthier juices and teas. • Trends favor antioxidants, less sugar and gut-friendly probiotics.

recognition like coconut water did. The report cited “fringe drinks” containing ingredients like aloe vera, cactus, tart cherry and watermelon gaining acceptance in a health-conscious consumer mindset. Future innovation in juices will primarily build on enhanced functionality and the creation of unique drinking experiences. TAKING RISKS

The c-store cold vault is a competitive place, but also a hightraffic place, which means testing some of these trendier items could pay off for retailers. “I think you’ve got to be a bit more creative and try some products that you might not try elsewhere in the store,” said Dunstan. Separating the few winners from the many more losers will take work. Dunstan said Parkland USA tries to narrow the options based on other products, whether by flavor or product type. “And then certainly looking at sales right out of the gate — what’s moving,” said Dunstan. “You put something on the shelf, in the vault, you highlight it a little bit and then you get some early movers, and you know what’s going to move.” And if it doesn’t move? Dunstan is clear on that question. “It’s got to move, or it’s out.” CSD

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Category Management | Beer

Bettering

BEER

SALES

More states shed old 3.2 beer laws, while retailers entice customers with local and craft brews. Pat Pape • Contributing Editor

By the end of 2019, Minnesota will stand alone as the only U.S. state still featuring a 3.2 beer law, a holdover from Depression-era prohibition that restricts grocery and convenience stores to selling beer with 3.2% alcohol by weight, which is about 4% alcohol by volume (ABV). A sign that times are changing, Oklahoma, Colorado, Kansas and Utah all recently eliminated 3.2 beer laws. Meanwhile, more c-store retailers are stocking craft and local brews to appeal to customers. UPDATED BEER RULES

As of Jan. 1, Colorado shed its 3.2 beer law, allowing c-store and grocery shoppers to purchase full-strength beer. Kansas began allowing beer with up to 6% ABV, starting April 1. In Utah, a bill signed earlier this year takes effect Nov. 1 and allows convenience and grocery stores to sell drinks with 4% alcohol by weight. Even with the update, Utah still holds one of the strictest laws nationwide. Oklahoma shifted away from 3.2 beer in October 2018, allowing c-stores — along with grocery and drug stores — to sell beer with as much as 8.99% 50

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Betsy Decker buys products, including beer, for the four locations

alcohol content, thanks to a statewide referendum passed in 2016. “Since Oklahoma has joined the 21st century and we can now sell strong beer, sales have been fantastic,” said Mike Thornbrugh, manager of public and government affairs for QuikTrip, the Tulsa-based convenience chain with more than 800 stores in 11 states. “It’s given us an opportunity to look at a lot more varieties than we’ve had in the past. For QuikTrip and our customers, it’s really exciting.” Oklahoma was dry when it joined the Union in 1907, a situation that didn’t change until 1959. Oklahoma forefathers would be shocked to see today’s stores, such as QuikTrip, with beer caves (QT is testing two) and unique craft brews aimed at attracting customers. The chain spent the first quarter of 2019 educating Oklahoma customers about the rule

of Melvin Davis Oil Co. of Stony Creek, Va.

change and introducing them to new beer options that never existed at the c-stores before. “We try to focus on local beers the best we can for several reasons. They’re popular, they taste good and consumers want them,” said Thornbrugh. “It’s an exciting time to be a retailer selling beer.” BOOSTING SALES

Nielsen data for the four weeks ending July 13 (including the July 4 holiday) showed the beer, flavored malt beverage and cider category saw dollar sales up 2.8% compared to 4.4% for other channels, as reported by Wells Fargo Securities. For the 12-week period ending July 13, dollar sales for the category were up 0.7% at c-stores. “We seem to grow our beer year-over-last every year and don’t see the slip that maybe the industry sees,” said Michael Cordonnier, category

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Category Management | Beer

and marketing manager for Fastbreak, a 23-store chain based in Klamath Falls, Ore. About 80% of Fastbreak’s beer sales are over Friday, Saturday and Sunday and usually include the same 15 brands. In 2018, the “horrible smoke situation” from the Oregon forest fires put a damper on sales at the stores. “We literally had bad smoke for 45 days, which cut down on tourism substantially during our busiest months,” Cordonnier said. Luckily, the chain had assigned cooler captains that summer to ensure stores were well stocked with the brews customers preferred. The result was increased sales despite an unanticipated drop in visitors to the area. “We still eked out an increase, but not like it would have been if we’d had the campers and tourists pouring into our market instead of avoiding it,” he said. Nonetheless, the result demonstrates how best practices in merchandising — such as staying in-stock on best-selling brews — can make or break a c-store’s bottom line. CRAFTY SALES

Melvin Davis Oil Co. of Stony Creek, Va., owns and operates two travel centers and two convenience stores. Betsy Decker manages the pricebook and vendor relations and buys products, including beer, for the four locations. Last year, the chain introduced a bigger presence of craft beer in one of its c-stores. “We carry beer in three of our locations, but we did a much greater craft beer presence in this one. We’ve tried to showcase local Richmond craft brews, such as Hardywood, Legend and Bold Rock, and we try to keep up with the new craft beers coming out.”

fast facts: • By the end of 2019, Minnesota will be the last state with a 3.2 beer law. • Local and craft brews are driving excitement in the category. • Getting the basics right, like staying in-stock on customers’ favorite beers, makes your store a destination of choice.

While most of the craft customers are millennials, people of all ages are showing interest in new and different brews. Now that consumers can go into a bar or restaurant and enjoy a flight of beers, older beer shoppers are just as likely to experiment with new offerings, she said. “Everything is turning around with all of the new breweries opening in Virginia.” Decker and her husband, Bill, manager of the Davis Travel Center, visit beer producers in the Richmond area to learn what offerings are slated for local markets and try to acquire the new releases for their stores. “We’re doing well with our new planogram of craft beers in our beer cave and doors,” she said. Thanks to the unique labels on craft beer, “you can have fun with it and make your cooler pop with color. The cooler goes from being dull to eye-catching.” CSD

C-store Beer category $ Sales growth vs. all channel Beer DoLlar sales growth

Source: Nielsen data ending July 13, 2019, as reported by Wells Fargo Securities

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September 2019

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Category Management | Salty Snacks

SALTY SNACKS

ENTICE HEALTHIER, DIVERSE CONSUMERS

As consumer demographics and preferences change, c-stores update salty snack options. Isabelle Gustafson • Associate Editor

C-store customers continue to demand healthier snacks with clean labels, and products are evolving to satisfy today’s snacker. Hispanic snacks have hit the mainstream, appealing to both the growing Hispanic American population, as well as the young consumer overall, regardless of ethnicity. These trends are underscored by growth of the snacking industry as a whole. According to market research firm Packaged Facts, U.S. demand for salty snacks at the manufacturer level is forecast to grow 3% annually from 2017 to 2022. Cara Brosius, research analyst of consumer and commercial goods, MarketResearch.com, said demand for salty snacks is growing because of the “snackification” of American diets. 54

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Today’s consumers, especially millennials and Gen Z, want better-for-you salty snacks as well as snacks with bold new flavors.

“Most consumers snack multiple times each day, and a growing number are replacing entire meals with snacks or eating snacks with main meals,” Brosius said. To take advantage of this shift and optimize profits, c-stores must make sure they’re offering what consumers, particularly millennials and Gen Z, really want. HEALTHY SNACKING

and they should also sell more healthy snacks for the same reason.” Brosius cited plant-based snacks with ingredients that are often thought of as ‘superfoods,’ such as Brussels sprouts, jackfruit, moringa, turmeric, asparagus and spinach, as well as products that replace traditional snack ingredients such as corn and potatoes with peas and lentils. CLEAN LABELING

Daniel Moran, category manager for Rotten Robbie, with 34 stores in Northern California, said the chain makes an effort to offer better-for-you snacks, which he said are mixed in amongst the traditional products, thus relying on the packaging “to call itself out.” “Clean labels have been trending for a few years now, and that’s carried over to salty snacks as well,” he said. Some companies are taking this a step further.

“Gen Z and millennials are especially driving growth in the category, as they have fast-paced, on-the-go lifestyles that demand portable and ready-to-eat foods,” Brosius said. In order to appeal to young consumers, she said c-stores need to stock more snacks that provide health benefits, such as added Chips and ‘chip-like’ products continue protein and plant-based ingredients. “Young people, who are the most likely to be strong. We have brought to want better-for-you foods, are increasin kale chips, beet chips and other ingly doing more of their grocery shopveggie-based items, with mixed success. ping at convenience stores,” said Brosius. “Convenience stores are stocking more - Mike Nelson, senior category manager for Plaid Pantry fresh produce to entice this demographic, 56

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September 2019

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Category Management | Salty Snacks

The demand for salty snacks is increasing due to the “snackification” of the American diet. Most consumers snack multiple times per day, and a growing number are replacing entire meals with snacks.

For example, Kettle Brand potato chips introduced a “Tater Tracker” feature on its website that allows consumers to input the product code on their bag of chips to track the farmer who sourced the potatoes used in that particular bag. “Transparency efforts such as sharing lists of suppliers, QR codes with further ingredient and supplier information, and blockchain technology used to track ingredients throughout the supply chain will become more common in the snack market,” said Brosius. Mike Nelson, senior category manager for Plaid Pantry, which operates 108 c-stores in the Pacific Northwest, said, “The more, the better,” in terms of clean labels. “Chips and ‘chip-like’ products continue to be strong,” he said. “We have brought in kale chips, beet chips and other veggie-based items, with mixed success.” But, he said, the newest innovations in salty snacks seem to be the flavors. FLAVOR INNOVATION

While Brosius said the biggest trends in salty snacks are health-related, many c-stores have seen the growth of Hispanic flavors, too. The U.S. Census Bureau expects the Hispanic population to reach 106 million by 2050 — a 57% increase from 2015. Hispanic people are one of the fastest-growing populations in the U.S., and their buying power is growing quickly, as well. According to a June 2018 report from Chicago-based market research firm IRI, Hispanics spend more than $94 billion on consumer packaged goods per year. But it’s not just Hispanic consumers who buy these products. Forty-eight percent of millennials have eaten 58

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Central or South American foods in the past three months, according to Mintel's “Defining Ethnic Food” report. “Hispanic salty snacks and flavors have been growing for us for a few years now and are doing well in 2019,” said Moran. “Some of the larger brands are getting creative with innovation, as well, which I like to see.” He added spicy snacks are especially popular among Rotten Robbie customers. “I don’t know how they eat some of the stuff we sell,” he said of flavors that are too spicy for his palate, but in high demand among customers. CSD

fast facts: • Demand for salty snacks is growing because of the “snackification” of American diets. • Millennial and Gen Z consumers especially want healthy snack options. • Snacks with Hispanic flavors are increasingly popular due to the growing Hispanic American population and an overall interest in new and spicy flavors.

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Category Management | Smokeless

SMOKELESS

Steps Up

Nicotine pouches are gaining prominence in the smokeless set as regulatory uncertainty pressures the tobacco industry as a whole. Thomas Mulloy • Senior Editor

Smokeless tobacco sales are on the rise. The smokeless market grew at an average annual rate of 3.96% from 2014-2017, when it reached $209 million, according to BisReport Consulting Co. Ltd.’s “Global Smokeless Tobacco Market Report 2019.” The report projected the market will continue to climb to $242 million by 2022. Convenience stores are seeing the bump in sales. “We’re definitely up,” said Tim Greene, category director for the Smoker Friendly chain, which has 105 stores across Colorado, Wyoming, Montana, Nebraska and Florida. “We’re up about 10% over last year. … The programs that the major (smokeless) companies have put together, the loyalty and the scan data have helped volumes.” Greene sees opportunity with sales of nicotine pouches. He said Smoker Friendly was the first retailer in the U.S. to carry ZYN back in 2015. “ZYN has really brought some excitement to the category, some margin to the category,” Greene said. 60

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Fast Facts: • Global smokeless sales are projected to reach $242 million by 2022. • Some 18 states and nearly

Greene also cited the continued 500 municipalities have rollout of R.J. Reynolds (RJR) Vapor adopted Tobacco 21 laws. Co.’s VELO and Altria’s On! oral nicotine pouches as reason for excitement in the category. RJR Vapor • New products are adding Co. announced recently it would options to the fast-growing expand availability of VELO to more than 70,000 outlets nationwide. Altria’s nicotine pouch segment. On! hit the U.S. market last year with several thousand retailers. It’s expected to expand distribution later this year. “I would say that the traditional set won’t change much, at least in our stores,” said Greene. “But we will carve out a section for the nicotine pouches and make that a category, if you will.” STATE & LOCAL REGULATIONS

The growing wave of Tobacco 21 laws at the state and local levels — at press time, 18 states and nearly 500 municipalities had increased the purchase-age for buying tobacco products to 21 — will likely push smokeless sales down in those areas. Smokeless doesn’t get a pass when it comes to local restrictions. “All of the legislation at the local level that we’ve been dealing with over the past three or four years has dealt with all forms of tobacco,” said Jim Calvin, president of the New York Association of Convenience Stores (NYACS). Retailers have recourse, though, when localities begin looking at tobacco-related laws.

The most important thing that retailers can do now, before a local ordinance is proposed in their city, is to reach out to local lawmakers and set up a meeting with them; or invite them to their store to explain how they responsibly sell tobacco products and why the tobacco category is critical to their business model.

— National Association of Tobacco Outlets Executive Director Tom Briant

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Category Management | Smokeless

“The most important thing that retailers can do now, before a local ordinance is proposed in their city, is to reach out to local lawmakers and set up a meeting with them; or invite them to their store to explain how they responsibly sell tobacco and why the tobacco category is critical to their business model,” said National Association of Tobacco Outlets (NATO) Executive Director Tom Briant. Calvin echoed the wisdom of engaging with lawmakers. “They need to contact their elected officials and make them aware that these tobacco issues are not purely, not exclusively, public health issues,” said Calvin. “They also are business issues, and all sides of the issue need to be examined.” Calvin said a significant number of counties in New York are already at the minimum purchase age of 21, and the statewide Tobacco 21 law takes effect in mid-November.

Smokeless tobacco dollar sales were up +2.8% for the four weeks ending Aug. 10, 2019 (vs +3% for 12 weeks and +1.8% for 52 weeks) in the U.S. c-store channel, according to Nielsen data as reported by Wells Fargo Securities.

While legislative and regulatory uncertainty continues at all levels of government, Greene said there could prove to be a silver lining as tobacco manufacturers jockey for valuable shelf space. “I think we’ll continue to see more scan data and loyalty offers from the manufacturers,” said Greene. “I think you’ll start seeing some stronger offers … not that they’re bad now — I’m just saying it’s going to get more competitive.” CSD

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Category Management | Frozen Dispensed

Frozen Drinks

Offer Wellness Appeal From kombucha slushies to cucumber Slurpees, the frozen dispensed beverages at c-stores are evolving with the times. Erin Del Conte • Executive Editor

Convenience stores are catering to changing customer needs with healthier frozen beverages featuring functional attributes and more natural ingredients, as well as vibrant colors and flavors, and an array of choices to allow for customization. Convenience stores are incorporating artisan and betterfor-you trends into their frozen drink sections and focusing less on traditional soft drink flavors containing high fructose corn syrup, said Jill Failla, foodservice analyst at market research firm Mintel. She noted consumers are also embracing better-for-you versions of their childhood favorites, such as organic or functional slushies, at c-stores. “A new breed of convenience store with a natural and wellness focus is emerging in urban areas, which some are calling the ‘bougie bodega.’ Many of these independent c-stores are setting the bar for what a better-for-you frozen beverage looks like,” Failla said. She pointed to Portland, Ore.’s Green Zebra, which offers kombucha slushies in flavors such as pineapple ginger and marionberry mint; and 7-Eleven’s test lab in Dallas with organic Slurpees in cucumber, coconut and blood orange. When it comes to flavors, Mintel finds tropical beverage flavors like coconut, pineapple and passion fruit are trending, as well as health-minded flavors and ingredients such as turmeric, celery and carrot. 64

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fast facts: • Tropical beverage flavors like coconut, pineapple, and passion fruit are trending, as are health-minded flavors and ingredients like turmeric, celery and carrot. • Customers are also demanding more functional frozen beverages, nonGMO and organically sweetened items made with natural flavors and colors.

NUTRIENT-RICH SMOOTHIES

Alltown Fresh, which has two locations open and several more slated to open by end of year, is one c-store chain embracing these trends. It focuses on organic, natural, gluten-free, vegan, vegetarian and locally sourced alternatives at its convenience stores, and its frozen dispensed beverages are no exception. “As the fresh convenience market, Alltown Fresh offers a wide variety of functional, nutrient-rich smoothies in substitution of traditional sugar-filled slushies,” said Shauna Seidenberg, category marketing manager of dispensed beverage for Alltown. “In addition to crafting all smoothie items with the most natural ingredients and fresh-cut produce cstoredecisions.com

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available, we also offer an array of personalization options — from almond milk and coconut water to Greek and cashew milk.” Add-ins are also available, such as spirulina powder, chia seeds and matcha. Alltown customers want choices they can feel good about drinking, and beverages that are as fresh and natural as possible, Seidenberg said. Customers are also demanding more functional beverages, non-GMO and organically sweetened items made with natural flavors and colors. “Our guests are raising the bar on what they put into their bodies, and we are raising the bar to meet those needs,” Seidenberg said. Smoothies were the best-selling cold beverage item at Alltown Fresh’s Plymouth, Mass., September 2019 • CSTORE DECISIONS

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Category Management | Frozen Dispensed

Alltown Fresh offers functional, nutrient-rich smoothies with natural ingredients and fresh-cut produce. It allows for personalization with options like almond milk, coconut water or cashew milk, and add-ins such as spirulina powder, chia seeds and matcha.

location this summer, with flavors such as Awake and Refresh trending. “The Awake smoothie blends coffee with cacao powder, almond butter, banana, honey and yogurt, while the Refresh is made with berries and cucumber for a nutrient-packed, hydrating beverage,” Seidenberg said. “We’ve found that flavors and products that feel functional — whether it be hydrating or energy-boosting — and flavors that feel indulgent, such as chocolate or cacao, are what our guests look for.” The energizing Awake smoothie is even outselling traditional canned Red Bull, Seidenberg said. TESTING FOR SUCCESS

As Yesway, which operates 150+ locations in nine states, continues to grow its footprint, it’s adding or upgrading the dispensed beverages at its locations. “We have put frozen dispensed beverages into all stores that we have remodeled and have promoted them not only at the remodeled stores, but also at

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existing stores (that) were serving them when we acquired them,” said Jeff Keune, senior vice president of food service and innovation at Yesway. Yesway is testing a combination of frozen carbonated beverage machines and frozen noncarbonated beverage machines to determine which has the broadest appeal for its customer base, as well as which is easiest to operate and has the strongest return on investment. As Yesway continues to test the segment, it is only offering core flavors. “We offer at least two flavors at each of these stores and have many stores with more than two,”

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Category Management | Frozen Dispensed

Circle K caters to customer demand for an abundance of frozen dispensed flavor options, which shoppers love to mix and match. This summer, Circle K launched #MakeYourMix to promote Froster, as well as Circle K’s other proprietary dispensed beverage offering, Polar Pop.

Keune said. “Fruit flavors like cherry are our most popular, but we will be looking to expand our variety and roll more innovation out in 2020.” Yesway customers are demanding refreshment, flavor and fun, Keune said. “There is a wonderful experience with the texture that (customers) seek, which goes beyond just something cold.” Frozen beverages are currently rolled under Yesway’s overall cold dispensed beverage promotional strategy, which is focusing on cup increases, Keune said. “We want as many people to engage with our beverages as possible, and we use them as a brand builder. We will promote on price and with our loyalty platform including with card deals and clubs.” MIXING IT UP

Circle K’s proprietary frozen beverage offering, Froster, includes a selection of frozen carbonated beverages in “vibrant fun flavors,” including favorites like Coca-Cola, Blue Raspberry and Cherry, in a variety of sizes starting at 79 cents. “Our customers demand variety, flavor, convenience and price,” said Alicia Mowder, senior director of global marketing for Circle K Stores. New products, flavor extensions and category crossover items were major drivers for the category this summer. “We kicked off the summer with a unique and exciting flavor inspired by Ferrara’s Lemonhead candy. Young customers loved the puckerinducing goodness and older

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generations were drawn to the nostalgia of the treat,” Mowder said. The chain followed that with a twist on a Froster favorite, Mountain Dew, called Mountain Dew White Out. “The Dew nation counts on Circle K as their goto for dispensed Mountain Dew flavors, so bringing White Out to Froster was a no-brainer, not to mention the white product is aesthetically pleasing mixed with any other Froster flavor,” Mowder said. “Other flavors like Watermelon Lemonade, Orange Cream and the Circle K Exclusive Mountain Dew Voltage, have been big hits with customers looking to cool off with a Froster this summer.” “Circle K has always been about endless flavors,” appealing to customers’ love to mix and match, she noted. This summer, Circle K launched #MakeYourMix to promote Froster, as well as Circle K’s other proprietary offering, Polar Pop. Customers that “mixed it up” with their favorite Circle K products and posted them to Instagram or Facebook, while tagging @CircleKStores and #MakeYourMix, had the chance to win prizes such as Circle K gift cards. “For added inspiration, Circle K also partnered with top travel and parenting influencers to create a variety of summertime survival kits featuring Polar Pop and Froster,” Mowder said. “We’ve even brought the icy-cool blast of Polar Pop and Froster to our hottest markets in San Antonio and Phoenix for a winter wonderland — a free event featuring real snow, a snow slide, live ice sculpture demonstrations, ice luge drink samples and product giveaways.” CSD

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Foodservice | Chicken & Sandwiches

POSITIONING PREPACKAGED SANDWICHES

Whether spicy or mild, chicken proves a popular sandwich protein, while fresh and aesthetically appealing sandwiches remain vital to driving foodservice as a destination. Isabelle Gustafson • Associate Editor

Both sandwiches and chicken are notorious for driving c-store sales, so it’s no wonder chicken sandwiches are finding a permanent spot on many c-store menus. In its “2019 SNAP Report” on sandwiches, Datassential noted 78.7% of foodservice sandwiches contain chicken, making it the most commonly used sandwich protein on menus. 70

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Foodservice | Chicken & Sandwiches

Fast Facts: • Data-saving is key to ensuring profitability in a fresh sandwich program. • Sandwiches should be aesthetically pleasing, especially now that consumers are likely to take a photo of their food for social media. • Chicken is an ideal sandwich topping due to its versatility and universal appeal.

But no matter the ingredients or style, whether prepackaged or made to order, the key lies in ensuring sandwiches are fresh and not only taste good, but look good, too. “Fresh is the key, I always say. Being a dietician, I’m big into fresh, fresh and more fresh,” said Nancy Caldarola, president of The Food Training Group. Caldarola cited fast-casual sandwich chain Pret a Manger as a shining example. “They know exactly how many (sandwiches) to make (daily) with a very small amount left over,” she said. “If you can get to that point, then you can afford to give away 5-10% of the product.” Getting to that point, she said, requires a lot of groundwork. “You’ve got to save the data,” Caldarola said. “You’ve got to know exactly what sold, what day it

PERFECTING PRESENTATION

Derek Thurston, director of foodservice for Marcy, N.Y.-based Cliff’s Local Market, agreed that freshness is hugely important to a successful sandwich program. But he emphasized that a sandwich’s appearance, its presentation, is also key. “You can have the greatest ingredients in the world, but if it’s slopped together, and it doesn’t look like a good product, then you’re not going to go anywhere with your sandwich program,” he said. To ensure every sandwich looks up to par, he trains

sold, and you cannot put that off. That’s very important because that’s how you get fresh sandwiches. And that’s how you buy fresh products. And that’s how you stay on top of profitability that comes along with freshness.”

“I think it’s very important to make a greatlooking sandwich because nowadays, someone’s probably going to take a darn picture of it before they eat it. And that’s your brand out there on social media. — Derek Thurston, director of foodservice, Cliff’s Local Market

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Foodservice | Chicken & Sandwiches

employees to place each ingredient in a specific sequence — lettuce, then spinach, then tomato, then cucumber, then pickles, then onions, then green peppers, then olives — something he believes to be more important now than ever before, thanks to the rise of social media food photography. “I think it’s very important to make a great-looking sandwich because nowadays, someone’s probably going to take a darn picture of it before they eat it. And that’s your brand out there on social media,” Thurston said. Caldarola added that packaging and merchandising are important pieces of the presentation puzzle. Not only should the sandwich look good, but it should be marketed well, too, and that means placing it next to add-on items like chips and drinks. “You have to be able to dress it up,” she said. “All those things people would eat, you have them together, merchandised as a package.” Jason Schindler, operator of Markle, Ind.-based Crossroads Pantry, said his customers usually pair their

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Derek Thurston, director of foodservice for Cliff’s Local Market, said he trains employees to place sandwich toppings in a specific order to ensure they look as good as they taste.

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Foodservice | Chicken & Sandwiches

You’ve got to save the data. You’ve got to know exactly what sold, what day it sold, and you cannot put that off. That’s very important because that’s how you get fresh sandwiches. And that’s how you buy fresh products. And that’s how you stay on top of profitability that comes along with freshness. — Nancy Caldarola, president of The Food Training Group

Chicken Soars on Sandwich Menus Chicken proves the most menued sandwich ingredient. According to Datassential’s “2019 SNAP Report,” Chicken appears in 78.7% of sandwich menu items. Grilled chicken appears in 40% of sandwiches, with chicken breast (37.7%) close behind.

sandwiches with chips and a fountain drink, but that this depends heavily on the season. “We sell, primarily, a lot more fountain than we do bottled. But a lot of that depends on the time of year,” he said. “Right now, in the Arizona heat wave, we’re selling a ton of Gatorade, as opposed to (soda). So a lot of Gatorade. A lot of water.” CHICKEN APPEALS

Source: Datassential, “2019 SNAP Report”

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Schindler said prepackaged sandwiches in particular are popular with the chain’s customers, who appreciate taste, value and, perhaps above all, convenience. “My customers tend to not want to wait,” he said. “We pre-make them, wrap them and put them in a sandwich case for grab and go.” Crossroads Pantry uses Broaster for most of its chicken foodservice, which Schindler said does very well as a whole. Its chicken sandwiches are from Michigan-based Gordon Food Service — both an original and a spicy option. Whether spicy or not, prepackaged or made to order, Caldarola said chicken makes for an ideal sandwich topping. “There’s so many things you can do to it,” she said. “You can fry it ahead of time. You can have it cold. You can put sauces on it. You can marinate it. It’s very versatile.” Thurston said that while Cliff’s offers plenty of traditional deli sandwiches, and turkey represents the No. 1 seller at around 10% of all sandwiches sold, chicken is not to be overlooked. “We have what we consider our chicken collection,” he said. “We’ll do a chicken cordon bleu sandwich. We’ll do a western barbecue, a buffalo one. When you combine all the different chicken sandwiches we do, it’s a top mover at our stores.” CSD

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Foodservice | Coffee

Branded Coffee

Builds Foodservice Retailers are strengthening the branding and on-trend positioning of their coffee programs, which they view as a key ambassador for their fresh foodservice offerings and a perk for loyalty card members. Marilyn Odesser-Torpey • Associate Editor

A generic cup of joe just won’t cut it with today’s coffee-savvy consumers. They’re looking for quality brews and programs that retailers are proud to put their name on. For the past year, northern Ohio-based FriendShip Food Stores’ locations have been undergoing “mini remodels” of coffee preparation and merchandising areas to upgrade their offerings and build the brand, according to Ed Burcher, the 26-unit chain’s vice president of foodservice. The first two orders of business were to standardize the equipment and grind the beans fresh for each pot. Even the bulk sweeteners and creamers carry the FriendShip logo and graphics, as does an overarching sign that guests can see from six feet away. “Coffee starts people’s day, and it’s one of the highest transaction categories that we have,” Burcher explained. “Having an upgraded coffee program makes a big impact and gives us more opportunities for bundling with fresh foodservice items, especially breakfast sandwiches.” Burcher said he expects the retrofitting of the stores’ coffee areas to be completed chainwide by summer of next year. FriendShip Food Stores’ locations have been upgrading coffee “Our initiative has been successful, resulting preparation and merchandising areas and offerings to build the in increased coffee sales and expansion of our brand, including standardizing equipment and grinding beans brand,” he noted. fresh for each pot of coffee. 78

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fast facts: • Adding your c-store branding to everything in the coffee area can help grow sales and expand your brand. • U  pgrade brews instead of adding more varieties to better entice customers. • G  ood coffee communicates storewide freshness.

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Foodservice | Coffee

At Nouria Energy’s c- stores, coffee is the “cornerstone” of its fresh foodservice program and sets the tone with five different morning brew varieties, limited-time offerings and add-ins from creamers to syrups.

Coffee’s position as a high-quality item provided an impetus for guests to sign up for and use their FriendShip loyalty card, which offered $1 cups for members during a recent 15-month promotion. Now through at least the end of the year, members can get a free cup on Mondays when they use their loyalty card. Most of the stores offer five different varieties in the morning. Three times a year, a special, limitedtime offer (LTO) variety replaces a slower-moving offering. In newer stores where there is space, FriendShip has added three flavors of syrups. Eventually, all the stores, as they go through their retrofits, will offer syrups. SIGNALING FRESH

At Nouria Energy’s Nouria convenience stores, coffee sets the tone for freshness of everything they sell, said Joshua Clark, category manager, fresh foods. Nouria Energy has a total of 117 Nouria locations in Maine, New Hampshire, Massachusetts, Connecticut and Rhode Island, 71 of which sell coffee. “Coffee is the cornerstone of our fresh foodservice, and even people who don’t drink it can see that we focus on freshness,” he pointed out. 80

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Nouria stores that offer coffee have also seen that streamlining the number of varieties from eight to 12 down to six or fewer and increasing the number of customizing add-ins such as creamers, shots and syrups is fine with the majority of customers. “Overall, we are seeing growth in both our cup volume and sales dollars,” Clark said. Other trends that are important to an increasing number of customers, especially younger ones, are that organic, Fair Trade and sustainable brews be available, Clark noted. Currently the Nouria stores offer two Green Mountain Fair Trade and organic blends. For cappuccino drinkers, Nouria has been testing three different bean-to-cup formats in select stores for about a year. One has the singular purpose of making specialty, barista-quality espresso-based drinks with real milk. Another has the bean-to-cup machine as the only equipment being used for regular and specialty coffee drinks. In the third format, the equipment grinds beans, but also mixes powdered cappuccinos and hot chocolate. To promote their coffee, the stores offer price breaks in the afternoon — for example, 99 cents from 2 p.m. to 6 p.m. Coffee is also positioned as an addon purchase for $1 to go along with a snack. CSD cstoredecisions.com

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Foodservice Column | Food Marketing

FOOD MARKETING’S SECRET WEAPON:

SAMPLING Successful foodservice marketers offer samples and let customers’ tastebuds seal the deal. John Matthews • Gray Cat Enterprises

I remember my first interview with a convenience store chain. I had just spent nine fast-paced years with Little Caesars Pizza as the national marketing director. Our chain had grown from 1,300 stores to 5,000 stores in less than five years, and had revenues exceeding $3 billion. My role was to oversee all of the field marketing for the company both at the regional and the grassroots levels. When an equally large c-store chain approached me with the possibility of leading their marketing, I listened. During the interview process, the chief financial officer of this company asked, “How are you going to adjust going from essentially one product (pizza) to managing 4,000 SKU’s in a convenience store?” At first, this seemed like an interviewkilling question. Then I realized that I didn’t have to make any of these 4,000 products. And that is the ultimate challenge of foodservice marketing — delivering on the expectation of a product that is created 82

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every order and multiple times a day by different operators. The real beauty of a well-executed proprietary foodservice program is that it can make your brand unique. Convenience store items, for the most part, are the same from store to store. Pricing, promotion and display can add some level of uniqueness, but essentially a Snickers bar is the same from c-store to c-store. Foodservice marketing has to take a different form than simply putting up a sign in a window screaming a price point. On-site prepared food is a very personal choice for a customer. Be it a sandwich or pizza, we all have our likes and dislikes. While there are a myriad of marketing ideas for promoting foodservice, the ones that make or break your success enable the customer to taste the product firsthand. SAMPLE FOR SUCCESS

At Little Caesars, our local store marketing programs were built around the premise of “getting the product in the mouths of customers.” Every promotional event attempted to involve tasting the product.

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Foodservice Column | Food Marketing

A flyer or coupon will only go so far — customers want to know if the product tastes good to them. Our group sales programs to schools, our fundraisers and our sports sponsor-

ships all involved eating the product at some point. This sampling by the customers, combined with our value proposition of “Pizza! Pizza!” created a winning combination.

When I left the convenience industry, I became president of the Jimmy John’s Gourmet Sandwich chain. Not surprisingly, this 2,000-store chain had its marketing built around the same premise — sampling. Built into Jimmy John’s daily operations is a sampling program where the store employees make eight sandwiches, divide them into thirds and deliver samples and a menu every morning to 24 businesses that surround the store. Day in and day out, the business community is reminded of the great tasting sandwiches less than a few blocks away. Foodservice operators are competing for “share-of-stomach” and the dollars spent in the food industry are staggering in comparison to the c-store industry. Competing against the titans like Taco Bell, Pizza Hut and McDonald’s is futile if you try to outspend them. Where operators can succeed is developing foodservice marketing programs that create opportunities to get customers in their immediate trade areas to sample their products on an ongoing basis. This product trial will create the routine for your customers provided you can deliver a consistent product. John Matthews is the founder and president of Gray Cat Enterprises Inc., a strategic planning, operations and interim general management firm that specializes in helping businesses grow in the restaurant, convenience and general retail industries. With more than 25 years of senior-level experience in retail and a speaker at retailgroup events throughout the U.S., Matthews has recently written “Game-Changing Strategies For Retailers,” which is available on Amazon. In addition, he has two stepby-step manuals, “Local Store Marketing Manual for Retailers” and “Grand Opening Manual for Retailers,” which are available at graycatenterprises.com.

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8/22/19 11:26 AM


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Technology| Frictionless

FIGURING FRICTIONLESS Experts advise c-store retailers to begin their frictionless journey by defining a comprehensive “check-in” strategy. Erin Del Conte • Executive Editor

Creating a more frictionless experience for shoppers remains a hot button issue as c-store retailers weigh when, where and how to reduce pain points for customers, especially at checkout. CStore Decisions asked Crone Consulting LLC’s CEO Richard Crone and Managing Partner Heidi Liebenguth to share their insights on what retailers should consider before embarking on a journey to reduce friction. CStore Decisions (CSD): What does frictionless really mean to a retailer? Richard Crone & Heidi Liebenguth: Imagine a shopping nirvana. There would be no friction, only the enjoyment of finding what you really wanted at an affordable price, in a stimulating — or relaxing — environment that delights the senses. Is this faster? Not necessarily. It is pleasurable, taking as much time as the customer wants to spend. Frictionless would remove the aggravation of digging through things you don’t want, of standing around unproductively, of not being able to obtain goals.

Richard Crone

CSD: How do smaller retailers truly achieve a frictionless experience? RC & HL: Retailers can achieve

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personalization frictionlessly by emulating the Uber experience. ... There’s no delay at checkout because customers are already known and pre-authorized. When they’re done, they just walk out. Retailers too can interact oneto-one at scale using frictionless check-in. Invite customers to interact, share buying intent (responsive text, shopping lists, augmented voice). Provide tailored offers and customize the in-store journey. As with Uber, the best way to do this is with a pre-authenticated known customer within the retailer’s own five star-rated app, augmented by computer vision and artificial intelligence. C-stores don’t have to go it alone — numerous suppliers provide turn-key platforms for retrofitting legacy retail formats. Caveat Emptor: the varying approaches require careful due diligence. CSD: What problem(s) is frictionless checkout technology trying to solve? RC & HL: Ideally, frictionless checkout would eliminate waste: Wasted time for consumers, wasted space for retailers and wasted promotional dollars spent

advertising items consumers don’t want. The biggest problem isn’t checkout — it’s Heidi Liebenguth check-in — because most retailers don’t know their customers. Only by knowing the customers’ wants and needs can retailers deliver the right stuff to the right person at the right time. The promise of autonomous check-in is personalizing the shopping journey at scale. That’s why any form of “anonymous” autonomous checkout is a race to the bottom and commoditization. Retailers need to define a comprehensive “check-in” strategy before donating to others the life-blood of their merchandising concept, i.e. SKU-level, in-aisle and in-store data. Otherwise, retailers risk being further commoditized and removed from their customer relationships, especially when their customers checkout autonomously through third-party intermediaries. Caveat Emptor. Read the full Q&A at cstoredecisions.com/2019/08/19/ figuring-frictionless/. Heidi Liebenguth is managing partner, and Richard Crone is CEO, of Crone Consulting LLC, an independent advisory providing market insight and self-service strategy for retailers.

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8/21/19 1:13 PM


Technology | Energy Efficiency & LED

Energizing

the Bottom Line Whether upgrades or new builds, rebates and energy efficiency equal savings and sales. Thomas Mulloy • Senior Editor

There’s little doubt that LED lighting is paving the road to an energy efficient future. In barely more than a decade, LED lighting will be nearly ubiquitous, garnering around 84% share of the general illumination market by 2030, according to Global Market Insights’ “LED Market Size – Industry Share Report, 2019-2025.” Many c-store operators bought into the promise of energy efficiency early. After all, energy efficiency also means cost efficiency. “We started installing LED lighting in 2008,” said Niki DePhillips, senior vice president of store development for Des Moines, Iowa-based Kum & Go and its 400 stores in 11 states. “We have built over 100 stores with LED lighting and retrofitted many as well.” And Kum & Go is not alone. Numerous c-stores, as well as other industries, are catching on to the benefits of LED upgrades. Global Market Insights forecasted that the LED market will grow at a more than 28% compound annual growth rate (CAGR) through 2023, on its way to $45 billion that year — nearly triple what it was in 2014. Dan Soltis is vice president of real estate with CIMA Developers, the property arm of The PRIDE Stores, which operates 16 locations in the Chicagoland area. “All of them have been retrofitted with canopy fixtures, lot lighting fixtures,” said Soltis. “We’re still making our way through the interior. We haven’t quite gotten to all of them yet. But that’s on the agenda and somewhere on the priority list.” 88

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g

fast facts: • C-store retailers can find help for energy efficient upgrades logistically and financially. • LEDs are projected to reach 84% of general illumination by 2030, according to Global Market Insights.

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Technology | Energy Efficiency & LED

Kum & Go began upgrading its stores with LED lighting in 2008 and has built more than 100 stores with energy efficient lighting and other fixtures inside and outside. The company has 109 stores that are LEED certified.

INDOOR-OUTDOOR SAVINGS

Soltis said while it doesn’t matter where in the store an operator begins, the outdoor area is where the most usage exists, so it’s where you’ll see the most savings. “Just for an example, a typical canopy light is 400 watts,” said Soltis. “A lot of the new LED lights that we’re putting in are 100 to 150 watts.” In addition to the outdoor energy savings, LEDs make sense inside the c-store, too. First off, the smaller lighting units fit more easily into tighter shelf spaces, better highlighting product. They also run cooler than traditional lighting. Global Marketing Insights reported LED bulbs generate up to 90% less heat than incandescent bulbs — which is a bonus inside the cold vault as well as for the general efficiency of temperature control inside the building. “Reducing our energy consumption is a focus of ours,” said Kum & Go’s DePhillips. “We have an associate that is dedicated to managing our energy usage. One of his focus areas is to continue to upgrade lighting and equipment in older stores to become more energy efficient, as well.” Soltis estimated The PRIDE Stores have saved 20-25% through energy efficient upgrades. Energy efficiency is a no-brainer for new construction, too. “For the new builds, for our exterior lights, we have photocells,” Soltis said. “The photocells are basically activated when it gets darker (at) dusk. … We do have motion detectors in the bathrooms. All of our building signs have photocells on them, as well.” 90

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DePhillips said that Kum & Go has 165 stores that are built to the company’s internal green building standards, with 109 of those being LEED certified. “In our new builds, 100% of the store is lit with LED lighting,” she said. “We continue to look at other equipment or systems that are more energy efficient.” Kum & Go’s new headquarters is proof of that. Its parent company, Krause Group, moved into its new offices in Des Moines’ Krause Gateway Center, which was designed for LEED certification. GUIDANCE & REBATES

Don’t be intimidated by the process of energy efficiency upgrades, Soltis advised. C-store operators can expect a lot of help throughout the process, logistically and financially. “More and more, you have a lot of folks out there that are really specialized in this and can really take it from A to Z,” Soltis said. “If somebody is not too familiar with the programs or the applications, there are folks out there that really try to make it easy for you.” Electric utilities offer financial help in the form of rebates and other incentives that vary from supplier to supplier, DePhillips said. But there may also be financial assistance from unexpected sources that’ll help defray the initial costs, even fuel suppliers. “Take advantage of the programs that are out there because you have lighting programs, you have HVAC programs, you have interior, exterior lighting, garage lighting (programs),” Soltis said. “There’s many programs out there that you can utilize.” CSD

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CStoreDecisions Honors Weigel’s ®

as the 2019

Chain of the Year! Outstanding leadership, great stores and unsurpassed customer service are the hallmarks of the convenience store industry’s exceptional chains. Weigel’s checks each of these boxes and so much more. For decades, the company has been a respected member of the communities it serves, has built a strong foodservice program and has maintained a pristine reputation as a leading employer in the markets it operates. Following these guiding principles, CStore Decisions is proud to announce Weigel’s as the 2019 Convenience Store Chain of the Year. Weigel’s is the 30th winner of this prestigious award, considered the gold standard in convenience retailing.

Wednesday, October 2nd, 2019 6 to 9 pm Fox Theatre Atlanta

Register at: https://csdchainoftheyear2019.eventbrite.com/?ref=estw

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Technology | Security & Surveillance

LIGHTS, CAMERA, ACTION:

SURVEILLANCE IS A GROUP EFFORT Well-lit stores, surveillance equipment and community partnerships are a triple-threat strategy for improving c-store loss prevention. Brad Perkins • Contributing Editor

In July, employees of a Sonoma, Calif., Bonneau c-store noticed a car returning throughout the day. Chris Bambury, vice president and general manager of Bambury Inc., which runs three Bonneau c-stores, watched on surveillance as the car returned late at night. So, he called the sheriff’s department to come watch. “About 3 a.m., it all came together,” PREVENTING THEFT Bambury said. “In minutes, they swapped The National Retail Foundation’s “2019 their license plates, surveyed the business, Security Survey” noted loss prevention looking through the window with banprofessionals reported increases of 44% danas covering them up, and then used a in budget, 56% in technology and 29% in small sledgehammer to hit the front door.” staffing in 2018. But all they got was arrested. But it’s not just staffing and budgets With the combination of surveillance, protecting the tobacco, vape products coordination and a nearly impermeable and ATMs that are top of the list for theft. laminated glass door, which shatters the “It’s definitely lighting, surveillance, eiglass inside of it and triggers an alarm ther shutters or laminated glass, the best when hit, it was the perfect mix of prelocking system you can get,” Bambury vention tactics. said. “Because you may not be able to 92

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DOES YOUR VIDEO MANAGEMENT SYSTEM PROVIDE DATA INSIGHTS? What is the average time spent at the pump? Do customers notice promotional messages?

How many fuel customers visit the convenience store?

Which pumps are they coming from?

NOW IT CAN. Get answers to these questions and more with innovative video management solutions from ClickIt. Our solutions are designed to provide actionable business intelligence to maximize Pump Conversion.

PEOPLE COUNTING

Count pump traffic throughout the day to evaluate peak traffic times

HEAT MAPPING

Color coded traffic map with indicators of the “hot spots” of activity

VIRTUAL LINE UP

Anonymous ID that identifies an individual at the pump and tracks as they enter the store

Total Video Management Solutions Recording • Traffic Counting • Retail Video Analytics • Data Integration

www.clickitinc.com

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Technology | Security & Surveillance

A CCTV/DVR model is going to give us a lot of analytics for heat mapping and targeting certain things in the store. It will cut our investigating time in half.

stop them, but the more you can slow them down, the more likely they move on.” Just think of the Hollywood phrase, “lights, camera, action.” Lights. Outside the store, lighting helps store employees see suspicious activities, like when a potential robber sits at the air pump pretending to work on his car for hours, as happened at Bonneau. It also guards fuel and keeps customers safe. Camera. Sean Sportun, manager of security and loss prevention for Circle K’s Central Canada Division, added one loss prevention (LP) investigator and an LP analyst to his team this year. But it’s the addition of new, - Sean Sportun, manager of security higher-resolution and more and loss prevention for Circle K’s Central effective cameras that has Canada Division him most excited. “A CCTV/DVR model is going to give us a lot of analytics for heat mapping and targeting certain things in the store,” Sportun • Since deploying its comsaid. “It will cut our investigating time in half. We munity involvement can identify problems and deploy our resources to programs in 2007, Circle that problem before it gets out of hand. It can take K Canada has seen a 63% away the guesswork and look at point-of-sale data, then go back to video and marry those together. reduction in robberies We still have to verify and do the legwork after and saved $10.5 million that, but it will reduce the time (involved).” in potential trauma and He is also piloting cameras that can detect workers compensation gunshots and read license plates. He also sees future applications for facial recognition that go claims. beyond stopping crime to finding lost children or elderly adults. • More than 60% of retailers Action. The additional benefits of surveillance have implemented pointadd the community benefit that action produces. Putting together positive policing tactics like posiof-sale analytics, and tive ticketing and community meet-and-greets, another 25% expect they and having a good, collaborative relationship with will by 2020, according to police, whether it’s in sharing video or coordinatthe National Retail Federing theft surveillance, helps deter crime. Circle K has used its Crime Stoppers program ation (NRF)’s “2019 Securiand events that connect the police and local youth, ty Survey.” But fingerprint but it’s a new program of community street art muID and facial recognition rals in front of stores that have both reduced youth continue to lag. crime 64% in those areas and increased sales at the stores near the murals by $65,000. “Involving the community in what’s going on • The average dollar loss the mural, being part of the building of the mural, from robbery decreased breaking barriers with police and having them to $2,885 in FY2018. there is the community engagement piece,” Sportun said. “So the community looks at our store and While this continues a says, ‘I'm going to pick this brand.’” downward trend, it is still Improved lighting; cameras that integrate securihigher than the FY2014 ty, marketing and employee safety; and action with average, per NRF. the police and community all add up to greater theft deterrence. CSD

fast facts:

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CStoreDecisions.com is geared toward C-Store retailers, convenience store suppliers, and distributors looking to stay abreast of industry trends, new product offerings and category management best practices.

CStoreDecisions .com Making Connections that Drive Business

We use the latest media technology, delivering content the way you want it: print issues, digital issues, enewsletters, and videos. Use CStoreDecisions.com to help you strengthen your peer network with social engagement through Twitter, LinkedIn, Facebook, YouTube, Pinterest, and Google+. Browse, bookmark, share and interact with the most relevant industry content and people in the market.

Thank you to our Key Partners:

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Operations | R e a l E s t a t e

Playing the

Acquisitions

Game

As the convenience store acquisitions market continues to thrive, smaller marketers can carve out opportunities by considering some useful tips. Mark Radosevich • Contributing Editor

The c-store acquisitions market continues to enjoy brisk activity with elevated purchase multiples, continuing a multi-year run with an ever-growing stable of well-healed buyers actively looking for deals. Pristine store packages garner the most value, putting them virtually out of reach for acquisition-minded traditional marketers. Rather than be content to sit it out on the sidelines and yield the field to the big equity guys and national store operators, following are some thoughts and tips to enable smaller marketers to stay in the game. MULTI-STORE PACKAGES

Multi-store packages tend to be viewed as “pristine” when they comprise the following features: • The package includes a sufficient number of stores to enable a buyer to enter a new market where it doesn’t already have a presence. Generally 20 or more stores are optimal. • Store financial and volume performance is consistent across the chain with minimum inside sales of $1.8 million and fuel volume of 1.5 million gallons per store. • Facilities are all of a modern size and configuration. • Foodservice and other traditional revenue streams are the norm at all sites. Pristine store buyers are generally not concerned about whether a site is owned in fee, as owning the business enterprise is more important than owning the dirt. This inclination to not own the real estate and willingness to enter into long-term leases is one of the primary factors that drive the exceedingly high valuations of pristine store packages. Long-term leases with well-healed private or publically traded chain operators are then marketed post-closing to investors, thereby garnering the seller additional 96

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fast facts: • Pristine store packages garner the most value, putting them out of reach for most traditional marketers seeking acquisitions. • Multi-store packages that fall below a pristine level won’t attract the same buyer enthusiasm and values, thus leveling the playing field for traditional marketers.

proceeds from the sale. The combination of the proceeds from the initial sale plus the proceeds from the subsequent sale of the leases elevates the purchase multiples way past normal ranges and pushes them out of the reach of traditional marketer buyers. This approach only works with the sale of pristine store packages. Multi-store packages that fall below a pristine level will not garner the same buyer enthusiasm and values, thus leveling the playing field for traditional marketers. LESS-THAN-PRISTINE DEALS

Less-than-pristine deals are types of deals that may include a mix of good to average fee and leased company-operated stores, dealer leased sites, dealer supply contracts, and maybe a commercial fuels and lubes component. They often feature company-operated sites that are better suited for a lessee dealer or a straight dealer sale. In other words, the deal can’t be wrapped into a neat package with a bow on top. The primary focus for traditional marketers is ownership of the real estate, while sellers have a simple requirement of cash at closing and an industry exit that is as seamless as possible. Large store operators have a tendency to cherry-pick sites from a package, which complicates the overall divestiture process, putting them at a disadvantage versus buyers that are willing to take down the entire offering and sort it out post-closing, including divestitures or transitioning stores to alternate operational methods. Be prepared to place a reasonable value on deals

that fit within pre-established acquisition and growth plans, and don’t expect to steal anything. Multiples above 6.5 times EBITDAR (earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs) for fee simple properties are the norm right now. Paying a higher multiple may be warranted for choice synergistic deals. Remind the seller that marketer due diligence is usually less strenuous than that of larger operators, and there is less chance of a price re-trade at the end. Demonstrate sufficient financial capacity by being forthcoming with the sources of readily available capital. Engage a preferred lender in the early stages of the process, including having them provide a comfort letter confirming their willingness to fund the deal. Stay continuously engaged with the seller’s point person, and don’t be shy in asking for guidance on price or desired deal structure. If selected as the preferred buyer, develop a rationalization plan during due diligence, then be decisive with post-closing site divestitures or operational adjustments. Traditional marketers may not enjoy all of the advantages of the larger buyers on pristine deals, but with some forethought and preparation, they can still enjoy success with the numerous other deals that will be coming on the market over the next couple of years. Mark Radosevich is a strong industry advocate and 40-year petroleum professional. He is president of PetroActive Real Estate Services LLC. Contact him at mark@petroactive.net, (423) 442-1327, petroactive.net.

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2020 May 4-5

NASHVILLE TENNESSEE

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PRODUCTShowcase

Four-Ingredient Blended Burger Bush’s Best announced the Bush’s Best Blended Burger, a plant- and beef-based offering that looks, tastes and cooks like an all-beef burger, but has less fat and fewer calories. With Bush’s Best quality beans and mushrooms replacing 40% of the beef content, the Blended Burger has just four ingredients: beef, Bush’s Best Great Northern Beans, mushrooms and salt. Pre-formed, frozen, four-ounce raw patties make it easy for operators to give their guests a delicious burger that is gluten, allergen, dairy and soy free.

Bush Brothers and Co.

www.bushbeans.com

Heated Air Curtain Cabinets Hatco Corp.’s patented Flav-R-Savor Heated Air Curtain Cabinet effectively and safely keeps food at ideal serving temperatures without the use of doors, giving customers easy access to fresh, hot products. The FS3HAC features removable slanted or horizontal shelves with removable sign holders, balanced LED lighting and easy-to-use digital controls.

Hatco Corp.

www.hatcocorp.com

Sugar-Free Beef Jerky Jack Link’s Zero Sugar Beef Jerky is just that — all the satisfying flavor and fuel Jack Link’s fans love, without sugar. It is Jack Link’s first zero-sugar offering in the market. Made with 100% beef, no added MSG, nitrates and no preservatives, Jack Link’s Zero Sugar Beef Jerky is inspired by the iconic Link family recipe, now without any added sugar or artificial sweeteners. The suggested retail price (SRP) is $5.99 for the 2.3-ounce package and $7.99 for the 4.7-ounce.

Jack Link’s

www.jacklinks.com

All-Natural Hemp Rolling Paper Hempire, a Swisher brand, is the first all-natural, highest quality 100% hemp rolling paper available in the U.S. that delivers what customers are looking for in a clean smoking experience. Hempire offers 11 different quality papers, rolls, tips and packs that can satisfy any customer. Its paper and rolling paper accessories are manufactured with European expertise using vegan, pesticide-free and lead-free hemp. Hempire also uses innovative packaging with visible brand elements and cello wrappers to combat paper staleness and ensure freshness. Hempire is a plantbased solution for adult consumers seeking to live a sustainable lifestyle.

Swisher International Inc.

(800) 874-9720 • www.swisher.com/hempire cstoredecisions.com

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PRODUCTShowcase

Tropical Candy Rope Ferrara has launched NERDS Tropical Rope. NERDS continues to experience disruptive growth, increased distribution and unprecedented velocity. It first became available nationwide at 7-Eleven this past August. The soft candy rope is coated with tropical flavored NERDS for a sweet and tangy taste and joins NERDS’ existing Rope flavors, Rainbow and Very Berry. NERDS Tropical Rope is available in a 0.92-ounce size for a suggested retail price (SRP) of 99 cents to $1.39.

Ferrara Candy Co.

www.ferrarausa.com

Pancake and Sausage Bites New Jimmy Dean Pancakes & Sausage Bites from Tyson Foodservice help c-store operators enhance their all-day breakfast offerings from a trusted brand. With their fluffy pancake coating, savory sausage center and convenient format, Jimmy Dean Pancakes & Sausage Bites are the perfect on-the-go finger food to help drive traffic any time of day. Jimmy Dean Pancakes & Sausage Bites are fully cooked and easy to prepare in conventional ovens, microwaves, TurboChef and convection ovens, and will hold up to four hours in a warmer.

Tyson Foodservice

www.tysonfoodservice.com

Chesapeake Flavored Sauce Tulkoff Food Products Inc. launched Chesapeake Sauce, the newest addition to their foodservice flavored mayonnaise product line. Tulkoff’s Chesapeake Sauce was born out of the kitchen of the Calvert House Inn, a Maryland restaurant known worldwide for its Maryland-style crab cakes. The sauce was originally created so that when used for crab cakes, it only requires the sauce, a filler (typically bread crumbs) and crab meat. The product contains freshly made mayonnaise and a proprietary blend of bold seafood seasoning commonly known and recognized to the Maryland region.

Tulkoff Food Products Inc. www.tulkoff.com

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Limited-Edition Watermelon Cigarillo Customers will love what they find when they open the classic taste of the latest limited-edition offerings from White Owl & Game: White Owl Watermelon Smash & Game Watermelon. White Owl’s latest limited-edition flavor is truly a smash — Watermelon Smash — while Game Watermelon is a completely refreshing natural leaf cigarillo from Game. Both offerings are smooth, flavorful and seedless. White Owl Watermelon Smash and Game Watermelon are available in a ‘2 for 99 cents’ format, ‘2 for $1.49’ and a ‘save on 2’ package that allows for retail pricing flexibility.

Swedish Match North America

(800) 367-3677

customer.service@smna.com www.swedishmatch.com

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PRODUCTShowcase

Forecourt Products MasonWays Mobile Water Caddy easily rolls out fluids to replenish washer buckets at the pump islands — convenient for employees to get their job done fast. MasonWays Locked Emergency Spill Centers keeps equipment for dangerous toxic spills in one convenient location at the pump island or outdoors. MasonWays’ super-strong Indoor/Outdoor Stair Step display fixtures are impervious to weather and require no assembly. Available in three- and four-foot size options with two- or three-step risers. Manufactured with an advanced ‘no-seam’ technology that is durable, increases safety and is economically priced. Enhance your exterior forecourt and capture impulse sales with items like windshield washer fluid, rock salt or water.

MasonWays

(800) 837-2881 • info@masonways.com • www.masonways.com

Wind-Resistant Torch Flame Lighter Calico Brands Inc.’s new Scripto EZ-Squeeze Torch Flame features a squeezegrip ignition for easy lighting, wind-resistant torch flame, ergonomic design, visible fuel supply, refillable tank, angled nozzle and built-in hook for storage. The patented torch flame lights and stays lit in windy conditions and is perfect for tackling challenging outdoor lighting situations. The Scripto EZSqueeze Torch Flame lighter is available in a single pack with a suggested retail price (SRP) of $7.99. This lighter is also available in a variety of display vehicles such as a floor display, clip strip, counter display and open stock.

Calico Brands Inc.

(800) 544-4837, ext. 1113

marketing@calicobrands.com www.calicobrands.com cstoredecisions.com

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Raspberry Rosé-Flavored Chocolate Introducing DOVE Chocolate Bars in six bold new flavors inspired by the latest culinary trends. Raspberry Rosé, made with a layer of silky-smooth pink chocolate, is perfectly sweet with real rosé and raspberries over a layer of rich dark chocolate. These products are available nationwide. Plus, DOVE Chocolate PROMISES four-pack — the DOVE brand’s popular PROMISES format now lives in the checkout aisle and gives consumers the opportunity to take this silky-smooth treat on the go and share it with others.

Mars Wrigley Confectionery

www.mars.com

Natural Fruit Bars Ekoa bars are 100% natural dried fruit bars, with no sugar added, no preservatives and no other ingredients but the fruits. The bars are gluten free, vegan, lactose free and soy free. They come in four different flavors: Mango (two ingredients), Pineapple (two ingredients), Coconut (three ingredients) and Banana (one ingredient), with calories ranging from 100 to 150 depending on the bar. The serving size is 1.23 ounces.

Ekoa

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PRODUCTShowcase

Single-Serve Dressing Cups Columbus Vegetable Oils’ dressing cups — available in 1.25-ounce, 1.5-ounce and 2-ounce containers — are filled with dressing from Columbus’ Butcher Boy line. With nearly 30 dressings, sauces and dips to choose from, the cups are a solution for operators looking to offer individual portions of condiments to customers. The dressing cups were created to accompany grab-and-go items such as pizza, chicken wings, salads and wraps. From ranch to honey mustard to tartar sauce and pancake syrup, the dressing cups are gluten free and don’t require refrigeration. Private labeling is also available.

CBD Essential Oil Roller CB Distributors has introduced a new product to help you capitalize on sales in this exploding category. Global Widget’s Nature Script premium CBD topical line has introduced CBD Essential Oil Rollers, formulated with 125 milligrams of CBD and luxurious botanicals to create an invigorating aromatherapy experience. CBD Essential Oil Rollers come in sleek, convenient packaging. Each 10-milliliter bottle features a rollerball for easy application. CBD Essential Oil Rollers are available in a bright, citrusy focus blend and a calming sleep blend to appeal to a variety of consumer preferences.

Columbus Vegetable Oils

www.cvoils.com

CB Distributors

(888) 824-3256 • sales@cbprices.com • www.cbprices.com

Low-Calorie Coconut Drink ZICO was founded in 2004 and joined the Coca-Cola family of beverages in 2013. It’s packaged at the source in Thailand and provides naturally occurring electrolytes and potassium. ZICO COCO-REFRESH was announced in December 2018. The beverages are vibrant fusions of flavor with a splash of real coconut water. Each contains only 10 calories and is ionized for a pH of 7.5+. ZICO products are available in 16.9-fluidounce, clear, resealable PET bottles as well as in a new concentrate version for bubblers, which will be available in 2020.

The Coca-Cola Co.

www.coca-colacompany.com

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Combination Candy Bar Reese’s is taking over Take5. It has the perfect combination of five key ingredients: chocolate, peanut butter, caramel, peanuts and pretzels. Reese’s Take5 Bar is the ideal combination of salty, sweet, crunchy and chewy in one candy bar. The product is available now in standard bar (SRP 99 cents), king size bar (SRP $1.69) and snacksize bag (SRP $4.09).

The Hershey Co. www.hersheys.com

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Classifieds/Ad Index Baker Boy

39

Philip Morris USA

Blu

17

Pierce Chicken

Bob’s Red Mill

55

800.437.2008 / www.bakerboy.com 888.207.4588 / www.blu.com www.bobsredmill.com

Cardtronics

104

8 33.200.5250 www.cardtronics.com/CSDecisions

CB Distributors

5,7

Click It

93

888.824.3256 / www.cbprices.com www.clickitinc.om

Danone

888.620.9910 www.DanoneAwayFromHome.com

32-33

35

77

Sonic Drive-In

62

Pinnacle

85

Swedish Match

Prairie City Bakery

40

Premier Manufacturing, Inc.

69

Raybern’s

74

800.336.9876 / www.poultry.com 817.795.5555 / www.pinncorp.com www.pcbakery.com

800.272.8656 / www.manitou.us.com www.rayberns.com

Reliva

866.223.4367 / www.relivacbd.com

R.J. Reynolds

Del Monte

83

E-Alternative Solutions

59

800.950.3683 / www.freshdelmonte.com 877.373.0069 / www.LeapVapor.com

FIJI Water

13

888.426.3454

Franke Coffee

800.310.5710 / www.coffee.franke.com

Gulfcoast

81

www.engagetradepartners.com

Ruiz

www.ruizfoods.com

800.367.3677 www.zyn.com www.gamecigars.com

63

27 108

The J.M. Smucker Company

23

Transact Technologies

87

Tyson

43

Werner Meat Snacks

57

www.smuckerawayfromhome.com/powerups 877.748.4222 / www.BOHAsolutions.com www.TysonFoodservice.com

73

Smokey Mountain

9 45

Swisher

800.874.9720 www.hempire.com www.swishersweets.com

19

49

www.SmokeyMountainSales.com

866.332.9049 / www.sonicfranchises.com

107

Shamrock Farms 612.259.8848

888.384.7333 / www.solarihemp.com

800.459.6420 / www.wernerjerky.com

3

727.449.2296 / www.gulfcoast.com

Hatco

15

Hershey

21

888.815.8460 / www.hatcocorp.com www.HersheySolutions.com

Home Market Foods

Solari Hemp

2

28-29

800.367.8325 / www.HomeMarketFoods.com

Hoshizaki

67

Inline Plastics

75

JUUL

53

Krispy Krunchy

71

Liggett Vector Brands

41

Little Caesars

84

Little Debbie

37

MasonWays

105

www.hoshizakiamerica.com 800.826.5567 / www.inlineplastics.com www.juul.com 800.290.6097 / www.krispykrunchy.com 877.415.4100

800.553.5776 / www.LittleCaesars.com

800.315.6208 / www.LittleDebbieCStore.com 800.837.2881 / www.masonways.com

McLane

www.mclaneco.com/contact

North American Bancard

866.481.4604 / www.nynab.com

11 103

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BOOTH #3617

www.masonways.com 800-837-2881

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IndustryPerspective

Workforce Management:

Be an Enabler

Mobile-enabled, app-based solutions can engage today’s more tech-advanced employment pool.

Lisa Stewart • Impact 21

Retailers across all channels are continually looking for better ways to attract, onboard, train and engage new talent in a way that improves our retention. Yet one of the biggest issues for c-stores today remains retention of store employees. Year after year, we fail to move the needle. Wage increases and other incentives have not been enough to keep those hired, onboarded and trained employees long enough to bring down our turnover rates. The highest cost comes when we lose the employees we’ve trained after only weeks or months. ATTRACTING CANDIDATES

C-store retailers need to build a never-ending pipeline of candidates to handle turnover. To do so, many companies have been rethinking diversity and what it means to be a great employee or to offer great customer service. Appearance isn’t everything; customer service, however, is. While relaxing hair, piercings and tattoo policies have helped in attracting new associates and managers, regional differences in social norms still have many companies feeling they have opened a Pandora’s box in some more conservative markets. So, the dialogue con-

Tips For Success

• Close gaps in workforce / labor management practices — Improve practices for attracting new candidates, onboarding administration, training and learning to drive down costs and turnover rates. • Actively engage new talent — New hires need to feel they are key players. If they don’t, in one way or another, they will check out. • Be an enabler of employee facing solutions — App-based, self-serve solutions empower employees and reduce administrative costs. • Dedicate money, time and effort to your greatest customerfacing assets – Consider your store workforce a key opportunity to improve your brand, your customer experience and customer loyalty. 106

CSTORE DECISIONS •

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September 2019

tinues in many organizations on how far to relieve these long-standing policies and still maintain the desired brand image. Increased pay, incentives, benefits and relaxed employment policies are a start, but with increased employee costs, there has not been a significant impact on retention across the board. Increased solutions sourcing for planning labor, payroll and benefits administration, and workforce management continue to drive down administrative costs and automate very manual, monotonous tasks. Each is necessary given centralization in a chain environment where lean staffs don’t have the bandwidth and/or expertise to manage the store workforce. TECH TOOLS

There are mobile-enabled, app-based solutions to meet the changing, more tech-advanced employment pool — and not just millennials. The workforce is getting smarter, technology is allowing people to connect like never before, and employees have higher expectations of employers. They want to easily apply, onboard, train, trade shifts with other employees, work in multiple retail locations and easily pick up shifts when time allows. Employee-facing solutions are coming at lower costs. With improved app-based solutions, employees can download tools on their own devices for associate self-serve administration. When integrated, or part of a learning management solution, these tools become even more powerful for ongoing learning. Employee engagement is enhanced through gamification to reward learning and/or participation, acknowledgement for review of changing policies, procedures and communications. So, look inward. Be an enabler, and engage your teams. Lisa Stewart, co-founder and president of Impact 21, works with retailers, suppliers, manufacturers and solution providers to build business infrastructure and leverage returns on investment for corporate- and store-level technologies.

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8/21/19 7:39 PM


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Convenience Store Decisions September 2019  

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Convenience Store Decisions September 2019  

30 years of C-Store Industry Evolution As CStore Decisions celebrates its 30th anniversary, we look back on the major changes to the c-stor...

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