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Neon Marketplace Shines Light on Growth Neon Marketplace is set to debut its prototype design as it prepares to expand to 150 sites within five years via new-to-industry stores.

INSIDE Balancing Alcoholic Beverage Sets Five Ways to Boost Hot Coffee Sales Security: Caught on Camera

54 76 82 September 2021

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

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Leading Through Innovation

CStore Decisions is a three-time winner of the Neal Award, the American Business Press’ highest recognition of editorial excellence.

EDITORIAL ADVISORY BOARD Robert Buhler, President and CEO Open Pantry Food Marts • Pleasant Prairie, Wis. Lisa Dell’Alba, President and CEO Square One Markets • Bethlehem, Pa. Raymond Huff, President HJB Convenience Corp. • Lakewood, Colo. Bill Kent, President and CEO The Kent Cos. Inc. • Midland, Texas Patrick Lewis, Managing Partner Oasis Stop ‘N Go • Twin Falls, Idaho Reilly Robinson Musser, VP, Marketing & Merchandising Robinson Oil Corp. • Santa Clara, Calif. Bill Weigel, CEO Weigel’s Inc. • Knoxville, Tenn.

NATIONAL ADVISORY GROUP (NAG) BOARD Doug Galli (Board Chairman), Vice President/General Manager Reid Stores Inc./Crosby’s • Brockport, N.Y. Mary Banmiller, Director of Retail Operations Warrenton Oil Inc. • Truesdale, Mo. Greg Ehrlich, President Beck Suppliers Inc. • Fremont, Ohio Derek Gaskins, Senior VP, Merchandising/Procurement Yesway • Des Moines, Iowa 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. • Marcy, N.Y. Vernon Young, President and CEO Young Oil Co. • Piedmont, Ala.

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

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Caroline Filchak, Director, Wholesale Operations Clipper Petroleum • Flowery Branch, Ga. Cole Fountain, Director of Merchandise Gate Petroleum Co. • Jacksonville, Fla. Kalen Frese, Food Service Director Warrenton Oil Inc. • Warrenton, Mo.

Copyright 2021, 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.

Alex Garoutte, Director of Marketing The Kent Cos. Inc. • Midland, Texas Sharif Jamal, Corporate Brand Manager Chestnut Petroleum Inc. • New Paltz, N.Y.

CSTORE DECISIONS does not endorse any products, programs or services of advertisers or editorial contributors. Copyright 2021 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. ©

CSTORE DECISIONS •

September 2021

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V INNOCKING

E FIND MAOTRION AT INeNrsOheVySolutions.com H

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e s u o h r e Pow

CONTENTS september 2021

•

Number 9

•

Volume 32

CStoreDecisions

EDITOR’S MEMO

10 Dealing With the Labor Crunch FRONT END

14 Kevin Smartt Wraps Up Busy Year as NACS Chairman 20 Quick Bites: Customer Habits Evolve 22 Ken McMullen, CEO of Weigel’s, Passes Away 24 Nominate Next-Generation Leaders for CSD’s 40 Under 40 CATEGORY MANAGEMENT

40 Smokeless Stands Firm 48 Refreshing the Dispensed Segment 54 Balancing Alcoholic Beverage Sets 58 Merchandising the Snack Aisle 64 Sorting Out Health & Beauty FOODSERVICE

68 Hispanic Flavors Come Into Focus 76 Five Ways to Boost Hot Coffee Sales

COVER STORY

TECHNOLOGY

26 Neon Marketplace Shines

82 Security: Caught on Camera 88 The Power of Energy Efficiency

Light on Growth

OPERATIONS

94 Petro Mergers and Acquisitions Prognostications for 2022

Neon Marketplace is set to debut its prototype design as it prepares to expand to 150 sites within five years via new-to-industry stores. Cover photo courtesy of: Cordtsen Design Architecture (Architecture & Photography) Dash Design (Interior Design)

BACK END 96 Product Showcase 101 Ad Index 102 Industry Perspective: C-Store Opportunity: Pet CBD

48 8

CSTORE DECISIONS •

September 2021

cstoredecisions.com

Editor’s Memo

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

Dealing With the Labor Crunch The COVID-19 pandemic has been challenging for the convenience industry, but the difficulties have been compounded by legislation that, in some cases, pays prospective workers more money to stay home than they would receive from working. In fact, convenience store operators I’ve spoken with confirm that enhanced federal unemployment benefits are contributing to the labor shortages they’re experiencing. Those benefits — $300 a week on top of regular state payments — are set to expire after Labor Day. As the Wall Street Journal recently reported, with millions of Americans still out of work and job openings at a record high, now lawmakers are dealing with an unexpected problem: how to coax people back into the labor force. Lawmakers from both parties are considering incentives such as providing federal funding to pay for hiring bonuses for workers and expanded tax credits for employers. These are all well and good, but they are short-term solutions for what is emerging as a long-term problem. To deal with the crippling labor crunch, retailers have to examine and embrace new strategies and new technologies that position them as an employer of choice and reduce their dependence on people. I know that sounds counterintuitive for convenience stores because we are a people business, but there is no denying the impact self-checkout has had at big box chains, supermarkets and home improvement stores. Walmart, for example, has one or two employees manning a dozen self-checkout lanes. Amazon Fresh stores utilize fewer employees than that. Customers are now conditioned to check out on their own. What’s worse, during the pandemic, people have become used to ordering online and having items delivered by a third party, further eroding the value of face-to-face transactions. This really is distressing, but it’s also a reality that must be acknowledged. While I’m confident there will always be customers that enjoy the interaction with employees at their local c-store, the difficulting of finding great team members to represent your brand shows no signs of abating. This is a growing concern because not only are convenience retailers competing with other c-stores for workers, they are battling all of retail and manufacturing for the same workers. 10

CSTORE DECISIONS •

September 2021

One group of workers that is highly sought after is the millennial generation. On the face of a changing workplace, millennials are forecast to be the dominant demographic in 2025, with 87 million people. That’s a 14% increase compared to today. However, companies that are best positioned to attract these workers understand the kind of workplace millennials seek. Workplace behaviors of millennials differ signiﬁcantly from Baby Boomers. Some millennial characteristics are: work and life are integrated; egalitarian work culture; expect personal training and mentoring daily; must multitask and feel creative; must feel they are making a difference. Retailers should strategize how to tell their company story and how to make it appealing to this generation. Millennial-aged workers are less loyal, so c-stores must communicate to them that this is a place they belong. When it comes to why employees — millennials and otherwise — leave their jobs, study after study shows the main reason good workers jump ship is a bad manager. This is hardly some statistic you should just gloss over. In fact, human resources consultant Mel Kleiman has told me for the past two decades that if convenience store chains can either invest in a higher pay structure or create a more welcoming environment, you have to focus on the workplace culture. That’s what keeps people. If an employee is motivated only by money, they will always be a threat to walk out the door for the next higher-paying job. Understanding this is more important than ever. As you evaluate your HR strategy, don’t simply focus on how many openings you have and ﬁll shifts with any warm body. Start looking at solutions for this longterm challenge so that you have the people in place to grow your overall business. Tomorrow will be too late. This approach needs to start today.

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FRONT END Leadership Spotlight

Kevin Smartt Wraps Up Busy Year as NACS Chairman Despite the pandemic, convenience stores pushed forward to grow sales. On the homefront, the CEO of Texas Born (TXB) led the rebranding of his stores from Kwik Chek to TXB. John Lofstock • Editor-in-Chief

Providing great leadership during the best of times can make or break a business. Leadership during a global pandemic is downright daunting. People look to leaders for guidance on what to do, what to expect and how to act. During uncertain and fluid times, the need for strong, calm, trustworthy leadership is more important than ever. As Kevin Smartt, CEO of Texas Born (TXB), wraps up his year as chairman of the National Association of Convenience Stores (NACS), he has seen firsthand the importance of staying focused, remaining calm and being a guiding influence for his company and his peers across the industry. As the pandemic raged on the past 18 months, Smartt navigated a delicate balancing act of representing the industry in hearings before Congress with rebranding his own c-store chain from Kwik Chek to TXB. Either one of those would be a full-time job. 14

CSTORE DECISIONS •

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FRONT END Leadership Spotlight

Spicewood, Texas-based TXB recently opened its ﬁrst store since transitioning from the Kwik Chek brand. The new store is located in Georgetown, Texas.

“It’s all part of the business of convenience retailing,” food and beverage lineup, quality and locally sourced said Smartt, who will be succeeded as NACS Chairman products, and more. by Jared Scheeler, CEO of The Hub Convenience Stores “This rebrand is more than just a different logo or name; in North Dakota. this is a true reflection of who we are as a company,” “As an industry, we stepped up our game and provided Smartt said. “We want our guests to have the absolute great service and kept our doors open for our customers, best experience, whether it’s our fresh foods; versatile, often at times when we were the only game in town. That eco-friendly packaging; convenient technology; clean shows that Americans trust convenience stores, and we are environment; or hospitable employees. It all reflects the an important part of consumers’ everyday lives. We should TXB mission to ‘Leave ‘em Better.’” all be proud of the work we are doing.” Smartt sat down with CStore Decisions to discuss the During his tenure as NACS Chairman, Smartt lobbied past year and outline where the industry is headed over before Congress on a host of issues ranging from techthe next 12-18 months. nology standards to liability issues surrounding COVID-19. Providing leadership in this area is in Smartt’s blood. In CStore Decisions (CSD): What a challenging year. What addition to serving as NACS Chairman, he is the chairdid you learn about the c-store industry during 2020? man for Conexxus, a technology group dedicated to the Kevin Smartt (KS): It was a challenging and unique year, implementation of standards and advocacy for the conve- but among the biggest takeaways is the affirmation that nience store and petroleum market. He is also a member our industry and our people never wavered for a moment, of the boards of directors for Oklahoma Petroleum and despite the difficulties of COVID. It was inspirational to Convenience Store Association and the Texas Food & see how everybody showed up for work every day and Fuel Association, where he assists with various committook care of business. There are so many wonderful stotees. All of this while rebranding his chain of nearly 50 ries of our stores across America being there to serve our convenience stores in Texas and Oklahoma. customers, and in many cases just being a friend people In a project that has been several years in the making, could count on when everything looked so bleak. But we Smartt officially rebranded Kwik Chek to TXB, a move to already knew this about our industry. In small towns across reflect a more progressive retail offering. The modern, the country, we can be everything to consumers: the upscale brand is dynamic in its aesthetic appeal and grocery store, the gas station, the restaurant, the sponsor futuristic in its offering. of local youth sports teams. The list goes on. For decades, TXB markets have a host of features including premium we have endured through snowstorms, hurricanes, tornaelectric vehicle rapid-charging stations, an expansive does — any challenge — and we found a way to keep the 16

CSTORE DECISIONS •

September 2021

cstoredecisions.com

D E C N A V D A N O I T A R D Y H

3X THE ELECTROLYTES AND 1/4 THE SUGAR VS THE LEADING SPORTS DRINK *

SEE YOU IN CHICAGO AT NACS

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TXB’s mission is to “Leave ‘em Better” — from its fresh foods to its eco-friendly packaging, clean environment, hospitable employees and more.

lights on and the shelves stocked for our customers and, just as importantly, for first responders. What I am proud of is people have noticed how good our industry is, how good we are as neighbors and responsible businesses and that we are indeed the fabric of America. CSD: What were the biggest initiatives or challenges you worked on during your time as chairman? KS: There are a number of issues important to the industry that need attention. First and foremost, I testified in front of the U.S. Senate Judiciary Committee on behalf of NACS and its members, asking it to consider reasonable liability protections for responsible businesses during COVID-19. This helps protect our industry against frivolous lawsuits that could arise from COVID. Technology-wise, TruAge has been a big one for us. This is an innovative age-verification program that assures consumer privacy while increasing reliability of age verification. There have been several hearings before a House Financial Services Committee task force that deal with the issue of maintaining privacy in the age of digital identification. This is going to be a huge issue for the c-store industry. The charging infrastructure has been another big topic of conversation for us in terms of having a seat at the table and trying to make sure that, as technology advances, convenience stores have a level playing field. CSD: What big initiatives or challenges will persist during this next year? KS: Technology is always going to be a challenge. Whether it’s privacy laws, processing payments, social media or automated distribution, as an industry, we need to find the right balance to stay competitive and keep the playing field level. But the most important issue we are facing is likely go18

CSTORE DECISIONS •

September 2021

ing to be the labor market. I don’t think the challenges of hiring are going to subside anytime within the next year. We have to be innovative in our recruiting and retaining processes to deal with the labor shortages. Legislation is hurting our process. I want to be careful I’m not putting everyone in one basket, but it is hard to compete when we are offering full-time jobs again, and our pay has increased substantially, and we still can’t find enough bodies to work. When people that you’re trying to hire tell your recruiters and HR team that they’ve got more money in their checking account than they’ve ever had, why do they need to work, this is an issue that must be addressed. Legislation on tobacco will persist on all legislative levels for all tobacco products, so we need to stay on top of this and make our voices heard. I still think there is going to be some kind of tax reform to help pay for the infrastructure package, so this is another area where we must have a voice to articulate how increased taxes affect our industry and the communities we serve. CSD: We have seen so many categories come under fire the past few years: tobacco, foodservice regulations, minimum wage hikes, etc. How important is industry advocacy and having retailers getting involved in the legislative process? KS: This is absolutely critical. An opportunity exists for everyone in this industry to get involved in the legislative process. Don’t sit back thinking others have this covered because it’s too important. Your congressman, your senator, your local mayor — they want to hear from their constituents. We need to tell our story of how we support communities, how we are an employer of choice and how we are responsible businessmen and women. NACS sponsors ‘Day on the Hill.’ If you have not participated, come to D.C. and join us to learn how you can make a

cstoredecisions.com

INTRODUCING OUR NEW

Make everyday a celebration with a Birthday Cake Ooey Gooey!

The TXB brand is more than a different logo or a name, said CEO Kevin Smartt; it’s “a true reﬂection of who we are as a company.”

difference. If you can’t come to Washington, speak to your local legislators and tell them about the great work you are doing. Everyone’s voice is important, and collectively is how we are going to make a difference. CSD: As a whole, what do you think are the industry’s greatest strengths? What is the one area we should work to improve? KS: We have many great strengths, so as a whole I would lean on both foodservice and technology just because these are two key areas that can help us drive sales. These are two areas I would like to see our industry continue to evolve and develop because they are critical to our long-term success. When you look at the headwinds in our competitors around us, we don’t have a choice but to continue to evolve. We’re going to have to do that and do it quickly. Supermarkets and big box chains have mastered things like self-checkout. That’s one extremely successful step for dealing with the labor shortage. To improve, I would like to see operators focus a little more on future-prooﬁng the business and understanding how we are going to play in the next round of retail innovation. Our competitors understand that retail is constantly evolving, and they use technology to gain advantages. We need to understand the opportunities better. The other thing, again, is advocacy. We need to continue telling our story in a more prominent way. We keep America rolling, and we need our story to be heard. cstoredecisions.com

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quickBites CUSTOMER HABITS EVOLVE PANDEMIC SHOPPING SHIFTS Nielsen found the percent of customers using the following services has grown from before the pandemic to June 2021.

MEAL KITS

STACKING UP 42% of Americans have tried a meal kit service at least once this past year. 83% of American consumers believe meal kits encourage them to cut down their restaurant visits.

45% of Americans have tried both cook-and-eat and heat-and-eat meal kits. 41% of American subscribers opted for ‘meals for two’ plans. Source: Piplsay, “Are Meal Kits Here to Stay?” August 2021

% of Customers Pre-Pandemic

% of Customers June 2021

In-store shopping

78%

82%

Online ship to home

70%

77%

Online in-store pickup

25%

38%

Online curbside pickup

16%

36%

Order local home delivery

22%

32%

Source: Custom Nielsen study conducted June 2021 via an online survey, based on a weighted sample among P18+

MULTICULTURAL GROCERY SHOPPERS While all online shopper segments spent about 40% of their grocery dollars online, multicultural shoppers were most likely to report that they planned to increase online spending in the future. By demographic, those who said they expect to spend even more money online grocery shopping in the future included:

25%

of white shoppers

HOME HAPPY HOUR

With the pandemic still ongoing, the majority of customers reported planning to consume alcoholic beverages at home this summer and fall.

Where do you plan to drink alcoholic beverages most regularly this summer and fall?

54% At home 16% Restaurants, bars 15% Friends, family house 9% Beach, lake 5% Park, picnic Source: 2021 Drizly Consumer Report, survey of 1,000 Americans of legal drinking age, independent from Drizly’s customer base, in late June 2021

CSTORE DECISIONS •

September 2021

33%

of Black shoppers

40%

of Asian shoppers

29%

of Hispanic shoppers

While the majority of Black (36%), Hispanic (29%) and white shoppers (43%) consider low prices to be the most important grocery store attribute, Asian shoppers (40%) are more interested in convenience. Source: Acosta, “The Why? Behind the Buy: Multicultural Shopper Insights,” July 2021

CHASING DIGITAL

CUSTOMERS

Retailers see growth opportunities with digital outreach as well as obstacles to take advantage of these opportunities.

90% Want to innovate 49% Say existing tech hard to change 43% Lack resources to innovate Source: Bold Commerce and RSR Research, “Retail eCommerce in Context: The Next Iteration,” July 2021, survey of 100 large retailers

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FRONT END News

Ken McMullen, CEO of Weigel’s, Passes Away Bill Weigel, chairman of Weigel’s, described Ken McMullen as “a brother” and credited his 40-year legacy at Weigel’s as the driver of the company’s success. The 2022 NAG Scholarship will be named in his honor. A CSD Staff Report

Convenience store chain Weigel’s is mourning the loss of Ken McMullen, CEO of Weigel’s, who passed away unexpectedly on July 29. He was 73. Under McMullen’s leadership, Powell, Tenn.based Weigel’s added 49 convenience stores and developed its own bakery. His tenure and legacy at Weigel’s lasted 40 years, and the chain now has 70 stores. “Ken was like a brother to me,” said Bill Weigel, chairman of Weigel’s. “We’ve been together since 1981. He has been an integral part of the tough decisions we’ve had to make and the success our company has achieved. He leaves an amazing legacy not only here, but in the convenience store industry. We are all immensely blessed to have had Ken in our lives, and I know we will all miss him. I can only hope we will honor his legacy of servant leadership, inspiration, gratitude and for his life well-lived.” McMullen began his career at Weigel’s in 1981 as operations manager. He was a driving force in the expansion and growth of the company with his innovative sprit, servant leadership and expertise. McMullen was the 22

CSTORE DECISIONS •

September 2021

first non-family member to serve as president when he took on the role in 2001. In 2017, McMullen took the helm as CEO of Weigel’s, becoming the first non-family member to be appointed to the role. Through McMullen’s leadership, drive and perceptive ability to see forthcoming trends, Weigel’s was named CStore Decisions’ 2019 Convenience Store Chain of the Year. McMullen helped propel Weigel’s charity efforts, as well, specifically the Weigel Family Christmas, through his dedication in wanting to make a difference in the lives of East Tennessee’s community. The Weigel’s team has been an integral part of the National Advisory Group (NAG) and the Young Executives Organization (YEO) for more than three decades. When McMullen’s wife Lana passed away in 2019, the 2020 NAG Scholarship was dedicated in her honor. NAG will rename the 2022 Scholarship in McMullen’s honor. Applications for the Ken McMullen NAG Memorial Scholarship will open in December, said NAG Executive Director John Lofstock. McMullen is survived by his two daughters and three grandchildren.

cstoredecisions.com

FRONT END News

Nominate Next-Generation Leaders

for CSD’s 40 Under 40

Submit c-store retailer nominations for the 40 Under 40 by Sept. 20 using the link below. A CSD Staff Report

CStore Decisions (CSD) and the Young Executives Organization (YEO) need your help identifying next-generation leaders for our 2021 class of 40 Under 40 C-Store Leaders to Watch. Do you work with bright, up-and-coming young executives or next-generation leaders who are under 40 years old? In today’s tight labor market and age of digital disruption, convenience store chains need young executive talent who can lead the company into tomorrow. That’s why we’re recognizing young executives who are standing out at their c-store chains for their leadership skills. “The industry’s young executives and leaders of tomorrow face unique challenges as they grow their businesses in the competitive convenience store market. CSD’s 40 Under 40 is an annual list of the industry’s up-and-coming leaders whose ideas and abilities, either personally or as part of a team, have been responsible for helping to advance their business in a demonstrable way within the last 12 months,” said John Lofstock, executive director of the National Advisory Group (NAG) and editor-in-chief and vice president of content for CStore Decisions. “As we emerge from the pandemic, these individuals and their leadership are even more critical. We are proud to recognize these emerging leaders and grow YEO to serve their needs for industry education and networking.” WHO IS ELIGIBLE?

Nominees for the 40 Under 40 must be retailers from a convenience store or petroleum chain only. Nominations are welcome from all corners of the c-store business — executive level, operations, technology, foodservice, 24

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September 2021

human resources — anywhere within a convenience store business that requires leadership. Nominees must be 40 years old or younger through the end of 2021. While CSD will only recognize retailers in this prestigious 40 Under 40 list, nominations will be accepted from retailers, suppliers and other industry personnel. The full 40 Under 40 list will be published in CSD’s December issue. Nominations are due by Sept. 20, 2021. Enter a nomination here: bit.ly/40under40-2021. ABOUT YEO

The National Advisory Group’s Young Executives Organization (YEO) was formed specifically to addresses the unique challenges that young executives face today and help the industry’s next-generation leaders identify solutions with others in their age group. YEO’s mission is to cultivate young talent in the convenience store and petroleum industry through implementation of education and networking. For more on YEO, visit https://nagconvenience.com/yeo-about/. Please nominate your next-generation leader today for this prestigious list.

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MARKETPLACE SHINES LIGHT ON GROWTH Neon Marketplace is set to debut its prototype design as it prepares to expand to 150 sites within five years via new-to-industry stores. Erin Del Conte • Executive Editor

E H

Neon Marketplace arrived on the scene in mid-2020, opening two stores in New England in the middle of the COVID-19 pandemic at a time when most c-store retailers were grappling with a deluge of new and shifting operating practices. A year later, the Cranston, R.I.-based chain is ﬁnalizing a well-tested prototype design that incorporates its food-centric vision and omnichannel approach, which will roll out in Q4 with the opening of two new-to-industry stores. From there, Neon Marketplace is set to aggressively expand to 25 locations in 2022 within Rhode Island and Massachusetts, before growing to 150 sites within the next ﬁve years — all via new builds. Its omnichannel focus spans drive-through, order-ahead, delivery, a rewards app, as well as electric vehicle (EV) charging and, combined with its upscale proprietary food offering, positions Neon Marketplace as a modern convenience store that’s ready to scale. AN OPPORTUNITY

While the Neon Marketplace concept began in 2020, the chain can connect its roots back to the 1970s, when businessman George Giacobbi entered the c-store business, later branding his stores Patriot Petroleum convenience stores. His sons, Joseph Giacobbi and Nick Giacobbi, became involved in the family business. Nick Giacobbi went on to become the director of development for the Procaccianti Cos., a privately held real estate investment and management company. In 2020, the Giacobbi family divested their two existing locations — one in Middleton, R.I., and one in Portsmouth, R.I. — to Procaccianti Cos., which rebranded them in July and September 2020, launching the Neon Marketplace banner. Neon Marketplace is its own standalone company, but it works in close partnership with Procaccianti Cos., which is the owner and developer of the chain’s real estate. Neon Marketplace’s prototype design is set to launch with the opening of its third location in the fourth quarter of 2021.

After a year of testing, Neon Marketplace is ready to launch its prototype and grow to 25 stores in 2022. Industry veteran Peter Rasmussen (pictured right), director of operations for Neon Marketplace, is leading the charge. He joined the company in November 2020 after 17 years with Wawa.

“They handle real estate development as well as construction, and because they operate a large number of hotels across the country, we leverage a lot of their resources until it makes sense for us to bring them in internally ourselves,” noted industry veteran Peter Rasmussen, who joined the Neon Marketplace team as director of operations in November 2020. Rasmussen brings with him 17 years of experience from Wawa, where he held various executive positions and played a key role in the c-store chain’s Florida expansion. Neon Marketplace’s corporate leadership team as a whole has more than 45 collective years of Wawa experience. Over the past year, Neon Marketplace has been incorporating that expertise and using its two existing stores as testing grounds to develop its modern convenience concept that will roll out with its protype in Q4. That includes building out and testing the infrastructure in its existing stores, from its supply chain partners to its PDI back-office system to its Radiant point-of-sale interface, among other core elements. “These are never investments you would make if you just had two stores,” Rasmussen said. But Neon 28

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September 2021

Marketplace knew it needed a place to solve any glitches before scaling its footprint. Simultaneously, the chain has been training and developing its employees. “We have four great general managers on board now that worked in those two stores, and we’re excited that they’ll have at least six months of experience with Neon Marketplace before they lead our flagship models,” Rasmussen said. While New England is home to a number of strong c-store brands with quality food and coffee, Neon Marketplace saw an opportunity to combine a highquality coffee offering and proprietary food concept while raising the bar on convenience and omnichannel accessibility — all in one shop. Opening its first sites in the middle of a pandemic also gave the chain an opportunity to learn and adapt to changing market practices, including drive-through and delivery. Both will be key features when Neon Marketplace’s prototype opens in Q4 with two new-to-industry stores — one in Warwick, R.I., near the Providence Airport, and one in Seekonk, Mass. From a market perspective, the chain is focused on growing in Rhode Island and Massachusetts in the ‘Boston Providence Corridor.’

cstoredecisions.com

Leading Together:

SPONSORED EDITORIAL

A conversation between CStore Decisions and Reynolds American Inc. Engaging Employees John Lofstock

CStore Decisions Editor-in-Chief

Sandro Ribeiro

Reynolds Marketing Services Company Vice President National Sales

Reynolds is part of the British American Tobacco (BAT) group of companies, and I understand you started your career with BAT. Many of our readers are retail executives. From your global experience what do you believe is the most important part of building effective, inspired, and devoted teams? I believe we must provide the right conditions for people to operate effectively: provide clear direction, resources, and the right level of autonomy to operate in a fast and agile environment; recognize their achievements, the small and big ones; and support them when they face difficult challenges. It’s critical to listen to employees, collect feedback, be transparent, provide clear direction and be consistent. We must stimulate business ownership and accountability behavior. Employees should understand why decisions are made and be considered as part of the process so that they have a sense of ownership.

Last year, the global labor market changed significantly. What do you believe every leader must do to continue to attract the best talent to their organization? Leaders are responsible for facilitating the right conditions to work, no matter how the workplace needs to evolve. It’s not about an in-person or a virtual model; it is about business presence, great leadership, modern organization, and diverse teams. It starts by listening to people and showing them that they are part of a larger whole.

*Reynolds American Inc. and its operating companies (collectively referred to here as “Reynolds”)

What is your number one goal for your team when working with retail executives? How does the Reynolds vision support that goal moving forward? Our primary goal is to deliver A Better Tomorrow™ for our adult nicotine consumers, retail customers and society while reaching our business ambition to achieve market leadership in the United States Market. We must be able to clearly explain what it means and how we will build “A Better Tomorrow™,” and why we want to be leaders in the U.S. market. Our strategy is simple – partnership with our customers. It may be cliché, but it is a win-win partnership. Reynolds will succeed because of our strong business relationship with our partners. We build together. We win together.

Based off your years of global experience, what do you believe sets the U.S. convenience channel apart from the other markets you’ve worked? There are a couple reasons why the U.S. convenience channel is ahead of the rest of the world: its size, scale and level of development. The channel provides a vast quantity and quality of services that have been improved year-over-year for its customers. Also, its high level of digital capabilities develoment allows excellent connection with customers. The U.S. convenience channel can definitely be a strong example for the rest of the world, influencing this channel growth and development.

Neon Marketplace

New stores will feature six to eight gas islands in the forecourt with 12-16 fuel pumps. Neon Marketplace offers unbranded fuel. It’s also introducing electric vehicle charging stations.

As it sets its sights on growing to 25 locations through new builds by the end of 2022, Neon Marketplace expects to have 10 of those sites up and running by the end of Q2 before continuing to expand to 150 sites by 2026. PROTOTYPE PLANS

As it grows, Neon Marketplace is looking to build on at least 1.5 acres where possible. The chain’s ideal store size is 5,500 square feet, which the new Q4 locations will showcase, but it’s also developed 4,500and 6,500-square-foot store models. New stores will feature six to eight gas islands featuring 12-16 fuel pumps. Neon Marketplace offers unbranded fuel, giving it the power to buy from multiple suppliers. “We’ve really set up a beautiful infrastructure 30

CSTORE DECISIONS •

September 2021

where we have many fuel suppliers, and we have diversity in the different ways that we can buy, and it allows us to deliver that value to the consumer,” Rasmussen said. Green energy is also a major focus for the chain. Neon Marketplace is currently installing EV chargers at one of its existing locations and plans to include EV charging at future sites. It is partnering with both Tesla and ChargePoint and is speaking with additional providers as it prepares to stay nimble until it has a feel for the most sustainable models as EV evolves. “Our first several sites will feature Tesla superchargers, but we’re looking across the entire energy channel to see how EV evolves — and looking to evolve with it,” Rasmussen said. Neon Marketplace’s focus on EV charging is about “doing the right things,” he added. “We want to be a place where consumers can get the energy that they need to move on. We believe EV is a part of the future. There’s certainly great environmental benefits for it, and we want to be a part of that,” he said. “Gasoline is still very important, and it will be for a long time … but we want to have EV as well. It’s part of our values and our beliefs.” If the sizeable forecourt is any indication, Neon Marketplace is designing its prototype to impress. Once customers step inside a new Neon Marketplace store, they are greeted by a large foodservice area, featuring an 800-degree artisan pizza oven as the focal point, where the chain prepares fresh-made pizza. The surrounding counter features the word “pick-up” directing customers who are stopping in for food they ordered ahead, while digital screens feature beauty shots of sandwiches and list menu items.

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Neon Marketplace partnered with Middletown, R.I.-based Cordtsen Design Architecture on the building design and New York City-based Dash Design on the interior design, which features an open layout with wood and stone accents throughout. The layout features four registers, as well as a drivethrough with register, 10 doors for packaged beverages and a “beer and beyond” section featuring two doors of single-serve alcoholic beverages, plus a walk-in beer cooler. The sales floor includes 66 feet of low-profile linear shelving where customers can find their favorite national brands, but the chain is also working to feature local products and products from minority- and women-owned businesses. Extra attention went into designing the restrooms, which feature airport-style doorways and a touchless experience. The stores also feature indoor and outdoor seating areas and self-service lottery kiosks.

CSTORE DECISIONS •

September 2021

“With EV charging, you may have 15-25 minutes or so where you need a place to hang out,” Rasmussen said. “So, that’s where we’re also looking to our stores to offer a nice indoor seating area, outdoor seating area — a place where you can hang, have a meal, get a cup of coffee. We’re there for you 24 hours a day. And it’s a place that you would want to be.” FOOD-CENTRIC

Neon Marketplace’s vision is to “dynamically change the perception of a convenience store to that of a food destination where friendly colleagues provide premium products at bright, clean and technology-driven stores.” As such, proprietary foodservice is an extensive focus for the chain, starting with its 800-degree artisan pizza oven. “We get fresh dough delivered every day,” Rasmussen said. “We press it. We add sauce, cheese

cstoredecisions.com

Neon Marketplace saw an opportunity to combine a high-quality coffee offering and proprietary food concept while raising the bar on convenience and omnichannel accessibility — all in one shop.

and the toppings, and we cook it in the fire oven, baking it to perfection. So, we spent a lot of time with the manufacturer, and we’re continuing to work with them on the culinary development.” The pizza oven cooks eight large pizzas at a time and delivers a quality level not often associated with c-stores. The chain is set to provide both traditional and breakfast pizzas with the opening of its third location. The proprietary foodservice offering also includes grinders and sandwiches on fresh-baked bread, as well as burgers. A grab-and-go section features hot prepared breakfast sandwiches, as well as cold salads and sandwiches. “We set up an amazing bakery partner who delivers fresh to our store every day,” Rasmussen said. “Our bread is baked fresh and delivered every single morning. We have fresh cookies and doughnuts every day.” 34

CSTORE DECISIONS •

September 2021

Coffee represents a signature focus for the chain. Neon Marketplace features bean-to-cup coffee dispensers, so customers can serve themselves, as well as a full barista program, where customers can order lattes or espresso-based beverages via a touchscreen. “We truly feel that bean-to-cup is the future and a standard,” Rasmussen said. “We want to provide the customer with a fresh cup of coffee instantly with the technology that’s available today with quality aroma and taste. And there are a couple other places in New England that have that, but for the most part, we’ll be the first major chain that has it in this market.” Going forward, Neon Marketplace plans to provide a consistent food offering across its footprint. “As we expand to different footprints, we’ll do some market customization, but our core offer will remain the same and evolve,” Rasmussen said.

cstoredecisions.com

Neon Marketplace

The drive-through will be a key service for its foodservice offering. Neon Marketplace partnered with The Howard Co. to launch a drive-through with a large digital interface. “We’re doing it in a big way, and we have a lot to learn,” Rasmussen said. “It’s interesting because it’s a tough one to benchmark as drive-through has been new to the industry.” Neon Marketplace is currently fine-tuning its drivethrough offering, finding the sweet spot between having a sizeable assortment, but one that isn’t so big it starts to impact speed. For now, drive-through customers will be able to order via the food menu, as well as from a menu of limited c-store offerings. The chain hopes to encourage drive-through customers to order ahead via the Neon Marketplace

app if they wish to place an expanded order. “We’re building out our app with a goal that we have our entire proprietary food and beverage offer on it as well as having at least 200 convenience items,” Rasmussen said. “It’s about giving the consumer choices. At the end of the day, we want you to come in. But if you don’t want to leave the house, we’ll deliver to you. If you want us to come curbside, that’s fine. If you want to do the drivethrough, that works, too. It’s about really giving the consumer the option of what they need in that moment for convenience.” AN APP FOR THAT

Neon Marketplace’s ‘Neon Rewards’ app will play a big role in expanding that convenience. The app is currently in the final stages of testing and set to launch with the third location in Q4. PDI is the developer of its Neon Rewards app, while it partnered with Vroom Delivery to create its in-app mobile ordering platform and with DoorDash on the door-to-door delivery. The chain’s foodservice is also available via third-party delivery apps, including Uber Eats, DoorDash and Grubhub. Neon Marketplace views third-party delivery platforms as a place to start gaining share of wallet as it continues to build its own infrastructure and convert customers to its Neon Rewards app and continue to create a “GoPuff-like experience.” “We really admire GoPuff and what they’ve done in the convenience industry,” Rasmussen said. “They operate off of dark sites, and now they have foodservice, as well. I think that is really the ultimate benchmark of what has been done in convenience from a delivery perspective. And I think a differentiator for us is that, yes, we can offer that, but then we have brick-and-mortar stores, as well.” The Neon Rewards app features a points-based system that includes several club programs for coffee, pizza and other popular products, so customers can get an item free after ordering so many cups of coffee or pizzas. In addition, customProprietary foodservice is an extensive focus for the chain, starting with ers will have the opportunity to earn and its 800-degree artisan pizza oven. Fresh dough for the pizza crusts is redeem points for both fuel and in-store delivered to the stores daily, and the pizzas are prepared on-site. With merchandise. the new app set to launch, customers will be able to order ahead and But perhaps the biggest driver for the pick up their pizza at the counter or via the drive-through window. chain is the app’s order-ahead capability.

CSTORE DECISIONS •

September 2021

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Neon Marketplace features indoor and outdoor seating areas for guests. This allows customers, including those who might need to wait 15-25 minutes for EV charging, to have a comfortable area to hang out while having a slice of pizza or a cup of fresh-brewed coffee.

“When you look at the primary goal of the app, it’s to allow the consumer to order and pay ahead to keep them going,” Rasmussen said. “We have a choice with our time. We want to give the consumer the option to protect their time if they’re on the go; or if they want to chat with us and hang out, we love that, too.” Neon Marketplace doesn’t believe in restricting customers when it comes to payment, whether that’s Apple Pay, credit cards or other emerging payments. For example, the stores don’t offer a cash or ACH discount vs. credit card price at the pump. “While we certainly would love for customers to use the Neon Rewards app to pay, we don’t force them to,” Rasmussen said. “We give the same value for everyone. We work really hard with multiple suppliers to get fuel at the best cost so we can have the most competitive retail possible, no matter how customers want to pay.” Between its drive-through, delivery, payment options and mobile app, Neon Marketplace is looking to make the customer experience as frictionless as possible. “We’re interested in self-checkout,” Rasmussen added. “We do believe that we’ll test that at some point — not in the initial stores, but our technology can certainly upgrade to that.” He’s also watching the trajectory of autonomous locations. But for now, Neon Marketplace is focused on prioritizing the programs it has and mastering their execution. 38

CSTORE DECISIONS •

September 2021

PEOPLE-FIRST CULTURE

As Neon Marketplace looks to create a warm and friendly shopping experience for its c-store customers, it knows its employees, whom they refer to as colleagues, are central to creating those connections. “We’re a very people-focused organization, and we’re focused on building a strong, motivated, diverse team and giving everybody the opportunity to grow if they want,” Rasmussen said. Neon Marketplace is serious about inclusiveness. Its corporate leadership team is comprised of 80% women. In addition to treating employees with a sense of friendship and respect, it wants to provide staff members with a path forward, whether an employee is seeking to grow into a management role and beyond or simply looking for a part-time position with desirable pay and hours. “We’re focused on making sure that our compensation and our beneﬁts programs are built to make us an attractive employer,” he said. “If somebody wants to grow with us, we’ll do everything in our power to give them the opportunity to achieve as much as they can and really have a life-changing experience.” “We know that if our team members are happy, that delivers a great customer experience,” Rasmussen said. “Our goal is to provide a ﬁrst-rate customer experience that will help keep our customers moving forward, but will always keep them coming back.” CSD cstoredecisions.com

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CSTORE DECISIONS •

September 2021

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Category Management | Smokeless

There’s a new type of tobacco customer shopping at convenience stores — one who is more willing to cross over between product families. For example, category managers report smokeless tobacco users now like to mix in oral nicotine products, especially pouches. “The growth in oral tobacco-derived nicotine appears to be coming from multiple categories, which speaks to true consumer poly-usage,” said Kevin Harder, Yesway senior category manager, tobacco and car wash, for more than 400 Yesway and Allsup’s stores in nine states throughout the Midwest, West and South. “The popularity of these products has created discussion among tobacco industry professionals, and the consensus is certainly that there is some measure of cross-category cannibalization. Like vapor for combustibles, nicotine pouches

offer a form factor, which is familiar to the moist consumer but with a more favorable risk profile,” added Adam Long, senior category manager at The Rutter’s Cos. Headquartered in York, Pa., the familymanaged group of companies operates 79 c-store locations in Pennsylvania, Maryland and West Virginia. “We’ve proactively tailored our in-store assortments to leverage the potential of this new and growing category. We offer full assortments for ZYN, On! and Velo. We’ve also added Rogue SKUs to our assortment in the past six months,” he continued. “We’re very happy with what the segment has contributed to total nicotine sales.” Ben Brooks, category manager for Nouria Energy, also started selling Rogue this year, as well as added more flavors at the Worcester, Mass.-based company’s 146 convenience stores across five states. However, it’s also his observation that chewing tobacco and snus have dipped a bit.

Sales Spotlight

Despite price drops, spitless tobacco continues to gain in dollars and units. 4 wks ending 7/11/21

12 wks ending 7/11/21

52 wks ending 7/11/21

1.9%

-0.1%

0.4%

49.5%

43.7%

47.6%

4 wks ending 7/11/21

12 wks ending 7/11/21

52 wks ending 7/11/21

Chewing tobacco/snuff

-4.9%

-6.1%

-7.9%

Spitless tobacco

53.7%

50.5%

52.9%

Change in Price/Unit

4 wks ending 7/11/21

12 wks ending 7/11/21

52 wks ending 7/11/21

Chewing tobacco/snuff

$0.43

$0.38

$0.52

Spitless tobacco

-$0.14

-$0.23

-$0.18

Dollar Sales Chewing tobacco/snuff Spitless tobacco

Unit Sales

Source: IRI, a Chicago-based market research firm, Total U.S. Convenience, ending July 11, 2021; received Aug. 6, 2021

CSTORE DECISIONS •

September 2021

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Category Management | Smokeless

“Yes, traditional smokeless products have been impacted by modern oral pouches. They seem to not be growing at the same rate as before,” Brooks explained. “We have had to adjust planograms to fit a larger assortment of modern nicotine pouches. Depending on a location’s overall tobacco space, the adjustments come from a variety of different subcategories.” Market analyses confirm the growing popularity of spitless tobacco products, such as pouches, and the slowdown for snuff. According to the National Association of Convenience Stores (NACS), sales for chewing tobacco during the first half of 2020 posted gains — up 7.4% for Q1 and 8.7% in Q2. However, that paled considerably in comparison with pouches, which boasted an increase of 470% for the first six months of last year, per Nielsen data. That trend has carried into this year. IRI reported spitless tobacco dollar sales in U.S. convenience stores climbed more than 40% for each four-, 12- and 52-week period ending July 11. Unit sales jumped more than 50% for each period, too. What’s more, price per unit fell for spitless tobacco, while costs inched upward for chewing tobacco/snuff. Harder noted that price changes also influence consumers’ choices. “Manufacturer price increases continue to drive customers to seek value options or to take advantage of multi-can/loyalty offerings to obtain savings,” he said. 44

CSTORE DECISIONS •

September 2021

FLAVOR BAN PROPOSALS

Despite the strong sales performances, legislative restrictions block some convenience stores from fully taking advantage of this trending other tobacco products (OTP) segment. “At our locations, we carry Velo and ZYN, and sales are doing good; however, most of our locations are situated in areas with tobacco ordinances. We have seven locations, and three of them have ﬂavor bans, which makes cstoredecisions.com

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Category Management | Smokeless

CSTORE DECISIONS •

September 2021

fast facts: • S pitless tobacco unit sales jumped more than 50%. • Prices fell for spitless tobacco, while costs for chewing tobacco/ snuff inched upward. • Eight states consider flavor bans, including smokeless tobacco.

the amount of SKUs we carry very minimal. By Jan. 1, five locations will have a flavor ban,” said Madalena Morgan, director of convenience store operations for Bobby and Steve’s Auto World, a chain headquartered in Minneapolis. Pew Charitable Trusts reported this spring that at least eight states are considering bans on all flavored tobacco products, including smokeless tobacco. “We’ve already seen how harmful flavor bans are for people who vape by pressuring them back to smoking or buying products from informal sources,” said Alex Clark, CEO for Consumer Advocates for Smoke-Free Alternatives Association (CASAA), a nonprofit advocacy organization for consumers seeking reduced-harm tobacco products. “There’s no reason to expect a different result from banning other flavored smoke-free options like snus, nicotine pouches and moist snuff.” CSD

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Category Management | Dispensed Beverage

Refreshing the Dispensed

Segment

Many c-stores used pandemic self-service pauses as an opportunity to evaluate and update their dispensed beverage segment. Now retailers are looking to carry summer sales momentum into the fall. Marilyn Odesser-Torpey • Associate Editor

This summer brought customers back to the cold and dispensed beverage section at c-stores, after the COVID-19 pandemic impacted the category in many areas of the country during 2020 and early 2021, from self-service bans to supply disruptions. Many retailers used the disruption as an opportunity to re-evaluate their cold and frozen dispensed beverage section. With sales bouncing back, retailers are now looking for ways to drive the segment’s momentum beyond the summer season. During the pandemic, fear of contamination put the kibosh on fountain drink sales at the 27 Nittany MiniMart stores in Pennsylvania. First, customers turned to prepackaged beverages, then they slowly began returning to the fountain but now want behind-the-counter service over dispensing their own beverage. 48

CSTORE DECISIONS •

September 2021

cstoredecisions.com

“I think that’s how it’s going to stay, at least for the foreseeable future,” said Angela Gearhart, the chain’s food service category manager. In the meantime, MiniMart has continued working to build the category with new products and promotions. To kick off the summer season, the company replaced its slush machines with Frazil, which offers a wider variety of ﬂavors beyond the basics. Especially well received by customers have been the limitedtime offer (LTO) Bermuda Triangle (strawberry, banana and peach) and Rock and Roll (grape, cstoredecisions.com

blueberry and blue raspberry). Iced coffee, which is exploding in popularity across the country, is also growing in sales at MiniMart stores, Gearhart said. Each store is equipped with a bag-in-box machine. To incentivize sales, the stores tie in special deals such as buy so many, get one free or any-size fountain drink for 99 cents with a MinitRewards loyalty card. LTOs will also be rotated in to keep customer interest high, and there may also be some bundling opportunities with sandwiches, Gearhart noted. September 2021 • CSTORE DECISIONS

Category Management | Dispensed Beverage

SunStop Convenience Stores and Markets has continued to expand and update its dispensed cold and frozen beverage offerings throughout the pandemic.

Despite some challenges with product availability due to the pandemic, SunStop Convenience Stores and Markets, which has 80 locations in Alabama, Florida and Georgia, has continued to expand and update its dispensed cold and frozen beverage offerings, according to Michelle Weckstein, director of foodservice. In several of its Florida convenience stores, the company introduced Jarritos Freeze, a slushy variation of a favorite Mexican soda. Mandarin/Mandarina and Lime/Limon have been the most popular ﬂavors. In May, SunStop’s Icee and Fountain Club programs were rolled into the stores’ loyalty app. Once a customer purchases nine beverages, the 10th one is free. And a large fountain drink is 99 cents with any lunch or dinner LTO from the chain’s proprietary Eat’s Southern Cookin’ restaurants — an offer Weckstein said will continue through the fall. All traditional coffee brewers, including those for iced coffee, are set to be replaced with bean-to-cup 50

CSTORE DECISIONS •

September 2021

machines by the end of September. Each machine will make three different ﬂavors of iced coffee. Weckstein noted that SunStop will continue to invest back into the cold and frozen category with new fountain machines and nugget ice dispensers. The company is also testing frozen uncarbonated beverage machines in several locations as a potential replacement for its current frozen carbonated beverage offering. LOOKING TO FALL

Coming off a stellar summer of cold and frozen sales, Duchess Convenience Stores, with 119 locations in Ohio and one in West Virginia, is planning to keep “exciting new things” coming for the category as fall sets in, said Nathan Arnold, the company’s director of marketing. Arnold said the company sees “a lot of potential for growth” in cold and frozen, especially for coldbrew coffee. cstoredecisions.com

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Category Management | Dispensed Beverage

SunStop Convenience Stores and Markets is replacing all of its traditional coffee brewers with bean-to-cup machines, each of which make three different ﬂavors of iced coffee.

“National coffee chains are putting emphasis on cold brew in their advertising, so it makes sense for us to take advantage of this exposure,” Arnold explained. “Customers like it because it’s lower in acidity and high in caffeine, both of which they want year-round, so we are planning to rebrand and relaunch our iced as well as hot coffee in the coming months.” The stores are expanding their cold and frozen equipment and testing new ﬂavors and

Duchess Convenience Stores Director of Marketing Nathan Arnold said the chain sees “a lot of potential for growth” in cold and frozen beverages, especially cold-brew coffee. 52

CSTORE DECISIONS •

September 2021

fast facts: • C-stores reported strong summer frozen and cold dispensed beverage sales, with help from limitedtime offers. • Cold-brew and iced coffee are growing in popularity and offer an opportunity for retailers.

add-ins for the iced-coffee segment. They also plan to add new flavors to both the cold and frozen dispensed lineups, probably seasonal flavors or other LTOs. “Limited-time offers are a big part of our marketing strategy in many of our categories because we’ve had great success with them over the years,” Arnold said. He emphasized that, in addition to iced coffee, slushees are also spanning the seasons. Dispensed beverages are promoted in-store quite heavily including an ongoing “buy five drinks, get the sixth one free” program on Duchess’ Crown Card loyalty program. CSD cstoredecisions.com

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Category Management | Adult Beverages

Balancing Alcoholic

Beverage Sets After a pandemic-driven storm of new product innovation and increased customer demand, c-stores are seeing alcoholic beverage sets stabilize, but out-of-stocks still pose challenges in some areas of the country. Erin Del Conte • Executive Editor

At the end of last summer, the alcoholic beverage category at convenience stores was seeing a surge of new product innovation, shoppers were stocking up on big packs of beer and hard seltzer to drink at home, and retailers were combating out-of-stocks due to supply chain issues caused by the COVID-19 pandemic. A year later, pandemic lockdowns are over, new product launches have slowed, but the disruption still lingers. Various areas of the country are seeing differences in supply challenges and customer demands when it comes to the alcoholic beverage segment. “I think the word I would use for what I’m currently seeing in my beer sets is ‘stable,’” said Kim Cuellar, category manager for beer, wine and packaged beverage at Stillwater, Okla.-based OnCue Marketing LLC, which operates 70 c-store locations in Oklahoma and Texas. “It seems like at this point we are not seeing tons and tons of new innovations constantly being introduced. Customers have their favorite brands they pur54

CSTORE DECISIONS •

chase and are really becoming brand loyal, especially within seltzers.” Meanwhile, in the Chicagoland area, shifting supply challenges are the biggest difference Mario Spina, owner & CEO of The PRIDE Stores, has seen in the category compared to last year. “This time last year, the skinny cans were unavailable, and the distributors had issues supplying them,” he said.

September 2021

By contrast, today, supply issues are impacting bottles as well as every shape of can at the chain’s 15 Chicagoland sites and one Indiana location. “With bars opening, bottles are harder to stock, where before it was (just) cans,” Spina said. The PRIDE Stores is making daily changes to its alcoholic beverage sets to offset out-of-stocks. “One-offs have helped keep some of the holes filled, but we still are having the everyday beers not available, which discourages customers,” he said. “These issues create a need for the managers to hand-sell products and learn more about alcoholic beverages than the previous year.” In Oklahoma, beer supply at OnCue stores this summer has proved much more consistent compared to summer of 2020.

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“I know some bigger beer brands have recently announced they are retiring some slower-moving SKUs to allow for the packaging to be used for higher-velocity brands, which will help a lot,” Cuellar said. “For retailers, it’s key to work with distributors on figuring out similar-style packages to replace potential out-of-stocks with to ensure brand continuity — especially if you have a beer cave store where you may see a gaping hole from an out-of-stock.” The good news is consumption has been similar vs. the initial lockdown last year, with customers stocking up on beer and other alcoholic beverages to drink at home, Spina noted.

ratio of about 75% craft (including the large craft) to 25% seltzers and others,” Spina said. But each location is different. At a few PRIDE Stores, craft is less popular as the customer base gravitates toward imports. What falls under the “craft” designation today is also evolving with the trend. “Craft beer is becoming more of a sales word, as our favorite craft breweries have grown above the license/production specs that aren’t recognized as craft by some people — I believe in Illinois it is 120,000 BBL (beer barrels),” Spina said. “Look at Lagunitas, Revolution and many others around our area that sell incredibly well who are local but passed the BEER BOOST threshold to be considered craft.” Despite any lingering supply chalOnCue strongly supports local craft lenges, beer continues to be a major beer, and 48 of its sites feature beer draw for customers at The PRIDE caves. Overall beer sales have grown for Stores, with an increase in purchases the chain year over year, Cuellar noted. as product is available. “Almost all of our 70 locations have “While people are willing to spend extra space in a standalone cooler a little more on craft beer, they also dedicated to local craft,” she said. want the lower-priced macros. Cus“When it comes to your overall craft tomers are still pulling through the selection, demographics are key. We dry-hopped, fruited and New Enghave some locations where we carry land IPAs the most, in regard to craft,” two to three choices, and others where Spina said. “The days of over-hopping we have close to 100 selections.” beer in the boil to make them bitter Imports and super-premium beers are over, while fresh local is the trend.” have also been major growth drivers Nine of The PRIDE’s locations for OnCue. feature beer caves. “We try to keep Overall, 2021 has been “a wild primarily craft in the accessible doors year” for the chain’s alcoholic beverand the macros in the beer cave to a age category.

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“We had the largest beer category release for us ever with the Sonic Drive-In/COOP Ale Works Hard Seltzer. Customer were waiting for deliveries and trying to call and reserve the product. I’ve never seen anything like that before,” Cuellar said. Also on the hard seltzer front, fullflavored seltzers like Truly Punch and Truly Lemonade have seen strong sales at OnCue, as has variety pack No. 3 from White Claw. While hard seltzer sales growth is currently strong, Cuellar expects demand to start to level off in seltzer. For one, there are fewer new entries vying for space in the category compared to a year ago. “I think the major supplier players are in the market, and there’s very little room for new entrants (except Mountain Dew and Sonic). I don’t foresee a surge of new consumers to the category moving from beer or wine,” she said. “The consumer base is now developed and stable.” RTD COCKTAILS & WINE

Hard seltzer and ready-to-drink (RTD) cocktails skyrocketed as trends during the early days of the pandemic. Nearly a year and a half later, OnCue is watching RTD cocktails evolve. “Now that the seltzers have really shook out on what brands are winning and losing, RTD cocktails have become a huge focus for me,” Cuellar said. “It is definitely a tricky segment as well for states that don’t

September 2021 • CSTORE DECISIONS

Category Management | Adult Beverages

Tracking Beer Sales Trends

Overall beer is up 1% and flavored malt beverages (FMB)/cider is down 4.3% between May 1, 2021, and Aug. 1, 2021, vs. the same period last year, per data from National Retail Solutions (NRS). Imports continue to grow as the beer share leader in NRS stores. Typically, cigarettes, soft drinks and cigars are the most frequently purchased categories with beer. Vodka is the second most common purchase with hard seltzer. Beer is purchased as the only item in the basket about 10% more than FMB/cider, according to NRS.

July 2021 NRS Insights — Independent, small-format alcoholic beverage trends (Beer) Segment

Subsegment

$ % chg

$ shr of category

Chg

Unit % chg

Units per store per week chg

% of times purchased only within category

Beer

Above Premium

Import

7.6%

48.0

3.0

8.3%

9.6

39.2%

Beer

Domestic Premium

-2.8%

24.7

-1.0

-4.4%

-7.1

38.1%

Beer

Budget

Below Premium

-6.3%

10.2

-0.8

-8.4%

-10.7

38.8%

Beer

Above Premium

Craft

-13.0%

7.5

-1.2

-8.0%

-6.5

31.1%

Beer

Above Premium

Domestic Super Premium

5.3%

6.8

0.3

-1.5%

-0.7

32.5%

Beer

Budget

Malt Liquor

-8.0%

2.8

-0.3

-12.0%

-7.1

39.4%

Total Beer

1.0%

Category

Beer

-1.9%

Flavored Malt Beverage (FMB)/Cider FMB/Cider

FMB

Flavored Malt Beverage

4.0%

55.2

4.4

0.3%

-1.2

27.9%

FMB/Cider

FMB

Hard Seltzer

-13.5%

40.1

-4.3

-1.5%

-1.1

26.9%

FMB/Cider

Cider

-7.0%

4.7

-0.1

-9.3%

-0.5

22.6%

Total FMB/Cider

-4.3%

0.0

FMB/Cider

-0.5%

Data: National Retail Solutions (NRS) scan data of ~6,000 stores selling alcoholic beverages. All change mesasures are same store sales (3,456 stores) 5/1/21 - 8/1/21 vs 5/1/20 - 8/1/20

have liquor in convenience because it blends that line between singles, flavored malt beverage (FMB) and wine. Do you put them in the beer doors? Wine section? It really could go so many places.” RTD cocktails are considered part of the wine segment for OnCue because the cocktails they serve are technically wine-based. Top sellers include flavored margaritas, which are expanding into tetra packages. “I foresee the next RTD trend to be ‘zero sugar’ RTD cocktails, which could bring some of those seltzer drinkers back to the wine category,” she said. At The PRIDE Stores, RTD cocktail customers fit into one of two groups: those seeking handcrafted beverages and those looking for low-calorie. “As the price on the crafted cocktails went up, the low-calorie has 56

CSTORE DECISIONS •

seemed to flatten along with alcoholic seltzers,” Spina said. “Keeping a variety of both options has proved to be necessary.” But, like Cuellar, he noted that liquor laws can cause challenges for the retailers in this segment. “In order to sell either of these in Illinois, you have to have a liquor license that sells hard alcohol,” Spina said. “That alone has caused this category to not be a top product for The PRIDE. One smart brand created an agave wine and made margaritas. All of our locations have the ability to sell wine in 750-milliliter bottles, and this brand, Flybird, has excelled.” On the wine front, sparkling wine and champagne are growing the most, according to National Retail Solutions (NRS) scan data of approximately 6,000 stores from May 1,

September 2021

2021, to Aug. 1, 2021, vs. the same period in 2020. Total French Champagne is up 21.3%, and total other sparkling wine was up 15.9%. “The past few summers, they say rosé is going to be the hot new wine trend, and it has definitely grown with the introduction of some more relatable wine brands like 19 Crimes Cali Rosé with Snoop Dogg on the label,” Cuellar said. For The PRIDE Stores, California Cabernet has been the big seller this summer. During the pandemic, when restraurants closed, The PRIDE began selling wine usually meant for restaurants. “Now that we are allowed to sell wines we weren’t able to before COVID,” Spina said, “customers are used to grabbing them from our locations, and they are not slowing down.” CSD

cstoredecisions.com

Category Management | Snacks

merchandising the

snack Aisle

C-store retailers must balance their snack sets to meet a diverse range of customer needs today, from classic options to adventurous flavors and healthy alternatives. Howard Riell • Contributing Editor

Today’s customers are not only reaching for tried-and-true salty snacks, they’re also seeking out healthier options that are all-natural, low-sugar, nonGMO and/or contain no synthetics or artificial colors, flavors or sweeteners. C-store retailers report growing both indulgent and healthy snack segments to attract customers. “The rates at which consumers reach for both healthy and indulgent snacks reflect their ongoing quest to balance divergent needs,” noted Blaine Becker, senior director of marketing for Bellevue, Wash.-based The Hartman Group Inc. Among the most frequently consumed snacks, he added, are those that support physical health, such as fresh fruits and vegetables, snacks low in undesirable ingredients or high in nutrients, and those that support mental well-being. Alyssa Hangartner, flavor and ingredient trends

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analyst for London-based Mintel Group Ltd., noted that more than half of consumers prefer simple, basic flavors, which can serve as a foundation for a snacks portfolio. “Innovate through premium upgrades or nuanced versions of classic flavors to stand out in the crowded snack aisle,” she advised. “Alternative snack ingredients such as legumes, beans, seeds and vegetables can deliver texture, added nutrition, and of course flavors that can be good carriers of diverse seasonings to provide consumers with their ideal balance between health and indulgence when snacking.”

September 2021 • CSTORE DECISIONS

Category Management | Snacks

Mintel reports that more than half of consumers prefer simple, basic flavors. Premium versions or upgrades of the classics can help brands stand out in the crowded snack aisle.

OFF THE WALL

Knowing just what customers are looking for takes a c-store halfway to the goal line. “In the snack department, I am trending toward the items that can provide trendy and off-the-wall flavors,” noted Howard Magee, director of fuel management, operations and category management for The Carioca Co. in Phoenix, which owns and operates convenience stores throughout Arizona. “That includes anything hot — ghost pepper, habanero, Tabasco, etc.” Carioca’s assortment also includes flavors like Korean barbecue, wasabi, Sriracha and salted carmel. “Anything unique, I will give it a go,” Magee added. “Pork rinds, popcorn, chips, nuts, jerky. ... These all have crazy flavors — something different for everyone.” Jessica Catanzaro, director of purchasing for Green Valley Grocery, which operates more than 60 stores in the Las Vegas area, said her customers are 60

CSTORE DECISIONS •

September 2021

snacking on Takis Waves chips, fresh sandwiches, fresh chopped fruits and yogurt parfaits. The retailer’s job is simple, she said: “Keep them in stock.” Meanwhile, Sam Odeh, founder and CEO of Power Buying Dealers (PBD) USA Inc., of greater Chicago, which includes 25 owned and franchised locations in Illinois, Georgia and Florida, noted his stores are continuing to expand their healthy snack bars section. “Consumers want variety and constant new stuff. There is no loyalty to any item,” he said. Sales are being driven, at least in part, by careful merchandising and pricing that emphasizes value. In the absence of further disruption, Odeh predicted, both parts of the snack category — indulgent and healthy — should see more growth. Chips are the top-performing product category within salty snacks for Army & Air Force Exchange Service’s more than 475 c-stores, according to retail food buyer Dragana llic. “Flavor innovations are key

cstoredecisions.com

Category Management | Snacks

Fast Facts: • More than half of consumers prefer simple, basic flavors, which can serve as a foundation for a snacks portfolio, according to Mintel. • Salty snack products with alternative snack ingredients such as legumes, beans, seeds and vegetables can appeal to health-conscious customers. • Flavor innovation is helping retailers grow sales in the salty snacks segment.

C-store retailers report that flavor innovation and a strong variety of product options are helping to drive sales in the snacks category.

SPORTS SPURRING SNACK SALES

“With the effect that COVID had on the market, consumers are craving sports more than ever, and the salty snack category took advantage of 62

CSTORE DECISIONS •

September 2021

to continued growth in this category. Top brands include Frito-Lay, Pringles, Kettle and Takis.” In the military as elsewhere, shoppers became more health-conscious during the COVID-19 pandemic. “The Exchange is stocking more better-for-you snacks that include protein and plant-based ingredients,” Ilic reported. “Nuts, seeds and trail mix continue to perform well, with sales up 8% over last year. Wonderful Pistachios, Power Up trail mix and Blue Diamond almonds are among the top brands in this category.”

this,” reported Michael Pavone, president and CEO of Quench, a Harrisburg, Pa.-based food and beverage marketing firm. Pavone and his colleagues see a lot of brands using sponsorships as a vehicle to spread messaging and break out in the space. Flavor remains the focus in product innovation as a way to generate news and tap into a younger audience. “Flavor plus celebrity endorsements (combined) is also a shortcut to generating attention with consumers and retailers,” he said. To ratchet sales up further, Pavone added, some convenience stores are investing in their online platforms, shoppable ads and click-tocart to keep up with internet shopping behaviors and Amazon. CSD

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Category Management | Health & Beauty

Sorting Out

Health &Beauty While overall sales are flat, c-store consumers expect health and beauty/personal care items to be there when they need them. Thomas Mulloy • Senior Editor

When consumers think of stopping at a convenience store, health and beauty aids (HBA) and personal care items probably don’t rank high on the list of reasons. At least, not until that customer finds herself with a headache and no pain reliever or forgets to put on deodorant that morning.

CSTORE DECISIONS •

September 2021

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That’s when this often-overlooked category is very top of mind. Jodi Leibowitz, category manager for Rotten Robbie’s 35 stores in Northern California, said that while it’s a lower volume area of the store, for customers those become “need to have” items. “There’s probably only 10-15 SKUs that are really highly productive,” said Leibowitz. “The rest were just put in there because we think we have to have them.” While the health and beauty category’s convenience channel sales were flat for the 52-week period ending July 31, according to NielsenIQ data, there were some big swings among the category’s segments. First aid products rose 37.6% for the year, medical accessories — which includes masks — were up 35.3%, travel sets grew 28.4%, and cosmetics and nail grooming saw an uptick of 14%. Among the products that were down, the bath and shower segment dropped a hefty 43.6% followed by facial and skin care (19.6%), upper respiratory (15.8%), adult incontinence (15.2%) and sleeping and alertness aids (11%). NAVIGATING PANDEMIC SHIFTS

Pandemic lockdowns are likely to have influenced many of these segment shifts. That certainly applies to hand sanitizer, a strong seller during the past year. That’s now changed somewhat. Rotten Robbie carries two sizes of hand sanitizer in its HBA set: a 2.5-ounce and a four-ounce size. With the surge in the COVID-19 Delta variant, Leibowitz observed that demand for sanitizer seems to vary according to the different areas of the country. Where Rotten Robbie stores are located, it’s top of mind. “I think on the West Coast and probably urban areas — New York; Austin, Texas; probably the Bay Area — you’ll see a bigger tick up in masks and sanitizer,” she said. When it comes to masks, Rotten Robbie is carrying just the disposable type. By now, Leibowitz said, most customers already have their own nondisposable masks that they prefer. Leibowitz said that she’s assessing how much space to devote to Rotten Robbie’s HBA set and where in each store to place it. That can be a challenge. Every inch of display space is valuable. In addition to its standard convenience store, Rotten Robbie also has what Leibowitz called smaller “snack” stores that feature 10 cooler doors of beverages and 15 feet of gondola space for snacks and HBA.

cstoredecisions.com

September 2021 • CSTORE DECISIONS

Category Management | Health & Beauty

“Maybe (HBA) goes just to some type of different rack rather than being in set,” she explained. “Maybe it goes to a wall fixture or something like that. Those are the things we’re actually exploring. And I’ve done that in two stores (that are) smaller snack stores. I cut down, and I just put what the essentials were on the wall, and we sell out all the time because it’s the best assortment of all the SKUs we offer.” Rotten Robbie also uses the checkout area for some items. “I do some different things,” Leibowitz said. “Liquid NyQuil last year had the oneshots available. So rather than putting it in the set, they did these great little counter unit displays. We put that up by the register, and it sold out immediately.” Leibowitz said that checkout positioning is always good for “as needed” items. The checkout counter is also a good place to test new personal care products. “We try to look for little things like that to put on the counter units. …” she said. “And it’s a good way for c-stores to test to see, ‘Does that deserve a place in the HBA set?’” Product research at other outlets is a must. Leibowitz asks herself, “What does the customer really, actually need from us?” And then she’ll follow up by spending time at larger pharmacy or big box stores to see what items they’re carrying that her customers may want. As consumers grapple with a feeling of pandemic relief due to increasing vaccination rates darkened by the specter of the Delta variant, the size of the HBA set could go either way. “I’m looking forward to seeing what other people do with HBA,” said Leibowitz. “It’ll be interesting to see … if it grows or not.” CSD

fast facts:

• Annual health and beauty sales remained flat for the year. • Checkout displays are good for testing new items. • Geography dictates hand sanitizer sales.

HBA Sees Mixed Results Medical accessories were up 35.3% at c-stores driven by mask sales, while bath and shower products fell 43.6% as customer habits changed due to the COVID-19 pandemic in the 52 weeks ending July 31, 2021, according to NielsenIQ Total U.S. Convenience data. 52-Week Dollar Sales

1-Year % Change

Health & Beauty Care

$1.64 B

0.1%

Pain Relief

$338 M

2.0%

Vitamin

$271 M

10.4%

Upper Respiratory

$224 M

-15.8%

First Aid

$142 M

37.6%

Oral Hygiene

$124 M

-2.4%

Sexual Health

$123 M

3.7%

GI Care

$122 M

3.1%

Eye Care

$60.7 M

0.4%

Bath & Shower

$53.5 M

-43.6%

Feminine Care

$45.8 M

9.4%

Hair Care

$26.1 M

5.8%

Deodorant

$22.4 M

8.6%

Cosmetics and Nail Grooming

$14.4 M

14.0%

HBL

$14.1 M

-5.5%

Sun Care

$13.6 M

9.4%

Sleeping and Alertness Aides

$12.5 M

-11.0%

Hair Removal

$12.4 M

2.7%

Fragrances

$6.26 M

6.7%

Facial Skin Care

$2.44 M

-19.6%

Footcare

$2.35 M

11.9%

Medical Accessory

$993,152

35.3%

Travel Sets

$951,803

28.4%

Adult Incontinence

$445,793

-15.2%

Ear Care

$195,753

22.2%

Combination Packs

$80,883

38.9%

Product

Source: Nielsen IQ Total U.S. Convenience data for the 52 weeks ending July 31, 2021

CSTORE DECISIONS •

September 2021

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Foodservice | Hispanic Foods

Hispanic Flavors

Come Into Focus From burritos to tacos to empanadas and more, c-stores are featuring Hispanic flavors and foods — with a focus on fresh, made-to-order options for today’s consumers. Isabelle Gustafson • Associate Editor

Mexican foods like burritos and tacos have long been popular menu items, but c-stores are expanding further with other Hispanic or Latinx foods, like empanadas, tamales and more. Fresh ingredients and customization take the offer up a notch. Jacksonville, Fla.-based Gate Petroleum’s GATE Fresh Kitchen stores serve a variety of items made fresh every day, including empanadas, tamales and burritos, which Sara Wilson, GATE’s food service supervisor, said are popular among customers at its stores across Florida, Georgia, North Carolina and South Carolina. 68

CSTORE DECISIONS •

September 2021

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Foodservice | Hispanic Foods

CEFCO’s Steak Fajita Burrito features marinated steak paired with freshly prepared pico de gallo, lettuce, rice, black beans and shredded cheddar cheese with a side of guacamole.

And they’re not conﬁned to any daypart. Offers include breakfast styles, too, like breakfast burritos, as well as GATE’s sausage, egg, cheese and potato empanada, in addition to chicken and beef options. “GATE is continually evolving its foodservice offerings to satisfy our customers’ tastes and provide the on-the-go options they need,” said Wilson. Temple, Texas-based CEFCO Convenience Stores, with more than 200 stores in Texas, Alabama, Mississippi, Louisiana, Arkansas and Florida, offers a variety of tacos and burritos, all of which are made to order using fresh ingredients. CEFCO Director of Foodservice Jeff Foley pointed to the Steak Fajita Burrito as a customer favorite, featuring marinated steak paired with freshly prepared pico de gallo, lettuce, rice, black beans and shredded cheddar cheese with a side of guacamole. The hand-breaded fresh chicken, offered with a variety of sides and sauces, is another popular offer, he said.

CUSTOMIZE IT

CEFCO recently launched new self-ordering kiosks in two of its Texas-based CEFCO Kitchen locations. Both stores feature CEFCO Kitchen’s new menu lines, including made-to-order mac and cheese bowls, sandwiches, grilled cheese and new breakfast offerings to complement the current lineup of burritos, tacos, fried chicken and more.

Gate Petroleum’s GATE Fresh Kitchen stores serve a variety of items made fresh every day, including empanadas, tamales and burritos. 70

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September 2021

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Foodservice | Hispanic Foods

CEFCO added self-ordering kiosks to two of its Texas-based CEFCO Kitchen locations. Director of Foodservice Jeff Foley said he sees personalization as “the future of the c-store industry.”

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September 2021

“

Overall, 66% of c-store consumers say customization motivates them to visit a c-store over a competing foodservice location. In many ways, customization gives consumers that freshness cue they are looking for in c-store because they know it has to be at least partially made from scratch, often right in front of them. — Mike Kostyo, trendologist, Datassential

“

“We expect self-ordering kiosks to positively impact the customer experience at CEFCO by offering our customers’ favorite foods they’ve grown to love in a customizable format,” Foley said. Extras like sauces and toppings, too, enable customers to make an order their own. “We offer over 20 toppings and sauces for our burritos and tacos,” said Foley. “Some of our favorites are the Spicy Guacamole Salsa, Jalapeño Corn Salsa, Chipotle Ranch, Mild to Hot Buffalo sauces, Cholula, sour cream, guacamole and many more.” At GATE, popular condiments for customers to pair with the chain’s Hispanic food offerings and more include jalapeños, pico de gallo, salsa and onion, said Wilson. “GATE also offers a variety of sauces, queso, jalapeño cheese and chili.” “Consumers love customization,” conﬁrmed Datassential Trendologist Mike Kostyo. “In fact, customization is a real area of opportunity for c-stores.”

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Foodservice | Hispanic Foods

At GATE, popular condiments to pair with Hispanic food offerings and more include jalapeños, pico de gallo, salsa and onion.

When Datassential asked consumers about varithey know it has to be at least partially made from ous trends they were interested in when visiting scratch, often right in front of them.” their local c-store, customizable options rose toward Ultimately, Foley said, he sees personalization as the top, with over half of consumers (51%) noting “the future of the c-store industry.” they were interested in customizable burritos and “Customers are hyper-aware of what they are eattacos. Yet, according to Datassential, only 14% of ing now more than ever,” he said, “and this gives c-stores offer these items. each customer the ability to choose exactly what “Overall, 66% of c-store consumers say customiza- goes on his or her food. Some customers like loading tion motivates them to visit a c-store over a compet- their burritos with veggies, while others prefer ading foodservice location,” said Kostyo. “In many ditional meat. Giving customers the ability to choose ways, customization gives consumers that freshis what makes this program great and will continue ness cue they are looking for in c-store because shaping the future of CEFCO foodservice.” CSD

fast facts: • Hispanic food offers are customer favorites, and there’s a real opportunity for made-toorder burritos and tacos especially. • Over half of consumers (51%) said they were interested in customizable burritos and tacos, according to Datassential. Yet only 14% of c-stores offer these items. • Overall, 66% of c-store consumers say customization motivates them to visit a c-store over a competing foodservice location.

CEFCO’s new breakfast offerings complement the current lineup of burritos, tacos, fried chicken and more.

CSTORE DECISIONS •

September 2021

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Category Management | Coffee

5 Ways to Boost Hot Coffee Sales Retailers are upgrading and showcasing their hot coffee to fuel the rebuilding of breakfast business lost during the pandemic. Marilyn Odesser-Torpey • Associate Editor

C-store operators know a proﬁtable foodservice offering hinges on a high-quality coffee program. But after the COVID-19 pandemic paused some workplace commutes, many retailers watched their morning coffee sales plummet. Now, retailers are working to recapture coffee sales as more customers return to life as usual. 76

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Category Management | Coffee

Here are five ways to become the go-to coffee spot as morning commuter traffic revives:

1 CHAMPION LOCAL BRANDS

B-Quik, which has three stores in Louisiana, wanted its coffee to stand out in the marketplace, but management did not want to have to start from scratch on building their own brand — so they decided to focus on an already-beloved premium local brand. “People around our stores were raised on Community Coffee, and they seek it out,” explained David Schumaker, B-Quik’s general manager. Convenience stores can also make a strong statement by partnering with coffee roasters to develop co-branded offerings, roasts exclusive to the stores or exotic coffee origins, said Trevor Boomstra, director in the restaurants, hospitality and leisure practice at management consulting firm AlixPartners LLP.

another test sometime early next year. “It’s a sensual experience for customers because they can see and smell the coffee being brewed fresh just for them,” Cole said. The aroma of fresh brewing can also entice customers who come into the stores for other items. Cole added that timecrunched customers are surprised to find they can get in and out with a customized cup in under three minutes.

2 BREW IT YOURSELF

Bean-to-cup technology is gaining popularity as a growing number of consumers come to associate it with the freshest cup and ease and speed of dispensing, noted Paul Servais, retail food service director for the 770 Kwik Trip and Kwik Star stores in Minnesota, Wisconsin, Iowa and Illinois. Sixty of the chain’s locations offer bean-to-cup, and all remodels and new stores will include it. David Cole, category manager for Plaid Pantry’s 107 stores in Washington and Oregon, had just launched a test of bean-to-cup brewing in six locations in February 2020 when the pandemic shut everything down less than a month later. During that short test period, “store managers and customers really liked it,” he reported, and the chain is planning to do

CSTORE DECISIONS •

September 2021

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Category Management | Coffee

At B-Quik stores, Schumaker occasionally runs specials offering any size cup of coffee for 69 cents or 89 cents. “We hope the customers will choose the larger cup and stick with that when the promotion is over,” he said. To get the most bang for the promotional buck, retailers should give any special offer sufficient time to gain traction. Schumaker runs his promotions over three-month cycles because, as he explained, “for the first two weeks, customers don’t notice or read the signs.”

4 TRACK TRENDS

The health and wellness trend is one of the biggest trends in the food and beverage industries today, Boomstra pointed out. A simple way for retailers to give their coffee a healthier halo is to offer milk and creamers made from soy, almond, coconut or protein collagens in their condiment selections. The demands for online ordering and delivery took big leaps during the pandemic, and Boomstra believes those trends will continue as well. “To help offset a slow return of commuter morning routines, c-stores have a great opportunity to bundle coffee and fresh food for delivery to homes and offices,” he said.

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September 2021

Fast Facts: • P lant-based creamers, bean-to-cup coffee, and order-ahead and delivery services are top trends to watch for the hot dispensed category. • Don’t underestimate the power of best practices. Keeping the coffee bar clean and well-stocked can help position your chain as a coffee destination.

3 CENT-SIBLE SPECIALS

5 IF YOU CLEAN IT, THEY WILL COME

Even the most basic coffee area can be a draw for new and repeat customers if it’s always clean and fully stocked. This area is key because customers’ experience in this section is often the first impression they have of the store and can encourage — or discourage — them from doing any further shopping there. “Always be prepared so every customer has the best experience and is able to get in and out quickly,” Cole said. CSD

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CONVERSATIONS WITH WOMEN IN CONVENIENCE This year, CStore Decisions has featured Conversations with Women in Convenience as a series on our CStore Talks podcast to learn more about women’s experiences in the industry. This fall we’ll be chatting LIVE in a Zoom format with women executives to discuss how the generation we are born into has shaped our experiences in the workforce, the issues still disproportionately facing women today, finding our voices, building more inclusive workspaces and how women are driving changes in the workplace today.

DATES: Sept. 16, 2pm EST Erin Del Conte, Executive Editor

Oct. 26, 2pm EST Erin Del Conte, Executive Editor

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Technology | Loss Prevention

Caught on Camera Convenience retailers weigh in on loss prevention best practices — plus, one chain’s unconventional approach. Isabelle Gustafson • Associate Editor

Loss prevention is an important consideration for all convenience stores, but every chain approaches it differently. Marietta, Ohio-based Par Mar Oil Co., which operates 165-plus Par Mar Stores in Ohio, Kentucky, West Virginia and Pennsylvania, is currently working to streamline its strategy, said Terri Caldwell, regional director of operations for the chain. Caldwell’s been with Par Mar for 20 years now and was recently promoted from the director of loss prevention role. “I’ve implemented a 20-point inspection for all the supervisors to do at their location,” she said. “It’s going to pinpoint anything that could cause a loss to the company or injury to an associate. Do you have too much product over here by the door? Is your office disorganized, so you can’t count (inventory) properly?” 82

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September 2021

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Technology | Loss Prevention

Marietta, Ohio-based Par Mar Oil Co. tripled its store count in three years. Now, the company operates 165-plus Par Mar Stores as well as 16 quick-service restaurants. Regional Director of Operations Terri Caldwell said the goal now is to streamline operations, including loss prevention training and strategy.

Because Par Mar tripled its store count in four years, streamlining and training are more important than ever. Before the end of the year, Caldwell said, the goal is to have all loss prevention training completed with each district. “The lady who took my place (as the director of loss prevention), we’re starting to do some training together on our PDI system,” she said. “Her goal is to go through the whole company and just make sure our system is being used the way it’s meant to be used. … I was at a store today, and the manager was trying to find a transaction. Well, she couldn’t find it because the associate rang it under (the wrong category). With our back-office system, it was easy to pinpoint exactly what that associate did.” As a back-up to its preventative approach, Caldwell said, Par Mar utilizes between 10 and 20 cameras per store, depending on the size and the location. “If we couldn’t find the transaction, we could’ve looked at the camera,” she said, “which we do have on our ATMs, our money order machines, our Coinstar machines, on the associates.”

a picture on Facebook, and that got us some attention.” Finally, the company decided to try uploading shoplifting videos to the chain’s YouTube channel — with commentary, recorded and edited by Sultan himself. Now the Fav Trip YouTube channel has close to 50,000 subscribers — and a reach of 8 million on Facebook in July, up from 900,000 a few months prior. Customers will visit the store — sometimes from out of state — just because they’ve seen the videos. “It’s almost like a destination for them,” Sultan said. “And they buy our shirts and hoodies.”

NEIGHBORHOOD STORE

Video surveillance plays an important part in Kansas City, Mo.-based Fav Trip’s loss prevention strategy, too. The two-store chain really struggled with shrink when it first opened. “When we started the business, shoplifting was an everyday issue, even with regulars,” said Fav Trip President and CEO Babir Sultan. “We used to put up their photo on the door. And that created some buzz. And then we were putting 84

CSTORE DECISIONS •

September 2021

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Technology | Loss Prevention

Kansas City, Mo.-based Fav Trip’s YouTube channel is known among customers and fans alike for its videos of shoplifters, coupled with commentary by Fav Trip President and CEO Babir Sultan himself. The channel has close to 50,000 subscribers — and has helped to signiﬁcantly decrease shrink.

Not only are the videos attracting customers and driving engagement (and ad revenue), but shoplifting has signiﬁcantly slowed, too. “We’re a neighborhood store, and people know — these guys don’t tolerate it,” Sultan said. “Even employees, when we hire them, they’ve got to sign off on, ‘if you steal, you give us the right to publish your video.’ So, rarely do we have an employee steal.” Of course, Sultan noted, this is a strategy that works best for a small, neighborhood chain, where “everybody seems to know everybody else.” In fact, customers will often identify shoplifters in the videos. “What we’ve done as well is, if somebody comes back and says, ‘Hey, I made a mistake, I’m sorry about it, I’ll go ahead and give back the money,’ we’ll take down their video or picture too,” he said. “We 86

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had one guy whose ﬁancée said, ‘I’m going to leave you if you don’t make this right.’ So he came back.” For community members in need, Fav Trip’s there to help; the c-store hosts a food drive every year. “And, all year round, if somebody comes to us and says, ‘Hey, I need a sandwich, I’m hungry,’ we’re happy to take care of them,” Sultan said. “It’s always been our policy.” These days, Fav Trip’s video strategy works so well that it’s running low on content. “At this point right now, we don’t have a single video of a shoplifter to post. So it’s a double-edged sword for us,” Sultan said. “It’s a good problem to have, but at the same time, people want more content. So we’re diversifying quite a bit. We have a few things up our sleeves to keep our customers entertained.” The company’s keeping busy on other fronts, too. It’s currently building its third store from the ground up in Grandview, Mo., which will be 4,000 square feet — twice the size of the other two — with an updated, modern design. Will Fav Trip ﬁlm shoplifters in the new store, too? “Oh, yeah,” Sultan said. “Anywhere. Because in our store, if they shoplift, we will post them.” CSD cstoredecisions.com

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Technology | LED & Energy Efficiency

The Pow Energy Ef Whether replacing large HVAC equipment, upgrading exterior signage and canopy lighting or replacing cooler door seals, energy efficiency pays off. Thomas Mulloy • Senior Editor

It’s no secret to convenience retailers that saving on costs is crucial to succeeding in an increasingly competitive landscape. Energy efficiency upgrades can turn those pennies saved into pennies earned. The energy savings hype is definitely focused on LED lighting — and with good reason. As the technology evolves and those fixtures become more efficient, it is even more important for operators to take advantage of those improvements. “We’ve continued to focus on changing out most of the interior lighting on our remaining sites,” said Dan Soltis, vice president of real estate for Cima Developers, the construction arm of The PRIDE Stores, which operates 15 stores in the Chicagoland area and one in Indiana. “We’ve got, maybe, two left that we’re just going to wrap up before the end of the year here.” Retrofitting newly acquired stores is at the top of the list for Charleston, S.C.-based 88

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September 2021

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ower of Efficiency Charleston, S.C.-based Refuel Market has grown to 160 stores since 2018 through multiple acquisitions. Once Refuel buys a store, energy efficiency is one of the first priorities. “What we do, absolutely, is any fluorescent tube lights that are in cooler doors, we replace them with LED strips,” said Mark Jordan, president and CEO of Refuel. “And any cooler door seals that aren’t perfect — literally, perfect — we replaced those seals. Those are two things that go without saying.” But using more efficient LEDs in the cooler does more than save on costs. It can help move product, too, Jordan explained. The updated lighting makes for a more appealing product. He recalled a side-byside cooler display at a trade show comparing fluorescents to LED lighting.

cstoredecisions.com

“It was like night and day,” he said. The same result applies to a store’s exterior. Soltis said that The PRIDE Stores has begun converting its outside signage to LED. “So that’s been a pretty, fairly seamless process,” he said. “The contractors are taking care of all the ComEd rebate programs for us and then giving us the reduction in our invoicing. So that’s been easy to do.”

September 2021 • CSTORE DECISIONS

Technology | LED & Energy Efficiency

Energy efficiency is a top priority for Refuel Markets (top left). When the c-store chain acquires a new store, for example, fluorescent tube lights in cooler doors are replaced with LED strips.

For its new builds, Refuel is all-in on LED lighting, converting “every single thing that is a light, even the parking lot lights,” to LEDs, Jordan explained. “We don’t do that deal that a lot of people do with the power company, like lease the parking lot lights from them over the years and all that. We put in the nicest, brightest LED lights we can — day one.” To make its older convenience stores more energy efficient, Refuel has begun installing solar panels, starting with the least-efficient buildings. That’s where solar will save more in costs. To determine where to prioritize placing the solar panels, Refuel looks at the kilowatt-hours per store. “We would never install solar panels at the first (new build) store, it being the cheapest in kilowatt-hour costs.” Don’t overlook replacing a store’s big power users, either. Older air conditioning rooftop units or other HVAC equipment can be big power consumers, which has been especially true at the older stores Refuel has acquired. Jordan explained that previous owners don’t always maintain them well, especially if they anticipate selling the store. 90

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fast facts:

• R eplacing aging HVAC equipment returns big savings. • S tart with the small items like cooler lights and door seals. • L ED product lighting saves money and increases sales.

cstoredecisions.com

FROM SOLAR TO HVAC

Soltis echoed that. “A lot of our sites are 20 years old,” he said. “Especially the ones that we purchased from BP years ago. So, as we change out the HVAC units, we’re obviously finding the most efficient HVAC units that we can change out.” The new units are also high-efficiency, he said. “So just by default, we’re getting the (savings) bumps in the efficiency.” Affording those big-ticket items is easier for larger chains, but what can smaller operators and independents do to start tackling efficiency? Start small. The little things matter. “When I was a smaller operator, starting with one store and all that, I didn’t really think about (energy efficiency) because cash was always a concern,” Jordan said. “But if you’ve got the ability to do it, you have to do it.” Soltis noted that The PRIDE Stores continues with smaller savings efforts, like installing hand dryers and motion detectors in the bathrooms. “I would start with the cooler,” Jordan advised. “If your cooler isn’t LED lit, and if your seals are not literally perfect, you’re just throwing away money.” CSD

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.

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Operations | Mergers & Acquisitions Column

PETRO MERGERS A

PROGNOSTICATIONS F Retailers are rushing to finalize real estate acquisitions and divestments before the end of 2021, given the threat of increased taxes on the horizon. Mark Radosevich • PetroActive Services

As the second half of the year winds down, my mission with this article is to formulate and share a learned opinion as to what the mergers and acquisitions (M&A) picture will look like in 2022 for the c-store and wholesale petroleum industry. Will buyers, sellers and lenders still be plentiful? Will interest rates remain low, while purchase multiples remain high? Will outside investors continue to view the retail petroleum sector as an attractive investment? What real effect will planned liberal policies have on real estate considerations? I took the opportunity to interview various pieces of the M&A puzzle at a recent branded marketer conference, hoping that some of the key players would crystallize the picture and make my job easier. No such luck. As such, following is my best attempt to make some sense out of a very confused situation. 94

CSTORE DECISIONS •

September 2021

At the moment, there is a mad dash to finalize deals before the end of the year, when a period of feared uncertainty will set in. Buyers are inundated with acquisition opportunities to the point that they have to apply the brakes and pass on choice deals in order to digest what they are buying. Traditional marketers that may have planned to exit in the next few years suddenly advanced their plans in a desire to complete a sale before a threatened host of higher taxes devour what they created over generations. Buyers and sellers involved in active deals that originated in time to actually close this year seem to be racing toward a cliff — get it done by New Year’s Eve or plummet over the edge into a period of uncertainty. For future deals or those that won’t make the New Year’s Eve deadline, the question is to what degree will M&A activity be dampened by higher capital gains and estate taxes, as well as electric vehicle rhetoric that clouds reality on the importance of petroleum for the wellbeing of our country.

cstoredecisions.com

S AND ACQUISITIONS

S FOR 2022 When queried about their plans for next year, buyers, lenders and equity investors all expressed continued commitment and engagement with no plan to moderate their appetite for deals. When various limiting factors were mentioned, there seemed to be a general acknowledgement of risk, but that had not yet factored into growth plans. For the moment on the buy side of a transaction, it is business as usual, which will still foster elevated deal valuations. BUYER & SELLER CONSIDERATIONS

On the seller side of the equation, a clear dichotomy exists that, despite these high business valuations, has the real potential of slowing the M&A train. The deliberate and misguided actions of liberal politicians in Washington have the potential to disrupt America’s economic equilibrium and result in many marketers putting off a decision to sell until things hopefully revert to normalcy. For c-store owner operators, leasing may be the only alternative left to help ensure retention of ingrained business equity, versus giving a large chunk to the government. The potential for significant and costly limitations on 1031 Exchanges necessitates a long-term hold position on the leases for as long as those in government that want to harm our industry continue to run things in Washington, D.C. For family businesses where cash proceeds were slated to be divided between family members, pragmatic discussions need to take place so all parties understand the rationale for leasing and how rental income will be allocated. cstoredecisions.com

For buyers insistent on owning the real estate, purchase arrangements could be made related to lease terminations and the properties purchased at a predesignated time or under certain circumstances related to future tax law changes. After all of these considerations, my M&A prognostication for next year is that buyers, lenders and investors will remain bullish, multiples and valuations will remain high, but deal flow will be moderated due to seller hesitancy caused by uncertainty and fear. Deals that do get done will have a higher level of leasing as a primary component of value. Our next important hurdle is the mid-term elections, when I hope we’re able to vote enough of the liberal politicians out of Washington, D.C., for business normalcy to return. In the meantime, if you are not a member, join your local petroleum marketers association and get involved to help protect our industry. Don’t let someone else do all of the heavy lifting. Mark Radosevich is a strong industry advocate, recognized petroleum veteran and president of PetroActive Services (www.petroactive.net). He can be reached by email at mark@ petroactive.net and by phone at (423) 442-1327. The opinions in this column are the author’s alone. September 2021 •

CTORE DECISIONS

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cstoredecisions.com

PRODUCTShowcase

Emergency Spill Kit Station MasonWays Emergency Spill Kit Stations are designed for rapid response and safe cleanups at the fuel island. Securely locked cabinet has everything required for dangerous gas and oil spills — store employee safety equipment, absorbent materials and cleanup tools conveniently in a locked cabinet outdoors or right at the pump island where they are needed. Store orange cones, disposable safety gloves, glasses, dust masks along with caution tape safely inside. The unit has ample room and shelves to store equipment in an organized manner to make responding to an emergency more efﬁcient.

MasonWays Indestructible Plastics

(800) 837-2881 info@masonways.com

www.masonways.com

Watermelon Hard Seltzer Variety Pack Vizzy is launching its fourth variety pack with Vizzy Watermelon. The new watermelon hard seltzer, available in Passion Fruit, Mango, Blueberry and Kiwi, is launching nationwide in a variety 12-pack as well as single 24-ounce cans of Passion Fruit. Each 12-ounce can contains 100 calories, one gram of sugar and checks in at 5% alcohol by volume.

Molson Coors Beverage Co.

Seasonal Flavored Whiskeys Two Trees Beverage Co. Inc. introduces Pumpkin Spice and Peppermint woodcrafted flavored whiskeys. Both are available in 750-milliliter bottles, are 70 proof and 35% ABV — with a suggested retail price of $21.99 per bottle. Two Trees wood-crafted flavored whiskeys are created by pairing specific grains with wood varieties that are toasted to perfect charlevels to deliver rich flavor profiles that carry a hint of smokiness. The whiskeys are also sustainably matured; the Two Trees process leads to conservation in forestry, reduced emissions and reduced environmental footprint overall.

www.molsoncoors.com

Two Trees Beverage Co. Inc.

New and Improved Zero-Sugar Cola

www.twotreesbeverage.com

(803) 767-1322 info@twotreesdistilling.com

Coca-Cola is releasing a new and improved Coca-Cola Zero Sugar recipe with a new look. This recipe was achieved by further optimizing the blend of ﬂavors using the same ingredients to deliver a great Coke taste. The new design will be featured on all Coca-Cola Zero Sugar products, including 7.5- and 12-ounce cans; fridge packs; and 13.2-ounce, 16.9-ounce, 20-ounce, 1.25-liter and two-liter bottles — with zero calories and zero sugar. The new packaging is simpliﬁed and celebrates the iconic logo, beginning with the brand’s original and universally recognized red, with black Spencerian script, signaling the Zero Sugar variety.

The Coca-Cola Co.

www.coca-colacompany.com cstoredecisions.com

September 2021 • CSTORE DECISIONS

PRODUCTShowcase

Chocolate Cookie and Icing Combo General Mills Convenience announced that Dunkaroos, the beloved cookie and icing combo from the ‘90s, are now available in chocolate. The new ﬂavor has been a top request by consumers since the successful comeback of Dunkaroos with vanilla frosting in 2020. Both varieties of the dunk-able cookies come with frosting and are individually packaged in a 1.5-ounce single-serve tray that are perfect to eat on the go. The suggested retail price is $1.99.

General Mills Convenience & Foodservice

Halloween Lighter Series Calico Brands Inc. introduces a new Halloween series to its Scripto Hybrid Designer lighter line, featuring five Halloween designs. The Scripto Hybrid Lighter is the perfect crossover of a multi-purpose lighter and pocket lighter now available with a variety of stylish designer wraps. It features a refillable tank, extended nozzle for safer lighting, adultfriendly pushbutton ignition and adjustable flame. The Scripto Hybrid Lighter Designer series are available in a 50-count display-a-tray and one-pack open stock. The lighters have a suggested retail price of $1.20 per lighter in a display-a-tray and $1.25 per one-pack.

Calico Brands Inc.

www.calicobrands.com 98

CSTORE DECISIONS •

www.generalmillscf.com

Pickup Experience With Integrated Loyalty Punchh Pickup creates a frictionless, end-to-end pickup experience for both customers and employees. It allows operators to view and manage all pickup orders from a customizable web-based console, providing real-time location and arrival estimates that enable clear, automated communication with customers through a personalized mobile and web experience. Built to seamlessly integrate loyalty with curbside, drive-through and in-store pickup orders, Punchh Pickup offers a fully synchronized employee and customer experience that reduces customer wait times and simpliﬁes both back-of-house and front-of-house operations.

Punchh

www.punchh.com

Banana Taffy Bites Laffy Taffy’s new Laff Bites “Gone Bananas!” combine the classic banana taffy fans know and love in the center with a candy-coated, crunchy shell. Laff Bites “Gone Bananas!” are available nationwide in three sizes: two-ounce single pegs, suggested retail price (SRP) $1.29; 4.2-ounce pegs, SRP $1.49; and six-ounce pegs, SRP $1.69. Laff Bites are also available in assorted bags with four ﬂavors including cherry, strawberry, green apple and blue raspberry.

Ferrara

www.ferrarausa.com September 2021

cstoredecisions.com

PRODUCTShowcase

Crunchy Cookie Meets Classic Candy M&M’S unveiled its latest product innovation, M&M’S Crunchy Cookie, which features a crunchy center covered in milk chocolate, all wrapped in the M&M’S candy shell. A great balance between cookie and chocolate, M&M’S Crunchy Cookie taps into America’s favorite cookie, chocolate chip, and offers a nostalgically satisfying treat with the taste and texture of M&M’S. M&M’S Crunchy Cookie will be available nationwide beginning March 2022 in single (1.35 ounces), share (2.83 ounces) and sharing stand-up pouch (7.4 ounces) sizes.

Mars Inc.

www.mars.com

Fudge-Filled Cookies Chips Ahoy! continues to look for ways to provide consumers with exciting twists on the classic chocolate chip cookie through new flavors and ingredients. Chewy Chips Ahoy! Fudge Filled Cookies bring the taste of Chips Ahoy! combined with Hershey’s-inspired fudge flavor with a rich fudge-filled center. The new cookies combined with ice cream makes for the ultimate summer sundae.

Mondelēz International Inc.

www.mondelezinternational.com

Watermelon CBD Gummies Pure Craft CBD is launching its new watermelon-ﬂavored vegan CBD gummies. Pure Craft CBD’s gummies are vegan and come with a third-party lab Certiﬁcates of Analysis (COA). The Nano CBDInfused Broad-Spectrum Gummies utilize nanotechnology so they can be absorbed by the body at the fastest rate possible. Each gummy is infused with 25 milligrams of NanoOptimized Broad-Spectrum CBD, with no bitter, leafy aftertaste. Pure Craft CBD Watermelon Gummies are available in 30-count jars with a suggested retail price of $55.

Pure Craft CBD

www.purecraftcbd.com

Zero-Sugar, Lactose-Free Yogurt To create Chobani Zero Sugar, Chobani starts with a milk that’s been ﬁltered to reduce naturally occurring sugar. From there, Chobani uses cutting-edge natural fermentation methods that allow yogurt cultures to consume the remaining sugar. Chobani then adds natural, non-GMO sweeteners like monk fruit and allulose. Chobani Zero Sugar has only natural ingredients, 60 calories and zero sugar. It is lactose-free, an excellent source of protein and contains six live and active cultures including probiotics. Chobani Zero Sugar is available in Vanilla, Mixed Berry, Strawberry and Blueberry ﬂavors.

Chobani

www.chobani.com cstoredecisions.com

September 2021 • CSTORE DECISIONS

Classifieds/Ad Index 5-Hour Energy

Invenco

Abbott

J&J Snackfoods Corp.

Jet Brands

Black Buffalo

Kraft Heinz

Calico Brands, LLC

Krispy Krunchy Chicken

Lancer Worldwide

Liggett Vector Brands

800.367.3677 www.zyn.com www.gamecigars.com

March Networks

800.874.9720 / www.swisher.com

Mars Wrigley

TexasPeteFoodservice.com/FlavorsForTheRoad

www.5hourEnergyRetailer.com linnea.solbrook@abbott.com

Altria Group Distribution Company 877.968.5323

www.blackbuffalo.com 800.544.4837 / www.calicobrands.com

CB Distributors

888.824.3256 www.cbprices.com / www.hempbombs.com www.naturesscript.com

6-7

Click It Inc.

E-Alternative Solutions

GSK C-Store

www.clickitinc.com EalternativeSolutions.com/Forth Scott.F.Breisinger@gsk.com

Gulfcoast

The Hershey Company

727.449.2296 / www.gulfcoast.com www.HersheySolutions.com

Hunt Brothers Pizza

www.huntbrotherspizza.com/csd

Hussmann

800.592.2060 insidesales@hussmann.com / Hussmann.com

71 77

Cover, 45

877.515.0939 / www.invenco.com/s/csd www.jjsnackfoodservice.com 877.822.2214 / JetBrands.net www.kraftheinz-foodservice.com

800.290.6097 / www.krispykrunchy.com www.lancerworldwide.com/CSD 877.415.4100

searchlight.marchnetworks.com www.mars.com/made-by-mars/mars-wrigley

Reynolods American Inc. Ruiz Foods

29 9

www.RuizFoodservice.com

Safe Shop Assured

92-93

www.safeshopassured.com

The Seagram Beverage Company

Success Systems

www.seagramsescapes.com/spiked

800.653.3345 / www.success-systems.com

Swedish Match

21, 103 43

Swisher International

11, 104

Texas Pete

Transact

Trion Industries, Inc.

Tyson Convenience

USA CBD Expo

MasonWays Indestructible Plastics, LLC

101

877.748.4222 / www.transact-tech.com/cd

Modern Store Equipment

800.444.4665 info@triononline.com / TrionOnline.com

North American Bancard

100

www.Tysonconvenience.com

Prairie City Bakery

www.usacbdexpo.com/tickets

Premier Manufacturing, Inc.

800.420.3106 / Sales@VitaminEnergyLLC.com

800.837.2881 / www.masonways.com

877.532.8433 / sales@modernstoreequipment.com modernstoreonline.com/cstore 866.481.4604 / www.nynab.com www.pcbakery.com

www.gopremier.com

www.masonways.com | 800-837-2881 cstoredecisions.com

Vitamin Energy

12-13

BOOTH #609 September 2021 • CSTORE DECISIONS

101

IndustryPerspective

C-Store Opportunity:

Pet CBD

Brightfield Group data shows significant growth in the pet CBD market, driven by factors like rising awareness of its benefits and ongoing pet humanization; c-stores would be wise to capitalize on this trend. Connor Skelly • Brightfield Group

The pet CBD products market is set to achieve $561 million in sales in 2021, up 30% from 2020, and is expected to reach $1.1 billion in 2026, representing a 15% compound annual growth rate. This was one of the best-performing product types in 2020, aided by national pet chains Petco and PetSmart starting to sell CBD products in select stores in 2020. Pet CBD consumers are becoming increasingly educated on brands and products as the industry grows, discussing CBD brands with their veterinarians and using CBD for ailments that mirror those of human conditions for their pets. Across the industry, the shuttering of many physical retail locations stunted discovery of CBD in 2020. In addition to convenience stores, consumers could previously come upon CBD when browsing a beauty retailer, vitamin shop, pet store or medical practitioner’s ofﬁce. Even with these channels reopened, consumers are not spending time in stores like they once were. But many customers are still visiting convenience stores, which offers c-stores an added opportunity to capitalize on a demand for CBD pet products. It is also imperative for brands to understand consumer behavior at the channel level and position their products appropriately. Consumers still report buying CBD at brick-and-mortar channels, even with 50% saying they purchase online. Notable increases are in pharmacies and specialized CBD retailers — as was highlighted in Brightﬁeld Group’s July 2020 CBD report.

The ongoing pet humanization trend encouraging “pet parents” to spend lavishly on their pets, including on premium pet foods and treats. While the majority of CBD-infused pet products are designed with dogs in mind, with time there has been an increase number of products for the broader pet kingdom, such as cats, birds and horses — expanding the market even further. Mass pet retail chains are expanding the number of stores selling pet CBD products and the entry of mass merchandisers (e.g., Target, Walmart) into the market, as well as the potential medium-term participation of pet product manufacturers like Mars and Nestlé. As the pet CBD market grows, so too will the product types available in retail chains. While tinctures hold the top spot, edibles will see the fastest growth over the forecast period. As more mainstream consumers come into the market, many will look to the more budget-friendly and familiar format of treats to administer CBD to their pets.

IDENTIFYING GROWTH DRIVERS

Here are Brightﬁeld Group’s 2021 growth drivers of the pet CBD market: Rising awareness of CBD’s beneﬁts for pets with the anticipated development of more clinical data and clear and explicit policy allowing veterinarians to both discuss and recommend CBD products as appropriate (70% of pet CBD buyers discussed pet CBD brands with their veterinarians). 102

CSTORE DECISIONS •

September 2021

Connor Skelly is the marketing director for Brightfield Group, a consumer insights and market intelligence firm for the CBD and cannabis industries. Brightfield works with well-known brands, manufacturers and agencies across the world, providing strategic data, insights and guidance for these dynamic markets. cstoredecisions.com

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FOR C-STORES IN 2020

SEE YOU AT BOOTH #2134

NACS 2021 | October 5–8 | Chicago For Trade Purposes Only. ZYN is the top ranked new product launch in the convenience store channel in 2020, according to IRI’s New Product Pacesetters. Find us online at ZYN.com. ©2021 Swedish Match North America LLC

NATURAL BORN WINNER.

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