C-Stores' Power Play
NACS' Armour urges retailers to throw their weight around on industry issues, swipe settlement
LAS VEGAS-- In 2007, some pundits predicted that, in an economic downturn, convenience stores would be the hardest-hit retail channel. Their reasoning was that many customer visits to c-stores were discretionary. Instead, the past four years have been the most profitable for the channel in its history. Total industry sales totaled $682 billion in 2011, according to NACS, which would make the channel the 19th largest economy in the world.
Put another way: C-stores processes 160 million transactions a day, or the equivalent of one-half of the U.S. population.
"The customer has made a lot of changes," said Hank Armour, president and CEO of NACS, during Tuesday's general session at the 2012 NACS Show in Las Vegas, "but not to their daily habit of visiting the local c-store. We deliver what our customers want, when they want it and how they want it."
Armour credited this enduring habit to retailers' focus on cleaner stores, expanded assortment, impressive foodservice offers and great customer service.
"If you haven't been in a convenience store today, you're going tomorrow," said Armour.
Just as retailers have upped their game, said Armour, so has NACS is its advocacy for the industry. He first cited successful efforts at encouraging the passage of legislation to close a loophole that was allowing large-scale roll-your-own (RYO) tobacco manufacturing in some tobacco shops, which were stealing 10% of c-stores' RYO business. "Through our grassroots efforts, we leveled that playing field when Congress voted 82 to 16 to pass our legislation," he said.
There were also positive results for advocacy when the industry heard no bad news, said Armour. For example, despite two spikes in gasoline prices during 2012, the c-store industry largely avoided a media or consumer backlash, which Armour credited to NACS' efforts at educating the public about retailers' roles in fuel pricing and sales.
But some battles continue to be fought--for example, the effort to bring transparency and fairness to the swipe fees charged by Visa and MasterCard for debit and credit transactions. Debit swipe-fee reform through the Durbin Amendment helped save the industry and consumers $500 million in transaction fees in 2012, with the average fee cut from 44 to 22 cents per transaction, Armour said; however, if the Federal Reserve had followed the rule of law, the fee should be 12 cents per transaction. NACS has filed suit against the Fed, presented oral arguments and expects a ruling at the end of 2012.
Armour also highlighted the proposed $7.2 billion settlement with Visa and MasterCard in an antitrust lawsuit that was trumpeted as being "record-breaking" in size; however, after reading through the details, NACS and five other associations that were lead plaintiffs in the lawsuit have rejected it. Armour argued that the settlement would "cement Visa and MasterCard's roles as price fixers," and provides a one-time monetary payout that equates to only about two months' worth of swipe fees. It would also prevent associations and retailers from suing for changes in the swipe-fee system for several years.
The proposed settlement is currently before a judge for preliminary approval. During the next 30 days, he will accept comments from industry stakeholders. To this end, Armour urged retailers to sign a declaration that explains why the proposed settlement is bad for their business.
To receive a copy of the declaration, email [email protected].
Despite the amount of money the industry has lost to swipe fees, "This was never about the money," said Armour. "It was about fixing a broken system."