Armour Tells All
NACS Show: Record year but challenges remain, association president says
ATLANTA -- Despite a record $700 billion in annual sales last year, convenience stores face key battles in the years ahead, including declining gasoline sales, stricter regulations on tobacco and greater scrutiny in the area of foodservice, according to the president and CEO of the industry's largest association.
Addressing several thousand attendees at a general session during the NACS Show, Hank Armour applauded retailers for outpacing sales of both the restaurant and grocery channels combined, but warned that pressures on core categories mean participation in both legislative and public-relations matters was vital.
"We handle 160 million transactions a day--half the population is coming to our stores per day," Armour said. "No one comes close."
But just as the industry's traffic count is the envy of other channels, its challenges are equally as vast.
What Armour called "demand destruction" is occurring with fuel and cigarette sales, both core categories. With gasoline, the issue is the increasing motor-vehicle fuel efficiency. With cigarettes, the pressures come from increased regulation, taxation and smoking bans.
An area that has been a profitable haven for the industry--foodservice--is also under attack, he said, noting recent attempts by New York City to initiate beverage-size limits, as well as proposed bans on energy drinks and emerging rules around menu labeling.
For its efforts, NACS has developed what Armour called tools to help retailers succeed, including store-level, computer-based training modules, as well as training options for executive leadership. He noted one such program established at the Wharton School of Finance in Philadelphia.
Another recent development has been the creation of NACS' "Fuels Institute," an effort to bring stakeholders together to pursue research that may aid in policy-making and regulation creation, especially with regards to renewable fuels.
In the area of foodservice, Armour said NACS has been every engaged with the Food & Drug Administration to make better sense of new rules and to work on the legislative front to help craft reasonable laws going forward. In addition, Armour mentioned its program, "NACS Cafe," which addresses foodservice management, safety and marketing "to help take foodservice to the next level."
On the issue of nutrition and obesity, he said the industry has a "good story to tell" in that the channel is offering more healthy choices than in the past and is building on its history of supporting sports and fitness within its communities.
Finally, Armour addressed the issue of credit-card swipe fees, calling it a battle of longevity where an opponent keeps the pressure on until retailers give up out of exhaustion or lack of resources. He noted how NACS recently sued the Federal Reserve and won, adding that the government has appealed the ruling.
Armour went on to call a proposed $7.2 billion swipe-fee settlement offered up by the major credit-card companies a "horrible deal," vowing to fight on if a pending ruling does not go in favor of what association executives feel proper. "Our industry is mobilized," he said.