TORONTO -- Canada's 22,984 convenience store owners must comply with no less than 517 different federal and provincial laws and regulations costing them more than an estimated $225 million annually. One of the most widely dispersed and familiar industries in Canada is now possibly the most taxed and regulated industry, according to the 2012 State of the Industry Report prepared by the Canadian Convenience Stores Association (CCSA) and presented to 300 Canadian retailers, distributors and manufacturers meeting in Toronto this week for the occasion.
"This first, in-depth study focusing on convenience store regulation in Canada clearly confirms our worst fears. Our industry is very heavily regulated and this is impacting business growth and prosperity," said CCSA president Alex Scholten. "It's only a matter of time before convenience stores will vanish from this country unless the current regulatory trend is reversed. We are calling upon governments to work in partnership with our industry to address this issue, allowing for the creation of thousands of more jobs and preserving a unique family business model that provides billions in revenue for all levels of government annually."
According to the CCSA's study, the federal government is enforcing 34 laws and regulations that impact c-store retailers nationwide. On top of the federal laws and regulations, provincial governments add another layer of rules with which the industry must comply.
The level of regulation from province to province varies greatly. The provinces that most impact small business owners are Ontario with 85 laws and regulations, followed by British Columbia (72) and Quebec (62). The most c-store-friendly provinces are Manitoba with 22 laws and regulations, followed by Saskatchewan (31) and Newfoundland (38).
The report did not look at the further impact of municipal laws and regulations that apply to c-store operations.
"The cumulative effect of the sheer volume of this regulatory environment is that business growth and prosperity is impeded and that affects our ability to employ more Canadians and generate economic growth." said Scholten.
While overall industry profits are estimated at close to $1 billion annually, revenue generated by the c-store industry for government exceeds $16 billion annually. In other words, for every dollar of profit the industry generates, governments collect $16 in revenue.
In addition to withstanding a heavy regulatory burden, Canadian c-stores' profitability continues to be hit hard by the persistence of contraband tobacco and excessive credit-card transaction fees. Contraband tobacco continues to erode 20% to 25% of the market, mostly in Ontario and Quebec.
As for credit-card fees in Canada, they are among the highest in the world, the group said, and c-store owners in Canada are paying the price. The CCSA's study indicates that more than $36,000 in net expenses per store on average go to pay for debit and credit-card related expenses annually. Studies have shown that Canadian fees are almost twice the rates charged to merchants in Australia, New Zealand and many parts of Europe.
"We can't keep paying such exorbitant fees in Canada and expect to stay in business." said Scholten.
Despite those strong headwinds, the industry is showing remarkable resilience. C-store sales (apart from gasoline) fell 3.2% this year, reflecting tougher competition while sales at convenience stores with gas stations increased 22.3%--a situation mainly attributed to higher fuel prices (at 123.6 cents per liter in 2011, the average gas price was 20.4% higher than the 2010 average of $102.7). Having lost 346 stores in 2010, the industry regained 347 in 2011 for a net gain of one store over the past two years.
Meanwhile, the National Association of Convenience Stores Distributors (NACDA) announced its intention to enter into an affiliation agreement with the CCSA, thus becoming the fifth autonomous entity of the association, the same level as the four existing regional associations (Atlantic, Quebec, Ontario and Western Canada).
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.