ASHEVILLE, N.C. — An enticing group of retail attendees helped make CSP’s 2019 Outlook Leadership conference a must-attend event.
New heavyweight players such as EG Group and chains in the news—recently acquired Cumberland Farms (by EG Group) and Thorntons (by BP/Arclight Capital), among others—rubbed shoulders with Army Lt. General Russel Honore, NFL great Peyton Manning (pictured) and more to make the event held Aug. 11-14 at the beautiful Omni Grove Park Inn, Asheville, N.C., a timely reminder of the constant change that is keeping retailers on their toes.
Here are a dozen insights, from M&A to food safety, that stood out to CSP’s editorial staff …
1. The British are coming
Since acquiring the Kroger Co.’s convenience division in February 2018 in its first foray into the U.S. market, EG Group has made growth in the states a top priority, said Jay Erickson, president of EG America, the U.S. arm of U.K.-based EG Group. The company has attained more than 800 U.S. locations since 2018, placing it in the top 10 of the largest c-store chains in the United States. It now is looking to remodel all the Minit Mart stores it acquired from TravelCenters of America within the next 10 months, he said.
EG’s recent acquisition of the Cumberland Farms c-store chain, based in Westborough, Mass., moved the brand’s store associates and state count from 15,000 to 24,000 and from 25 to 30, respectively. With U.S. headquarters in Cincinnati, EG America says it wants to acquire 5,000 U.S. stores within the next two to three years and develop 50 to 100 new-to-industry stores per year starting in 2020, said Erickson (pictured second from right).
2. Relevant questions
Convenience-store retailers are worried about remaining competitive in today’s rapidly changing c-store environment. Eighty-two percent of c-store operators said they are concerned about their brand’s relevancy to today’s and tomorrow’s consumers, said Donna Hood Crecca, principal with Technomic, Chicago, citing a joint CSP/Technomic study. Beyond that, 82% of operators said innovation in foodservice is what they must use to propel growth in their stores.
“Fundamentally, the question becomes: Are your stores relevant?” Crecca said. “Are they ready to compete, or do they need a face-lift?”
3. Pace yourself
When it comes to unit growth, c-stores are tracking on pace with the U.S. population, Crecca said. This is providing the channel with runway for continued growth. Meanwhile, restaurants are increasing their unit growth at a rate 2.5 times population growth. The result: Restaurants are becoming saturated, which is challenging larger industry growth.
4. Rethinking real estate
The Wills Group’s Dash In c-store chain is aggressively rebuilding its sites as it seeks to unify its brand offer, investing $70 million over the next couple of years to rebuild and modernize the stores at the rate of five or six per year. At the same time, it is eyeing underperforming sites as it seeks to unify its brand offer.
“Just because something is a Dash In today doesn't mean that it is worthy of investment of $4 million or $5 million for a new build, or even $1 million for a major remodel,” said Mark Samuels, vice president of retail operations for the La Plata, Md.-based chain. “We have a certain minimum threshold that we expect to do for the store, for the fuel gallons, for the margin. And if we don't think it's going to hit, we're going to cut the tail and move it into our wholesale business.”
5. Retailers get in on CBD
Roughly half of convenience-store retailers sell CBD products in their stores today, while 20% plan on doing so down the line, according to a c-store operator survey conducted by Wells Fargo Securities, New York. Beyond that, c-store retailers currently sell the most of or are most interested in selling lotions and topicals more than any other CBD product. They outpaced gummies, tinctures, gel caps, shots, pet treats, bottled water, oils and more.
“Most of the CBD innovation is in food and beverages, beauty products and nicotine,” said Bonnie Herzog, managing director of equity research for Wells Fargo.
6. Business priorities
Retailer QuickChek Corp. models its business on four core pillars: value, fresh food, ease and speed, and community. And while the chain is focused on profit and cash flow to fuel growth, consumer engagement and foodservice are its top priorities, said Rob Easley, senior vice president of merchandising and marketing for the Whitehouse Station, N.J.-based chain, during a retailer executive panel.
“We want to be a great place to work, a great place to shop and a great place to invest,” Easley said. “But connecting with community and building a brand around fresh food and a new destination around grab and go comes first.”
7. Keep it clean
Despite constant innovation in foodservice safety, foodborne illnesses remain a constant public health concern. Diseases caused by foodborne pathogens result in 48 million illnesses per year, said James Marsden, former executive director of food safety for Chipotle, Newport Beach, Calif., during an Innovation Forum at Outlook Leadership. One way to prevent these illnesses is to regularly change and clean the towels used to wipe down tables, he said.
“Cleanliness is a top priority for you and for your customers,” he said. “How many times have you sat in a restaurant and saw someone wipe your table with a dirty towel?”
8. Don’t fall behind
The willingness to change is an essential trait of leadership, said Lt. General Russel Honore, the three-star general who led the military relief efforts following Hurricane Katrina in New Orleans in 2005. It’s a lesson easily applied to c-stores as innovation in technology and foodservice force retailers to step beyond what the channel has historically been known for.
“Look at your business 10, 20, 30 years ago and how it’s changed today,” Honore said. “If you’re not changing, you’re falling behind.”
One primary way to stay relevant: maintain clean restrooms, said Honore, a native of Louisiana. “The chicken livers and boudin balls can be looking good, but if the bathroom’s dirty, we’re not eating there,” he said.
9. Cover that sneeze
While the United States and other established economies used to set the tempo of energy demand, the other half of the globe is now calling the shots, according to fuel analyst Tom Kloza. “If emerging economies sneeze, the rest of the world gets a cold,” said Kloza, global head of energy analysis for Oil Price Information Service (OPIS), Gaithersburg, Md. He pointed in particular to the rise of Southesast Asia and China, where the greatest number of new workers are entering the labor force.
10. The carding gap
When it comes to age-restricted product sales, there is a due-diligence gap between independent and chain retailers, according to Intouch Insight’s recent mystery shop of c-stores and other retail channels. President and CEO Cameron Watt reported that nearly 89% of c-stores asked Intouch Insight’s mystery shoppers—ages 18 to 25—for an ID when they attempted to buy a vaping product. One chain even hit 100%. But only two-thirds of independent retailers shopped checked for ID.
Pictured, Watt (left) congratulates Stuart Sullivan, vice president and CFO of QuikTrip, for having won this year’s CSP/Intouch Insight’s mystery shop.
11. Class dismissed
The real trick of success with third-party delivery? “You’ve got to find the right partner,” said Mark Meisner, director of marketing and advertising for Kwik Trip, La Crosse, Wis. Kwik Trip recently partnered with local delivery company Eat Street. The chain ran a test at the University of Wisconsin of Madison and saw 20-25 orders per day, according to Meisner—and classes hadn’t even started yet.
12. Ready for prime time
What heightens a consumers’ experience or helps them decide where to eat or drink? Having something to watch while shopping might do the trick. Fifty-eight percent of consumers said TVs help create a welcoming environment in c-stores, according to Technomic. Beyond that, 52% said that in-store TVs encourage customers to stay longer and spend more. On the operator end, 22% of store owners said TVs help make their stores a destination among consumers.
“It’s not just about getting something to eat and drink anymore,” said Mike Lawshe, president of Paragon Solutions, Fort Worth, Texas. “The next generation is here, and they want to be entertained.”