There was no denying the variety of leadership styles on display at CSP’s Outlook Leadership Conference earlier this month. Convenience-store industry executives rubbed shoulders with high-profile representatives of retail chains, federal government and even the Mafia during the three-day event in Rancho Palos Verde, California. Here are some of the highlights of the conference.
And the Mystery Shop Winner Is …
As a fourth-time Mystery Shop champion, Rutter’s succeeded once again by keeping its stores stocked with product, attending to customers with friendliness, and functioning with consumer and employee health in mind. High’s, second place, and Nouria, third place, weren’t far behind, making the top three scores some of the closest in Mystery Shop history. In fact, the scores of the mystery shop and revealed audit, led by Intouch Insights, continue to grow closer and closer over the years. “In the last six years, we have seen the audit scores (derived from announced visits) relatively stable,” said Cameron Watt, president and CEO of Intouch Insight, who awarded the Intouch-CSP Customer Experience Award to Rutter’s. “The mystery shop (unannounced visits) has actually increased over time. It’s right up there with the audit. That’s pretty cool to see.”
Economics With Anthony Scaramucci
In an opening general session keynote talk at Outlook Leadership, Anthony Scaramucci—investor, entrepreneur, lawyer and author—offered three predictions about the future of the U.S. economy.
- "If we get into a recession, which I think is likely, it'll be a mild recession, because there is still a tremendous amount of savings in the country," he said.
- Scaramucci thinks that the federal government will return to cutting interest rates at the end of this year or the first quarter of next year, which he said will be important for the stock market.
- His last prediction was a major caveat: "Having said those two things, I honestly don't know."
Foodservice Disruption
It’s no secret that the pandemic did a number on breakfast as a foodservice daypart in convenience. After the fact, retailers are finding it necessary to shift the focus … and timing … of their food offers. “COVID was the great disruptor,” said Derek Gaskins, chief marketing officer at Yesway, during an Outlook Leadership Conference innovation forum titled Pump-to-Store Profitability and sponsored by Cardlytics. “Pre-COVID, breakfast was the primary foodservice driver [in c-stores].” Afterward, not so much. And when the foodservice customer did return, their patterns had changed. “It used to be the breakfast rush had our stores packed for a good hour starting around 6:30 a.m.,” said Jason Read, director of store operations at Wawa. “That hour now has pushed back to 8:30 or even 9:30.” Both retailers agreed that customers now are increasingly turning to c-stores for lunch and late-night meals. “We really don’t think that we’re going to get that [6:30 a.m.] customer back,” Read said. “I expect breakfast will continue to erode.”
The Changing Store Set
That one big issue that’s keeping retailers up at night? For many, it’s tobacco regulation. Currently, it’s the bans on flavored vapor and tobacco products that “can change your business pretty fast when 40% of it is gone,” said Mark Jordan, president and CEO of Refuel Operating Co. Kole Olinger, director of merchandising at ExtraMile Convenience Stores, agreed and is looking to foodservice to make up for some of that loss. “With regulatory pressures in other categories, we really have to develop sales in other areas of the store at a pronounced rate to really stay viable,” Olinger said.
Demographic Diversity
Convenience-store retailers need to pay attention to the trends shaping the future of their business. One of those is that demographics are shifting, according to Donna Hood Crecca, principal at Winsight’s sister data company Technomic. Twenty-one percent of the population will be 65 or older by 2030, up from 17% in 2020. “Ignore seniors at your own risk,” Crecca said. Retailers should strategize now to meet evolving needs when it comes to things like preferences in vehicles and products. The U.S. population is also becoming extremely diverse, she said. By 2030, just more than half (56%) of the U.S. population will be white. Thus, it’s wise for retailers to assume diversity is the new normal, Crecca said. Retailers should monitor immigration and migration trends, optimize their offering to local demographics, and embrace diversity, equity and inclusion to remain current, she said.
The New Nicotine
There are about 47 million legal-aged tobacco consumers in the United States. And more than half of them are interested in completely switching from cigarettes to a non-combustible tobacco product, according to research from Richmond, Virginia-based tobacco company Altria.
“Clearly the barriers still far outweigh the motivators for adult smokers, because only 6 million of them have switched completely to a smoke-free product,” said Brett Brobston, vice president of accounts at Altria Group Distribution Co.
It boils down to three things, he said: Tobacco consumers are not getting the nicotine satisfaction that they want from smoke-free products, smoke-free products are not easy to carry, and they’re not providing an enjoyable experience.
“We think there’s real opportunity to make sure we have product offerings to satisfy that consumer wherever they may be on this transition journey,” Brobston said. That’s why the company is leaning into a variety of products, including NJOY e-cigarettes, Swic heated tobacco product, On nicotine pouches and others.
In the Driver’s Seat
For convenience retailers trying to figure out the next step in electric vehicles, Colin Dornish of Coen Markets Inc. has some advice: “Put yourself in the mindset of an EV customer. Rent an EV car. Try it out for experience … and see what impacts those customers go through.” The vice president of innovation for the Pennsylvania-based chain said c-stores need to be mindful of the expectations of EV customers and find out how they can win in the space.
Name Game
EG America has grown fast, mostly through acquisition, since launching in the United States in 2018 as a unit of the U.K.’s EG Group. It now is dedicated to maintaining the variety of retail brands it has acquired over that time, according to Interim CEO Nick Unkovic. “There are customers that are loyal to our brands, and we want to make sure we preserve that loyalty,” he said. “You don’t want to pretend that a Quik Stop in California, which is very different from a Cumberland in Massachusetts, can be the same thing; they can’t.”
Inspiring Innovation
Innovation can come from and number of places, including reflecting on the projects in a chain’s innovation pipeline from time to time. Robby Posener, chief development officer at RaceTrac, says the company was working on many micro projects that might have been important to a leader that has since left the company or might not align with the organization’s strategy anymore. At RaceTrac, when the executive team assessed the company’s projects and goals, it decided to reprioritize. “We are becoming more disciplined about stepping back and looking at our strategic focus,” said Posener.
At the same time, retailers are keeping their ears open to listen to ideas from employees of all levels. “We look at every single idea that comes in and we follow up with all of those folks that submitted ideas,” said Ryan Boothe, vice president of operations and innovation at Maverik. “I think it makes it feel really safe for all those people to share candidly what they think is working or broken.”
Technology as a Crutch
Don’t let technology become a crutch. In a recent retailer study, mystery-shop company Intouch Insight found technology was used more than half of the time to verify customers’ age for age-restricted products. About 15% of the time, an associate scanned the ID without looking at it, and 8% of the time, associates didn’t scan the ID at all, they simply asked the person their birth date. And in one instance, an associate entered a random birthday every time without asking the customer.
“I would hypothesize that it’s because they’re being told to worry about speed of service, and it’s a whole lot faster to get people moving through if you just enter a [random] birthday,” said Cameron Watt, president and CEO of Intouch Insight.
Next-Gen Loyalty
Even as loyalty programs get more sophisticated, industry leaders in the field said there are still some basics that need attention. For one, the sign-up process is full of friction, said Mike Templeton, director of digital experience at Casey's General Stores. There also needs to be better brand affinity consistent throughout loyalty programs, in-store experience and social-media marketing, he said. In stores, operators need to make sure employees support and understand loyalty programs. "Our challenge is improving that overall end-to-end wholistic experience outside of just the app," said Templeton.
Underworld Observations
Retailers at Outlook Leadership had the rare opportunity to meet Michael Franzese, a former mob captain, author and corporate fraud expert who developed and executed a massive gasoline tax fraud scheme on the East Coast in the 1980s. Franzese defrauded the federal government out of $8 million per week at the height of his criminal career. Meeting his wife prompted him to exit the mob, but not until he spent seven years in prison. Still, Franzese said that if he wanted to, he could pull off the same scheme again today.
Product Liability
That person behind the point-of-sale is more responsible than ever in protecting customers from injuries caused by defective products because of ongoing changes to product liability law, according to Alan Bowie, senior legal counsel for BIC USA Inc. Retailers should make sure they’re dealing with reliable and trustworthy manufacturers, he said, and not sacrifice safety in the name of a product that might be good or trending. Retailers should make sure in any agreements with new manufacturers they work with that they have a certificate of insurance for the products, that they have a good insurance company and that they are willing to engage with the retailer on the conversation of indemnity should anything go wrong, Bowie said.