CHICAGO -- The convenience-retail industry converged at the 2019 State of the Industry Summit, held April 2-4 near Chicago, for a stark message: The world is changing, and c-stores also need to change, or they risk becoming irrelevant.
“There’s a different expectation of convenience now,” said Billy Milam, chief operating officer for RaceTrac Petroleum, based in Atlanta. The classic “gas, Cokes and smokes” model c-stores have leaned on for years is becoming more irrelevant as commerce moves online and consumer wants and needs change.
Given the disruption steadily marching toward convenience, here are five great ideas shared during the NACS SOI Summit …
Just because the industry is already talking about swipe-fees doesn’t mean it should stop, said Milam. “We’ve got to keep beating that horse,” he said.
While the c-store industry saw a year of record pretax profits of about $11 billion, the industry paid $11.1 billion in swipe fees last year. Also, from 2017 to 2018, fees to process credit card payments went up 11.7%, Milam said.
FDA and flavors
If the FDA ultimately prevails in using proposed guidance policies to severely restrict flavors in tobacco products, the effect could be devastating, said Charlie McIlvaine, chairman and CEO of Coen Oil Co., Canonsburg, Pa. He told SOI attendees that menthol and flavors in general represent 35% of units and 34% of cigarette sales, according to Chicago-based SwiftIQ.
According to Nielsen numbers, e-cigarettes in general saw a 179.4% gain in sales and a 98.2% gain in units, with cigars showing an 8% gain in sales and a 7.4% gain in units. If the FDA guidance has its intended effect, McIlvaine said, “the whole thing slides negative,” referring to overall OTP gains seen in 2018.
He suggested attendees reach out the FDA with their perspectives.
Throughout his presentation, Jason Lobel, CEO of Chicago-based SwiftIQ, a retail analytics company, emphasized the role of product promotions on c-stores’ long-term success. He said the industry needs a blueprint for building promotions that scales across all retailers, regardless of region or store size.
“Ask yourself if you have a good handle on funding and promotions,” he said. “If the answer is ‘No,’ it may be because you’re using the wrong measurement tools for the modern world.”
Aside from tracking sales, basket units and price, take rates and more, it’s also important to consider what affects a promotion’s performance, he said. This may be how long the promotion runs, the timing of the promotion, how many other promotions a retailer has running simultaneously, and how much signage was used.
Capture second breakfast
“One of the fastest-growing snack occasions is the early-morning snack,” said Laurie Demeritt, CEO of the Hartman Group, Bellevue, Wash. Mornings are a busy time for consumers, whether it’s due to morning meetings or dropping kids off at school, Demeritt said. Sometimes folks don’t have enough time to eat as much breakfast as they would like, or even eat breakfast at all.
“This is a perfect occasion for your channel to meet,” Demeritt said. She also pointed to the midnight snack as another opportunity for c-stores.
Character and culture trump competence
Jim Knight, founder and owner of Knight Speaker and formerly with Hard Rock Cafe, loves Chick-fil-A, and not just for the chicken.
He told a story about deciding what to order one day while he stood in a wide stance with his hands against his hips. The cashier, a kid named Jose, called Knight “Peter Pan” as a joke, and both of them got a good laugh out of it.
Knight said that as much as he loves Chick-fil-A’s food and service, this specific experience was memorable and made him want to return even more. Jose took a risk by engaging Knight in such a way, and he respects both Jose and the company for that. “He still calls me Peter Pan,” Knight said.