EMV Deadline for Pumps Extended Until 2020

Issues with regulatory-compliant EMV hardware and software to enable most upgrades by 2017 prompted shifting the compliancy deadline.

By Pat Pape, Contributing Editor

Citing technological and regulatory challenges, Visa, MasterCard and American Express recently announced that the U.S. deadline for installing EMV (Europay, MasterCard and Visa) chip-card readers at automated fuel pumps has been extended to Oct.1, 2020 from Oct. 1, 2017.

More than 1.7 million merchants—or about one-third of all U.S. stores—now accept chip cards, and the nation has already seen a 43% reduction in counterfeit-card fraud among merchants using chip technology, according to Visa. However, selling fuel comes with a complex set of challenges, and gasoline retailers need more time to make the mandated upgrades.

Companies now have three more years to migrate from traditional magnetic stripe-based payment card scanners to chip readers before they would incur any financial liability for fraud perpetrated at the point of sale (POS).

But preparing gas pumps to be EMV compliant is more difficult and costly than updating an in-store POS. While many existing fuel dispensers will be eligible for EMV-ready retrofit kits, some older fuel pumps will need to be replaced before chip readers can be installed.

Even five years after announcing the EMV liability shift, there are issues regarding a sufficient supply of EMV-compliant hardware and software, as well as enough professional installers, to ensure a majority of upgrades are completed by October 2017.

“The card brands have come to understand that these challenges are not of retailer creation, but a result of late specifications, certification complexity and supply chain constraints, rather than a lack of resolve to adopt EMV,” Gray Taylor, executive director of Conexxus, told news outlets recently.

Conexxus is a non-profit, technology organization based in Alexandria, Va., dedicated to standards and innovation for the convenience store and petroleum markets.

“We are still sifting through the details…We don’t see this announcement as a true game delay, but a bit of breathing room to work out the challenges,” Taylor said.

Other finance and technology insiders have publicly stated that the extended liability deadline comes as no surprise since EMV has required about a decade for complete implementation in most parts of the world.

FUEL PUMP THEFT
The deadline postponement doesn’t mean that gas station owners can take a vacation from their EMV upgrade plans. In fact, fuel retailers using the traditional, magnetic-stripe card readers could become liable for fraud losses even before the new deadline if their credit-card fraud increases beyond a certain level.

Currently, fuel-pump credit-card fraud is relatively low, making up an estimated 1.3% of all U.S. payment fraud. A number of available fraud prevention tools, have helped curb fraud activities at fuel dispensers, Visa reported, including the Visa Transaction Advisor (VTA).

In seconds, VTA analyzes nearly 500 pieces of data, such as past transaction history, to create a risk score and either approve the fuel sale or ask the customer to complete the transaction inside the store. According to Visa research, fraudsters asked to go into the store to finalize a sale will typically drive away instead.

BUSINESS AS USUAL
The new deadline may take the immediate pressure off retail fuel merchants that have been scrambling to develop a new EMV payment system and locate the necessary hardware and software to meet the mandates. But for many more, it will be business as usual as they work to wrap up their existing plans for compliance.

One of those retailers is Rutter’s Farms Stores of York, Pa. “We already have our plans in place, and this announcement really doesn’t impact us, said Derek Gaskins, chief customer officer for Rutter’s.

Recently, Rutter’s announced that it is using the mandatory EMV update as an opportunity to update other features of the fuel dispensers at its 66 convenience locations throughout Pennsylvania. The company plans to retrofit the fuel pumps with NCR’s Optic outdoor payment solution, which features a large touchscreen, an EMV-compliant payment terminal and 2-D barcode scanner.

Not only will the new system accept EMV payments, Gaskins said, it can read magnetic-stripe cards, mobile phones and mobile wallets. The system also features new media capabilities, such as full-motion video, which allows the chain to promote in-store products and services to customers at the gas pumps. Rutter’s also plans to integrate its VIP Club rewards program into the retail system.

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Smoke and Mirrors?

Can ongoing price increases on cigarettes continue to compensate for dropping unit sales?

By Anne Baye Ericksen, Contributing Editor

In early November 2016, Philip Morris USA, owned by Altria Group Inc., Reynolds American Inc., and several other tobacco companies added eight cents to the per-pack wholesale price of their top cigarette brands. ITG Brands upped the ante by levying a 16 cent hike.

The move isn’t a surprise to convenience store owners, operators and managers as it reflects a trend of price increases that’s been happening since 2014 for most manufacturers. What’s more, it appears the pattern will continue into 2017.

According to Nielsen data reported by Wells Fargo Securities, pricing of cigarettes in all retail channels jumped 3.5% for the four weeks ending Dec. 3. The price boosts, however, have not translated into proportionate sales gains. For the same four weeks, sales dollars grew by 1%. In a 52-week comparison, dollar sales for cigarettes rose 1.6%.

Rather, the price increases have buoyed the category as it continues to face falloffs in volume or unit sales. The Alcohol and Tobacco Tax and Trade Bureau this past November released its statistical report for tobacco products manufactured domestically last September. A monthly tally showed a decrease of nearly two billion units. A cumulative year-to-date assessment also showed a falloff of more than eight billion units.

For the aforementioned four weeks, cigarette unit sales in all retail channels fell 2.4%.

According to Wells Fargo Securities, volume sales for the fiscal year 2016 will reveal a loss of at least 2%. The market research organization also predicts volume will continue its downward trek by another 3% during fiscal year 2017.

BRAND BREAKDOWN
Some cigarette brands have fared better than others. Wells Fargo Securities revealed Reynolds American’s Natural American Spirit posted an impressive 16% growth in volume for the same four-week period. The brand posted an equally impressive 15.1% for a 12-week period ending Dec. 3, which is topped by 19.6% unit sales growth for the past year. Although pricing for the brand did creep up over the four weeks, at 2.8% it’s below the national average.

Philip Morris USA’s Marlboro also posted positive figures across the board for the same period—dollar sales were up 0.9%, volume was up 1.7% and pricing climbed 2.6%. Perhaps some of that performance can be attributed to the expanding popularity of Marlboro Black. In the same month of November, the Wall Street Journal reported that the less expensive option reached a marketshare of 44.1%, in part due to popularity among Millennials.

“Customers may start trying a lower-priced brand—Pall Mall, L&M, Winston, Kool or fourth tier [cigarettes]—which we try to make similar penny profits on,” said Bailey Lyden, vice president of retail for Brecksville, Ohio-based Truenorth Energy LLC, which owns and operates 110 truenorth c-stores. “One factor that does help is the fact the fuel prices are low, which leads to more disposable income,” he added. “This helps customers absorb the price increases.”

TAXING TOLL
Of course, a dwindling number of smokers are a major contributing factor for the lessening of volume sales.

“The Centers for Disease Control and Prevention reported the adult smoking rate was at a historic low of 16.8% during 2014, down from 17.9% in 2013 and 20.9% in 2008. This clearly shows the smoker base is decreasing year on year and will continue during the future period,” said Manjunath J, a lead analyst for Technavio, a global research firm.

Both analysts and healthcare experts generally agree this downward trend most likely will not reverse itself.

Industry watchers assert new taxes on cigarettes will contribute to further price hikes. Although federal excise tax per pack has been $1.02 since 2010, the average state tax has gone up each year since 2008, reports Wells Fargo Securities. Estimates place the 2016 average state tax increase at 4.5%, with six states issuing higher taxes on cigarettes last year. November ballots in California, Colorado, North Dakota and Missouri each featured proposed cigarette tax hikes; however, only California’s Proposition 56 passed.

Effective April 1, the tax on cigarette sales in the Golden State will change rise to $2.87 per pack from 87 cents per pack.

“As of August 2016, the average tax per retail price per pack is around $2 in the U.S.,” said J. “The increase in taxes always will result in an increase in selling price.”

FUTURE QUESTIONS
All these circumstances—the deflation of the smoking population, manufacturer price hikes and higher taxes—have analysts and convenience store operators wondering if tobacco will finally lose its stake as a top performer. In 2015, tobacco products combined accounted for more than 35% of in-store sales for c-stores, according to the National Association of Convenience Stores (NACS) survey data.

Some analysts project that U.S. consumers will opt for e-cigarettes and vaping devices over combustible cigarettes in bigger numbers, and Big Tobacco companies will continue to invest in these alternatives. While in London for the introduction of IQOS, the company’s heat-not-burn smokeless cigarette, Philip Morris International CEO, André Calantzopoulos, intimated traditional cigarettes could be phased out and replaced by alternative products.

“As tobacco companies see the decline in the number of smokers, they are looking for other products to stay competitive in the marketplace,” said Ray Story, CEO of the Tobacco Vapor Electronic Cigarette Association.

Lyden believes the traditional cigarette consumer will begin using more alternative tobacco items such as e-cigarettes and vape products. However, those options may change as new regulations pressure the market.

“The problem is that the U.S. Food and Drug Administration (FDA) has put such an onerous burden on the e-cigarette category that a lot of companies are going out of business, and that’s stifling growth of new developments or products,” added Story. “We’ve been dealing with the same technology for quite some time. They have to quickly reinvent themselves and come up with next-generation technology.”

Recently, Philip Morris USA submitted a Modified Risk Tobacco Product application to the FDA for IQOS, which is already on sale in Asia and Europe. The federal agency has 60 days to evaluate the application and determine if it will be passed on to the substantive review stage.
When the FDA released its final deeming regulations last year, industry watchers and manufacturers expressed concern about the costly and arduous application process. However, Story holds out hope the incoming administration of a new president and Republican control in the House and Senate could lead to less federal regulations.

“If that happens, we should see new products,” Story said. “Once the technology reaches a level where we can mimic the conventional cigarette experience and euphoria, we will see a decline in conventional tobacco sales like we’ve never seen.”

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How To Maintain Foodservice Compliance In Face of U.S. Labor Laws

How does a company ensure their food operation is in compliance with U.S labor regulations?

Just as people would trust their health with a doctor, the government trusts restaurant owners and foodservice operators with labor integrity. Shockingly, in a recent article released by Restaurant Business Online, 95% of Restaurants in Austin, Texas, that were audited were not in compliance with the federal government’s wage and hour regulations during an eight-month period in 2015-2016.

Only 5% of restaurants in this study were accurately accounting for wages owed to employees in cases such as tipped minimum wage. Imagine the magnitude of restaurants outside of Austin that are in violation. This creates a potential catastrophe for the reputation of the restaurant industry.

So how does a company ensure their restaurant is in compliance with U.S labor regulations?

Know the difference between Labor Laws and Labor Rights.

Labor Laws- These laws originated to protect employees from unethical work and compensation correlations. Labor laws vary around the world in complexity and amount. The industrial revolution and its uncanny working conditions were the main ingredient to the tough U.S labor laws that exist today. Key labor laws address items such as number of hours an employee can work, ages for employment, medical leave acts, and minimum compensation. Additional state and local labor laws may also exist that pertain to particular wages and working conditions.

Labor Rights- Labor rights are similar to labor laws; however, labor rights provide employees with security. These rights include the right to breaks, the right to report unhappy working conditions, the right to timely pay and, most importantly, the right to unionize. Thus, allowing for the democratic voice of workers to their employers. Labor rights are a necessity to ensure labor laws are being obeyed.

Be aware of the Laws and Rights.

Labor laws and rights are constantly evolving and multiplying. Restaurants must on stay top of these. Knowing these laws and rights will be the key to avoiding violations such as the ones our friends in Austin received. The United States Department of Labor website is a great resource in aiding in this knowledge. Keep updated prints of the labor laws and rights posted throughout the restaurant. Teams and managers need to review these so that they can further discuss them with employees.

Listen to Employees.

No one will pay more attention to laws being obeyed and rights being addressed than the restaurants’ employees. From the perspective of the employee, they want to ensure they are receiving the right pay, benefits, and breaks that they are entitled to from their work. If an employee voices concern, the company needs to take the time to investigate their claim. It is best to identify the error and correct it. Even if the claim turns out to be erroneous, it is better to investigate the claim than it is to be out of compliance.

Audit the Restaurant before the Department of Labor Does.

There are many different auditing platforms out there that a restaurant can use as a resource to ensure compliance during the year, such as software programs, consultants, and third party labor contractors. These platforms may come with a sizeable expense; however, in relation to the cost of violations and back pay, this expense can be microscopic.

U.S Labor laws and rights are vastly complex and at times rather tedious. However, without employees, the restaurant and service industry would cease to exist. To keep employees, restaurants must compensate them according to their work. The government recognized this when they created the modern labor laws in the 19th century. Now restaurants are trusted to protect their employees with these laws and rights. In return, employees can trust their employers.

For more information about Restaurant Labor Compliance, visit http://www.ctuit.com.

 

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Big Red Stores Plans Three Stores for the New Year

New c-stores to feature contemporary design, touchless bathrooms and fresh food items.

Big Red Stores is set to introduce three new convenience store locations in 2017 and has already has begun construction of its 34th store in central Arkansas located in Cabot at the corner of Highway 367 and Highway 38. This store will be the seventh to incorporate the company’s new contemporary design developed to meet changing customer needs.

This location will include a Hardee’s restaurant, as well as touchless bathrooms, fresh made items, such as fruits, pizza and burger, f’real milk shakes and many more new additions. The opening is currently planned for May 2017.

“We are very pleased to be adding another location to the Cabot area. Being a local Arkansas company, we’re excited about serving our neighbors and growing our support for the Cabot community,” said President of Big Red Stores, David Hendrix.

In addition, in 2017 Big Red plans to open two additional new stores in the state.

The first is located in Hensley, and the other will be located in Bryant.

Big Red Stores are owned and operated in central Arkansas, with a planned total of 36 locations including the three opening in 2017. The company’s central office is located in Bryant and the company provides over 400 jobs in Arkansas.

 

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Meat Snacks Gain Weight

Convenience store customers crave variety, which is a big draw in today’s meat snacks category.

By Howard Riell, Associate Editor

From a wide variety of flavor offerings, including specialty meats, to various textures and forms, the meat snacks category succeeds in meeting consumers’ desires.

The category is well positioned at what some refer to as the intersection of snacking trends and consumer demand for protein. New brands, flavors and formats have the potential to bring new consumers to the category, which will drive growth through 2017 and beyond.

Marketers continue to develop creative ways to get consumers to test the jerky segment, including reframing jerky to fit into other categories such as energy bars and trail mixes. Millennials are continuously on the prowl for new flavor experiences, which has led to experimenting with jerky in new shapes, sizes and flavor profiles.

Meat snacks have grown in popularity, as consumers view these as a convenient, tasty and high-protein snack, market research company Mintel Group Ltd. recently reported. “These nutrient-dense snacks also fit into several niche diets including gluten-free. The segment also benefits from simple ingredients and strong flavor and ingredient innovation from large and niche brands alike,” Mintel stated.

REAL FOOD
More gourmet and premium meat snack options are entering the marketplace in response to consumers looking for authenticity and higher quality. Indeed, offering such upscale protein items—in concert with unconventional forms and exciting packaging—has been one way for companies to break into the already crowded field. Jack Link’s three-year-old premium brand Small Batch Jerky saw sales grow 75% in the past year, according to market research firm Packaged Facts.

An increasingly popular buzzword is “exotic proteins,” which—while still a minute share of the market—include venison, bison, buffalo, lamb, elk, boar, duck, pheasant and ostrich. Another emerging trend is so-called meat bars, led by such brands as Epic, Krave and Tanka. Beef remains the dominant flavor, outselling turkey, pork and chicken.

The category continues to grow more competitive as well, as evidenced by the number of new brands vying for shelf space. For instance, Slim Jim, a category leader, continues to expand its flavor profile. In addition to its Original, Barbecue and Habanero, the company has recently added Turkey Sticks as well as Barbecue and Habanero offerings—a response to consumers looking for new, bolder, more “extreme” flavors.

Such spicier flavor innovations are also capturing business from Millennial-age consumers.
So pronounced has been the proliferation of meat snacks, in fact, that Euromonitor International said it fears the category is becoming saturated. According to spokesperson Marissa Bossler, there are dozens of artisanal meat snack players banking on the natural protein hype, and meat giants such as Tyson have already started to launch snack variants of their existing brands. “In addition, Hershey and General Mills have already made their forays into the category.”

According to Chicago-based market research firm IRI, for the 52-week period ending Oct. 30, 2016, the multi-outlet convenience store channel showed dried meat snack sales of just over $1.5 billion, a 0.71% increase over the same period last year. ConAgra Foods’ Slim Jim brand, which holds 19% market share with $243 million in sales, posted 11% growth in dollar sales in the past year, according to Packaged Facts.

Oberto and Bridgford Foods posted dollar sales growth of 18% and 30% in that period, respectively.

COOKING UP INNOVATION
Sales are being driven by more health-conscious shoppers, but also changes in flavors to appeal to a broader crowd.

An emerging trend in the meat snacks category is meat bars, which are pushing the market with brands such as Krave.

“New bars coming out from Krave with non-traditional flavors typify that innovation,” said Heidi Rembecki, director of merchandising for Tonawanda, N.Y.-based NOCO Energy Corp., which operates the NOCO Express convenience chain.

For example, the Hershey Co. launched Krave Bars—the first items to come out of its partnership with Krave Pure Foods, the Sonoma, Calif.-based meat jerky company it acquired last year. The bars are available in four flavors: chipotle cherry beef, cranberry thyme turkey, mango jalapeño pork and wild blueberry barbecue beef. Each selection features dried fruit and quinoa. According to Packaged Facts, Krave Jerky sales rose 71% to $38.3 million, with volume sales growth of 84% in the past year behind increased distribution since being acquired by the Hershey Co. in 2015.

Another is Jack Link’s Lorissa’s Kitchen brand, which markets a jerky with higher moisture for what it called a more tender bite.

“Lorissa’s Kitchen is not your standard looking package or product,” Rembecki said. The line comes in four flavors: Korean Barbeque Beef, Ginger Teriyaki Chicken, Sweet Chili Pork and Szechuan Peppercorn Beef, which touts 100% grass-fed beef, responsibly raised pork and antibiotic-free chicken with no preservatives, added growth hormones, and is gluten free.

As with other categories, newness is an essential ingredient in stirring consumer trial.
Merchandising should also be updated from time to time.

“We’ve started to use the ConAgra rack that allows the sticks to be lying down out of the box,” said Rembecki. “The labeling allows consumers to see what the varieties are much easier than the old stand-up of boxes.”

Indeed, innovative products, flavors and merchandisers may be just what some retailers need. Rembecki suggested that some c-store operators fail to spend time and attention on building the category, relying instead on traditional favorite brands. “However, looking at the newer items will bring new users into the category.”

Critically reviewing the category also helps operators keep from ending up with a small section, with heavy inventory dollars tied up, she added. “They should take a peek more than once a year.”

PROMOTING CHANGE
Sam Odeh, founder and CEO of Power Buying Dealers (PBD) USA Inc., of greater Chicago, includes 25 owned and franchised locations in Illinois, Georgia and Florida. Odeh said he is seeing many new touches in the form of different meats, spices, brands, sizes and line extensions being introduced to PBD’s locations. “What’s important in my opinion is the high-end protein, which is used as a meal during the day instead of a snack.”

Odeh said he has enjoyed success with the category by merchandising it next to his assortment of energy drinks. On the other hand, he keeps meat snacks away from endcap displays. “It tends to signal non-health snacks, like chips.” A wide assortment is likewise needed. “They must carry all sizes of bags.” Price promotions, especially those that bundle with energy drinks, are also helping drive sales.

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Adult Beverage Boom

The convenience channel continues to experience growth in beer, while there’s also opportunity for growing wine and adult beverages sales in some regions.

By Lisa White, Contributing Editor

There is sizable interest for beer, wine and spirit manufacturers and retailers to work together to win over consumers, according to a new study from IRI.

Millennials, Generation Xers and baby boomers make in-store shopping trips more than once per week, and 40% of buyers walk into the store undecided on what product to purchase. Of the 60% who do have a planned beverage purchase, 21% end up changing their mind in store, and 50% of those who change their mind ultimately buy a different brand than they originally intended.

Certainly, when a convenience category shows growth, it pays to make the jump and become a trendsetter.

Mad Max Convenience Stores, based in Saukville, Wis., has 12 locations in its home state, where the retailer is experiencing increased in-store sales of beer, wine and liquor.

In the last four years, all of its new stores have included an alcohol section, no matter where the site is located.

“We’ve discovered that wine and liquor are markets that the c-store industry as a whole doesn’t want to get involved with, maybe due to regulations or the price points, but it’s a category we need to have, expand on and tweak, depending on the area,” said Steve Magestro, Mad Max’s president.

Liquor has been a part of Mad Max stores’ lineup for about six years, and sales have followed a seasonal ebb and flow. Being up north, these products begin to move in spring and gradually build to a peak season in November and December. January and February are the slowest months for moving beer, wine and liquor.

“Our liquor distributors tell us how grocery stores move these products, and we essentially see the same buying patterns,” said Magestro.

According to data from the Nielsen Co., 23% of convenience stores reported selling alcoholic beverages in 2015, with approximately 82% of these stores selling beer, close to 70% providing wine and about 32% offering liquor.

POTENTIAL PROFITS
Although c-stores are not expected to be a primary stop for beer, wine and liquor, customer support makes it evident that there is growing potential in this retail channel.

“We learned over the last four years that it takes two years to mature a liquor market in our stores, for customers to understand we have a full line and for them to tell their friends,” said Magestro. “Will we ever be as big as liquor or big box stores? No, but we will carry the items that turn, and customers show us that it’s worth it by buying the product.”

The success of the category can be attributed partly to Millennials, who are visiting c-stores multiple times a day, rather than once daily or a few times a week like other consumers.
Liquor distributors are starting to realize that, depending on the store’s location, convenience stores can help the segment by expanding sales opportunities. “What’s interesting is, if a c-store is competitive, it will have customers coming in to buy product; however, the wine side is more fickle,” said Magestro. “Wine is like craft beer; stores can’t sell the same wine types year in and year out.”

These offerings have to be constantly changing, as consumers are seeking something different with wine and craft beer month to month.

“With wine, it’s important to foster relationships with suppliers, since they know what’s selling in the big box stores,” said Magestro.

Mad Max relies on a couple of its distributors, which serve as partners rather than just order takers, to determine the best wine varieties to carry.

Jeff Lenard, vice president of strategic industry initiatives, for the National Association of Convenience Stores (NACS), based in Alexandria, Va., has seen more of a focus on local beer and growlers.

“There are a record number of breweries in the country now and many are too small to bottle or can their product, so beer is only available in kegs,” Lenard said. “I have seen stores like Kum & Go and Mendez Fuel both do a great job with growlers and local beer. And then there is Kent Couch, who has 50-plus taps in Bend, Ore.”

WHAT’S SELLING
Beer, wine and liquor sales and trends are regional and also can vary from store to store in the same city.

In some states, the landscape of retail sales is changing. For example, starting July 1, 2016, Tennessee grocery stores are now permitted to sell wine.

“Although we were not the first c-store in Tennessee to get a wine license, Git N Go was the first c-store chain to acquire a license and start selling wine in the state,” said William Baine, CEO of the four-store operation. “The margin on wine is around 30%, however the category has some additional shrink issues in our space.”

The regulations, licensing fees and ongoing training cost make this an expensive category to get into for retailers in the state. Consequently, this creates a significant barrier to entry in the convenience channel.

“Our stores are in the top quartile in NACS inside sales, and we still expect half of the category margin to go to ongoing costs,” said Baine.

Some Mad Max stores do well with craft beer, depending on the area and its demographics.

IN NEW YORK
Tonawanda, N.Y.-based NOCO Energy Group’s 36 NOCO Express stores started seeing the popularity of spiked or alcohol-infused water and seltzer water rise by mid 2016.

“If a c-store doesn’t currently carry it, it’s in the mix for 2017,” said Heidi Rembecki, NOCO’s director of merchandising.

Varieties include Mark Anthony Brands’ White Claw Hard Seltzer, Boston Beer Co. affiliate Hard Seltzer Beverage Co.’s Truly Spiked and Sparkling Spiked Seltzer.

NOCO Express stores, located in western New York, do not sell wine due to state regulations.

“There is definitely a leaning toward more craft beer, and we have a couple stores centered around these products,” said Rembecki. “It’s important to stay on top of these brands and evaluate new lines as they are launched.”

SPACE RACE
Designating space for beer, wine and other alcoholic beverages can be challenging in smaller footprints.

NOCO Express stores typically allocate five doors in the cold vault for beer, with some stores incorporating beer caves.

Beer vaults are typically located at the rear of the store or off to the sides, with beer caves adjacent to cooler doors.

“One of our newer locations includes an open air craft case,” said Rembecki. “We’re focusing on craft cases as part of remodels and new builds when they make sense to the area, as this is a growing and profitable segment, though still a smaller portion of the overall beer category.”

Craft beer in cans, as opposed to bottles like in the past, have become more prevalent recently, as well.

Mad Max’s Class C-size stores, which are 4,750 square feet, include 15 coolers and a walk-in beer cave, for a total of 35 linear feet of wine and liquor.

“We make sure to have big walk-in coolers to accommodate these products,” said Magestro. “We believe in the wine, liquor and beer segments and need to expand offerings.”

As impulse items, these products are kept in the front of the stores. This also provides easier accessibility for customers seeking a quick one-stop shop.

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Understanding the Hispanic Market

Dr. Jim Johnson

Growing populations warrant c-stores’ investment in Hispanic/Latino communities.

By James Johnson, Jr., Terry Johnson and Allan Parnell

Hispanics/Latinos continue to reshape our nation’s demography and consumer markets. They are the nation’s youngest consumer group, with a median age of 28 and tend to be brand-loyal consumers, especially when culturally-sensitive marketing and advertising are used to target them.

Their buying power is impressive—an estimated $1.5 trillion in 2015. Convenience store owners have a unique opportunity to garner a greater share of these dollars if they understand the diversity that exists within the Hispanic/Latino population. Also, to increase their odds for success, retailers need to redesign their stores and broaden their mix of products and services.

BY THE NUMBERS
In 2015, the U.S. Hispanic/Latino population totaled 56.5 million, representing 18% of the nation’s total population. Its growth (12.2%) outpaced total U.S. population growth (3.9%) between 2010 and 2015, extending a more than two-decade trend.

In absolute numbers, the Hispanic/Latino population increased by 6.2 million during this period. Nearly three quarters of this growth (74%) was the result of natural population change, that is, more births than deaths. The balance was due to international migration, that is, an influx of Hispanic/Latino newcomers from abroad.

Allan Parnell

Significant domestic migration—movement within the U.S.—undergirded this growth, leading to considerable regional redistribution of the Hispanic/Latino population. The South was the primary migration destination, continuing a trend dating back to at least the early 1990s, and received net flows of Hispanic/Latino migrants from the Northeast, the Midwest and the West between 2010 and 2015.

Taking into account both natural growth and migration trends, an uneven pattern of Hispanic/Latino population growth was evident at the state level in 2015, with three types of Hispanic/Latino markets for potential c-store growth and expansion:

• Nine U.S. states, including California, Texas, Florida, New York, Illinois, Arizona, New Jersey, Colorado and New Mexico—account for about 63% of Hispanic/Latino population growth between 2010 and 2015. They were home to 76% of the nation’s Hispanic/Latino population in 2015. Most of the Hispanic/Latino communities in these states are long-established and therefore are mature markets.

• Another 27 states—relatively new Hispanic/Latino population migration magnets—captured 28% of Hispanic/Latino population growth between 2010 and 2015. Hispanics/Latinos began moving to these states in significant numbers during the late 1990s/early 2000s and growth continues as a function of both migration—domestic and international—and natural population increase. Combined, these states were home to about one-fifth of the nation’s Hispanic/Latino population in 2015. Given the timing of their growth and development, Hispanic/Latino communities in these states are defined as emerging markets.

• The remaining 14 states (plus the District of Columbia)—future Hispanic/Latino population growth magnets—captured the balance of net Hispanic/Latino population growth between 2010 and 2015. In these states, the Hispanic/Latino population influx is fairly recent—mainly since 2010. Most of the growth to date has been a function of international as opposed to domestic migration, which typically foreshadows continued growth through chain migration from abroad. For this reason, Hispanic/Latino communities in these states are labeled as incipient markets.

As a result, major opportunities exist for c-store owners to expand in existing mature and emerging markets. They also have an opportunity to strategically position themselves for first-mover advantage in incipient markets.

LOOKING AHEAD
Among the nation’s major race/ethnic groups, the Hispanic/Latino population is projected to experience the largest absolute gains (34.8 million)—accounting for 59% of projected total U.S. population growth—between 2015 and 2040.

Success in fully tapping this booming market will hinge on convenience store owners’ ability to customize their product and services mix to align with consumer tastes and preferences of the specific Hispanic/Latino group(s) in their local markets.

But such statistics may mask critical success factors in attracting and retaining Hispanic/Latino customers.

Convenience store owners must understand that where Hispanic/Latinos live in the U.S. is strongly influenced by their specific country of origin. The U.S. Census covers
various Hispanic/Latino demographics including Mexicans, Puerto Ricans, Guatemalans, Salvadorans, Colombians, Ecuadorians, Peruvians, Cubans and Dominicans.

All of these groups enter the U.S. with different cultural orientations and consumer tastes.
Moreover, each group typically follows well defined migration streams when they settle in the U.S.

Differing Demographics
At the regional level, for example, Mexicans are concentrated mainly in the West and South; Puerto Ricans are in the Northeast and South; Cubans are overwhelmingly in the South; and Dominicans reside mainly in the Northeast.

Because the various groups often overlap in some regions and group-specific socio-demographic metrics may differ in significant ways from aggregate statistics on Hispanics/Latinos, settlement patterns can be quite nuanced at the neighborhood or community level where store location decisions are typically made.

Given the strong and deeply-rooted family orientation of Hispanics/Latinos, convenience store owners must strive—in all of these markets—to make convenience stores true shopping destinations—one-stop venues, not only for healthy food and basic household items that align with group specific cultural tastes and preferences, but also for a range of services that address basic social and health needs of the population.

Consistent with the concept of Hispanic/Latino new urbanism—a form of community development that aligns with the unique family, cultural and community orientations of Hispanics/Latinos—such an expanded model is likely to work especially well in food deserts where grocery stores are nonexistent.

Hispanic/Latino buying power will only increase in the years ahead—as the various specific origin groups become better educated and more upwardly mobile. For c-store owners, making a concerted effort to attract and retain Hispanic/Latino consumers makes good business sense.
James Johnson, Jr. is the William R. Kenan Jr. Distinguished Professor of Strategy and Entrepreneurship at Kenan-Flagler Business School, University of North Carolina at Chapel Hill. Terry Johnson is the principal of Yuubik Consulting. Allan Parnell is vice president of the Cedar Grove Institute for Sustainable Communities.

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Measures to Safeguard the Workplace

Easy access to cash, the presence of alcohol and tobacco products, and solitary late-night or early-morning shifts are among the factors that make convenience stores workplaces that require added protective considerations.

By David Quezada

The convenience store industry nearly doubled in size over the last three decades, according to the National Association of Convenience Stores (NACS).

The latest CSD/Humetrics Human Resources Benchmarking Survey found that convenience store owners expected these growth trends to continue, with more than one quarter of those surveyed having anticipated hiring more employees in 2016.

PREPARING EMPLOYEES
Working in a convenience store involves a certain level of risk, for which many new employees aren’t initially prepared. Easy access to cash, the presence of alcohol and tobacco products, and solitary late-night or early-morning shifts are among the factors that make convenience stores more dangerous places to work.

On average, convenience stores experience a work-related homicide rate that is seven times higher than other industries, according to the Centers for Disease Control and Prevention. Not surprisingly, homicide is the leading cause of death in retail establishments.

In a growing industry where hourly employee turnover is estimated to range from 55-77%, smart convenience store owners realize there are recruiting and retention advantages as well as cost savings to be gained by offering their frontline employees a safer work environment.

In addition to protecting a business’s employees, workplace safety programs that teach violence de-escalation strategies can help convenience store owners keep the cost of their workers’ compensation insurance and related expenses under control.

There are a number of violent acts that could occur during a robbery, including actual or threatened bodily harm, harassment or property damage.

PREVENTIVE MEASURES
There are some important prevention measures business owners can implement to reduce the risk of workplace violence, including:
• Implement a violence prevention training program. A professional training program conducted by a reputable professional or law enforcement can train employees in specific conflict de-escalation techniques and detailed, step-by-step instructions on what to do in case of a robbery or assault.
• Limit access to cash. Require workers to deposit cash into drop safes frequently to reduce the amount of cash on-hand. You can also prohibit the use of bills greater than $20 bills.
• Establish what to do in case of a robbery. Make sure employees are then trained in what to do during a robbery, like calling 9-1-1 and activating a silent alarm.
• Staff appropriately. If your store is located in a high crime area, consider staffing two or more workers in order to reduce the risk of assault.
• Address adequate outdoor lighting. Make sure parking lots and all areas of the property are well lit, including behind the store where garbage dumpsters are often located.
• Do not do your banking at a set time. Robbers will look for patterns to spot potential times to target staff. If you are depositing a large amount at one time, consider using a cash transit service.
• Always have two people present at opening and closing times, if it’s feasible. Have one person shutting up and the second positioned away from the door but with a clear view of what is happening.

Prevention techniques like these and others are only effective if they are being used. Business owners should regularly review and monitor safety practices to make sure everyone understands the correct procedures in case of an emergency. Workplace violence is serious and frightening, but by implementing these practices, employers can greatly reduce the risk of adverse incidents.

No business owner wants to see their property damaged or employees injured or killed. By taking preventative steps to reduce the risk of workplace violence, convenience store owners can help protect their employees, customers and business.
One of the smartest things a business owner can do is to maintain a safe workplace—it makes good business sense, and it’s the right thing to do.

David Quezada is vice president, Loss Control Services for EMPLOYERS, a company that offers workers’ compensation insurance and services to small businesses.

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VERC Enterprises Presents $500 Grant to Local School

Shan Muhammad, District Manager and Tony Depina, Manager of the VERC Enterprises Commerce Way Mobil present a check for $500 to Kristin Wilson, principal at Hedge Elementary School; the grant was made possible through the ExxonMobil Educational Alliance Program.

ExxonMobil Educational Alliance Program helps VERC Enterprises invest in local community.

VERC Enterprises, a convenience store and Mobil/Gulf gasoline operator with locations throughout eastern Massachusetts and New Hampshire, recently presented Hedge Elementary School in Plymouth with a check for $500, a grant made possible through the ExxonMobil Educational Alliance Program.

Funded by the ExxonMobil Corp., the ExxonMobil Educational Alliance program is designed to provide local retailers an opportunity to invest in the future of their communities through educational grants to neighborhood schools.

Tony Depina, manager of the VERC Enterprises Commerce Way Mobil location in Plymouth and District Manager Shan Muhammad presented the check to Kristin Wilson, principal at Hedge Elementary School.

“We’re proud to participate in such a fine program that recognizes and supports the quality of local schools,” said Leo Vercollone, CEO of VERC Enterprises.

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