Hot Fuels Hot Topic

Last week, Costco agreed to install temperature-sensitive gas pumps that will slightly adjust the amount of fuel dispensed to account for the fuel lost to expansion as outside temperatures rise above 60 degrees. This was the retailer's way of removing itself from national and state class action lawsuits by drivers over the sale of "hot gasoline."

This has only served to increase temperatures and maybe blood pressure levels among industry advocates representing petroleum marketers who are spending millions to fight these lawsuits, which groups like the National Association of Truck Stop Operators say are without merit.

The National Conference on Weights and Measures hasn't yet approved the equipment Costco has agreed to install, and gasoline industry groups contend the equipment will cost consumers more through increased gasoline prices, and provide no tangible benefit in the way more fairly priced fuel.

If Costco installs this equipment and markets it as a way for consumers to get what they think they are paying for, how will other gas marketers compete against that message? Will some others feel compelled to install similar equipment? How are consumers supposed to judge what a fair price is in their market, if retailers are no longer selling the same "size" gallon?

-- Barbara Grondin Francella

Indulging or Watching Weight?

This may be true, but recent sales trends indicate indulgent snacks -- which make up more than two-thirds of the snack category -- have flat-lined, while some perceived-healthier snacking options -- yogurt and nuts for example -- have grown in volume sales.

According to a recent report by IRI, last year, sales of a number of healthier snacks outpaced the category as a whole (which was down 1 percent in sales in 2008.) Among them: kernel popcorn (up 15 percent in dollar sales); non-sweet popcorn (up 13 percent); natural string cheese (up 11 percent) and sugarless gum (up 11 percent).

          

Sugarless gum should get another boost, as news this week broke of a study suggesting chewing gum helped people consumer fewer calories. Are your consumers looking for healthier alternatives, or are they stress-eating and indulging in full-calories, low-fiber, fried salty snacks and rich, sugary sweets?

 

--Barbara Grondin Francella

More Competition Hits the Convenience Store Channel

Convenience Store News toured the new Giant To Go store opening this week by Ahold, and while the company is saying “it is not a c-store in the traditional sense,” the store sure seems to sell a lot of convenience store staples, such as tobacco, lottery tickets, money orders and gas, not to mention its candy and snacks is being supplied by convenience store distributor McLane Co.

But this isn’t the first time the industry is faced with competition from someone outside the market attempting to break in -- channel blurring started years ago. However, looking back at previous attempts, like Home Depot Fuel stores, the industry really has not been impacted in the past.

Will Giant To Go stores change the mix, or will people simply view them as smaller supermarkets? I mean, they are selling fresh meats.

If history is any indication, I think the c-store industry will prevail.

-- Tammy Mastroberte

Get The Right People on Your Bus

5.1 million. That’s how many jobs have been lost to date in the United States since the recession began. It’s hard to imagine how such a dismal figure could translate into any good news for convenience retailers, but it turns out there is an upside.

 

C-stores have long struggled to attract a higher caliber of employee and retaining them has been even more difficult – until now. With more people out of work and fewer jobs to be had, candidates who would have never before considered working at a convenience store are filling out applications. Now is the time to upgrade your work force.

 

This not only means replacing workers who are not performing up to standards with new hires, but also pushing your average workers to become high performers. Set goals that are challenging but attainable, and reward those employees who rise to the occasion. The more high performers you have on staff, the more high performers you will attract.

 

The winds have shifted, and c-store retailers are now in a power position. Don’t settle any longer for merely shift fillers. There are many others looking to take their place.

 

-- Linda Lisanti

Wawa's Way

Millions of words have been written about the success of c-store industry leader Wawa Inc. Known for its fresh foods, its growing list of private-label products, and willingness to take risks (no-fee ATMs, among others), Wawa has long been heralded for its business practices and hiring and retention strategies (hiring students from outside the U.S. to staff it's Jersey Shore stores in the summer, for example.)

Covering this industry for more than 22 years, I've seen risk-taking retailers with then state-of-the art technology fail (remember National Convenience Stores, anyone?) and the smallest independents succeed with barely more than a cigar box as a cash register and good memories for customer's names and histories.

For 45 years, Wawa has succeeded by doing both: adhering to its core values, investing in technology and employee education and benefits, and hiring and retaining associates who, for the most part, are truly members of the neighborhood they serve. With tenures marked in years -- even decades -- instead of months, many Wawa associates can tell you who just had a baby, who likes their hoagies with extra cheese, and which of their colleagues needs a day off next week.

I saw the Wawa phenomenon up close at a recent 25th anniversary celebration of a store in New Jersey, where associates egged each other on in a "dance off" and smiled at every customer. Even if the customer didn't smile back.

Kudos to Wawa's Lori Bruce and her team for pulling off a year full of Wawaversaries that includes public ceremonies recognizing long time associates and customers.

Is Wawa perfect? Nah. A recent test of mobile marketing fell flat for instance. But they are willing to try new things and even in recessionary times, keep their commitments to their employees. More often than not, their efforts pay off big -- and loving their thick shake machines hasn't biased me at all.

--Barbara Grondin Francella

Food-bourne Illnesses Holding Steady Despite Media Uproar

The report by the Centers of Disease Control (CDC) last week that Americans didn’t suffer more food poisoning last year flies in the face of high-profile media coverage of contamination outbreaks involving peppers, peanut butter and other foods.
Rates of food-borne illnesses have been holding steady for five years, according to the CDC’s publication, “Morbidity and Mortality Weekly Report.”
Despite the publication’s depressing name, the report is good news for retailers concerned about the safety of the nation’s food supply lines. Food-borne illnesses in this country have been declining from the mid-1990s until the beginning of this decade, due to improvement in the meat and poultry industries, according to experts.
However, contamination outbreaks associated with produce are increasing, and overall, the incidence of food-borne illnesses is not decreasing anymore either.
"Progress has plateaued," said Dr. Robert Tauxe of the Centers for Disease Control and Prevention, a co-author of the report.
The report looks at the occurrence of about 10 leading food-borne illnesses in 10 states that participate in a federally-funded food poisoning monitoring system. CDC officials think it's nationally representative, based on the sample's mix of geography and demographics. For more details on the report, see http://washingtontimes.com/news/2009/apr/10/food-borne-illnesses-hit-plateau-in-us/
While the food supply may be safer today than it was 50 or 100 years ago, though, offers little comfort to the people who suffer food poisoning or the manufacturers and retailers who are laid vulnerable to lawsuits and reputation damage as a result.
Convenience store retailers, especially those that are serious about being the fresh food business, need to tighten their food safety procedures. They need to monitor and demand safety certifications from their suppliers as well as watch their own safety operations at the store level.
These types of stories, like the recent peanut scares, will always feed big headlines, and a touch of hysteria, in the general press.

Technology Spending in 2009

CSNews released some of the results from its 2009 Technology Study Wednesday during a Webinar, and while tech spending increased in 2008, many c-store operators are planning to spend the same or less than they did this year.

While one-third of the respondents to the survey say they are spending more in 2009, many will be placing a chunk of it into PCI compliance. While that is important, it doesn't exactly leave a lot of room for innovation.

When asked if the economy is effecting the technology budget this year, most retailers said it was, explaining spending will only include "necessary" technology.

Do you think the tight budget will effect innovation? Will next year's report see less increases in adoption?

-- Tammy Mastroberte

Lessons in C-store Social Networking

Having a Web site is great -- it allows convenience stores to communicate hours, location, specials and more to customers. But there's a downside to this communication tool -- it’s a one way road. The store talks to the online visitors, but the visitors can't talk with the business, or each other for that matter, except for an e-mail address of contact us form on the site.

Why should having an online dialogue be important to convenience store retailers? It allows customers and potential customers to interact with the brand, while the brand itself can garner unedited, instantaneous feedback as well. It also spreads the convenience store brand into the personal areas' of customers' lives, in the times they are not on-the-go or in the store -- it increases awareness of the brand, and can help establish a hip or "cool" factor by being on top of the latest technological trends.

But perhaps more importantly, it can help generate customer loyalty to that c-store brand. Customers who connect with the brand outside of the store may be more likely to favor it over the competition for their needs.

One of the easiest ways to begin down the path to online dialogue is through social networking, and one of the most popular tools to use (for Gen Y and Baby Boomers alike) is Facebook. Simply sign up with an email address, create a page dedicated to the business, upload a picture and fill in some information about the company and viola -- instant dialogue tool. When customers visit the page and become "fans" of the business, they can post comments, suggestions, pledges of loyalty to the fountain selection, or whatever else they choose. And the business can reply back, post its specials, events, promotion or news.

This is the first and most basic step to opening up a dialogue with customers online. One convenience store chain -- Whitehouse Station, N.J.-based Quick Chek -- has taken this approach with a Facebook page dedicated to its business and its mascot, Q. There, members of the social network can view photos of store events and other promotions, and profess its love for the convenience store chain. (A recent comment by Facebook user Gary 'Boot' Seem said "Quick Chek is THE PLACE for my morning coffee and a muffin! And I love the in-store audio messages.")

Another cool element of the Facebook tool is that it can host videos -- an element Quick Chek has embraced by posting blooper reels of its mascot falling at the New Jersey Devils' hockey arena, and also its viral video of customers slamming down competitors' to-go coffee cups in favor of a Quick Chek cup, as part of the chain's recent Slam Dunk Day promotion, where it takes a tongue-in-cheek poke at its coffee competition -- namely, Dunkin' Donuts.

The best part of the video is the very end, where Q dunks what appears to be a cease and desist order from Dunkin' Donuts in a basketball hoop.

One final piece of advice: there's a slew of advice on the Web from consultants and organizations about using social networking as a marketing tool. Be sure to look into these suggestions before deciding to go all out online. Like any other marketing campaign, social networking takes time, financial and employee resources, and dedication. But you may find the rewards are worth the effort.

-- Mehgan Belanger

Soft Drinks Flatter Still

Sales of conventional ice-cold soft drinks, on the downslide for the last five years at least, are expected to lose even more fizz, as Americans by the millions rapidly switch from sugary carbonated beverages.

From 2003 to 2008, the regular carbonated soft drink market lost 15.6 million adult drinkers, according to recent estimates by Mintel. Just 68 percent of respondents to Mintel’s November 2008 survey said they drank regular soda in 2008, down from 76 percent in 2003. During the same period, the number of diet soda drinkers grew; 7.8 million more adults reported drinking diet soda in 2008 than in 2003.

"Regular soda has taken the brunt of criticism from America’s obesity and health issues, because people associate it with 'empty' calories and artificial ingredients,” Krista Faron, senior analyst at Mintel, noted. "As health and wellness awareness grows, more people are turning away from old-fashioned pop and looking for healthier, lower calorie drinks, as well as drinks that offer the functionality to meet their specific lifestyle needs."

For the most part, c-store operators have been hip to this trend, giving more cooler space to diet sodas, bottled water, energy drinks and sports drinks. But how are retailers adjusting at the fountain?

Consider this: One in three beverage-purchasing adults told Mintel they’re drinking more water and less carbonated beverages to manage weight or other health conditions, compared to their choices in 2006. Mintel found 16 percent of respondents worry about the health risks of high-fructose corn syrup, while 15 percent say they’re drinking less artificially sweetened beverages because of risks.

"Manufacturers have done well at keeping pace with people’s new preferences, and we expect continued momentum in tea, coffee drinks and diet soda in particular," Faron said.

Maybe it's time to reconsider what's coming out of those 16- and 32-head dispensers, too. I'd love to find more caffeine-free, no-calorie selections at the fountain.

-- Barbara Grondin Francella

Taking a Bailout to the Max

Last week, I blogged about Domino Pizza's "Big Taste Bailout" campaign featuring CEO Dave Brandon traveling the country delivering $5 pizzas to American consumers. See "A Bailout We Can Sink Our Teeth Into," at http://sparechange.csnews.com/2009/03/a-bailout-we-can-sink-our-teeth-into.html.

Now comes word that Domino's accidentally gave out thousands of free pizzas when someone discovered that typing "bailout" into the online promo-code window on Domino's Web site triggered a freebie campaign that was scrapped but never taken down from the site.

Before the company caught on, 11,000 pies were delivered. Now that's a better bailout than even GM is getting.

-- Don Longo