Convenience store

Article Dean Dorton

Operators need to monitor the following risk areas to stay competitive 2021:

1. Cybersecurity

Convenience stores should comply with PCI standards in order to protect cardholder information. Also be aware of skimming, in which devices are affixed to gas pumps and ATM machines to steal credit card information. C-stores should implement procedures to monitor pumps and ATM machines, and prevent and/or remove such skimming devices. Additionally, establish controls around the use of artificial intelligence to better understand consumer buying habits. Companies have until April 17, 2021 to comply with EMV chip card technology. Companies should invest in a proactive cybersecurity program which includes training programs to educate employees on common phishing scams.

2. Social Media & Mobile Technologies

Social media is increasingly becoming a part of everyday life. Incorporating social media into your business model can improve customer service and provide a low-cost alternative to traditional advertising. More than half of all buying is expected to occur on mobile devices. Therefore, having mobile applications is crucial to achieving success. Incorporating a rewards program in an app can lead to customer loyalty and increased sales.

3. Food Service

Food service sales continue to drive the success of the convenience store industry, and you risk losing out on business if you do not invest in food service. Because customers are looking for healthier food options, the c-store industry has seen large sales increases in “better-for-you” items, with lunchtime traffic as the biggest opportunity. Continued trends in 2021 are going green, customization, unique experiences, healthy options, and tech takeover.

4. Wage Rates

The focus on driving up federal and state minimum wage requirements will get additional attention as the U.S. sees a transfer of power in Washington D.C.

5. Regulation Compliance

Increased regulation may result in higher prices for products such as e-cigarettes and other vapor products, diet and energy drinks, and dietary supplements, or a ban on those products altogether. Convenience stores must also comply with regulations regarding sales of alcohol, tobacco, and lottery tickets or face serious fines and penalties.

6. Softening Tobacco Market

While the tobacco market is stable, cigarette consumption is slowing as consumer demand flattens. E-cigarettes can be an important product line in c-stores, as almost half of adult smokers are looking for an alternative to cigarettes. Cigarette taxes have been rising, which will impact demand as well.

7. Shortage of Truck Drivers

The average age of a truck driver is 55, so all industries need to work together to identify an expanded labor pool. Currently community colleges are expanding programs along with a focus on female and military veteran drivers. The shortage of truck drivers can create delays in shipments to stores, inventory shortages, and frustrated customers. The LA Times reports 1.7 million American truck drivers could be replaced by self-driving trucks over the next decade.

8. Environmental Trends (Going Green)

Environmental trends are changing the landscape of c-stores. Plastic straws and disposable cups have been marked as ecological hazards. The industry needs to work together on finding alternatives to risk not losing its customer base. California has issued a ban on new gasoline cars by 2035 which puts an emphasis on developing battery powered vehicles and the need for c-stores to add charging stations.

9. COVID-19 Impact

COVID-19 has caused a substantial decline in travel and gas consumption. C-stores have to expand marketing to draw traffic for food and other items beyond fuel.

Beyond 2021, operators need to monitor competition from nontraditional c-store locations and sources. Amazon and Dollar General are both evaluating c-store options. Operators have also expressed concern in recruiting top talent and having to explore nontraditional labor pools. Additionally, significant changes in the automobile industry in the next 10 years will see autonomous vehicles, ride sharing programs and battery powered vehicles which will dramatically reduce the fuel supply provided by c-stores. C-stores provide approximately 80% of the fuel purchased in the U.S.

Sources: csnews.com, dol.gov, nacsonline.com, convenience.org

Article Dean Dorton

Owners need to monitor the following risk areas to stay competitive in 2016:

  1. Cybersecurity
  2. Social Media
  3. Volatility of Gas Prices
  4. Mobile Technologies
  5. Food Service Competition
  1. Wage Rates
  2. Regulation Compliance
  3. Asset Theft
  4. Changing Demographics
  5. Increased Fuel-Efficiency
  1. Cybersecurity
    Cybersecurity involves the need to comply with PCI standards to protect cardholder information.
    This also includes skimming, in which devices are placed on pumps to steal credit card information. Procedures should be implemented to monitor the pumps and prevent and/or remove these devices.
  2. Social Media
    Social technologies are increasingly becoming a part of everyday life. Incorporating social media communications into the business model can improve customer service and provide a low-cost alternative to traditional advertising.
  3. Volatility of Gas Prices
    Decreases in gas prices nationwide have led to consumer confidence in the health of the economy, which will also benefit convenience stores with increased sales. However, the converse is true as well: should gas prices significantly increase again, then in-store purchases of snacks and drinks will drop. Additionally, Congress is looking at raising federal gas taxes to fund the nation’s aging highway projects.
  4. Mobile Technologies
    More than half of all buying is expected to occur on mobile devices; therefore, having mobile applications is crucial to achieving success. In addition, these mobile applications will provide ways of saving money and reducing human error.
  5. Food Service Competition
    Convenience stores that don’t invest in food services create the risk of losing out on business. The market for convenience store prepared meals is increasing as consumers desire diverse, affordable, convenient, and healthy food options. Convenience stores are uniquely positioned to meet this growing need if an adequate investment in food service is made.
  6. Wage Rates
    The growing pressure to raise the federal minimum wage will increase the number of part-time workers, so businesses can keep the cost of labor low and avoid certain benefits. Additionally, there is a federal proposal that salaried individuals who earn less than approximately $50,000 per year be potentially eligible for overtime, which will impact convenience store managers and raise labor costs. This change to overtime pay should be in place by 2017.
  7. Regulation Compliance
    There is an increase in regulations in a variety of categories, including e-cigarettes and other vapor products, diet drinks, energy drinks, and dietary supplements. Increased regulation may result in higher prices for those products or a ban on the products altogether. In addition, menu-labeling regulations taking place in 2016 will require increased menu-labeling that will likely cause consumers to avoid lower quality or less healthy food options, thus decreasing food sales. Convenience stores must also comply with regulations regarding sales of alcohol, tobacco, and lottery tickets or face serious fines and penalties.
  8. Asset Theft
    A persistent threat to convenience stores is employee theft of cash from registers and customer theft of inventory from the shelves. Review and monitoring procedures should be implemented to prevent and detect these threats.
  9. Changing Demographics
    The workforce and general population are becoming more ethnically diverse and growing older. Demographics will change dramatically in the future as people live and work longer and as the percentage of other cultures in the U.S. increases. This will affect how convenience stores operate internally and how they reach a much more diverse marketplace.
  10. Increased Fuel-Efficiency
    Vehicles are becoming increasingly fuel efficient, which means fewer stops at gas stations to fill up the tank. This results in fewer opportunities for consumers to visit convenience stores and make purchases. The use of reward programs and other tools are needed to drive inside sales.

Sources:
www.csnews.com
www.nacsonline.com
www.petrolplaza.com

For more information, contact Bill Kohm at bkohm@deandorton.com or (859) 425-7625.

View Bill Kohm’s Bio