Convenience Stores: The Retail Channel That Could

LAS VEGAS -- Back in 2007, as the economy began its unforgettable downward spiral, financial experts everywhere were quick to count convenience stores out -- predicting the industry would be the retail channel to suffer the most.

Boy, did the industry prove them wrong. According to Hank Armour, president and CEO of NACS, the Association for Convenience & Fuel Retailing, many financial pundits sounded the alarm for the convenience store channel because they said customer visits were "entirely discretionary." What followed were the four most profitable years for the industry, which came through the downturn as the best-performing retail channel, he told the attendees of the 2012 NACS Show.

Specifically, he noted, the c-store industry rang up $682 billion in sales in 2011. In fact, if the industry was a country, it would have the 19th largest economy in the world. Even more notably, convenience stores conduct 160 million transactions a day, Armour added.

"If you haven't been to a convenience store today, you are going tomorrow," he said in his speech leading up to the show's popular "Ideas 2 Go" presentation. "We have become part of the everyday life of the American consumer."

Armour acknowledged that c-store owners and operators have raised the bar in retail by, among other things, having cleaner and better designed stores; better assortment of products; enhanced foodservice offerings; and better trained employees.

"But we need to continue to raise the bar," he said, explaining the industry can do that through knowledge, connection and advocacy -- the main tenets of NACS.

Calling out all these three drivers to success individually, he particularly noted the success that  the association and the industry has had with advocacy, such as with roll-your-own tobacco legislation this year.

"When we speak as one, our industry is powerful and successful," Armour said.

The c-store industry still has battles to fight, though. While it won the war on debit swipe fee reform last year, the new Federal Reserve rules do not go far enough, he explained. NACS filed a lawsuit challenging the new 22-cent rule, pushing for the Fed's original proposal limiting the cost of a debit transaction to between 7 cents and 12 cents. The association testified in the suit last week and expects a ruling by the end of the year.

Credit card swipe fee is another story altogether for convenience stores and could be "the big ugly, potentially, bad news," Armour said. The issue is at the center of a seven-year lawsuit filed against Visa, MasterCard and some of the largest issuing banks, in which NACS is a plaintiff. A proposed $7.2 billion settlement is currently on the table; however, NACS is among several associations opposing the deal.

"It was never about the money, but about fixing a broken system and this settlement doesn't do that," he stated.

The federal judge hearing the case will receive the proposed settlement for preliminary approval and review it over the next 30 days, according to Armour. He urged all the industry's retailers to reach out to NACS and sign a declaration explaining why the proposed settlement would be bad for their business.