Industry Highs & Lows Frame 2013 Nacs Show

C-store leaders detailed achievements and challenges of the past year

NACS President and CEO Hank Armour drew rousing applause at last month’s 2013 NACS Show when he boasted, “We sued the Fed and we won!” during his day-two general session address, in which he detailed the convenience store industry’s achievements and challenges.

“Wow, that’s a big deal,” he continued, referring to the interchange fee victory that NACS scored recently when a judge ruled that the Federal Reserve disregarded Congress’ intent when it decided how much banks can charge retailers to process debit card transactions.

“Who beats the government? This time, we did,” Armour exclaimed.

He noted, however, that the war over swipe fees has been raging now for more than a decade and it’s still far from over. In regards to debit fees, the Fed has appealed the judge’s ruling and Armour said it will likely take another year to reach a final resolution.

Meanwhile, in regards to credit card interchange fees, the NACS chief said it’s quite possible the court will approve the proposed class-action settlement even though most of the retail industry has objected. “It’s a horrible deal,” he said, noting that if it is approved, NACS will vigorously appeal and fight in the courts. “And if that doesn’t work, we will go back to Congress.”

While the big financial institutions usually wait for their opponents to either run out of money or run out of passion, Armour said NACS has done neither — and will not. “We are absolutely right on this issue, but being right is not enough. We need to fight…and be persistent.”

Convenience stores are a vital part of the U.S. economy, according to Armour, who cited that U.S. c-stores topped $700 billion in sales last year and conducted 160 million transactions a day. “That’s half the population coming to our stores every day,” he explained. “While other retail channels struggle, our industry continues to thrive.”

As for current and future challenges, Armour discussed what he calls “demand destruction” happening in both the motor fuels and tobacco categories, as well as increasing regulation industrywide. These obstacles mean c-store companies have to ask: “How do we replace those sales?”

He vowed that NACS, the Association for Convenience & Fuel Retailing, will continue to help its members grow their businesses and fight on their behalf on Capitol Hill. “When we speak with one voice, we are an awesome force to reckon with,” he concluded. “Rising up together, we can accomplish great things.”

CHANGING NEGATIVE PERCEPTIONS

The day before Armour’s address, 2012–2013 NACS Chairman Dave Carpenter kicked off this year’s NACS Show by choosing to talk about two areas he feels are crucial to the future of the convenience store industry: its image and its people.

“Your image is your business,” he said. “And sometimes it’s true that perception is more important than reality.” He noted that the industry, with NACS’ support, has done a lot to change the market’s negative perception of convenience stores and gas stations as unattractive, dirty, polluted and attracting “shady characters.” However, as the owner of 12 7-Eleven convenience stores in the Denver area, he said he still encounters community opposition to building new c-stores in that market.

Even though today’s new c-stores are more attractive and appealing than in the past, communities still react more negatively to a new gas station even though these same communities are aggressive in trying to attract other businesses such as shopping malls. He argued: “How will existing stores get better if competition doesn’t force them to?”

Carpenter said he keeps thinking the next store will be easier, but it never is.

On the image front, he pointed out that NACS is ready to help other c-store operators with a customizable toolkit for regulators, zoning boards and community organizations.

“Today, we are not demonized like we were several years ago,” said Carpenter, pointing to the fewer stories about price gouging that came out in the media following Hurricane Sandy last year in comparison to Hurricane Katrina several years ago.

As part of the changing image, he also noted how c-stores are being forced to change due to declining tobacco sales and fuel volumes, more competition from quick-service restaurants (QSRs) new expenses from the Affordable Care Act and higher costs for PCI (payment card industry) compliance.

“We need to keep our core,” said Carpenter, noting that c-stores as an industry now generate more than $31 billion in foodservice sales the equivalent of No. 1 foodservice operator McDonald’s Corp. and as much as the No. 2 through No. 4 QSRs in the country combined.

“We are only at the beginning of this next phase of our development as an industry and I truly believe [foodservice] is our biggest opportunity” he continued.

The outgoing chairman concluded with a more personal vow to change the way he deals with people-building at his own company. “[Since] I sold my business in Iowa and started over from scratch I have put more emphasis on finding the right people to grow my company ” he said.

Creating better people will create better stores concluded Carpenter.

THE FREEDOM TO CHOOSE

On the final day of the NACS Show in his first speech as the new chairman of NACS Brad Call of Maverik Inc. spoke to his convenience store industry peers about the freedom of choice as it relates to the country’s fight to reduce obesity and get Americans healthier and more active.

“It’s an awesome thing that our nation is focusing on health, fitness and fighting obesity. So, as retailers, what’s our responsibility? Your responsibility and my responsibility are to provide healthy choice options. But it’s not our responsibility to tell customers what they should and shouldn’t eat,” he explained.

According to Call, one of the main reasons for Maverik’s success over the years — the chain’s first store was opened by his grandfather Reuel Call in the fall of 1928 — is freedom, which is also coincidentally the name of his hometown in Wyoming.

“We should all have the freedom to make our own choices, right? In our stores, that means our customers should be able to make their own choices without anyone telling them what they can — or what they can’t — buy,” Call said, noting that the New York City mayor’s proposed 16-ounce beverage ban wouldn’t sit well with thirsty construction workers “who depend on our stores for their day’s hydration.”

Customers should be free to choose what they want to consume Call said noting that Maverik’s adventure-themed convenience stores offer both higher-calorie items and healthy products.

The incoming NACS chairman also stressed that consuming calories (“calories in”) shouldn’t be the only focus in addressing obesity. Burning them off (“calories out”) through physical activity and exercise is equally if not more important. Maverik is developing an app that will reward people for their exercise. After they earn enough points they will receive some sort of treat from the stores.

The basic message is “Work up a sweat, then come to our stores to re-energize” Call said.

Customizing a famous quote about freedom by the philosopher Camus he concluded by saying: “Freedom is nothing but a chance to be better — without some pencil-neck regulator or ivory-tower legislator telling you how to do it. Freedom allows us to take chances to get a little crazy to be adventurous and to give customers what they want. I love living in Freedom!”

The 2013 NACS Show took place Oct. 12–15 at the Georgia World Congress Center in Atlanta.