NACS Leadership Forum Focuses On Future Of Fuel, Refreshment And People

The CEOs of 7-Eleven Corp., PepsiCo and Alon USA headlined three days' of panels and speakers discussing the future of the convenience store industry at this year's NACS Leadership Forum, held in Miami Beach last month.

The jobless recovery, the rising cost of commodities, channel blurring or competition from other retail channels of trade, and increasing government oversight of business were just a few of the major issues cited by Joe DePinto, CEO of 7-Eleven, in his opening address.

“To stay relevant, you have to listen to your customer and change,” said DePinto. “Our customers, the environment and the competition is changing rapidly. We must be mindful of that and change just as rapidly.”

Jeff Morris, CEO of Alon USA, a leading refiner and marketer based in Texas and also operator of Southwest Convenience Stores, which consists of more than 300 7-Eleven and Fina stations in Texas and New Mexico, addressed the future of the forecourt side of the business.

Morris pointed out gasoline demand in the United States peaked in 2007. “We will never again sell as much gas as we did in 2007,” said Morris. Why? The energy bill passed in December of that year set new mileage standards that call for a huge fuel efficiency improvement, which was accelerated to a new goal of 25 percent fuel efficiency improvement by 2016 by the Obama administration.

As car makers strive to meet that target, consumers also began buying more fuel efficient autos when fuel prices reached $4 per gallon in the summer of 2008. These factors are working to change the types of vehicles on the road today and in the future. “In reality, consumers can't change their fuel demand much through their driving behavior,” noted Morris. “They still must drive to work, to school, etc. But when they buy a new vehicle and go from a 15-mile-per-gallon guzzler to 30 mpgs, that is significant change.”

Opokua Kwapong, vice president of R&D, Sports and Hydration for PepsiCo Inc., provided attendees with a look at the drivers and trends that will impact refreshments by the year 2020. The five main drivers, according to Kwapong, are Demographics, Economics, Health, Environment and Lifestyle.

From soft drinks, the discussion moved to the beer category. Dave Carpenter, president of J.D. Carpenter Cos. based in Iowa, said beer is critically important at his Shortstop stores. Carpenter believes a beer cave (or beer vault as it's called at Shortstop) is the best way to maximize sales and profits in the beer category.

Carpenter listed differentiation, larger selection, more efficient use of labor, and reduced out of stocks as reasons to install a beer cave.

Sticking with the cold beverage theme, John Zikias, vice president of marketing for Thorntons, provided a case study in how to drive fountain business for cold and frozen beverages. Zikias said focusing on quality goes beyond figuring out the ideal temperature for a carbonated soft drink from the fountain is 34 degrees. “We asked ourselves, 'what's a perfect drink,'” said Zikias. “We came up with the term 'tongue tingling' and then we made sure all our team members understand what that means.”

Lisa Wollan of Wawa wrapped up the session on refreshments. The head of consumer insights and brand strategy at the Pennsylvania-based retailer discussed how Wawa reinvented its vaunted coffee program.

The first thing the company did was shore up its current offering by tightening every specification, hiring a coffee expert and adding a new premium 100 percent Columbian coffee. Then it improved the process through SKU rationalization and evolved the packaging with new graphics that connoted quality. The changes had an immediate positive impact, according to Wollen, but the company didn't stop there. “That just stopped the bleeding,” said Wollen. “But long term we needed to defend and grow our coffee share by delivering quality coffee without increasing spoilage — a decision that led to a new urn system.”

The Forum ended with a question-and-answer session with PepsiCo CEO Indra Noovi. She touched on her personal career achievements, the importance of having mentors, and the development of Pepsi's culture of Performance with Purpose.