A Call to Action

Of all the issues I’ve worked on at Convenience Store Decisions, this month’s issue stands out for the sense of urgency conveyed throughout the numerous stories. Beginning with Bob Gatty’s outstanding cover story on the opportunities in the candy category to PCI compliance, Hispanic marketing and emerging tobacco trends, retailers are being challenged at every corner to achieve operational excellence just to stay one step ahead of their competition. But excellence can prove to be quite profitable.

In this month’s exclusive cover story, we detail the soon-to-be-released “Convenience, Candy & Profit” report, which was developed following a year-long study by Kit Dietz—an industry consultant with more than 20 years experience both as a retailer and distribution executive. Gatty reports the industry could realize hundreds of millions in new candy profits if they embrace some basic changes.

“If the nation’s 146,000 convenience stores and their distributors worked together to make sure the top 50 SKUs in candy, gum and mints, the ‘core brands,’ were always in stock, as much as $358.8 million in new candy sales could be generated. Numerous other steps that could generate even higher sales and profits, in excess of $500 million, are also identified,” Gatty writes.

Even though we are struggling with a tough economy, candy remains among the strongest categories in convenience stores. “Our research shows that consumers are still turning to these simple treats, and trading partners could capitalize even further on this highly recession-resistant category, if they are willing to adjust some important business practices,” Dietz said.

The study uncovered major opportunities available through improved manufacturer, distributor and retailer collaboration including:

• Keeping core brands in stock at all times.

• Improving in-store product placement.

• Improving exit strategies for weak items.

According to the report, which is sure to open a lot of eyes, if all 50 core brand items achieved 90% in distribution and in-stock status, the channel would realize $192.7 million in increased sales. A 95% level would boost sales by $269.2 million and, if the 100% level could be achieved, the result would be increased sales of $358.8 million.
To learn more about this groundbreaking study, read the story here.

Race Against the Clock
While PCI deadlines continue to bear down on the industry, many operators remain behind schedule for achieving compliance. Remarkably, thousands more are still unaware that they need to do anything at all. Given potential liability retailers face for one breach of credit card data either at the pumps, the cash registers, online or even at ATMs, there really is no excuse for inaction.

Some operators, as expected, are forging ahead with compliance. Sheetz Inc., for instance, recently said it is upgrading 2,000 fuel dispensers at 270 locations with encrypting PIN pads that are PCI compliant and provide Triple Data Encryption Standard (TDES) encryption of the PINs entered by consumers during debit card transactions at the pumps. Another operator, Walters-Dimmick Petroleum of Marshall, Minn., is installing the same units at its 75 Shell-branded units.

Others, however, are not as current.

“It’s hard for me today to believe there are folks out there who don’t know (what PCI compliance requires), but the reality is, there are,” said Paul Culver, manager of payment solutions for 1,600 Cenex convenience stores. “That’s the effort we’ve gone through with our brand, and I think it’s true with a lot of the other branded folks in the petroleum world. I really think the petroleum folks are farther ahead than some of the other industries, yet we talk to somebody every day who says, ‘Oh—when did this happen?’”

You can read the security standards story beginning on page 50.


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