Industry Update From Around the World

CICC / CONVENIENCE INDUSTRY COUNCIL OF CANADA

Convenient in Good Times… Essential in Tough Times

The convenience industry always comes through in a crisis, and COVID-19 is the gravest crisis our country has faced in generations. Throughout it, the convenience industry channel has risen to the challenges and obstacles faced in operating through a global pandemic and has continued providing for our communities. Just as our members work hard each day for their customers, staff and communities, the Convenience Industry Council of Canada (CICC) is here working on behalf of its members. From the outset, CICC’s primary focus has been to advocate with provincial governments that convenience stores and gas stations be deemed essential services. These efforts paid off. From coast to coast, our stores are listed as essential businesses allowing them to remain open.

Moreover, the essential services designation extends to the entire supply chain: retailers, distributors, and vendors. Though we have succeeded in gaining this designation for our channel, CICC continues to reinforce to governments the importance of the convenience industry. The council has recently launched a targeted social media campaign with the goal of reinforcing to politicians how the industry has stepped up during the COVID-19 crisis and is committed to providing for its communities.

In This Together

To help navigate the constantly-changing situation and the resulting issues it causes, CICC has put in place a COVID-19 working group that is focused on sharing experiences and best practices. Anne Kothawala, president and CEO of the CICC said: “As this very challenging situation evolves, we are learning from each other to quickly adapt and put preventative measures in place that will ensure reliable and safe customer service.”

Continuing to Advocate

Further to ensuring our stores are on the list of essential services, the CICC has been advocating with all levels of government to ensure our industry receives financial support through programs, as well as pushing for a pause on all industry regulations during this fiscally challenging time. We have already seen success with the federal government pausing all nonessential regulations and with Ontario delaying implementation of new vaping regulations that directly impact our channel. At a federal level, CICC advocated for flexibility in income support programs. The government responded to industries needs and implemented changes to wage subsidy legislation C-14, which now states that businesses that have suffered a 15 per cent decline in revenues in March (rather than the initial 30 per cent) are eligible for support as well. Kothawala said: “this is a significant change, as many of our members’ stores only started to see declines in the latter half of March, after business closures were announced mid-month.”

In Atlantic Canada, gas retailers are feeling the effects of the regulated selling price of motor fuel that has rapidly decreased as a result of the pandemic and the global oil price war between Russia and Saudi Arabia. As Kothawala explains: “Atlantic gas retailers are caught with inventory purchased at a price much higher than what they could sell it for. The situation was made worse with pump traffic declining as much as 50 per cent due to work-from-home and stay-at-home public health directives. It is estimated that Atlantic convenience gas stations were losing upwards of $14 and more on every fill up until they could clear their inventory and the losses average thousands of dollars. These are real losses because there is no deferred demand that can be made up down the road.” CICC has collaborated with the Canadian Independent Petroleum Marketers Association and the Atlantic Convenience Store Association to request a financial program from provincial governments that would enable retailers to partially recover retail gasoline losses in March. National Convenience Industry Summit: In light of the evolving COVID-19 situation, CICC is evaluating different options to bring together industry executives for networking and learning. CICC will provide clarity and details in the coming weeks.

OCSA / ONTARIO CONVENIENCE STORES ASSOCIATION
Government Provides Commercial Rent Relief

Program Details

Prime Minister Trudeau recently provided details on the Emergency Commercial Rent Assistance program to provide 75 per cent rent support to small businesses unable to pay their rents because of COVID-19. The program will be delivered through forgivable loans to landlords.

Developing the program required the government to negotiate with all provinces and territories in Canada as the responsibility for commercial rent agreements is provincial jurisdiction.

Details include:

• Eligible businesses are those paying less than $50,000 per month in rent and who have temporarily ceased operations or have experienced at least a 70 per cent drop in pre-COVID-19 revenues.
• This support will also be available to non-profit and charitable organizations.
• Forgivable loans will be offered to qualifying commercial property owners to cover 50 per cent of monthly rent payments that are payable by eligible small business tenants in April, May, and June.

The loans will be forgiven if the mortgaged property owner agrees to reduce the eligible small business tenants’ rent by at least 75 per cent for the three corresponding months under a rent forgiveness agreement, which will include a term not to evict the tenant while the agreement is in place. The program will be available to commercial property owners in mid-May and will be retroactive.

• The small business tenant would cover the remainder, up to 25 per cent of the rent.
• Prime Minister Trudeau said there is more to come for businesses with larger rents.
• The Prime Minister and the provinces will meet to further discuss the gradual reopening of the Canadian economy.

As we source additional details we will continue to update.

Dave Bryans, Chief Executive Officer (CEO)

Ontario Convenience Stores Association (OCSA)

905 845 9152

www.ontariocstores.ca www.we-expect-id.com

ACSA / Atlantic Convenience Stores Association

ACSA Advocates for Subsidies on Gasoline Sales Losses

The double whammy in March of rapid reductions in regulated gasoline selling prices and big declines in pump traffic cost retailers a lot of money until older inventory could be cleared.

The Atlantic Convenience Stores Association (ACSA) notes that these losses can’t be made up through pent up or deferred demand, so the association, in collaboration with the Convenience Industry Council of Canada and CIPMA, is advocating with the Atlantic provinces for subsidies to offset these losses.

“We’ve made submissions to each provincial government and proposed some subsidy options,” says Mike Hammoud, president of the ACSA. “The best option is likely a situation where retailers would retain some portion of a province’s gas tax on a temporary basis until the March losses are recovered.”

Hammoud says that Nova Scotia’s Utility and Review Board has always had a process where individual retailers can apply for a temporary margin adjustment to recover losses under certain economic conditions, but it’s not geared to an industry of some 400 retailers each making an application.

“We’re proposing an industry-wide solution that is easy to implement and monitor,” says Hammoud.

The ACSA is in the process of setting up virtual meetings with key government officials in each province to follow-up on the submissions.

ACSA has built a new website https://www.theacsa.ca/covid19/and has added a special COVID-19 members information portal for:

• One click access to federal and provincial assistance programs and applications
• A series of free small business information videos on advice for retail operations in COVID19 from businessman Marc Gordon
• Other useful tips, suggestions, and information to help convenience members during these uncertain times.

Here is ACSA’s calendar of events for 2020:

• Maritime Golf: September 24th (Moved from June 18th) – Fox Creek Golf Club, Dieppe, NB
• NL Golf: September 15th – Clovelly Golf Course, St. John’s, NL
• Atlantic Convenience Expo: October 20-21st, Halifax, NS
• Retail Convenience Awards: October 20th, Halifax, NS
• All events are subject to change due to COVID-19.

NACS / ADVANCING CONVENIENCE & FUEL RETAILING

By Jeff Lenard

The COVID-19 Pandemic Creates a New Normal in United States

Retailers pivot to offer more take-home items but also continue to do what they do best: serve communities.

It’s hard to describe the current convenience retailing landscape without mentioning two terms: “pivot,” which refers to how retailers are addressing new trends around products in stores and “new normal,” which references how retailers are operating and providing convenience with enhanced safety precautions.

But another word, which has long been associated with convenience retailers, also needs to be mentioned: “community.” The line that NACS 2017 Chairman Rahim Budhwani said at that year’s NACS Show rings more true than it did three years ago, “C-store doesn’t just stand for convenience store. It also stands for community store.”

C-Stores Are Essential Businesses

Convenience stores in the United States conduct 165 million transactions per day, which represents about half of the total population, and sell 80 per cent of the fuel purchased in the country. And, they are in every community, especially highly rural areas that depend upon these stores for basic needs like bread, milk, meat and produce. However, in the early stages of regulations being considered around social distancing and business closures, the industry stepped up to tell its story.

NACS and other related associations and their members communicated that convenience stores provide essential services and products in their communities, such as fuel for healthcare and medical professionals, first responders, delivery workers and other essential employees. Without convenience stores selling fuel, for example, supply chains and deliveries would be significantly disrupted. When disasters or emergencies occur, convenience stores, most of which offer 24-hour operations, remain in operation as long as they can without putting their own employees’ safety and wellbeing in harm’s way. This means making sure fuel, food and other necessities are available for emergency workers and customers seeking what they need.

And on March 19, convenience stores were deemed essential. This was reaffirmed a month later (April 17), when the U.S. Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) updated its guidance identifying convenience stores, their distributors and supply chains as critical infrastructure workforce.

The CISA guidance is advisory and is not a federal directive to states, meaning state and local governments are not required to provide the same level of recognition. NACS expects, however, that state and local governments heed Homeland Security’s decisions and do not interfere with businesses that the department identifies as critical infrastructure workforce. Industry state association partners are actively engaged with their governors and local governments to ensure convenience stores are recognized as essential.

Retailers Pivot to Changing Times

While convenience stores are considered essential services, many of their core offers saw dramatic changes. Fuel sales make up 63 per cent of total industry sales, but demand was cut in half as all 50 states declared states of emergencies and commuter traffic virtually disappeared. Stores that served daily commuters and those off major highways were hit the hardest.

And this decrease in traffic also affected in-store traffic. Fewer customers buying fuel meant less foot traffic inside the store. For reference, a recent NACS Consumer Fuels Survey found that 53 per cent of gas-buying customers also went inside the store.

The biggest profit driver inside the store, foodservice, had its own challenges, with safety precautions having a huge impact on self-serve offerings.

According to a March NACS member survey, 66 per cent of retailers said they closed public seating and dining areas and 45 per cent removed customer access to self-serve foodservice such as coffee, fountain drinks, bakery items and roller grill. It is important to note that these percentages reflect retailers who have made changes; many operators do not have dining areas, for instance.

Whether foodservice or packaged snacks, convenience stores traditionally sell immediate consumption items – 83 per cent of all products sold at a store are consumed within an hour – but retailers pivoted to providing items that can be brought home: 52 per cent said they added more cleaning/toiletry items, 31 per cent emphasized ready-to-heat meals and 28 per cent are showcased multi-pack/bulk items in mid-March—and those percentages have undoubtedly increased since then. And, most of all, consumers responded: More than half of all retailers (52 per cent) said their grocery sales have increased.

Reacting to the New Normal

As consumer demand for products shifted, there also was a shift around safety. Consumers wanted more assurance that a store was clean and retailers responded. They ramped up the frequency of cleaning and disinfecting practices inside the store and at the pump. The March NACS survey found that nearly one in three (31 per cent) retailers said they provided hand sanitizer at the pump and 20 per cent provided gloves. Overall, 99 per cent of retailers said they enhanced their cleaning protocols for high touch surfaces, with regular cleaning conducted as often as every 30 minutes. And some retailers, taking the phrase seeing is believing to heart, posted pictures or videos to social media so consumers could see the efforts in stores.

Nearly two in three retailers (60 per cent) have reduced store operating hours, due to less customer traffic or to deep clean and restock during overnight hours. “We are here for the public and their needs. We are taking every precaution to conduct business safely,” noted one survey respondent.

For consumers still wary about going to stores, retailers redefined their offer to allow social distancing and to enhance convenience: By mid-March, 14 per cent were offering some sort of curbside pickup program, 13 per cent increased a focus on drive-thru and 11 per cent added or increased delivery options. Others even used their night-drop window as a walk-up order window.

C-Store Stands for Community Store

NACS research suggests that convenience stores contribute over $1 billion a year to charitable causes and there is no question this community spirit has remained strong during the pandemic.

Convenience retailers are supporting medical/healthcare personnel and first responders: Nearly half (49 per cent) of NACS member survey respondents are supporting these individuals by offering free beverages and steep discounts on food, delivering free meals and providing free fuel. Retailers are also donating product to local food banks and other programs, and supplying masks and other PPEs to emergency and healthcare professionals.

“We have always supported first responders with coffee and the like to help them through their shifts,” said one survey respondent

Retailers expressed the importance of their teams serving customers. Nearly one in three (32 per cent) said that employee conversations with customers were the most effective means of communication for sharing their pandemic response activities.

There are many amazing stories to tell. Here are three (and feel free to tell your own stories with us on social media at #conveniencecares):

Sheetz and Wawa, exceptional operators who compete in some markets, teamed up to provide emergency food bank relief amid COVID-19. The companies donated a combined 1,000 lunches and a combined $4,000 to Helping Harvest Food Bank and Second Harvest Food Bank in Pennsylvania.

7-Eleven opened its first-ever hospital pop-up c-store at Children’s Medical Center Dallas, the flagship hospital of Children’s Health, which is open to hospital staff, patients and their families. “The doctors, nurses and care teams at Children’s Health are true heroes,” said 7-Eleven President and CEO Joe DePinto.

Casey’s, based in Ankeny, Iowa, donated 30,000 pounds of deli meat to a local food bank to support hunger relief.

There are more than 90,000 individual businesses owning convenience stores in the United States, there are probably that many stories about how these local businesses are supporting their communities. While we all hope to return to some sort of normalcy very soon, there is no question that the efforts of the convenience store industry will help us move forward more quickly.

Jeff Lenard is the vice president of strategic industry initiatives with the National Association of Convenience Stores (NACS) Jeff oversees NACS’ industry-wide external communications campaigns to advance the role of convenience stores as positive economic, social and philanthropic contributors to the communities they serve. The U.S. convenience store industry, with more than 152,000 stores nationwide selling fuel, food and merchandise, serves 165 million customers daily—half of the U.S. population.