In the absence of the in-person NACS Show in 2020, the NACS Crack the Code Experience brought the convenience industry together during a very tumultuous year. Attendees experienced more than 50 content-rich education sessions loaded with insights and new ideas, more than 5,000 products displayed in hundreds of virtual showrooms, and numerous Cool New Products ready to adorn store shelves.
Educational opportunities offered during the five weeks of the experience provided tools for both retailers and suppliers to grow personally and professionally. From retailer-led education sessions on many different operational topics, to small group meet-ups with industry leaders such as Sheetz CEO Travis Sheetz, to spotlight sessions with dynamic storytellers, to live small operator training, there were myriad opportunities to learn and connect.
Clearly, Crack the Code attendees now have an edge: They will emerge from the pandemic ready to gain customers and generate revenue after what they learned. So that you can stay current yourself, here are a few highlights from a handful of education sessions:
Caring for Employees
“The biggest things all of us are working on is creating that compelling employee experience so our team members feel appreciated for what they do every day,” said Paul Shore, chief people officer at Pilot Travel Centers LLC, during the “Motivating and Protecting Your Frontline” education session. “It’s more important that every team member feels connected and part of the team, and that we go out of our way to make sure our team members feel part of the larger organization.”
Shore outlined the common strategies retailers employ to motivate workers, including developing camaraderie with other team members, the desire to do a good job, being encouraged and recognized by management, and making an impact with their work. “Taking the time to recognize and appreciate those team members who are coming in every day is more important than ever,” Shore said.
Casey’s General Stores Inc. also follows the same best practices. “One that I heard most appreciation for was thank-you pay,” said Sherri Hart, vice president of total rewards at Casey’s. “We received random thank you notes and emails from employees showing their appreciation for the extra pay.”
What garnered the most feedback for Kum & Go was an email of gratitude and appreciation Matt Spackman, vice president of fuels, sent out to employees during the summer when civil unrest had exploded around the country. “I expressed my personal thanks for the work our associates had been doing,” he said. “I got a number of responses from associates thanking me and our owners for all that we had done. It was a great reminder of how we need to empathize with our associates.”
Retailers work hard to attract more customers and sell more merchandise, but they can often generate additional revenue by simply tackling shortage.
Hart also discussed how to motivate employees into the future. “We know things are changing, … and human behaviors are going to change, too,” she said. “We need to ground ourselves in the fundamentals of change and the fundamentals of management and the fundamentals of motivation. … We’re trying very hard to listen to employees and guests.”
Hart highlighted four motivational strategies she sees going into the future:
- Clarity around expectation
- Recognition and appreciation
- Coaching and feedback
- Following through on promises
“It’s been a stressful time,” she said. “If there are ways to have fun and laugh with co-workers, we need to encourage that, too.”
Protect Profits Through Loss Prevention
Resolving convenience store shortage problems starts with the hiring process, according to Mark Wells, president of LJT Management, a California-based consultancy for the convenience and fuel retailing industries. “Successful companies have consistent processes in place for recruiting, selecting, training, developing and managing employees,” he said.
Train them well, make them responsible for their shifts and “put the perception in their minds that you are watching, listening and managing your business,” he advised during the “Protecting Profits Through Loss Prevention” session.
Another important way to curtail shortage is to count critical inventory items, such as cigarettes or lottery, every day.
Wells shared his system to make counting cigarette packs quick and efficient. It starts with the way packs are stored in the cigarette rack. Load from the back to the front (or top to the bottom based on the type of display). Every fifth pack should be turned backward or marked in some way. One of Wells’ clients puts paint sample cards from the hardware store at every fifth pack. This way you can quickly count your inventory by fives. Each carton is counted as 10.
Wells suggests using Microsoft Excel to create a diagram of your cigarette rack or even drawing your rack on a piece of paper. The first employee in the morning counts the merchandise, producing an “opening count” and records that figure on the paper. Any cigarette deliveries during the day are counted and “added” to the original number. At the end of the day, the employee on duty makes a third count and subtracts that from the earlier total, which is then compared to the daily POS results.
“It will take about 30 days to get people trained to use the system,” Wells said. “What you’re looking for is a pattern or a large discrepancy.”
In addition to keeping a close eye on inventory, make unannounced visits to your business and conduct periodic cash audits. Use a security camera system and a mystery shopper program, practice proper vendor check-in procedures and communicate your zero-shrink tolerance policy to staffers. Invest in automated cash management technology, such as safes, change systems and backoffice systems that provide reliable information about your operation, he said.
Retailers work hard to attract more customers and sell more merchandise, but according to Wells, they can often generate additional revenue by simply tackling shortage and “plugging up the holes.”
Why Gamble When You Can Hedge?
Price volatility is always an issue with fuel logistics, whether you are fuel retailer, distributor or commercial fuel buyer. It is bad enough chasing rack prices each day, but what if you are moving larger quantities with greater lead times to achieve favorable pricing? The price exposure can be more significant, making that purchase either a brilliant decision or catastrophe, depending on the whims of the market. However, there are mechanisms in place that can remove much of the risk through what amounts to price insurance.
“People say to me, isn’t hedging risky?” said Elaine Levin, president of Powerhouse, during her Buying Smarter Despite Volatile Petroleum Prices session. “It’s really the opposite. The real risk lies in not hedging your fuel purchases. Conservative companies want to protect their precious profit margins from the unknown factors of the market, whether that be an OPEC decision, or the weather, or a pandemic.”
As Levin noted, the goal of hedging is to defend profit margin against energy price volatility to allow fuel purchasers to concentrate on growing their businesses. “Hedging is a defensive activity,” said Levin. “If you are a speculator, you are willing to take risk in exchange for the opportunity to profit. Speculators think they know something about the future, whether that is going to the roulette table and thinking that red will come up on the next spin, or that the price of crude oil is going to go to $50. The hedger, on the other hand, says, ‘I don’t know what the future holds, and I want to make sure that my precious profit margins are preserved.’”
Speculators trade risk for the ability to profit, and the transactions are not related to an underlying physical position. It is basically an investment and is treated as investment income. Hedgers, on the other hand, try to stabilize the revenues or costs, and hedging gains or losses is part of the cost of goods sold.
What other opportunities are provided by hedging beyond pure profit protection? Distributors can establish fixed-price or cap deals for their customers with the knowledge that their fuel prices will have stability. It also allows a purchaser that is an end-user, such as a fleet, to have stable budgeting.
Diesel Quality Concerns
Is there something wrong with diesel? That may seem like an odd question to ask—you don’t see stalled trucks littering the highways—but there have been concerns, and diesel quality is going to become even more important as newer engine technologies start hitting the road.
The most notable concern was the discovery over a decade ago of what appears to be widespread corrosion within the diesel fuel infrastructure after the switch to ultra-low sulfur diesel. Was this related? Perhaps, and perhaps not. And if so, how?
The Fuels Institute’s session “Diesel Fuel Quality and Tank Maintenance” provided highlights from three projects focused on analyzing and maintaining diesel quality.
Fred Passman, president of the microbial contamination-focused consultancy Biodeterioration Control Associates Inc., discussed some of the potential parameters responsible for causing corrosion in the diesel fuel storage infrastructure.
Passman described a laboratory study commissioned by the Coordinating Research Council that aims to identify the primary factors that contribute to accelerating corrosion in a diesel fuel environment. The study was expected to be released by the end of 2020.
Spencer Parkinson, executive director of Decision Innovation Solutions, which focuses on such areas as agricultural policy analysis and economic modeling, discussed the Fuels Institute’s Diesel Fuel Quality Council’s Diesel Fuel Sampling Study. Parkinson shared several key, preliminary takeaways. For the nozzle samples, all PADDs met industry standards, except for oxidation stability, flash point and appearance, which were out of specification in at least one PADD each.
For tank samples, the middle layer samples had better quality than bottom layer samples, as was expected. At least one PADD did not meet industry standards in each area except for water and sediment. Amanda Applebaum, Fuels Institute director of research, shared that members of the Diesel Fuel Quality Council will be carefully reviewing the results of the sample analysis to determine if there are material lessons to be learned or additional research that should be undertaken to assist stakeholders in their efforts to improve fuel quality. The study was expected to be released by the end of 2020.
Jeff Hove, Fuels Institute vice president, reviewed the Diesel Fuel Quality Council’s efforts to establish best practices for retailers and distributors to follow in order to preserve diesel fuel quality and provide proper tank maintenance. He noted that the studies covered earlier are helping with these efforts. Also involved in the project are fleet operators, equipment manufacturers, retailers, trade associations, government agencies and industry service providers. The focus is on distribution, storage and dispensing.
Global Design Ideas
Although curbside pickup and drive-thrus are relatively new concepts for some convenience retailers, others are accelerating these services to provide customers another option for engaging with their foodservice and in-store offers.
Dan Munford, managing director at Insight Research, and Joseph Bona, president of Bona Design Lab, shared trends and examples of how global convenience retailers are transforming the curbside and drive-thru concepts in a NACS Crack the Code Experience spotlight session, “Ideas From Around the World.”
Bona noted that during the earlier months of the pandemic, spending a few hours in line at the local drive-thru was a welcoming escape from being stuck at home. But as the c-store industry embraces the drive-thru concept, it’s important to bear in mind an aspect of the customer experience that defines the convenience retail industry: time.
The increase in drive-thru demand has added an extra 30 seconds to the average wait time per person at some convenience stores and QSRs, and as people’s routines start to normalize, “it’s another thing to be sitting in line that long”—especially if a customer is 15th in line, said Bona.
Globally, QSRs and retailers alike are looking at their drive-thru concepts longer term—not necessarily in response to the pandemic. EG Group, which has long embraced the drive-thru well before the pandemic, is developing sites with multiple drive-thru offers. During the pandemic, EG Group saw a shift in sales where drive-thru went from about 31% to more than 50%. Wawa also announced plans for its first-ever freestanding drive-thru-only convenience store, which opened in Falls Township, Pennsylvania, in December. Meanwhile, Pak-A-Sak, an Amarillo, Texas-based retailer with 22 stores and 13 drive-thrus, the first of which opened in 2008, won’t build a new store without a drive-thru.
As the drive-thru concept evolves, Munford noted that convenience retailers are very resilient and adaptable—two qualities they should capitalize on when building for efficiencies.
With limited lot sizes and parking spaces, forecourts in the front and limited circulation around the building, c-stores are by design set up differently than QSRs. Therefore, integrating a drive-thru “comes with a lot of planning and thoughtfulness as retailers consider whether drive-thru is right for them,” said Bona.
In terms of format development, Bona suggested that retailers embrace the future and not run away from it. “Think about the site and its entire functionality: how you enter, exit, fueling, EV charging, drive-thru, curbside—all of these things have to work together,” he said.