ONE YEAR LATER: CHIP WITHOUT PIN

October 3, 2016

Since the October 2015 liability shift, EMV remains frustrating for retailers and confusing for consumers—not a good proposition leading up to the next liability shift in October 2017.

October 3, 2016

ALEXANDRIA, Va. – One year after the October 2015 liability shift took effect for retailers to accept Europay MasterCard Visa (EMV) chip cards inside the store, thousands of chip readers have yet to be activated. To make matters more frustrating, the next liability shift—for fuels dispensers—is one year away.

Convenience retailer investments in EMV are not preventing fraud because chip cards in the U.S. are not enabled for PIN authentication, which is the most effective way to combat fraud, ensuring the customer using the card is the owner of that card. In the United States, the convenience store industry processes 160 million transactions each day and invests billions to reduce fraud at the point of sale. For example, many retailers pay to use customers’ ZIP codes to verify a transaction to protect their customers and their business. Retailers have real incentives to eliminate payment card fraud because they, according to the Kansas City Federal Reserve, absorb 80% to 90% of all fraud losses on credit and debit card transactions.

Convenience retailers will spend more than $7 billion on EMV—or just under 70% of industry pre-tax income for 2015—to upgrade and replace software and equipment to accept chip cards, but the card companies prevent retailers from requiring the use of PINs to verify the cardholder and protect against fraud. Without the protection of a PIN number on transactions, consumers and retailers are vulnerable to fraud.

Leading up to the October 2015 deadline, the card networks were late providing the necessary software specifications to accept EMV transactions. Retailers then needed certification from each card network before they could activate EMV. There were bottlenecks for both, compounded by the fact that the card networks set a liability shift timeframe without regard to the ability of equipment manufacturers and software providers to actually meet the deadline—a problem that will undoubtedly turn out to be even worse at fuel dispensers.

Nearly a year ago, NACS Board member Jared Scheeler, managing director of The Hub Convenience Stores Inc., testified before Congress that his chain of four North Dakota convenience stores had spent roughly $134,500 to install POS and pump card readers that accept EMV chip transactions. At that time, NACS estimated that the average transition cost would be more than $26,000 per store, compared with an average profit of $47,000 per year.

Since the October 2015 EMV liability shift, many retailers have also been experiencing an outrageous increase in chargebacks, mostly erroneous. Counterfeit chargeback liability is unknown, and has not been divulged by Visa and MasterCard, despite industry efforts for clarification.

Last week the Merchant Advisory Group (MAG) sent a letter to Visa and MasterCard regarding ongoing challenges with the EMV transition for in-store deployments, and highlighted concerns regarding the feasibility of the payments industry being ready for the October 1, 2017, liability shift for fuel dispensers.

“Compounding the financial burden for small merchants is the liability shift already in place for in-store EMV transactions under which chargebacks have far exceeded expectations. And for larger retailers with many stores and multiple pumps at each location, the expense is staggering,” MAG wrote in the letter.

The NACS Show is just two weeks away, so if you want to learn everything you can about EMV, its hurdles and how to prepare for the next October 2017 liability shift, do not miss out on the education, guidance and discussions that will take place during the event.

Here’s how you can maximize your time at the NACS Show learning more about EMV:

  1. Participate in Technology Edge.
  2. Attend EMV-focused education sessions, such as “Are You Prepared for EMV?”
  3. Meet with vendors at the expo.
  4. Talk to members of Conexxus and industry experts at the Technology Edge Solutions Center.
  5. Talk to NACS government relations staff and general counsel in the NACSPAC Lounge.

On Capitol Hill, most of the efforts have so far focused on the aftermath of a data breach and notification requirements. NACS is urging policymakers to consider not only what happens after a data breach occurs, but also how to prevent breaches and fraud from happening in the first place. Protecting against fraud should be a top priority for all forms of payment, including mobile payments, and the best way to authenticate transactions is through a PIN or more advanced means.

NACS is advocating that retailers should have the option to require PIN on credit and debit card transactions and those that occur on a mobile device—the same protection banks require at ATMs.

PIN is the most secure authentication technology currently available and can be implemented now. All EMV chip-card readers are PIN-enabled with encryption security. When PIN is required, whether a card number or the card itself is stolen, a PIN protects consumers against fraud.

http://www.nacsonline.com/Media/Daily/Pages/ND1003161.aspx#.V_KCGvArK70

 


Visa Security Alert Threat Landscape: Pin Pad/POS Skimming

June 3, 2016

Incident Details

Visa Global Payment System Risk is aware of increasing incidents involving suspects placing skimming devices on point-of–sale (POS) terminals for the purpose of collecting payment card information, including PIN numbers. Perpetrators use this information to create counterfeit cards re-encoded with the stolen card information and make unauthorized ATM withdrawals. The primary targets for these recent skimming events are self-checkout terminals in supermarkets. However, any POS terminal may be at risk, including those that are often unattended, such as terminals near deli counters, coffee stands, etc. The perpetrators are mobile and will target multiple stores within a geographic area for a period of time before moving on to a new location. Most entities targeted are using payment devices that have not yet been upgraded to accept EMV cards.

Placement of Skimming Devices

Skimming devices can be placed at any time of the day but placement usually occurs during slower times of business when the perpetrators can go undetected by employees or other customers. The perpetrators will usually work in teams of two or more with one person being a lookout, one person placing the skimming device on the POS terminal and another creating a barrier so that no one can observe the skimming device being placed. Perpetrators have been known to use large items such as packs of paper towels to block the view of POS terminals. In some instances, it was reported that the suspects created a distraction in the store by faking a medical incident or causing commotion that distracted the attention of store personnel away from the POS terminals. The skimming devices will mimic the look of the front of the POS terminal.

Recommended Inspection & Response Actions

1. Prevention Through Device Inventory Management

  • In accordance with PCI DSS Requirement 9.9, ensure implementation of security controls to protect POS devices from tampering and substitution. Examples include:

Maintain a list of devices including the device serial number or other method of unique identification. 

Keep a list of device location either by store or physical location within the store itself (i.e., self-checkout, deli counter, manned checkout). 

Train personnel to be aware of suspicious behavior and to report tampering or substitution of devices.

 Verify the identity of any third-party persons claiming to be repair or maintenance personnel, prior to granting them access to modify or troubleshoot devices.  

2. Physical Inspection of POS Devices

  • Implement security procedures to inspect POS devices at least twice each day and at random times.
  • Physically examine the device. Skimming devices are typically attached with minimal adhesive allowing them to be place and removed with ease, so devices may be detected by giving the front of the POS/PED a good grab-and-pull. Weighing the devices may also identify tampering.
  • Please note some skimming devices are Bluetooth enabled and data can be captured without the device needing to be recovered.
  • When inspecting devices, use backup security personnel to monitor from a distance as suspects may watch compromised terminals and suspects are trained in counter surveillance to avoid detection/arrest.

3. Device Recovery Response

  • If a skimming device is discovered on a POS terminal, do not handle it, as evidence may be damaged.
  • Notify local law enforcement and the FBI or USSS office so they can recover the skimming device.
  • Protect any video surveillance that may be used to identify any perpetrators and confirm timing of when the device was placed on the POS terminal.
  • Initiate incident response procedures and notify your Acquirer so that Visa can assist with the investigation.

 

Information from VISA April 2016

For other questions, please contact Cyber Intelligence & Investigations via email at USFraudControl@visa.com

Additional Resources:

What To Do If Compromised

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Support for older versions of Internet Explorer Ended

May 31, 2016

What is end of support?

Beginning January 12, 2016, only the most current version of Internet Explorer available for a supported operating system will receive technical support and security updates. Internet Explorer 11 is the last version of Internet Explorer, and will continue to receive security updates, compatibility fixes, and technical support on Windows 7, Windows 8.1, and Windows 10.

Internet Explorer 11 offers improved security, increased performance, better backward compatibility, and support for the web standards that power today’s websites and services. Microsoft encourages customers to upgrade and stay up-to-date on the latest browser for a faster, more secure browsing experience.

What does this mean?

It means you should take action. After January 12, 2016, Microsoft will no longer provide security updates or technical support for older versions of Internet Explorer. Security updates patch vulnerabilities that may be exploited by malware, helping to keep users and their data safer. Regular security updates help protect computers from malicious attacks, so upgrading and staying current is important.


Potential risk of using older versions of Internet Explorer:

Security

Without critical browser security updates, your PC may become vulnerable to harmful viruses, spyware, and other malicious software which can steal or damage your business data and information.

Compliance

Businesses that are governed by regulatory obligations such as HIPAA should conduct due diligence to assess whether they are still able to satisfy compliance requirements using unsupported software.

Lack of ISV Support

Many Independent Software Vendors(ISVs) no longer support older versions of Internet Explorer. For example, Office 365 takes advantage of modern web standards and runs best with the latest browser.

Click here to read more

 


Chargebacks on Credit Cards Happening NOW! #EMV

May 10, 2016

RETAILERS ON THE HOOK FOR COUNTERFEIT TRANSACTIONS

Chargebacks are on the rise following the October 2015 EMV liability shift, and convenience retailers are fighting back.
May 10, 2016

NEW YORK – Beginning with the October 2015 EMV liability shift, retailers that have not upgraded their payment terminals to accept EMV chip-card transactions are

on the hook

for counterfeit transactions, writes the Wall Street Journal, and this particular cost of fraudchargebacks—is adding up.

The news source reports that chargebacks among small and medium-size merchants increased 15% in Q4 of 2015 from a year earlier, according to a Strawhecker Group survey, adding that the volume of chargebacks has likely increased even more since then. Although the group didn’t put a dollar figure on the chargebacks, other experts put the total around the tens-of-millions of dollars mark.

Since the October 2015 EMV liability shift, many retailers are experiencing an outrageous increase in chargebacks that are mostly erroneous. Mike Lindberg, payment solutions manager at CHS Inc., commented during the Conexxus Annual Conference last week that some smaller retailers have reported a $10,000 to $15,000 increase in chargebacks per week, while larger retailers are experiencing $1 million in chargebacks per week.

I can’t imagine what will happen at the pump come October 2017,” Lindberg warned.

The No. 1 chargeback reason code since October 2015 is

merchandise not received,”

he said, which in theory makes no sense for the big box retailers. Some retailers are even seeing multiple chargebacks on the same credit card, and indicating that there is very little interest from card issuers or acquirers to help solve this costly problem.

Due diligence, however, can pay off. Convenience retailers experiencing a higher volume of chargebacks can successfully reverse the charges on challenge because convenience retailers aren’t within the October 2015 liability shift specification for type and applicability (i.e., the fuel dispenser).

“The banks will hopefully learn from the first October 2015 liability shift what is chargeable, because right now it’s a

‘charge it all back and see what gets challenged’

approach,” said Gray Taylor, executive director of Conexxus. He previously told NACS Daily that this approach to chargebacks “will have dire consequences for small to mid-size retailers, who can scarcely afford dedicated chargeback staff.”

NACS Online article found here


MAKING PEOPLE SMILE in Seattle

March 28, 2016

A Chevron gas station in Seattle uses its sign to entertain customers, rather than inform.
March 28, 2016

​SEATTLE – Usually signs are in the business of letting potential—and current—customers know about sales, special events and other information related to the company. Most convenience stores use outdoor signage to highlight specials and products, but the Wallingford Chevron gasoline station and convenience store has taken a different tack: humor.

For more than a decade, this station’s sign has posted amusing sayings to the delight of customers and residents. The genesis of the humorous postings is traced back to when the owners replaced an auto repair shop with a convenience store. To get the word out about the change, the owners hit on the idea of entertaining signage, the News Republic reports.

Popular messages include:

  • Ban pre-shredded cheese—make America grate again.
  • If attacked by a mob of clowns, go for the juggler.
  • When it’s raining cats & dogs, don’t step in a poodle.
  • A clear conscience is the sign of a fuzzy memory.
  • Hold the door open for a clown. It’s a nice jester.
  • Ever stop to think and forget to start again?
  • The past, present & future walk into a bar. It was tense.
  • I child-proofed my house but the kids still get in.
  • If pride comes before a fall, humility should come by winter.
  • I checked into the hokey-pokey clinic & I turned myself around.

The station has a dedicated Facebook page for the Wallingford Sign with photos of its most popular ones.

Full article found here:

NACS online


CHIP CARD DELAY FRUSTRATES RETAILERS

March 24, 2016

Delays in POS equipment certification have many retailers frustrated and worried about huge spikes in chargebacks.

March 24, 2016

​NEW YORK – Avi Kaner, a co-owner of the Morton Williams supermarket chain in New York, has spent about $700,000 to update the payment terminals at his stores to accept EMV chip cards. However, he can’t turn them on, writes The New York Times, a bottleneck in offering a more secure payment process that is frustrating retailers—both large and small—across the United States.

Since the EMV liability shift took place on October 1, 2015, retailers have been essentially put on hold to get their payment terminals certified to accept chip cards.

The Times reports the cost of waiting is piling up. “It’s been very frustrating,” Kaner told the news source, noting that he purchased most of the upgraded POS equipment before the Oct. 1 deadline, and he’s still waiting for certification. The delay, he says, has cost him thousands of dollars in payments for fraudulent purchases. “There’s no recourse,” he said.

“The long delays are just the latest black eye for the deployment of the new systems,” writes the Times, noting that some consumers haven’t even received new credit and debit cards with the embedded EMV chip.

First Data, one of the largest payment processors, told the Times that about 20% of the four million American merchants it works with are in the process of being certified, a procedure than can take weeks to months.

Mallory Duncan, general counsel at the National Retail Federation, told the Times that the payments industry was unprepared to handle the flood of certification requests around the Oct. 1 liability shift deadline. “They didn’t allow for enough time or people to perform this certification,” he said. “Merchants have gotten slammed because they weren’t able to get certified, because the networks failed to provide the necessary resources to do that.”

Kaner commented that since Oct. 1, customers who have contested charges made with their EMV-enabled cards have been successful in reversing transactions, and he’s worried that some customers will use the Oct. 1 liability shift to get out of paying for legitimate purchases. Chargebacks, he said, have increased significantly. “It started out as a trickle, and now it’s turning into a flood,” he told the Times. “In the first couple months, it might have been a few hundred dollars a month. Now, it’s thousands a month.”

“The convenience and fuel channel has numerous retailers in the same situation, having invested upwards of $30,000 per site to be hardware-ready for EMV, only to be put on perpetual hold with approved software,” said Gray Taylor, executive director of Conexxus. “These retailers are trying to avoid the inevitable manufacturing and installation bottlenecks to do the right thing and get ahead of the curve, only to be on perpetual hold by an over-burdened vendor community trying to navigate late specifications and complex certifications. This is what happens when you simply choose a deadline, like the card brands did, without diligence. The premium retailers will pay for this ‘hurry up and wait’ situation and it will result in higher consumer prices.”

=====================================

Thanks NACS for this article. Retailers aren’t the only ones frustrated, resellers share equally in the frustration.

http://www.nacsonline.com/Media/Daily/Pages/ND0324161.aspx?utm_content=NACS%20Daily%20032416:%20newsarticle1%20(Chip%20Card%20Delay%20Frustrates%20Retailers)&utm_source=NACS%20Daily&utm_campaign=NACS%20Daily%20032416&utm_medium=email&utm_term=343490#.VvQaOOIrK70

 

 


11 Strategies for Market-Basket Growth

March 2, 2016

Opportunities abound in wine, chocolate and … newspapers?

Published in CSP Daily News

By Jennifer Bulat, Group Director of Editorial Production, CSP 18

DALLAS — Did you know that people buy chocolate with just about anything else in the store? That people have had $700 more in their accounts since last year? And that customers shop a convenience store in the evening the way they do a small grocery store?

In the session “Boosting the Convenience Market Basket” at CSP’s Convenience Retailing University, Don Burke, senior vice president of Management Science Associates Inc., Pittsburgh, analyzed data compiled from three convenience-store retailers and offered these tips:

  1. That $700 extra consumers have comes from lower gas prices. While in-store sales are up 3% as a result of customers spending less on fuel, “You have to work a little harder to get that money now,” Burke said.
  2. Revenue from fuel sales is down, but dollars from those sales aren’t down as much because people have been “buying up”—purchasing higher-octane gasoline instead of regular. However, 85% of fuel customers don’t buy anything in the store. How can you get them inside? With signage promoting the top in-store categories. (See No. 9.)
  3. Speaking of those categories, some of the fastest growing (in the latest 13 weeks of data vs. the same time a year ago) are wine (up 12%), beer (10%), cold vault/energy drinks (9%) and ice cream (8%). Many of these are up as a result of consumers wanting to treat themselves via the extra cash they have, Burke said.
  4. And more on wine: The “sweet spot” price for wine in the c-store is $8 to $12, and the wine market basket is $18.62 on average. However, Burke says some folks are willing to spend $24.99 for a good bottle. Make sure customers know you have high-quality items and some may bite. Even better: Many of those who purchase wine buy hard liquor with it, so make sure the displays are close together.
  5. Two other complementary liquids: water and carbonated soft drinks. “Always leverage and market your cold case together” for bundling opportunities, Burke said.
  6. Who knew? People tend to buy a newspaper when they buy a lottery ticket, according to MSA data. “If you want to sell more newspapers, put it near the lottery machine,” he said.
  7. Most beer is purchased between 3 and 11 p.m., usually when folks are on the way home from work. “Put a six-pack on your (checkout) countertop just to remind them,” Burke said.
  8. Total store sales peak between 4 and 5 p.m. And sales of milk spike in the later hours. “People shop c-stores in the evenings the same way they do a small grocery,” he said.
  9. In a market-basket analysis of the top categories, chocolate always pops up as something customers will buy with another product. Those fuel customers who don’t come into the store (see No. 2) might be lured inside by a promo on chocolate candy.
  10. Thirty-six percent of customers who buy beer make that their sole purchase. The category purchased second most often with beer? Family planning. Safety first!
  11. Finally, it’s not just hype: MSA numbers show stores that offer foodservice have 2% higher sales than those without. And when people purchase foodservice, they buy something else 82% of the time. 

 

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Ever Heard of Advocacy Cards?

February 26, 2016

You haven’t, because they don’t yet exist. Read on to find out if the concept is something you should consider for your operation.

Advocacy cards. They don’t have quite the same ring as loyalty cards do, but maybe get used to the idea?

While advocacy cards are not a living, breathing thing, advocating for customers is fast becoming the new way retailers should approach customer relationship-building beyond simple loyalty efforts.

While a loyalty card program rewards consumers for quantity of goods and services bought, advocacy cards could go a step further to inform the qualitative aspect of the retailer-customer bond— rewarding shoppers who buy healthy foods, for example, with points, gift cards or other incentives.

Sounds like a daunting task for a retailer, but it’s one that all retail channels should think about.

Retailer advocacy for customers was discussed during the webinar “Top Food Trends for 2016.” Sponsored by The Food Institute and BMO Harris, the session was comoderated by Phil Lempert, known as the “SupermarketGuru,” and The Food Institute CEO Brian Todd.

In addition to citing consumers’ thirst for additional product information along with coming to grips that the “retail world is in flux,” Lempert said advocacy might be the new loyalty. In that spirit, “focus beyond relationships and think beyond loyalty to advocacy,” he said.

Your consumers are already vigilant when it comes to the food selection process—like vetting a political candidate. They abide by concepts of “free from” and “less is more,” the latter meaning products with five or fewer ingredients and no artificial ingredients. Foods labeled with health attributes saw sales increase 13%, said Lempert, citing the National Grocers Association-SupermarketGuru 2015 survey.

The broad picture: A new way of eating will be defined by new proteins, algae, insects, vegetable, yeast, cricket flour and nut powders. Rewarding your customers for participating in the trend could incentivize those higher-margin items, and earn you goodwill and higher sales in the process.

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Consumers Tell All

February 25, 2016

Guess what customers are saying about your stores? Some of the answers surprised even us

By Abbey Lewis, Editor in Chief, Convenience Store Products , Feb. 2, 2016

consumer-opinions.png

Illustration by Jean Jullien

From behind the two-way mirror, we exchanged glances—we were perplexed, surprised, amazed. A colleague and I sat with our notebooks in the dark, prepared to hear a lot of things we already knew: Customers like variety, fresh food, clean bathrooms, etc. But when our two focus groups arrived at Product Evaluations Inc.’s offices in Oak Brook, Ill., we heard a lot of things we weren’t expecting. Did you know they don’t consider convenience stores and gas stations to be the same thing?

Product Evaluations, a foodservice market research company, usually focuses only on food. Its expertise is on your roller grill or coffee bar. But for us the company bent the rules, focusing the line of questioning on the forecourt, backcourt and new products—and, of course, foodservice.

When we began developing the questions, we realized this could be a unique opportunity to truly discern between millennial customers and all the others. So we broke them into two groups. The first group was made up mostly of Gen X shoppers, with some baby boomers. The second group was composed entirely of millennial customers.

It’s worth mentioning all panel participants are from the Chicago area, which is flush with 7-Eleven, Speedway, BP, Thorntons and independent locations. None of our participants had even heard of Wawa, much less Rutter’s, Kwik Trip or Stripes. (Maybe next year we’ll conduct a panel from Florida and see what they think …)

Read on to see the differences and surprising similarities among respondents—as well as actionable tips based on their feedback. And keep an eye out at CStoreProductsOnline.com to read some of the outtakes.

> Consumer Loyalty Programs <

MILLENNIAL

Q: What makes you loyal to a particular convenience store?

Liz (Household income <$25,000): I look for a rewards program. I have one that’s an app on your phone and you can get free coffees and different free things. … I know if I get something, I’m going to get something free next time. It’s easier on my wallet. 7-Eleven had free coffee for the entire week recently, so I was there a lot. I went out of my way to get to that.


Q: Who has used rewards cards? Does it make you more loyal to those brands?

Mary ($75,000-$99,999): Yeah, at Speedway if you say you don’t have [your card], half the time they’ll just scan a new one for you. They pass them out like candy.

Tom ($100,000 or more): Yeah, they have bonus points that you buy like, say you buy a Red Bull, you get a hundred more extra points or something like that [at Speedway].

David ($100,000 or more): You buy three pieces of pizza instead of two, you get a bunch of extra points …

Convenience Store Products: So do they “get you” on that?

David: Oh yeah, I’m a sucker for that.


Big Idea

Liz: When I go to get scratch-o­ffs, I always go to the CITGO in Glenwood, Ill., because they have all the machines right next to each other. They also have an area where you can sit down and scratch them o­ff. It’s much better than other places.

 

Altria Scan Data

GENERAL POPULATION

Q: What are you purchasing when you go to the convenience store?

Lorraine ($25,000-$39,000): When I go to a c-store … I might get some feminine products. I don’t want to necessarily go through the hassle of going to Wal-Mart, standing in line, going to search for it. The convenience store has got your drinks over here, you got your other stuff over here, you go, “OK, let me just grab it real quick and go.” The big stores, you have to deal with people, the crowd, and you got to really search. You ain’t got time for that.

Catherine ($100,000 or more): I usually just go there for drinks, like AriZona tea, or just a bag of chips and then go.

David ($100,000 or more): Beer, lottery tickets, scratch-offs—that’s probably it for that.


Do This!

Mobile payment, souped-up loyalty programs, at-pump ordering, connected cooking equipment and more can greatly affect your foodservice program. According to an NCR study from earlier this year, 67% of restaurant owners and managers said that technology has a direct effect on increased revenue, and 35% are more dependent on tech tools than they were a year ago. Just remember to do your due diligence. Don’t invest in something your customers won’t use.

New-Product Strategy <

GENERAL POPULATION

Q: How often do you go into the convenience store vs. just staying out at the pumps for gas?

Liz (Household income <$25,000): Most of the time I go inside.

Peter ($25,000-$39,000): I always go inside. When I’m not getting gas at Costco because it’s cheaper, whenever I stop at one of those stations, I always go inside. If I stop at one of those stations to get gas, it’s because I’m almost empty.

Jane ($40,000-$74,999): If I’m at the pump, and it’s at a convenience store, I always go in. Not that I need to go in. I don’t know why. I want to look at something. And I don’t pay at the pump.

Anne ($40,000-$74,999): Even with your credit card. Just go in. You just got to go in.


Convenience Store Products: You say you don’t ever pay at the pump?

Peter: I don’t because of security reasons. … I’ve heard so many things. I always go inside and pay, even if I want to swipe my card—I just don’t swipe it at the pump.

35%

The amount of gas customers who also go inside the store —2015 NACS Consumer Fuels Survey

 

Q: What piques your interest when you walk in a store? What will catch your eye?

Peter: Sometimes a display. What’s in front of your face—sometimes it’s a new product.

Anne: You know when you were a kid in a candy store, you see something at that display and you think, “Let’s go check that out.”

Peter: New Gatorade just came out. New flavors. Oh, that looks good. I’ll just take it.


MILLENNIAL

Q: What makes convenience stores unique from other kinds of stores?

Catherine ($100,000 or more): No lines.

David ($100,000 or more): In and out—it’s quick.

Lorraine ($25,000-$39,000): Everything is conveniently placed, so it’s not a whole search through a maze. Most of the aisles are open, so that when you’re walking through diagonally, you can see most of the things as you’re going. The setup is more open than a regular store.

Tom ($100,000 or more): Everything is accessible—easy to find.

“I’ll be out at lunch, and I don’t want to be at work, so I’ll find the gas station, go in there, look around, take my time, find something to snack on, then go back to work.” —Liz (<$25,000)

Do This!

New products matter! Work on developing your new-product strategy, but first strengthen Your core offer. Implement the proper analytics to measure your core products before investing in too many new-product tests. Of course, consistency could be the key—your customers are coming to you to find new products and will go to the same area or merchandiser to find them each time. Develop a plan and stick to it.

Store Atmosphere <

MILLENNIAL

Q: How do you choose one store over the other?

Amanda (Household income $40,000-$74,999): I judge it on the size of the gas station. If I’m driving around or on a road trip, I’m going to hit the gas station that’s the biggest if I’m looking for snacks. I’m not going to go into, like, a little square shop …

Convenience Store Products: Why wouldn’t you go into the little place?

Amanda: Because then I feel like there’s less selection. If I’m going there specifically for food or whatever, I’m going to look for the biggest one. Even for a bathroom, I look for the biggest one because it means it won’t be outside.


Q: What do you buy at convenience stores?

Jenna: I remember when those Cheetos things came out, with all like the weird balls and everything, and I was like, oh my God, that’s going to be amazing. I was looking for them and I figured the gas stations would have it, so that’s when I was just knocking down the door. I finally found them.

57%

The amount of convenience stores (127,588 total) that sell motor fuels —NACSonline.com

 

GENERAL POPULATION

Q: What does the size of the store mean to you?

Peter ($25,000-$39,000): The small ones—it’s too cramped in there. There’s too many people in there. And it’s not just the inside, but the outside also. When you’re pulling up to this huge place, where there’s 10, 12 pumps and a big parking lot … with good lights.

Jane ($40,000-$74,999): Yes, you want the good lighting. It would be a safety issue.

Jack ($100,000 or more): A cramped place doesn’t feel as safe.

Jane: I will bypass those [small stores]. I’ll go to a bigger one. I would definitely go there before I’d go to a smaller one—it’s just safer.


Big Idea

Patty ($40,000-$74,999): What they need is oatmeal. Everyone else has oatmeal. I want oatmeal. It would be perfect for a convenience store—defi­nitely.


Do This!

Surprisingly, both demographics differentiated between “gas stations” and “convenience stores.” To explain, Liz said, “I feel like the size is what distinguishes it. If it’s a really small building, then we feel like it’s just a gas station, nothing special. If it’s a bigger-size building and there’s more square footage, then it’s more of a convenience store.” Installing brighter lights and decluttering could go a long way toward attracting that new customer, boomers and millennials alike.

Foodservice  <

GENERAL POPULATION

Q: What’s your favorite food to buy at convenience stores?

Lorraine (Household income $25,000-$39,000): Pizza. You’re not expecting to get a supreme pizza—like, it’s going to be your most basic pepperoni, sausage or cheese.

David ($100,000 or more): I’m one of the least pickiest eaters out there, so it’s like I’ll get a Speedy Dog, and just load it up with all the ingredients, and I’ll go to town and I will love it. I’ll get their pizza and I’ll love it. That’s just me.

3 in 4

The number of shoppers who say it’s important to feel good about the foods and beverages they consume —Technomic’s Consumer Trend Report

 

Q: Which foods belong in convenience stores, and which do not?

Convenience Store Products: OK, so you’ve indicated that these items don’t ­fit at all: deli salads; chicken, either fried, roasted or grilled; soup, chili, dispensed ice cream or frozen yogurt.

Jenna (<$25,000): Where are you cooking the chicken?

Convenience Store Products: What about ice cream, soup or chili?

Amanda ($40,000-$74,999): I haven’t seen those.

David: Yeah, me neither.

Catherine ($100,000 or more): I think it’d be hard to keep the frozen-yogurt machine clean, but I’d totally get it.


MILLENNIAL

Q: How have your perceptions of convenience-store food changed?

David: Before, I always just assumed that it wasn’t good, that it wouldn’t taste good—I don’t know. … Once it became convenient to where I was working, and it was easy, convenient to get food there, I tried it. I said, “What the heck? Let’s do it.” And it tastes good. Let’s do it again.

Amanda ($40,000-$74,999): I feel exactly the same. I always thought it was just disgusting, and people might sneeze on it or something, but then it’s like, my guy would have me go pick up a pizza or something. Okay. And then I’m like, “Oh, it’s not that bad.” Then I ended up getting a few things for myself after that.

Tom ($100,000 or more): I felt like coffee was really bad at convenience stores, but I actually found out that at 7-Eleven, their coffee is much better than I thought.

“A large Slurpee from 7-Eleven—at 2 a.m., every time I was studying … we’d all go. It was awesome. And they go great with those little taquito things.” —Jenna

InsightRS Scan Data

Do This!

These customers have changed their view of the food in your stores. Believe it or not, as much as perception of c-store fare has improved, there are still opportunities to be had. And freshness is the key. According to Technomic, 76% of consumers say positive terms such as “natural flavors” are perceived as resulting in enhanced flavors. And shoppers are demanding more transparency in their food. Non-GMO-fed, verified fresh eggs, chicken, pork and even sausages from brands such as Fork in the Road will be worth watching. Try it. They might like it!

http://www.cstoreproductsonline.com/foodservice/opinion-consumer-perspective

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Convenience Stores Offer More Convenience

February 23, 2016

Convenience Stores Sell Time

Convenience stores offer speed of service to time-starved consumers who want to get in and out of the store quickly. These shoppers recognize this channel of trade for its convenient locations, extended hours of operation, one-stop shopping, grab-and-go foodservice, variety of merchandise and fast transactions.

The average convenience store is 2,744 square feet. New stores are bigger, with 3,590 square feet, with about 2,582 square feet of sales area and about 1,008 square feet of non-sales area — a nod to retailers recognizing the importance of creating destinations within the store that require additional space — whether coffee islands, foodservice areas with seating or financial services kiosks. Convenience stores also have expanded their offerings over the last few years, with stores become part supermarket, restaurant, gas station and even a bank or drugstore. (NACS State of the Industry data)

The convenience store industry is America’s primary source for fuel. Overall, 83.5% of convenience stores (127,588 total) sell motor fuels, a .7% increase (960 stores) over 2013. The growth of convenience stores selling motor fuels is nearly double the overall growth in the industry, as fuels retailers added convenience operations and convenience retailers added fueling operations.

Convenience stores have an unmatched speed of transaction: The average time it takes a customer to walk in, purchase an item and depart is between 3 to 4 minutes. Here’s the breakdown: 35 seconds to walk from the car to the store, 71 seconds to select item(s), 42 seconds to wait in line to pay, 21 seconds to pay and 44 seconds to leave store. (NACS Speed Metrics Research, 2002)

The convenience store industry is a destination for food and refreshments. With falling revenues from fuels and tobacco products, foodservice sales are increasingly becoming convenience stores’ most profitable category. In fact, convenience store foodservice is roughly a $41 billion industry contributing 19.4% to in-store sales in 2014 (NACS State of the Industry Report of 2014 Data).

Convenience stores are everywhere. There are 152,794 convenience stores in the United States — one per every 2,095 people. Other competing channels have far fewer stores, such as supermarkets (41,529 stores), drugstores (41,799 stores), and dollar stores (26,572). (Source: Nielsen, as of December 31, 2014)

Consumers are embracing convenience stores like never before. An average store selling fuel has around 1,100 customers per day, or more than 400,000 per year. Cumulatively, the U.S. convenience store industry alone serves nearly 160 million customers per day, and 58 billion customers every year.

Self-serve at the pump is a part of most convenience stores’ fueling operations. The first self-serve gas station was opened by Hoosier Petroleum Co. in 1930, but was closed by the fire marshal as being a fire hazard. Frank Ulrich reintroduced the idea in 1947 at the corner of Jilson and Atlantic in Los Angeles. Modern self-service began in 1964 with the introduction of remote fueling; an attendant was no longer required to reset the pumps after each transaction. Today it is now available in 48 states. (New Jersey and Oregon still require full-service operations; New Jersey’s law was enacted in 1949; Oregon’s in 1951.)​

http://www.nacsonline.com/Research/FactSheets/scopeofindustry/pages/convenience.aspx

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