C-store Update Im from Washington DC and Im here to help! August - - PowerPoint PPT Presentation

C-store Update

I’m from Washington DC and I’m here to help! August 16, 2012

The Association for Convenience & Fuel Retailing

ABOUT NACS

The Association for Convenience & Fuel Retailing

The Association for Convenience & Fuel Retailing

• Founded in 1961
• More than 2,200 retail member companies
• Operating more than 50,000 stores in the US
• Operating more than 300,000 stores globally
• Members in 44 countries
• 47 of the 50 largest companies in the industry
• Over 70% of our US members operate 10 or fewer stores
• Increasingly diverse retail membership
• Delta Sonic Car Wash, Kroger, Publix, Giant Eagle, Follett College Book

Stores, TA Travel Centers, Colorado Café Associates, Home Depot, Army and Air Force Exchange Services, Marine Corps Exchange

• Suncor, Quickie Convenience Stores, Topaz Energy Group, SPAR UK,

Total, Emirates National Oil Co (ENOC), Pick n Pay, Seicomart, Family Mart|Famima, PetroChina, 7-Eleven Stores Pty. Ltd, JMEL, OXXO, Repsol, Ipiranga, YPF SA

• Approximately 1,600 supplier member companies

About NACS

The Association for Convenience & Fuel Retailing

NACS’ three pronged focus

Knowledge

• State of the Industry (SOI)

Data through CSX

• Convenience Tracking

Program (CTP)

• NACS Consulting
• NACS Research
• NACS CAFÉ
• Technology and payment

standards (PCATS)

• Leadership Executive

Program at Cornell

• Educational products and

programs

• NACS Magazine & NACS

Daily

• NACS Help Desk

Connections

• The NACS Show
• SOI Summit
• THE Tech EVENT.
• HR Forum
• NACS Leadership Forum
• NACS Global Forum & Study

Tours

• NACS Social Media
• NACS International

Advocacy

• Government Relations
• Media Relations

The Association for Convenience & Fuel Retailing

ABOUT OUR INDUSTRY

The Association for Convenience & Fuel Retailing

• Our 148,126 stores equal more than all the other retail

channels combined

• Over 93,000 of stores are run by single store operators
• 2011 sales equaled $682 Billion USD
• We process about 162 million transactions per day
• 98% of Americans shop at c-stores once/month
• We sell 82% of the motor fuel sold in the U.S.
• We employee about 1,900,000 million workers on the retail

side alone

• We have stores in every congressional district
• We are the mosaic of America
• Every race, creed, gender, income, age

About our industry

The Association for Convenience & Fuel Retailing

Industry Store Count

Source: Nielsen TDLinx, NACS Research

59,875 67,612 78,395 76,044 84,770 84,574 89,957 90,683 89,567 90,049 91,815 93,209 59,876 56,904 54,029 54,615 53,435 56,081 55,162 55,611 55,308 54,492 54,526 54,917

• 20,000

40,000 60,000 80,000 100,000 120,000 140,000 160,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Single Stores All Others

119,751 124,516 132,424 130,659 138,205 140,655 145,119 146,294 144,875 144,541 146,341 148,126

The Association for Convenience & Fuel Retailing

112.0 109.3 116.2 132.1 151.1 163.6 168.5 173.9 182.4 190.4 195.0 171.0 181.3 220.8 262.6 344.2 405.8 408.9 450.2 328.7 385.2 486.9 $0.0 $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Dollars in Billions

Inside Sales Motor Fuels Sales

Industry Sales

Source: NACS State of the Industry Survey of 2011 Data & CSX, LLC.

$681.9 Billion

The Association for Convenience & Fuel Retailing

Same-Firm Sales

Per Store/Per Month 2010 2011 % Change Total All Sales $390,499 $464,558 19.0% Fuel Sales $336,014 $427,097 27.1% Fuel Gallons 124,157 123,710 (0.4)% Average Selling Price $2.71 $3.45 27.6% In-Store Sales $125,116 $129,208 3.3% Foodservice Sales $21,155 $23,431 10.8% Merchandise Sales $104,979 $107,135 2.1% Mdse Less Cigarettes $62,400 $63,804 2.3% Cigarettes $52,546 $52,045 (1.0)%

Source: NACS State of the Industry Survey of 2011 Data & CSX, LLC.

The Association for Convenience & Fuel Retailing

Same-Firm Gross Profit

Per Store/Per Month 2010 2011 % Change Total Gross Profit $59,495 $63,411 6.6% Fuel $20,475 $22,759 11.2% In-Store $38,317 $39,880 4.1% Foodservice $11,030 $11,854 7.5% Merchandise $27,885 $28,660 2.8% Mdse Less Cigarettes $21,228 $22,158 4.4% Cigarettes $7,774 $7,571 (2.6)%

Source: NACS State of the Industry Survey of 2011 Data & CSX, LLC.

The Association for Convenience & Fuel Retailing

In-Store Sales Contribution

Average Monthly Sales = $128,187 3.1% Cigarettes 38.09%, -1.4pts Foodservice 16.86%, +0.9pts Pack Bev 14.34%, +0.6pts

Beer 7.27%, +0.1pts OTP 4.04%, +0.1pts

Salty 3.45%, +0.1pts

Candy 2.75%, flat Sweet 2.04%, +0.1pts

Milk 1.81%, +0.1pts Alternative 1.74%, +0.1pts All Other 7.61%, -0.7pts

Source: NACS State of the Industry Survey of 2011 Data & CSX, LLC.

The Association for Convenience & Fuel Retailing

In-Store GP Dollar Contribution

Average Monthly Margin = $39,880 4.1% Foodservice 29.37%, +0.9pts Pack Bev 18.42%, +0.7pts Cigarettes 18.09%, -1.2pts Beer 4.48%, -0.1pts

Candy 4.44%, -0.1pts Salty 4.21%, +0.2pts

OTP 4.08%, +0.1pts

Alternative 2.45%, flat Sweet 2.18%, +0.2pts Milk 1.40%, -0.3pts All Other 10.88%, -0.5pts

Source: NACS State of the Industry Survey of 2011 Data & CSX, LLC.

The Association for Convenience & Fuel Retailing

$3.2 $3.8 $5.4 $6.6 $7.6 $8.4 $7.4 $9.0

$11.1B

$4.0 $5.0 $5.9 $4.8 $3.5 $5.2 $4.8 $6.6

$7.0B

$2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 $11.0 $12.0

2003 2004 2005 2006 2007 2008 2009 2010 2011

Billions of Dollars

Card Fees Pretax Profit

Credit Card Fees vs. Pretax Profit

Source: NACS State of the Industry Survey of 2011 Data & CSX, LLC.

Durbin shaved $90 Million in 2011

Fuel Cost 96% Transactions 0% Card Costs 4%

Card Cost Increase Detail

The Association for Convenience & Fuel Retailing

DURBIN SWIPE FEE UPDATE

The Association for Convenience & Fuel Retailing

• Most of the Federal Reserve’s rules on debit swipe fees went

into effect October 1, 2011

• Those rules limit swipe fees on debit purchases made with

cards issued by banks with more than $10 billion in assets

• The limits on these transactions now are 21 cents plus 0.05% of

the transaction amount and a 1 cent fraud prevention adjustment versus the 7-12 cents the Fed research initially proposed

• According to the Fed, these limits mean the average fee being

charged on covered debit transactions is 24 cents

• NACS believes the Fed mishandled the rule and did not follow

the law as written. NACS along with NRF, FMI and NRA have sued the Fed over that issue

Durbin update

The Association for Convenience & Fuel Retailing

• So does Senator Dick Durbin
• On May 10th Senator Durbin files a friend of the court brief
• “In its efforts to accommodate the banks, the board’s Final Rule failed in

several respects to follow the law. As the plaintiffs have correctly argued, the board’s final rule making exceeded the statutory authority that Congress gave the board,” Durbin argued in the brief.

• Congress is now through addressing debit cards – that is up to

the Court and the Fed.

Durbin update

Our friend Senator Dick Durbin

• In the meantime, VISA and

MasterCard announce new “Card Association Fees” putting the Department of Justice on alert…

The Association for Convenience & Fuel Retailing

• VISA’s new fees:
• A Transaction Integrity Fee (new, post-Durbin)
• Revisions to its Network Acquirer Processing Fee (old, slight reduction
• f ½ penny per transaction)
• A Fixed Acquirer Network Fee (FANF; new, post-Durbin)
• MasterCard’s new fees:
• Annual License and Registration Fee (new, post-Durbin)
• Annual Type III Third Party Processor (TPP) Registration Fee (new, post-

Durbin)

Durbin update

The Association for Convenience & Fuel Retailing

• Congress has never taken

action on credit card swipe fees which remain too high.

• Now we are educating

Members of Congress about credit card swipe fees and convincing them that reform is needed.

• We must push our message

everywhere we can – in the press and directly to the industry – in order to get some relief on the credit card front.

Durbin update

The Association for Convenience & Fuel Retailing

FDA UPDATE

The Association for Convenience & Fuel Retailing

• “This act expands bureaucracy,”
• “The bill will increase taxes on Americans”
• “It expands the authority of an inefficient agency (FDA)

already struggling with the approval process for, and monitoring of, existing drugs.”

• “The Act will distract the FDA from its core mission of

approving safe and effective products – a standard unachievable by any tobacco product.”

How the public feels

The Association for Convenience & Fuel Retailing

FDA Inspections/Civil Money Penalties

• The Tobacco Control Act, signed into law by President Obama

in 2009, contains a number of restrictions intended to limit the sale of tobacco products to minors.

• To ensure retailers are complying with these restrictions, FDA

has been conducting undercover inspections of retail outlets. These inspections cover:

• Prohibition on underage sales
• Age verification requirement
• Prohibition of free samples of tobacco products
• Restrictions regarding gifts/discounted items
• Self-service displays
• Improper use of Tobacco Brand Names

FDA Update

The Association for Convenience & Fuel Retailing

FDA Inspections/Civil Money Penalties

• FDA has begun fining retailers who are found to have violated

FDA’s tobacco regulations.

• There is a fundamental disagreement on the law between

industry and FDA regarding the issue of multiple violations:

• FDA appears to have a policy whereby they are permitted to find and

penalize for multiple violations resulting from a single inspection. This could lead to a $10,000 fine and a No-Tobacco-Sale Order resulting from a single inspection.

• NACS maintains that the Tobacco Control Act’s graduated penalty

structure—whereby penalties are assessed in increasing increments as multiple violations are discovered over time—not, as a result of one inspection, but rather in the prescribed, gradually increasing manner.

FDA Update

The Association for Convenience & Fuel Retailing

FDA Inspections/Civil Money Penalties

• Under its broad enforcement authority, the FDA is proposing to

allow the general public to submit a report of a potential retail tobacco violation through a smartphone application, over the Internet, by telephone or by mail.

• If a retailer is fined for multiple violations resulting from a

single inspection, please contact NACS immediately and consider hiring counsel. After you receive a complaint from the FDA, you have only thirty calendar days to request a hearing.

FDA Update

The Association for Convenience & Fuel Retailing

• FDA Regulations and Enforcement

Activity

• Warning Letters and Civil Money

Penalty Complaints

• Recommendations for Retailers

The Association for Convenience & Fuel Retailing

Non-Face-to-Face Sales

• FDA is in the early stages of a rulemaking process pertaining to

non-face-to-face sales of tobacco products:

• NACS filed comments urging the agency to crack down on tax evasion by
• nline sellers of cigarettes and to require delivery personnel delivering

tobacco products to check the identification not only of the delivery’s recipient, but also whomever purchased the product online. Additionally, we urged FDA to enforce all tobacco regulations—for both brick-and- mortar and online sales—with respect to Tribal sales.

• NACS and NYACS recently filed an amicus brief in the District of

Columbia urging the court to uphold the PACT Act (regulating

• nline cigarette sales) and allow that law to go into effect. (The

case is Gordon v. Holder)

Upcoming FDA Rulemaking

The Association for Convenience & Fuel Retailing

Menthol

• The FDA has proposed a ban on menthol in tune with the

Tobacco Control Act, which essentially stated that menthol cigarettes have an adverse impact on public health and the removal of menthol would be a benefit.

• An external peer review panel is evaluating the agency's final review and

the FDA will then publish its final menthol report, open to public

• comment. There is no deadline date for a final report to be issued by the

FDA.

• The FDA is currently reviewing the unintended consequences of a

menthol ban including higher manufacturing costs to comply with the FDA's requirements, black marketing of menthol products, etc.

Upcoming FDA Rulemaking

The Association for Convenience & Fuel Retailing

Labeling

• Two lawsuits, two different decisions
• The first lawsuit was filed in 2009 and the U.S. Circuit Court of Appeals

ruled in March 2012 that the graphic health warnings are commercial disclosures of important health-related information and, therefore are constitutional.

• The federal district court judge hearing this second lawsuit issued a

decision in late February finding that the graphic warning labels were protected commercial speech and violated the U.S. Constitution. This decision was appealed and the U.S. Court of Appeals for the District of Columbia heard the case in April 2012. A decision by the District of Columbia Circuit Court is expected to be issued in the coming months.

• The graphic labels are on hold…

Upcoming FDA Rulemaking

The Association for Convenience & Fuel Retailing

Defining “Tobacco Products”

• In the coming months, we expect FDA to propose a rule

expanding the definition of “cigarette” and “other tobacco product” and thus expanding the universe of products subject to FDA’s sales restrictions:

• We anticipate FDA will determine whether e-cigarettes will be regulated

as “cigarettes.” This would make it more difficult for these products to be sold and at a minimum, flavored versions could be banned.

• This summer, the FDA plans to issue proposed regulations covering other

tobacco products such as cigars, cigarillos, hookahs and possibly other tobacco products.

• It is possible that this definition could include RYO tobacco in a way that

would enhance the regulation of that product and limit the market- distorting impact RYO machines have had.

Upcoming FDA Rulemaking

The Association for Convenience & Fuel Retailing

THE BIG FINISH

The Association for Convenience & Fuel Retailing

NACS can help Marketers create more profitable Dealers

• NACS Jobber|Dealer Membership Program
• Jobbers become full Retail Members
• Dealers become full Retail Members…for a fraction of the

typical membership cost

• Petroleum Marketers can differentiate themselves
• Provide more benefits and discounts
• Provide more information and education
• See me or contact me for more information

Let us help you help your Dealers…

The Association for Convenience & Fuel Retailing

• Contact Info

Michael Davis VP Member Services mdavis@nacsonline.com +1 703 518 4246 888 843 5705

Questions?