Convenience and Petroleum Retailing Convenience and Petroleum Retailing Industry Update: Industry Update: Facts, Figures, and Best Practices to Help Marketers and Dealers Succeed February 16 2010 February 16, 2010
T d Today… � Ab � About NACS t NACS � About our Industry � Understanding consumers U d t di � Changing operator landscape � Differentiation iff i i
ABOUT NACS ABOUT NACS
Ab About NACS t NACS � Founded in 1961 � � More than 2 000 retail member companies More than 2,000 retail member companies – Operating more than 75,000 stores in the US – Operating more than 300,000 stores globally – Members in 49 countries – 49 of the 50 largest companies in the industry – 72% of our US members operate 10 or fewer stores – Increasingly diverse retail membership • Jack ‐ In ‐ The Box, Delta Sonic, Kroger, Publix, Giant Eagle, Follett College Book Stores, TA Travel Centers • PetroCanada, now Suncor, Quickie Convenience Stores, Tesco, BWG, Topaz, Welcome Break, Total, Pick n Pay, Seicomart, Dairy Mart, Famima, PTT, Woolworths AU, Coles Express, JMEL, OXXO, Repsol, Ipiranga, PetroChina, Sinopec � More than 1 800 supplier member companies More than 1,800 supplier member companies
NACS’ th NACS’ three pronged focus d f • Knowledge • Connections – State of the Industry (SOI) – The NACS Show Data through CSX – NACStech Show – Support of Technology – SOI Summit SOI Summit standards (PCATS) – HR Forum – Industry research – Category Management – Educational products Conferences Conferences – NACS Magazine & NACS – NACS Global Forum & Study Daily Tours – NACS Help Desk – NACS Social Media NACS Social Media • Advocacy – Government Relations – Media Relations
ABOUT OUR INDUSTRY ABOUT OUR INDUSTRY
About our industry About our industry � Our 145,000 stores… = 50,000 more than: Warehouse clubs+ Supercenters + Dollar stores + Mass merchandise stores + Supermarkets + Drug stores Over 90,000 of stores are run by single store operators � Our 2008 sales totaled US$624.1 billion equaling over 4% of the US GDP � 160 million transactions per day � 160 million transactions per day – Every 40 hours the industry serves the equivalent of the entire mobile population of America (6 years to 85 years old) � 98% of Americans shop at c ‐ stores once/month � We sell 80% of the motor fuel sold in the U.S.
About our industry About our industry � We employee over 1,700,000 million workers on the retail side alone side alone � Some of our members made Fortune Magazine’s 100 Best Companies to Work For in the USA in 2010 – #41 (QuikTrip) � We have stores in every congressional district � Our stores are physically closer to the homes of America than Our stores are physically closer to the homes of America than any other channel of trade – We are the “neighborhood” store � We are the mosaic of America � We are the mosaic of America – Every race, creed, gender, income, age
Industry Snapshot Industry Snapshot 2007 2008 Change Industry Stores 146,294 144,875 (1.0)% Industry Sales y $577.4B $ $624.1B $ 8.1% Industry Pretax Profit $3.4B $5.2B 54.2% Credit Card Fees $7.6B $8.4B 10.5% Number of Employees 1,714,300 1,727,700 0.8% Fuel Pool Margin (cpg) 14.6¢ 18.0¢ 23.3% Source: NACS State of the Industry Survey of 2008 data powered by CSX Source: NACS State of the Industry Survey of 2008 data powered by CSX
Store Growth by Firm Size Store Growth by Firm Size 160 150 50 140 Single stores +50% since 2000 130 130 120 Total stores +21% since 2000 Total stores +21% since 2000 110 100 90 " Chain" stores ‐ 8% since 2000 80 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: TDLinx, a service of the Nielsen Company
Do ollars in Billions $100.0 $200.0 $300.0 $ $400.0 $500.0 $600.0 $0.0 1979 9 1980 0 Inside Sales Motor Fuels Sales Motor Fuels Sales 1981 1 1982 2 1983 3 1984 4 1985 5 1986 6 1987 7 1988 8 1989 9 30 Years of Industry Sales 30 Years of Industry Sales 1990 0 1991 1 1992 2 Source: NACS State of the Industry Survey of 2008 data powered by CSX 1993 3 1994 4 $624.1 Billion 1995 5 1996 6 1997 7 1998 8 $99.8 $134.2 1999 9 $104.1 $165.3 2000 0 $112.0 $171.0 2001 1 $109.3 $181.3 2002 2 2003 3 $116.2 $220.8 2004 4 $132.1 $26 62.6 2005 5 $151.1 $344.2 2006 6 $163.6 $405.8 2007 7 $168.5 $408.9 2008 8 $173.9 9 $450 0.2
Core Direct Store Operating Expenses Core Direct Store Operating Expenses Per Store/Per Month 2007 2008 Change Wages & Benefits $17,813 $18,245 2.40% Utilities $3,667 $3,965 8.10% Repairs & Maintenance $2,837 $3,016 6.30% Supplies Supplies $1 102 $1,102 $1 118 $1,118 1 50% 1.50% Total DSOE $34,086 $36,060 5.80% Source: NACS State of the Industry Survey of 2008 data powered by CSX
Interchange Rates Interchange Rates USA 1.75% India 1.10% Brazil 1.00% HK 1.04% NZ 0.95% Sweden 0.90% Italy 0.90% UK 0.79% Denmark Denmark 0.75% 0 75% EU Crossborder 0.70% Australia 0.45% S Source: Merchant Payments Coallition M h t P t C lliti 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% 1.80% 2.00%
Interchange Rates Increased to Highest Interchange Rates Increased to Highest Level Ever 2.50% $4.50 Effective Interchange Paid v. Gas Prices Effective Interchange Paid v. Gas Prices $4.00 2.30% ations EIA Gas Prices d all grades/formula rchange Rate Pai $3.50 s CPP Rate 2.10% $3.00 Visa Changes $ ice per gallon - a Effective Inter 1.90% Structure Moderate inverse relationship $2.50 1.70% % Pr Visa Announces “relief to consumers” $2.00 Highly inverse relationship 0% 50 $1.5 1.50 Source: NACS Card Processing Program
Card Fees vs. Pretax Profit Card Fees vs. Pretax Profit $10.0 $10 0 $9.0 $8.4 Billion $7.6 $8.0 ollars $6.6 $7.0 ons of Do $5.9 $6.0 $5.0 $5.2 Billion Billio $5.0 $5 0 $5.4 $4.0 $4.8 $4.0 $3 8 $3.8 $3.4 $3.0 $3.2 $2.0 2003 2004 2005 2006 2007 2008 Source: NACS State of the Industry Survey of 2008 data powered by CSX
Growth Rate of Key Expenses y p 2006 ‐ 2008, 12 Month Moving Average 175 Card Fees 165 165 155 145 135 Repairs and 125 Maintenance Utilities DSOE 115 115 Wages 105 Supplies Source: NACS State of the Industry Survey of 2008 data powered by CSX 95 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08
Average PIN Debit Cost – 34.8 Cents Average cost if all PIN Average cost if all PIN Transactions went “offline” Transactions went “offline” 34.5 cents* 34.5 cents* * Includes new network access and chargeback fees
UNDERSTANDING CONSUMERS UNDERSTANDING CONSUMERS
bub ∙ ba (b ŭ b' ə ) bub ba (b ŭ b ə ) noun, slang: 1 A 1. A white working ‐ class man, stereotypically regarded as hi ki l i ll d d undereducated and gregarious with his peers. 2. A man of the Southern U.S., variously characterized as easygoing, companionable, assertively masculine, etc. 3. A typical c ‐ store customer
bub ∙ ba (b ŭ b' ə ) song Rascal Flatts: song, Rascal Flatts: Bubba is a friend, he`s a beer drinkin` buddy of mine But lately somethin`s happened that ain`t hard to define Bubba`s got himself a cousin and I`m gonna make her mine Bubba s got himself a cousin and I m gonna make her mine And she`s brushin` both his teeth And she`s makin` him biscuits and gravy I just know it And she`s lovin him in that double wide late late at night And she s lovin him in that double wide late late at night Y`know, I wish that I had Bubba`s girl I want Bubba`s girl Why can`t I find a cousin like that? Like bubbas girl I want I want Bubba`s girl Why can`t I find a cousin like that!
Understanding consumers Bubba: � Age: 18 ‐ 55 years old � Cultural influences: Beer, NASCAR, pick up trucks cigarettes beer baseball beef trucks, cigarettes, beer, baseball, beef jerky, football, beer, dip, mom, hunting dogs… � Brand loyalty measured in: a lifetime Brand loyalty measured in: a lifetime � The industry's stereotypical customer profile
There’s more to operating a successful convenience and successful convenience and petroleum retailing site than just catering to Bubba… i bb
U d Understanding consumers di Beyond Bubba: Beyond Bubba: Different types of shoppers value different shopping experiences and retailers that best tap into these values and experiences, and retailers that best tap into these values and shoppers' needs will capture a greater share of the convenience business, which is no longer confined to c ‐ stores outlets, according to Fast Forward: Emerging Opportunities in Convenience Retail , a report from the NACS/Coca ‐ Cola Retailing Research Council . g
Understanding consumers U d di Beyond Bubba ‐ Fast Forward: Emerging Opportunities in Convenience Retail d bb d l The NACS/Coca ‐ Cola Retailing Research Council identifies three types of c ‐ stores: c ‐ stores: � Neighborhood stores • Customers live close by and shop for fill ‐ in items and specific category purchases purchases � Commuter stores • Located on high ‐ traffic thoroughfares and shopped mostly by blue ‐ and white ‐ collar commuters white ‐ collar commuters � Interstate stores • On major highways and frequented by long ‐ distance travelers and professional drivers professional drivers
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