President of the New York Association of Convenience Stores
Convenience stores have gone from places where you can just buy a big soda to where you might even buy dinner these days. Jim Calvin, president of the New York Association of Convenience Stores (NYACS) talks about the growth of this “neighborhood” industry.
What’s the mission of NYACS?
The mission is to lead, safeguard and forge a favorable environment for New York State’s community of neighborhood convenience stores. And we do that in a lot of ways, from constantly delivering vital knowledge to the trade to maintaining a unified voice on public policy issues. We also offer ways for members to share ideas and address common challenges and build relationships.
You use the word “neighborhood.” Tell us why.
The vast majority of our member convenience stores are not along the interstate. They’re situated in neighborhoods and urban areas or in small towns where they truly are the neighborhood, the convenience store or mini-mart or bodega.
You always think of the Circle K or 7-11 when you think about convenience stores. But are they really not the mainstay of the industry?
The reality is that over half the convenience stores in the country are single-store enterprises. There’s still a surprising number and percentage of convenience stores that do not have the familiar-sounding brand or chain name, but rather it’s Fred’s Deli Mart or Mary’s Mini Mart.
It seems like convenience stores have come a long way from the days of just selling sodas and chips.
Many of them have, to varying degrees – and some, whole hog – jumped into foodservice. Others have experimented and are slowly and gradually taking further steps to expand. They didn’t just wake up one day and say, I think we will try food service. In New York State, most of them were forced.
The tobacco category, which historically has been the biggest product category in terms of inside sales for convenience stores nationwide, began to erode as New York State and also New York City dramatically increased the excise tax on cigarettes. And as that happened, more and more convenience store customers began seeking out untaxed sources from, for example, Indian reservations, over the Internet, street dealers, bootleggers, you name it.
What percentage of cigarettes are now sold outside convenience stores? How has this affected the convenience store?
Believe it or not, half the cigarettes that are consumed in New York State today were purchased without the collection of any New York State tax, which means they weren’t sold in any licensed convenience store.
And so, that means a whole lot less customers coming through the door. The convenience store’s relationship with the tobacco category was not just about direct sales of tobacco. It was also about driving foot traffic. Research shows that the cigarette customer historically has come into the convenience store more frequently than the non-cigarette customer. And those cigarette customers usually buy something else while they’re there.
Where you used to sell cartons of cigarettes, now you’re selling packs of cigarettes and you’re selling a lot less of them and so overall your sales are down and so they began to explore, how can we replace the sales volume, the customer traffic that the tobacco category had been generating in the past and many of them turned to food service. That was the genesis here in New York State.
It’s not the gradual decline in the adult smoking rate; it’s more a matter of the shrinking tobacco category in convenience stores. It’s still there. It’s still very important and I don’t expect it to go away. But it has created the need for development and enhancement of new destination product categories for convenience stores and food service is one that many of them are turning to.
Do trade shows and other external marketing events reflect this trend away from selling tobacco products?
Tobacco is still a key product category for convenience stores, but foodservice has now taken part of the center stage in the industry, and at the trade shows where industry players get together, there’s a lot more hot food, more prepared foods, specialty foods, a lot more coffee and hot beverage than there ever was before. Many convenience stores are putting a premium on quality products and equipment and programs that will help them to evolve and improve their foodservice offering.
Do you see a move towards more food service exhibitors at your show this year than you may have in the past?
It’s been gradual. But it has a larger presence every year and I think probably other convenience store trade shows as well.
Are there any common characteristics within those successes that you’re seeing that are making it work?
There’s a single store enterprise in Ithaca, NY called Shortstop Deli that has done a phenomenal job with foodservice for many, many years. They even were written up in Gourmet Magazine, before Gourmet Magazine stopped publishing. And they’re so laser-focused on their food service program as their bread and butter that they stopped selling beer and tobacco and they’re still thriving. Which is pretty crazy in a college town, if you think about it!
Then there’s the Nice N Easy grocery shops, a chain in central New York that has earned national awards for their foodservice innovation. Nice and Easy actually has three full-time executive chefs on staff producing menus and sourcing products and doing product selection. They’ve done a tremendous job. Those are just two examples, but there are many others in our membership who are really, reinventing their business model and achieving success with it.
But the characteristics that make these businesses succeed is continuous learning – they are thirsty for knowledge about what works and what doesn’t, communicating with other non-competing retailers in other areas. What have you tried and has it worked? Might it work in our stores? A constant flow of information. Read as much as they can. Talk to as many people as they can.
They also listen to their customers, about what they like and what they don’t like in terms of the food, the price, the packaging. Is it hot enough? Is the quality right? That customer feedback helps to guide your foodservice program as you move forward.
But the most important is commitment – of resources, space inside your store, fixtures, counters and ovens and sinks and all sorts of food prep equipment. And it all has to be constantly upgraded. It requires a commitment of labor. More people, more hours. It’s not for the faint of heart. It’s not something to enter into lightly.
What legislative issues do you see ahead?
Some of them have to do with motor fuel – 75% of our member stores sell gas. Also, the tax evasion stampede with regard to cigarettes and tobacco products continues to get worse. And we’re still trying to get the state to take some action to step up enforcement of laws prohibiting underage sales of tobacco and beer and lottery. We are always vigilant about the attempts to increase taxes, increase fees on any of the products that we sell – beer, gas, tobacco, soft drinks, etc. That’s always a priority. The runaway credit card swipe fees that retailers have to pay to credit card companies to process the purchase. That’s a huge issue for us. So there’s a whole host of things on our list but usually what happens is we end up playing defense.
Is there anything that a restaurateur can learn from the convenience store operator?
Convenience stores are laboratories. Progressive ones, at least. If you go in today and then you go into the same store three months from now, a lot will be different in terms of what is being sold, how it’s being sold and the way the products are marketed. There is constant change in terms of what’s offered. There’s no tolerance for products that don’t move. So you have to add something and take something away and continue to experiment with what’s the right combination – foodservice or coffee or what have you. If you don’t keep paddling, you will die.