C-store Update I’m from Washington DC and I’m here to help! August 16, 2012
ABOUT NACS
The Association for Convenience & Fuel Retailing The Association for Convenience & Fuel Retailing About NACS
. 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 o 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 o 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
The Association for Convenience & Fuel Retailing NACS’ three pronged focus
Knowledge Connections . State of the Industry (SOI) . The NACS Show Data through CSX . SOI Summit . Convenience Tracking . Program (CTP) THE Tech EVENT. . NACS Consulting . HR Forum . NACS Research . NACS Leadership Forum . NACS CAFÉ . NACS Global Forum & Study . Technology and payment Tours standards (PCATS) . NACS Social Media . Leadership Executive . NACS International Program at Cornell . Educational products and Advocacy programs . Government Relations . NACS Magazine & NACS . Media Relations Daily . NACS Help Desk
The Association for Convenience & Fuel Retailing ABOUT OUR INDUSTRY
The Association for Convenience & Fuel Retailing About our industry
. 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
The Association for Convenience & Fuel Retailing Industry Store Count
Single Stores All Others 160,000 145,119 146,294 144,875 144,541 146,341 148,126 138,205 140,655 140,000 132,424
124,516 130,659
119,751
120,000
54,917 54,526
55,611 55,162 54,492
55,308
56,081 53,435
100,000 54,029
54,615
56,904
59,876
80,000
60,000
40,000 93,209 91,815 90,683 90,049 89,957 89,567
84,770 84,574
78,395 76,044
67,612
59,875
20,000
- 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
The Association for Convenience & Fuel Retailing Source: Nielsen TDLinx, NACS Research Industry Sales
$681.9 Billion $600.0 Motor Fuels Sales Inside Sales $500.0 486.9
$400.0 450.2 385.2 408.9 405.8 328.7
$300.0 344.2 Dollars in in Billions Dollars 262.6
$200.0 220.8 181.3 171.0
$100.0 195.0 190.4 182.4 173.9 168.5 163.6 151.1 132.1 116.2 112.0 109.3
$0.0 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
The Association for Convenience & Fuel Retailing Source: NACS State of the Industry Survey of 2011 Data & CSX, LLC. 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)%
The Association for Convenience & Fuel Retailing Source: NACS State of the Industry Survey of 2011 Data & CSX, LLC. 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)%
The Association for Convenience & Fuel Retailing Source: NACS State of the Industry Survey of 2011 Data & CSX, LLC. In-Store Sales Contribution Average Monthly Sales = $128,187 3.1%
All Other Alternative 7.61%, -0.7pts 1.74%, +0.1pts Milk Cigarettes 1.81%, +0.1pts 38.09%, -1.4pts Sweet 2.04%, +0.1pts Candy 2.75%, flat Salty 3.45%, +0.1pts OTP 4.04%, +0.1pts
Beer 7.27%, +0.1pts
Pack Bev Foodservice 14.34%, 16.86%, +0.6pts +0.9pts
The Association for Convenience & Fuel Retailing Source: NACS State of the Industry Survey of 2011 Data & CSX, LLC. In-Store GP Dollar Contribution Average Monthly Margin = $39,880 4.1%
Milk All Other 1.40%, -0.3pts 10.88%, -0.5pts Sweet 2.18%, +0.2pts Alternative 2.45%, flat Foodservice 29.37%, +0.9pts OTP 4.08%, +0.1pts Salty 4.21%, +0.2pts Candy 4.44%, -0.1pts Beer 4.48%, -0.1pts
Pack Bev Cigarettes 18.42%, +0.7pts 18.09%, -1.2pts
The Association for Convenience & Fuel Retailing Source: NACS State of the Industry Survey of 2011 Data & CSX, LLC. Credit Card Fees vs. Pretax Profit
$12.0 Card Fees Pretax Profit $11.1B $11.0
$10.0 Durbin shaved $90 Million in 2011
$9.0 $9.0 $8.4
$8.0 $7.6 $6.6 $7.4 $7.0B $7.0 $6.6 $5.9 Billions of Dollars $6.0 $5.0
$5.0 $5.4 Transactions Card Costs $4.0 $5.2 $4.8 0% 4% $4.0 $4.8 $3.8 Fuel Cost $3.5 96% $3.0 $3.2
Card Cost Increase Detail $2.0 2003 2004 2005 2006 2007 2008 2009 2010 2011
The Association for Convenience & Fuel Retailing Source: NACS State of the Industry Survey of 2011 Data & CSX, LLC. DURBIN SWIPE FEE UPDATE
The Association for Convenience & Fuel Retailing Durbin update
. 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
The Association for Convenience & Fuel Retailing Durbin update
. 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. . In the meantime, VISA and MasterCard announce new “Card Association Fees” putting the Department of Justice on alert… Our friend Senator Dick Durbin The Association for Convenience & Fuel Retailing Durbin update
. VISA’s new fees: • A Transaction Integrity Fee (new, post-Durbin) • Revisions to its Network Acquirer Processing Fee (old, slight reduction of 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)
The Association for Convenience & Fuel Retailing Durbin update
. 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.
The Association for Convenience & Fuel Retailing FDA UPDATE
The Association for Convenience & Fuel Retailing How the public feels
. “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.”
The Association for Convenience & Fuel Retailing FDA Update
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
The Association for Convenience & Fuel Retailing FDA Update
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.
The Association for Convenience & Fuel Retailing FDA Update
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.
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 Upcoming FDA Rulemaking
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 online 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 online cigarette sales) and allow that law to go into effect. (The case is Gordon v. Holder)
The Association for Convenience & Fuel Retailing Upcoming FDA Rulemaking
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.
The Association for Convenience & Fuel Retailing Upcoming FDA Rulemaking
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…
The Association for Convenience & Fuel Retailing Upcoming FDA Rulemaking
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.
The Association for Convenience & Fuel Retailing THE BIG FINISH
The Association for Convenience & Fuel Retailing Let us help you help your Dealers…
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
The Association for Convenience & Fuel Retailing Questions?
• Contact Info
Michael Davis VP Member Services [email protected]
+1 703 518 4246 888 843 5705
The Association for Convenience & Fuel Retailing