C-store Update. I m from Washington DC and I m here to help! August 16, 2012

Transcription

1 C-store Update I m from Washington DC and I m here to help! August 16, 2012

2 ABOUT NACS

3

4 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

5 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

6 ABOUT OUR INDUSTRY

7 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

8 Industry Store Count 160, , , ,000 80, ,751 59, ,516 56, ,424 54,029 Single Stores 138, , ,659 54,615 53,435 56,081 All Others 145, ,294 55,162 55, , , , ,126 55,308 54,492 54,526 54,917 60,000 40,000 20,000 59,875 67,612 78,395 76,044 84,770 84,574 89,957 90,683 89,567 90,049 91,815 93, Source: Nielsen TDLinx, NACS Research

9 Industry Sales $600.0 $500.0 Motor Fuels Sales Inside Sales $681.9 Billion Dollars in Billions $400.0 $300.0 $ $ $ Source: NACS State of the Industry Survey of 2011 Data & CSX, LLC.

10 Same-Firm Sales Per Store/Per Month % Change Total All Sales $390,499 $464, % Fuel Sales $336,014 $427, % Fuel Gallons 124, ,710 (0.4)% Average Selling Price $2.71 $ % In-Store Sales $125,116 $129, % Foodservice Sales $21,155 $23, % Merchandise Sales $104,979 $107, % Mdse Less Cigarettes $62,400 $63, % Cigarettes $52,546 $52,045 (1.0)% Source: NACS State of the Industry Survey of 2011 Data & CSX, LLC.

11 Same-Firm Gross Profit Per Store/Per Month % Change Total Gross Profit $59,495 $63, % Fuel $20,475 $22, % In-Store $38,317 $39, % Foodservice $11,030 $11, % Merchandise $27,885 $28, % Mdse Less Cigarettes $21,228 $22, % Cigarettes $7,774 $7,571 (2.6)% Source: NACS State of the Industry Survey of 2011 Data & CSX, LLC.

12 In-Store Sales Contribution Average Monthly Sales = $128, % Alternative 1.74%, +0.1pts Milk 1.81%, +0.1pts Sweet 2.04%, +0.1pts Candy 2.75%, flat Salty 3.45%, +0.1pts OTP 4.04%, +0.1pts All Other 7.61%, -0.7pts Cigarettes 38.09%, -1.4pts Beer 7.27%, +0.1pts Pack Bev 14.34%, +0.6pts Foodservice 16.86%, +0.9pts Source: NACS State of the Industry Survey of 2011 Data & CSX, LLC.

13 In-Store GP Dollar Contribution Average Monthly Margin = $39, % Milk 1.40%, -0.3pts Sweet 2.18%, +0.2pts All Other 10.88%, -0.5pts Alternative 2.45%, flat OTP 4.08%, +0.1pts Foodservice 29.37%, +0.9pts Salty 4.21%, +0.2pts Candy 4.44%, -0.1pts Beer 4.48%, -0.1pts Cigarettes 18.09%, -1.2pts Pack Bev 18.42%, +0.7pts Source: NACS State of the Industry Survey of 2011 Data & CSX, LLC.

14 Credit Card Fees vs. Pretax Profit $12.0 $11.0 Card Fees Pretax Profit $11.1B $10.0 Durbin shaved $90 Million in 2011 Billions of Dollars $9.0 $8.0 $7.0 $6.0 $5.0 $5.9 $6.6 $7.6 $8.4 $7.4 $6.6 $9.0 $7.0B $5.0 $4.0 $3.0 $4.0 $3.2 $3.8 $5.4 $4.8 $3.5 $5.2 $4.8 Fuel Cost 96% Transactions 0% Card Costs 4% $2.0 Card Cost Increase Detail Source: NACS State of the Industry Survey of 2011 Data & CSX, LLC.

15 DURBIN SWIPE FEE UPDATE

16 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

17 Durbin update So does Senator Dick Durbin On May 10 th 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

18 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)

19 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.

20 FDA UPDATE

21 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.

22 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

23 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.

24 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.

25 FDA Regulations and Enforcement Activity Warning Letters and Civil Money Penalty Complaints Recommendations for Retailers

26 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-andmortar 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)

27 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.

28 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 A decision by the District of Columbia Circuit Court is expected to be issued in the coming months. The graphic labels are on hold

29 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 marketdistorting impact RYO machines have had.

30 THE BIG FINISH

31 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

32 Questions? Contact Info Michael Davis VP Member Services