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Was 2016 Naughty or Nice to Convenience Stores?

NACS weighs in on the biggest industry issues of the year.
December 23, 2016

​ALEXANDRIA, Va. – This is the time of year for reflections, for looking back as well as looking ahead. For the convenience store industry, 2016 brought successes as well as setbacks. Here’s a look at the top issues facing the industry this year, as well as what’s in store for 2017.

Payment Problems. In the House of Representatives, Rep. Jeb Hensarling (R-TX) launched an attack on the reforms we fought so hard to achieve. Hensarling, chairman of the House Financial Services Committee, included language to repeal the Durbin Amendment in his Wall Street reform package, the Financial Choice Act. The bill narrowly passed out of his committee. While it didn’t move to the House floor in 2016, it will be a top policy priority for Hensarling in the new year. For this reason, it’s essential that retailers contact their members of Congress to voice opposition to any efforts to repeal debit swipe fee reform.

Meanwhile, EMV/chip cards have garnered their fair share of news this year, some good, and some bad for the industry. On the plus side, MasterCard and Visa—and later American Express​—announced that they would delay EMV compliance at the pump until October 2020, giving retailers much needed time to upgrade their fuel pump operations. In March, merchants filed a lawsuit against MasterCard and Visa related to EMV regulation, alleging that the credit card companies colluded to shift liability to retailers for credit-card transaction fraud. By October, a U.S. district judge had allowed the suit to move forward. NACS will continue to monitor both situations related to EMV.

Pumping Confidence. Low gasoline prices fueled consumer confidence in 2016—the average gas price never topped $2.40 nationally, and it was less than $2.00 during Q1. Several NACS surveys throughout the year detailed howlow fuel costs spurred consumer spending and confidence in the economy. On the heels of the presidential election, consumer confidence soared, with low pump prices once again a major factor in that sunny outlook. Going into the last few days of 2016, U.S. drivers continue to pay some of the lowest gas prices in years.

An “Unsettling” Verdict. More than 10 years ago, numerous antitrust class actions were filed against Visa, MasterCard and their card-issuing banks, which resulted in a class-action settlement agreement that received preliminary approval by the U.S. District Court for the Eastern District of New York in November 2012. That approval was challenged on appeal to the U.S. Court of Appeals for the Second Circuit in September 2015. This June, that court overturned the class-action settlement, calling the settlement “unreasonable and inadequate.” NACS hailed the ruling as a major victory for the retail industry, and will continue to keep a close eye on further developments.

Amazon “Go”es Convenience. The retail environment is constantly changing, with technology often at the forefront of those changes. Nowhere is that more clear than with Amazon’s convenience store concept, Amazon Go, which debuted this month. In a Convenience Matters podcast from this week, NACS addressed the concerns that Amazon Go generates, including how the convenience store industry might be affected and how this concept could revolutionize convenience.

Working for a Living. NACS was influential in getting the final overtime rule changed from the Department of Labor’s (DOL) last proposed rule. NACS and others persuaded the agency to amend their rule to recognize regional disparities in salaries resulting in the new “white collar exemption” threshold coming down a few thousand dollars. However, the rule was still potentially very harmful to the industry, so NACS continued to work with business and congressional allies to find ways to stop the rule. Fortunately, just before it was to go into effect, a federal judge in Texas put an indefinite hold on the new rule.

Advocates for a higher minimum wage also gained steam this year, with California, New York and Washington, D.C., approving a $15 starting wage; and Arizona, Colorado and Maine voters raising their minimum wage to $12 an hour, and Washington State to $13.50 an hour. Other states considering a higher minimum wage include Iowa, while New Jersey rejected raising its minimum wage. This will continue to be a hot topic in the coming year, as labor unions and others seek to capitalize on the momentum created by the “Fight for $15” movement.

Lottery Fever. 2016 started off with a bang in January when the highest jackpot in history was up for grabs in the Powerball lottery. Across the nation, retailers sold tons of tickets to customers reaching for the $1.5 billion grand prize. While the jackpot had three winners—from Chino Hills, Calif.; Melbourne Beach, Fla; and Munford, Tenn.—convenience stores also won with higher foot traffic and sales surrounding the gigantic jackpot. Meanwhile, New Mexican retailers joined Minnesota and Missouri in offering Play at the Pump options for state lottery tickets.

It’s a SNAP. In February, the U.S. Department of Agriculture (USDA) proposed a regulation that drastically changed retailer eligibility requirements for the Supplemental Nutrition Assistance Program (SNAP). As drafted, the proposal would have pushed nearly 100,000 convenience stores out of the program. The industry opposition to the proposal was significant—NACS, along with hundreds of convenience store retailers, filed comments addressing concerns with the problematic provisions. USDA heeded our concerns and overhauled many of the issues in the proposal. NACS is still analyzing the final rule, so stay tuned to NACS Daily in 2017 for our compliance memo.

Becoming Healthy. This year, more convenience retailers embraced fresh and healthy as they strived to provide customers with better-for-you food and beverages. This initiative has been replicated across the country, from Washington, D.C., to Maine, and everywhere in between.NACS jumped in with fresh ideas and suggestions to provide guidance to convenience stores with our “Building the Case for Produce at Convenience Stores.” A Nielsen study released in April also found that consumers are very interested in health and wellness—and how convenience stores are in a good position to meet that need.

On the Board. NACS helped get legislation to amend the Food and Drug Administration’s (FDA) onerous menu labeling rule passed by the House of Representatives in February. Unfortunately, the Senate didn’t act but we are optimistic that the strong vote in the House will continue to provide momentum to get this done. NACS also helped convince the FDA to formally move the compliance date to May 2017, protecting retailers all over the country from potential civil or state enforcement.

Hands Off Their Data. Securing customer data has become a major concern for both retailers and consumers, as data breaches continue to happen at major chains, such as Wendy’s. ATM fraud is a growing worry too. Conexxus provides retailers with both low-cost and high-cost ways to protect data in its “Protecting Payment Card Data at Your Dispensers.” NACS and Conexxus stay on top of the latest in security and data protection. Read more about protecting internal data in the September NACS Magazine cover story, “Safe & Sound.”

Ranging Beyond the Expected. With consumer behavior evolving toward new vehicle technology, one of the biggest drawbacks of electric vehicles (EVs) has still been the distance they can travel on a single charge. But EVs took a major leap in 2016: Chevy changed the game by combining Tesla-like range with Nissan-like affordability. The 2017 Chevrolet Bolt is an all-electric vehicle that drivers should expect to cruise for 238 miles on a single charge. Sales began this month in California. If we look further into the future, how long will it take before EVs represent one out of every 10 cars on the road?