The Year of Change

NACS Chairmen Steve Loehr and Jack Kofdarali discuss how convenience retailers of all sizes—with the help of NACS—can adapt to a constantly changing retail landscape.

October 19, 2015

At the 2015 NACS Show last week in Las Vegas, 2014-15 NACS Chairman Steve Loehr passed the gavel on to 2015-16 NACS Chairman Jack Kofdarali. NACS Magazine sat down with them for our October issue to talk about their roles as leaders at NACS, their experiences and the year ahead for the convenience and fuel retailing industry. 

Q: What are you most proud of about your past year as the NACS chairman?
STEVE: It’s been a great year, but what I am most proud is the association. It’s been a blessing to be able to represent the association and Kwik Trip and all of our employees to the different groups we meet. It’s made me more proud than ever of NACS. When you go out and talk to other associations and other groups, it really jumps out at you how great NACS is. I’m proud to be able to represent it for a year.

What NACS does for the industry is unbelievable. And we’re [NACS chairmen] just kind of caretakers for a year. We get to go out and be the face of NACS at some meetings, but NACS is a lot greater than one person—it’s everybody in the association.

Q: As chairman this year, what do you hope to accomplish?
JACK: Steve said it best; we’re just the one person in the line. And one thing I hope I bring different than Steve is to appeal to the single store operators. When I had two or three stores, I would look at Steve’s company and think, “That is just so out of my reach and so unrealistic for me to think that big.” And then there are those times where I think, “What am I doing in here?” when I’m talking to a guy whose company has 600 stores, and I’m incoming NACS chairman with 22 stores.

But more than 60% of the industry is single store operators so it’s a much smaller percentage of the bigger companies—yet NACS is representative of both. I want to appeal to the smaller guys to get more engaged with NACS, to come to events, educational sessions and get involved with any of the NACS committees. Now, you might not learn something earth-shattering every time, but it’s going to be that one time you weren’t expecting where you learn a new idea and implement it in your business. A lot of the things I’ve done [in my business] over the last 10 years have been a direct result from my involvement with NACS.

Q: What do you see as the biggest opportunities facing our industry?
STEVE: There is such a great opportunity in our country today, regardless of the size of the retailer. The consumer overwhelmingly wants convenience, and if we can find a way to offer it at a fair price and in a clean facility, we’re going to continue to get more and more customers coming to convenience stores.

We get hundreds of letters every week [at Kwik Trip] and a lot of them are commenting on something that we see as ordinary, like somebody actually said thank you to me, or they carried something out to my car. We think that’s what we’re supposed to be doing, but the customer thinks it’s extraordinary. It’s customer service.

JACK: It’s our job to say thank you, to be kind and courteous.

STEVE: To us, [customer service is] our greatest asset, when the customer is greeted when they come in and someone says, “Thank you, we’ll see you again tomorrow” when they leave.

JACK: If you asked 10 years ago or even five years ago, about going to a convenience store to buy steak, you probably would’ve been laughed at. Who goes to a convenience store to buy steak, or even produce? There are a lot of great brands right now taking a leap and stepping up the food offerings. And I think we are all learning from them and hopefully expanding.

I think the face of convenience is changing, where the consumer believes that every store looks fantastic and there’s no fear of using a restroom or buying food from a c-store. If we can improve on those things, I think that’s one of our biggest opportunities.

Q: Where are the biggest threats to our industry coming from?
JACK: Like Steve, I build new stores and the whole NIMBY issue [Not in My Back Yard] is a problem. I’ve had people show up to zoning hearings and say how offended they are that there’s going to be a gas station in their backyard, thinking it will bring gangs and other bad elements to the neighborhood. That’s unfortunately how we are perceived sometimes, and we have to educate people and show them that we’re a good business to have in the neighborhood, that we provide jobs and services to the community.

STEVE: In terms of what keeps us up at night, at Kwik Trip we say there are two things. First is the culture of our people, and second, with our greater emphasis on food, if a food-related illness were to break out it could really put you out of business. And in the last five years we added a third: new government regulations.

Take the FDA’s menu-labeling regulations. You always try to minimize your risk in business, but if you don’t put a calorie count on the sign it’s a felony? Come on! There’s got to be some balance in the industry, and that’s been the role of NACS and its advocacy: to educate legislators that their regulations, just like their legislation, have consequences.

Q: What about fuels? What are some of the challenges?
STEVE: Cars are getting more efficient and consumers are driving less miles, so there’s less fuel being consumed in the nation than five years ago. Fuel is still a major item with most retailers, so how do you replace that fuel sales with something else? And then the other different kinds of fuel are evolving. At Kwik Trip we have 30 CNG stations and will have 34 at the end of the year.

And then there’s new EMV regulations, where retailers are going to have to replace most of their dispensers. For Kwik Trip, that’s $32 million in three years we are going to spend, and that’s just outside at the dispensers. And that doesn’t add a penny to your profit, it’s just an expense. It’s a big challenge for us but it’s a really big challenge for the smaller operator, too. Maybe at a small retailer’s one site it’s $80,000 but that $80,000 spend isn’t going to make his business grow. It’s just going to have him take care of a mandate.

JACK: Over the years that’s how we’ve lost some operators. When you’re adding an $80,000 to $100,000 burden on them, it’s money they don’t have.

Q: Where are the industry’s biggest ideas coming from?
STEVE: The challenge in the retail industry today is that all of the channels are getting so blurred. Drugstores sell milk and sandwiches. Big box stores are building smaller stores, and smaller stores are building bigger ones. To get those ideas, we take a group every year and go outside the United States, to Ireland, England or Germany or somewhere just to see what’s going on in the rest of the world. We don’t have all of the best ideas just because we’re the United States. And certainly outside of our industry we look at what the big box guys doing, fast-food feeders and Starbucks, and try to embrace those things and bring them into our business.

JACK: In our area and in other industries, I think you learn more about customer service.

STEVE: That’s the ironic thing—we sometimes want to make it so complex, but it really is about taking care of customer needs and being friendly. It’s just common business sense.

JACK: With gasoline going back down recently, in Orange Country I’ve heard so many people, especially the moms with kids in the car, say that they wished there was a full-service pump. That they’d pay an extra 50 cents a gallon to not have to get out of the car… STEVE: And clean the windshield…

JACK: …Have somebody pump my gas so I don’t have to. Wow, look it’s come back full circle again!

STEVE: Check their oil, too.

JACK: What a novel idea! Yeah, who thought of that?

Q: Finish this sentence: 2016 will be the year of …
STEVE: I think it’s going to continue to be a year of great change. Politically, we’re coming up on an election year and a new president. But looking at what the industry is going through, who ever thought we’d be sitting here today and gas would be under $40 a barrel? It’s going to create great opportunity for some, and challenges for others.

JACK: You’re right; it’s going to be the year of change. I think next year’s NACS State of the Industry data will show us how 2015 was such a changed year. We’ve gone through some really bad years, and the tide has changed to where we’re doing better. Our stores are doing fantastic year-over-year and sales are increasing. I think it’s going to continue to do so.

STEVE: But with the year changing, it requires us as retailers to change, too.

Be on the lookout for the November issue of NACS Magazine, featuring complete coverage of the 2015 NACS Show. 

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