OCSA | Convenience Central

Plinko paying off for operators and OLG

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In just six weeks, Ontario c-store operators have help drive $29,643,900 in Plinko sales due, in part, to a commission-based incentive from OLG.

OLG announced in December that retailers in Ontario would earn 30% sales commission for every pack of $5 Plinko tickets activated from January 4 to March 31, 2021. This is an increase of 22% over the regular commission of 8%.

The move was designed to thank and support c-store operators, while also driving customer awareness and sales growth of this new lottery game, which launched January 1, 2021. As part of the Plinko promotion, retailers earn $105 per pack activated vs $28 based on regular commission of 8%: The promotion is slated to last three months.

“This is the most successful launch the OLG has ever seen,” says Dave Bryan, president of the Ontario Convenience Stores Association, which last fall petitioned the provincial government to recognize and reward the key role that c-store operators play in driving revenue for the Ontario Lottery and Gaming Corporation by increasing lottery commissions across the board by 2%.

While this hasn’t happened yet, the Plinko incentive is a good first step.

Bryans points out this is the first time the OLG has moved off of commission standards and it’s paying off for everyone involved, with motivated operators earning $8.9 million in commissions so far, compared to the $2.4 million they would have earned at the usual rates. “It shows that promotion, plus incentive, plus the support of small business gets record sales and helps small business.”

READ: OLG shares best practices for lottery sales during the pandemic

Despite COVID-19, lottery continues to be a significant traffic generator for c-stores. So far this year, convenience stores account for 84.6% of the total lottery business in the province – 44 weeks into the OLG’s fiscal year, that amounts to $224 million in commissions YTD, compared to $191 million this time last year.

“Lottery brings in the traffic, which drives sales of chips and pop and everything else,” says Bryans, who encourages operators to “continue to push these new products as leverage for future discussions with OLG.”

READ: Priming the purchase is key to boosting lottery sales

As the cost of doing business for c-stores continues to increase—not to mention the added financial and related challenges brought on by the pandemic—the OCSA argues that this is an ideal opportunity for the province to support the channel and small business owners.

C-stores account for 76% of Ontario lottery sales for OLG.
During the pandemic, this increased to almost 85%.
C-stores facilitate $2.4 billion in lottery sales every year for the province.
C-stores earn 5% on standard electronic tickets and 8% on scratch tickets.
The margins are slim, but the value for c-stores is in generating foot traffic.
As more customers pay with credit cards, c-stores are being hit with transaction fees of 2 to 2.5% on lottery purchases, further reducing margins.
Lottery commissions haven’t increased in more than 30 years.
OCSA is suggesting a 2% increase in commissions.
An additional 2% at point of sale for lottery equals about $5,000 per store.
This would inject an estimated $30 million into the convenience channel.

OCSA update: End-of-year notes from 2020

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OCSA president & CEO Dave Bryans

2020 has been a challenging year for all retailers in Ontario. Throughout it, the OCSA has been proud to work with the government to ensure that the entire convenience industry is recognized as an essential service. As a result, our sector has avoided some of the unfortunate circumstances many other retailers have had to face during the COVID-19 pandemic.

It is extremely important that every convenience store in Ontario continues to practice strict protocols as we persevere through this, including prioritization of customer and employee face masks, safety shields, customer limits in stores, directional arrows and sanitation stations.

First impressions are important and customers will only return to their local convenience store if they feel safe and welcomed at the same time. Let’s make every effort!

Here are some of the highlights of a most unprecedented year:

Tobacco – No tax increases from either the federal or provincial governments. There is a commitment in the Ontario budget to address contraband tobacco as the OCSA continues to work with the Tobacco Strategy Project office on this important and illegal issue.

Lottery – During the last six months, convenience stores continue to support the sale of lottery tickets accounting for almost 85% of all ticket sales (versus 74%) and have collected over $220 million in collective commissions working closely with the OLG. It is no secret that the OCSA has approached the government to increase our commission base on ticket sales and we will keep you updated as we move through the process.

Gas & Dash – 2020 has seen growing gas drive-offs and thefts with little support from local police services due to the sheer number of thefts taking place in every community. We have supported a private members Bill #231 to make pre-pay at the pumps mandatory in every community. The two exemptions would be that stations with old pumps (technology) would not be required to upgrade to comply and only would need to do so when they install new pumps. Full-serve gas sites would be exempt as there is always an attendant at the pumps.

LCBO Convenience Agency Stores – We continue to work with the LCBO on the roll-out of additional family-run agency stores in rural communities giving great access to beverage alcohol as we await the approval of the Ministry of Finance to roll out Beer and wine to all convenience stores in the province.

Beer & Wine – The government has assured the association that we are still scheduled to roll out beer and wine in the convenience store channel and the OCSA continues to meet with the government on the process. This has been a frustrating time lag for all convenience stores as we await the three major beer companies to settle on the MFA agreement and become partners with the convenience store industry as demonstrated in all other communities in North America.

Independent Stores – Over the last two years the OCSA has focused on how we can help our thousands of family-run stores to be as competitive in the marketplace as possible. We are proud to be preparing to roll out Paygos to all stores in Ontario starting in January 2021 in the GTA. This will allow all retailers the opportunity to have best pricing, free delivery and promotions through a coordinated web portal.

We Expect ID – Congratulations to all retailers in Ontario for being the best at age-testing young people for tobacco, vape products and lottery demonstrating a pass rate of over 96%. Please be vigilant and aggressive during COVID-19 when it comes to photo ID and customers wearing masks. Better to refuse the sale if there is any doubt about the ID presented by the customer and this is a great time to remind all staff of procedures.

Support Ontario Made – As we march through these difficult time, we encourage all Ontario convenience stores to make every effort to support Ontario made products, Ontario suppliers and distributors to our channel to encourage customers in our stores to also help our local economy get back on its feet. May I suggest we set up an Ontario products section in our stores.

Eyvind Dahl owns Dahl's Coin Laundry & Convenience in Renfrew, Ont.

The ups and downs of tobacco

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After a surge in sales during the COVID-19 lockdown, how do c-stores keep smokers coming back for more?

Eyvind Dahl owns Dahl’s Coin Laundry & Convenience in Renfrew, Ont.

As Canada locked down in the wake of the COVID-19 pandemic, Eyvind Dahl noticed something at his Renfrew, Ont. c-store went up: tobacco sales.

Dahl, the owner of Dahl’s Coin Laundry & Convenience, attributes the increase in tobacco purchases to the closure of First Nations’ borders in the province, a protective measure to fight the coronavirus. “When they closed the reserves, our tobacco sales more than doubled,” says Dahl.

He notes that sales of Imperial tobacco alone jumped from 50 to 100 cartons a week. Hand in hand with that increase in business came a surge in impulse purchases. “All my categories shot up,” says Dahl. “We were so busy it was crazy.”

Surge then slide

Dahl was not alone in seeing a surge in tobacco. According to a survey conducted by the Ontario Convenience Stores Association (OCSA), retailers throughout Ontario showed an increase in tobacco sales that ranged from 10% to more than 30%. The survey of the association’s 6,000 members also found that proximity to a reserve played little role in the booming business. Sales increased across the board, and almost half of the stores surveyed were more than 30 kilometres from the closest reserve. Dahl’s Coin Laundry & Convenience is an hour away from the nearest First Nations community.

The boom has been temporary, however. “Now that the reserves are back open, sales are going down, down, down,” says Dahl. “It’s going back to normal, which shouldn’t be normal.”

The issue of contraband tobacco has been a significant one for retailers, particularly in Ontario. “The illegal cigarette market has been left unchecked for far too long,” says OCSA CEO Dave Bryans, who is based in Oakville. “This can’t go on. In Ontario, 30 to 60% of butts swept are contraband.”

The OCSA is calling on the provincial government to develop an integrated plan to address contraband concerns and other tobacco issues. “The survey demonstrates a need to work with the Ontario government to develop a tobacco strategy from pricing, formats, promotions and incentives to protect small businesses as well as government’s health policies,” says Bryans.

The Convenience Industry Council of Canada noted a similar surge amongst its members. During a recent interview with CSNC, president and CEO Anne Kothawala said CICC is engaging “Ernst & Young to put together a comprehensive study on contraband tobacco across the country. We need much stronger public policy to address this issue.”

Competing with contraband

Until then c-stores are looking for ways to enhance tobacco sales. In the current environment, productivity is paramount, says Anthony Ruffolo, vice president, McCowan Design & Manufacturing Limited in Toronto. “Plain packaging has definitely made it more difficult to vend the product quickly. You need to be more efficient and organized.”

Products like McCowan’s secure undercounter tobacco cabinets can help. This may also free up the back wall for new opportunities, space often previously dedicated for tobacco products. “There is an ability to generate profits off the back wall. You may even be able to sell advertising,” says Ruffolo.

Sara Clarkson, president of Storesupport Canada in Mississauga, points out that helping people work through the plain packaging maze will build customer loyalty. “There is still lots of confusion regarding cigarette brands with the start of plain packaging. Knowing what brands to recommend is key and ensuring stock is available of those brands for your regular customers is also of huge importance.”

Bryans recommends c-stores promote the least expensive products they have in inventory as a way of competing with First Nations’ retailers at a basic level.

While that will attract some new customers and keep others coming back, there is no way c-stores can compete head on with contraband sales, notes Dahl. A carton of cigarettes from the reserve is $20. His cheapest brand is $120. “It’s a huge difference. I can sympathize with the customer.”

The focus on tobacco sales includes another harsh reality for c-stores: the category is declining.

Bryans notes that c-stores sell 99% of all legal cigarettes and sales are declining 1.5 to 2% a year. “That is a huge concern for the channel. The time has come for a task force to review the tobacco business in Canada.”

Filling the void

One solution is to look for options that can replace tobacco. Vaping seemed a promising category and the profit margin is greater than tobacco. The product is also very popular, but there are concerns about safety and increasing regulations that are undoubtedly affecting retailers.

Many would like to see c-stores be able to sell alcohol, and the industry has been lobbying the government and raising public awareness for the last seven years to encourage a move to an open retailing market. Doug Ford’s Progressive Conservative government has promised that market will soon be a reality in Ontario, but the wait continues.

Ruffolo also recommends retailers look for products and services that set them apart, such as foodservice or local products. “You need to draw in new customers. The more you know your customers, the more you will be able to retain them.”

It’s also critical to remind customers—through signage, conversation, and any other means—that c-stores offer what competitors, from larger stores to smoke shacks and vape shops, do not. That message resonates more clearly and convincingly in a COVID-19 world, notes Clarkson. “With access to grocery stores being more difficult with line-ups and extra time needed to shop, quick convenience is more important than ever. Ensuring staples are in stock and healthy snacks will promote a quick stop at the convenience store.”

Ontario c-stores are encouraged to ‘Support Ontario Made’

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The Ontario Convenience Stores Association is teaming up with Canadian Manufacturers and Exporters to ‘Support Ontario Made’.

The multi-pronged celebration of Ontario Manufacturing brings together consumers, retailers and manufacturers. The initiative is designed to increase sales of Ontario-made goods by helping consumers make informed decisions about the products they purchase, as well as helping retailers to make informed decisions about the items they stock. Manufacturers and supplierscan register and promote their products through the website.

According to the group, “polling suggests that nearly 75% of Ontarians are looking to buy locally manufactured goods over imported ones. That may not always be possible, but where it is possible, we need to provide consumers with that information.”

“OCSA is fully committed to supporting Ontario-made products, we are Ontario retailers so we have a vital role to play,” says OCSA CEO Dave Bryans, who suggests retailers set up special displays or sections in their store to support Ontario made.

He is encouraging convenience retailers and manufacturers large and small to find out how their companies can play a role in the initiative.

In a letter to members, OCSA encourages organizations to “to explore how your company and brands can be recognized in the retail channel. You also have the rights to use the logos on your Ontario made products and we will encourage the c-store operators to support Ontario made during these unknown times.”

It’s worth noting that Ontario-made products span independent companies like Horse & Buggy Brands to multinationals, such as Frito-Lay. The idea – backed by the provincial governement – is to support companies that create jobs for 750,000 workers and add value to communities across the province.

Ontario retailers, including convenience stores, are being asked to:

Use the logo in store, on websites, and through other promotional materials on goods that have been qualified as Ontario Made.
Where possible create in-store set-aside areas for Ontario Made goods.
Use the Support Ontario Made website to identify local manufacturers of Ontario Made goods and sell those products.

Ontario CStore Day goes virtual

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CStore Days will once again take place throughout Ontario, but with a twist.

The Ontario Convenience Stores Association is turning what is traditionally a one-day event into a week-long effort to raise awareness of the important role c-stores play in communities, as well as raise funds for the province’s four children’s charity hospitals.

Sick Kids’ Foundation
Children’s Hospital of Eastern Ontario Foundation
Children’s Health Foundation
McMaster Children’s Hospital Foundation

This year, CStore Days will happen August 15-22, with a special focus on Saturday, August 22.

Whereas local politicians have traditionally shown their support for small businesses in-person (some even helping out behind the counter) due to the ongoing need for social distancing in light of COVID-19, this year’s C Stores Day will be virtual: The OCSA is encouraging MPs and MPPs to tweet their support of the campaign.

In turn, the OCSA will continue to partner with the children’s hospitals to raise important funds and convenience stores can accept donations any time throughout the week-long event.

In a statement, the OCSA said: “We encourage our industry to collect donations electronically at the cash while customers are paying with debit or credit cards.”

There are more than 6,000 c-stores operating as independents and regional chains in Ontario, opening up the potential to do a huge amount of good in their communities in support of the children’t hospitals.

If you are interested in participating, contact Donna Montminy at (905) 845-9152 or click here for more information.

OCSA partners with Paygos for e-commerce platform

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The Ontario Convenience Stores Association is partnering with

Shutterstock

Paygos to create a service that will enable independent convenience stores to order merchandise from a centralized cloud-based platform.

Developed and managed by Paygos, the e-commerce platform will feature a wide range of CPG products, as well as automotive items and tobacco (the goal is to add beer when legislation is passed for convenience store sales).

“Our solution relies on existing distribution partners to fulfill all orders,” Paygos CEO Hesham Shafie explained in a release.

The service will be free to use for convenience stores in Ontario: The OCSA represents more than 6,000 independent retailers and regional chains in the province.

“For many years the convenience channel has searched for a business partner that can coordinate programs and services for the thousands of family-run convenience stores in Ontario,” said OCSA president and CEO Dave Bryans. “In a changing retail environment, working together with manufacturers and Paygos will allow independent store owners the same opportunities as major retailers in the province.”

OCSA invites retailers to participate in tobacco survey

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The Ontario Convenience Stores Association is conducting a survey to gather information to share with the Ontario Government in an effort to find solutions to illegal cigarettes, while understanding the importance of the tobacco business for convenience stores.

Independent, chain and franchise operators are invited to participate in a survey and share their experiences and thoughts.

“If you are concerned about contraband and what it is doing to your revenue and traffic, then here is a great opportune to weigh in as a small business owner,” says OCSA president & CEO Dave Bryans. He will be sharing the information with the Tobacco Project Team, which is making a report to the Minister of Finance in August. “The government wants to hear from the convenience sector themselves, small business owners and how it effects them.”

Click here to complete the survey.

Coca-Cola and Sheridan College team up to produce safety shields for c-stores

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Source: Coca-Cola

Coca-Cola is working with Sheridan College’s Centre for Advanced Manufacturing and Design Technologies (CAMDT) to produce and distribute protective countertop shields for small businesses, including local convenience stores and restaurants hit by the COVID-19 pandemic.

The initiative is designed to support and help business owners continue to operate while maintaining physical distancing measures.

The project came about when Coca-Cola spoke to their customers and realized that a number of smaller, local businesses did not have protective shields or or only had temporary solutions, thereby putting staff and customers at risk.

“Retailers and restaurants are working hard to ensure that Canadians can get the food, drinks and supplies they need during this challenging time,” Ron Soreanu, VP, public affairs & communications at Coca-Cola Ltd., said on the company’s website. “We know that the COVID-19 pandemic has been devastating for many retailers and we wanted to help businesses that may be overwhelmed trying to keep their business running. Protective barriers between the cashier and the customer will give an extra layer of confidence to everyone during their shopping experience. And, we hope that this investment will enable Canadians to continue supporting their favourite local store or restaurant as our economy begins to re-open.”

Coca-Cola Ltd. is investing $75,000 to fund the purchase of materials and lead the project. Coke Canada Bottling is sourcing the locations and stores that need protective shields and will lead distribution and delivery.

Dave Bryans, president and CEO of the Ontario Convenience Stores Association, says his organization “has partnered with Coca-Cola and Sheridan College to supply safety shields to family run c-stores in Ontario. We will be installing these wonderful new shields in upwards of 100 Hasty Markets throughout the province ensuring the safety of our customers and employees. A big thanks to both Coca-Cola and Sheridan College.”

Sheridan College designed the prototype behind these shields and is using an alternative form of plastic, which is just a story as plexiglass, for which there are shortages across North America due to high demand in the wake of the pandemic.

Sheridan is manufacturing multiple designs to suit different countertop configurations for employees working at cash registers or takeout counters.

“Our dedicated team responds to industry needs in an agile way and puts Sheridan in a position to contribute to our communities efficiently and effectively,” Dr. Michelle Chrétien, director of CAMDT at Sheridan College, said in a statement. “We’re delighted to be supporting small business owners with a solution that helps facilitate safe interactions with customers.”

Industry reacts to cross-Canada contraband cigarette bust

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Following a major crime bust last week, 16 people are facing charges and millions on contraband cigarettes are off the streets.

According to the OPP, a two-year investigation, dubbed Project Cairnes, took place across Ontario, British Columbia and Quebec, and targeted the illegal manufacture and distribution of contraband tobacco, as well as cannabis and other drugs.

Among the items seized, were 11.5 million contraband cigarettes, with an Ontario street value of $942,000, as well as 1,714 pounds of cannabis, with an estimated street value of $2.5 million.

“The depth and scope of this investigation reveals just how extensive the problem of contraband tobacco and its links to organized crime is in Canada,” Anne Kothawala, president of the Convenience Industry Council of Canada, said in a statement. “These groups are well-financed and organized, and their operations have major consequences on public health and safety as well as on small business convenience retailers.”

The tax loss associated with the cigarettes seized throughout the investigation is estimated at $3.3 million.

“Particularly at a moment when governments are looking to finance COVID-19 response and recovery efforts, decision-makers should support even greater actions to break up contraband networks that consistently evade taxes,” said Kothawala. “These are criminals who are flooding the legal market with cheap, unregulated cigarettes that have economic consequences for both law-abiding retailers like convenience stores as well as governments across the country.”

She further noted that these illegal products are more easily obtained by youth, as organized criminals are not concerned about access to tobacco by minors.

According to The Toronto Star, “The project began as an investigation into a tobacco plant on Six Nations of the Grand River First Nation, near Brantford. The OPP said that operation was controlled by a GTA-based criminal organization and that no benefit or investment was provided for Six Nations.”

The fight against contraband tobacco is ongoing. As the convenience store industry’s number one dollar sales category, stopping contraband and the illegal sale of cigarettes is an important issue.

The Ontario Convenience Stores Association is asking independent, chain or franchise operators to participate in a related survey.

“If you are concerned about contraband and what it is doing to your revenue and traffic, then here is a great opportune to weigh in as a small business owner,” says CEO Dave Bryans, adding he will be sharing the information with the Tobacco Project Team, which is making a report to the Minister of Finance in August. “The government wants to hear from the convenience sector themselves, small business owners and how it effects them.”

Click here to complete the survey.

COVID-19 a boon for c-store tobacco sales

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With stay-at-home measures in place across the country, c-stores are experiencing an unprecedented spike in tobacco sales, in part because First Nations reserves (and their popular smoke shacks) are largely closed to outside visitors

Dave Bryans, CEO of the Ontario Convenience Stores Association, estimates that the legal tobacco business is on track to grow by 20-25% while the reserves stay closed and he’d like to see c-stores to hold on to that business once the restrictions are lifted.

However, it’s an ongoing battle and the lines are fuzzy, with many smokers not even realizing that it is often illegal to purchase cigarettes on a reserve. Many Canadians make a regular pilgrimage to stock up, but experts say it’s important people understand the difference between being in possession of legal and illegal cigarettes, as the fines are hefty.

Under the Tobacco Tax Act, unless otherwise authorized, it is illegal to buy, possess or distribute any quantity of untaxed cigarettes or any other untaxed tobacco products.

Smoke shacks unto themselves are not illegal. Indigenous Canadians living on reserve are allowed to buy tobacco products tax-free there, however non-indigenous Canadians are not legally allowed to buy any tax-exempt cigarettes.

That said, the practice is widespread, as taxes make up about 70% of the purchase price. A carton of cigarettes in a c-store costs about $120, while you can buy a carton on a reserve for about $35. While this represents a significant cost-savings to the individual, it also represents billions in lost tax revenue for society.

“Our fear is most will return to the reserves or have the underground delivery model revived post COVID-19,” says Bryans, adding he is “hoping manufacturers will work to keep the prices down, with no increases and offer levels of value brands to help c-stores retain this new customer base.”

He points to studies that show contraband accounts for 30-35% of all tobacco sales – in areas closer to reserves, that number spikes as high as 65%.

While it is hard to compete with the massive price differences between legal and illegal sales, c-stores operators have proximity and the law on their side.

Operators and their teams would be well-advised to take advantage of the current situation by getting to know customers’ and their smoking habits. Fulfilling a customer’s wants and needs in a friendly (legal) exchange, will no doubt help build and maintain those relationships and sales once travel restrictions subside and communities open up.

Educating customers is a key component in reducing illegal sales and driving smokers back to c-stores, says Bryans. “The OCSA has met with Ministry of Finance to discuss an educational component on how reserve products are illegal and hurt every community.”

CCentral-Main-logo-EN-trans

Plinko paying off for operators and OLG

OCSA update: End-of-year notes from 2020

The ups and downs of tobacco

After a surge in sales during the COVID-19 lockdown, how do c-stores keep smokers coming back for more?

Ontario c-stores are encouraged to ‘Support Ontario Made’

Ontario CStore Day goes virtual

OCSA partners with Paygos for e-commerce platform

OCSA invites retailers to participate in tobacco survey

Click here to complete the survey.

Coca-Cola and Sheridan College team up to produce safety shields for c-stores

Industry reacts to cross-Canada contraband cigarette bust

COVID-19 a boon for c-store tobacco sales

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