Over-Regulation Threatens Canada's C-Stores

Published in CSP Daily News

Canadian Convenience Stores Association releases 2013 State of the Industry Report

Michel Gadbois, executive vice president, CCSA (left), Alain Bouchard, president & CEO, Alimentation Couche-Tard, Alex Scholten, president, CCSA.

MONTREAL -- A total of 868 federal, provincial and municipal regulations have been identified as directly impacting convenience store operators in Canada, according to the Canadian Convenience Stores Association (CCSA). The estimated cost to retailers: $225 million annually. The findings are part of the CCSA's 2013 annual C-store State of the Industry (SoI) Report, released in late October in Montreal during the industry's annual convention of retailers, distributors and manufacturers.

Last year's report focused on federal and provincial regulations, while the group expanded this year's report to include municipal regulations found in five of Canada's largest cities (Calgary, Halifax, Montreal, Toronto and Vancouver). It discovered an additional 176 municipal regulations that add a significant burden to the cost of doing business in those cities, especially when compounded with a large number of federal and provincial regulations.

"The volume of regulation impacting our members in Canada poses a real threat to our industry," said CCSA president Alex Scholten. "By eliminating out-of-date regulations, simplifying others or avoiding new, unnecessary regulation, we could achieve major improvements to the profitability of our members and to the Canadian economy in general. For this reason, we are calling upon governments to alleviate this burden, which we believe will trigger the creation of thousands of jobs and preserve a unique family business model that generates billions in tax revenues for the government. We have been working with a number of provinces and the federal government to achieve 'smart regulation'--regulation that is deemed effective and efficient by the industry and government alike."

Over-regulation has significantly hindered the profitability of c-store retailers in Canada. According to the latest CCSA SoI report, sales in the Canadian convenience store industry topped $40 billion (an increase of 3.28% over 2011); however, due to increasing costs (including the cost of compliance with ever expanding regulation), the threat of contraband tobacco, credit-card fees and competitive pressures, the industry collectively lost an estimated $254 million in 2012 compared to an estimated $1 billion profit in 2011. Only two-thirds (66.2%) of traditional c-stores (without gasoline) reported a profit last year.

The current environment is particularly challenging to small, "mom-and-pop" independent c-store owners - many of which are operated by newly established Canadians. Since 2008, among the 2,252 c-stores that have closed, most were independently owned. The proportion of independent c-stores has fallen from 47.8% in 2011 to 44.9% last year, a staggering 3% reduction in just one year representing almost 700 stores.

"We are asking Canadian politicians across the country and at every level to start working in partnership with our industry to achieve a smarter regulatory environment," Scholten said. "This will ensure a healthier and stronger c-store industry that can continue providing jobs, wealth and essential services to all Canadians well into the future."

Canada's c-store industry employs over 190,000 Canadians, generates $4 billion in wages and benefits annually and collects an estimated $17 billion in tax remittance yearly for all levels of government.