Government gridlock, consumer frugality temper retailers’ 2014 expectations in latest Outlook Survey.
It will also help the company grow its new E85 business. While no retailers participating in the Outlook Survey said they planned to install E15, more than 23% who are making a change to their fuel offer plan to install E85. At Sapp Bros., new blender pumps and the debranding will enable the chain to blend its own E85, and offer ethanol-free gasoline (E0) as well.
About 65% of Outlook Survey retailers will make a change to tobacco. The product on which most are betting growth is e-cigarettes, with nearly 95% planning to grow this segment.
“E-cigarettes are a strong performer for us—although this is off no base a year ago,” says Zikias of Holmes Oil, which sells blu, NJOY, FIN and Logic brands. He is also anticipating FDA regulation.
“As with anything the government would do, we might not like it, but at least it gives clarity,” he says. “Uncertainty is the enemy.”
7-Eleven franchisee Keane has no serious fears about potential—inevitable?—FDA regulation of e-cigarettes. “I’ve been in the industry for 37 years and don’t remember a time we were selling a tobacco product that was not regulated,” he says. “What probably happens next year is the tobacco companies get inside of it, and it is marketed aggressively.”
In the rest of the tobacco section, most Outlook Survey participants tagged premium cigarettes as a key area to shrink. The retailer quoted anonymously has grown its tobacco section from an average of 7 to 12 feet. “We are looking at cigarette SKU rationalization—eliminating slow movers,” he says. “This is to give more room to the new brand extensions (mainly from Altria and Lorillard).”
Nearly one-half of Outlook Survey participants plan to keep their beverage set the same. For the retailer quoted anonymously, cooler resets happen each year, but he acknowledges they are more of a “minor tweak.”