CICC Summit's The Chat with Alain Bouchard

Very happy to be here today. It reminded me of my beginning when I started, and I've always been involved with associations, being here in Canada or being with NACS in the U.S. And we are part of NACS; our CEO is on the board there. And I mean, without an association as a group, it would be quite difficult to resist, to provoke changes, and to have someone that represents all of us because we are competitors, but we have to work together as an industry. So I've been involved from the beginning here in Quebec, obviously, and eventually in Canada and the U.S. and all over the world. So the basic of winning in an industry is to have a strong association. So that's my belief.

Actually, the changes we have seen in the last couple of years, unfortunately for some, are here to stay. Fortunately too, for the evolution of the virtual work, I should say. I think I was surprised to see how productive we've been able to be working at a distance. I mean, our offices were empty, but we were still working, right? And I think it's there to stay. Well, I don't think we will have all our office people back in offices full-time, and that's fine. I mean, I'm okay with that, and it's still a challenge, but we will see where we end up. Not this year, I think it will take a couple of years to adapt to that. On the stores itself, it's about labor, it's about our people. They have been good during this pandemic. We've been lucky as an industry; we've been recognized as a type of stores that is a necessity, and we serve our customers at proximity. That's a different definition of convenience, obviously. So with our people helping the customers, not just for the food, not just for the product we sell, for a lot of stuff. I have so many experiences that we have seen all over the world with our people helping. That proved to us that we are needed and we are there to stay. The other issue, as you know, is labor. We lost a lot of people. Depending, you know, you have one contaminated employee, all of a sudden close contact, you have to test everybody, you close the store for two days, three days, you reopen, you clean everything. Absolutely. Oh, wow, it was a nightmare. We still have some stores that are not open for the night shift in some of our markets because it's so hard to get started. We don't find people to work in the night shifts. But it's going down, going down, going down, shrinking. I was in the U.S. six weeks ago, and where it's heading in the right direction, in Canada too, but still a challenge.

I think the industry reacted very well. I think the customer in general realized that we are needed. So that's the word I would use: we are essential. I mean, we have been recognized, obviously, by all the governments all around the world as essential. It's good and bad to be essential because it's been quite challenging too.

Yeah, transferable is a good word, and transformation is even a bigger word. We have to transform ourselves as an industry. I think if we stay the way we are, we would disappear. We have to adapt our product mix, we have to adapt to the Millennials, the consumers are different and they are asking for a different offer. So we are there to stay if we are able to adapt and transform. Right, so the trends are obviously still, and it's been there for a long time: food service. Food service, we have a program we call the 3F: Fresh Food Fast. Fresh Food Fast, you know, better. And it's quite performing. I mean, wow, I'm so happy with the results we're having, but it took so many years to get to that point. And if I look at Europe, they were there. I mean, Europe was so good in food. Our sales per store there in food service, the ratio is 30, 35, 40 percent in food, while here in North America, it's more in the teens, you know, 15, 20, 25 depending on the market. Right, we're weak in Canada. A lot of adjustments need to be done, and we're starting to get better here, but there is a lot more restaurant offer in Canada per population than there is in the U.S. and Europe. So it's a different context, but we need to adapt here too.

Eighty percent of what we sell is consumed in the hour, so it's quite convenient, right? I'm not a strong believer in delivery for convenience; we are already convenient, but we're there, we're in that business, we're learning, we're testing. I was in Chicago a couple of months ago, visiting. We are partnering with others, and I stopped in a hotel with my team, and we started to order with the phone, order from GoPuff, from... anyways, all these names that I don't remember. And we were receiving the bags with the food we ordered, some 15 minutes, some 30 minutes, 45 minutes, with the right product. The prices were quite different from one to another, always more expensive than the price you find in our stores. I'm not sure us as a convenience store, it's the future, part of the future. Maybe in big cities where you have a high concentration, that's what we do mainly. But in the suburbs, in rural areas, I don't think this will fly. But it's my thought that Amazon will not make it when they started, so I can be wrong.

It's a big challenge and a great opportunity. Actually, we have the benefit of being in Norway; Norway is our laboratory today. Eighty percent of the cars sold are full electric or hybrid. That's an impressive stat, yeah. It's been like that for the last three years. So in a number of years, there will not be many fuel cars in that country. And it's coming there, actually, though it's the big subsidies that exist that can support that. I was in Sweden last week, and in Sweden, they have a big demand for EV cars too, but it's not as subsidized as it is in Norway, so it's more in the 10% of the EV cars sold in Sweden. So it's going to evolve, it will take time, and don't take me wrong, EV is there to stay, right? And they will take market share every year and grow. So we are part of it or not, and we are, right? We are investing massively in quick chargers in Europe, in North America, and we will start in Asia too. So, and actually, it's evolving in the right direction. We were not making any money with this in Norway for many years, now we make money, we charge for a charge. And that's the good news. I mean, if you don't charge, nobody can make money with something free. And Tesla is there; they were not there at the beginning. Now they realized that if they don't charge, with the number of cars that are there, they will lose money for a long time. So it's evolving in the right direction, and we have a big team in the EV in Europe and here in North America, so learning. And not many countries are able to supply the electricity that it takes for a big percentage of the fleet, right? So Quebec can do that because of Hydro-Québec and the hydro supply we have, and Norway. Other than that, it's all about new electricity, new grid that needs to be installed. Will that come from windmills, from solar, exactly, from coal or from nuclear? So there is not that many sources of electricity out there. There is gas, obviously. We see the story in Europe right now. So I think the electrification will be delayed with the war of Ukraine, with the cost of the electric car that is going to the roof—not just the fuels going up, right? The lithium, batteries, I mean, that's triple. I mean, it's so different right now with the supply of product. I mean, we don't know where we are heading, but it will settle, it will come back, it will take time. Take at least a year and a half to get a sort of a supply looking like 2019, right? But maybe I'm too optimistic with 18 months; maybe it will take more time than that. So it's there to stay for some time, and what we don't know is how labor will adapt to this, right? I mean, we have a very hard time to find drivers, to find engineers, to find accounting, to find people to work in our stores. And it's not just us, it's not about the paycheck, it's about the availability of workers. The pandemic has created a lot of new retirees; just take two, three percent adjustment upstream or downstream, you don't have the supply. So it will take time, it won't be resolved in 18 months, I think. Optimistic.

Yeah, it's frustrating for sure, and I just don't get it. I mean, that's so part of the path, right? It has to evolve. It was like that in the U.S. 20 years ago, dry county, dry states, and now it's all open. Look at Colorado; they have changed the rule two, three years ago, and they were the last state, I think. In Canada, I mean, we are a country of the past; we have to evolve there. So we need a very strong association to help us to do our representation and meet with the government to take the right decision on beer and wine, all alcohol. We sell our alcohol in the U.S. Gosh, they think we're not able to manage or what? We manage tobacco, we manage lotteries, I mean, our control products, we are the best to manage that. And they resist to changing the rules in these products, they want to keep the power or whatever. I don't know who's lobbying there, but it's time. Convenience stores cannot deliver the message alone, so we need a strong association like CICC. Actually, that's the full point of having an association, a strong association that can meet and help us to meet with the government and have these rules to change. We need a change on many things, but certainly on beer and wine in the country, on credit cards and all kinds of stuff, as you know. So, strong association is a must.

Yeah, that's big, it's very big actually. It's in Canada, in the U.S., in Europe. It's under control there; there is some contraband there too, don't take me wrong, but it's better controlled there. The governments are involved and they take action. Here, it's like this market is in the hands of people that the government don't want to touch or don't want to send their police forces, or whatever. I don't know, I don't know the rules, but gosh, contraband, it's heading in the same direction we were 20 years ago when there was that big problem with contraband when they changed the rules in '94. So over 28 years, almost 30 years ago, and now we're back there. So if we don't act, the business will all be illegal. Contraband, it's illegal, so it's like encouraging organized crime. I'm so surprised of no action there, but very little action, I would say.

A lot more civilized in Europe in that aspect. I mean, the European Union understood early that this doesn't make sense—having someone paying for the program put together by others, like the banks. They put these programs of points about everything, and we pay for it. Wow, what a good formula for a bank or oligopoly here in Canada. I mean, they laugh at us. Oh, don't—I don't want to say too much because I'm so frustrated with these guys. It's the same in the U.S., so only these two markets in the world are like this: Canada and the U.S. We paid 900 million U.S. dollars last year in credit card fees. Does it make sense? No, not us—consumer paid, our customers, they pay for that. They come, they don't see it, but we charge more. It's the same everywhere, right? In our industry, you buy clothes, you pay for the credit card fees—it's in the price. Everybody does that. You see that they're talking about the fuel; the fuel increased a lot. At our level, we had to take a bit more margin, and everybody did, because we have to cover the credit card fees that are increasing. And people are complaining with reasons, but what's wrong there? It's just so—I'm mad at it, you can feel, you can see it, but it's just the government that can take a decision on that. We cannot take a decision for the consumer; they like to put their card in the fuel dispenser or come at the counter and pay with their card, and we accept it, but we're stuck.

We are often the last retail standing. I mean, I've seen that a lot in Canada mainly, and it's everywhere. I mean, you go in Northern Ontario, you try to stay open, the community is begging us to stay open, but we don't make money anymore because we don't sell all the product we could, we should, right? So the number of people is not enough for a convenience store to stay. So we need the changes in Ontario and elsewhere. We are the last retail available, and I saw that in many areas where we closed and others did, and you have to do 50 kilometers to have access to a bag of milk or bread or whatever. So it's not what we want. And CICC is very good at helping there, but we need to continue to do representation and make sure we have support from our convenience store community too, because when you're alone in your store, you don't always see the benefit of the association. So we need to make sure that they understand that together we can win. So that's where the message has to be shared.

Totally agree, fully agree. I mean, and grassroots work has to be at the level of the convenience stores. They are there, they meet these people, they meet the deputy, they meet the politicians in their county, and they can share their concern. But with the support of CICC, it's even better. Well, listen, I just want to finish things by saying thank you, and I think this is just going to be extraordinarily valuable for the folks that are in attendance at our summit. Like I said before, it's retailers, it's distributors, it's vendor partners, and we all have to work together because we all have a shared interest in ensuring that our channel continues to survive and thrive. So thank you again. Thank you to you, and I cannot say no to the association. I mean, it's needed, and if we all invest in this, we win. In the Maritimes, in Ontario and Quebec, in the west—I mean, all together, we can change the playing field here and win. Thank you.