THE CHANGING DYNAMICS OF CONVENIENCE STORE RETAILING

Scope Of The Stores Represented In The Audience 1. Type Of Organization: Almost half the respondents (46%) work at c-store chains (headquarters or store locations). And almost half (45%) work at independently owned c-stores (single stores). 2. Number Of C-Stores Operated: On average, those who work at chains, work at organizations that operate 534 stores (median = 45) C-Store Revenues: Average projected 2010 c-store sales revenue, companywide, for chains is $540,080,000 ($2,485,000 for independents).

4. Sales Trends: Year to date, compared with 2009, c-store chains project an increase in sales revenues of 2.6%, and an increase in units sold of 1.3%. Independent operators project a 0.6% decline in revenues and a 0.7 decline in units.

The Audience’s Personal Buying Power 1. Titles: Across the CSNews/CSNews SSO audience, two-thirds (67%) of the respondents are Senior Management (owners/partners, corporate managers, directors or general managers). 2. Responsibilities For C-Store Operations: Extensive management level responsibilities for c-stores.

3. Number Of Stores Affected By Audience’s Decisions: The decisions made by chain store audience members affect an average of 77% of their organization’s c stores (77% of an average 3. Number Of Stores Affected By Audience’s Decisions: The decisions made by chain store audience members affect an average of 77% of their organization’s c-stores (77% of an average of 534 stores = an influence of 411 stores per person). 4. Level Of Responsibility For Key Business Issues: The Large majority of the audience has responsibility and accountability for four major issues that impact suppliers... Including: Offering the right mix of products to consumers (87%) Using effective marketing/merchandising approaches (92%) Sales results (92%) Margins/profitability (91%)

5. Involvement In The Selection Of Suppliers And Products: Virtually all professionals reached by CSNews/CSNews SSO (93%) have responsibility for the “selection of suppliers and products for c-stores.” Nine of ten are involved in the early stages (85%), 90% are involved in the middle stages, and 82% in the final stages of selection.

6. Involvement In Sale Of Products: Virtually all audience members (91%) have responsibility for the sale of products in c-stores.

Involvement In Decisions For Specific Product Categories

CONCLUSIONS: The CSNews/CSNews SSO audience is made up of senior c-store managers who have multidisciplinary management responsibilities... including planning, financial management and marketing/merchandising. The decisions of those at chains impact 411 stores per audience member. They have extensive responsibilities for both the “buy in” of suppliers and products, and the sale of products in c-stores. Those responsibilities span the spectrum of all major product categories. Therefore, suppliers seeking to make ongoing contact with those who control the destiny of individual suppliers and brands at c-stores, will make contact at that level through the CSNews/CSNews SSO suite of media.

Purchasing Dynamics At C-Store Chains 1. At C-Store Chains - Levels At Which Major Decisions Are Made: When c-store chains are Making major decision about which products/brands to sell, eight of ten (84%) involve decision-makers at The headquarters level, almost half (42%) at the store level, and a third (31%) at regional offices. 2. At C-Store Chains - The Influence Of Individual C-Store Managers: Given that stores can be located in areas with different ethnicity, income, urban/rural settings, etc % of the chain store respondents indicated that their individual c-store managers influence the selection of products that are sold.

4. At C-Store Chains - Trend In The Number Of People Involved In Major Decisions: Compared to years ago, a third of the chains (32%) are now involving even more people in the decision making process. At C-Store Chains - Number Of People Involved In Major Decisions: In total, when those major product decisions are being made, an average of 9.1 many people are involved, at all levels (median = 5.0). 5. At C-Store Chains - Why More People Are Involved In Major Decisions: The leading reasons for involving more people in the product/brand decision process are “we want input from those who have different perspectives (75%), and “to achieve ‘buy in’ from those at different levels” (75%). We want input from those who have different perspectives 75.0 To achieve “buy in” from those at different levels75.0 To share the responsibility of major decisions45.8 There’s now more at risk with each decision (order size, consumer trends, etc.) 29.2 There’s more pressure to get the decision right the first time29.2 % Respondents

7. At C-Store Chains - Frequency Of Suppliers Calling On All Decision Makers: Those who make major brand decisions at chains are often difficult for supplier/distributor reps to contact... with half (49%) indicating that reps only “sometimes/rarely/never” get to contact all of those who are involved in such decisions. 8. Whether C-Store Chains Sell Private Label Products: Exactly half (50%) of the c-store chains sell their own private label products. CONCLUSIONS: At c-store chains, major decisions about the selection of brands and products involve multiple business levels. In addition to the headquarters level, almost half involve store-level personnel and a third involve regional office staff members. In fact, more than three-quarters of chain store respondents report that individual store managers influence the selection of products that are sold in their stores... due to varying ethnicity, income, geographic settings, etc. Today, an average of nine decision makers are involved in major product decisions... many of whom suppliers cannot contact via reps with any degree of frequency. Therefore, suppliers must market their products at all levels at c-store chains. In addition, given that many decision makers often cannot be seen by reps, the investment in communications media that penetrate at all levels becomes even more vital.

Trends Affecting The BRANDING Of Products Among C-Store Decision Makers Number Of Suppliers Attempting To Place Products In C-Stores:

2. Trend In The Number Of New/Improved Products: Compared to years ago, more than half the professionals (57%) report there are now even more new/improved products they could potentially carry in their c-stores. Only 12% indicate there are fewer products. 3. Percent Of New/Improved Products That Get Placed On Shelves: However, each year, an average of only a fifth (22%) of the new/improved products that suppliers want to place in c-stores, actually get onto the shelves (median = 15%). 4. Number Of Brands Carried In C-Stores**: Across the stores represented by each professional, there are an average of 773 different brands carried (across all product categories) (median = 200). This increases dramatically at c-store chains (average = 1,185).

5. Number Of Brands** Attempting To Place Products In C-Stores: And professionals report there are an average of 2,327 different brands that suppliers attempt to place in their c-stores (median = 200). **Example provided: Bud Light counts as a single brand. 6. Trend In The Complexity Of Branding Products: Compared to years ago, the environment for branding products with c-store decision makers is even more difficult.

7. How Open Decision Makers Are To Evaluating New/Different Suppliers: Compared to years ago -- more than half of c-stores (58%) are now more open to evaluating suppliers with whom their companies do not now do business.

Number Of Suppliers That Decision Makers Talk With Each Week: 10. Whether Distributor Reps Have Time To Differentiate The Brands They Carry: Only a third (38%) of the professionals report that distributor reps “frequently” have time to differentiate

11. Decision Makers Prefer To Have Prior Knowledge Of Products Before Giving Them Serious Consideration: (84%) prefer to have already gained insight into the company or product via its communications programs. 12. Where Decision Makers First Obtain Information About Brands For C-Stores: Professionals indicated where they first obtain most of their information about new/improved product categories and brands.

13. Ways In Which Suppliers Can Move More Quickly Through The Branding Process: (96%) believe suppliers can help retailers evaluate their brands and arrive at decisions more quickly if they communicate with them more effectively.

CONCLUSIONS: C-store decision makers are faced with making decisions across a wide range of product categories, multiple suppliers per category, and thousands of potential brands that could be sold. And each year, even more new/improved products are introduced (with only a fraction actually making it to c-store shelves). Professionals therefore report that it has become even more complex to stay aware of new product categories and individual brands, and learn their attributes and differentiations. Plus it is now more difficult for them to determine which new brands to seriously evaluate. Yet, most decision makers say that they are open to evaluating suppliers with whom they do not now do business. Despite the many suppliers and brands available to them, professionals talk with only a modest number of reps each week. And they report that distributor reps often do not have time to differentiate the many brands they carry. It therefore is understandable why c-store professionals desire to have prior knowledge of products before seeing reps or giving the products serious consideration. And it is via the industry media where they first obtain that prior knowledge. In addition, we see that most buyers believe suppliers can do a significantly better job of communicating with them about new products, product differentiations, and so forth. Therefore, to properly brand their products with decision makers, suppliers should make extensive use of the marketing media that enable contact with those who control brand selection.

The Engagement With/Influence Of CSNews And CSNews Single Store Owner

2. Trend In Going Online For Business Purposes: And over the next years, three- quarters (74%) project they will be increasing their use of the Internet to access information related to c-store issues and products (22% projecting a “significant increase”). 3. Engagement With Media From CSNews And CSNews SSO: On average, c-store professionals are engaged with 3.3 different media from CSNews/CSNews SSO.

4. The Productivity Of Having A Broad Suite Of Media: In fact, eight of ten (81%) find it “very productive” or “productive” to have a broad suite of related media from CSNews/CSNews SSO -- those that work together to provide a full spectrum of content and alternative ways to learn about products and marketing techniques Reasons For Engagement With The Suite Of Media:

6. Ways In Which The Editorial Contents Are Used: Virtually all professionals (92%) proactively use the contents they find in the CSNews/CSNews SSO suite of media.

8. The Importance Of Unbiased Editorial Content: Nine of ten c-store professionals (85%) indicate that it is “extremely important” or “important” that the content in their industry media remains independent of the suppliers who advertise there.

How CSNews And CSNews SSO Compare To Other C-Store Media: Number Of Magazine Issues Read:

12. Trend In Magazine Readership: And CSNews/CSNews SSO magazines will continue to attract strong readership in the future, with 91% of the audience indicating that, over the next years, they will spend either more or the same amount of time with the publications. Only 9% expect to spend less time.

14. Actions Taken Based On Ads In The Magazine: Within the last 12 months, 94% of the subscribers have taken action as a result of reading advertisements in CSNews/CSNews SSO magazines... with 56% doing so electronically. (57%) have “ordered or recommended that an (advertised) product be carried”, based on seeing products in CSNews/CSNews SSO magazines.

CONCLUSIONS: Today’s c-store professionals are making extensive use of online resources. As they embrace the Internet, they’ve also embraced the suite of media available from CSNews/CSNews SSO... with 78% engaged with the brand’s digital media. The primary reason for their engagement -- to stimulate ideas for new products and marketing approaches. And more than three-quarters use the content to help form opinions and make decisions. Decision makers believe that it’s important for the content in industry media to remain independent of the suppliers who advertise there... and they feel CSNews/CSNews SSO is a superior medium in terms of providing authoritative, unbiased content. CSNews/CSNews SSO magazines remain strong in their attraction to professionals... generating exceptional readership and exposure, both today and very likely into the future. And professionals clearly read and use the advertisements in the magazines... with 94% taking action within the last 12 months, and 57% ordering/recommending products that were advertised there. Therefore, vendors seeking to utilize an integrated mix of print and online media, where decision makers seek out product solutions, will find the CSNews/CSNews SSO brand to be a primary option.

1. How Decision Makers Are Initially Branded On Suppliers And Products: Professionals indicated the media via which they are most likely to first become aware of and stay current with suppliers of c-store products. *The closer to “1.0”, the more the medium is likely to be the one where respondents first become aware of products and suppliers.

2. Media That Best Help Brands Move Through The Product Adoption Process: Professionals were also asked to choose among various c-store media on factors relating to the branding of products.