Canadian C-stores' State of the Industry Report: Canadian regulatory burden hurts Convenience Store growth - Costs industry more than $225M a year with no end in sight

TORONTO, Sept. 10, 2012 /CNW/ - Owning a small convenience store in Canada was once an uncomplicated business to start up and successfully operate - but not anymore. Today, the country's 22,984 convenience store owners must comply with no less than 517 different federal and provincial laws and regulations costing them more than an estimated $225M annually. One of the most widely dispersed and familiar industries in Canada is now possibly the most taxed and regulated industry according to the 2012 State of the Industry Report prepared by the Canadian Convenience Stores Association (CCSA) and presented today before 300 Canadian retailers, distributors and manufacturers meeting in Toronto for the occasion.

"This first, in-depth study focusing on convenience store regulation in Canada clearly confirms our worst fears. Our industry is very heavily regulated and this is impacting business growth and prosperity." says CCSA President Alex Scholten. "It's only a matter of time before convenience stores will vanish from this country unless the current regulatory trend is reversed. We are calling upon governments to work in partnership with our industry to address this issue, allowing for the creation of thousands of more jobs and preserving a unique family business model that provides billions in revenue for all levels of government annually.

The impact of over-regulation
According to the CCSA's study, the federal government is enforcing 34 laws and regulations that impact convenience store retailers from coast to coast. On top of the federal laws and regulations, provincial governments add another layer of rules that our industry must comply with.  The level of regulation from province to province varies greatly. The provinces that most impact our small business owners are Ontario with 85 laws and regulations, followed by British Columbia (72) and Québec (62). The most convenience store-friendly provinces are Manitoba with 22 laws and regulations, followed by Saskatchewan (31) and Newfoundland (38).  The report did not look at the further impact of municipal laws and regulations that apply to convenience store operations.  "The cumulative effect of the sheer volume of this regulatory environment is that business growth and prosperity is impeded and that affects our ability to employ more Canadians and generate economic growth." says Scholten.

One dollar for me, $16 to governments and the rest to … credit card companies?
While overall industry profits are estimated at close to $1B annually, revenue generated by the convenience store industry for government exceeds $16B annually. In other words, for every dollar of hard-earned profit our industry generates, governments collect $16 in revenue.

In addition to withstanding a heavy regulatory burden, Canadian convenience stores' profitability continues to be hit hard by the persistence of contraband tobacco and excessive credit card transaction fees. Contraband tobacco continues to erode 20 to 25 per cent of the market, mostly in Ontario and Québec.

As for credit card fees in Canada, they are among the highest in the world and convenience store owners in Canada are paying the price.  The CCSA's study indicates that more than $36,000 in net expenses per store on average go to pay for debit and credit card related expenses annually.  Studies have shown that Canadian fees are almost twice the rates charged to merchants in Australia, New Zealand and many parts of Europe.  "We can't keep paying such exorbitant fees in Canada and expect to stay in business." says Scholten.

Despite those strong headwinds, the industry is showing remarkable resilience. Convenience store sales (apart from gasoline) fell 3.2 per cent this year, reflecting tougher competition while sales at convenience stores with gas stations increased 22.3 per cent - a situation mainly attributed to higher fuel prices (at 123.6 cents per litre in 2011, the average gas price was 20.4 per cent higher than the 2010 average of $102.7). Having lost 346 stores in 2010, the industry regained 347 in 2011 for a net gain of one store over the past two years.

NACDA joins the CCSA to meet the challenges in the industry
The National Association of convenience stores distributors (NACDA) announced today its intention to enter into an affiliation agreement with the CCSA, thus becoming the fifth autonomous entity of the association, the same level as the four existing regional associations (Atlantic, Quebec, Ontario and Western Canada). According Raymond Bouchard, Chairman of the Board of NACDA, Canadian distributors stand to benefit from an affiliation of their association with the CCSA, which includes retailers. "We share the same desire to improve the business environment," he said. "I can't imagine a better strategy to raise and strengthen the collective voice of the industry among governments than by combining our efforts with that of the CCSA. Regulatory relief is one of the priorities for the industry, both for distributors and retailers."

Faced with excessive credit card fees, the impact of contraband tobacco and a debilitating regulatory environment, the CCSA is calling for industry unity in order to create a stronger and louder voice to respond to these issues that impact our business growth and prosperity.  "We have no choice - either we respond to these issues or our industry will quietly fade away.  We will respond." Mr. Scholten concluded. The report is available on demand.

About the CCSA
A strong voice for the Canadian convenience store industry, the CCSA represents the economic interests of about 25,000 convenience stores across Canada who serve Canadians for their daily needs. The CCSA works to promote and foster professional business practices, standards and ethics throughout the convenience store industry and provides training, education and guidance to its members.

Image with caption: "The National Association of Convenience Stores Distributors (NACDA) today announced its affiliation agreement with the Canadian Convenience Stores Association (CCSA). Alex Scholten, President of the CCSA (left) welcomes Raymond Bouchard, Chairman of the Board of NACDA. The affiliation will provide the industry a stronger voice on key issues such as over-regulation, excessive credit card fees and contraband tobacco. (CNW Group/Canadian Convenience Stores Association (CCSA))". Image available at: http://photos.newswire.ca/images/download/20120910_C5072_PHOTO_EN_17597.jpg

SOURCE: Canadian Convenience Stores Association (CCSA)

Dianna Eakins, CCSA
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Email: [email protected]