Title: Do governments really care about C-Stores?

Sub-title: While the industry provides huge benefits for Canadians, key factors make it hard for it to get its voice heard.

 

Four years ago when Linda Lapointe took over the AJK Corner Gas store in Apple Hill Ontario, she made it a priority to get the Ontario Lottery and Gaming Corporation to install a 6/49 machine there. After several phone calls yielded no response, Lapointe put on the gloves. She organized a petition asking the government enterprise to take action and got several hundred people to sign it, including North Glengarry mayor Grant Crack. The result? Nothing.

 

“They told us that we were too small to merit a terminal, and that it would affect their profits if they installed too many of them,” said Lapointe. “But that’s just plain unfair. They should be treating big and small businesses equally. I feel like I wasted my time.” (An Ontario Lottery and Gaming Corporation spokesperson noted appreciation for Lapointe’s interest in acquiring one of its 9,000 terminals, but acknowledged that these are allocated using business criteria).

 

However getting a lottery terminal isn’t the only government-related issue bothering Lapointe these days. There are a slew of others too. “We are located 20 minutes from Cornwall so all of the contraband tobacco coming across the border is killing us,” says Lapointe. “The recent implementation of Ontario’s Harmonized Sales Tax made things even worse, because now we have to charge even more for cigarettes. The province’s high minimum wage, during a time of economic recession is also a problem, because we have a hard time paying those rates, and often end up working extra hours instead of delegating.”

 

An industry that makes a significant impact

Lapointe isn’t alone. Her challenges, and those of AJK Corner Gas, echo those of convenience stores across the country. On issue after issue, it seems like the industry’s position is given short thrift. As a result many stakeholders are increasingly asking: do the federal, provincial and municipal governments really care about convenience stores?

 

At first glance you’d have to think yes. Convenience stores are a key part of life for Canadians who shop there, work there or who produce or sell goods that stock the shelves. According to the 2009 State of the Industry Report, there are close to 23,000 points of sale in operation throughout the country, which employ 163,0000  Canadians that generated $32.1 billions of dollars worth of sales last year.

 

One half of Canadians shop at a convenience store at least once a week, and 10.4 million each day. For those who live in small communities, where convenience stores are often the only game in town, their importance is magnified. Furthermore, through its collection of lottery, tobacco and alcohol (in some provinces) taxes, the industry acts as an uncompensated government revenue agency. As if that wasn’t enough, the industry provides a considerable number of students and younger Canadians (a group which is facing the highest unemployment rate in the country) with entry level jobs into the workforce.

 

…. but struggles to make itself heard

Yet despite the vast benefits that the convenience store industry provides, it just can’t seem to get any respect. One file alone illustrates the problem: alcohol distribution. At a time when economies around the world are trying to boost efficiency, consumers in Ontario and many other Canadian provinces, are forced to make destination trips to buy alcohol at government run stores such as Liquor Control Board of Ontario outlets, or at stores operated by the beer companies.

 

There they are served by unionized employees, who are paid exorbitant salaries and benefits for low or unskilled work, all of which get built into the prices that consumers pay. (LCBO employees earn up to $25.45 per hour, which experts say works out to a salary of about $60,000 per year when benefits are included). Furthermore, because buying alcohol is a destination trip for most Canadians, consumers don’t just pay higher prices, they also pay more in time (driving, parking shopping) , an increasingly rare commodity in today’s busy world.

 

Yet in Quebec for example, anyone who can prove that they are 18, can walk down to the corner convenience store and pick up a bottle of beer or wine, and thus combine those with other purchases, so their time cost is close to zero.

 

In short, almost everyone loses from Ontario’s antiquated, inefficient system. Probably the only category of winners is the LCBO’s 6,900 unionized employees, who have managed to successfully defend their privileged position. So why are for example the alcohol industry unions so more effective in defending their turfs, than are convenience store stakeholders, who outnumber them by a factor of close to ten?

 

A clear lack of understanding

“There is a clear lack of understanding among politicians about the importance of small businesses in Canadian society,” says Bryans. “Small businesses create the lion’s share of all jobs, but they have a hard time getting heard. Politicians tend to be flying at the 50,000 foot level, along with executives from special interest groups. So their opinions tend to reflect what they hear from them.”

 

Yet not all of the convenience store industry’s problems are due to others. In fact, according to Bryans, it is high time the industry take a good long look at itself.  “Our industry includes a lot of independent stores which means we are quite fragmented,” says Bryans. “But in many ways we are our own worst enemies. We don’t work well enough together. For example you could have a small town with eight or ten convenience stores, and almost none of them will talk to each other.” In contrast, unionized workers often pay hundreds of dollars in annual dues which fund strong organizations to defend their interests, and they are also far more ready to mobilize to express their displeasure when required. 

 

New Canadian C-Store owners: shy to speak out?

Another key reason that convenience store owners have a hard time getting heard is due to the fact that a large proportion are new Canadians. “Many of them are so happy to be here in Canada, and so appreciative about being welcomed into a new society, that they feel shy about complaining. Though that is starting to change,” said Bryans. “For example a few years ago, some Korean businessmen got together to protest the tobacco display ban. Nothing was done, though implementation of the measure was delayed. However it was a positive step towards working better together.”

 

That said, in many ways, there are indications that over time, Canada’s recent immigrant convenience store owners will gradually get their voice heard more. One reason has to do with language. It’s no secret that not all recent immigrants have total mastery of the English language, an essential tool if they want to make their grievances heard. New Canadian C-Store owners are no exception.

 

For example for this article, our reporter made extensive calls to stores owned by new Canadians, and noticed that many demonstrated considerable difficulty in understanding the questions that were asked of them. On the other hand, their children, many of whom were born here, spoke much better English. One could assume that as second generation Canadians gain more leverage within these businesses, and start to take them over, that they will be in a far better position to make themselves heard.

 

Making their voices heard at the local level

That said, according to one expert, who has done considerable work for the convenience store industry, getting political and public opinion more familiar with its crucial role in the Canadian economy, the challenges the industry faces and the opportunities that it can bring, is a long term task, that needs to be dealt with on several fronts.

 

For example not all issues confronting the industry have the same weight in all regions. The recent implementation of the Harmonized Sales Tax in British Columbia and Ontario, barely raised eyebrows in Quebec, which has had such a tax for close to a decade. On the other hand central Canadian C-Store owners, due to their proximity to smuggling choke points, are feeling the effects of contraband tobacco far harder than those in outlying regions. In short, provincial governments have differing strategies on a range issues affecting he industry ranging from energy drinks to the implementation of online gambling.

 

“Our firm has been working particularly hard lately lobbying the government. However while we can talk with politicians all that we want, they are like anybody else. They face a myriad of issues, and like many people, they will deal with the those that they get the most pressure from first,” says Peter Seeman, an associate at Prime Strategies, which does government and media relations work for the Canadian Convenience Store Association. “This is why it is so important that convenience store owners generate additional pressures from the ground up.”

 

“The squeaky wheel gets the oil,” says Seeman. “We need to get more store owners active at the local level, calling their Members of Parliament and Members of Provincial Parliaments, to make their voices heard. The also need to take advantage of the personal contacts that they have with the millions of customers that walk through their stores ach day.”

 

Bryans agrees. “We need to encourage convenience stores to come closer together,” says the industry veteran. “Otherwise the big will get bigger and the small will die.”

 

Peter Diekmeyer (peter@peterdiekmeyer.com) is a Montreal-based freelance business writer.

 

 

 

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