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NATIONAL REPORT — As the convenience store industry and the world in which it operates face large-scale changes, convenience distributors in turn must prepare for the challenges ahead.
"Most people spend their time working in the business and not necessarily on the business," according to Dr. Tony Vercillo, a 25-year veteran in the supply chain industry with experience as a senior-level manager and vice president for PepsiCo Inc. and a third-party supply chain firm. Vercillo was the featured speaker in a webinar presented Tuesday by the Convenience Distribution Association (CDA), entitled "10 Challenges Distributors Will Face in 2025."
He emphasized that understanding the future helps people formulate a strategy to deal with it, and understanding multiple levels of trends puts people in a better position to execute their plans.
During the webinar, Vercillo shared his findings based on research, communication with government officials, and a two-week brainstorming session in a futures think tank at California State University in Fullerton. He identified 10 distinct challenges c-store distributors will face that will require forecasting and resource planning.
The workforce of the future will be considerably more ethnically diverse and older, as people work much longer before retiring. These changing demographic facts will change the way we do business on every level. On the distributor level, where labor is a major component, this will increase the need for bilingual or even trilingual managers.
Continued pressure on the minimum wage is likely to push it to $20 per hour, not just $15, according to Vercillo. This will increase the number of part-time workers as businesses cope with labor that is more expensive due to the minimum wage and associated benefit costs, such as health care.
The use of robotics and smart machines will rise as more advanced technology becomes available and provides ways of saving money through automation and reducing human error. Additionally, 60 percent of all buying is expected to occur on cell phones, even at the store level. Accordingly, mobile applications will be a crucial part of achieving success.
Light-duty vehicles and material handling equipment will fall under increased scrutiny in order to reduce emissions, and regulations will require carbon-footprint-reduction reporting. This plus increased oversight regarding driver hours of service will increase compliance costs.
In the future, trucks used for shipping and distribution will be lightweight with much higher miles per gallon, but they will also be extremely expensive and further boost the price of distribution due to the higher upfront cost.
The truck driver shortage will reach critical proportions. "The millennial generation is just not interested in driving," Vercillo said. To get the skilled drivers they need, distributors will be required to dramatically increase pay, benefits and retention bonuses.
Social technologies will become a central part of everyday life, reshaping companies from the inside and pushing them to create and deliver value to customers. Even companies with no social media presence will eventually need to integrate social technologies into customer service, order processing and logistics as mobility and connectedness become the heart of the future business technology environment.
As technology and mobility advance, security becomes all the more important in the face of cybercrime and a rising tide of litigation, new policies and regulation. Consumers prioritize digital privacy, and distributors must be "buttoned up" with security of their customers as well as their internal security.
The Food and Drug Administration is likely to clamp down on a variety of categories, affecting electronic cigarettes and vapor products, diet drinks, energy drinks and dietary supplements. Increased regulation and labeling requirements will result.
Globalization will affect business at every level, and distributors won't be insulated by operating domestically or regionally. Foreign supply will become a more compelling option, and standard cell phones will have mobile reach as the norm.
To get ahead of all these challenges, Vercillo simply recommended planning. This can consist of setting up a Futures Committee to attack rising costs; developing green/sustainability plans; analyzing the use and legality of using part-time workers; developing a technology plan with improved security measures; and much more.