While wholesalers will retain a significant role in the convenience industry, according to a top industry consultant, Dr. Adam J. Fein, consolidation will also increase over the next few years as the impact of increased regulation by the federal government is felt. (photo caption: Dr. Adam Fein discussed the Future for Convenience Distribution Channels during a Tuesday workshop.)

Speaking at a morning session yesterday, Fein, President of Pembroke Consulting, said that unlike other wholesale industries, including grocery and floral, the fragmentation and large number of small relatively unsophisticated independent convenience store operators will assure a bright future for distributors.

However, he said, the new law giving the Food and Drug Administration the authority to regulate tobacco products will mean implementation of a system to track and trace tobacco products as a means of controlling the sale of counterfeit and illicit products and protect public safety.

That, he said, will increase costs to distributors and will add to other economic factors that will likely result in increased consolidation within the channel. “Government affairs is more important than it has ever been to you – ever,” Fein declared.

Fein pointed out that convenience store sales actually have increased by 0.4 percent so far this year compared to an 8.5 percent decline in total retail sales, indicating that consumers are still purchasing candy and tobacco products despite the recession. But as the regulatory climate changes, the challenges will increase, he predicted, and those companies that “win” will be those with “the skill to be strategic in a new era; the will to invest when others are pulling back; and the till to fund growth and new operational costs.”