Three Ways Convenience Stores Can Regain Competitive Edge
August 19, 2021
First published on Convenience Store News, ChangeUp’s Partner and Executive Director of Strategy & Insights, Bill Chidley, explores reinventing the c-store for the digital future.
When it comes to convenience, today’s c-stores offer it in name only.
The first convenience store launched nearly 100 years ago to make life more convenient, back before you could do anything or buy everything on a smartphone. But there has been an extended dry spell of innovation. The biggest impact on convenience stores — pay at the pump — occurred way back in the 1980s. Pay at the pump technology, enabled by rapid growth in consumer ATM cards, changed labor requirements and allowed convenience stores to add fuel, giving birth to the c-store model we know today.
Mobile technology and e-commerce have revolutionized how consumers buy goods and services in ways even more profound, yet the convenience store industry has not responded.
The current c-store format may be heading for the same fate as video rental in today’s convenience-obsessed, digital world. The channel is ripe for disruption, and yet current investment is around upgrading food and beverage options, leaving broader trends and technological possibilities on the table.
THE CHALLENGES WITH TODAY’S PERSPECTIVE
Today’s business model is vulnerable, especially after the broad improvements in convenience across traditional retail due to the pandemic. A study from August 2020 by Convenience Store News illustrates just how vulnerable, with 52 percent of consumers readily cutting c-stores out of their repertoire. Of course, online grocery was up 40 percent, and 42 percent of shoppers stated that they were seeking to bundle more of their trips overall. Although c-stores can serve essential but limited need states, they don’t take full advantage of their proximity to customers.
A major weakness of current c-stores is that shoppers increasingly seek touchless solutions. Getting out of the car to buy something is obsolete. With all the necessity-driven improvements over the last year (BOPIS, drive-thru, curbside pickup), c-stores’ convenience advantage has been stolen. Consumers have accepted the power of digital tools to book time, check occupancy, and order ahead according to individual preferences.
Most importantly, our vehicles are becoming a sanctuary of safety and control with increasingly sophisticated connectivity. As an extension of the smartphone through CarPlay, Android Auto and integrated Alexa, our cars have become portable addresses when we’re not at home. Our cars, not Starbucks, have become our “third place.”
The future of c-stores comes down to shifting today’s reliance on the snack driven in-and-out trip to a broader, redefined view of convenience using a blend of new technologies and hyper-convenient, digitally driven shopping experiences. How the physical site is utilized must be entirely rethought to redefine convenience for today.
THREE NEW DIMENSIONS OF CONVENIENCE FOR TOMORROW’S C-STORE
Tomorrow’s c-store must lead the consumer definition of “easy” by redefining and innovating the business with respect for the rising tide of convenience across all retail and e-commerce.
There are three areas where c-stores can regain their convenience advantage:
1. Extend the store as we know it
Consumers are increasingly expecting their purchase decisions to be made at the point of need vs. in a retail space. The smartphone has become the primary conduit between a want or need and its acquisition, because it is the store that is always with you.
This gives need for c-stores to move beyond physical shopability, opening an innovation opportunity to also be the place where digital sales are fulfilled. Areas currently used exclusively for shopable fixturing, displays and queuing — and even a second level — could also be utilized for high-density product inventory.
Utilizing interactive technology, wireless connectivity and automation, convenience can be taken to a new level. Close to where you live or work, the c-store’s biggest asset — location — enables it to become an output device for the goods and services that make up your daily needs. Like a high-quality printer for your documents, you could digitally send your routine and impulse retail needs to be fulfilled.
The physical c-store extends itself to become the app on your phone, the Alexa skill in your car’s infotainment system, a drive-up kiosk, and artificial intelligence (AI) based on the proximity of your vehicle to the location and time of day. Instead of walking in to shop, your merchandise is sent to you via multiple drive-thru pickup lanes that anticipate your arrival.
2. Use AI to broaden & tailor the assortment
Focusing on fulfillment vs. merchandising, the physical footprint can support a broad assortment of fill-in grocery categories, such as baby, pet and personal care needs that are not feasible in today’s space-constrained retail space. Moving to a digitally driven shopping model can provide the data to tune the assortment to shopper demand at a local level.
This new c-store approach can also be an aggregator of other local online purchases to create a central BOPIS pickup location. Surrounding retailers can expedite orders there for easy pickup in a hyper-convenient location.
Convenience is also about bundling, which means an added tier of time saving for customers who also need a fuel fill-up or a quick charge. Customers could utilize the app or kiosks at the fuel island for items that are dispatched to their location. Impulse items actually available for purchase at the pump could be easily merchandised with “just walk away” technology like that used by Amazon Go. And for a touchless experience, your car is your wallet, enabled through connected vehicle technology.
3. Out-Q QSR competitors
When it comes to driving frequency and sales, there is no substitute for food and today, no one has solved the challenge of getting consumers good-tasting, healthy food in a quick, drive-thru operation. Building off of the multilane drive-thru idea, combined with repurposing the physical store space with an efficient kitchen, can be the answer.
Menus can be broader, and service can be faster with a mobile-order-only model. Orders, including fresh-prepared meals and kits, could be sent to one of the multiple drive-thru lanes for fast pickup vs. funneling all orders to a window like most quick-service restaurant (QSR) concepts.
Today’s convenience stores no longer have a monopoly on convenience. Now, every retailer is in the game. As options expand, and e-commerce gains momentum, what the c-store of tomorrow can be best at is giving us our time back vs. merely being a place for Cokes and smokes.
With over 150 million current locations, that can be a lot of time.
Bill Chidley is partner and executive director, strategy and insights at ChangeUp. His broad experience includes helping Fortune 100 clients succeed as both a strategy and design leader. Whether developing new retail concepts, or integrating new digital and mobile experiences, Chidley has worked with Home Depot, AT&T, P&G, Dunkin’ Donuts and John Deere, using insight-driven strategy and creativity to imagine winning ideas and bring them to life.
Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News.
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