C-Store Retailing: Visioning the Future

By Pat Pape

ALEXANDRIA, Va.—Alimentation Couche-Tard, based in Laval, Canada, wants to become the world’s preferred destination for convenience and fuel, according to Brian Hannasch, president and CEO. And during “Visioning the Future,” a Spotlight Session in the recent NACS Crack the Code Experience, he explained how the global chain plans to achieve that goal.

Speaking with Henry Armour, president and CEO of NACS, Hannasch said that the future is already here; it’s just unevenly distributed.

“Last year in Asia, I saw artificial intelligence that lets you pay with your face, and they have incredible home delivery there,” he said. “Ten years ago in Vietnam, I saw bicycles everywhere, and now I see scooters. I go to Norway, which is a big market for us, and 60% of all vehicles sold are electric. Change is accelerating,” he said.

“How do you know when trends are going to stick?” Armour asked.

“We’ve realized that we’ve got to try different things,” Hannasch answered. “We’re not a culture that likes or accepts failure, but we know that failure is OK. We must talk to customers, which is something we didn’t do in our early history. Today, we do a lot of panel interviews, asking customers about their journey with us and what they want to see in the shopping experience. Between those two things—and focusing on being agile—hopefully, we’ll have a few wins.”

Armour noted that there are four major product areas that c-stores should be focused on today: fuel, payment, technology and cannabis.

Electric Vehicles

“We think about energy transformation a lot,” Hannasch said. “Where we’re seeing it first is where governments are willing to subsidize and make the electric vehicle experience less expensive from a purchase standpoint. In Norway, for example, in addition to receiving large tax subsidies, EV owners may use the bus lanes, and they can park and recharge for free. So, the government has made it attractive from an ownership perspective to make that transition.”

Where there are no government subsidies, Hannasch believes transition will start when the cost of the EV battery is comparable to that of an internal combustion engine, probably in 2023 or 2024.

“In Norway today, almost 20% of our fleet is electric,” he said. “We want to be part of the mobility solution. When we look at the charging experience, about 65% of charging is done at home, and another 25% is done at work or shopping. About 15% of charge occasions are in our network. We’ve gone as far as to create charging experiences not just at our locations but at people’s homes, and today we have 1,500 chargers installed in homes and apartments in Norway. We’re trying to figure out if we can be part of customers lives past the fossil fuel era.”

The company has announced it will install more EV chargers at Circle K locations in core EV markets, such as California. “We’ll grow that in the U.S. as consumer demand evolves,” he said.

Payments

Like many retailers, Couche-Tard has been working to see swipe fees reduced and is aware that COVID-19 has consumers in many countries changing their method of payment, such as going to contactless.

“In western Europe, cash doesn’t really exist,” said Hannasch. “We take it, but it’s a small percent of our payments versus in the U.S., where it’s about 26%. Customers will do what’s easiest over time. [In the future,] it won’t be cash, and it probably won’t be the card.”

Couche-Tard has rolled out mobile payments in Europe, but “it’s been a bit of disappointment,” he said. “In Norway, we’re piloting license plate recognition. The technology recognizes your car when you drive up. It knows who you are and the link to your bank account or your card. You don’t have to touch the pump. It’s ready to go. You pick up the handle and fuel. That’s truly easier.”

The chain also is testing license plate recognition at a store in Phoenix. “We want to make the customer journey a bit easier,” he said. “We sell time. That has been our advantage over the decades. We can keep that advantage by looking at the whole journey comprehensively. How do we communicate with people when they’re in or outside our stores? How do we make the fueling experience easier?”

Cannabis

Cannabis was legalized in Canada in 2018, and since then, Couche-Tard has partnered with cannabis store operators there. 

“The convenience-store industry is good at providing responsible retailing in the alcohol and tobacco categories,” Hannasch said. “We look at cannabis as similar to tobacco.”

When cannabis first came to the market, there were big assumptions about what was going to happen, but “reality has taken hold,” he said. “The consumer demand is there. But the governments are heavily involved, and there are a lot of regulations and hoops to jump through. The government is learning along with us, so it’s been trial and error. I think it’s an industry that’s here to stay, and we’ll see it legalized in the U.S. and other countries.”

Human Resources

Armour asked Hannasch his thoughts on rising wages and labor productivity.

“People are by far our biggest investment,” Hannasch said. “We’re trying to make that job easier for everyone to allow them to focus on higher value activities. We’re trying to do a better job of training people. Historically, we put people in the store or back office to learn parts of the job. With the technologies out there today, we’re trying to move all our training to digital. We’ve seen a strong response from new employees learning that way.”

One training model is a “gamified simulation” that allows employees to win points and compete with colleagues while learning to operate a store.

“It has helped us increase merchandise sales and basket size while reducing employee turnover,” said Hannasch. “Plus, 97% of store managers like this type of training and say it makes onboarding easier and ensures more consistent behavior. Among employees, 95% report they prefer this way of training, and 85% say it has made them better at their daily jobs.”

Don’t expect the rapid pace of change to slow down.

“I’ve seen more changes in our industry in the last two or three years than I saw in the prior 30, and the ability to adapt to change is very important,” he said. “Other channels are playing in the convenience space—home delivery, click and collect and e-commerce. We’ve got to be more customercentric. We must become even better retailers. If we don’t, other channels will take share from us. Change will continue to accelerate. The customer must be first and foremost.”

The NACS Crack the Code Experience is available on demand for attendees through December 31, 2020.

Pat Pape worked in the convenience store industry for more than 20 years before becoming a full-time writer. See more of her articles at patpape.wordpress.com.

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