By Frank Beard
Although this past year provided many positive things to say about the state of convenience retailing, there seems to be one word on everyone’s mind for 2018: disruption.
Whether it’s burdensome regulations, changing consumer habits, or new services and technologies, the question being asked at industry events and in private conversations is, “What can retailers to do avoid disruption?”
One of the most significant threats may come from services that make it easier to access meals and basic items. Jeff Lenard, NACS’ Vice President of Strategic Industry Initiatives, said it best on a recent podcast with KFGO in North Dakota: “If you aren’t at least as convenient as the internet, you’re in trouble.”
It’s tempting to remind naysayers that 93% of Americans live less than 10 minutes from a convenience store—and as I’ve pointed out, many of today’s leading brands provide a convenient, consumer-centric experience—but let’s assume for a moment that these new services do succeed. What would that look like?
Tomorrow’s ride-sharing commuter could purchase a protein bar, pack of chewing gum, or even replace a lost phone charger from Cargo—a service that turns Uber and Lyft vehicles into mini convenience stores. At work, consumers could purchase everything from basic snacks and beverages to ibuprofen from the Bodega kiosk in their office complex. For lunch, they might place a large order with coworkers from UberEats. And whether they’re busy with their children or just really into the latest Netflix series, the “30 minutes or less” promise of delivery service GoPuff may be the most convenient method to get a pint of ice cream or some late-night snacks.
That’s why in addition to being at least as convenient as the internet, I’d add an additional caveat: if your product selection is no different from what’s available online, then you may be in trouble. Many convenience retailers do stand out by offering unique products and services, but there remain quite a few whose offerings consist of the same consumer packaged goods that exist at virtually every other store. 2018 may bring significant challenges to that playbook.
This concern, of course, is not unique to convenience retailing. A recent article from Fast Company describes how Target is attempting to differentiate itself by creating more than a dozen high-quality, affordable brands exclusive to their stores. “When consumers can get seemingly anything and everything online,” writes Austin Carr, “what can Target offer that Amazon can’t?”
That’s why as I look forward to 2018, I think it will be an especially good year for two groups of retailers: those who succeed at creating destination stores, and those who successfully leverage new technologies and services.
From single-store independents to large brands, many retailers have already succeeded in creating destinations. Wawa’s new store in Washington, DC, for example, attracted overflow crowds on opening day. As I’ve visited retailers around the United States, I’ve witnessed the same enthusiasm and loyalty at brands like Buc-ee’s, Kwik Trip, and Sheetz.
Indeed, a recent report from Kantar Retail found that 49% percent of convenience store shoppers tend to “always go to a specific store” they like—as opposed to “whatever store is most convenient at the time”. Amongst Wawa’s customers, the percentage of those who are loyal rose to 72%. Kantar noted that brands like Wawa, Sheetz, and QuikTrip succeed by creating an in-store experience that resonates with customers—and leveraging social media and other technology to engage them long after they leave.
7-Eleven has also set itself apart as a leader in utilizing new, innovative technology to reach customers. The company has begun experimenting in Dallas, TX with mobile ordering and delivery through a new smartphone app. "Today's digitally savvy consumer expects a wide range of options right at their fingertips and 7-Eleven is delivering on that promise," said 7-Eleven Chief Digital Officer Gurmeet Singh.
While the effects of potentially-disruptive technologies and services remains to be seen, it seems that 2018 may reward retailers who are willing to think outside the box and update their playbook.
Frank Beard is a regular NACS Daily contributor who has traveled to more than 1,000 convenience stores in 24 states. He raised awareness of the industry's healthful food options with his "30 Days of Gas Station Food" experiment, and he's an analyst/evangelist for convenience store and retail trends at GasBuddy. Follow Frank on Twitter at @FrankBeard.