“Let’s not get caught thinking that we are an insulated channel.”
LAS VEGAS – The largest retailer in the world, Alibaba, shared with NACS President & CEO Henry Armour that convenience lives online, and that the domain of bricks-and-mortal retail resides in the shopping experience—a conversation that served as the catalyst for Armour’s keynote address at the NACS Show general session on October 9.
Armour grew up in retail working at his family’s businesses, Armour Oil Company, and later founded West Star Corporation, which operated 59 NOW! convenience stores, truck stops and quick-service restaurants in the Pacific Northwest until he sold the company in 2004. Prior to becoming NACS president and CEO of in July 2005, he also served as the association’s chairman in 2002 and 2003.
Having been involved in retail for 50 years, Armour is no stranger to asking provocative questions about the evolution of the convenience and fuel retailing industry: Are convenience stores being disrupted, or is the convenience concept facing radical changes that will lead to a competitive and innovative future?
“Disruption is a word that we hear all the time,” said Armour, noting that in some ways the rate of changes caused by disruption, particularly in the retail environment, is amazing—as well as alarming. “The retail world is undergoing intense change right under our feet. And we constantly hear that there has never been as dramatic and as rapid of change as there is today,” he said.
But is today’s disruption faster or more unique than previous ones? Armour shared examples of disruption, such as the evolution of the smartphone into a personal digital device, and the advent of combustible engines from horse-and-buggy in the early 1900s, to exemplify that such dramatic changes foster new competition in the marketplace.
“Someone always wins, and someone always loses when the table is reset—when the rules of the game change,” he said. “It always fosters new competition and new ways to compete, which is a central theme of this year’s NACS Show.”
Armour referenced surfing terms from his youth in California in discussing change in today’s marketplace. “In this new era of disruptive change, we need to start paddling and paddling fast,” said Armour, describing how new issues and competitors are quickly approaching. “There are an enormous number of waves heading our way and some are very, very close,” he said, such as electric and autonomous vehicles, the ever-increasing focus on healthier lifestyles, the legalization of marijuana, and the impact of e-commerce on traditional bricks-and-mortar retail, to name a few.
To determine which “waves” convenience retailers should focus on, or completely avoid, Armour quoted author William Gibson, who said that the future is already here, it’s just unevenly distributed. He noted that this idea has helped NACS navigate innovations in the marketplace to help its members discern the path to success.
“The future is all around us, we just need to look for it because there are pieces scattered all about,” said Armour, keying in on three that the convenience and fuel retailing industry should be focusing on:
Friction in the customer’s journey and the massive technological opportunities to reduce it.
In the realm of new point-of-sale innovations, from cashierless technologies to mobile ordering and payment options, companies like Amazon and Starbucks have helped “deconstruct” the path to purchase by creating more frictionless customer shopping experiences.
“Mobile order and frictionless payment is a focus we must have,” said Armour. “The good news is that our industry has been among the leaders in this field. After all, mobile payments started at a Mobil gas station” with the introduction of Speedpass in 1997.
Electric vehicles and the significant implications for convenience retailers.
“Depending who you talk to, EVs will completely replace internal combustion engines or they’ll hardly make a dent. A year or two ago I would have said it’s a lot to do about very little, but today I’m not so sure,” said Amour, noting that urban areas with pollution problems will lead EV ubiquity much faster than less populated rural areas. “This is a case of the future being unevenly distributed,” he said.
Armour suggested that retailers can prepare for greater EV adoption much like the industry has done with its fueling offer, except with a different mindset: “For most of our industry’s history we’ve always used our fuel offer to bring people to our stores. I think we need to reverse that. We need to deliver such a compelling store offer to bring people to our fuel offer.”
The changing definition of convenience.
More and more consumers today don’t distinguish a convenience store, drug store or dollar store as a distinct channel of trade. To them, said Amour, it’s all about the convenience of the shopping experience.
“Convenience is a mindset; it’s a lifestyle,” he said. “Let’s not get caught, either as convenience store operators or as suppliers to c-stores, thinking that we are an insulated channel. We aren’t. The world competes for the convenience shopping occasion and channel walls have not only crumbled, they are being obliterated.
We must be paddling to a future in which our stores deliver a compelling shopping experience with products that fuel and excite the immediate consumption demands of our customers in as frictionless ordering and payment environment as possible.”