32 minute read
Stepping Up
from CSN-0921
by ensembleiq
The convenience channel has long been criticized for being a follower rather than a leader when it comes to innovation, but it stands poised to lead once the COVID cloud clears
A Convenience Store News Staff Report
Ask a convenience store retailer what “innovation” means to them and the answer continually ties back to serving the customer best.
For Scott Hartman, CEO of Rutter’s, based in York, Pa., innovation is interpreting customer needs in the future and developing great solutions for those needs.
The convenience channel’s ability to innovate has been especially visible during the COVID-19 pandemic. “We did things faster and better than most anyone else during the pandemic,” said Hartman. “The number of changes in our regulations, customer habit changes and supply chain forced our industry into survival mode. While other industries simply closed, limited hours, cut out inside seating and sales, we adjusted in ways many thought impossible. Not only did we step up and stay open, but we were a huge winner for our customers and investors.”
Kevin Smartt, CEO of Texas Born (TXB) and the 2020-2021 NACS chairman, says innovation at his Spicewood, Texas-based company means making the guest experience even better than it was before — in every element of their experience.
Technological innovation has been critical for TXB and one of Smartt’s pillars of focus during his time as NACS chairman. During the pandemic, techbased options such as cashierless payment options have been especially useful, and his team anticipates such innovations continuing to be adopted and iterated upon post-pandemic. He points to mobile ordering and contactless payment as the emerging technologies most likely to take off in the future as consumers want convenient payment options they can choose rather than having to wait in line at a traditional checkout. This includes curbside pickup, home delivery, and online ordering.
Global Partners LP also places hospitality and improving the guest experience at the center of its innovation efforts. For this c-store operator, innovation means continually listening to the needs of its customers, keeping what works, while always investing in change.
“An entrepreneurial spirit runs deep at Global and this value inspires our people to pursue new ideas and deliver the products customers want in the ways they want, even if they don’t know it yet,” said Mark Cosenza, senior vice president of retail at the Waltham, Mass.-based company. “We empower every employee to innovate and ask customer-focused questions like: What does our customer want? What will make their life easier? What do they need from their neighborhood convenience space?”
Laggards No More
In the past, the convenience channel has had a reputation as being slow to innovate.
Eva Strasburger, president of StrasGlobal, a privately held retail consulting, operations and management provider serving the small-format retail industry, believes it’s a fair assessment as there’s been years of time in between the introduction of new products and services.
Since the onset of COVID-19, c-stores have been getting more credit for their embrace of innovation. However, Strasburger questions whether it’s really the convenience store industry that is innovating, or rather is it that convenience retailing itself is changing?
For example, she points to c-store retailers being lauded for installing drive-thrus. “We had drive-thru c-stores back in the 1980s, so is that innovation or just bringing back an old way of doing business as a reaction to the need for social distancing during COVID?” she posed.
Strasburger’s definition of innovation is any novel creation that adds value and saves time, stress or money. “Convenience retailing is now, more than ever before, about convenience and the value proposition for the customer,” she said. “With online delivery offerings, the physical location is less important than what the c-store’s unique offering is to its customers. The nimbler you are to react to what’s going on and how you’re interpreting ‘convenient’ retailing is what will define your success.”
Overall, she views the c-store industry as not aligning well with innovation up to now because the business is based on small margins and high volumes, and is focused on the details of retailing. Innovation is hard and requires one to step back and look at the bigger picture to recognize the needs and tackle the problems, she noted.
“The innovators in our industry now were already operating differently from the norm, or are disruptors who have joined our industry. They have been able to identify the gaps, create the solutions, and figure out what resources they require to put them in place. It’s a process that is fuzzy, messy and hard,” Strasburger said.
One such disruptor to join the industry is Denverbased Choice Market, operator of Choice branded c-stores across Colorado. Founder and CEO Mike Fogarty agrees that the convenience channel has been slow to innovate, which he says is partly why Choice was created.
Choice Market founder Mike Fogarty created his chain because he and his team saw a lack of innovation within the c-store channel.
“The team saw a lack of innovation within the c-store channel around areas such as merchandising, technology, mobility, product selection, and even store design. So, if it weren’t for that, Choice might not be here,” Fogarty remarked. “That being said, just in the past five years, we’ve seen tremendous innovation with similar concepts to Choice, and legacy players understanding that the momentum is shifting and they have to innovate or they might not exist in 15-20 years. Historically, the reputation has been warranted, but the tide is certainly changing.”
Choice Market views innovation through four core lenses:
• The Store Model: All Choice locations feature a scratch kitchen surrounded by a smallformat natural grocery store that leverages high-quality products and ingredients to create a circular economy within the store that aims to reduce waste.
• Technology: Coming onto the c-store scene as a disruptor in 2017, Choice recently launched its latest innovation with Choice:
NOW, an omnichannel platform that allows guests to experience a fully frictionless shopping journey powered by Aifi.
• Sustainability: The retailer’s sustainability efforts include the introduction of electric vehicle (EV) charging and delivery, compostable packaging, and a hyperlocal supply chain.
• Merchandising: A key factor in Choice’s success, the operator aims for a hyperlocal supply chain and products, as well as introducing new categories.
“Holistically, these four areas of innovation create a business that consumers enjoy,” said Fogarty.
The convenience channel’s reputation for being slow to innovate is tied into the complexity of the industry, which stood at more than 150,000 stores at the start of 2021, according to Tim Powell, managing principal at consulting and insights firm Foodservice IP.
“You can typically put c-stores into three groups. First, there are the shapers of the industry, which include Sheetz, Wawa, Casey’s, QuickChek and Rutter’s — and perhaps some small single stores in the South known as a destination,” he said. “These are innovators because other segments — like QSRs and fast casual — look to them for their unique offerings.”
The next group is the approximately 80,000 c-stores offering food and beverages that can keep up with intersegment trends, but aren’t able to blaze trails. These stores are mostly followers that are not culturally designed or geographically centered to execute foodservice, Powell explained.
“Third, there are those who dabble for the margins, but don’t really execute. These are the rest of the 50,000 stores,” he said. “In my opinion, no, the reputation is not changing; it’s just that consumers (Gen Z) are less picky than previous generations and therefore some of the things that turned us off are normal to them (food anywhere — even a gas station, etc.).”
Foodservice-focused operators are much farther ahead in terms of food, ambiance and service compared to the overall c-store segment and the general food industry, according to Powell. They provide a well-lit and staffed foodservice section, friendly employees, and a concept that puts a lot of effort into seeing what works through trial and error. And these high standards don’t stop at the store exit — they extend to the suppliers they work with, too.
Tom Cook, principal at King-Casey and a noted consultant to the convenience store and restaurant industries, acknowledges that he never thought of the c-store industry as being innovative in the past, but he’s starting to change his mind. “There’s definitely been some movement forward on innovation since COVID-19. I’d say they’ve made progress. If I had to quantify it on a scale of 1 to 10, I’d say c-stores have moved from a 5 to a 7.”
What sets c-store innovation leaders apart is their boldness, Cook says.
“Innovative c-store retailers go BIG. They don’t
— Scott Hartman, Rutter’s
take baby steps,” he explained. “Look at Wawa’s innovation with the drive-thru-only store in New Jersey. They went all in, from menuboard to pre-selling merchandising, to everything that a real good QSR [quick-service restaurant] would do. And they communicate that innovation to customers. Customers can ‘feel’ that it’s different. Sheetz is the same way. It doesn’t look or feel like a traditional c-store when you walk in. Innovation is part of their brand.”
Rutter’s Hartman, a member of the CSNews Hall of Fame for his leadership and advancement of convenience retailing, says he would rate the industry’s leaders at a 10 for innovation. However, “75 percent of the industry is average, so I’d rate them a 5,” he said.
Still, he refutes the notion that the convenience channel has been slow to innovate.
“I never thought we were slow. I call our industry a bunch of chameleons — we can change colors (services) faster than any other industry,” he maintained. “We find new ways to serve and deliver to the ever-changing customer. … Even our weaker c-store players change faster than most industries, like QSR and grocery.”
The Innovation Playbook
For convenience stores, which offer a broad range of products and services, innovation can be applied in many ways, so it’s important for retailers to take a disciplined approach. Hartman is a strong
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Rutter’s is able to successfully innovate because it does strategic planning twice a year, according to CEO Scott Hartman.
proponent of strategic planning. Rutter’s is able to successfully innovate because it does strategic planning twice a year, according to the chief executive.
“Use tools to pull the best ideas out of your team, analyze and optimize those ideas, and then make sure they do not get lost in the day-to-day shuffle,” he said, stressing that the last step of implementation of the new ideas is crucial. “Often, this is the failure point because management’s attention is internally lost on another problem or issue that seems more pressing. The end result is a lot of good ideas get lost in the shuffle without good strategic execution.”
While Hartman admits the pandemic slowed Rutter’s generation of new strategic ideas, he said the situation showed the company’s tactical execution speed is exceptionally fast. A focus on execution paid off during the pandemic, but the company is now back on the strategic path again with renewed confidence. “I’m excited and think we have some really good ideas coming in the next 18 months to continue to separate ourselves in our super-competitive market,” he said.
The former NACS chairman foresees multiple avenues for c-stores to innovate in the future. He predicted the connected automobile in 2006 during his closing chairman’s speech at the NACS Show, but thinks there is still much more room to improve connectivity between the store, the vehicle and the customer — even if the customer is at home getting a delivery from an autonomous vehicle.
“There are so many divergent ways our industry can be successful and make money,” said Hartman. “No one model is perfect. Some want to build smaller stores. Others like us want bigger stores. Some will get rid of petro-based fuels, while others will double down on how to meet the energy needs of the future vehicle with alternative fuels. Key to change is to adapt at a rate faster than others. Recognize failure quickly and double down on your wins.”
When it comes to planning future initiatives, Global Partners also turns to its team members at every level for suggestions. According to Cosenza, the retailer has a system in place whereby employees can submit ideas to be vetted and oftentimes adopted. The COVID-19 pandemic pushed the overall pace of innovation, something the senior VP anticipates is here to stay. As the health crisis gripped the country and consumers’ concern for their safety bumped up against their need to access food and supplies, Global Partners saw the opportunity to expand the traditional offerings found at a convenience store.
“We pivoted quickly and introduced curbside pickup and delivery of fresh, healthy meals and meal kits, and crates of fresh groceries at our Alltown Fresh locations,” Cosenza said.
The company also accelerated the rollout of contactless payment at the pump and inside the store. For example, it’s partnering with PayByCar at 30 Alltown gas stations in Massachusetts, enabling customers to pay for gas and other goods using a combination of their toll transponder and mobile device. The retailer also rolled out apps that integrate the experience for customers and make it easier for them to order on the go.
Over the coming months, Cosenza said additional touchless payment options, more around alternative energy, and continued partnerships to bring customers fresh, sustainable food offerings are on Global Partners’ innovation docket. The retailer is also strategically installing the infrastructure for electric vehicle charging so that it’s ready to serve those customers as the demand for EV charging increases.
“We know we must continually invest in technology to stay current,” Cosenza said.
Viewing its stores as playing an important role in their local neighborhoods, Global Partners will continue listening to its customers and responding to their needs and preferences via innovation.
“The pandemic challenged all of us from the clerk to the C-suite to think about the customer experience in a new way. As a company, we’ve tried to not focus too much on how we stack up against the channel — we aren’t trying to be like others. We view industries that are adjacent to ours, such as hospitality, as more relevant bellwethers for the future,” Cosenza explained.
Alimentation Couche-Tard Inc., the Laval, Quebec-based parent company of the global Circle K brand, has a dedicated team that explores innovation opportunities, whether it’s through development of its own solutions or through key investments in other companies via the Circle K Ventures Fund, which looks
Embrace the Spirit of RTD Malt Beverages
Speaking with… Paul Rene,
VP of US Operations Geloso Beverage
When Geloso Beverage Group debuted in the U.S. market in 2002, the goal was to follow in the footsteps of parent company, Omni Brokerage Group, which was founded in Montreal in 1965: to embrace passion, innovation and product expansion while respecting the art and tradition of the company’s heritage. That’s just what Geloso has done for the past two decades with its malt beverage portfolio that includes ClubTails Cocktails in a Can and Johny Bootlegger, a spirit-like malt beverage in a fl ask. Here Paul Rene, VP of US Operations for Geloso Beverage, shares the story behind these two “really hot brands” that are driving malt beverage retail sales in most major markets from coast to coast. markets from coast to coast. Convenience Store News:
What made you decide to venture into the U.S.?
Paul Renee: The Geloso family has been in business since 1960. They’ve prided themselves on being true liquid designers. Their passion to innovate and develop new brands and categories is what drives them. Being based so close to the American border, it only made sense that the company’s future growth depended on expansion into the USA with meaningful and profi table brands.
CSN: What makes these two lines stand out from other RTD products?
PR: The high alcohol category continues to do well — sales are up 7%.* That is better than the industry overall, which makes us confi dent we are on the right track. We’ve spent a lot of time perfecting the taste profi le, so our products taste like actual spirit-based cocktails — a defi nite plus! Unique fl avors and packaging make us a consumer favorite in many markets.
Clubtails was developed to deliver a cocktail-like malt beverage. It contains 10% ABV, which years of trial and research have shown is the optimal alcohol percentage to taste like a spirit-based cocktail. Available in 11 great fl avors, it positions us to take advantage of regional and national taste trends. The line includes some of the most traditional cocktail profi les — Sex on the Beach, Bahama Mama and Sunny Margarita are the most popular. We also give consumers a choice of how they want to drink the single-serve cocktails: in 12-oz., 16-oz. or 24-oz. cans or in glass bottles. There is something for everyone, no matter the size or fl avor profi le they’re looking for.
The Johny Bootlegger brand is inspired by the 1920’s Prohibition era when many creative cocktails were invented in speakeasies. Consumers love the persona of Johny B and the legendary stories of the period it represents. Playing into the continued demand for high alcohol content and creative fl avor profi les, Johny Bootlegger off ers 12% alcohol by volume in eight fl avors including Sing Sing Sour Grape, Syndicate City Sour Peach and Alcatraz Sour Apple. Those three fl avors account for about 70% of the brand’s sales, with some new fl avors that are bringing in new consumers. Packaging is also a diff erentiator. Each Johny Bootlegger cocktail comes in a glass fl ask, so even though it’s a malt beverage it has a premium spirit look consumers love. We have loyal consumers who are extremely passionate about the brand — some get tattoos of Johny Bootlegger and post them on Instagram. It is the fastest-selling malt beverage of any product in the malt beverage category.
CSN: Can you share data that demonstrate the
profi t potential these
two products have?
PR: Both product lines have experienced signifi cant growth over the past year. Unit sales of Clubtails and Johny Bootlegger are both up double digits, and more importantly up in all original markets. Over the past 18 months, we have focused on expansion and should be national by end of this year. We are always researching trends and product white space to determine our next category or package to innovate.
*IRI Total US – Multi Outlet + Convenience for the latest 52 weeks ending 7-25-21
at innovation from around the world.
As Chief Technology Officer Deb Hall Lefevre explained during the company’s 2021 Investor Day, held in mid-July, Couche-Tard has established a pipeline to fuel its digital plans and narrow its focus around improving three key areas of the business:
• Modernizing and digitizing the customer experience in-store and at the pump;
• Delivering on the new post-pandemic notion of convenience; and
• Tackling operational challenges.
The Circle K Ventures Fund is a corporate fund established through a partnership with Bain Capital to act as a resource for meeting these objectives. Through the fund, Couche-Tard can leverage the innovative approach of startups, which is something that has not been typical of the convenience industry, Lefevre explained.
“The fund accelerates innovation and transformation by identifying new digital capabilities. With over $100 million over five years, we are well-positioned to attract high-quality startups and take some smart bets on relevant and strategic opportunities,” she said.
Couche-Tard launched the fund in 2020 and has made two investments to date: digital lottery with Jackpocket; and Pensa, an out-ofstock planogram compliance and recommendation platform.
In addition to the venture fund, the company is “keeping a pulse” on evolving market trends and the opportunities and threats they create, Lefevre noted. Such trends include “the reimagined last mile” with the rise of delivery aggregators, dark stores and kitchens, distributed productions and micro-fulfillment powered by robots, new forms of payment, and robotic labor.
“Given the pace of change and the plethora of opportunity, we cannot afford to chase shiny objects,” she said. “We make investments in technology with the same rigor and discipline as any other capital investment to ensure we are maximizing shareholder value. We review opportunities and promote the ones that have the best ability to differentiate, have strategic fit and, of course, financial upside. We test, we learn, we fail and move on quickly, or we scale with speed.” Among the opportunities Couche-Tard is currently pursuing are:
• Full Frictionless Shopping: The company is piloting a “just walk out” experience at seven
Circle K stores in Arizona, and opened a frictionless store at the McGill University Retail
Innovation Lab in Montreal. In addition, it is working on a next generation self-checkout solution that uses computer vision to identify, price and total items placed on the counter.
There are currently 300 of these units in 250 stores across the U.S.
• Pay by Plate: This seamless payment option uses license plate recognition technology so that motorists can fuel up and drive away.
Now available at 265 stores in Sweden, or 95 percent of that market, plans are to bring this option to the remaining stores in that market by the end of this summer. The aim is to then scale it to another 1,000 stores across Europe.
The company is also evaluating when to bring the solution to North America.
• Delivery: Couche-Tard’s stores are providing curbside, in-store pickup and on-demand delivery through the retailer’s own solutions and external partners. Delivery is live in roughly 3,000 stores across Europe, Canada and the U.S.
Innovation in the Post-Pandemic Future
Although the pandemic certainly accelerated innovation within the convenience channel, the need to develop new solutions to serve changing customer needs is lasting.
Convenience stores have traditionally focused on sales of cigarettes, gas and low-nutrition, high-caloric foods, but Choice Market’s Fogarty sees consumers — particularly millennials and Generation Z — setting the tone for how operators innovate in the near future across the areas of fresh and healthy food, product selection, and interior design. “That customer will continue to drive innovation across the channel,” he predicts.
Because the top three revenue drivers for the industry are fuel, cigarettes and “junk” food — all of which are precipitously declining in terms of market share, profitability and utilization — Fogarty urges the channel to innovate or be leapfrogged by industry disruptors.
“Innovation will continue to play a big role
PRIMED FOR PICKING:
Crisp Green Apple Joins Escapes Spiked Fall Lineup
This September, Seagram’s introduced a new fl avor to its line of Escapes Spiked premium malt beverages. Crisp Green Apple joined Jamaican Me Happy®, Blue Razberry and Strawberry Blast fl avors — all boasting a customer-pleasing 8% ABV. Convenience Store News dives into the details to show why c-stores should carry these refreshing malt beverages that appeal to consumers who want a higher alcohol product that doesn’t compromise the fl avors they love.
Please enjoy our fl avored malt beverages responsibly. Please enjoy our flavored malt beverages responsibly. ©2021 The Seagram Beverage Company, Rochester NY ©2021 The Seagram Beverage Company, Rochester NY
GREAT C-STORE PERFORMANCE
The high ABV segment is growing…and Escapes Spiked is primed to help c-stores drive sales in the category.
• 1 in 4 singles going out the door is a traditional FMB at c-store.
• Traditional FMB singles are growing 50% faster than the remaining category.
• Traditional FMB singles deliver 50% more $ per point of distribution than hard seltzer singles and 100% more than craft singles yet are losing space to those segments.1
• The High ABV FMB segment accounts for 42% of FMB volume in c-store.
• It’s a brand extension of the highly popular, lower ABV
Seagram’s Escapes drinks — products that have experienced
10 consecutive years of sales growth.
• It’s the #6 BEST-SELLING High ABV Brand in the total U.S. convenience channel.2
• Green Apple was the #3 High ABV fl avor and is growing 3x faster than the category.3
FRUIT-FORWARD FLAVORS
Flavor is the #1 DRIVER OF PURCHASE for FMB products. These DELICIOUS FRUIT FLAVORS have helped the Escapes Spiked become the #4 high ABV FMB singles brand contributing to growth in the total U.S.4
NEW THIS FALL: Spiked Crisp Green Apple
A crisp burst of green apple fl avor with a tart, refreshing fi nish — an electric combination of sweet and sour that’ll keep your customers coming back for more!
Spiked Jamaican Me Happy
A classic blend of watermelon, guava, lemon and strawberry fl avors
Spiked Strawberry Blast
Jam-packed with juicy strawberry fl avors
Spiked Blue Razberry
A burst of raspberry fl avor, with a lingering sweet berry fi nish — ranked the #2 most preferred fl avor among consumers who drank a high ABV FMB in the past three months, coming in at the #1 most preferred fl avor among males and #3 most preferred fl avor among females in primary research.5
23.5oz cans available nationally. 16oz cans available in FL, LA, MO, MS, & WI
When you carry Escapes Spiked, you can tell your customers… “They’re right inside, go grab one—you’ve earned it.” For more information on Seagram’s Spiked line, visit www.seagramsescapes.com
1. IRI Unify, Total US MULO, FMB, Sub Brand Family, Brand extension, Total High ABV FMB by Flavor, High ABV FMB 16-24oz Singles, Latest 52 WE 2/2/20, $, $ CYA, $ % CYA, $ Share of Segment 2. IRI Unify, TTL US Conv, Traditional FMB, 7.0-9.9% ABV, Brand Family, Sub Brand Family, Brand Extensions, Vol, Vol CYA, Vol % CYA, Avg Weekly CWD, Avg Weekly CWD CYA, Avg Weekly Vol Per Pt CWD, 2015-YTD 2021 WE 02.28.21 3. Qualtrics Survey March 2020; P3M High ABV FMB Consumers, Total US, Non-rejectors of Seagram’s Escapes Spiked, n=218 4. IRI TTL US CONVENIENCE 26 WEEKS ENDING 8-8-21, HIGH & BOLD ABV $ SALES BY FLAVOR 5. IRI TTL US CONVENIENCE 26 WEEKS ENDING 8-8-21, SINGLES VELOCITY & ROS BY SEGMENT
in the channel in the future and what’s exciting is that it ultimately expands the addressable market,” he said. “For instance, Choice operates in the c-store, fast-casual and grocery channels, which aggregate more than $1.4 trillion. I think that’s exciting for a retailer that’s in the c-store channel because it’s not seen through the lens of ‘I want to take more pieces of the pie,’ but [rather] ‘I want to grow the pie that me as the operator can address.’”
Omnichannel will play a quintessential role in Choice’s future, Fogarty shared with CSNews. This will include new formats, although the retailer isn’t prepared to divulge any specific details yet. In the meantime, Choice recently entered into a partnership with WeStock, whereby customers can scan a QR code and request products. The retailer has a few shelves dedicated to crowd stocking where customers determine what is being stocked there.
“The idea of personalization and customization and allowing customers to drive our merchandising decisions is really powerful and is an area of focus we will continue to lead with in the future,” Fogarty said.
Because the pandemic forced convenience
TXB approaches innovation with guest experience as its top priority.
retailers to step out of their comfort zones and implement different services and amenities that they may not have considered doing before, Strasburger of StrasGlobal says operators must now evaluate and decide if they will stick with the changes they made by analyzing the data, deciding if more customers were engaged because of these actions, and continuing to find more ways to reach these customers.
“As convenience retailing changes, it is going to require a lot of thought and innovation to bring customers into your stores,” she said.
Although it is important to know and understand the convenience store business, Strasburger finds that the most innovative retailers are those who look outside the channel and see what operators in other industries, and even other countries, are doing to distinguish themselves. To this end, she cofounded The Vision Group, which has members from different industries who meet regularly to learn from one another with a focus on innovation and disruption.
Furthermore, during the COVID-19 pandemic, StrasGlobal recognized that there were areas of its company that needed to be strengthened, so it brought on a vice president of innovation and brand marketing to take its ideas centered on innovation and expand upon them.
“We recognized that if we were looking outside our industry for answers, it changed how we categorized our job descriptions and expanded upon differentiators of candidates, especially with upper management and area managers,” Strasburger explained.
Like many observers, King-Casey’s Cook believes COVID-19 has forever changed convenience retailing — but not necessarily in a good way for c-stores because the pandemic changed consumers’ expectations of “convenience.”
“The restaurant industry was forced to pivot to off-premise sales; it built a new business around delivery, drive-thru, curbside. People got used to that kind of convenience. Going forward, c-stores have to realize they are losing their key advantage of convenience over restaurants,” he cautioned. “They are behind the curve on off-premise sales. So, they’ve improved greatly on their foodservice, but are falling behind on their most important asset: convenience.” Cook urges c-store operators to look at different formats in the future. “Size, location, non-traditional sites will all have to play a larger role in a c-store chain’s portfolio,” he said.
He also sees technology continuing to play a prominent role, specifically payment technology and mobile apps. C-stores should also more aggressively utilize geofencing technology and other ways to track customers from off-premise to inside the store, he noted.
Looking ahead to life after COVID, Powell of Foodservice IP believes it’s too early to be certain of the sweeping statement that the pandemic has forever changed convenience retailing, although he does acknowledge that the pandemic definitely accelerated mobile ordering and third-party delivery in a segment that has been slow to adopt technology.
“In the short term, I expect to see more automation and self-pay as retail employees are scarce and some may never return to the industry after the interaction scare with COVID customers. It will be critical that stores make the transition from fuel destination to electric car charging destinations so that others don’t sneak in and take that position. Finally, with the workforce largely working remotely for two to three days per week, there will be fewer commuters for the morning rush, but more for the snacking rush. The c-store will act more as a ‘break room’ for snacks [for those interested in] taking a walk or ride in the car. This will drive more beverage and food purchases,” Powell predicts.
If a c-store retailer is not pursuing innovation right now, they should be, according to TXB’s Smartt, because the COVID-19 pandemic will eventually end and it will leave behind new
— Deb Hall Lefevre, Alimentation Couche-Tard Inc.
consumer trends and preferences that retailers can’t ignore if they want to succeed.
“Innovative retailers are taking the lessons learned and implementing those into regular practice,” Smartt said. “For example, our new TXB store in Georgetown, Texas, has nice, simple, outdoor seating with misting systems to give guests the option to not only enjoy their meal on-site, but also allow them to space themselves appropriately. We also added a hand washing station outside of the restrooms, so guests can wash their hands more conveniently before eating while also preventing the spread of germs.”
Talking about practical steps c-store retailers can take to be more innovative, Smartt said his advice includes staying up to date on industry trends, turning to organizations like NACS for guidance, and looking at what competitors are doing. This may include retailers outside the convenience channel and for the foodservice category, can mean everything from restaurants to food trucks. Requesting consumer data from suppliers can also help operators get in touch with what customers are seeking, especially considering regional variations.
Most importantly, the NACS chairman says retailers should think about how to make their customers’ experiences better based on their specific stores and capabilities. A proponent of technology, he points to loyalty programs, apps and mobile payment options as tools that can help streamline the guest experience and get consumers to rethink what a c-store can be.
“I also believe that adopting tools like EV charging stations really sets retailers apart and puts them ahead of the game in preparing for the future of fuel stops,” he said. “We’re doing this at our new TXB stores as well, and find it to be an important factor that can help encourage consumers to make the switch to EVs down the line.”
Smartt is putting his own advice into practice, too, as TXB is rolling out the ability to order fresh food and other in-store items via its mobile app, among other innovations.
“We’re looking to add a food locker pickup room for third-party and app orders to enable easy contactless pickup,” he said. “In all new TXB locations, our guests will also have the ability to pay for their e-vehicle charging directly within the TXB app, and we’ll be adding e-vehicle media stations to entertain guests while their vehicle charges to give them a great experience.”
Retailers must keep track of and respond to the changing demographics in the U.S. as well.
“We’ve utilized customer intercepts and surveys in order to get a clear demographic perspective of our customer base across all the different regions we serve,” Smartt said. “We incorporate those insights to form our strategies when it comes to marketing, messaging, promotions, and more. We like to look at these demographics by region as we know Texas is especially diverse.”
Smartt offers one final thought on innovation: it doesn’t have to be “crazy” to be impactful. “In the c-store space, it’s a series of small upgrades that really elevate a guest’s experience,” he said.
Trial & Error
One extra hurdle of innovation is that it takes time for new concepts to become mainstream, and it can be challenging to distinguish between an innovative new concept that is early in its journey and an innovative new concept that will ultimately be unsuccessful.
Fads can also shift unexpectedly based on the current environment and become trends.
For instance, Powell noted that while disposable packaging and single-serve packaging were once on their way out, in the age of COVID, they are now in high demand.
However, Cook cautions that while retailers need to experiment, they also need to know when to bail on a concept that is not working. “In my experience, you have to get out of the blocks quickly. For example, with a new product, you want to see an initial burst of sales; there needs to be some consumer excitement generated around the new innovation,” he said. “Innovation doesn’t usually start slow and then build. My feeling is that you should fail early before you spend too much time on it.”
C-store retailers can increase their odds of identifying a promising innovation early by following social media, joining webinars, and collaborating on research efforts, Smartt added. But ultimately, they need to accept that innovation means taking risks, and success isn’t guaranteed.
“If I knew the answer, I would be worth a lot more money,” he joked. CSN
