NATIONAL REPORT – The convenience store industry is moving away from the old ‘Cokes and Cigarettes’ model and has for some time been moving towards a business model focused on foodservice, with foodservice currently the second largest revenue category after the tobacco. The impact of the COVID-19 pandemic has only accelerated this change, changing the competitive landscape so that convenience stores are now regularly competing with quick service restaurants (QSRs), as well as other retailers. Proximity.
The widespread adoption of mobile and online ordering, curbside pickup and delivery during the pandemic means consumers today view these amenities as standard. Convenience store operators will quickly find themselves left behind if they don’t offer these options, according to a recent report Convenience store news webinar sponsored by Paytronix Systems Inc.
Now is the time for convenience stores to focus on improving their competitive position. As overall convenience store foodservice sales declined in 2020, “many expect a big comeback as people start to resume their normal routines,” said webinar presenter Jessica Shelcusky, Convenience Store Marketer at Paytronix, whose platform supports more than 500 retailers and restaurant brands.
Over the past year, Paytronix has observed an increased interest in favorite comfort foods, such as fried chicken and “pandemic-proof” pizza. Customers are also interested in exploring new ways to get this food, including drive-thru and curbside pickup. This happens in both convenience stores and QSRs, Shelcusky noted,
The seven omnichannel convenience store trends expected for 2021 are:
- Customers are coming back, but slowly;
- Delivery anytime and anywhere;
- Scalable formats;
- Acceleration of mobile and loyalty programs;
- Industry consolidation;
- Regulatory uncertainty; and
- Localized customer experiences.
Clearly, while consumers are eager to regain some semblance of normalcy, all will not go back to the way it was before – a sentiment shared by Incisiv, a leading analytics company for industry leaders in digital transformation. the consumption.
“We recommend that retailers make it easier to find store inventory online, simplify the in-store pickup experience, and help their in-store associates build stronger relationships with customers digitally.” said Quarav Pant, knowledge director of Incisiv.
The numbers confirm it: 40% of consumer spending is expected to be attributed to Gen Z this year, a very digital savvy generation; and 60 percent of U.S. consumers currently order takeout at least once a week. Online orders are expected to reach $ 28 billion in sales by 2023.
This presents a huge opportunity for convenience store operators, but they will face unique concerns not shared by restaurants. For example, how many SKUs should their online menu include? Will it have central store items or just food service? Packaging is also a concern, as convenience store customers might order a two-liter bottle of soda to accompany their freshly made sandwiches, only to find that the bottle has crushed the food if not packaged properly. Identity checks for alcohol and tobacco purchases are also extremely important and prone to complications depending on state and local regulations.
There is also an offline component for online ordering. Will the delivery be handled internally or by a third party? How does ordering online for pickup affect staffing levels? Will there be separate lines for picking up online purchases?
C-stores must answer these questions to remain competitive with QSRs. They should consider what they want to offer and how they want to offer it when choosing a supplier for online ordering, according to the webinar.
Another part of translating the in-store experience into an online ordering experience is to consider the product marketing offerings and supplier financing that customers typically see visually as they walk the aisles. Retailers may consider having the ability to offer and track the use of such offers when ordering online.
Platforms that include machine learning “aisles” are a plus, as they can make recommendations based on what customers already have in their shopping carts, helping to simulate the in-store incentive to impulse purchases.
Alcohol sales are also worth adding when legal. Nearly 40% of convenience stores focused more on beer and wine in 2020 as sales increased, according to NACS data. However, retailers should ensure that their platform makes it clear to customers that they will need to show identification at the time of pickup.
Opportunities around loyalty programs
Loyalty programs are another key method of staying competitive, especially against QSRs who may not have their own rewards program.
AlixPartners research found that 50% of the most frequent customers (three times per week) rated loyalty as “very” or “extremely” important. Most notably, an 18% increase in the frequency of online orders occurred when loyalty was added; customers just don’t want to lose their loyalty benefits.
Investing in an online ordering platform also represents an opportunity to improve a retailer’s existing loyalty program. There is often room for improvement, as only 40% of customers report being satisfied with their existing loyalty program. Improving loyalty while adding an online experience is a win-win scenario.
Loyalty programs that segment customers based on their pumping and in-store habits enable a more effective targeted marketing strategy, according to Paytronix, which has identified several cluster segmentations that allow convenience stores to better target customers. For example, gas bundling can help identify other high margin products to entice gas buyers to visit, while tobacco bundling presents a potential opportunity to target certain customers with offers on unrestricted products.
Above all, convenience stores must actively manage their loyalty programs and test new initiatives. Loyalty programs, in general, drive more visits and sales while driving a positive ROI, but there are game-changing and brand-differentiating benefits that can be unlocked by retailers keen to experiment with innovative campaigns based. on the data.
On-demand replay of this webinar, “Growing Competition: C-Stores and Quick Service Restaurants”, is available here.