“The future is already here – it’s just unevenly distributed.” This quote from futurist William Gibson perfectly sums up convenience retailing today, according to Jeff Lenard, Vice President, Strategic Industry Initiatives at NACS, the global association working to advance convenience and fuel retailing.
But what does this mean in the context of the changing face of convenience retailing? Well, around the world convenience retailers are implementing different strategies to take their stores into the future, and to cement their positioning as being more than just retailers of fuel. From Thomas Ennis, who is widely considered one of Ireland’s most innovative convenience retailers, having set the standard, and continuously raised the bar with the fresh food and barista made coffee at his network of Spar stores, to Kevin Smartt, owner of Texas Born (TXB) in the US, which is in a period of significant growth – there is much Australian retailers can learn from abroad.
According to NACS’ Lenard, the most successful retailers are those that seek out ideas from around the world and bring them back to their stores.
He says: “It is essential to have an understanding of global trends because they are concrete examples about how consumers are already embracing new concepts, even if they aren’t yet in our own backyard.”
This sentiment is echoed by Theo Foukkare, CEO of the Australian Association of Convenience Stores (AACS), who says: “We now live in a world where global trends on the other side of the world are relevant somewhere in Australia. The key to ongoing success is to stay across all of the latest trends and look to implement what you need, when you need it to solve a problem that will benefit your business, and your customers.”
The trends shaping global convenience
In today’s world, we are all linked, and to be truly successful it’s important to learn from our industry peers, both near and far.
It doesn’t matter where in the world you are; the truth is that convenience remains the most valuable customer commodity, and convenience stores are best positioned to provide that to customers.
NACS’ Lenard says: “There are enormous opportunities to continue to redefine convenience into new areas. The biggest challenge is complacency; if you aren’t focused on the customers’ needs today – and tomorrow – you may find that others do better meet the customers’ needs.”
Across the board it is agreed that food, coffee, and technology are leading the way into 2024 for c-store evolution, and this isn’t slowing down anytime soon.
TXB’s Smartt has observed a higher acceptance of private label products and as such, in 2024, the business is expanding its private label line into salty snacks, craft soda, enhanced and sparkling water, energy drinks, and candy.
Smartt also highlights a shift from consumers towards lower sugar content in non-alcoholic drinks and snacks, and higher alcohol content in beer and wine-based beverages. Non-combustible nicotine products continue to show growth, and there has been a continued uptake in use of TXB’s mobile app.
“We will continue to invest in our fresh food program. New food innovation and new equipment technology are important to us as we continue to get better in foodservice,” says Smartt. “Technology that is either customer facing or behind the scenes will provide improved efficiencies and customer insight.”
In terms of the technology that is shaping the future of the convenience landscape, Smartt says that the next five years will prove highly beneficial for the industry.
“Most c-stores already have apps and loyalty programs, so data mining and providing intuitive customer promotions that allow personalisation will drive enhanced sales. We’ll also see many efficiencies to come with artificial intelligence (AI) in enhancing operations within our system,” he says.
“We are continuing to get better and smarter at mining customer data out of our loyalty programs, which will allow us to combine this data with new sophisticated AI programs that will allow us to gain a greater understanding of our customer and their needs.”
Lenard at NACS agrees that technology is playing a huge role in convenience stores, and he offers the advice that technology must always be used to enhance the customer experience.
“The uses [of technology] related to operating efficiency alone are countless,” he says. “Beyond that, technology will play a big role in how you talk to customers – whether via social media, an app or other means. It will literally be an important driver for EV charging, and it will allow retailers to be more creative in finding solutions to problems.
“But, as with any new innovations, adoption will not be a linear path, and it will only be successful if you keep the customer’s needs in mind as the ultimate objective. We’ve seen that to a certain degree with self-checkout. Some stores used it to save on labour expenses and it reduced the customer experience.”
Frank Beard, marketer and analyst who serves as Head of Marketing at Rovertown, says that as retailers chase the goal post of ‘personalisation,’ they need to remember that rewards programs are just one of several potential engagement tools.
“They’re a great piece of the puzzle, but they alone aren’t the complete picture. Many customers aren’t interested in rewards programs. It’s not the only engagement strategy available to retailers.
“For example, I’m noticing a trend where retailers are using their apps to more effectively engage folks who aren’t members of rewards programs. I’ve seen retailers allow customers to redeem the coins won from mobile games within their apps on various items in the store – both self-funded and vendor-funded. This creates new engagement opportunities, like a parent who gives a noisy kid the retailer’s app and tells them they’ll stop by the convenience store if they win something.
“Retailers with mature brand identities also need to lean-in on opportunities to surprise and delight, especially with limited-run merchandise. The marketing team at Kum & Go, prior to the acquisition by Maverik, was a great example of this. They even engaged in brand collaborations with brands like Busch, creating highly desirable merchandise that was purposely made scarce. The result – paired with social media that was clever at the time, prior to their acquisition – was a brand that was just pure fun as a customer. It was cool. A person might not care about their rewards program and still be a very loyal customer.
“On that note, Buc-ee’s has perhaps the most intense brand loyalty in this industry. They have no loyalty program. Think about it.”
Excellence abroad
We asked global experts if they could identify any convenience stores within their networks that are setting the pace of customer satisfaction.
In the US, Lenard pointed to Sheetz and Wawa, saying they have long pushed the boundaries over what a convenience store is, especially around foodservice, and that trend still has room for growth.
“Many chains will now call their locations restaurants rather than stores, because the focus is so heavily tilted toward foodservice. That’s a trend that we have also seen with small, one-store operators. They’ve given food truck operators or independent chefs the ability to create a unique menu in a small footprint,” he says.
“Buc-ee’s has certainly pushed the boundary on store size. Their stores, located off busy interstates in sparsely populated communities, are 70,000 square feet or more – in addition to 100-plus fuelling locations. That’s roughly 30 times larger than the traditional 2,400 square foot 7-Eleven. The concept isn’t to have a giant store, but about an amazing experience. It’s turning the concept of having to stop for a fast fuel, food and a restroom break into wanting to stop for a leisurely fuel, food, and a restroom break.”
According to AACS’ Foukkare, he thinks that TXB is an international convenience retailer that is doing an amazing job with evolving their offering. But he also flagged some retailers closer to home that are setting the bar on a global scale.
“In Australia, we are blessed with some exceptional retailers that continue to push the boundaries and deliver on their customers’ expectations. In terms of overall offer, OTR in my opinion are a global example of best practice in convenience retail.
“There are a number of independent retailers that have developed their brand and food/coffee offers focused on fuelling their customers’ hunger through exceptional ranges. The ones that come to mind include Mood Food by Bennett’s Petroleum, Bowser Bean Café, APCO 24/7 Café, Jack & Co, The Station Grocer and Urbanista Café & Convenience,” he says.
Challenges and opportunities
Convenience stores face a mix of challenges and opportunities influenced by various factors, including evolving consumer preferences, technological advancements, economic conditions, and global trends.
Foukkare highlights that some of the main challenges right now include intense competition combined with ongoing margin and pricing pressures.
He says: “The ongoing global supply chain disruptions seem to be always in the background presenting new challenges. As consumer preferences and behaviours are changing due to a range of reasons, this is adding more complexity to satisfying customers. Other areas that continue to impact retailers include the high cost of technology implementation, labour shortages and increasing wages along with regulatory compliance and industrial relations changes.
“In terms of opportunities, retailers need to ensure that they listen to their customers feedback and their changing expectations. In my opinion, the four largest opportunity areas include digital transformation combined with data analytics to drive their decisions; personalisation and loyalty programs need to be enhanced to drive customer loyalty; food and beverage needs to be front and centre for all retailers and finally community engagement is paramount for all retailers in many different ways.”
This article was originally written by Deb Jackson for the February/March issue of Convenience and Impulse Retailing magazine.
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