4 MINS READ
Industry
Highlights
- With the rise in electric and autonomous vehicles, and changing customer expectations, convenience stores should pivot to become a point-of-experience for customers, not just a point-of-sale.
- Convenience stores, which bore the brunt of the pandemic, are no longer simply about convenience. They must represent an experience steeped in safety for customers and communities.
- Enhancing customer experience through hyper-personalization is key to the future of convenience stores.
In this article
The future
Restoring the relationship between customers and convenience stores is key to transformation and growth
Convenience stores (C-stores) make up one of every three stores in the United States, with 80% located at gas stations. Increased gas efficiency, remote work, and customer reluctance to shop in-person due to COVID-19 has reduced footfalls in convenience stores.
While in-person shopping practices may eventually return to pre-pandemic levels, dealing with this emerging shrinkage in gasoline demand is a challenge for many convenience stores. In the not-so-distant-future, gas-powered cars will no longer be sold in some markets. Case in point: California will stop selling new gas-powered vehicles by 2035. Washington state has the same goal for 2030. Even with legacy cars, the demand for gasoline will continue to decline as automobiles age and are removed from service.
TCS survey shows that the relationship between customers and convenience stores is broken. There is little loyalty inside the store or outside at gas station pumps. Restoring that relationship is key to convenience store transformation and growth.
So, what additional motivations could one construct to make a convenience store a destination rather than an adjunct when filling a vehicle with fuel or charging an EV?
Thinking through the future for convenience stores, we see three areas of focus —enhancing customer experience, reimagining C-stores, and the traditional gas stations.
Enhanced CX
Do you know who your customers are, what they like, and how they respond to your brand? What are their demographics, social media engagements and interactions with your brand? Insights into your customers’ buying behaviour help build a customer profile that will assist in creating the right campaigns, outreach strategies, and personalized offerings to boost customer loyalty.
While retailers are generally familiar with this type of data, historically C-stores have not collected it.
C-store reimagined
Hyper-personalization can go a long way in restoring the customer and convenience store relationship.
C-store experiences will have to be enhanced to reflect customer sentiments in terms of new formats, experiences, products, and innovations, like drive-through stores, contactless checkout, and more healthy food options.
Figure 1 - The different parameters of enhanced convenience store experiences that reflect customer sentiments.
Empowering the C-store with connected commerce capabilities will also provide unified pricing and seamless experience across channels enabled by AI and a strong technological architecture.
Remodeling the store to optimally manage space and support curb-side pick-up, enhancing merchandizing with the right product assortment, pricing, and promotion will also enhance customer experience. Same with managing the supply chain, which plays a big role in providing this seamless experience. Given that online ordering will be increasingly available, networks of stores with real-time shared inventory information can provide customers with a choice of destinations based upon inventory availability. With a similar demand for improved products, knowing the inventory status by store can become another differentiator. The ability to purchase online and pick up at a convenience store (perhaps via a drive-through) could be an attractive option in our post-pandemic world.
An improved payment experience could take advantage of touchless systems and secure transactions. Connecting this to a loyalty program would yield increased basket size and wallet share.
Additionally, new products like fresh and healthy food, quality coffee, or a branded quick-service restaurant can enhance brand value and increase sales. The goal: enhance product offerings from just convenience to convenience with high-quality service. One successful example is US food retailer Trader Joe’s who boasts strong customer loyalty. With limited product selection, product inventory turnovers are high and consistent with convenience store businesses. An alternative model popular in Japan relies on a smaller physical platform but more frequent daily inventory checks and stock delivery.
A restaurant operation will increase time spent at a C-store location—and it’s a useful feature for electric and hybrid vehicles. Similarly, coffee house operations are likely to create customers who don’t mind a wait.
Ancillary service offerings, like Amazon lockers for last mile delivery, to pick-up or drop-off orders can increase traffic to the location.
Figure 2 - An infographic on new-age convenience stores powered by connected commerce and AI.
The Traditional Gas Station
The gas station side of the business is more complex to reinvent.
The fuelling part of the C-store business is evolving as charge time for electric cars changes. Fast charging from use of new battery technologies, like solid-state batteries, will make stopping to charge as little as a 10-minute task. In the shorter term, longer charge times will likely make convenience stores visits merely a top-up. This provides C-stores an opportunity to not only redefine their business model but also create new revenue streams.
Larger locations can offer restaurants and perhaps lounges allowing drivers to wait while their cars charge.
Newer cars will, in the future, require less charging. Local customers may charge their cars fast at home, but apartment dwellers will be a key target. To attract and retain these customers, C-stores can provide services like WiFi. The disruption in this space has begun and will rapidly change the C-store landscape. Now is the time to align your growth strategy to this transformation.
C-store strategies
The way forward is to align your business growth strategy to successful transformation.
The disruption in this space has begun and will rapidly change the convenience store landscape. Now is the time to align your business growth strategy to this transformation. A few key aspects that can help address this transformation are:
Experiential store to reinvent the guest experience through customer profiling, engagement, personalization, next-gen loyalty, and fuel pump re-imagination.
Autonomous and intelligent operations to create capacity through efficiencies by inventory control, production planning, and autonomous stores.
Frictionless omnichannel commerce and safe operations for the future.
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