It was a dark and stormy night. The small boat was being rocked and pummeled by towering waves. Hard rain slashed across my face and continued to drench my clothes as I became a human sponge. Slightly in front and above me, the captain of the boat kept trying to make headway on a course that would deliver us to the dock, safety and stillness.
My nocturnal journey is an apt metaphor for the future of convenience retailing.
As a passenger (who, by the way, had paid for this experience) my destiny was controlled by the forces of nature and the skill of the captain. I had no control over our speed or direction and was having to do what I needed to do to survive the situation. This included wedging myself into a corner to keep from being tossed around, huddling under a thin windbreaker to reduce the soaking, and thinking happy thoughts about rainbows and unicorns.
After what seemed like ages, we safely docked, and I stumbled off the boat, grateful to be on solid ground. Sadly, I had forgotten that we still needed to be transported back to the hotel. I clambered into the back of an open pickup truck, again at the mercy of the driver as we made the terrestrial part of the journey up the steep hill on an unpaved road that had never seen a guard rail.
The New Competition
Thinking back on this experience in the Caribbean, my nocturnal journey is an apt metaphor for the future of convenience retailing.
In the past, the great threats to our business came from other retailers: hypermarkets and grocery stores selling fuel, pharmacies selling groceries, quick-service restaurants encroaching on our foodservice offer.
Today, the threats are coming from beyond traditional retail channels. The pandemic has introduced more customers to online ordering and delivery. New quick-delivery services are popping up, targeting convenience retailing by promising to bring any item to consumers’ doors in 15 minutes or less.
These new competitors redefined what “convenience” means. While once related to physical location and speed of service, it now means ease of online ordering, frictionless payment and speed of delivery.
Meanwhile, these digital competitors are harvesting and analyzing the data that comes with implementing their programs. Customer preference, location and profile data allow these tech-based companies to use artificial intelligence to optimize product selections and pricing. Moreover, they are developing predictive models so they can position their mini fulfillment centers (some essentially dark c-stores, others mobile warehouses) in locations near their customers so they are in the right place at the right time when an order comes in.
Historically, traditional retail and foodservice channels have willingly given partners access to their customer data, rather than build a digital ordering and delivery system themselves. Companies such as DoorDash, Gopuff and Instacart have been gathering information that once was solely owned by retailers’ loyalty programs and using it to open their own dark stores. In the words of Pogo, “We have met the enemy, and he is us.”
If the delivery companies have redefined convenience, then convenience retailers need to redefine retailing. What will entice consumers to visit your store?
To meet this challenge, c-stores need to be hyperlocal, reflecting the demographics and needs of the people who live around it. Locally made products should be a large portion of the items on offer. Price points need to reflect the economic reality of the area. Cultural differences and identities need to be reflected in promotions and the events celebrated. Just as important, your store needs to support local associations and groups. Be an active participant in causes that are important to your customers.
Finally, take back the control of your customer data. Find ways to create your own online presence, do your own order fulfillment, and collect information in your store. Use that information to pinpoint retail opportunities with your customers.
Others are trying to shape our destiny. That doesn’t mean that we are unable to change our course. Convenience retailers need to get back in the driver’s seat to redefine the retailing experience for their customers.
Published in: CSP Magazine – June 2022
Roy Strasburger is CEO of StrasGlobal, a privately held retail consulting, operations and management provider serving the small-format retail industry nationwide. StrasGlobal operates retail locations for companies that don’t have the desire, expertise or infrastructure to operate them.
Contact him at firstname.lastname@example.org.