Photo: Wawa
C-stores focused on being even more convenient during the pandemic
Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Refrigerated Buyer magazine.
With commuting and general travel down since the coronavirus landed in the U.S., c-stores have struggled to drive traffic and are losing share to bulk-buying at larger formats.
As a result, “They need to lean on other categories and services to help develop new shopper routines and cater to evolving consumer needs,” said Simon Johnstone, director of London-based Kantar’s global discounter/c-store unit.
Among the opportunities for c-stores:
Grocery shortfalls: Out-of-stocks or fear of crowds at supermarkets, club stores or mass merchants offer opportunities for c-stores “to pick up the slack by making non-traditional convenience store categories more accessible,” said Mr. Johnstone. Cleaning and toiletry items, ready-to-heat meals and bulk items were already being added to c-stores’ mix early on the pandemic, according to National Association of Convenience Stores (NACS) findings.
Urban c-stores, in particular, can cast themselves more as “corner stores” where consumers can pick up staples such as eggs, milk and fresh fruit instead of venturing out to a crowded supermarket.
Foodservice shortfalls: Adding seating and revamping menu offerings could be a solution for families facing restaurant restrictions and seeking alternatives to home cooking. Some c-stores are keeping pace with QSRs by offering healthier items. Wawa recently announced plans to open its first drive-thru-only location and just started testing a selection of customizable dinner items to better compete with higher-end, sit-down restaurants.
Omnichannel shortfall: C-stores are seen as well behind supermarkets in developing effective apps, online ordering, pickup and delivery with elevated omnichannel convenience becoming an expectation amid the pandemic. Gary Stibel, CEO of The New England Consulting Group, said, “Even the chains that are doing a good job today are still playing catch up.”
Encouragingly, some signs of improved traffic have been seen in recent weeks, although it’s possibly tied to summer vacations. Said IRI’s EVP of consumer and shopper marketing Larry Levin, “I’m confident the channel will return to power in time. It’s still the best channel for on-the-go consumption. But if working from home is the new normal, it will have to adapt.”
Discussion Questions
DISCUSSION QUESTIONS: How may c-stores have to reposition themselves or tweak their offerings amid the pandemic, and possibly after? Should they concentrate investments and efforts more on their product mix or omnichannel upgrades?
Poll
BrainTrust
Shifting merchandise selection to staples and focusing on better quality meals-to-go are the keys to weathering the COVID-19 impact. C-store traffic and volumes will return quickly post-pandemic. Until then, survive.
C-stores with gas pumps have a great opportunity to drive more traffic as shoppers must stop for gas. Use that occasion to drive those shoppers into the store by making offers too good to pass up. 7-Eleven is doing a very good job in promoting coffee, snacks and healthy choices. On a recent road trip, I was able to buy three bananas, two packages of peanuts and an iced coffee for around $5. Many c-stores also have video monitors on each pump that are used to showcase offers as well as loyalty programs. C-stores will come back faster than many other retailers for many of the reasons stated in the article from Frozen and Refrigerated Buyer.
All true above although I will add that c-stores are now teaming up with delivery businesses like Instacart to start delivering to customers. As far as assortment, that would entail remapping the store and that will depend on space available.
The changes c-stores need to consider are a function of their strategies and target markets. For example, for those chains like Wawa, which have morphed into convenient foodservice, adding groceries would not be consistent with their foodservice focus. The key for the foodservice c-stores is more convenience in terms of access, e.g. drive thru and drive up pickup, delivery options, etc. Similarly, enhancement of the dinner day part with tasty, nutritious and easy to prepare (heat and eat) entrees would drive additional business.
Great c-store operators are in a great position to come out on the winning side of the pandemic. Just look at two of the things they can offer and do.
It will be exciting to see more at-the-pump selling – as most pumps today have electronic pads with full video, effectively a mobile self-service POS. Customers will also love limited touch service in this age of COVID-19. Great points.
Rather than looking at this situation as a threat to c-stores, I look at it as an opportunity. If c-stores execute on the punch list detailed in the article (expanded grocery assortments, expanded meal offerings, and better delivery and pickup options), I think they have a real opportunity to become that “corner store” in people’s lives and change shopping habits in ways that persist long beyond the pandemic. They can become part of people’s regular routine for an expanded range of their weekly shopping lists. The trick, of course, as it always is, will be in execution. There are some very difficult assortment/space/planogram decisions to be made in order to find a new balance that works.
Add to that list providing delivery services in suburban areas more so than urban ones, and you start to see a new c-store playbook emerging. Delivery may seem counterintuitive for a c-store format at first, and perhaps doesn’t make as much sense in an urban setting when you can just walk to the corner store, but in suburbs where you’d still have to get in your car and drive, even if only 10 minutes away, the convenience factor starts to set in. Quality meals-to-go may be another large opportunity as everyone starts to grow tired of cooking the same meals over and over again at home. Truly adding to the convenience factor in these ideas would be simply more omnichannel investment, especially in mobile apps to make ordering that much easier and faster.
Right now it might be useful to review who is not working at home and offer solutions for them. That’s more than cigarettes, candy bars, and Cokes. Remerchandising will be required, but this is an opportunity to capture a new market and possibly hold on post-crisis.
C-stores are all around impulse buys. Whatever the trends are surrounding our lives, there is always opportunity to jump on those trends and offer complimentary product categories.
C-stores don’t necessarily have to reposition. They should take stock of shopper expectations for retailers and ensure they are at least at parity. I do think there is an expectation for order ahead/fresh food BOPIS, a big opportunity to innovate around the gas pumps making it easier to get quick items without walking into the store. We’ve seen them partner with delivery services to get their fresh food offers to the community. Consider some larger pack sizes and think of themselves as grocery fill-up within reason.
Survive the near-term but do smart things to be ready for a post COVID-19 world.
C-store were quick to react to the changing shopping habits of their customers when COVID-19 appeared. However one of the issues they faced was the center store items they carried were limited and in the smaller convenience size. This is what they sold previously and what their supply chain had to offer. In addition, the inventory levels were based on historic sales much the same as every other retailer. When the pandemic hit, they quickly realized that they had to get back into the grocery business and did so. Fortunately bottled and canned drinks, beer and snacks we also in high demand. Sales of those items allowed them a little cushion to adjust their product mix and they have done so. The c-store industry has always adapted to the needs of their customers and will continue to do so in the future.
It all comes down to executing and delivering on the brand promise for the c-stores. With the expected increased consumer traffic, now is a prime opportunity for c-stores to up their merchandising game and start offering packaged prepared meals, organic foods, premium coffee, and other beverages. All of this will drive increased traffic, higher margins, increased revenues, and shelf and floor productivity. Hopefully the days of only finding Gatorade and Doritos at rest stops are behind us.
If you’re going to be called a convenience store I guess you should probably live up to the name! I don’t think there’s a one-size-fits all approach here, but generally speaking I’d focus efforts in making e-commerce, pickup and checkout as frictionless as humanly (and technically) possible. Orders waiting to pick up when you pull in. Scanning your phone to simply walk out without having to wait in line. Easy re-ordering options. Your order brought out while you’re pumping gas. The list goes on. Any c-store that takes out meaningful amounts of friction will win the day not only through the pandemic but out into the future.
I’ve seen my local c-store expand their assortments in fresh food over the years and it’s a very welcome change. If they can figure out produce for high turn SKUs I think they would be well on the way to becoming a destination for quick fill in trips. I don’t know that supporting omnichannel in the way I think about it – curbside for example – makes sense for them. That would require that the customer places an order before they arrive. If they’re going to go through that amount of effort I would suspect they’ll use the traditional grocer and fill out the rest of their list. The value add for c-stores is the quick grab and go. Now if they were able to do something like allow customers to place an order at the pump for a few items and have them brought out to the car, that might be interesting.
People are time-starved and this is likely to get worse – independent of the COVID-19 situation. I think in a few years we will see more specialization among different types of c-stores to cater to different types of customer needs in a way that delivers real convenience to the individual or their family. Given the modest store footprint they won´t be able to be everything to everyone, so they will differentiate based on product or service selection.
With convenience and specialization, a customer´s frequency with one or several of them puts the operators in a good position to build a loyal following – and for that reason, they will also need to step up their game in loyalty marketing.
I love that the convenience store is getting even more convenient. Beyond multiple locations, easy to get in and out of parking lots, simple navigation in the store, quick food and drink selections, an inventory of snacks, much shorter lines than a grocery store – and more – what else can be more convenient? I like a bigger selection of the “staples.” How about a better no-touch experience, BOPIS with curbside pickup and even delivery?
C-stores were quick to react to the changing shopping habits of their customers when COVID-19 appeared. However, one of the issues they faced was the center store items they carried were limited and in the smaller convenience size. This is they sold previously and what their supply chain had to offer. In addition, the inventory levels were based on historic sales much the same as every other retailer. When the pandemic hit, they quickly realized that they had to get back into the grocery business and did so. Fortunately bottled and canned drinks, beer and snacks were also in high demand. Sales of those items allowed them a little cushion to adjust their product mix and they have done so. The c-store industry has always adapted to the needs of their customers and will continue to do so in the future.