The more high-tech goes mainstream,the more retailers seethemselves “phoning it in.”Not in the sense of putting their businesseson autopilot, but literally pickingup a smartphone and dialing up computer-generated reports, changing pricesigns or sending electronic coupons topassing motorists.
Knowledge may be power (if youknow how to use it), but for a workforceincreasingly used to instant information,the focus is as much about when as itis about what. In an outreach to morethan a dozen retailers and suppliers, CSPmagazine identifi ed fi ve “themes” thatbubbled up as top technology concerns:
- Mobility—internal uses, marketingand customer payment
- Loyalty
- Social media
- Business intelligence
- Connectivity
A review of these themes is only partof this year’s annual technology wrapup.Equally engaging are perspectives onmobile payment and industry standardsfrom two top industry tech names, as wellas updated original research on cash-handlingbehavior among c-store operators.
The concept of mobility as it applies toc-store technology can mean many things.Certainly, the hub of the idea is the smartphoneor tablet device, which gives theuser the ability to do a number of onlineactions. Of these activities, retailers seemfocused on three: marketing, customerpayment and internal communications.
While all three have yet to mature interms of specifi c standards and widespreadacceptance, retailers are tracking technologicaladvancements and positioningthemselves to act—with some alreadypulling the trigger.
Mobile Marketing
Issuing smartphone apps to build relationshipsdirectly with consumers isprobably the No. 1 technology priorityamong retailers. Just ask 7-Eleven. Itreleased an app in February, launchingit on Apple and Android operating systemsand offering it for free at the AppleApp Store and Google Play for Android.
The app started with a store-locationfinder, mobile coupons, select productsand news on store events and specials.The Dallas-based c-store giant selectedthe initial capabilities based on commentsreceived from 7-Eleven Facebook fans,with mobile couponing the top request.
An update subsequently added theability to “check in” to stores with theFoursquare social-media app. Frequent7-Eleven visitors can earn a Foursquare“mayorship” of their favorite store.
In developing its app, 7-Eleven solicitedfeedback from the public, most recentlytraveling to the 2013 South by Southwest(SXSW) festival and conferences. In acoordinated competition held there, thewinning idea allowed regular cellphoneusers to interact with the app via textmessaging. Other top ideas included addingmobile payment capabilities, morecoupons, individual store reviews, amembership loyalty program, nutritionalinformation and local gas prices.
“We looked at how people shop ourstores and patterned the app to improvetheir 7-Eleven experience,” said JesusDelgado-Jenkins, 7-Eleven executive vicepresident of merchandising, marketing,logistics and innovation, in a news release.“It’s all about building convenience onconvenience, and we continue to want tohear what capabilities customers wouldlike to see in the future.”
Another new feature identifi es storesthat meet specifi ed convenience needs. Filtersfor key products and services work inconjunction with the 7-Eleven app’s storelocator, so users can tailor store results byselecting fi lters, such as chicken, pizza, eggrolls, beer, wine, Redbox, lottery, ATM,fuel, diesel, propane and whether the storeaccepts specifi c food stamps.
But 7-Eleven is relatively new tothe game. Rutter’s president and CEOScott Hartman, known as an earlyadopter, was one of the first to jumpinto dynamic websites and mobile appsabout four years ago, having partneredwith Brooklyn Park, Minn.-based Gas-Buddy and its OpenStore program.Customers can use the app or visit thewebsite to fi nd locations, review productsor fi nd promotions.
Hartman says his 57-site, York, Pa.-based company is reaching “a demographicthat every c-store chain covets”and describes the feedback tools as“amazing.” The interaction and engagementthat results has become part of thechain’s brand identity, Hartman says.
Ultimately, retailers and supplierssay the greater treasure trove wouldbe giving motorists tempting offers asthey drive by. “Don’t expect all successstories as the industry goes down thispath,” Hartman says. “But those whounderstand it will begin to separate fromthe pack in just one more way with thecustomers we all want.”
The idea of mobility interweaves withother hot technology topics. In the caseof mobile marketing, the thread leadsto themes of loyalty and business intelligence.The logic extends to developingrelevant, enticing offers to customersbased on individual buying history.
“That’s when we get into much morepersonal, customer-specifi c intelligence,”says Carson Kuehne, chief innovationsoffi cer for Verge Retail, Henderson, N.C.“It leads … to having an understandingof each person and the couponsand offers [that may turn] a Saturdaycustomer … into a weekday customer.”Albemarle Oil Co. (ALCO), Albemarle,N.C., recently launched an appthrough Verge for its 23-store chain.“We’re excited about the ALCO smartphoneapp and the opportunities Verge’stechnology presents for enhancing ourcustomer experience and supporting thegrowth of our brand,” said Ron Lattimer,the company’s operations manager, ina release.
Mobile Payment
The second mobility concept that retailersseem focused on is payment. Whileno one disagrees that paying for goodswith a smartphone could be convenientfor many customers, the central issue isfi nancial. How will retailers benefi t?
“How do you incorporate mobilepayment in a way, [for instance], thatyou’re saving on credit-card fees?” saysJenny Bullard, CIO of Flash Foods,Waycross Ga. “[And] we don’t want toadd cost.”
The 172-store Flash Foods chain is inthe process of implementing a mobileapp, one that’s tied to its loyalty program.The connection will process transactionsvia its ACH-debit system, whichbypasses credit-card processors and, inturn, avoids high transaction fees.
“One of the challenges is solutionstied to the major credit-card brands[that] in the end aren’t offering savingsto the retailer,” says Drew Mize, COO ofThe Pinnacle Corp., Arlington, Texas.
“There’s no incentive for retailersto adopt it beyond it being a defensivemeasure. They don’t want to lose customers.”
Multiple players—PayPal, Google,ISIS—have a stake in the so-called“mobile wallet” game, with retailerssuch as Bullard eager to see how thingsplay out. Standards in technology alsoneed to fi rm up, with the chip-in-phonetechnology of near-field communications(NFC) along with bar codes onsmartphone screens getting buzz.
“There are many solutions emerging,each using completely different technicalapproaches,” Mize says. “It’s diffi cult togo all in when no one knows who’s goingto win.”
Yet despite the uncertainty, the goalis compelling. Jason Groff, director ofpetroleum and convenience, global solutionmarketing, for NCR Corp., Duluth,Ga., says such a transaction can startwith a quick response (QR) code on thepump. Customers can scan the postagestamp-size bar code, download the appand initiate the purchase. At the sametime, retailers can communicate promotionsthat customers can buy. Groffsays it gives customers control over thefueling experience.
Mobile—Internal Uses
Customers aren’t the only ones whowant more control. Employees demandit, too, says Mize of Pinnacle. Thoughhis company has provided the option ofremote access for several years, demandfor the option has spiked.
“The market is really starting toembrace it and demand that ability toaccess data in a more immediate fashionfrom wherever they are,” he says. “It usedto be a trend focused on the [top]-levelexecutives, but it’s gone down to theentire organization, whether it’s operations,district managers or marketing.The entire organization is trying to gainreal-time access to their systems.”
To access data remotely, solutionstypically need to be browser-based oreasily accessed via a mobile device. That’sthe fi rst requirement, Mize says. Second,a secure pathway must exist from thepublic world into those private systems.
Today, the proliferation of smartphones,iPads and tablets, as well as thesecurity options available, has created anentire ecosystem of possibilities. “Thinkback fi ve years ago,” Mize says. “Unlessyou had a BlackBerry—which was thego-to cellphone for businesses wantingto give employees secure access tocompany emails—there was no way toeffectively get mobile reporting unlessyou were chained to a PC.”
The importance of remote access iswhat drove officials at Tedeschi FoodShops, Rockland, Mass., to overhaul thecompany’s communications network.Doug New, vice president and CIO forthe 194-store chain, says, “One of ourbig drives is, through technology, to dowhat we can to make the lives of ourstore operators better, make their jobseasier and remove hassles.”
Such drivers raise the goal of real-time information. Greg Gilkerson, presidentof PDI, Temple, Texas, says simply,“People want to know.”
Tank-monitoring systems, pointof-sale (POS) and the communicationnetworks that exist for the most part arecapable of providing real-time data. Inthe fi eld, such information can identifyinequities in supply and demand. Whilea store on one side of town may be runningout of a product, a store on theother may have an abundance of it. Soa quick transfer may mean added profi t.
Most inventory systems, Gilkersonsays, are two to three days behind, and“people are hungry to get closer to theirbusinesses.”Just as the smartphone may be themailbox in this new day of accessibility,loyalty programs are the mail and, in thenear future, the personal assistant whosifts through the mail.
Retailers undoubtedly have loyaltyon the brain, with the range of programsgoing from pilot to fully embedded.
John Winter, vice president of planningand development for the 18-storechain Quality State Oil, Sheboygan, Wis.,speaks to the latter. In place for sevenyears, the company’s Q-Mart Rewardsprogram is arranged around a “club”concept, wherein customers buy a certainnumber of the same item, such ascups of coffee, and eventually get onefree. The program now tops 70 clubs andspeaks to the power of loyalty:
- $7 million in new sales since theprogram began.
- 80% of all gallons of milk purchasedgo through the Q-Mart program.
- Its new craft-beer club boosted categorysales by 300%.
- Targeted offers and cross-promotionscan drive up sales of specificproducts, making the chain the area’sbiggest retailer of items such as cases ofbottled water, family-size bags of chipsand frozen pizza.
- Its loyalty customers spend $2.50more than non-loyalty.
- When a competing store openedup next door to a Q-Mart, the Q-Martretained all its loyalty business but lost15% of its non-loyalty customers.
- Vendor partnerships flourish,fueled by concrete throughput data.Through its partnership with HoustonbasedCITGO, the program has givenaway $100,000 in random rewards.
With its loyalty provider, Outsite Networks,Norfolk, Va., Quality State recentlystarted rolling out its rewards programto its 60-store dealer network, callingthis version Badger Rewards. The biggesthurdle is educating store staff, says ScottStangel, wholesale marketing managerfor Quality State. Employees are the frontlines of communication to customers.
“Building the program requires youto be connected through your salesassociates,” he says, pointing out howmystery-shop bonus programs canreward employees for talking up loyalty.
It’s an ongoing battle, Winter says.“You have to differentiate yourself andgive the consumer the advantage,” he says.
“Over the years we’ve identifi ed winningclubs … and play off those. [Forothers] we go in different directions,keeping it interesting for our customers.”
Though interest still exists around socialmedia and sites such as Facebook andTwitter, questions remain. For Bullardof Flash Foods, the bottom line is brandawareness.
“It’s a presence you’ve got to have,”she says. “As time goes by, that presencegets more important, but whether there’sfi nancial gain outside of promotion, wedon’t know yet.”
For Stangel of Quality State, socialmedia will eventually play into howretailers can reach consumers based onlocation. “We’re gearing up for the newconsumer who goes everywhere with aphone,” he says.
Along with location-driven applicationsin cars, retailers can use “socialmedia to track individuals, find themwherever they are and [connect us to]their purchase habits,” Stangel says.buy will be signifi cant for retailers.
“We have the ability now that we didnot have before to collect more datafrom stores, pull back all transactiondata and take advantage of that in wayswe weren’t able to in the past,” New says.“We have goals of knowing what’s beingsold in conjunction with what, what truemarket baskets are and how it changesby time of day.”
New hopes to develop a loyalty programthat can ultimately tailor mobilecoupons and discounts to specificindividuals. “The accessibility of data—more appropriately, the accessibility ofdata presentation and mining tools—will make it easier to get informationand draw correlations,” he says.
Analytical tools have evolved inrecent years, helping c-store retailerstackle industry-specifi c questions. MarkHawtin, senior vice president of businessdevelopment for KSS Fuels, FlorhamPark, N.J., says retailers make manydecisions in “blissful ignorance” of theramifi cations.
For instance, retailers often changefuel prices without consideration of howthey’ll affect in-store sales. Lowering fuelprices will increase pump traffic, butwhat if it inadvertently starts a run ona related in-store product? “If I increasedemand [in fuel], do I have enoughproduct [in the store]?” he says.
“And what about labor schedulingand labor workload?” asks AdrianPreston, chief technology officer forKSS Fuels. “People want to use big datato solve business problems: How do Imaximize effi ciency?”Developing the logistical connectionsto transmit data is the backbone of allof these technology trends, says New ofTedeschi. That’s why his chain recentlycompleted an overhaul of its internalcommunications network, broadeningits ability to transmit data and preparingthe chain for future data demands.
Its biggest motivation was eliminatingpaper, New says. “We had incredibleamounts of paper produced routinely—financial statements andmarketing information intended for district managers or storeoperators,” he says. “We needed greater bandwidth to grab theinformation electronically.”
Now Tedeschi can use business applications to handle processessuch as reordering. With the company’s heavy emphasison fresh foods, the ability for stores to order directly from thecommissary was a huge benefit, New says.
Connectivity today is “more pervasive, more available and,most importantly, more secure,” says Dan Foster, president ofbusiness markets for MegaPath Corp., Pleasanton, Calif. AsTedeschi’s network provider, Foster says compliance to Visaand other credit-card standards for data security (commonlyknown as payment card industry, or PCI, standards) is criticalto daily operations and reducing exposure to data theft.
That said, Foster says retailers have to make a commitmentto their communication choices. Top decision makers needto be involved and thoughtful conversations with businesspartners need to happen. “You have to ask yourself what yousee over time, so you can future-proof your business withtechnology,” Foster says.
Communications becomes even more important as chainsopt for “hosted” solutions, putting many of their basic businessprocesses into cloud servers.“Retailers are very excited about the potential value that[hosted] products can give them,” says Groff of NCR. “Itlowers the barrier of entry while leveraging the same ‘brain’ ”that a larger competitor may use.
The Big Vision
Though the top themes identified here are an informal collection,what’s clear is the difference between the tech climatetoday vs. just two or three years ago. Ubiquitous technologiessuch as smartphones and tracking systems in people’s cars areinspiring retailers to dram big.
“As you and I are driving around, our mobile device ora satellite system will tell us when we get near to a preferredretailer,” says Hawtin of KSS Fuels. “I’ll get an offer that popsup that says, ‘Pull in—you’ll get a great deal.’ ”
Ultimately, that vision unifies the various themes mentionedby those interviewed, defining the many parts neededto reach that goal.
“If you’re in a market that’s at best flat or declining,” Hawtinsays, “your future is built on the ability to [persuade] yourcustomer to buy more.”
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