Ripe for Innovation
Twenty opportunities to turn your company into an innovation powerhouse
E-Commerce vs. Impulse
There is no doubt the Internet has affected the way consumers shop, but what is less apparent is how it might affect the convenience channel. So far, it seems that unlike your mass-merchandiser brethren, impulse-driven c-stores may have the upper hand over online retailers.
“We’re not seeing the increase in usage of e-commerce that all of us predicted a decade ago,” says Demeritt of The Hartman Group. “It’s growing, but quite slowly, for very select things.”
“Web-enabled grocery delivery is now in at least generation three, and still appears to be floundering,” says Michelle Barry, president and CEO of Centric Brand Anthropology, Seattle. “Some folks are doing cool things but don’t appear to be profitable.”
Demeritt attributes it to the American consumers’ lack of planning—a pretty pivotal element of e-commerce, even with next-day delivery.
And it’s the retail industry itself and the expansion of CPG across all channels that has decreased our need to plan. The Hartman Group calls it the “roadside pantry”: “You can stop anywhere and find food to eat,” decreasing your need to plan, says Demeritt. But don’t ignore e-commerce; assume online retailers are strategizing ways to make you irrelevant. Focus innovation on the elements that differentiate you: impulse and the sensory experience.
Apps With Meaning
By now, most big brands have developed their own apps—and while embracing such technology is great, even necessary, few have done so in a meaningful way.
“Most information-based shopping apps don’t tend to produce much that is worthwhile; they simply reproduce the standard text and photos you see on a manufacturer’s website,” says Barry of Centric. “So far it seems like the focus has been to put products like apps and such out there because we can, and because of our cultural obsession with technology, without any real consumer need driving them.”
Customer reviews back Barry up. A report from mobile-solutions firm Xtreme Labs released last year found that only two retailers received positive ratings for Apple and Android apps: Walgreens and CVS. A Forbes article on the report cited “immediate actual utility” as the reason why those apps scored well. So before rolling out or updating an app, carefully consider how to make it relevant and functional.
The buzz around vending has been slowly building over the past few years. While on the surface it looks like another avenue of competition, the technology might be translatable to the convenience channel. And consumer acceptance of purchasing meals from a machine may help c-stores’ own freshness perception.
Consider the data from IFMA and Datassential’s “Foodservice Landscape” study that 56% of people want an away-from- home meal to provide something beyond mere sustenance, and you begin to understand how Americans have raised their expectations on the consumer experience.
Perhaps it was an effect of the Great Recession, but consumers today are looking for small daily pleasures and affordable luxuries, be it a nice craft beer or a handcrafted cupcake.
“Twenty years ago, luxury meant something I can’t afford, for rich people, maybe something I have once or twice a year,” says Stangarone of The Culinary Edge, evoking images of yachts and jewels. “None of that really matters. … We’re yearning for what can make me feel luxurious in this moment.”