CSP’s Outlook Leadership conference kicked off Tuesday in Rancho Palos Verdes, California. Convenience-store retailers, suppliers and other industry partners gathered for three days of learning and networking.
From how to embrace technology to when to sell coffee and more, here are five big takeaways from day one of the event.
Friendliness sells … or not?
Some of the biggest players in the convenience-store industry are building bigger stores, bigger teams and more complex operating models, Peter Rasmussen said.
But Luckin Coffee, which opened in China in 2017 and grew rapidly there before making its U.S. debut in June, went the other way, said Rasmussen, the CEO and founder of Convenience and Energy Advisors, St. Petersburg, Florida.
Luckin’s business model is mostly focused on takeout and mobile order. Customers in Asia cannot order at the counter, for instance, CSP’s sister publication Restaurant Business has reported. It has also priced its beverages aggressively, which has helped it take market share.
They use a small footprint, extremely lean staffing, digital-first engagement and ruthless efficiency, “these people are fast,” said Rasmussen, who visited one of their New York City locations recently.
“We’re clearly more complex than a coffee shop in so many ways… but when you think about the future, who’s going to be the Luckin of the convenience-store and oil industry? Who’s going to reset the expectations when you think about an industry where our new builds are going in the direction of being more and more expensive, right? Is there a model of a lower-cost build, more technology and value that speaks louder than smiles?” Rasmussen asked.
Everything he’s learned about retail is that friendliness sells, Rasmussen said, but the data is now showing that there’s an emerging customer base who will trade that friendly experience for speed, value and personalized digital engagement.
“So that might not sit well, but that’s the reality where things are going, at least with a segment of customers,” he said.
Coffee’s not just for the morning
Coffee is no longer just a morning beverage. In fact, at least a quarter of all coffee sales come much later in the day—the evening and late at night—according to representatives from Costa Coffee.
That represents a huge opportunity for c-store retailers to offer high-quality, premium coffee options throughout the day. Plus, today's coffee consumers want high-end drinks, not just a big cup of hot java. So, retailers can charge more for those premium options. And maybe add in a pastry or breakfast sandwich bundle, too? Talk about a basket booster.
From scroll to sale
As consumers shift from traditional search engines to artificial intelligence (AI)-generated summaries, brands such as convenience stores are losing control over when and where they appear in search results, said Kesha Alexander, chief strategy officer and founder of advertising agency Supper Co., Springfield, Missouri.
Unlike conventional search engines, AI summaries often provide fewer direct links to brand websites, significantly reducing their visibility. Alexander recommends that convenience-store retailers explore an alternative channel to achieve better results with lower spending—social media.
TikTok, Instagram Reels and YouTube Shorts, for example, satisfy that short attention span and personability factor. Speak the language of the platform, said Kyle Drenon, owner and CEO of Supper Co. That means sharing videos that look like they were shot by one person organically and authentically, instead of a brand trying to sell its product. It feels more like a real person giving you a recommendation, he said. Consumers are more likely to trust that type of content.
Gen Z workforce seeks work-life balance
Fair wages, work-life balance and flexible hours are just a few of the top 10 prioritized qualities of hourly employment for the Generation Z workforce. That is according to Donna Hood Crecca, a principal with Chicago-based Technomic, CSP’s sister research arm, and Jason Read, director of store operations for Pennsylvania-based Wawa.
With the Gen Z presence in the labor force growing, they are also the most diverse generation in U.S. history, Crecca said. Gen Z are those born 1993-2007.
“They are a unique group of individuals that we’re looking to engage as consumers, but also as employees,” Crecca said.
In their presentation, Gen Z: Engaging Your Current and Future Workforce, Crecca and Read unpacked characteristics to better understand the Gen Z mindset and what that they bring as an employee.
“They are very in tune with the concept of social responsibility, and they’re also raised in an era of somewhat social unrest,” Crecca said.
Gen Z participates in that unrest whether online or go to a protest to demonstrate their support, she said.
“With that kind of mindset, they bring to employers very high expectations and very high standards around things like social responsibility and fair wages,” Crecca said.
Offer items with high and low appeal
One trend convenience-store operators should be keeping an eye out for today is “high-low.”
“We need something that’s very high end and pair it with something that’s a little bit more middle of the road,” said Ivan Estrada, vice president of business and brand growth at Irresistible Foods Group, Gardena, California, which makes King’s Hawaiian baked goods and other products. “For example, taking a fish sandwich and throwing some caviar on it, because who says no to a caviar bump? How do you elevate something like a Filet-O-Fish, prepared with something that's a little bit more on the high end?”
He said Dubai chocolate “is everywhere right now, and I think that the c-store space specifically has been fascinating.”
A c-store he frequents sells Dubai chocolate, and he said he’s on a mission to “find them everywhere. And some are better than others, but they’re there, and they’re $12, $15.”
He said he asks c-stores how many they sell, and it can be eight or 10 per week.
“If we think about that price point, we can’t race to the bottom,” he said. “If you plug into the right strategy, the right trend, the right execution, there’s things to be had for sure.”
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