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War for Convenience: Cross-Channel Battle

Are c-stores losing traction to grocers, mass merchandisers and others?

CHICAGO -- Convenience stores are losing traction because of delivery and tech innovations among grocers and mass retailers. Forty-nine percent of consumers who use grocery delivery say they are visiting c-stores less often because of delivery options offered through grocery stores and supermarkets, the report says. Also, 40% say they are purchasing fewer c-store items because of grocery’s delivery surge—seen in chains such as the Kroger Co., which recently launched home delivery via driverless vehicles in Scottsdale, Ariz.

This decline could be a familiarity issue among consumers, because grocery’s tech innovations are relatively newer, says Donna Hood Crecca, principal of CSP's research sister company Technomic.

“Grocery-store tech amenities are more recent developments, whereas c-store tech amenities such as kiosks and pay at the pump have been around for longer,” she says.

Among the 32% of millennials who use brick-and-mortar delivery services, 61% order from grocery, while only 44% do so from c-stores, according to the report. However, c-store users order more often—80% do so at least once a week—than those who order from other channels. C-stores currently implementing delivery include Wawa, which uses third-party services such as Grubhub and Uber Eats in more than a dozen locations nationwide.

This may result from c-stores leading in impulse occasions—something operators can capitalize on in delivery to combat grocery, the report says. These low-order impulse buys such as bottled drinks and candy can differentiate c-stores from mass retailers, because the latter typically sells the same products in bulk.

“C-stores that focus on quick delivery times have an opportunity to be the go-to for orders involving immediate-need items or to satisfy a craving for a particular food or beverage item, such as a craveable sandwich or specialty coffee,” Crecca says.

“To think we won’t lose business over [tech], though—we’d be fooling ourselves .”

And there’s another opportunity for c-stores. Merely 17% of consumers have used meal kits—something grocery stores such as Kroger have recently added to their repertoire to compete with online meal-kit services such as Blue Apron. If c-stores can channel both meal kits and delivery into one, they may increase their odds of competing against grocery and mass retailers for quick meal solutions, the report says.

This could be challenging for c-store operators, Crecca acknowledges. “Operators looking to break into meal kits must have some level of credibility in foodservice, establish a profitable model, an attractive consumer price and unique offerings [that] consumers will want to replicate at home,” she says.

How have your delivery orders from mass merchandisers (Walmart, Target, etc.) affected your convenience store visits?

 

Robert Byrne, senior manager of consumer insights for Technomic, says meal kits are “absolutely” an opportunity for c-stores, especially for younger demographics who are open to meal kits.

Alan Meyer, CEO of the c-store chain Mach 1 in Teutopolis, Ill., does not believe c-stores will match the e-commerce efforts of grocery and mass retailers, because grocery stores face more external pressures, such as from Amazon, and will elevate their game as much as possible to compete, he says.

“Walmart is coming out with an order online shopping list that they will bring straight to your car,” he says. “Every major big-box chain is going to have that—and c-stores won’t match.”

He also believes that the technology of grocery and mass retailers is more of a threat to urban c-stores than rural ones such as Mach 1, which has an average population per store location of 15,000. And although newer c-store operators will keep up, many older, traditional store owners may hesitate to invest the dollars in tech amenities, he says.

“Walmart’s tech is a real threat to our industry, but I don’t think it can completely consume us,” he says. “The majority of our people still want to run in, fill up their tank, grab a hot dog and go. But to think we won’t lose business over [tech], though—we’d be fooling ourselves.”

Next: Creating an Experience

Click here to read the complete War for Convenience report.

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