When we were growing up, my brother, Howard, and I shared an upstairs bedroom. At night, we watched TV. Ours was a modest black-and-white box, with dials to turn. We had VHF and UHF, with fewer than 10 viewable stations.
Those of you born before 1980 may remember having to get up from your seat, or bed, to switch channels.
My brother and I had an implicit agreement that we would alternate getting out of bed to turn the dial. Of course, because he was four years older than me, “alternate” meant I would take turns with myself while he directed me to the program he wanted to watch.
In 1980-1981, cable came to our community. In short order, we had a color TV and a remote control. Convenience.
In no more than a few years, the industry will view 2018 as the year we started transitioning from dial to remote, black-and-white to color, UHF to cable.
Put simply: For a new wave of shoppers, today’s convenience store is no longer convenient.
I recently met with about 20 industry leaders to talk about the future, and a few days later I spoke privately with one of the top executives in our channel.
Some of the executives described themselves half-jokingly as dinosaurs and doubted the urgency for change. They say the industry must up its retail game, execute better and give reason for consumers to go into a store. In short, it’s about creating a desirable destination where people go to shop and, with greater frequency, to sit and socialize.
There is another view that is taking storm: that the box remains the hub, but not necessarily the hubbub. Some companies are paying serious attention to third-party delivery for not only foodservice, but also for in-store merchandise. They are looking at the smartphone as the primary source for mobile ordering, home deliveries, loyalty programs and customized promotions. They’re looking at the store not necessarily as the destination but as a point of connectivity.
As one executive testing third-party delivery told me, “We’re seeing market basket for home deliveries being double and sometimes triple what we see inside (the store).”
He echoed the concerns of delivery critics that service fees are excessive, but he believes the costs will ultimately settle at around 15%-18%, as opposed to the current rates of 20%-30%.
More important, he and others assert, is the industry’s philosophy.
Many of the industry’s older chains started out as dairies, selling milk, eggs and the like. They evolved, growing into little markets, and then they evolved again, ushering in the fuel island. And over the past 20 years, many have introduced foodservice, from franchising quick-service restaurant brands to developing proprietary programs. And most recently, many retailers have embraced larger footprints with seating and free Wi-Fi.
Could the c-store of tomorrow be a hybrid, one that continues to welcome patrons to the store but also caters to customers who choose not to leave their home or office?
It is easy to say yes to technology and change, but it’s harder to adapt culturally and operationally. It means shifting priorities and personnel. It means building a strategy around a new definition of convenience—one that not only acknowledges but actually embraces a certain anonymity, a realization that retailers will service customers who may never step into the store yet purchases its products regularly and with loyalty.
It means replotting the store to cater to pickups, self-checkout and larger prep areas for digital orders of meals and merchandise.
“We could soon see the greatest change in our business since the days when 7-Eleven went from being an ice house to selling milk, bread and eggs,” one executive said. “We have to remember it is not we who define convenience, but the customer. And if the customer is telling us they want us to deliver to their home, we’re going to have to figure out how to do that if we want to stay convenient.”
Mitch Morrison is vice president of retailer relations. Reach him at email@example.com.
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