LAS VEGAS -- Convenience stores face growing pressure to evolve amid the ramped-up expectations of global consumers, Joseph Bona, president of branded environments at brand agency and retail design consultancy CBX, and Dan Munford, managing director of U.K.-based convenience store and gas station strategy specialist Insight, said in a presentation at the 2014 NACS Show.
"The phenomenon of channel-blurring has led to a proliferation of competitors from outside the traditional c-store sector," Bona said. "Whether you're talking about c-stores, QSR and fast-food chains or pharmacies and grocery stores, all of these retail categories are chasing the same consumers. C-stores must raise their game."
In Europe and the United States, a growing number of convenience store chains now aim to accomplish this by offering dramatically improved foodservice offerings, often in sumptuous settings compared to c-stores of the past, Munford said. According to a September 2014 report by Nielson, fresh foods will account for up to 50% of category sales in Europe's next-generation c-stores, he noted.
Meanwhile, U.S.-based chains such as Wawa, Sheetz and Rutter's are developing increasingly sophisticated store designs centered on higher-quality food, Bona said.
"These chains understand that time-pressed consumers crave healthier and better offerings in both the foodservice and grocery areas," he said. Indeed, in one Technomic survey, a sizeable majority--64%--said eating healthy was important. And earlier this year, two-fifths of consumers told the research firm they would visit convenience stores for prepared foods more often if freshness and quality were improved, Bona noted.
The trick, however, is not just to offer higher-quality food, but also to elevate the overall customer experience.
"Coffee shops in the U.K., for example, are booming, not because consumers are drinking more coffee, but because they fill a 'social venue' gap in society--one that used to be met by pubs," Bona said. "Today's c-stores have the opportunity to do the same thing."
Bona and Munford said a central issue facing a convenience store company is whether to develop its own foodservice brands or to engage in brand partnerships.
"In Europe, two of the most interesting partnership models to date are the Euro Garages 'convenience malls' and the 'brand implant' model being developed by Tesco," Munford related. "The Euro Garages are essentially a branded partner offer. Picture a hip-looking, corrugated building alongside the road, with the likes of Starbucks Coffee or Subway inside."
Euro Garages has already rolled out hundreds of these locations, Munford said. For its part, Tesco has partnered with foodservice brands such as Harris & Hoole, Giraffe Café, Euphorium and Fred's to good effect.
"This use of the 'friendly culture' of popular partner brands was a savvy move that is proving popular with consumers," he said.
Likewise, European convenience retailer SPAR has partnered with independent U.K. retailer Eat17 to create a retail destination that combines convenience store, restaurant and grocery.
Bona summed up the takeaway from these trends. "In the old days, people went to c-stores simply because they were easy to shop," he said. "Today, they're looking for something more. They want a pleasant environment, high-quality food, convenient locations, and, yes, good deals. The challenge moving forward is to exceed these rising expectations on all fronts."
CBX, based in New York, is a brand agency specializing in corporate identity, consumer branding and retail. Its client base includes Dr. Pepper Snapple Group, General Mills, Kimberly-Clark, Scotts Miracle-Gro, A&P, Pathmark, Saks Fifth Avenue, Lord & Taylor, Shinsagae, Radio Shack, Walgreens, Wawa and PetroChina.
Insight is a U.K.-based global convenience and petroleum retail strategy specialist. It specializes in best-practice benchmarking and advises leading convenience store operators on retail strategy at CEO, board and senior director level in many markets globally.
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