Prediction: The year 2016 will deliver some small victories, a few implosions, many “meh” moments and one huge, business-changing success.
For convenience operators, guessing what will be big in the next 12 months is a luxury. We are a live-in-the-moment, live-by-the-moment industry, thanks to our 24-hours-a-day, seven-days-a-week rhythm, 1-million-customers-perday traffic and blink-and-you’ll-miss-it shopping trips.
With your countless disruptions and interruptions in mind, the editors of CSP magazine have drafted your cheat sheet for 2016.
Click here to read what convenience-store industry gurus anticipate in 2016.
Retail is a moving target, and coming up with 20 ideas for ’16 was no small feat. So beyond sharing items that have kept us furiously writing in the areas of foodservice, merchandise, technology and consumer insights, we also picked the brains of some of the industry’s savviest gurus. The result is part aspirational, part practical and 100% doable.
Five reasons to read on:
- You will learn not only about the next cupcake craze, but also why a sandwich topped with an appetizer could wind up on your menu.
- There are a surprising variety of body parts you can scan to make a secure payment.
- We have the space-saving hack for putting in a drive-thru.
- Marijuana makes an appearance—or two.
- One word: millennials!
Table of Contents
20 Ideas from Our Editors
5 More Ideas from Industry Gurus
5 Ideas on the Fringe
Technology
1. Uberization (noun): to use smartphone technology, à la ride-sharing service Uber, to leapfrog the middleman, minimize overhead and deliver products—food, fuel, services—direct to the consumer
One area where this technological revolution is making the biggest bang is online groceries.
“If it is growing and you’re not part of it, you will be at a disadvantage,” warns Bill Bishop, chief architect for Brick Meets Click, Barrington, Ill.
Although traditional grocers are the most vulnerable, c-stores have a genuine opportunity. Bishop points to Europe, where the expansion of online shopping has triggered the development of a network of pickup points at brick-and-mortar retailers.
“People are going to be looking at building out a network of grocery points. The c-store network is a very logical place to do that,” says Bishop.
2. Mobile payment keeps on moving … and moving … and moving ...
Talk about room to grow: A Deloitte Touche Tohmatsu Ltd. study reports only 5% of phones equipped with near-fıeld communications (NFC) will make a contactless payment at least once per month inside a store by the end of 2015. Of course, this fıgure is up from 0.5% for 2014, so the growth curve is considerable.
Suggestion: Keep your eye on trailblazers in other channels—including Starbucks and Taco Bell for quick-service restaurants, and Walgreens among drug stores—to inspire your own paths forward.
3. Buy with an eye, face or finger
Biometric identifıcation has had its fıts and stumbles, but 2016 could be the breakout year for this technology, which promises to elevate payment security, loyalty and marketing. Consider Apple Pay’s expansion, MasterCard’s upcoming biometrics-based ID option and Samsung’s pending plans for fıngerprint payment. Whether it’s by fıngerprint, facial scanning or iris authentication, biometrics payment technology is about to get physical.
4. Take a digital turn in the drive-thru
While retailers with the space may consider adding a drive-thru, a less costly alternative could be what Bishop refers to as a “digital drive-thru.” Already popular with restaurants such as Chili’s and Olive Garden, and further propelled by the rise of digital ordering, this method allows customers to order ahead of time and pull up to a designated parking space, where an employee runs the order out to them. “You’re going to see much more of that kind of thing, instead of a literal drive-thru,” says Bishop.
CONTINUED: Retail
Retail
5. Drive on through to the other side of delivering convenience
After fits and starts, the c-store industry is getting traction on the drive-thru concept. Parker’s, Express Convenience Centers and now Wawa are among the latest entering the drive-thru lane, following the growth and promise of foodservice.
“The biggest roadblock was between the ears,” says Mike Lawshe, president and CEO of retail design and consulting firm Paragon Solutions, Ft. Worth, Texas. “You have to rethink how the store is designed to make it more customer- and employee-friendly.” C-stores that sell fuel have been pushing 40% of sales through the drive-thru, while those without gas can drive up to 70% of sales, says Lawshe.
Some newcomers have reinvented the drive-thru and c-store in one fell swoop. Customers of Cube, a Norman, Okla.-based “neighborhood concierge,” call to order everything from French toast breakfast sandwiches to 5-hour Energy shots and beer, then pick it up at the drive-thru.
“Retailers are doing research to find out more what customers want, making the shift, and it’s making sense,” says Lawshe. “Once you get over the hurdle, it’s rethinking everything.”
6. Belly up to the bar inside your fine local retail establishment
Starbucks, Target and even Wawa are following grocery retailers such as Whole Foods, Wegmans and Mariano’s into the world of in-store alcohol service, serving up beer, wine and more for customers to sip while they shop. What’s the appeal of a liquor license? For most of these retailers, it’s the embrace of the “third place” as they try to extend customers’ visits and make their store a genuine social hub.
7. Please have a seat—or two, or three!
As the urbanization trend continues and foodservice menus grow, more retailers are trying to make their establishments an experiential “third place” where customers can hang out, socialize and take root (see No. 6). For chains such as Sheetz, RaceTrac Petroleum, Mapco Express and NOCO Energy, expanded seating both inside and out represents the prioritization of foodservice and customer loyalty, transforming our businesses into convenience QSRs.
8. It’s time to vend a little—or a lot
Whether serving up cupcakes, barista-style coffee, pizza or DVDs, vending machines are providing a way to sell anything, anytime, anywhere. More recently, this has included fresh-focused foods. Case in point: Farmer’s Fridge, a vending machine that sells gourmet salads, oatmeal, yogurt and snacks featuring local and organic ingredients, all packaged in a recyclable, reusable jar. More than two dozen of the machines are scattered throughout downtown Chicago, half of which are in 7-Elevens.
CONTINUED: Merchandise
Merchandise
9. Reason for the season: ho-ho-ho, trick or treat, etc.
It seems like it gets a little earlier each year: Christmas decorations in October, Halloween stores popping up mid-summer, Fourth of July on the Fourth of June. If it seems early, that’s because it is. “Retailers should begin planning nine to 12 months in advance of the Halloween season,” says Larry Lupo, vice president of grocery, convenience and drug for Mars Chocolate North America, Hackettstown, N.J. “They should begin setting Halloween items … in early September.”
Why the early start to merchandising? “The channel sells a large percentage of non-seasonally wrapped chocolate, yet it sells only 5% of seasonally wrapped chocolate. There’s a huge opportunity for growth,” Lupo says. Being proactive will help you compete against seasonal stalwarts such as drug chains and mass merchandisers.
And that opportunity extends beyond traditional holidays and reaches across c-store categories. The possibilities are endless. So endless, in fact, that retail in general is hyping new seasonal occasions. From the Super Bowl to s’mores season, make 2016 your holiday year. Just remember, you can’t put pumpkin-spice into your entire product mix, but a little bit never hurt anyone.
10. Oh, I believe in yesterday
Everything that’s old is new again—literally. Surge Cola, Clearly Canadian, New York Original Seltzer, Suzy Q’s, Hydrox Cookies … we could go on. Consumers spoke, manufacturers listened and several long-discontinued products are making a comeback thanks to the power of social media and very vocal brand fans, some of whom even launched online Kickstarter campaigns to bring back their favorite products. Anything that inspires that sort of passion should be worth space on your shelf.
11. This is way more than just flavor country
The use of vaporizers as mere nicotine delivery systems could become passé. The buzz among retailers and suppliers at the Winsight Total Nicotine Conference earlier this year involved the potential of the vaporizer as a vehicle for other substances, not just nicotine (or even marijuana). Some manufacturers are thinking more broadly to a day when vaporizers deliver caffeine, vitamins and maybe even prescription medication. What’s the potential? The more products there are to inhale, the more customers will look for the right vaporizer.
12. You know it’s true: Everything I do, I do it for you
Consumers check their phones every three minutes. To grab those busy eyeballs, some genius at The Coca-Cola Co. developed its Share a Coke campaign. After all, you have to look up to fınd your name—then you can look back at your phone when you’re posting about it on social media.
And now other brands are jumping on board. Mars released a new personalized package design in September, each highlighting one of the 26 symptoms of hunger including loopy, dramatic and feisty. So if you want that extra-dramatic millennial named Jacob to buy a Snickers bar and a Coke next year (and then tell all his friends about it), take advantage of these campaigns and heighten that experience through expanded marketing and merchandising efforts.
CONTINUED: Foodservice
Foodservice
13. You want a special delivery? I’ll give you a special delivery
We’ve all been there. It was a long day at work. You’re too tired to cook and you’re already in your pajamas. You’re craving a sleeve of Oreo cookies and that taquito o the roller grill down at the 7-Eleven—but it’s raining.
You’re in luck! 7-Eleven has teamed with urban delivery service Postmates in San Francisco and Austin, Texas, to bring CPG and foodservice items to your door. The company expects to expand the service to other cities with many 7-Eleven stores, including Chicago and Washington, D.C.
“7-Eleven’s founder, Joe C. Thompson Jr., used to say 7-Eleven’s mission was to ‘give customers what they want, when and where they want it,’ ” Raja Doddala, 7-Eleven’s vice president of innovation and omnichannel strategy, said recently. “Through the modern-day technology that Postmates provides, we can fulfill that promise in a way we haven’t done before.”
14. Rutter’s Farm Stores has a way with (fried) b-o-l-o-g-n-a
Rutter’s Farm Stores added two local specialties, whoopie pies and fried sweet bologna, to its diverse menu. A small Louisiana chain called Go-Bears has crawfısh étouffee on its menu. And one Yelp user relies on his local Texas RaceTrac for his southern fı x of regular and Cajun-spiced peanuts: “If you haven’t ever had one, grab one and try it. They really are delicious.” These hyperlocal specialties will keep the regulars happy and draw those out-of-towners looking for local flavors, too.
15. Flavors to try (or at least define) in 2016
Matcha, coconut, togorashi, ’ndjua, ancho chile, guajillo chile, New Mexico chile, habanero, curry and miso. Here are some other dishes and ingredients to play with on your menus: shawarma, farro, deviled eggs, horchata and cookies. (Yes, cookies. They’ve ousted cupcakes as the next big fashionable sweet.)
16. Take two, they’re small
This should be your new mantra as you work to establish a winning menu. Customers are increasingly replacing traditional meals with combinations of appetizers, small plates and side dishes—so-called “left-of-menu” fare, or the mini-meal regimen. It allows the picky consumer to customize their meals—and you to increase check sizes. The trend has seen a staggering 80% increase in small plates on full-service restaurant menus since 2013, according to Chicago-based Technomic Inc.
CONTINUED: Consumer
Consumer
17. The millennial: You are what you tweet
Not new for 2016, you say? True—we’ve been talking about millennials for a while. What is new, however, is the speed with which their influence is affecting our industry.
This year The Coca-Cola Co. tried to nail down exactly what’s going on. Their “Knowledge & Insights iSHOP Tracking Study” details key insights and takeaways to help retailers fulfill millennial shopping desires. In aggregate, millennials have a $281 average monthly spending budget, and they account for $200 billion in annual grocery spending. About 25% more beverages land in their shopping baskets vs. that of other demographic groups, and they make 20 billion grocery trips a year across all channels. They’re fast. One out of every three trips lasts five minutes or less. They are also impulsive—74% of trips include no preparation, and 63% are more likely to buy a meal or snack to eat immediately. Thirty-five percent of their trips include a nonalcohol ready-to-drink beverage.
They are also plugged in. More than half of the U.S. users of Twitter are millennials.
What they want to buy from you: Craft beer, sodas with their names printed on the label and any grab-and-go item that is sriracha-based.
18. The boomer: Talking about my generation
Let’s face it: This group has more cash in their wallets, and they have a more discerning, educated taste. And they make up nearly one-fourth of the country’s population.
As for their palate? Speaking at Winsight's FARE 2015 conference, Ira Blumenthal, president of Co-Opportunities Inc., told retailers to consider smaller portions and more sophisticated takeout options. Boomers frequently take their meals home in doggie bags.
19. Multicultural consumers
They make up 45% of the millennial population in the United States, with nearly half being Hispanics. Healthy categories are growing faster than indulgent across all consumer demographics, but not as defınitively in the Hispanic and Asian-American markets. The opportunity is there to attract these consumers with a balanced mix of healthy and indulgent products. What they want from you: “It’s not only about marketing. It’s about how the company thinks,” says Juan Carlos Dávila, senior vice president of multicultural growth and strategy for Nielsen. “Does your organization look like your consumer?”
20. Women: What does gender equality mean for your stores?
With men making up 55% of c-store food and beverage share, one would surmise that women, at 45%, should be pretty important to you.
“Women have higher expectations when it comes to the store. You might be asking yourself, ‘If I go out of my way to appeal to women, am I going to tick off and alienate men?’ The answer is no. They want the same things,” said Michelle DeLamielleure, global consumer insights senior manager for General Mills, last year. What they might be buying: treats. Women are more moved to purchase a dessert or sweet treat at a convenience store.
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