NEW YORK — Data and insights firm Nielsen is bullish about the future of convenience retail.
A recent report outlines the theory that convenience stores will grow faster than all other offline channels in the next five years despite a lag in industry growth in 2019. Author Jeff Williams, senior vice president of retail and U.S. industry relations for Nielsen, found that even with an increase in competition from other small-format stores, including drugstores and dollar stores, expedient service coupled with advancements in technology will propel the industry forward.
Click through for the seven factors the team at New York-based Nielsen believes will shape the future of the convenience industry as we know it …
C-stores become more automated
In China and Korea, consumers are already experiencing a new level of frictionless payments because of RFID, scanner, biometric and sound wave technologies. In the United States, Amazon Go has helped spur a trend toward frictionless checkout in brick-and-mortar stores.
The United States can expect upgraded technology to overhaul a number of legacy systems, Williams said. Tech-enabled automation will fuel customization efforts. This shift is already underway in China, where automated baristas in stores allow consumers to order and pay through WeChat to choose their coffee type, exact temperature and taste profile.
Tech-enabled delivery systems will continue to roll out, Williams said. And as connected cars become a reality, Nielsen envisions technology fueling the ability to order in-store items from the pump for delivery to the car.
Foodservice image upgrade
Nielsen has found that quality and variety of prepared foods are two of the top attributes that drive brand equity. As such, c-store retailers are working to expand and optimize their menus, better cater to daypart needs and meet the need for fast, fresh food. As the fight for “share of stomach” continues, Williams foresees a move toward upgrading the overall image of foodservice at convenience as quality and selection of offerings continues to improve.
CBD and foodservice training
Williams predicts that the rise of fresh foodservice offerings and the federal legalization and widespread availability of nonedible cannabidiol (CBD) products will lead to an increased focus on employee training in these areas. This increased training will ensure employees are answering questions about CBD products with accuracy and that they are reinforcing proper food safety protocols and standards, he said.
The rise of private label within the United States has disrupted the traditional grocery retail landscape, Williams said. Only about 6% of units sold in c-stores are private label, vs. 16% to 23% in other channels. Williams identified c-stores as a prime target for UPC private-label disruption.
Creative experiential retail
Retailers are increasingly adding seating areas and creating social gathering spaces, Williams said. Within states where it is legal, Nielsen sees c-stores putting in video gaming terminals. Also, the emergence of electric vehicles (EVs) and the rise of EV charging stations reinforces this need. To compete with charging stations at malls and big-box retailers, convenience locations will need to provide consumers with an incentive to charge there. Williams predicts c-store retailers will increasingly focus on events and activities within the store to make their locations destinations for consumers.
Personalization and customization
Williams predicts c-store retailers that are able to get the right product to consumers at the right time will win. This means anticipating consumer needs and understanding and catering to daypart needs at an even deeper level. Also, c-store loyalty programs will mature, Williams said. Advanced programs will emerge, appealing to the emotional side of the consumer through enjoyable experiences. In the future, transactional incentives such as assortment and price will no longer be enough to maintain consumer attention and loyalty.
Williams said consumers are beginning to adopt a zero-waste mindset. In the coming months and years, he said c-stores will need to address issues linked to waste management, the anti-plastic movement and the rising consumer backlash toward single-use packaging. Retailers that are ahead of the game will look to show consumers that they are doing their part to close the sustainability loop and not contributing to the growing packaging problem.