Customers who hate to wait in line at the register are spurring convenience retailers to install self-checkouts and offer pay-by-phone apps, but the result might be lower in-store sales.
The less time consumers spend looking at merchandise at the front of the store, the less likely they are to purchase an impulse item, according to new research from VideoMining, a College Station, Pennsylvania-based insights and behavior analytics firm that works with retailers and consumer-packaged-goods brands.
Chief Executive Officer Rajeev Sharma told CSP convenience stores will have to think of smart ways to put impulse items in front of self-checkout customers. For example, they could stock merchandise on a “queue wall” next to self-checkout registers. “It is more about the co-location of the merchandising adjacent to the self-checkout to entice shoppers to notice and engage with the impulse items,” he said.
In-Store Purchases
VideoMining’s research shows fewer consumers are noticing front-of-store merchandise than a few years ago, but those who do are more likely to purchase an item than did in 2020. In 2022, 49% of shoppers passing by front-of-store merchandise glanced at the items, compared with 41% in 2020. Of those who looked at the items, one-third purchased merchandise in 2022, up from 21% in 2020, according to the company, which was started with U.S. Defense Advanced Research Projects Administration (DARPA) funds used to develop computer-vision applications for surveillance. Sharma said over 1,000 convenience stores throughout the nation were part of the research.
“The behavioral insights are collected using our proprietary AI technology that converts the video (from ceiling mounted cameras) into anonymous behavior data. This data is then combined with transaction data (that we get from the retailers) to provide the insights like the one in the Front End study,” Sharma said in an email.
Wait times at registers declined in 2022 as retailers installed more cash registers and self-checkouts and as their staffing levels improved for the amount of in-store traffic they received, Sharma said. The percentage of transactions at self-checkouts at all convenience stores in VideoMining’s panel—including those stores without self-checkout—increased to 3.3% in 2022 from 1.2% in 2019, he said. But at stores with self-checkout, 15% of transactions occurred at the self-checkout machines in 2022, up from 8% in 2019, according to the research.
Besides self-checkouts, other factors also are involved, Sharma said. “Also, more people are paying for gas at the pump rather than paying for gas inside,” he said.
Pay-by-Phone Apps
Use of pay-by-phone apps, such as Apple Pay and Google Pay, are growing as fuel retailers and convenience stores convert their existing loyalty programs to app- and web-based programs with greater capabilities. Nouria Energy in Worcester, Massachusetts, worked with St. Louis-based Rovertown on a June 1 app relaunch that allows users to pay for purchases with Apple Pay or Google Pay. “Generally speaking, it’s sort of this push to rely less on having employees scanning barcodes all day,” said Frank Beard, head of marketing at Rovertown, a retail-tech firm specializing in app integrations for convenience stores. Retailers also are striving to build a customer experience around self-service, he said. But what form it takes will vary from one store to the next.
Huck’s convenience store uses Skip, an app that allows consumers to scan items with their phones as they shop and complete the purchase on the app with a linked credit or debit card, said Randy Adams, category manager and buyer at Carmi, Illinois-based Huck’s convenience stores.
- Martin & Bayley Inc./Huck’s is No. 61 On CSP’s 2023 Top 202 ranking of c-stores by store count.
“We have stores that are running a huge percentage of sales through mobile checkouts,” Adams told CSP Daily News. “It’s all over the board in terms of usage, but in some areas, it’s getting more and more popular.”
A store near a high school has a high rate of teen customers using Skip, he said. “Those high school students are very used to mobile checkouts and credit cards,” he said.
Gulf Oil, which has a dealer network of 1,400 branded stations in 36 states and Puerto Rico, said many young-adult Gulf Pay members use Google Pay or Apple Pay to purchase fuel. “We’re really trying to get in front of those consumers before they choose to connect their digital wallet to another brand,” said Nikki Fales, vice president of marketing and payment at Gulf Oil, based in Wellesley, Massachusetts. “It’s unlikely a user changes that payment method,” and that helps Gulf Pay’s retention, Fales said. The company is working with Stuzo, a Philadelphia-based retail tech firm, to increase its loyalty membership numbers.
Summer of Free Coffee
To encourage consumers to download its new app, Nouria Energy offered special promotions for rewards members, including one free cup of coffee or a free MyNouria spring water per day throughout the summer. The app also offers e-commerce ordering for delivery or pickup.
- Nouria Energy Corp. is No. 48 on CSP’s 2023 Top 202 ranking of c-stores by store count.
“As a company experiencing rapid growth, we positioned ourselves for a digital transformation to enhance our guests shopping experience,” said Cheryl Winsor, director of marketing and communication at Nouria, a family owned and operated company with about 170 convenience-store locations, 55 Golden Nozzle car washes, a Whately Diner and a wholesale business.
“The goal is to drive in-store purchases such as beverages, snacks and fresh-food offerings when they fuel up,” Winsor said.
VideoMining’s research suggests about 70% of in-store sales are from “non-gas trips,” Sharma said. “Whether they use the phone or card to pay at the checkout, that itself does not change their propensity to make an impulse purchase.”
But as they adopt checkout technology, c-stores might have to reposition products to grow in-store sales. “Operators must now find a way to ensure that speed to checkout and increased options for customers does not translate to reduced front-end sales,” VideoMining’s report said.