Convenience Retailers Are Hesitant About AI, Confident in Personalization

The Convenience Technology Vision Group talked how to win customers
Retail Tech
Photograph: Shutterstock

The Convenience Technology Vision Group (CTVG) released its latest Vision Report, which touches on how to win customers with personalization, community engagement, data analytics and taking a proactive and balanced approach with technology.

At the group’s quarterly meeting, members also discussed taking a long-term approach to external forces like declining fuel sales and EV growth, reliance on third-party technology, new features in artificial intelligence (AI), payment and loyalty technologies and changing consumer preferences.

Winning the Fuel Customer

The diminishing demand for traditional products like fuel and tobacco has underscored the need for innovative products and services, according to CTVG. Buc-ee’s was cited as a prime example of a retailer that generates exceptional foot traffic without emphasizing fuel pricing.

Members also acknowledged advancements in fuel pump technology, surpassing current industry standards.

“When I think about the future of the convenience stores, I'm thinking primarily about, ‘what are those technologies? What are those initiatives? What are those business models that are going to be able to drive that fuel to retail conversion?’” said Tim Tang, director of business technologists at Hughes, a telecommunications company. “If we acknowledge...there is fuel demand destruction…tobacco demand destruction as well, then how do we increase that conversion from fuel to retail?”

Reliance on Third-Party Technology

Concerns about data accuracy from location services prompted a broader conversation on effectively harnessing and interpreting data.

Some members highlighted the importance of not blindly trusting AI-driven solutions, emphasizing the need for data vigilance.

Chris Egan, chief information officer at United Dairy Farmers, cautioned the group against having a “false sense of security that if it looks slick and it says AI, it must be right.”

Additionally, challenges such as internet connectivity in remote areas and during disasters gave further credence to the approach of convenience stores being community partners.

Data Analytics, Loyalty and Payments

Competition with adjacent channels like quick service restaurants, data analytics and the need for seamless technology integration led to a discussion on loyalty programs with integrated payment, illustrating the impact of incentivized engagement on consumer loyalty.

The Starbucks loyalty and payment app was referenced as a shining example combining mobile payment with customer-centricity.

“I do like this concept of stored credit because I do think it is a way to build loyalty,” said Nick Peters, vice president of IT for Campbell Oil Co. “It is a chicken or the egg argument. Did Starbucks build their loyalty program because of the store credit approach or did the store credit approach build the Starbucks loyalty? And I'm not trying to be funny about it, but I really do, I don't know which came first because I think that's a question worth asking as a whole on that.”

Lightning Round Update on Generative AI

Retailers share continued curiosity, experimentation and optimism about the potential of AI across various business functions with some actively employing AI solutions and others still considering it.

  • United Dairy Farmers is No. 47 on CSP’s 2023 Top 202 ranking of U.S. convenience-store chains by total number of company-owned retail outlets. Campbell Oil Co. is No. 92. Buc-ee's is No. 153.

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