FAIRFAX, Va. — The 2020 pandemic rapidly accelerated digital transformation in the petroleum and convenience store space, and stores who want to remain lucrative in 2021 and beyond must respond to Americans’ changing driving, shopping and eating habits.
Despite Americans driving far less last year, in a recent survey of U.S. c-store owners conducted by NACS Research, 58% of owners said that in-store sales through the first nine months of 2020 were higher than the same period a year ago. Meanwhile, 21% of U.S. c-stores have added contactless payment, 14% are focusing more on drive-thru experiences, including Wawa, and 14% have added delivery.
Some stores are adapting to the new environment by upscaling their food offerings, and I predict we will see increasing attention to fresh-food and gourmet options in the coming months and years, following the Wawa model, which reached $10 billion by 2018. Casey’s convenience stores took their beloved pizza, which was even reviewed by Food & Wine magazine, and launched curbside pickup in 2,200 stores during the pandemic. They also introduced no-contact food delivery.
In the petroleum/c-store of the future, we will see an evolution of the customer experience to more full-service, amenity-rich destinations, perhaps similar to today’s more upscale truckstops. There will be a greater emphasis on the shopping and eating aspects of the business and less on the gasoline, especially as hybrid and electric cars continue their growth.
Wawa has already begun adding electric vehicle chargers to select locations in anticipation of this evolution. It’s not hard to imagine most gasoline stations transforming into charging stations in just a few years, and the five minutes it takes to fill a gas tank and grab a cup of coffee will become the 30 minutes or more it takes to charge a battery. This means stores will have to offer more shopping, eating and entertainment experiences that can attract customers’ attention and spending for longer periods.
C-stores will also rely much more on customer-centric data, focusing more on enhancing the offerings that are driving the majority of their profits. Casey's has invested in a digital foundation with integration at all points of sale, from digital commerce to phone orders and mobile apps. Mobile payments will become the standard, and loyalty programs integrated with payment systems will entice greater customer spend and enable personalized recommendations—offering a discount on your favorite soda, for example, when you add a hot dog to your virtual cart.
Digitalization can also help draw in Gen Z with gamification, adding game-style elements to the retail experience to keep them engaged and loyal. As digital natives, Gen Z is adept at navigating digital rewards and games, and it’s likely we’ll see a digitized version of the McDonald’s Monopoly strategy becoming pervasive throughout convenience store chains as well.
Digital transformation will also include more targeted ads at the pumps and in-store kiosks. It will also include subscription models including car wash subscriptions, LCD signage at the pumps, linking in-store products to nutrition information on your phone and various upsell and cross-sell promotions.
The key to successfully implementing these new digital products is to minimize time to value. The quicker you get a digital product to market, the quicker you can evaluate the end-user experience, be competitive in the industry and adapt the product to changing customer demands. Petroleum and c-stores that focus on the ways in which digitalization can meet evolving transportation, service and retail expectations will accelerate their growth in 2021.
Casey Craig is senior vice president of retail for Fairfax, Va.-based 3Pillar Global.