How C-Stores Can Thrive Amid Delivery Boom, Disruption

ORLANDO, Fla. —At this year’s Convenience Retailing University, Donna Hood Crecca of Technomic offered retailers some hope, with a slight asterisk.

Crecca, principal with the Chicago-based data firm, said that the industry is right-sizing and responding to disruption with more appealing store environments and amenities.

“Retail isn’t dying,” Crecca said during the event, which ran Feb. 25-28 in Orlando, Fla. “Irrelevant retail is dying.”

Here’s how convenience stores can maintain relevance in today’s revolutionary retail environment.

Despite competition from all angles, convenience stores are still winning when it comes to speed. The top five factors that consumers prioritize when they think of an overall convenient experience are in-store attributes, Crecca said, citing data from CSP and Technomic’s Winning the War for Convenience Report. Compared to drugstores and dollar stores, 6 out of 10 consumers say convenience stores are much or somewhat better at speedy transactions, she said.

However, when technology is thrown in the mix, convenience stores start looking a bit less convenient. The majority of c-store consumers use smartphones, and one-fifth of c-store consumers are engaged in e-commerce, she said. “What’s more convenient than click, click, purchase, and then it just shows up on their doorstep?” she said.

To compete with mounting pressure from e-commerce and delivery services, Crecca proposed that the new definition of convenience was speed, ease and access.

Despite 15 years of record-breaking in-store sales, getting people in stores can be more challenging. Technomic is actually seeing an erosion in frequency of in-store visits, she said.

A few decades ago, convenience stores were the ones introducing disruptive technologies. In 1986, Mobil introduced pay at the pump in the U.S., and in 1995, Sheetz was the first American retailer to introduce a touchscreen ordering kiosk.

Crecca says the proliferation of this technology in the limited-service restaurant channel raises some questions. “Are we being proactive on the issue of speed, ease and access?” she said. “Are quick-service restaurants playing catch-up, or are we being left behind?”

Leaning into frictionless offerings could help c-stores compete in the crowded convenience market. About 40% of consumers say the availability of frictionless payment would increase their likelihood of visiting a location, and 5% of operators plan to implement frictionless payment, she said.

Even if c-stores do invest in frictionless offerings and delivery, Crecca warned operators not to get lost in the technology. “Get beyond tech-centric thinking, and understand consumers are the driving force behind this trend,” she said. "To succeed with delivery, it is imperative to take a customer-first approach.” In Amazon’s platforms, the consumer always comes first, she said.  

By 2021, Amazon plans to open 3,000 Amazon Go locations. Crecca says the format will change consumers’ expectations of what happens in other retail formats, including convenience. About half of consumers have already visited app-based, cashless concepts, she said.

Some of the top reasons that consumers are resistant to Amazon Go’s model could disintegrate over time. For instance, the top reason consumers have not used frictionless formats is that they don’t find the service appealing, which could be reframed with more education. Also, 21% of consumers who haven’t used frictionless checkout services are concerned about security, and 17% say they are simply not near a convenient location, according to Technomic data.

C-stores should not neglect the next generation of parents. By 2026, 80% of millennials will be parents, according to Technomic. Consistently, parents are more likely to source food and beverages from delivery services on a regular basis, Crecca said.

However, there’s another demographic who’s sweet on delivery. “Boomers overindex on current or potential delivery of food, beverage and alcohol from convenience stores,” she said. “Can we increase engagement with older consumers?”  

Whether c-stores decide to invest in delivery or in-store amenities, operators need to capture consumers with their brand story. The top reason that consumers don’t take advantage of delivery services from this channel is that c-stores aren’t on their radar, Crecca said. Retailers need to be in customers' faces about how stores can satisfy them with in-store and tech amenities, she said. 

The growth of third-party delivery services cannot be overlooked, Crecca said. “They are the key driving the disruption of the restaurant industry,” she said. According to Technomic estimates, the top five third-party delivery services raked in a collective $10 billion in sales in the past year.

In 2016, DoorDash was in 17 U.S. cities, and in two years, the service ballooned to 1,600 cities.

Although consumers use delivery from mass merchants, grocery stores and warehouse clubs more often than from convenience stores, c-stores have the most frequent rates of patronage than any other channel. About 91% of consumers who order third-party delivery from convenience stores do so once a month or more often, tied with drugstores.

“Do the disruptive trends put us on the defensive, or do they also inspire us?” she said.