Technology is expected to stay front and center in the convenience-store industry as retailers look for new ways to automate tasks in the face of labor shortages and changes in consumer behavior, according to a new report from PDI Technologies Inc. But c-stores also are expected to grow their focus on foodservice.
Covid-19 provided a reason for convenience stores to accelerate their adoption of new technologies, said Vlad Collak, vice president of innovation and web services at PDI Technologies, Alpharetta, Georgia, which released the 2023 Industry Innovators Report Thursday.
“It’s been a huge shift of consumers of any generation into digital. We accelerated the progress, this digital transformation, because we had to. We’re seeing that still play a role,” Collak told CSP Daily News.
The tech industry is rising up to meet this need. “There is a definite increase in the pace of innovation in this industry,” he said. “Even startups are coming into the space.”
Convenience stores also increased their focus on foodservice, now the leading in-store category based on year-over-year growth, the report said. Foodservice sales rose 21% in 2022 from 2021, outpacing the 16% rise in merchandise sales, according to data from NACS cited in the report. Convenience stores upped the number of fresh prepared food items to better compete with quick-service restaurants (QSRs), some of which closed for dining or reduced their hours during the pandemic.
Automation Efforts
Staffing and training challenges continue to frustrate many retailers, especially those who haven’t automated their inventory management, pricing and foodservice operations, the report suggested. With an average annual nonmanager turnover rate of 122%, according to NACS, more convenience stores are exploring automating back-office tasks, hiring gig workers, and relying on technology for mobile ordering and self-checkouts, the report said.
“The complexity of the c-store environment is completely lost on consumers who are already experiencing much more innovation in other retail and restaurant sectors, and therefore expect the same level of innovation in the convenience space,” according to the 2023 report, which includes feedback from top retailers and petroleum companies gathered at the 2022 PDI Industry Innovators Summit held in the fourth quarter.
The complexity of convenience stores, along with the smaller store footprint, can make it more expensive to keep up with the latest innovations, Collak said.
“It’s a very complex business. It’s not as simple as restaurants. C-stores not only deal with fresh foods, they deal with merchandise, fuels, tobacco and restricted products. In that environment, it’s harder to innovate,” Collak said. “It’s highly complex. What that actually does is slow down innovation.”
Seeking Solutions
To address the issues, c-store retailers seek a data strategy with “a single source of truth” across IT systems, an improved customer experience as determined from data insights, improved operational metrics, simpler IT with less complexity and more innovation, the report said.
COVID’s impact led to greater adoption of digital shopping and promotional buying. About 80% of consumers now want more personalized offers, while just 23% say retailers excel in this area, the report said. The hot topic in personalization is artificial intelligence (AI), Collak said. “It’s real, and with data being in the cloud and being organized a certain way, we can train machine algorithms to do better predicting and insights, and make it easier to understand what’s happening inside of a business,” he said.
Alternative Fuels
What surprised some, Collak said, was the growing number of environmentally conscious consumers, with two-thirds willing to pay more for fuel when emissions are offset and 71% seeking development of alternative energies, such as wind and solar, instead of oil, coal and natural gas, according to Pew Research. New government incentives for electric vehicles also are bound to bring new competition to convenience stores.
“As this industry is thinking about energy transformation, that’s a big unknown,” Collak said. The uncertainty has prompted many to look for other growth areas. “They’re looking at margins for fresh foods. Consumers are responding,” Collak said.
As an alternative to restaurants, consumers are saying, “I can actually go to my c-store, it’s good, clean and has amazing food. I can still buy a six pack of Coke on the way out,” he said. “It’s an opportunity for c-stores. A lot of retailers, many we talk to, are doubling down on foodservice.”
PDI Technologies began as Professional Datasolutions Inc. in 1983 and was serving over 10,000 convenience retail sites within 15 years, it said. It now serves over 200,000 sites in more than 50 countries. The company offers enterprise resource planning software, global cloud, software-as-a-service mobility, automation capabilities, loyalty and coalition marketing, fuel pricing software, data and insight solutions and other technologies for the convenience retail industry. It is also the parent of fuel price app platform GasBuddy.