Most experts agree that convenience stores lag behind other retail channels when it comes to digital engagement and e-commerce. And if more c-stores don’t improve their digital offering in the next five years, they risk lagging behind consumer expectations.
This is not to say c-stores aren’t doing well. Data firm Incisiv calls c-stores “one of the few bright spots in retail” due to the channel’s solid year-over-year growth. It attributes the industry’s success not just to fuel sales, but to grocery, cleaning supplies, household items and foodservice, as well.
That’s according to the recent Convenience Digital Maturity Benchmark study from Incisiv. The New York-based company conducted surveys of c-store operators and customers based on CSP’s Top 202 list of U.S. c-stores by store count to assess the industry’s level of digital maturity. With exclusive access to Incisiv’s results, CSP explored the report and consulted some of the industry’s most forward-looking retailers to get a sense of where c-stores stand digitally and how far they still need to go.
Digital Commerce Leaderboard
The Digital Commerce Leaderboard represents the top c-store chains with mobile apps and online tools with e-commerce functions, including the ability to place orders and make purchases. Some parent brands, such as SpartanNash and Houchens Industries, appear on the list multiple times. SpartanNash supports multiple chains that each appear on this list under the SpartanNash brand, and Houchens Industries supports multiple e-commerce programs through the Crossroads IGA chain.
At first glance, c-stores are behind the digital curve, according to Incisiv’s data. Only 23 banners of CSP’s Top 202 analyzed in Incisiv’s study have an e-commerce application. For the purpose of Incisiv’s study, e-commerce includes any monetary transaction that takes place on a digital platform such as a website or mobile app. Additionally, just over 50% of the banners analyzed have a live mobile application at all. Visit CSPDailyNews.com to see the complete ranking.
However, there are other factors at play that complicate this assessment. Yes, c-stores fall behind other retail verticals when it comes to digital offerings, but that’s partly because technology companies are just now realizing the potential return on investment in c-stores, says Eric Rush, digital marketing and advertising manager for QuickChek, Whitehouse Station, N.J. “In the past I think they focused on grocery stores, QSRs and larger retailers because of basket sizes,” says Rush. “However, the frequency of our customers, the ability to drive impulse purchases and the immediate consumption needs of a convenience shopper has definitely proven to be just as important.”
QuickChek’s digital program, No. 13 on the Digital Commerce Leaderboard, introduced self-checkout in 2009 and mobile ordering in 2016, well before most c-stores offered similar services.
Today, QuickChek Rewards allows customers to order sub sandwiches, salads and beverages ahead of time for in-store or curbside pickup. Rewards include buy-eight-get-one-free on subs, dispensed beverage and king-sized candy bars. QuickChek uses data gathered from the program to create personalized offers for each user.
Percentage of Industry With App Capabilities
The past three years have seen huge digital changes in the c-store landscape. But lockdowns and other precautions driven by the global COVID-19 pandemic have pushed c-stores to innovate more and faster, says Art Sebastian, vice president of digital experiences for Ankeny, Iowa-based Casey’s General Stores, whose Casey’s app tops the Digital Commerce Leaderboard. “Everybody amped up their digital [offering], so you were either in a good spot to amp it up faster or you said, ‘Oh no, I better start.’ And I have friends who are on both sides of that,” says Sebastian.
Sebastian says c-stores have succeeded in creating a convenient experience that allows customers to get in and out of the store quickly. “But that said, in regards to e-commerce, the channel is behind,” he says. Casey’s was already ramping up its digital experience when COVID-19 struck. Within the past year, Casey’s has launched a revamped website and app for online ordering.
While the study says convenience retail is behind the digital curve, it also predicts that retailers will be rolling out more robust digital features soon. Fifty-two percent of c-store retailers surveyed by Incisiv said loyalty and rewards will be key investment areas in the next six to nine months. “I suspect six months from now you and I will have a different conversation on how c-stores really leapfrogged,” says Sebastian.
Examples of App Capabilities
Incisiv’s study shows that new customer expectations are emerging as shoppers become increasingly comfortable with digital channels. It concludes that c-stores are largely unprepared for these evolving expectations because only 25% of the Top 202 c-stores have an online commerce channel.
Only 30% of consumers surveyed by Incisiv said they were satisfied or extremely satisfied with c-store website navigation. Only 37% of consumer respondents were satisfied or extremely satisfied with reward points redemption systems found in c-store loyalty and rewards programs. How can c-stores improve consumers’ assessment of the industry’s efforts? Sebastian says ask them. “I need to ask guests, ‘What do you want? What do you need? What motivates you, and how do we add value to your lives?’ ” he says.
Casey’s based its priorities for its new website and loyalty offering on customer feedback. “We learned really two things: One, they love our pizza, which we already knew, but they wanted to order it digitally, so that was interesting for us. And then the second thing we learned is they wanted us to have a loyalty program,” says Sebastian.
The expectations of Casey’s customers reflect those found in the Incisiv study. Historically, Incisiv found, the core features offered on mobile c-store apps have been loyalty management, store locators and service information. By adding features such as mobile payment, pre-ordering, curbside pickup and other similar options, Incisiv believes chains can position themselves for greater growth going forward.
Fifty-five percent of c-store retailers plan to deploy curbside pickup capabilities to ensure continuous growth, but as of now, only 7% of c-store retailers currently offer curbside pickup capability with online ordering, according to Incisiv’s study.
Similarly, Incisiv found that online ordering is among the top three investment focus areas for 38% of c-store retailers in the next six to nine months. Presently, less than 22% of c-store brands with a mobile app offer online ordering capability.
Such tools require consideration of and buy-in by employees, Sebastian says. “Just like our focus on the customer, I’m putting a little bit of focus on the team member, allowing technology to guide their process so we can operate much more efficiently in the store,” he says. Sebastian calls this “team member enablement.”
“We’re putting together training material, getting out to our stores, helping them understand the new way of working,” says Sebastian, noting that the pandemic has blown up the volume of curbside pickup orders, complicating operations. “How do we prioritize all the work in the store because there are a lot more orders coming in? And … you’ve got to navigate this new emphasis on safety, cleanliness and no-contact on top of everything else.”
Life After Coronavirus
Incisiv’s Digital Maturity Benchmark study asserts that COVID-19 has pushed digital adoption forward for c-stores, and it says convenience retail will need to continue to improve digital technologies to keep up with consumer demands over the next five years.
As important as the digital storefront will be to retailers in the future, c-stores are and always will be rooted in the convenience of their physical locations. Chris Tanco, chief operating officer of Irving, Texas-based 7-Eleven, says that 50% of Americans live within 1 mile of at least one 7-Eleven store, but that’s only a part of its appeal.
“7-Eleven will always have brick-and-mortar stores, but by seamlessly integrating our physical stores with sophisticated, ever-evolving digital platforms, we will be able to continue to provide customers the 21st century convenience they expect,” says Tanco. The 7-Eleven digital platform, which includes two apps, ranked No. 2 on Incisiv’s Digital Commerce Leaderboard.
The 7Rewards loyalty program has more than 38 million members. Members can earn and redeem points, play augmented reality games and more through the app. 7-Eleven is rolling out mobile checkout and piloting a fuel loyalty program to promote contactless payments at the pump. The retailer began testing its 7Now delivery app in 2017 and expanded its capabilities to allow customers to place orders most anywhere, regardless of address, in summer 2019.
“By providing shoppers with the choice to shop either in-store at a local 7-Eleven store or via the 7Now delivery app, we are remaining competitive in the e-commerce space, while allowing for flexibility for the customer, who can still enjoy the in-store experience if desired,” says Tanco. During the pandemic, Tanco says, 7-Eleven customers have shopped for groceries and other household items more to avoid crowds in big box stores and supermarkets. “We anticipate that consumers will continually rely on 7-Eleven for a wide variety of products long after the coronavirus pandemic is over,” he says. “We foresee this being the case for customers that shop both digitally and in-store, and we are fully prepared to innovate and adapt with them in the years to come.”
Tulsa, Okla.-based QuikTrip also adapted its mobile capabilities during the pandemic, significantly, pushing its e-commerce offering forward.
In March, QuikTrip launched its curbside pickup program, dubbed On-Lot Pickup. QuikTrip had planned to implement curbside pickup before COVID-19 reached the U.S., but the pandemic accelerated the company’s plans, according to Mike Thornbrugh, manager of public and government affairs for QuikTrip, which ranked No. 14 on the Incisiv list.
QuikTrip’s primary digital offer is the ability to place a mobile order and pay before reaching the store. Customers can select whether they want to enter the store or have their order brought to them in the parking lot. Customers also receive coupons and deals through the app. Finally, customers can check fuel prices, get store directions and select favorite stores.
In what could be a sign of things to come, Thornbrugh says, QT customers are interested in more than just foodservice when placing online orders. “We see demand for the ability to place an order through the app for not only QT Kitchens items but also non-kitchen items such as bottled beverages, bags of chips and more,” says Thornbrugh.
Mobile App Capabilities
The Digital Leaderboard represents the top c-store chains with a digital presence, either online or through a mobile app, such as a loyalty program. The chains and apps represented here do not include e-commerce functions. For example, 7-Eleven appears on the Digital Commerce Leaderboard for its 7Now delivery app due to its e-commerce functions, but the chain appears on this list for the 7Rewards app.
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A Unique Focus
Meanwhile, Pilot Flying J finds the spread of its stores one of the chain’s greatest strengths. “The convenience of our locations is extremely important to our guests, who are looking for a place to stop along their route,” says Tyler Tanaka, vice president of digital and loyalty for Pilot Co., which placed No. 5 on the Digital Leaderboard—that is, the list of the top c-store apps that do not offer e-commerce capability. “While physical location and proximity provides our guests with accessibility, having a robust digital presence enhances the guest experience with added value, efficiency and ease when shopping with us,” he says.
The Knoxville, Tenn.-based chain of truck stops and gas stations serves a variety of different customers, and the function and layout of its app reflects that business model. The Pilot Flying J app provides a separate experience for professional drivers, car drivers and RV drivers. Customers can use the app to find nearby locations, plan a trip, power mobile fueling, reserve parking and showers, redeem deals and take advantage of promotions.
The complicated nature of c-store operations means some solutions that work for grocers or other retailers might not have the same effect in c-stores. For instance, Casey’s piloted a consumer-facing kiosk that didn’t work in its stores, so the chain is looking for other ways to simplify the customer experience.
“We keep asking ourselves, ‘How do we make it easier for our customers? How do we make it faster for them to shop? And then how do we create something that’s unique to Casey’s?’ ” says Sebastian.
When asked why Casey’s hasn’t released cashierless checkout options for in-store purchases, Sebastian pointed to the chain’s locations and customer base. “We’re not Manhattan or downtown Chicago, so we might have a little different expectation with our customer mindset,” he says.
But just because rural and suburban c-store customers expect a different experience than urban customers doesn’t mean c-stores aren’t adding forward-looking consumer-facing digital tools. Sebastian says Casey’s is looking at artificial intelligence providers to allow it to sift through data faster.
“Customer insights, data and analytics are going to be key to what we spend our time and resources on in the next one to five years,” says Sebastian. “In a couple of months, we’ll have some really good stuff to talk about in regards to more targeted marketing.”
C-stores might be behind when it comes to digital innovation, but their vision for the future is bold. Access full report from Incisiv.
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