By Scott Barrett, VP Global Client Services and Kent Schlesselman, Senior Client Services Manager
Convenience isn't a one-size fits all business. Best-practice retailers know that their offering needs to be adapted to their demographic and current site and retail network strategy. The trends emerging as the convenience concept evolves are as important to consider as the role you play in this evolution.
Stay on Top of Trends
Over the last several years, the trend toward made-to-order, healthier food options has taken the convenience store industry by storm. Whether fueled by lowered tobacco profits, shifts in commuting behavior or changing consumer preferences, this trend appears to be here to stay.
It's taken some time for the stigma of "gas station" food to dissipate. Today, the average commuter can recognize the fresh food capabilities of the best-in-class retailer — but only because the best in class have stuck with their efforts and both demanded and created higher quality food options. Those retailers are now reaping the rewards in profit. By focusing on the main driver to their businesses — convenience — these retailers are turning the tide.
Convenience is transforming in other ways, as well. Loyalty programs abound. These offers have come a long way from the "buy 9, get the 10th free" offers of convenience retail past. With the use of technology and big data has come greater understanding of purchase patterns and desires, allowing retailers to couple promotions with humans, instead of running blanket loyalty programs. With that tailored effort, conversion rates skyrocket, leading to higher profits on promotions and more partnership offers from brands.
Servicing Your Demographic
Every trend in convenience retail is dependent on demand, whether it's being created or responded to — or both. Consider what might allow customers around your sites to experience greater convenience, and therefore, regard the site as a destination. A site could provide Amazon drop-off boxes, for example, or ready-prepared dinners, if its demographic would view these services as a draw.
If you want to participate in the transformation of the "convenience" store to encompass true convenience, you will need to leverage the latest technology to succeed. Fortunately, the thread runs both ways: new technology enables you to better serve your customers, and your customers connect new technology with convenience, thereby growing demand.
Analyzing Data
From drone deliveries to loyalty programs fueled by purchase data, technology significantly impacts your ability to create destination sites. Your offerings can expand to include the merits of new ways of packaging fresh food or delivering alternative fuels.
However you leverage technology to upgrade your core offering (for a traveling demographic) or develop an offering for your local demographic, doing so is key to your participation in the transformation of convenience retail.
Best-practice retailers will use technology to sharpen customer-focused marketing and pricing tactics, and to gather and analyze data to better understand potential. They might use technology to make it easier for customers to pay — or to discover how customers want to pay (or both!). One thing is for sure: the successful use of technology cannot be achieved without access to data and to the tools used to analyze that data.
Retailers can learn:
- How promotions within categories are patterned
- Store traffic and how to match it with workforce scheduling
- Which site locations can be the most profitable or have the most potential
- Purchase patterns
Of course, in order to gain enough solid data to make increasingly sound investment decisions, you need to reach a critical mass of stations — an appropriate station count to support your overall retail network and market. This is especially true for customer data. You can mine a massive database to understand purchase patterns and promotional decisions, but only if you have a comprehensive database.
Convenience is Always Changing
Convenience retailers have an opportunity: continue to evolve. Your offering must change with the times. And it can actually contribute to how the times change, as well; should an offer you provide (and provide well) change the retail landscape, your competitors will be required to adapt to keep up.
The bottom line is that you need to pay attention to the meaning of convenience in order to transform. Your customers want different things depending on their own definitions of convenience, which can evolve over time. Deeply understanding both your demographic landscape and your offering is the right path forward.
Want to learn more about what it takes to have a successful convenience retail store? Download our 7 Elements for Fuel and Convenience Retail Success white paper today.