The Race To The Future Of Convenience Retail
New cars and demands mean opportunities for fuel stores
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Technology is the key to providing a wider range of services

Major transformations are sweeping over the fuels and convenience retail sector, making it imperative for stores to rethink their fundamental operations. Consumers are becoming more conscious of health and sustainability. And technology is making retail operations more efficient and helping stores serve a growing variety of needs.

Perhaps the biggest impact will come from the shift to battery electric vehicles (BEV), which are changing the way drivers put energy in their cars and trucks. To add 100 miles (160 kilometers) of range, it takes 4.9 minutes to recharge an average electric car, compared to 24 seconds to refuel a traditional vehicle. The period a driver stays at a convenience store often increases to 20 minutes or more, from just under two minutes, giving customers an opportunity to refresh themselves and do some shopping – and retailers an opportunity to cater to them.

However, supermarkets and other non-fuel retailers are already starting to provide recharging facilities, and it is relatively easy to get hold of the necessary hardware. While convenience stores followed gas stations in the past – as an extra service for people refueling – from now, stores could become the primary destination. They will have to provide facilities, products, and services that make drivers want to stop by.

An additional 30% of consumers have begun using contactless payment and checkout, and 70% of those newcomers will continue in future."

These shifts create challenges and opportunities for retail stores linked to mobility, and they will either adapt with speed or be left behind. Here are three actions that can make a difference.

Provide healthy products, attractive facilities

Covid has increased people’s concerns over hygiene and cleanliness. This means that fuel convenience stores can no longer be an unsanitary quick stop for drivers who need a break. Instead, they need to be destinations where consumers want to stop – with clean, well-maintained bathrooms, lounge-style seating areas, high-speed Wi-Fi, and a broad range of food and packaged goods.

Health and sustainability are also rising concerns, especially for the young and for the BEV drivers who might have extra time to wait while recharging. Among Generation Z consumers, who were born between 1997 and 2012, 54% are willing to spend an extra 10% for sustainable products, compared to 34% of Generation X consumers (born between 1965 and 1980) and 23% of baby boomers (born between 1946 and 1964), according to a 2019 Forbes report. In the United States, 68% percent of people say they would visit their favorite convenience store more often if it offered healthy sandwiches and salads, according to research by Vixxo.  But foodservice doesn’t come naturally to most fuel retailers: It requires a skilled workforce, including trained chefs and baristas, complex operations such as cold chains, and increased hygiene standards. Irish convenience stores have shown it can be done, by investing heavily to provide healthier options, and they typically offer around 3,000 different products and restaurant style food. Convenience stores now account for 24% of Irish grocery retail sales, a much larger share than the global industry average of between 12% and 15%. Customer-centric technology, user-friendly lounge facilities, and high standards of food hygiene are complementing the offer, and increased the gross profit margin by 58% between 2016 and 2019.

Make shopping frictionless

Technology has played a key role in retailers’ interactions with consumers, which have become real-time, interactive, and intuitive. The trend towards greater concern with hygiene has also boosted demand for contactless shopping, including payments. Since the start of the pandemic, an additional 30% of consumers have begun using contactless payment and checkout, and 70% of those newcomers will continue in future.  

Beyond payment, some retailers are trying to reduce – even remove – physical interaction with sales personnel entirely. Pioneering unmanned stores use a combination of sensors, cameras, and visualization technology to eliminate the need for cashiers. Every large convenience-store chain in Japan is aiming to implement self-checkout stations at all their stores by 2025.

Consumers want personalization, efficiency, and control, and they have growing expectations."

Totally unmanned stores require costly technology, putting such systems out of reach of most retailers. However, a New-Zealand based low-cost system, which delivers some of the same features and does not require stores to be retrofitted, is being launched in the Asia-Pacific region. A smart basket detects and automatically registers items that a shopper adds or removes using computer vision and artificial intelligence. In parallel, the shopper uses an app, which generates a list of purchases and converts this into a barcode. Finally, a (human) clerk scans the barcode on their phone to complete the transaction. Retailers will be able to install the system within a week, and data from the app will provide insight into customers’ preferences.

Widen the choice of product and delivery

Consumers want personalization, efficiency, and control, and they have growing expectations. All retail formats have speeded up their services, so convenience retailers now have to compete with brick-and-mortar supermarkets and online delivery. That implies offering a wider range of products, services, and delivery channels: made-to-order food as well as grab-and-go; self- and assisted- checkout; and mobile, cash, and card payment options. Japanese convenience stores have succeeded by leveraging their proximity and becoming reliable one-stop shops for their communities. As well as food and beverages, they sell concert tickets and transportation passes, provide high-speed Internet connection, and act as points to send and receive parcels. Partly thanks to these ancillary services, they are among the busiest in the world, with an average of 932 visitors per store every day.

In fulfillment, Covid catalyzed multichannel interactions to let consumers shop safely. New models include mobile order, order at the pump, curbside pickup, drive-thru, and home delivery. Globally, 57% of convenience retailers currently offer last-mile fulfilment services, according to a recent study by NACS (the National Association of Convenience Stores). However, more than 80% of these retailers in Australia and Europe offer these services, compared to only 46% in North America.

Conclusion

Fuel convenience retail is about to be turned upside down by changes in coming years. These could be a threat to stores that don’t adapt. But they are a great opportunity for retailers willing to try out new formats and technologies and learn from the leading practices worldwide. Stores can grasp clients’ changing demands by relentlessly collecting and analyzing purchase data in real time. They can then maintain both an online and in-store presence, ensure a cohesive experience across the two, and personalize offerings in anticipation of customer needs. If they don’t, then others will take advantage of the opportunities instead.