By David Bennett, Senior Editor
Inventorying, loyalty perks, customer engagement, forecourt marketing and supply chain strategies carry weight in a successful convenience store operation. How developed each segment is and how well it functions more often than not depends on the degree of technology that’s attached.
It’s unlikely that the rise of online predators such as Amazon will be the endgame for convenience retailers. Instead, c-stores might find themselves on the endangered list because of their failure to react swiftly to technological advances in the industry.
Stacy Smollin Schwartz, a professor of marketing at Rutgers University, teaches introductory and digital marketing courses to undergraduates, MBAs and executives.
Schwartz explained that for retailers to be customer-centric, they should adopt an omnichannel approach, based on the premise that regardless of “internal company silos,” consumers see a brand as one store, regardless of which physical or virtual check-out line they happen to choose for a particular transaction, at a particular point in time. Today’s consumers fluidly flow between channels—in-store experiences are used to make mobile purchases and mobile content (especially social media) is consulted when making in-store purchase decisions.
Employing technology that engages today’s consumers, while fully meeting their expectations, should be a c-store’s ultimate objective.
“If adopted as part of a customer-centric strategy, digital technologies become simply another platform on which to communicate and connect with customers,” said Schwartz. “Human relationship building is enhanced because the company is treating that human being as a single person, regardless of how he or she happens to interact with the company at a given time, for a given transaction.”
A customer-centric approach can add value to a company by enabling it to differentiate itself from competitors that don’t offer the same shopping experience. More and more, convenience retailers are implementing the newest technology to create a positive consumer experience at the point-of-sale (POS) and post-sale.
“If a c-store retailer stays customer-centric, then it can maintain a consistent quality experience regardless of channel preferences among demographic groups or individuals,” said Schwartz. “That said, we are seeing the use of new tools that further bridge the digital/in-store experiences… augmented reality tools bring digital shopping benefits into the physical retail space, and the appearance of a physical retail space within a digital environment. And, the use of ‘beacons’ allows in-store triggers to generate digital communications such as coupons and other promotional notifications.”
INTERNET OF THINGS TO COME
As the operating needs of retailers become more high-tech, technological solutions have come to market more rapidly. In the last few years, much of that technology has migrated to the Internet of Things (IoT). IoT basically refers to a growing network of everyday devices—beyond computers—that are connected and can share information and perform tasks, even when no one is around.
The growth of IoT will continue to take over more facets of U.S. business. In fact, IoT devices connected to the internet will more than triple by 2020, to 34 billion from 10 billion devices today, according to the recently published “The Internet of Things Ecosystem Research Report” by John Greenough and Jonathan Camhi of BI Intelligence. Broken down, IoT devices will account for 24 billion, while traditional computing devices (e.g. smartphones, tablets, smartwatches, etc.) will comprise the other 10 billion.
Other findings from the study include:
• Nearly $6 trillion will be spent on IoT solutions over the next five years.
• Businesses will be the top adopter of IoT solutions because they will use IoT to: 1.) lower operating costs; 2.) increase productivity; and 3.) expand to new markets or develop new product offerings.
• Governments will be the second-largest adopters, while consumers will be the group least transformed by the IoT.
Maverik Inc., based in North Salt Lake, Utah, operates more than 270 stores across 10 western states, employing 4,000 people. As the chain has expanded its operations, with more assortment complexity—to include extending its BonFire food line made fresh in stores every day—Maverik leaders a few years ago recognized that the company’s sales data was becoming increasingly siloed and difficult to access by legacy information systems.
Ultimately, this situation was limiting the quality and timeliness of available data tied to consumer buying trends across the chain.
More than two years ago, Maverik executives began researching available technology options to improve the situation. The team ultimately selected a cloud-based analytics solution from SPS Commerce, which was rebranded as “Mav-Nav” by Maverik. The solution’s highly-intuitive user program equips Maverik with on-demand access to a repository of fresh, aggregated data and metrics for making informed business decisions.
Today, 18 customizable reports offer insights on everything from in-store SKU and category performance to POS metrics, consumer analytics and other facets.
As of early 2017, there are more than 130 Maverik corporate users including the entire category management team and executives who mine data. Maverik stakeholders in personnel, finance, store operations and foodservice log onto the system almost daily.
That’s a big improvement compared to how the company used to do business, said Joey Hobson, executive director of category management for Maverik.
“Almost every report allows you to customize your view based on the parameters you choose,” said Hobson. “Further, you can drill down deeper into the data. The operational decisions we are enabled to make are nearly real time and help us react to marketplace conditions, seamlessly.”
The technology has changed how everyone at Maverik views category management, including vendors.
“We have a completely different dialogue now with vendors,” Hobson said. “There are very few surprises because we look at data the same as our partners and we work really hard to make sure they are educated on our numbers. The conversations are now more geared toward category growth versus simply brand building.”
Last year, Freedom Oil Co., a 33-store chain based in Bloomington, Ill., was looking for a way to reduce store inventory levels in cigarettes and other tobacco products (OTP). The company integrated McLane’s Customer Managed Inventory (CMI) application in conjunction with by-item store level audits. Store managers take a by-item inventory of each category weekly with a smart handheld device, which is then downloaded to CMI.
Actual store sales are also downloaded weekly through Freedom’s POS tracking, said Mark Eckhoff, director of store operations of Freedom Oil. CMI then creates the order to bring inventory levels to the retailer’s goals without missing sales and still maintain in-stock levels.
Freedom Oil realized a savings of $700,000 in just eight weeks, reducing its cigarette inventory by more than 3,600 cartons and OTP by about 700 rolls.
This year, the c-store chain, which operates stores in Illinois and Florida, expanded the program to manage all major categories in its stores, and has eliminated the need for store managers to manually place orders. Everything that Freedom Oil stores purchase from McLane is loaded into the CMI system including candy, groceries and cooler items. Orders are generated, based directly on sales unless management requests a change. New orders are set each week through the data of SKU items sold.
In addition, the system allows Freedom to quickly scan and set reclamation quantities. In the end, saving time on the inventory side has allowed Freedom’s employees to shift their attention to more service-oriented duties.
“We were hoping we moved it to where they are doing more customer relations, where they are talking to the customer more,” said Eckhoff.
Arguably, nowhere can a retailer engage technological-savvy consumers with a higher rate of engagement than at the POS—depending on system capabilities.
A recent survey from Boston Retail Partners, a technology consultancy, found that retailers want the POS to improve the customer’s overall experience. A major focus is on customer identification and an improved shopping experience (70%), customer mobile experience alignment (57%) and giving sales associates mobile tools to better perform their jobs (46%). Other concerns include managing data in real time (33%) and the customer’s in-store experience (26%).
Of course, every mobile wallet is different. Having a system that’s streamlined, efficient and actually works is a big plus. Some can be found at digital food-ordering kiosks within certain c-stores and others are part of self-checkout stations dotting the convenience channel landscape.
Merchant Customer Exchange (MCX) a consortium formed by major retailers, including Walmart, RaceTrac, Sheetz and Wawa, for years tried to launch CurrentC without much success. A closed loop-style, retailer-led mobile payment platform that relied on users linking their checking account to the system, bypassing Visa and MasterCard.
CurrentC was intended to store and automatically apply exclusive offers, coupons and promotions from participating merchants during the payment process—an anomaly among mobile wallets such as Android Pay, Apple Pay and Samsung Pay.
When J.P. Morgan Chase agreed in March 2017 to acquire MCX’s payments technology last month, the project was officially labeled dead. Instead, J.P. Morgan Chase says it has acquired MCX to help bring Chase Pay to more retailers.
While the big players continue to lay claims to mobile wallet terrains, some c-stores are satisfying their customers’ need for speed by offering their own pay programs.
Savannah, Ga.-based Parker’s currently operates more than 45 c-stores throughout Georgia and South Carolina. Six months ago, the c-store chain rolled out its mobile payment program to a receptive customer base.
“The success has been built on the convenience and speed of using Parker’s MobilePay. Our customers love that they can forget their wallets at home and that the transaction speed is so quick,” said Jeff Bush, director of operations for Parker’s. “Our MobilePay application has been a great accomplishment for our company that our customers can’t get enough of.”
When motorists pull up to the pump, they open the Parker’s app, tap the MobilePay button, enter the pump number, their customer pin number, and then the pump is activated. “App, Tap, Pump, Pin,” said Bush, referring to the straightforward sequence to remember.
“We see the expansion of MobilePay as the future of payment everywhere,” said Bush. “I predict you will see a much larger attrition from debit cards in the future as our customers become more comfortable using their mobile devices to complete transactions. Once customers try it out they are hooked.”
Gone are the days when a business could stay competitive with traditional forms of advertising. Now, most customers turn to the internet and social media networks for information on products and services. In fact, 81% of shoppers report that they research online before they make a purchase, according to Retailingtoday.com.
Evolving technology is driving c-store loyalty programs that deliver varying levels of rewards based on guest visit, spending and purchase behavior.
More and more, convenience retailers are bypassing generic loyalty programs for customized systems that create a unique shopping experience for patrons. That’s what Thorntons set out to do when it enlisted Paytronix Systems Inc. to oversee the creation of the Thorntons Refreshing Rewards program. The platform has given the c-store chain the ability to capitalize on the opportunity to increase the visits of existing customers and has proven a valuable engagement tool.
Headquartered in Louisville, Ky., Thorntons operates 185 c-stores Kentucky, Illinois, Indiana, Ohio, Florida and Tennessee.
Refreshing Rewards is generating one extra visit per member per month, which adds substantial dollars to its bottom line. With the goal of generating an additional visit per member per month, Thorntons is developing specific campaigns geared at targeting members by daypart and encouraging extra purchases, such as breakfast foods or milk.
James Meara, Thorntons’ senior manager-loyalty, said the program operates using Paytronix software, which allows it to deliver highly-relevant, one-to-one messages, strengthening the engagement patrons experience.
“Refreshing Rewards has been very important to our guests and their interaction with our brand,” said Meara. “Thorntons created the Refreshing Rewards loyalty program to give value to our guests. The program was quickly adopted and continues to be widely used today.”
Just as smart devices are a normal extension of the modern shopper, digital coupons are also growing in popularity. According to eMarketer data; by the end of 2016, mobile coupon users were expected to increase 11% to 104 million users.
Late last year, Brentsville, Tenn.-based MAPCO rolled out a digital initiative able to send personalized mobile offers based on loyalty participation and shopper intent, incorporating MAPCO’s loyalty program as well as its POS. With the POS integration, Koupon will help MAPCO apply discounts on the transaction level, enabling secure, fraud-proof mobile coupons that cannot be applied to another transaction, said Ruth Picha, director of marketing for MAPCO.
With the loyalty integration, MAPCO, which operates 370 store locations, will be able to send offers based on what customers have self-identified as enjoying, have purchased in the past, etc.
The customer first sees the mobile offer within MAPCO’s distribution channels. The customer is then able to click the offer he or she would like to redeem to see offer details. Once the customer is in the store and is ready to purchase the product, he or she is able to pull up the offer where the cashier then scans their unique barcode and the discount is applied.
The Tennessee retailer is excited about the program’s potential.
“We expect that the integration of Koupon’s platform will have a profound effect on the way we engage with MAPCO customers on mobile devices,” said Picha. “With the integration of Koupon’s platform, we will be able to deliver a more customized, personal mobile offering that will help engage our customers in real-time and reward them for their loyalty.”