By Brandon Lawrence, Fuel Consultant, and Frank Beard, Director of Safe Shop, Special Projects
The marketplace is running out of room for generic retailers.
Convenience is being redefined, and retailers face challenges from many directions. Whether it’s goPuff, quick-service restaurants (QSRs), dollar stores, direct-to-consumer tactics or disintermediation from third-party delivery partners, it’s never been easier for consumers to get what they want.
The competitive landscape within fuel and convenience has also shifted. As previously discussed in this series, consolidators, QSRs and merchant-supported brands have diverged from the pack and put everyone else at a competitive disadvantage — especially generic brands that lack scale. These three formats are also well-positioned to fight for slices of a shrinking pie, if fuel demand stagnates or declines.
Winning in this new paradigm requires strong execution and a clear brand identity. Unfortunately, many of the brands most at risk from a competitive standpoint are also the ones presenting a generic customer experience and product offer. Remove their branding, and they’re nearly indistinguishable from each other.
The good news is that these brands also have advantages that their larger counterparts lack. As we conclude this three-part series, we want to take a closer look at two areas where they have an opportunity to win big.
Building Brand Identity
Maintaining quality at scale is difficult.
The advantages that make larger competitors strong also create weaknesses, and customer experience is an area where gaps frequently exist. This is especially true of consolidators. Cost discipline and lean operations often come with tradeoffs in customer experience. Even the QSRs struggle with this as new, innovative formats and programs may take years to trickle down to legacy stores.
Small operators have the advantage. Free from bureaucracy, quarterly earnings and other burdens, they can aggressively work to delight customers and build something unique.
But it starts with a relentless commitment to the basics: cleanliness, safety and hospitality. Without these core foundational elements, higher-order strategies will never achieve their full potential.
This doesn’t have to be an expensive, herculean effort. Even an old, well-maintained store can stand apart from a newer build that has inconsistent execution. A personal response from an owner is a more meaningful approach to a poor customer experience than a templated, copy-and-paste statement from a corporate office. Fewer stores also makes it easier to be more responsive — and genuine — in replies to reviews on platforms such as Google Maps.
Smaller retailers should be the industry’s standard-bearers on customer experience. Nobody is better positioned to create high-quality, boutique experiences.
It takes more than generic products and proximity.
With each passing day, consumers gain access to new and convenient ways to acquire products from the major consumer packaged goods (CPG) companies. For example, goPuff’s recent acquisition of BevMo will transform 161 prime retail locations into delivery distribution centers, making them even more effective at dropping snacks and beverages at customers’ doors in 30 minutes or less. Competition is also coming from third-party dark stores, continued channel blurring and the efforts of CPG companies to build direct-to-consumer channels and bypass retailers altogether.
Consumers need a clear, compelling reason to get in a car and drive to a store. For retailers who offer delivery, they also need to offer something customers can’t get through DoorDash or Uber Eats. This comes by way of product differentiation.
Smaller operators again have the advantage. Their ‘hyperlocality’ and sensitivity to community needs creates opportunities to build unique, one-of-a-kind solutions that are tailored to their customers.
Winning in this area is about being the best at something. It might be the best pizza in the market — like Slice Pizza & More outside of Boston or Round Rock-Texas-based High Country Market & Gastropub — or it could mean creating a neighborhood hangout and destination for locally-produced goods such as Mule Kick in Arkansas. Smaller chains like North Carolina-based Breeze Thru Markets also provide a hyperlocal product offer in each community they serve.
Differentiation is about transforming convenience stores into destination stores. The big brands may still have a place on the shelves, but it takes more in order to truly stand out.
We hope readers enjoyed this three-part series. The first two installments appeared in CStore Decisions’ October and November issues.
Far from the gloom, we believe this new decade is full of opportunities. We’re always encouraged by the creative, entrepreneurial spirit so common in this industry, and we look forward to continuing to work with retailers as convenience is redefined. CSD
Brandon Lawrence is an independent fuel consultant from Atlanta. Follow Brandon on Twitter (@_SSCM_) and Linkedin.com/in/brandonlawrence/.
Frank Beard is the director of Safe Shop and the director of special projects at CStore Decisions. Follow Frank on Twitter (@FrankBeard) and Linkedin.com/in/frankbeard/.