If you’re in the convenience retail world, you’ve doubtless heard it many times: “The customer is always right.”
In today’s digitally connected marketplace, technology and more demanding consumers seem to have called for an update to that old cliche: “The customer expects better.” That theme was the common thread that ran through a pair of educational sessions on day three of the National Association of Convenience Stores (NACS) Show 2021.
EV 301 The Economics of EV Charging
In the finale of a three-part NACS Show 2021 educational session series on electric vehicle (EV) charging, moderator and NACS EV Liaison Karl Doenges guided a discussion that centered on what may be the most important EV question of all: Can retailers make money from electric chargers?
Operators face a mountain of uncertainty when considering the many options involved – How much will the equipment and installation cost? How much should I ask per charging session? Level 2 or DC fast chargers? Direct or third-party revenue? How much will the increase in power usage cost and what’s the margin on it? What are the local, state and federal regulations governing EV charging?
Alliance for Transportation Electrification Phil Jones explained the complicated relationship utilities have with government regulation on all levels. Even though retailers and their utility won’t agree on everything, you’d be wise to keep the utility on your side. He advised, “Talk with the utility. Plan with the utility. Treat them as a partner.”
Taken on its own, installing and providing electricity for EV drivers may appear to be a tough sell. But like fuel sales, much of the benefit will come from the lift in business from those charging customers, the panel said.
LeRoy Fitzgerald, director of strategic sales for FreeWire Technologies, said the return side of the EV equation comes in two pieces. Revenue – from actual EV charging, in-store purchases (walk-in, kiosk or via apps), advertising and strategic partnerships.
But operators can also see return form incentives and grants, tax and energy credits, financing models, depreciation and smart business models. There’s a lot of math to do – but worth doing.
Aaron Young, commercial business development manager with Electrify America, pointed out that customer won’t be simply driving around looking for a station. The charging customer of the future will plan ahead, choosing a local charging spot that they favor. “Customers are looking for you and that’s how they’re going to behave,” he said.
Retailers, Young said, need to remove transaction friction from those customers you want to attract. Flexible and seamless payment options are essential.
However things play out, retailers are going to need to be creative in attracting and serving those EV charging customers.
Rushi Patel, senior analyst for diversified energy for the RaceTrac convenience chain, reminded the gathering that EV charging is essentially a digital function and will dovetail with drivers’ other digital activities. Retailers have a chance to attract charging customers via a loyalty app or other digital platform, but also allow them to shop that way. Once they arrive and begin charging, imagine a store team member delivering their purchase at the charge point.
Retailers would do well to seek out and explore any number of possibilities that can defray EV installation costs while better serving EV customers with their other needs.
A New Approach to Dayparts
There was a time when assumptions about convenience consumer dayparts were stable and accurate. Commuters came in for coffee and a breakfast donut. Blue collar workers grabbed a sandwich, soda and pack of smokes at lunch. Pizza was the favorite of the dinner daypart.
Those days are over. At least, that’s according to panelists Dafna Gabel, vice president of insights with market measurer PDI, and Mike Gervasio, vice president of category leadership with PepsiCo. A deep dive into daypart data reveals that there’s more to the equation. From candy to snacks to beer to foodservice, fine tuning your product offerings and pairings can significantly lift the bottom line.
The pandemic had a strong and lasting effect on consumer behavior across multiple channels, Gervasio reminded the audience. “They’ve really consolidated their trips, whether your big box retailer or a c-store,” he said. “That makes winning the next trip that much more important.”
Demand is now on the rise, Gabel said. But while fuel gallons are up by 20%, she said, in-store trips are down a slight 2% from 2020 and a hefty 14% from 2019. PDI research showed that in 2019, 60% of loyal convenience customers who bought gas also went inside. In 2021, that figure is down to 40%.
And while morning rush business is up compared to 2020, every daypart is down significantly compared to prepandemic 2019 levels. How can c-stores get that foot traffic back inside?
More often than not, according to PDI research, customers leave the store with more than one category in their basket. Dissecting each daypart is a more effective and more accurate way to attract foot traffic than relying on single categories alone.
By using more precise daypart data, retailers can use multiple category appeal to draw customers inside.