Last-Mile Demands

Whether third-party parcel pickups, on-lot or drive-thru pickups, c-stores are answering consumers’ calls for low-touch, safe options.

Last-Mile Demands

August 2020   minute read

By: Terri Allan

Convenience stores are competing more than ever in e-commerce, giving their customers the expanded shopping options they’re increasingly demanding. And as enhanced shopping choices dramatically impact last-mile fulfillment services, convenience retailers are rapidly responding. Indeed, these emerging “new normal” retail models are likely to continue to evolve and play a key role in the future growth of the convenience store industry.

In recent months, in the wake of the COVID-19 pandemic, much of the focus has been on safe retailer-customer transactions, particularly in the store and on the lot. As a result, numerous operators have expanded or rolled out low-touch shopping options, such as curbside or forecourt pickup and drive-thru windows, often joining the already-established walk-in pickup alternative. Third-party pickup services, meanwhile, are also advancing, offering retailers incremental sales opportunities and access to new customers.

State-of-the-art technology, including online shopping capabilities and mobile apps, has greatly assisted retailers in getting customer pickup programs up and running, and industry members and experts say there will be no looking back. “Some 67% of millennials and 56% of Generation Z consumers prefer online purchasing versus in-store,” remarked Lori Stillman, NACS vice president of research, and those consumers are likely to retain that penchant down the road.

Beyond consumer preferences, convenience retailers point to the bottom-line benefits that come from e-commerce. “We’re already seeing a 3 ½ minute savings in labor from digital orders, thanks to our new e-commerce platform,” reported Art Sebastian, vice president, digital experience, marketing, loyalty, e-commerce and customer insights and analytics at Casey’s General Stores, pointing to the average time it takes for an employee to take a customer’s order in person or on the phone. Casey’s website and app currently allow customers to place both delivery and in-store pickup orders, and at press time, the Midwestern chain was preparing to launch a pilot curbside pickup program at a dozen stores, Sebastian reported.

Need-Based Innovation

The COVID-19 crisis has ratcheted up consumer demand for curbside pickup across all types of retail businesses, and c-stores are no exception. Several major chains, including RaceTrac and Kum & Go, unveiled on-lot pickup this spring to minimize contact between shoppers and staff members. Melanie Isbill, chief marketing officer at RaceTrac, said the company’s launch of its online ordering platform in April had been on its radar prior to the pandemic, but the outbreak “escalated the opportunity. Times like these breed innovation.” The platform allows customers to place orders from a RaceTrac located nearest to them and pay for and pick up the items within 30 minutes from the store’s “grab-and-go box” pass-through window. (The windows are actually the stores’ already-installed night boxes.)

Some 67% of millennials and 56% of Generation Z consumers prefer online purchasing versus in-store.

One month after the rollout, Isbill said that while use of the feature was still low, “we’ve received positive feedback. We see the opportunity to get the word out.” She added that it was too soon to determine the impact of the program on in-store traffic, but bottled water, orange juice, energy drinks and salty snacks are among the more popular items ordered.

“The onset of the coronavirus [pandemic] has changed the way we live,” said Ariel Rubin, spokesperson for Kum & Go. The company’s curbside pickup option, introduced in April for phoned-in orders, is “just one way that we’re working to reach our customers and keep them and our associates safe,” he noted, as the service “helps people maintain social distancing and avoid common touchpoints.” Rubin said in May that Kum & Go had received “terrific feedback” from its customers about curbside pickup.

The pandemic also contributed to the rollout of curbside pickup at Global Partners’ Alltown Fresh concept, according to Melissa Mancini, social and digital marketing manager. In addition to protecting store employees and loyal customers, the transaction option helps to “attract new guests with our various ways to shop,” she said, adding, “Alltown Fresh will continue to offer curbside delivery well into the future to continue serving our guests in a manner they are comfortable with.”

QuikTrip, meanwhile, unveiled on-lot pickup via its mobile app earlier this year after testing in the Tulsa, Oklahoma, area. The feature joins the already-available in-store pickup option. “On-lot pickup is just one more way we’re attempting to make the customer experience at QuikTrip fast, friendly and convenient,” remarked Mike Thornbrugh, manager of public and government affairs. He described the early response as “positive,” and said that while it’s too early to assess the impact on in-store traffic, “a large percentage of on-lot orders have been for our full-service kitchen items.”

Competitive Advantages

While the benefits of curbside and on-lot pickup are largely customer driven, the services provide competitive advantages for c-store operators. “You’re still winning the trip over a competitor,” explained Stillman.

Mario Spina, owner and CEO of the Chicago area’s PRIDE stores, agrees. “For a company like mine, curbside pickup gives me an advantage over groceries, as I can offer complete meals from my Urban Counter restaurants; beer, wine and spirits; and typical c-store merchandise—a true one-stop shop.” Pride stores are in the process of rolling out a new app, which will allow for curbside pickup, Spina reported.

As with any emerging model, curbside pickup also presents some challenges for retailers. Isbill and Thornbrugh cited the typical pain points that come with introducing new technology to employees and customers. “In the beginning, it was a learning curve as we worked to make the new feature as user friendly for both our customers and store employees,” the QuikTrip executive said. “But we were able to accomplish this during the test phase with a few minor adjustments.”

Curbside pickup helps people maintain social distancing and avoid common touchpoints.

In addition to staffing concerns, Stillman pointed to inventory challenges. “You have to be able to meet demand,” she explained. “If you can only fill 50-60% of the order, it will reflect poorly on the store.” Global Partners’ Mancini added that curbside pickup removes the opportunity for impulse purchases. “Customers who place their orders over the phone eliminate their ability to peruse the store, which may lower the average ticket,” she said.

In-store pickup of pre-ordered items is a more established model for c-stores. Casey’s, for example, has offered pizza pickup for some time, and among the benefits are the impulse purchases made at checkout. With the move to e-commerce, customers have been able to add some in-store items to their pizza orders, including drinks, snacks and ice cream, with expanded options to come, according to Sebastian. But the addition of the ancillary items can create challenges when it comes to “uniting different temperature states” during the staging process, the Casey’s executive explained. “You can’t stack a Snickers bar on top of a hot pizza,” he said. “As we move into more items for in-store pickup, we may need to consider other strategies, such as shelving units.”

Drive-thru c-stores are another convenient option for consumers. According to Isbill, RaceTrac opened a store with a drive-thru window last year, and sales have been incremental to in-store purchases. Spina noted that one of his Urban Counter locations features a drive-thru, and during the COVID outbreak, “we tried to sell everything out of it.” Sales of alcoholic beverages via the drive-thru, however, weren’t permitted.

Pickup Points

For the last three years, PRIDE stores have benefitted from their partnerships with the Amazon Hub Locker program, whereby customers of the e-commerce giant can pick up ordered items at self-service kiosks at affiliated retail locations, in favor of home delivery. Spina remarked that the program—which is now available at each of the chain’s 15 locations, with plans to include it at a new Indiana store expected to open later this year—“helps traffic count,” and listing PRIDE stores on the Amazon site increases awareness among potential customers. The lockers, which, according to Spina, measure six feet wide by seven feet high by 27 inches deep, are generally located on PRIDE store lots, not in store.

PUDOpoint, meanwhile, is a carrier-neutral parcel pickup/drop-off technology and logistics network that is increasingly working with U.S. c-stores as partners for both its own system, as well as the Amazon Hub Counter program. “C-stores can now compete in the online opportunity,” said John Clarke, vice president of sales and marketing at PUDO Inc. “With pickup points becoming more common, retailers can benefit from the increased foot traffic.” In fact, Frank Coccia, PUDO CEO, added that consumers prefer small footprint stores to grocery stores when it comes to package pickup due to their convenient locations and easy-in, easy-out model.

In addition to enhanced foot traffic, c-stores enrolled in the Amazon Hub Counter program benefit from having their locations listed on the Amazon marketplace, Coccia added. According to Clarke, retailer requirements include about 40 square feet of space and the ability to expand up to 200 square feet seasonally, a smartphone with a scanner and Wi-Fi. Package pickup and drop off takes place at the store’s checkout counter. “We can set up a store in about 15 minutes,” he noted.

In addition to improved traffic opportunity, the benefits of third-party pickup destinations include impulse purchases. Spina said that depending on the time of day, Amazon Locker customers are likely to purchase a cup of coffee at a PRIDE store or lunch at an Urban Counter location. But he conceded that space can be a challenge. “Floor space is valuable, so devoting the space to the lockers has to be justifiable,” the retailer said.

Stillman agreed, saying that “operators must be prudent with where they put the lockers.” The storage units may make more sense in urban areas with high-rise residential buildings than in rural markets, she noted.

Whether it’s third-party parcel pickups, on-lot or drive-thru pickups, c-stores are answering consumers’ calls for low-touch, safe customer-service options. Spina, for one, said these programs are only just beginning to hit their stride. “I believe there will be an emphasis placed on these services,” he remarked, “not just for safety reasons, but for convenience, too.”

Terri Allan

Terri Allan

Terri Allan is a New Jersey-based freelance writer. She can be reached at [email protected] and on Twitter at @terriallan.

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