Making History

Convenience has had three waves. Are we already in the fourth?

Making History

August 2021   minute read

By: Jeff Lenard

Think “beyond the box”—that’s the mantra in retail today. How can retailers grow sales beyond the physical “box” that is their store, whether through delivery, curbside pickup, drive-thrus or some combination of them all, tying it all together with internet and app ordering and payment?

Industry experts call this convenience revolution “last-mile delivery,” and it has seen massive growth during the past year, accelerated by the COVID-19 pandemic. While these new conveniences may feel like an overnight success, in many respects they have been around for decades or even centuries. The key to determining which of these so-called pivots will gain traction and grow in popularity—or even spin off new conveniences—will hinge on consumer demand and retailer execution.

This month, in honor of the 60th anniversary of the founding of NACS in Kansas City, Missouri, we take a look back—and ahead—at how the meaning of convenience has evolved. There have been three distinct waves of convenience, with each one coming twice as fast as the previous one. And the fourth wave looks to be here.

“There is no question that key events from our industry’s past have shaped what and who we are today and that changes in our industry have accelerated in size and intensity in the past few years,” said Steve Loehr, vice president of operations support, Kwik Trip, and 2014-15 NACS chairman. “I think COVID has had and will continue to have a dramatic effect on our industry. Hands-free contactless transactions, self-checkouts, third-party delivery and curbside pickup are all things that have become a part of our industry and will grow in importance in the future.”

Frank Gleeson, region president/CEO Northern Europe for Aramark and 2018-19 NACS chairman, agrees. “Technology is such an integral part of every shopping mission, whether it’s voice-activated ordering on your phone or kiosk to a full frictionless environment of an autonomous store,” Gleeson said. “I feel that retailers who don’t embrace this change in some manner or form which is relevant to their offer and location will not deliver a good customer experience.”

Wave 1
Home Delivery: 1785-on

Home delivery and the United States almost share the same birthday.

Milk delivery was introduced in 1785 in Vermont, when milkmen traveled through neighborhoods with essentially a giant vat of milk, and residents would use any containers they had handy to fill up. It was more than a century until the patented milk bottle (1878) and eventually insulated containers would be brought in for the milkman to deliver milk and other products directly to a subscriber’s doorstep.

Mail-order delivery predates America’s July 4, 1776, founding. Benjamin Franklin created the mail order catalog in 1744, offering book delivery to people’s homes—the same concept Jeff Bezos used to create 250 years later. Over the next century, other specialty catalogues sold seeds or other items for home delivery.

The general interest mail-order catalog was introduced in 1872 by Montgomery Ward, although Sears Roebuck perfected the offer. It was once possible to buy a house through the Sears catalog: Everything to build the house, including nails and other fasteners, was sent to your home—or at least the location of your new home.

Then there’s food delivery. The first pizza “delivery” took place in 1889 when Queen Margherita of Savoy, who was tired of the local cuisine while on travel, asked a nearby restaurant to prepare traditional Italian food and bring it to where she was staying. That first delivery included a special pizza that featured the colors of the Italian flag: red (sauce), white (mozzarella cheese) and green (basil leaves), which then became known as a Margherita Pizza.

That moment did more than create a popular pizza—it planted the seed that to modern consumers seems so basic: Cooking at home or dining in a restaurant aren’t the only ways to get a meal. The Kin-Chu café in Los Angeles offered delivery in 1922. It was the booming economy following World War II that made delivery a trend, and New York City pizzerias began offering call-in, pickup pizzas. In Los Angeles, a few restaurants introduced pizza delivery, a practice that picked up nationally around 1960, the same year that Domino’s, first known as DomiNick’s, opened its first location in Michigan.

The strong post-war economy helped spur the suburbs’ growth in the 1960s, but the greater distances for travel between customers made traditional milk delivery from a dairy location cost inefficient. Wood Brothers, a 150-year-old dairy company, needed another distribution option for its milk and opened its first convenience store in 1964, now known as Wawa. Today, Wawa embraces home delivery of almost everything sold in the store, including milk. Wawa is one of many c-store companies that can trace its roots to the dairy industry, and the word “farms” in the name is usually a key indicator, as with Weigel’s Farm Stores, Rutter’s Farm Stores and Cumberland Farms.

There wasn’t much of a need for retail fuel delivery during the 20th century with 200,000-plus fueling locations across the United States. Change came in 2015 with technology advancements. Several on-demand fueling companies emerged, including Purple, Yoshi and Filld. For a delivery fee of $5 to $7, customers could have five, 10 or 15 gallons delivered to their vehicle. The offer was extended to fueling cars on demand at other locations, including office parking lots. And now EVs can have on-demand fueling via companies like SparkCharge and ChargePoint.

Electric vehicle growth has presented new opportunities to refuel vehicles, especially in Norway, where most new vehicles are EVs. In addition to its extensive network of charging units along busy roadways in Norway, Circle K continues to install charge points at convenient locations, including chargers in more than 4,200 homes and workplaces.

Wave 2
Delivery Services to Vehicles: 1913-on

The invention of the automobile created a second “place” for Americans beyond their homes. It ushered the second wave of last-mile delivery—to the car, beginning with fuel.

Karl Benz invented the first gasoline-powered automobile in 1885; however, fueling the first models was inconvenient. Early fueling sites were a patchwork of pharmacies—many vehicles ran on ethanol—or ramshackle sheds and blacksmiths’ shops, where fuel was dispensed from a container into a vehicle’s tank.

This early method for refueling changed in December 1913 when Gulf Refining Company opened the nation’s first drive-up service station in Pittsburgh, Pennsylvania, designed and built specifically to sell fuel. The station focused on servicing the vehicles. Attendants wore crisp, white uniforms and provided a full-service experience for drivers. Eventually, the service stations specialized in “TBA,” otherwise known as tires, batteries and accessories.

Like any new idea, the idea of a true gas station took time before consumers fully embraced the concept. That Gulf station only sold 30 gallons of fuel on its first day, less than 1% of the amount sold at a typical convenience store in a given day. But it was the first of several important redefinitions of retail convenience that focused on the vehicle and expanded during the next two decades.

In 1913, the total number of vehicles on the road first topped one million. These car owners wanted to keep their expensive new purchases in tiptop shape. And a year later, the first car wash, the “Automated Laundry,” opened in Detroit. However, it was far from automated, with workers washing, rinsing and drying cars that moved along a conveyor. Now, car care complements fueling, with about 65% of all car washes at businesses that also sell fuel—in other words, at convenience stores.

Today, the concept of delivery to the car goes beyond washing
and fueling.

Curbside delivery, for example, is a variation of the “carhop.” In 1921, a Texas BBQ joint called Kirby’s Pig Stand pioneered the concept of delivery to the car. Parking spots surrounded the building on all four sides, and the servers, known as carhops, brought food to people in their cars.

White Castle introduced a different level of convenience with its carryout sack in 1927. Customers could order food and take it to go to consume later or eat while driving, known as “dashboard dining.” This concept continues to be embraced by convenience store customers today: 65% of the items purchased at a convenience store are consumed immediately.

Curbside pickup and the carryout sack combined create another last-mile delivery concept: the drive-thru, which debuted in 1948 when In-N-Out Burger in California introduced an order system for its burgers, fries and drinks via an intercom and pickup at a window.

Many convenience stores embrace this model, whether for food or other items. Wawa garnered a lot of positive press and accolades in January 2021 when it introduced its first drive-thru convenience store, a concept that has been around in the industry for decades, even if they looked slightly different.

Other convenience retailers have embraced the drive-thru, whether it’s a drive-thru-only concept like Swiss Farms or one where customers can drive up and order in-store merchandise like at Pak-A-Sak in Texas.

Convenience stores may not have flourished without one innovation: self-service shopping for groceries. Before 1916, grocery shoppers presented their orders to clerks, who gathered the goods from store shelves while the shopper waited. (The baseball term “can of corn” describes an easily catchable ball and refers to that time period when clerks knocked cans of corn from upper shelves and caught them in their aprons.)

But Clarence Saunders saw that this method resulted in wasted time and expense, so he came up with a solution that would revolutionize the entire grocery industry: a way for shoppers to serve themselves. Saunders showcased this concept in the first Piggly Wiggly store in Memphis, Tennessee.

Now that shoppers could select their own items, the stage was set for convenience stores, and the first convenience store opened in May 1927 in Dallas, Texas. At the time, ice houses sold big blocks for use in iceboxes, precursors to modern refrigerators. Icehouses were open 16 hours, unlike grocery stores that closed at 5 p.m., to make it convenient to pick up blocks of ice in the cooler evening hours.

“Uncle Johnny” Jefferson Green, who ran the Southland Ice Dock, realized that customers sometimes needed to buy things such as bread, milk and eggs after the local grocery stores were closed. So, he decided to stock a few of those staple items. The idea turned out to be very convenient for customers.

Joseph Thompson, one of the founders and later president and chair of The Southland Corporation, saw the potential of Uncle Johnny’s big idea and brought it to other ice docks, which were open from 7 a.m. to 11 p.m., seven days a week. Eventually, the company rebranded its stores around its hours: 7-Eleven.

Convenience stores are responsible for a significant car-based convenience: self-serve fueling. While self-serve fueling had been around in some form since 1947, state and local fire codes kept the concept from growing. And it wasn’t truly self-serve since an attendant was still required at the forecourt to collect money and authorize the pump.

In June 1964, the Big Top convenience store chain introduced the first remote self-service gas pumps in Westminster, Colorado. On that first day, fuel sales only totaled 124 gallons, but this event ushered in the modern era of self-serve fueling.

Self-serve gas had massive implications for convenience during the next half century. By the mid-1960s, 7-Eleven had introduced self-serve, to-go coffee and self-serve fountain soda. By the decade’s end, the first ATM was introduced. Today, customers can order groceries by scanning QR codes located on digital signs in train terminals. They can order groceries online and schedule an at-home delivery. They also can make deposits into checking accounts by scanning paper checks via mobile banking apps. The possibilities are extraordinary, and most involve a mobile device.

Wave 3
Delivery Via Mobile Devices: 1985-on

Home delivery has historically been linked with a device. Originally the device was a pen and a catalog order form, which was mailed to a business. Later, the device used most for placing orders was a landline telephone.

In 1982, a new device was added: The television set became the equivalent of a print catalog with the debut of the Home Shopping Club, a local cable TV channel that evolved into the national Home Shopping Network in 1985.

New devices also were introduced at convenience stores in the 1980s. First it was pay at the pump, introduced in Europe in 1982 and in the United States in 1986 by E-Z Serve and its subsidiary AutoGas in Abilene, Texas. The dispensers featured a built-in credit/debit card reader system. Sharp-eyed movie-goers will recognize E-Z Serve from the 1979 movie “The Jerk.” Long-time Abilene resident Steve Martin requested that the gas station where his character worked be converted to an E-Z Serve.

Some retailers feared that self-serve fueling would discourage in-store purchases. Instead, pay at the pump increased industry sales, and customers who only wanted fuel embraced the added convenience. Meanwhile, pay at the pump increased in-store foot traffic because it shortened lines by eliminating the fuel-only customer, unless it was a cash purchase.

Convenience is closely tied to speed of service and that was also enhanced at the pump in 1996 when Wallis Companies, a Cuba, Missouri-based convenience store chain, served as the test market for Speedpass. In tests, Speedpass reduced the average three- to four-minute fueling time by 30 seconds. Within five years, more than five million customers were considered regular Speedpass users at Mobil-, Esso- or Exxon-branded stations.

Altoona, Pennsylvania-based convenience retailer Sheetz pioneered touchscreen kiosks for food ordering in 1993, replacing the cumbersome golf pencil and strip of paper traditionally used at delis to place orders. By 1996, every Sheetz store had the technology, and today the touchscreens are common at c-stores, allowing customers to choose and customize their orders.

Touchscreens soon evolved outside the store. In 2014, Sheetz became the first company to experiment with touchscreen kiosks at the pump, where customers could order foodservice items to pick up after they refueled. Sheetz abandoned the idea because it was difficult
to execute.

The idea was sound, however, and two University of Pittsburgh students agreed. Steve Huffman and Alexis Ohanian conceptualized an idea to order Sheetz sandwiches from the pump using their cellphones. They pitched their idea to a start-up investor in 2005, who suggested they try something easier. So, Huffman and Ohanian developed a new concept, launching the popular social news aggregation, web content rating and discussion website called Reddit.

Order-by-device innovations set the stage for how retail could take advantage of the coming digital revolution, which blended the in-store experience with the online experience, aided by mobile devices. The device became more convenient when the iPhone debuted in June 2007, followed by Apple’s App Store in 2008.

Smartphones quickly moved from a nice-to-have device to something essential to stay connected to each other and to mainstream businesses. In 2016, ExxonMobil released the Speedpass+ app, which allows consumers to pay for gas directly from their smartphones at the pump at thousands of Exxon and Mobil locations across the United States. Hundreds of convenience stores also have their own apps to facilitate orders and payments.

Brick-and-mortar retailers continued to rapidly add an online component to their offers. And then something interesting happened: Online retailers wanted to open brick-and-mortar stores.

Amazon opened its first Amazon Go convenience store in 2018. Companies like Skip have introduced similar technologies embraced by convenience stores like High’s in Maryland. Russell’s Xpress uses a different technology but with similar applications at completely unmanned stores in Denver. And then there is China, which pioneered the concept of “New Retail,” the melding of the online and in-store shopping experience.

The COVID-19 pandemic has reshaped convenience with a warp-speed focus on take-home and pickup items and an ever-expanding number of items that can be delivered. Convenience retailers like The Goods Mart in New York City offer curated snack boxes focused around themes, expanding its customer base far beyond its neighborhood.

“Technology has changed everything—even more so in COVID times—from delivery to curbside pickup, technology has changed the way shopping is done,” said Rahim Budhwani, CEO, 6040 LLC (dba Encore Stores) and 2016-17 NACS chairman. “With the labor market changing, it has caused some change in how we operate our stores, so self-checkout kiosks are growing in popularity, and self-ordering is really catching up.

Age verification has also become important, as age-restricted items can now be delivered. In some markets, you can have your favorite restaurant deliver a pitcher of freshly made margaritas along with that Margherita pizza. It’s created enormous new opportunities as well as some concerns: How can age-restricted purchases be properly vetted like they are in person? As with most challenges related to emerging trends, equally innovative solutions will be developed (see page 30).

“The strength of our industry is that we are so close to our customers that we spot trends and needs directly from the source,” said Jeff Miller, chairman and CEO of Miller Oil Co. and 2010-11 NACS chairman. “What makes us unique is that we are so nimble and customer driven that we respond to these insights quicker and more genuinely than other channels. Do we ‘reinvent convenience’ or do we just do a world-class job of knowing our customers and deliver on their changing definition of convenience?”

Wave 4

In looking at the first three waves of convenience, each wave was roughly half the length of the one prior. Wave No. 1, focusing on the home, was around 128 years until wave No. 2 focused on the car. And that wave lasted 62 years until wave No. 3 emerged, incorporating the device. It’s now been 36 years since the last wave, so it’s possible that we are now in wave No. 4 of reinventing convenience.

“Consumer needs will continue to evolve as they have for centuries but with more emphasis on quality, taste, customization and, of course, speed,” said Gleeson of Aramark. “Retailers who can move faster and be consistent will continue to win more market share.”

Convenience continues to advance because consumers value convenience as much as anything at retail, including price. That means that all retailers, regardless of channel, must sell convenience. While that makes the competition that much tougher for convenience retailers, it does reinforce two long-held beliefs: Convenience is king, and those who will win are those who can continue to redefine it.

“There will be many more changes ahead,” said Loehr of Kwik Trip. “I am confident our industry will be on the forefront of those changes and ready to meet the ever-changing needs of our customers.”

Jeff Lenard

Jeff Lenard

Jeff Lenard is NACS vice president of strategic industry initiatives. He can be reached at [email protected].