Increasingly, competitive realities and customer desires compel convenience stores—as well as just about every other retail format and channel—to consider delivery as an essential tool in their battle for sales and some degree of shopper resonance and relevance. Delivery is a natural extension of having an e-commerce presence that extends into easily accessible mobile applications and product pickup. (And if you’re not doing these things already, you might have bigger problems than not offering delivery.)
Some of the biggest and leading edge c-store chains in the country—such as 7-Eleven, Wawa and Sheetz—are offering delivery of various products in a number of markets. While it’s important to know what the competition is doing and keep pace where and when it’s possible, the argument here will be that the best reason to develop a delivery strategy is the customer, not the competition.
Chris Gheysens, president and CEO of Wawa, told an audience at the 2018 NACS Show in Las Vegas that “convenience is no longer a location. Convenience is a mindset … it is really about serving customers on their terms, the way they want to interact with brands, which is digitally, and frankly, it’s not in four walls anymore. You have to think about going beyond your four walls to serve customers.”
Just a few years ago, the idea of next-day delivery was radical, Gheysens said. But today, 30-minute delivery is the standard in many places. “We’re a service industry, and that service model is being disrupted,” he said, which means adapting to these changed consumer expectations.
Dae Kim, vice president of research at NACS, concurred. “We have a tendency to think of convenience as a format,” he said, “but if you are focused on format and things, then that’s not the right mindset.”
“This is reality,” Gheysens said, with enormous and rapid changes in “technology and how people interact with brands.” The brands that adapt to these changes at least have a shot at being successful.
There are a number of reasons for c-stores to not just accept but embrace delivery. This is not something you should do grudgingly. You have to truly embrace it, own it and see it as an opportunity.
Reason 1: Amazon
Let’s be clear: Amazon pretty much sets the tone for everything going on at retail these days, creating shopper expectations with which every other retail entity has to live. This doesn’t mean that everybody has to offer delivery, but it does mean that you have to keep Amazon’s business model—and its propensity for disruption—in mind when developing a competitive offering and value proposition. But it is more about what the customer wants, needs and expects than it is about what Amazon is doing as a competitor.
There now are several generations of people in this country who cannot remember a time when there wasn’t an Amazon. Prime membership that gives you automatic two-day delivery? Sunday delivery? These conveniences are taken for granted now, not seen as some sort of anomaly or radical initiative. It won’t be long, I suspect, before checkout-free formats such as Amazon Go and even drone deliveries will be seen the same way.
There still will be places where retailers can operate according to old rules, serving customers who appreciate legacy business models. But that path to retail success is narrowing, and it would be a mistake to think that it won’t go away entirely someday. Better to be prepared.
Reason 2: You Don’t Have to Be Amazon
John Nelson, CEO of the delivery service Vroom, launched the company to help his father—who owned a c-store with an attached restaurant—get into e-commerce and delivery. At first, Nelson sought an off-the-shelf solution but couldn’t find anything that met his demands. In addition, he realized that he needed to have greater control of the process so he’d be able to deliver alcohol. (Store employees generally can, but outsourced drivers usually can’t.)
Delivery, it should be noted, seems to have been embraced to a far greater degree by the restaurant business—even the fast food sector—faster than the retail food business. Everybody seems to be doing it, usually in conjunction with services such as UberEats, GrubHub or Postmates, and even McDonald’s seems to have followed the trend. If you see yourself in any sort of battle with these companies for share of stomach—and you should—then the need to consider delivery becomes even clearer. But again, it is more about what the customer wants, needs and expects than it is about what fast food joints and restaurant chains are doing as competitors.
Nelson’s experience has shown that delivery metrics from the c-store companies with which he has worked tend to be strong: The average ticket is $40, roughly six times the in-store average sales of these retailers (without gasoline). Plus, the margins are roughly $10 higher on these delivery orders, with stores doing two to three deliveries per hour.
Michigan-based Quality Dairy isn’t doing that many deliveries yet, but CEO Thomas Buschert said that he believes the company doesn’t have any choice. “If we’re not ready, we’re going to be blindsided,” he said.
Buschert said the company deliberately started out slow because he only has one driver. He also didn’t need to start in multiple stores because of the chain’s unique density—20 out of 30 stores are in an eight-mile radius—and so he could effectively and efficiently deliver out of one store to start. “I was extremely nervous that if [delivery] took off, I’d have a real problem finding drivers,” he said. But so far, so good.
Gheysens of Wawa said that the company recently started delivery, and “that business is much bigger than we thought. We opened up a store on Drexel University’s campus recently. The first week we did $12,000 in sales in delivery, and they were going across the street.”
Reason 3: Evolving Touchpoints
A Florida company called Fleat has come up with a fascinating construct that could be adopted by c-stores, supermarkets and restaurants—anybody that is looking for share of stomach. And since it is a convenience-oriented model, any non-convenience store retail outlet that uses the concept will end up competing with c-stores.
It is more about what the customer wants, needs and expects than it is about what competitors are doing.
Here’s how it works: Fleat has an algorithm that analyzes customer purchase behavior and matches it up with location information (the company calls it “patented StreetLogic technology”). So, when they send a delivery truck to a neighborhood, it can be stocked with foods and meals and virtually any other product category that either has been ordered by people from that area in the past or is the kind of food they are likely to order. And then, the Fleat app, which is customized for whatever business is using it, informs people in the neighborhood that they are coming to the area, and what foods they have on the truck.
It is sort of like the old ice cream trucks, which would ring a bell to get kids to respond like Pavlov’s dogs. Fleat’s premise is built on the assumption that a targeted app or email will get adults to react in the same way—especially when they realize that, at least conceptually, this is designed to bring stores right into the customer’s driveway, which is the ultimate in delivery.
A company called Filld has come up with a fascinating idea that ought to play right into many c-stores’ sweet spots—it delivers fuel for people’s cars. Originally launched to service company fleet cars, Filld pivoted when it saw an opportunity to service private, individual accounts.
The idea is simple. Customers download the Filld app on their phones and set up a delivery schedule for fuel based on auto usage. (Filld, as it happens, is fuel-agnostic—they’ll deliver regular, premium or diesel and also can charge your battery if you drive a hybrid or electric car.)
Think about it. You’re used to going to the gas station—whether it is attached to a c-store or not—to fill up your car, but now Filld takes care of that by delivering the fuel right to your car, parked in your driveway. If you have a store with fuel pumps, using such a program would allow you to extend your fuel offering beyond your physical footprint. You could get shoppers to sign up, establish a delivery subscription schedule, and suddenly they are captive customers, unlikely to leave you for another brand. (For more details on Filld and other innovative fuel services, see “Changing How Consumers Buy Gas” in the October issue.)
And, by the way, if you’re not in the fuel pump business, this allows you to get into it, extending your brand and service component in a new and compelling way. But remember: It is more about what the customer wants, needs and expects than it is about what competitors are doing.
Reason 4: Data Matters
All of these examples have something in common that should become more and more important to convenience retailers: Each of these delivery mechanisms generates data. This data then can help drive more sales, both inside and outside the store, because the retailer is able to use it to develop customer profiles.
Consider the fact that Amazon knows everything about everyone who shops on its website—how often customers visit, how much time they spend shopping, how many trips it takes for them to pull the trigger on a purchase, how much they spend, what the sale-drivers seem to be, and so on. Amazon can and does drill down on all of this information—analyzing it via algorithms—and uses it to create a more relevant and customized shopping experience. There’s a reason that if you put 100 or 1,000 people in a room and, if they all signed onto Amazon at the same time, they’d see different things. Amazon actually acts on the actionable data that it collects.
Now, it is a pretty safe bet that most c-store retailers cannot and do not achieve the same level of granularity in their data management. But by engaging in delivery of various kinds, retailers can start to compile and then respond to data in a competitive way.
Today, Wawa knows far more about those Drexel University students who turned into delivery customers than they did before. It can continue to market aggressively to them as they move through school and then into the work world. If the students had come in just to buy pizza and beverages, Wawa might not have known as much and could have lost the opportunity to create a relationship that can endure in the face of competition.
Consider the fact that retailers doing business with Vroom, such as Quality Dairy, can do the same thing: turn transactions into knowledge and convert this knowledge into sustainable relationships.
Or, if retailers have data and aren’t afraid to use it, they can use a company such as Fleat to deliver targeted product selections into neighborhoods and people’s driveways. If retailers use Filld, then they know something else about their customers’ habits and can respond with additional offers and suggestions.
Reason 5: Own the Experience
Michael Sansolo, who writes a column for MorningNewsBeat.com, recently talked about a conversation he had with a young woman in Atlanta who is married, in her early thirties with two kids; both she and her husband work. “Where do you do your food shopping?” he asked. “Instacart,” she responded.
Sansolo was startled, and yet it isn’t surprising—Instacart has done an excellent job of disintermediating traditional retailers and communicating to shoppers who want delivery that it is their source of product, not the people and companies that actually operate stores.
This is the best reason to be very careful about the delivery services with which you do business, if you decide to get into delivery but outsource it to a third party that also is working with your competition. Remember at every step of the process that these are your customers, not theirs. Protect your list and remember that offering delivery ought not be a matter of finding the easiest or cheapest way out. It is like Tom Hanks says in “A League of Their Own”: “It is the hard that makes it worth doing.”
Attracting customers, serving customers, understanding customers and sustaining customer relationships is hard. But in today’s hypercompetitive environment, doing these things—delivering on your value proposition, in all the meanings of that word—is critical to survival. And for the last time, remember: It is more about what the customer wants, needs and expects than it is about what competitors are doing.