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Convenience stores and fuel stations are having a rough go of it in 2020, as the change in work and driving habits by many consumers have affected that retail sector significantly.
According to the most recent industrywide data from the National Association of Convenience Stores, weekday morning traffic is just 85% of what it was in 2019. Lunchtime traffic has also dropped to 88% of the mark from a year ago.
That has reduced the number of office workers looking for quick afternoon snacks or in need of bread, milk, and other smaller items on their way to and from work. Likewise, consumers are filling up with gas less frequently, which means fewer trips to the small stores.
Moreover, consumers have begun to change their shopping habits, too. Many are learning about autonomous checkout in the era of safety, and many more are utilizing online ordering for essentials that might have been purchased at convenience stores when filling up in the past.
Focusing on Health and Safety
Brandon Logsdon, President and General Manager for Marketing Cloud Solutions and Fuel Pricing at PDI, says the most important thing on consumers’ minds right now is health and safety.
“Sneeze guards and hand sanitizer for checkout counters and flexible payment options like contactless, order ahead for delivery, or pickup are very important right now,” Logsdon says. “Consumers are also looking for increased in-store cleaning, sanitizer stanchions at fuel pumps—all of these are important.”
David VanWiggeren, CEO of Drop Tank, which specializes in gas station loyalty technology and loyalty solutions, adds that COVID is accelerating digital solutions in general, and it’s no different in the convenience store industry.
“Stores that rely on the cashier/customer relationship, and do not have a meaningful digital channel to engage those customers, may struggle,” VanWiggeren says. “App-based loyalty with mobile payment capability is really helping some operators bridge the current engagement gap, and give customers the information they need to feel comfortable and motivated to go inside the store.”
Adapting to Changing Habits
Some retailers are starting to adapt to these changing consumer habits. Circle K is opening what’s believed to be the world’s first convenience store retrofitted with AI technology for autonomous checkout in Tempe, Arizona, the company announced recently. The brand is equipping the store with up to 100 ceiling cameras that record which products customers who sign in with the app take off the shelves.
Wawa also revealed plans for its first-ever freestanding drive-through, which will be built in suburban Philadelphia. Customers will be able to order food and beverages including value meals, combo meals, coffee and specialty beverages.
Logsdon says that in PDI’s recently released 2020 C-Store Shopper Report, one of the main concerns for operators was customer retention, and that’s especially true this year.
“Rewarding customers for their loyalty is a great way to address this issue,” he says. “Loyalty rewards tell customers that you appreciate their business and incentivizes them to continue spending at your store.”
Personalization Will Be the Key
But Logsdon says rewards have to be valuable to each individual, and this is why personalization plays a big part in loyalty success. He also recommends that convenience stores go digital in their communications.
“Generally speaking, customers want relevant, digital communications over other forms of communication,” he says. “That preference is even more pronounced within the c-store vertical because consumers tend to make more mobility-based or impulse purchases as opposed to mission-based purchases.”
Loyalty Methods CEO Emil Sarkissian suggests stores implement a few new practices, including contactless payments, voice integration, and curbside pickup as well as home delivery — either organically or through partnerships with delivery companies.
“They should look at ways to provide real-time ‘risk’ indicators directly into apps, showing how many people are at a store location,” Sarkissian says. “Look at loyalty-based priority schemes where there are lines because of store capacity limits, similar to airline boarding.”
VanWiggeren says it’s fairly simple to adjust and that convenience store loyalty needs to focus on convenience.
“Does the loyalty solution make the customer experience more convenient or slow it down?” he says. “Targeted offers, autonomous checkout, instant rewards, intuitive UI, free delivery; these are critical to customers who are by definition ‘on the go.’”
Additional Mitigation Practices
In addition to the stores changing their practices, DoorDash has started delivering from more than 1,800 convenience stores across the country, such as 7-Eleven, Wawa, Casey’s General Store, Circle K, and DashMart in a number of cities.
Sarkissian says convenience stores should adopt additional mitigation for the current COVID situation such as suspending or delay expirations to allow more time for people to redeem their points/rewards.
“They should also move away from repeat, same-day visits, and towards one-stop, bigger-basket visits,” he says. “This can be done by reducing bounce-back coupons and other incentives to come later in the day, and instead focus on incentivizing basket size.”
If 2020 has taught us anything, Logsdon says, it’s the value of flexibility, and that lesson applies to a brand’s loyalty program as well. Since PDI began releasing its ‘Road to Rewards Report’ back in 2015, fuel savings has been the most popular rewards currency among surveyed consumers. Their new report is coming out in a few weeks, and Logsdon says it will show how consumer perception about the value of fuel savings as a currency has shifted.
“That doesn’t mean that the reward itself is less relevant,” Logsdon says. “We believe the change is largely being driven by the fact that consumers are driving less this year as a result of the pandemic. That was especially true at the time we conducted the survey. Adapting to changes in consumer attitudes and preferences requires flexibility.”
Ensuring Long-Term Loyalty Success
Logsdon says to ensure long-term loyalty success, operators—from c-store retailers to grocers to CPGs—must give their consumers choice when it comes to the rewards they offer and the ways they can redeem.
All three industry experts offer advice on ways convenience stores can tread the COVID period.
VanWiggeren says they should form and deepen digital relationships with customers.
“Store layouts, product mix, employee training … these are all important,” he says. “But they are table stakes. Providing digital commerce and loyalty solutions to make the customer experience more convenient and engaging will help convenience stores keep up with changing shopping habits.”
Logsdon adds that convenience stores have to know what their customers want; if customers arrive at a store and find the items they want are out of stock — or that inventory hasn’t been adjusted to accommodate for these unusual times — that leaves a negative and potentially lasting impression in their minds.
“During unprecedented times, historical data or seasonal trends can become unreliable,” he says. “Real-time, basket-level data is the key to success in this area. It provides visibility into how to best maximize promotional content by daypart, merchandise affinities, and basket adjacencies. These are powerful insights, and they really differentiate retailers from their competitors during a crisis.”
Sarkissian says stores can use loyalty as a learning tool, and leverage the data to adapt to changing behaviors.
“That is true in these times, as well as at any other time,” he says. “We often refer to it as validated learning.”
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