New consumer expectations have put C-stores in a unique position to thrive or fall short in our digital world.
As we mentioned in a previous article, the digital transformation has not bypassed convenience stores. And other changes have been making themselves felt. Whether it’s dealing with expensive technology investments, coping with a labor shortage and disrupted supply chains, or adapting to meet changing customer expectations, c-stores are facing a slew of challenges.
This doesn’t mean the situation is bleak. Indeed, convenience stores are among Americans’ most popular shopping stops. According to Convenience Store News, c-store sales hit an all-time high of $814 billion in 2022. That’s an increase of nearly 23 percent year over year. And CSP Daily News states that nearly 62% of Americans visit a c-store at least once a week, adding that “Americans are in love with convenience stores”.
So, let’s find out what c-stores can do about the challenges they’re facing. As we’ll see, a judicious mixture of the right tech and the right people skills can help c-store operators thrive in a changing and competitive market.
8 Challenges Facing Today’s Convenience Store Operators
1. Adopting and Affording New Technology
New technologies are making their way into the retail environment, changing customers’ behavior and expectations. For example, consider the journey from cash payments to credit cards to chip cards to mobile wallets and paying via app or smartphone. Imagine a c-store that didn’t make these additional forms of payment available; how do you think this store is faring with its more tech-savvy competition?
Still, there are significant costs involved – both in terms of equipment and in training hours and getting employees to adopt new tech. These can seem to outweigh the benefits of implementing new tech, at least in the short term. What can c-store leadership do in this situation?
Remain aware of tech trends. This doesn’t mean you have to adopt everything that comes your way. But you can’t develop a strategy or evaluate possible solutions to your needs unless you understand what options are available.
Know which technologies align with business goals and consumer habits. Consider new technologies from two perspectives: whether customers will use it and how it will help your business goals.
Evaluate the ROI. In addition to revenue increases, consider operational returns like increased efficiency and reduced stock outages. Also, think about how new tech can lead to an enhanced customer experience, which will boost engagement and loyalty.
Embrace employee training and change management. If you’re adding tech that will change how employees do their jobs, invest in employee training and change management. Training is essential if you want employees to use (and potentially help customers use) new tech. And using change management techniques – like explaining the benefits of the new system, listening and responding to employees’ concerns, and looking for ways to show your appreciation of their efforts – can help employees view any new tools more positively.
2. Labor Shortages
C-stores have been wrestling with labor issues for years, with departing workers citing low pay, lack of advancement opportunities, and a desire for better schedules and working conditions. This has led to a staggeringly high turnover rate of 118%.
What can c-stores do to combat this problem? There are some high-tech solutions available, such as self-service kiosks that allow employees to spend less time at the register. While we wait for these to gain traction, c-store operators can:
Improve company culture, focusing on building a sense of teamwork and ownership within various roles.
Offer competitive wages and flexible schedules to attract and retain new workers.
Develop employee training programs that enhance productivity, encourage ownership, and emphasize employee development.
Find ways to express appreciation for employees and contribute to employee wellness.
3. Supply Chain Disruptions
Supply chain problems peaked during the pandemic, and they haven’t entirely gone away yet. C-store management have adapted by being flexible – exploring alternative suppliers, changing order frequency and inventory levels, and even rethinking the items they offer. But as supply chains continue to stabilize, other changes will be needed.
One of these is related to technical growth. It’s becoming more common to see c-stores implement AI-powered inventory management systems. These use real-time data analytics to determine when and what to reorder, which leads to optimized stock levels and fewer out-of-stock situations.
The other change is more human-centric, and that’s building a strong relationship with suppliers. This can involve sharing data with them as well as having open communication about what works and doesn’t work in each store’s location. C-stores often have a uniquely clear view into customers’ shopping habits and needs, and this information can help suppliers in their own business as well.
4. Evolving Consumer Expectations
Driven by technological innovations, customer expectations regarding the in-store experience are also changing. And meeting these expectations is important, as these stats collected by Merkle show:
88% of customers say the experience a company provides is as important as its products or services
62% of customers say that a brand that doesn’t offer a personal experience could lose their business.
Disappointed customers do not become repeat customers; it’s important to meet your audience’s expectations for brand interactions, guest experiences, and more.
This is especially true in marketing. With a growing number of c-store chains launching mobile apps and loyalty programs, more customer data is available than ever before. And more touchpoints are possible than ever before.
C-stores that want to stay in front of the competition will take advantage of this to personalize the message, timing and channel of communications to each customer. And they’ll take the time to personalize offers, as well. You can read more about personalization here.
Of course, it would be impossible to do all this manually; that’s why there are many data analytics solutions and customer data platforms available to automate messaging and offer personalization.
5. Competition from Quick Service Restaurants
Convenience stores don’t have a monopoly on customers wanting a quick snack or a hasty lunch. They face stiff competition from fast-food restaurants, which also target the same on-the-move, time-crunched demographic.
C-stores can stave off this challenge by offering a wider range of food options. Most Quick-Service Restaurants (QSRs) offer a relatively limited selection of foods in one style (e.g. tacos, burgers and dogs, subs, etc.). C-stores can provide hot and cold foods, grocery staples, convenience foods, snacks, cakes and cookies, and much more. They can also get guests in and out quickly, as there’s little to no prep time and waiting.
Convenience stores can also learn a lesson from QSRs around optimizing the order experience through mobile apps and online ordering. Many c-stores that implemented contactless and curbside pickup during the pandemic have kept those features because their customers love them. Adding even more convenience to the c-store experience can increase customer loyalty and engagement.
6. Data Management and Privacy
A quick scan of the news will reveal the importance of data privacy – and how concerned Americans are with keeping their personal information secure. While customer data is a huge asset, it’s also a huge responsibility. With more c-stores collecting, analyzing, and storing customer data, they’ve also acquired the need to use and house it responsibly.
This means that c-store operators have to process and manage customer data in accordance with industry and government regulations. In practice, meeting this need often requires expert help and specialized technology to anonymize, store, encrypt, and/or secure sensitive or personal data. How to do this is beyond the scope of this article, but it’s worth acknowledging that information security is a major need for c-stores.
7. Balancing Convenience with Sustainability
Across industries, sustainable and environmentally-friendly practices have become a top concern. Not only does this resonate with many customers, it also can help businesses reduce operating costs.
In the food industry, sustainability often starts with altering ordering and inventory procedures to reduce food waste. This applies to c-stores as well, but it doesn’t stop there. Some other ways to run a more sustainable business include:
Sourcing food locally where possible.
Reducing energy and water use.
Offering recycling facilities onsite (e.g. for plastic bottles and cans).
Where possible, investing in renewable energy.
Choosing responsibly sourced goods.
Educating customers and employees on environmentally friendly behaviors.
8. Customer Loyalty and Retention
It is many times more expensive to make a new customer than to keep a current one. Like many other consumer-oriented industries, c-stores face plenty of competition for customers’ attention.
Once again, data can come to the rescue here. Personalization and creating the right customer experience are key to keeping customers satisfied and engaged – and that requires data. It’s easier to turn happy customers into repeat customers, as we discussed in an earlier post. And for ideas on creating an effective customer loyalty program, check out 4 Reasons Loyalty Programs Fail And How To Fix Them.
For Convenience Stores, Challenges Can Be Opportunities
Convenience stores face several major challenges. However, forward-thinking c-store operators can turn these challenges into opportunities for innovation and growth. To find out how you can use the latest technology to drive optimization and continued success, talk to Tillster today.
