By Chris Blasinsky

ALEXANDRIA, Va.—No doubt 2020 has seen a massive acceleration in the pace of change across the retail landscape, with pressures today continuing to intensify amid new regulations, economic uncertainty, supply chain disruptions and rapid deployment of e-commerce solutions that consumers have been waiting on for years. And of course, a global pandemic. But it is in this moment—what most call an unprecedented moment—that retailers have a front-row seat to a changing landscape ripe with opportunities.

Lori Stillman, NACS vice president of research, shared at the Conexxus Annual Education and Strategy Conference this week her take on where the convenience and fuel retailing industry is heading by exploring the benchmarks, strong and weak signals and consumer behaviors that are changing in a constantly evolving industry.

Stillman noted that the power has shifted to consumers, and that even before COVID-19 there were ample signs surrounding how shopping patterns were shifting. For example, Walmart and Chipotle stood out from the competition for being nimble enough to respond and deploy new solutions prior to the crisis like contactless payments, curbside and click-and-collect pickup, delivery and drive-thrus.

Although it is arguable that none of these time-saving and contactless ideas are new, they have been sitting on to-do lists for far too long. “For many retailers, these ‘strategic priorities for tomorrow’ were deprioritized for what felt like more urgent tasks that for many have been left unattended to in recent months with little to no impact on the bottom line,” said Stillman. 

The convenience retail landscape is uniquely positioned to lead the economic recovery of retail, she added, noting the industry’s ability to serve half the U.S. population per day at 153,000 locations.

“We’re where consumers need us to be,” she said, adding that few channels have the potential to deeply seat shopper loyalty than convenience stores, noting other strategic advantages:

• Customer frequency: There are 165 million transactions per day in U.S. convenience stores
• Operating hours: Most stores are 24/7, serving shift workers, first responders and medical and healthcare workers
• Strong offers and assortment for grab-and-go snacks, beverages, beer and impulse items
• Quick and friendly service
• Daypart agility and relevancy for foodservice programs

And despite today’s challenges, the outlook is exciting, said Stillman as she outlined three broad areas that can have a significant impact on the industry’s future:

1. How the industry fared in 2019, which is the bedrock to industry performance for 2020 and beyond
2. Current events and how they are reshaping consumer behavior, categories and operational considerations
3. What will greatly impact the industry’s future and what retailers can do now to prepare

Looking back on 2019, NACS State of the Industry data revealed that trips declined in the convenience channel, which will require retailers to focus on evolving their value proposition inside the store. For example, evaluate how to go beyond fuel to drive in-store traffic by:

• Innovating the shopper experience with a greater emphasis on loyalty, promotions and creating moments of relevancy for shoppers through digital offers and frictionless shopping capabilities
• Continue to evolve daypart offers that support customers’ busy lifestyles
• Continue focusing on a culture of cleanliness across stores—don’t take your foot off the gas on hygiene and the health and wellbeing of employees and customers

And there are some headwinds retailers should continue to keep an eye on, as some are already taking shape—and quickly:

• Swipe fees: Credit and debit card fees increased 6.3% to a record $11.8 billion in 2019, per NACS State of the Industry data. As contactless payments and delivery services grow, these costs will  continue to be a disproportionate expense on direct store operating expenses for retailers.
• Workforce: Efforts will continue to boost the minimum wage to $15 per hour
• Forecourt conversions: How can retailers convert the gas-only customers to shop the store?
• QSRs: With distance learning and working from home, the industry may be in for a fight to win over the lunchtime, budget-conscious shopper
• Technology upgrades and making the investments that need to be made to compete in a rapidly evolving digital world

Looking at this year so far, the pandemic has forced the acceleration of new behaviors for both shoppers and retailers. As the impacts of COVID-19 continue to manifest, convenience retailers can find opportunities to rise to the occasion and meet consumer expectations, said Stillman. For example, today’s (or post-COVID) shoppers are more comfortable with omni-channel experiences, giving rise to retailers to move forward with digital transformations that will now have a receptive and ready audience. 

Going into 2021 and beyond, Stillman shared five areas where the industry can thrive: 

1. Payments: Although the U.S. has lagged most countries in terms of contactless payment adoption, expect mobile and contactless payments to grow. Also, expect solutions for non-card holders; while 70% of Americans have a credit card, 6.5% (8.4 million) of U.S. households do not have a bank account. 
2. Loyalty: Harnessing valuable customer data will be key for retailer efforts to ignite, invigorate and innovate post-pandemic, said Stillman, citing the need for a better understanding of shopping behavior for customers who shop both in-store and online, and using AI and machine learning to identify untapped areas like sampling and impulse item automation.
3. Store Design: Moving forward, traffic and dwell time are no longer key metrics. Retailers should be thinking about building experiences around walk-up and drive-thru services, making food prep and hygiene more visible, and being more thoughtful about social distancing by creating aesthetically pleasing seating and food ordering waiting areas.
4. Pivoting Assortment: As the early onset of the pandemic proved, continue to plan for multipacks and essential grocery staples as well as recognize that consumers are more health-minded, therefore increased demand for fresh foods and locally-sourced items will continue to grow. Also, eating at home will likely continue, which is an opportunity to offer meal solutions. 
5. Community and Connectedness: People will crave connections with others and want to belong to something. Convenience stores are perfectly positioned to meet the immediate needs of their neighborhoods.

“Know your 2019 strengths and play into them, but don’t forget about the non-urgent performance gaps that are not getting better with time because they will still persist,” said Stillman. And while adapting to today’s challenges, listen to your customers, employees and supplier partners to increase reaction time for greater assortment and services that meet the needs of customers, she added.

Also, invest time “to understand how behavior changes are impacting the future role of your company in the community,” Stillman said.

Content, learnings and networking at the Conexxus Annual Education and Strategy Conference tapped into a central theme of “Surviving & Thriving in the Age of Disruption: How We Responded to the Pandemic.” The three-day event took place virtually and concluded yesterday with a lively discussion featuring Conexxus Executive Director Gray Taylor and Kevin Smartt, CEO of Austin, Texas-based Kwik Chek, chairman of Conexxus and member of the NACS Executive Committee. Look for more coverage in NACS Daily next week.

Chris Blasinsky is the NACS content communications strategist; she can be reached at cblasinsky@convenience.org, and on Twitter and LinkedIn.