This is part of Supermarket News’ 2019 Disruptors package. See the entire lineup here.
An ever-present competitive threat to grocers, convenience stores are upping their game – and raising that threat level along the way. Much of that competition comes from the foodservice side of the business, which accounts for nearly one quarter of c-stores’ $237 billion in in-store sales last year, according to the National Association of Convenience Stores (NACS).
“Food is a way to get a higher ring and a higher margin,” said Jeff Lenard, vice president of strategic initiatives at NACS. “There are a couple of things that are driving the push towards food in convenience stores. Number one, when you look at the core categories in our industry — fuel, tobacco, lottery — they all face challenges. So retailers need to look at how they reinvent themselves around convenience. From the other end, consumers are looking at where they can buy fresh food on the go, and they are now much more likely to seek out nontraditional places.”
Beyond offering higher-quality and more extensive prepared foods, convenience stores are continually elevating their formats and adjusting product selection to meet the changing needs of key demographics — namely, Millennials and the younger generation right behind them. Today’s independent operators are introducing some of the most exciting new c-store concepts — for example, focusing on healthy, high-end products from small brands the way L.A.’s upscale The Goods Mart does or creating a coffee-shop vibe like Chicago’s Foxtrot stores.
“I think customers have a really low expectation of what a convenience store is,” said Foxtrot’s co-founder Mike LaVitola, “and so, when you have a really fun and bright and welcoming one that has really high-quality products that they're not used to seeing, they get excited.”
Today’s shoppers of all ages are also seeking out faster and higher tech. To that end, we are seeing even traditional c-stores like 7-Eleven launching apps for in-store pickup and delivery and chasing the tail of Amazon Go’s cashierless stores with a test of its own. At this year’s ShopTalk event in Las Vegas, 7-Eleven’s Tarang Sethia, senior director of loyalty and CRM, threw down the gauntlet, saying, “Let’s see if we can scale this technology out to 10,000 stores before Amazon can build 10,000 stores. Bring it on!”