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The Changing Convenience Store Landscape

convenience store

The retail industry is rapidly evolving. Convenience stores need to adapt their strategy, expanding their product mix to appeal to today’s busy consumers who want fresh, ready-to-eat meal solutions faster.

Retailers know that providing a positive shopping experience is critical to building loyalty and increasing customer spend per visit. At the same time, they need to manage costs, ensure staff place customer support above maintenance duties and address changing market conditions that put pressure on profitability.

In the past, retail segments offered distinct services. The traditional competitive advantage for convenience stores — longer hours and quick access to high demand products — is eroding. Today, “convenience” has become pervasive. The competition crosses retail segments as:

  • Grocery stores are open for 24 hours and sell fuel, offering loyalty programs to subsidize low gas prices.
  • Pharmacies are on every corner, offering quick access to high demand products.
  • Dollar stores appeal to customers with convenience and value.
  • Quick service restaurants are top of mind for consumers as the choice for convenient, fast food.

How are convenience stores responding to these market conditions? There is a good chance that they are investing in foodservice, where margins can exceed 50 percent. Convenience foodservice is a $10.9 billion business. These stores are evolving to offer fresh, prepared foods in order to bring new customers inside the store and, ultimately, increase profits.

But, it’s not that simple. Consumers have higher expectations when it comes to purchasing these types of foods, and convenience stores are now faced with competition that has years of success in this area. They need to build a positive reputation for offering high quality food in a clean, safe and comfortable setting.

So, how can convenience stores convince customers to buy their food? This video takes a look at solutions needed to address the key variables that influence consumers’ shopping decisions:

Incorporating foodservice adds a new level of complexity to store operations in an already fast-paced environment. Convenience stores may not have much experience with food refrigeration and maintaining optimum temperatures and lighting conditions, which are critical to creating a welcoming environment for customers. Training can also be challenging if turnover rates are high. And, if refrigeration, HVAC and lighting systems are managed at each local store, it is difficult to deliver consistency across a chain of stores.

Until convenience store operators address these issues, they are only one bad experience away from losing customers — especially in today’s world of increased social media criticism for brands. Convenience stores need to take a fundamentally different approach to store operations as they enter into foodservice. They’ll look to automate operations for consistent delivery of high quality food in a welcoming environment for their customers.

Is your convenience store entering into foodservice? What challenges have you faced as you make this shift?

John Atchley
National Account Executive, Retail Solutions
Emerson Climate Technologies

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