Identifying Opportunity and Reducing Risk in U.S. Convenience Stores
By: Dean Dorton | January 19, 2021
Question? Contact Us
2020 has forced all businesses to rethink their processes and procedures, but even before the pandemic business was evolving at an incredible fast pace. Moving forward, even our favorite convenience stores have to weigh opportunity and risk to keep up with a rapidly changing environment.
Operators need to monitor the following risk areas to stay competitive 2021:
Convenience stores should comply with PCI standards in order to protect cardholder information. Also be aware of skimming, in which devices are affixed to gas pumps and ATM machines to steal credit card information. C-stores should implement procedures to monitor pumps and ATM machines, and prevent and/or remove such skimming devices. Additionally, establish controls around the use of artificial intelligence to better understand consumer buying habits. Companies have until April 17, 2021 to comply with EMV chip card technology. Companies should invest in a proactive cybersecurity program which includes training programs to educate employees on common phishing scams.
2. Social Media & Mobile Technologies
Social media is increasingly becoming a part of everyday life. Incorporating social media into your business model can improve customer service and provide a low-cost alternative to traditional advertising. More than half of all buying is expected to occur on mobile devices. Therefore, having mobile applications is crucial to achieving success. Incorporating a rewards program in an app can lead to customer loyalty and increased sales.
3. Food Service
Food service sales continue to drive the success of the convenience store industry, and you risk losing out on business if you do not invest in food service. Because customers are looking for healthier food options, the c-store industry has seen large sales increases in “better-for-you” items, with lunchtime trafﬁc as the biggest opportunity. Continued trends in 2021 are going green, customization, unique experiences, healthy options, and tech takeover.
4. Wage Rates
The focus on driving up federal and state minimum wage requirements will get additional attention as the U.S. sees a transfer of power in Washington D.C.
5. Regulation Compliance
Increased regulation may result in higher prices for products such as e-cigarettes and other vapor products, diet and energy drinks, and dietary supplements, or a ban on those products altogether. Convenience stores must also comply with regulations regarding sales of alcohol, tobacco, and lottery tickets or face serious ﬁnes and penalties.
6. Softening Tobacco Market
While the tobacco market is stable, cigarette consumption is slowing as consumer demand ﬂattens. E-cigarettes can be an important product line in c-stores, as almost half of adult smokers are looking for an alternative to cigarettes. Cigarette taxes have been rising, which will impact demand as well.
7. Shortage of Truck Drivers
The average age of a truck driver is 55, so all industries need to work together to identify an expanded labor pool. Currently community colleges are expanding programs along with a focus on female and military veteran drivers. The shortage of truck drivers can create delays in shipments to stores, inventory shortages, and frustrated customers. The LA Times reports 1.7 million American truck drivers could be replaced by self-driving trucks over the next decade.
8. Environmental Trends (Going Green)
Environmental trends are changing the landscape of c-stores. Plastic straws and disposable cups have been marked as ecological hazards. The industry needs to work together on finding alternatives to risk not losing its customer base. California has issued a ban on new gasoline cars by 2035 which puts an emphasis on developing battery powered vehicles and the need for c-stores to add charging stations.
9. COVID-19 Impact
COVID-19 has caused a substantial decline in travel and gas consumption. C-stores have to expand marketing to draw traffic for food and other items beyond fuel.
Beyond 2021, operators need to monitor competition from nontraditional c-store locations and sources. Amazon and Dollar General are both evaluating c-store options. Operators have also expressed concern in recruiting top talent and having to explore nontraditional labor pools. Additionally, significant changes in the automobile industry in the next 10 years will see autonomous vehicles, ride sharing programs and battery powered vehicles which will dramatically reduce the fuel supply provided by c-stores. C-stores provide approximately 80% of the fuel purchased in the U.S.
Sources: csnews.com, dol.gov, nacsonline.com, convenience.org
Have a question? Click here to contact this representative.