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10/31/2022

C-store Operators Turn to Self-Checkout to Compete

Retailers adapt to outside pressure by embracing speed, adding fresh offerings and reallocating store space.
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JACKSONVILLE, Fla. — Convenience store chains are feeling increased competitive pressure from grocery stores and general merchandise retailers that offer a larger assortment of food and essentials through convenient delivery and pickup options. As a result, the channel is adopting new strategies to stay relevant, such as embracing flexible, speedy checkout methods; ramping up fresh offerings; reallocating store space; and catering to their local communities.

However, speed of change remains problematic for c-store operators, nearly three-quarters (74 percent) of which say they are dissatisfied with their ability to expand quickly, according to industry insights from Incisiv and Toshiba Global Commerce Solutions in a new report entitled "State of the Industry: The Future of Convenience Stores."

In a survey of 128 U.S. convenience retail executives in September, Incisiv and Toshiba found that convenience has lagged technologically compared to other segments, as it has not moved as quickly toward unifying experiences across digital and in-store channels. C-stores need to prioritize this to effectively compete for shoppers' share of wallet, according to the organizations.

"There is a significant opportunity for the convenience industry to prioritize unified commerce to gain market share against other segments," said Fredrik Carlegren, vice president of marketing and communications, Toshiba Global Commerce Solutions. "While grocery and delivery trends continue to encroach on 'convenience' trends unifying in-store, online and delivery, convenience retailers see the need to innovate rapidly to compete and succeed in a competitive market to win consumers."

Other key findings from the research include:

  • Twenty-six percent of c-stores plan to reduce space allocated to fixed checkout. Additionally, artificial intelligence or machine learning assisted self-checkout is set to outpace traditional self-checkout over the next 12 to 18 months.
  • Eighty-two percent of c-stores lack a unified architecture across digital and physical commerce, and only 8 percent offer shoppers a unified e-commerce and in-store basket.
  • Seventy-two percent of c-store executives say it is important to differentiate on higher quality fresh food, but only 32 percent are satisfied with their brand's current offering.
  • Thirty percent of c-stores plan to increase in-store space for fresh food preparation, and 25 percent plan to increase space for in-store dining.
  • Sixty-two percent of c-store executives consider becoming more relevant to the local community to be a critical part of their growth strategy.
  • Sixty-one percent of c-store executives are satisfied with their brand's current capabilities around localizing assortment. However, they need to become more adept at high-frequency replenishment, quicker inventory turns and more frequent store layout resets.

"C-stores no longer just compete with the corner shop down the street. Grocery and general merchandise retailers offer a larger assortment of food and home essentials through convenient delivery and pick-up options. Quick commerce upstarts such as Gopuff offer ultra-fast delivery in urban areas," said Giri Agarwal, chief strategy officer at Incisiv. "C-stores have the unique opportunity to become a unifying agent for some of the most exciting consumerism trends of the future: health and wellness, electric mobility and sustainability, and the rise of local ecologies. If they can do that successfully, they would have smartly redefined 'Convenience 2.0' to be about more than the need for speed."

The complete findings of "State of the Industry: The Future of Convenience Stores" are available here.

Incisiv is a next-generation industry insights firm that helps retailers and brands navigate digital disruption in their industry.

Toshiba is a global market share leader in retail store technology.